To amend title XVIII of the Social Security Act to provide incentives linking quality to payment for skilled nursing facilities and to establish a Long-Term Care Financing Commission.

March 17, 2005

Mr. ENGLISH of Pennsylvania (for himself, Mr. TANNER, and Mrs. WILSON of New Mexico) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend title XVIII of the Social Security Act to provide incentives linking quality to payment for skilled nursing facilities and to establish a Long-Term Care Financing Commission.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Medicare Nursing Facility Pay-for-Performance Act of 2005'.

SEC. 2. ADDITIONAL MEDICARE PAYMENT FOR FACILITIES THAT REPORT ADDITIONAL QUALITY DATA.

(a) Voluntary Reporting of Quality Measures and Adjustment in Payment-

(1) IN GENERAL- Section 1888 of the Social Security Act (42 U.S.C. 1395yy) is amended by adding at the end the following new subsection:

`(f) Voluntary Reporting of Quality Measures; Change in Payment Based on Reported Quality Measures-

`(1) ESTABLISHMENT OF ADDITIONAL QUALITY MEASURES-

`(A) IN GENERAL- Not later than 6 months after the date of the enactment of this subsection, the Secretary, through a contract with a qualified independent party (such as the National Quality Forum) identified by the Secretary, shall provide for the identification of--

`(i) at least 10, and not more than 15, quality measures for the performance of skilled nursing facilities under this title; and

`(ii) the data to be reported, including their collection and formatting, on a calendar quarter basis for each such quality measure to measure the performance of a skilled nursing facility.

Such measures may be outcome or process measures. Such measures shall be in addition to the 14 enhanced measures published by the Secretary for such facilities for use as of September 1, 2005.

`(B) MEASURE OF STAFFING LEVEL- The quality measures identified under subparagraph (A) shall include a measure of the level of facility staffing and the mix of licensed staff at a facility.

`(C) RISK ADJUSTMENT- The values obtained for quality measures identified under subparagraph (A), including the existing 14 enhanced measures, shall be appropriately risk adjusted as applied to individual skilled nursing facilities in order to increase the likelihood that any differences in such values reflect differences in the care provided by the skilled nursing facilities and not differences in the characteristics of the residents in such facilities. Such risk adjustment shall take into account resident characteristics that are related to triggering a value for a quality measure but are not reflective of facility care processes. Risk adjustment approaches may include, as appropriate--

`(i) excluding certain types of residents;

`(ii) stratifying residents into high-risk and low-risk groups;

`(iii) statistical adjustment (such as regression analysis) that takes into consideration multiple characteristics (covariates) for each resident simultaneously and adjusts the nursing facilities' quality measure values for different resident characteristics; or

`(iv) payer mix.

`(D) LOW-UTILIZATION FACILITIES-

`(i) IN GENERAL- In selecting and applying quality measures, there shall be taken into account the circumstances of low-utilization skilled nursing facilities.

`(ii) DEFINITION- For purposes of clause (i) and paragraph (2)(B), the term `low-utilization skilled nursing facility' means a skilled nursing facility which had, in most recent preceding cost reporting period, fewer than 1,500 patient days with respect to which payments were made under this title.

`(E) ANNUAL EVALUATION- The Secretary shall provide for an annual process whereby the use of particular quality measures are evaluated and, as appropriate, adjusted in consultation with a qualified independent organization

`(F) POSTING ON WEBSITE- The Secretary shall provide for the posting on its website, and the publication at least annually, of the quality performance of skilled nursing facilities as measured through values reported under this subsection by such facilities.

`(2) ADJUSTMENT IN PAYMENT BASED ON QUALITY PERFORMANCE-

`(A) IN GENERAL- For each fiscal year beginning with fiscal year 2007, in the case of a skilled nursing facility that reports data under paragraph (1) for the data reporting period with respect to that fiscal year (as defined in subparagraph (C)), the aggregate amount of payment under this subsection shall be adjusted as follows:

`(i) INCREASE OF 2 PERCENT FOR FACILITIES IN TOP 10 PERCENT IN QUALITY- In the case of a facility that, based on such data, has a composite score for quality that is equal to or exceeds such score for the baseline period (as defined in subparagraph (D)) for the top 10 percent of skilled nursing facilities that have reported such data for such baseline period, such aggregate payment shall be increased by such amount as reflects an increase in the market basket percentage increase applied for the fiscal year involved under subsection (e)(4)(E)(ii)(V) by 2 percentage points.

`(ii) INCREASE OF 1 PERCENT FOR FACILITIES IN NEXT 10 PERCENT IN QUALITY- In the case of a facility that is not described in clause (i) and that, based on such data, has a composite score for quality that is equal to or exceeds such score for the baseline period (as defined in subparagraph (D)) for the top 20 percent of such skilled nursing facilities that have reported such data for such baseline period, such aggregate payment shall be increased by such amount as reflects an increase in the market basket percentage increase applied for the fiscal year involved under subsection (e)(4)(E)(ii)(V) by 1 percentage point.

