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1 facilities may be used for the furnishing of services of the 2 type which, if furnished by a skilled nursing facility, would 3 constitute post-hospital extended care services. 4 "(B) (i) Notwithstanding any other provision of this 5 title, payment to any hospital for services furnished under


an agreement entered into under this subsection shall be

7 based upon the reasonable cost of the services as determined

8 under this subparagraph.


“ (ii) The reasonable cost of the services will consist of

10 the reasonable cost of routine services and ancillary services. 11 The reasonable cost of routine services furnished during any 12 calendar year by a hospital under an agreement under this 13 subsection shall equal the product of the number of patient14 days during the year for which the services were furnished 15 and the average reasonable cost per patient-day. The aver16 age reasonable cost per patient-day shall be established as 17 the average rate per patient-day paid for routine services 18 during the previous calendar year under title XIX to skilled 19 nursing facilities located in the State in which the hospital is 20 located and which have agreements entered into under sec21 tion 1902a (28). The reasonable cost of ancillary services

22 shall be determined in the same manner as

he reasonable

23 cost of ancillary services provided for inpatient hospital

24 services.


1 “(2) (A) The Secretary shall not enter into an agree2 ment under this subsection with any hospital unless3

“(i) for a period specified by the Secretary (not 4 less than twelve months) which immediately precedes 5 the date the agreement is entered into, the hospital has 6 had an average daily occupancy rate of less than 60



“(ii) the hospital is located in a rural area and has

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“(iii) the hospital has been granted a certificate of need for the provision of long-term care services from the agency of the State (which has been designated as the State health planning and development




agency under an agreement pursuant to section 1521


of the Public Health Service Act) in which the hospital

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17 “(3) An agreement with a hospital entered into under 18 this section shall, except as otherwise provided under reg19 ulations of the Secretary, be of the same duration and 20 subjeot to termination on the same conditions as are agree21 ments with skilled nursing facilities under section 1866, 22 unless the hospital fails to satisfy the requirements defined 23 in paragraph (2) (A) of this subsection and shall, where not 24 inconsistent with any provision of this subsection, impose 25 the same duties, responsibilities, conditions, and limitations, 1 as those imposed under such agreements entered into under 2 section 1866; except that no such agreement with any hos3 pital shall be in effect for any period during which the hos

4 pital does not have in effect an agreement under section 5 1866, or where there is in effect for the hospital a waiver of 6 the requirement imposed by subsection (e) (5). A hospital 7 whose agreement has been terminated shall not be eligible 8 to undertake a new agreement until a two-year period has

9 elapsed from the termination date.

10 “(4) Any agreement with a hospital under this sub11 section shall provide that payment for services will be made 12 only for services for which payment would be made as post13 hospital extended care services, if those services had been 14 furnished by a skilled nursing facility under an agreement 15 entered into under section 1866; and any individual who is 16 furnished services, for which payment may be made under an 17 agreement, shall, for purposes of this title (other than this 18 subsection), be deemed to have received post-hospital ex

19 tended care services in like manner and to the same extent

20 as if the services furnished to him had been post-hospital 21 extended care services furnished by a skilled nursing facility

22 under an agreement under section 1866.


“(5) During a period for which a hospital has in effect an agreement under this subsection, in order to allocate rou


25 tine costs between hospital and long-term care services for


1 purposes of determining payment for inpatient hospital serv2

ices (including the application of reimbursement limits specified in section 1861 (aa)), the total reimbursement received


for routine services from all classes of long-term care patients,



including title XVIII, title XIX, and private pay patients, shall be subtracted from the hospital's total routine costs


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bursement for routine hospital services. 9

“(6) During any period during which an agreement is 10 in effect with a hospital under this subsection, the hospital 11 shall, for services furnished by it under the agreement, be 12 . considered to satisfy the requirements, otherwise required, of 13 a skilled nursing facility for purposes of the following pro14 visions: sections 1814 (a) (2) (C), 1814 (a) (6), 1814 (a)

(7), 1814 (h), 1861 (a) (2), 1861 (i), 1861 (j) (except 16 1861 (j) (12)), and 1861 (n); and the Secretary shall 17 specify any other provisions of this Act where the hospital 18 may be considered as a skilled nursing facility. 19

(7) (c) Within three years after enactment, the Secre20 tary shall provide a report to the Congress containing an 21 evaluation of the program established under this subsection 22 concerning: 23

“(1) The extent and effect of the agreements on 24

availability and effective and economical provision of

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“(2) whether the program should be continued,

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" (3) whether eligibility should be extended to other hospitals, regardless of bed size or geographic lo



cation, where there is a shortage of long-term care

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(b) Title XIX of such Act is amended by adding at

8 the end thereof the following new section:





11 "SEC. 1911. (a) Notwithstanding any other provision 12 of this title, payment may be made, in accordance with 13 this section, under an approved State plan for skilled nurs14 ing services and intermediate care services furnished by a 15 hospital which has in effect an agreement under section 16 1861 (bb).

“(b) (1) Payment to any such hospital, for any skilled 18 nursing or intermediate care services furnished, shall be at a 19 rate equal to the average rate per patient-pay paid for routine 20 services during the previous calendar year under this title 21

to skilled nursing and intermediate care facilities located in


22 the State in which the hospital is located. The reasonable

23 cost of ancillary services shall be determined in the same

24 manner as the reasonable cost of ancillary services provided 25 for inpatient hospital services

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