A bill to amend title XVIII of the Social Security Act to provide medicare beneficiaries with access to information concerning the quality of care provided by skilled nursing facilities and to provide incentives to skilled nursing facilities to improve the quality of care provided by those facilities by linking the amount of payment under the medicare program to quality reporting and performance requirements, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Long Term Care Quality and Consumer 
Information Improvement Act of 2004''.

SEC. 2. MEDICARE PAYMENT ADJUSTMENTS FOR SKILLED NURSING FACILITIES 
              BASED ON QUALITY DATA.

    (a) In General.--Section 1888(e) of the Social Security Act (42 
U.S.C. 1395yy(e)) is amended by adding at the end the following new 
paragraph:
            ``(13) Payment adjustments based on quality data.--
                    ``(A) Establishment of quality measures.--
                            ``(i) In general.--Subject to the 
                        succeeding provisions of this subparagraph, not 
                        later than July 1, 2005, the Secretary shall 
                        establish between 10 and 15 quality measures 
                        applicable with respect to skilled nursing 
                        facilities in addition to any quality measures 
                        applicable with respect to such facilities 
                        established prior to January 1, 2005.
                            ``(ii) Consultation.--In establishing the 
                        quality measures under clause (i), the 
                        Secretary shall consult with--
                                    ``(I) residents of skilled nursing 
                                facilities;
                                    ``(II) representatives of patient 
                                advocacy organizations;
                                    ``(III) State regulatory 
                                representatives;
                                    ``(IV) representatives from the 
                                skilled nursing facility industry; and
                                    ``(V) experts on quality measures.
                            ``(iii) Staffing and mix of licensed 
                        staff.--At least one of the quality measures 
                        established under clause (i) shall relate to 
                        the level of skilled nursing facility staffing 
                        and the mix of licensed staff.
                            ``(iv) Establishment and application of 
                        risk adjustment methodology.--The quality 
                        measures established under clause (i) shall 
                        take into account the relative risks associated 
                        with the population of each skilled nursing 
                        facility to ensure that the differences in the 
                        quality measures reflect differences in the 
                        care provided by the facilities and not 
                        differences in resident population 
                        characteristics by using a risk adjustment 
                        methodology established for purposes of this 
                        subsection. The risk adjustment methodology 
                        established and applied under this clause may 
                        exclude certain types of residents, stratify 
                        residents into high-risk and low-risk groups, 
                        or use a statistical adjustment, such as a 
                        regression analysis, that takes into 
                        consideration multiple characteristics for each 
                        resident.
                            ``(v) Special provision for small skilled 
                        nursing facilities.--The Secretary, in 
                        consultation with the individuals and groups 
                        described in clause (ii), shall establish 
                        criteria for determining which quality measures 
                        established under clause (i) do not apply with 
                        respect to skilled nursing facilities that are 
                        not large enough to yield meaningful data with 
                        respect to such measure.
                            ``(vi) Annual review and revision.--The 
                        Secretary, in consultation with the individuals 
                        and groups described in clause (ii), shall 
                        annually review and revise the quality measures 
                        established under clause (i), as the Secretary, 
                        in consultation with such individuals and 
                        groups, determines appropriate.
                    ``(B) Reporting on quality measures.--
                            ``(i) Submission of data.--Each skilled 
                        nursing facility that desires to receive a 
                        payment adjustment under subparagraph (C) shall 
                        submit such data at such time and in such form 
                        and manner as the Secretary, in consultation 
                        with the individuals and groups described in 
                        subparagraph (A)(ii), requires for purposes of 
                        applying the quality measures established under 
                        subparagraph (A)(i).
                            ``(ii) Publication of quality ratings.--Not 
                        less frequently than annually, the Secretary 
                        shall cause to be posted on the Internet 
                        website of the Centers for Medicare & Medicaid 
                        Services and to be published in newspapers with 
                        a national circulation a quality rating for 
                        each skilled nursing facility submitting data 
                        under clause (i) by using such data to apply 
                        the quality measures established under 
                        subparagraph (A)(i) to each facility.
                    ``(C) Additional payment amount.--
                            ``(i) In general.--Subject to clause (iv), 