`(iii) QUALITY THRESHOLD COVERING 80 PERCENT OF FACILITIES- For the baseline period (as defined in subparagraph (D)), the Secretary shall establish a quality threshold score that covers 80 percent of the skilled nursing facilities that have reported such data for such baseline period.

`(iv) DECREASE OF 1 PERCENT FOR FACILITIES BELOW QUALITY THRESHOLD- In the case of a fiscal year beginning with fiscal year 2007, in the case of a facility that, based on such data, has a composite score on quality measures that is below the quality threshold score established under clause (iii) for the baseline period, the aggregate payment for the fiscal year involved shall be decreased by such amount as reflects a decrease in the market basket percentage increase applied under subsection (e)(4)(E)(ii)(V) by 1 percentage point.

`(v) YEAR BY YEAR DETERMINATION- Any increase or decrease in payments to a skilled nursing facility under the preceding provisions of this subparagraph for a fiscal year shall not affect or apply to payments to such facility in any subsequent fiscal year.

`(B) TREATMENT OF LOW-UTILIZATION FACILITIES- In the case of a low-utilization skilled nursing facility that is unable to submit data on one or more quality measures--

`(i) the facility shall not be penalized under this paragraph due to its non-reporting of such data; and

`(ii) the composite rank or score shall be based on the data so reported, with appropriate adjustments so as to be comparable to other facilities.

`(C) DATA REPORTING PERIOD- For purposes of subparagraph (A), the term `data reporting period' means, with respect to--

`(i) fiscal year 2007, such period of calendar quarters in fiscal year 2006 as the Secretary shall specify, which, to the extent feasible, shall be a period of at least 2 calendar quarters; or

`(ii) a subsequent fiscal year, the period of 4 consecutive calendar quarters ending on the June 30 preceding the fiscal year.

`(D) BASELINE PERIOD- For purposes of subparagraph (A), the term `baseline period' means, with respect to--

`(i) fiscal year 2007, the period of calendar quarters specified under subparagraph (C)(i); or

`(ii) a subsequent fiscal year, the period of 4-calendar-quarters ending on June 30, 2007.'.

(2) LIMITING MARKET BASKET INCREASES TO FACILITIES THAT VOLUNTARILY REPORT INFORMATION- Subsection (e)(4)(E)(ii) of such section is amended--

(A) in subclause (III), by striking `and' at the end;

(B) in subclause (IV), by inserting `before the first fiscal year in which the reporting of quality measures is in effect under subsection (f)(1)' after `each subsequent fiscal year' and by striking the period at the end and inserting `; and'; and

(C) by adding at the end the following new subclause:

`(V) for each subsequent year, the rate computed for the previous fiscal year increased, in the case of a skilled nursing facility that reports data under subsection (f)(1) for the fiscal year, by the skilled nursing facility market basket percentage for the fiscal year involved.'.

(b) Using Fiscal Year 2005 Payment Rates as a Floor for Subsequent Updates-

(1) IN GENERAL- Subsection (e)(4)(E)(ii)(IV) and subsection (e)(4)(E)(ii)(V), as added by subsection (a)(2), of such section is amended by inserting `(taking into account, with respect to a previous fiscal year that was fiscal year 2005, all add-ons to such rate that were applicable in such fiscal year as well as market basket adjustments made in subsequent fiscal years)' after `the rate computed for the previous fiscal year'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to the computation of rates for fiscal years beginning with fiscal year 2006.

SEC. 3. LONG-TERM CARE FINANCING COMMISSION.

(a) Establishment- There is hereby established a commission to be known as the `Long-Term Care Financing Commission' (in this section referred to as the `Commission').

(b) Composition- The Commission shall be composed of 10 members appointed by the Secretary of Health and Human Services.

(c) Duties-

(1) ANALYSES- The Commission shall conduct analyses of the financing of long-term care, including the financing of nursing facilities. Such analyses shall include an analysis of each of the following:

(A) The adequacy of Medicaid program financing of the long term care system.

(B) Medicare's cross-subsidization of long-term care for Medicaid patients.

(C) Total industry margins in long-term care.

(D) Long-term demographic challenges.

(E) The impact of current trends, including staffing shortages and litigation costs, on long-term care spending.

(F) Different approaches to refinements in the per diem RUG payment amounts and related payment methodologies under section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)) .

(2) REPORT- The Commission shall submit to Congress an annual report on its analyses. Each such report shall include recommendations for such changes in financing of long-term care as the Commission deems appropriate.

(d) Terms, Compensation, Chairman, Meetings, Staff, and Powers- The provisions of subsections (c)(3), (c)(4), (c)(5), (c)(6), (d), and (e) of section 1805 of the Social Security Act (42 U.S.C. 1395b-6) (relating to provisions for the Medicare Payment Advisory Commission) shall apply to the Commission in the same manner as they apply to the Medicare Payment Advisory Commission.

END