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and

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"(2) whether the program should be continued,

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

"HOSPITAL PROVIDERS OF SKILLED NURSING AND INTER

"(3) whether eligibility should be extended to other hospitals, regardless of bed size or geographic location, where there is a shortage of long-term care

beds.".

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).

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"(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 2 has an agreement under section 1861 (bb), in order to allo3 cate routine costs between hospital and long-term care serv4 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 calcula8 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 be11 come effective on the date on which final regulations, promul12 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.

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REIMBURSEMENT RATES UNDER MEDICAID FOR SKILLED

NURSING AND INTERMEDIATE CARE FACILITIES

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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) 23 a rate of return on net equity)" immediately after "cost 24 related basis".

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1 MEDICAID CERTIFICATION AND APPROVAL OF SKILLED

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"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 agree8 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 section 1905 (c)).

"(b) The Secretary shall advise the State agency administering the medical assistance plan of his approval or disapproval of any institution certified to him as a qualified skilled nursing or intermediate care facility for purposes of section 1902 (a) (28) and specify for each institution the 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

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

necessary to prevent irreparable harm to the facility or

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NURSING AND INTERMEDIATE CARE FACILITIES

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

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1 hardship to the facility's patients or if he finds it impracti2 cable within the twelve-month period to determine whether 3 the facility is complying with the provisions of this title and 4 applicable regulations. The State agency may upon approval 5 of the Secretary enter into an agreement with any skilled 6 nursing or intermediate care facility for the specified approval 7 period.

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"(c) The Secretary may cancel approval of any skilled 9 nursing or intermediate care facility at any time if he finds 10 that a facility fails to meet the requirements contained in 11 section 1902 (a) (28) or section 1905 (c), or if he finds 12 grounds for termination of his agreement with the facility 13 pursuant to section 1866 (b). In that event the Secretary shall notify the State agency and the skilled nursing or inter15 mediate care facility that approval of eligibility of the facility 16 to participate in the programs established by this title and 17 title XVIII shall be terminated at a time specified by the 18 Secretary. The approval of eligibility of any such facility to 19 participate in the programs may not be reinstated unless the 20 Secretary finds that the reason for termination has been removed and there is reasonable assurance that it will not

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"(d) Effective July 1, 1978, no payment may be made

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to any State under this title for skilled nursing or intermedi25 ate care facility services furnished by any facility

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"(1) which does not have in effect an agreement with the State agency pursuant to subsection (b), or

"(2) whose approval of eligibility to participate in

the programs established by this title or title XVIII has been terminated by the Secretary and has not been reinstated, except that payment may be made for up to thirty days for skilled nursing or intermediate care facility services furnished to any eligible individual who was admitted to the facility prior to the effective date of the termination.".

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"(e) Any skilled nursing facility or intermediate care 12 facility which is dissatisfied with any determination by the 13 Secretary that it no longer qualifies as a skilled nursing 14 facility or intermediate care facility for purposes of this 15 title shall be entitled to a hearing by the Secretary to the 16 same extent as is provided in section 205 (b) and to judicial 17 review of the Secretary's final decision after such hearing as 18 is provided in section 205 (g). Any agreement between such 19 facility and the State agency shall remain in effect until the 20 period for filing a request for a hearing has expired or, if a 21 request has been filed, until a decision has been made by the 22 Secretary: Provided, however, That the agreement shall 23 not be extended if the Secretary makes a written determina24 tion, specifying the reasons therefor, that the continuation 25 of provider status constitutes an immediate and serious

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