                        each skilled nursing facility that submits data 
                        under subparagraph (B)(i) shall receive the 
                        update described in clause (ii) and the payment 
                        adjustment described in clause (iii).
                            ``(ii) Full market basket update.--
                        Notwithstanding paragraph (4)(E)(ii) or any 
                        other provision of law, each skilled nursing 
                        facility described in clause (i) shall receive 
                        the full market basket update for the year 
                        following the year in which such data is 
                        submitted.
                            ``(iii) Payments based on quality.--The 
                        Secretary shall adjust the total payment amount 
                        under this subsection for skilled nursing 
                        facilities described in clause (i) as follows:
                                    ``(I) Beginning with fiscal year 
                                2006, for each of the skilled nursing 
                                facilities that the Secretary 
                                determines, based on the quality 
                                measures established under subparagraph 
                                (A)(i) for the preceding fiscal year, 
                                to be--
                                            ``(aa) in the top 10 
                                        percent of all nursing 
                                        facilities that submitted data 
                                        under subparagraph (B)(i) 
                                        during the preceding fiscal 
                                        year, each payment amount 
                                        determined under the other 
                                        provisions of this subsection 
                                        shall be increased by 2 percent 
                                        of that amount; and
                                            ``(bb) below the top 10 
                                        percent of such nursing 
                                        facilities, but within the top 
                                        20 percent of such facilities, 
                                        each payment amount determined 
                                        under the other provisions of 
                                        this subsection shall be 
                                        increased by 1 percent of that 
                                        amount.
                                    ``(II) Beginning with fiscal year 
                                2007, for each of the skilled nursing 
                                facilities that the Secretary 
                                determines, based on the quality 
                                measures established under subparagraph 
                                (A)(i), to be in the bottom 20 percent 
                                of all nursing facilities that 
                                submitted data under subparagraph 
                                (B)(i), each payment amount determined 
                                under the other provisions of this 
                                subsection shall be decreased by 1 
                                percent of that amount.
                            ``(iv) Special provision for small skilled 
                        nursing facilities.--The Secretary may not 
                        refuse to provide a full market basket update 
                        under clause (ii) or to provide an increase or 
                        reduction under clause (iii) with respect to a 
                        skilled nursing facility because such facility 
                        does not submit data with respect to a quality 
                        measure that does not apply to the nursing 
                        facility as a result of the application of the 
                        criteria established under subparagraph (A)(v).
                    ``(D) Budget neutrality.--In implementing this 
                paragraph, the Secretary shall ensure that the 
                aggregate amount of expenditures made by the Secretary 
                under this title in a fiscal year does not exceed the 
                aggregate amount which the Secretary would have 
                expended under this title in the year if this paragraph 
                had not been enacted. In determining the aggregate 
                amount which the Secretary would have expended under 
                this title in the year if this paragraph had not been 
                enacted, the Secretary shall assume a current services 
                budget baseline that includes in the assumption of 
                current services a level of expenditures for covered 
                skilled nursing facility services that reflects a 
                continuation of the Resource Utilization Groups (RUGS) 
                that were used for making payments under this section 
                during fiscal year 2004.''.
    (b) Evaluation and Report.--
            (1) Evaluation.--The Secretary of Health and Human Services 
        shall conduct an evaluation of the implementation of the 
        amendment made by subsection (a), including an evaluation of 
        the number of skilled nursing facilities that submit the data 
        pursuant to paragraph (13)(B) of section 1888(e) of the Social 
        Security Act (42 U.S.C. 1395yy(e)), as added by subsection (a).
            (2) Report.--Not later than December 31, 2007, the 
        Secretary of Health and Human Services shall submit a report to 
        Congress on the evaluation conducted under paragraph (1) 
        together with recommendations for such legislation and 
        administrative actions as the Secretary considers appropriate.

Summary: Long Term Care Quality and Consumer Information Improvement Act of 2004 - Amends title XVIII (Medicare) of the Social Security Act to provide for payment adjustments for skilled nursing facilities based on quality data.