42 U.S.C. § 1395tt — Hospital providers of extended care services

(a) Hospital facility agreements; reasonable costs of services. (1) A hospital that has an agreement under section 1395cc of this title may, subject to subsection (b), make an agreement with the Secretary. Under that agreement, the hospital’s inpatient facilities may be used to provide services that would be “extended care services” if a skilled nursing facility provided them. This section does not define “extended care services.” (2)(A) Despite any other rule in this subchapter, payment to a hospital other than a critical access hospital for services provided under an agreement under this section must be based on the reasonable cost of the services. (B)(i) The reasonable cost consists of the reasonable cost of routine services under clause (ii) plus the reasonable cost of ancillary services under clause (iii). (ii) To calculate the reasonable cost of routine services that a hospital provides during a calendar year under an agreement under this section: (I) Count the number of patient-days during the year for which the services were provided; and (II) Multiply that number by the average reasonable cost per patient-day. The average reasonable cost per patient-day is the average amount paid per patient-day for routine services during the most recent year for which cost-reporting data are available for those services. Increase that average, using compounding, by the applicable increase for payments for routine-service costs of skilled nursing facilities under subsections (a) through (d) of section 1395yy of this title for later cost-reporting periods, up to and including the calendar year being calculated. The comparison is to the payments under this subchapter to freestanding skilled nursing facilities in the region where the facility is located. “Region” has the meaning given in section 1395ww(d)(2)(D) of this title. (iii) Determine the reasonable cost of ancillary services in the same way as the reasonable cost of ancillary services provided for inpatient hospital services. (3) Despite any other rule in this subchapter, a critical access hospital must be paid for covered skilled nursing facility services provided under an agreement under this section at 101 percent of the reasonable costs of those services. Determine those reasonable costs under section 1395x(v) of this title. (b) Eligible facilities. The Secretary may not make an agreement under this section with a hospital unless, except as provided in subsection (g), the hospital is in a rural area and has fewer than 100 beds. (c) Terms and conditions of facility agreements. Unless the Secretary’s regulations provide otherwise, an agreement with a hospital under this section must last for the same period and be subject to termination under the same conditions as an agreement with a skilled nursing facility under section 1395cc of this title. To the extent this section does not conflict with those agreements, the hospital agreement must impose the same duties, responsibilities, conditions, and limits as agreements made under section 1395cc. However, a hospital agreement may not be in effect during any period when the hospital does not have an agreement in effect under section 1395cc. If an agreement under this section is terminated, the hospital may not make a new agreement under this section until two years have passed from the termination date. (d) Post-hospital extended care services. An agreement with a hospital under this section must provide that payment will be made only for services for which payment would be made as post-hospital extended care services if a skilled nursing facility had provided them under an agreement under section 1395cc. For purposes of this subchapter, other than this section, a person who receives services for which payment may be made under an agreement under this section is treated as having received post-hospital extended care services in the same way and to the same extent as if a skilled nursing facility had provided those services under an agreement under section 1395cc. (e) Reimbursement for routine hospital services. While a hospital has an agreement in effect under this section, the hospital must subtract the total reimbursement due for routine services provided to all classes of long-term care patients from the hospital’s total routine costs before calculating the reimbursement under this subchapter for routine hospital services. The long-term care patients include patients covered by this subchapter, subchapter XIX, and private-pay patients. The subtraction is used to allocate routine costs between hospital services and long-term care services when payment for inpatient hospital services is determined. (f) Conditions applicable to skilled nursing facilities. A hospital that makes an agreement with the Secretary under this section must meet the conditions that apply to skilled nursing facilities concerning discharge planning and social services, including staffing requirements for that function, that the Secretary issues under section 1395i–3 of this title. Services provided by the hospital that would otherwise be post-hospital extended care services if a skilled nursing facility provided them are subject to the same requirements that apply to those services when a skilled nursing facility provides them. The only exception is a requirement that the Secretary determines is inappropriate when a hospital provides the services under this section. (g) Agreements on demonstration basis. The Secretary may make an agreement under this section on a demonstration basis with a hospital that does not meet the requirement of subsection (b)(1), if the hospital meets all the other requirements of this section. This section does not define “demonstration basis,” “rural area,” “critical access hospital,” “reasonable cost,” or “private-pay patients.”