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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 hos4 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 ex19 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. 23

“(5) During a period for which a hospital has in effect 24 an agreement under this subsection, in order to allocate rou

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

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1 purposes of determining payment for inpatient hospital serv

ices (including the application of reimbursement limits speci3

fied in section 1861 (aa) ), the total reimbursement received

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

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including title XVIII, title XIX, and private pay patients,

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bursement for routine hospital services.

“(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 å skilled nursing facility for purposes of the following pro14

visions: sections 1814 (a) (2) (C), 1814 (a) (6), 1814 (a) 15 (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.

“ (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:

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(1) The extent and effect of the agreements on

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availability and effective and economical provision of long-term care services,

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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

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

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7 (b) Title XIX of such Act is amended by adding at 8 the end thereof the following new section:

9 "HOSPITAL PROVIDERS OF SKILLED NURSING AND INTER

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MEDIATE CARE SERVICES

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"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). 17 "(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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“(2) With respect to any period for which a hospital has an agreement under section 1861 (bb), in order to allo

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3 cate routine costs between hospital and long-term care serv

4 ices, the total reimbursement for routine services received

5 from all classes of long-term care patients, including title 6 XVIII, title XIX, and private pay patients, shall be sub7 tracted from the hospital total routine costs before calcula

8 tions are made to determine title XIX reimbursement for

9 routine hospital services.”.

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(c) The amendments made by this section shall be

11 come effective on the date on which final regulations, promul

12 gated by the Secretary to implement the amendments, are 13 issued; and those regulations shall be issued not later than 14. the first day of the sixth calendar month following the month

15 in which this Act is enacted.

16 REIMBURSEMENT RATES UNDER MEDICAID FOR SKILLED

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NURSING AND INTERMEDIATE CARE FACILITIES

18 SEC. 21. Section 1902 (a) (13) (E) of the Social Se19 curity Act is amended by inserting “(and which may, at the 20 option of the State, include a reasonable profit for the facil21 ity in the form of: - (a) fixed per diem amounts or, (b) 22. incentive payments related to efficient performance, or (c)

a rate of return on net equity)” immediately after "cost

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24 related basis".

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i MEDICAID CERTIFICATION AND APPROVAL OF SKILLED

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NURSING AND INTERMEDIATE CARE FACILITIES

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Séc. 22. (a) Section 1910 of the Social Security Act is

4 amended to read:

5 "CERTIFICATION AND APPROVAL OF SKILLED NURSING AND

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INTERMEDIATE CARE FACILITIES

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"SEC. 1910. (a) The Secretary shall make an agree

8 'ment with any State which is willing and able to do so 9 whereby the State health agency or other appropriate State 10 or local agencies (whichever are utilized by the Secretary 11 pursuant to section 1864 (a)) will be utilized to recommend

12 to him whether an institution in the State qualifies as a

13 skilled nursing facility (for purposes of section 1902 (a)

(28)) or an intermediate care facility (for purposes of sec14

tion 1905 (c)). 15

“(b) The Secretary shall advise the State agency ad16

ministering the medical assistance plan of his approval or 17

disapproval of any institution certified to him as a qualified 18

skilled nursing or intermediate care facility for purposes of

section 1902 (a) (28) and specify for each institution the 20

period (not to exceed twelve months) for which approval is granted, except that the Secretary may extend that term for

up to two months, where the health and safety of patients 23

will not be jeopardized, if he finds that an extension is 24

necessary to prevent irreparable harm to the facility or 25

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