SEC. 1412. ACCOUNTABILITY REQUIREMENTS.

[a] Effective Compliance and Ethics Programs-

[1] SKILLED NURSING FACILITIES- Section- 1819[d][1] of the Social Security Act [42 U.S.C. 1395i-3[d][1]], as amended by section 1411[c][1], is amended by adding at the end the following new subparagraph:

'[C] COMPLIANCE AND ETHICS PROGRAMS-

'[i] REQUIREMENT- On or after the date that is 36 months after the date of the enactment of this subparagraph, a skilled nursing facility shall, with respect to the entity that operates the facility [in this subparagraph referred to as the 'operating organization' or 'organization'], have in operation a compliance and ethics program that is effective in preventing and detecting criminal, civil, and administrative violations under this Act and in promoting quality of care consistent with regulations developed under clause [ii].

'[ii] DEVELOPMENT OF REGULATIONS-

'[I] IN GENERAL- Not later than the date that is 2 years after such date of the enactment, the Secretary, in consultation with the Inspector General of the Department of Health and Human Services, shall promulgate regulations for an effective compliance and ethics program for operating organizations, which may include a model compliance program.

'[II] DESIGN OF REGULATIONS- Such regulations with respect to specific elements or formality of a program may vary with the size of the organization, such that larger organizations should have a more formal and rigorous program and include established written policies defining the standards and procedures to be followed by its employees. Such requirements shall specifically apply to the corporate level management of multi-unit nursing home chains.

'[III] EVALUATION- Not later than 3 years after the date of promulgation of regulations under this clause, the Secretary shall complete an evaluation of the compliance and ethics programs required to be established under this subparagraph. Such evaluation shall determine if such programs led to changes in deficiency citations, changes in quality performance, or changes in other metrics of resident quality of care. The Secretary shall submit to Congress a report on such evaluation and shall include in such report such recommendations regarding changes in the requirements for such programs as the Secretary determines appropriate.

'[iii] REQUIREMENTS FOR COMPLIANCE AND ETHICS PROGRAMS- In this subparagraph, the term 'compliance and ethics program' means, with respect to a skilled nursing facility, a program of the operating organization that--

'[I] has been reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal, civil, and administrative violations under this Act and in promoting quality of care; and

'[II] includes at least the required components specified in clause [iv].

'[iv] REQUIRED COMPONENTS OF PROGRAM- The required components of a compliance and ethics program of an organization are the following:

'[I] The organization must have established compliance standards and procedures to be followed by its employees, contractors, and other agents that are reasonably capable of reducing the prospect of criminal, civil, and administrative violations under this Act.

'[II] Specific individuals within high-level personnel of the organization must have been assigned overall responsibility to oversee compliance with such standards and procedures and have sufficient resources and authority to assure such compliance.

'[III] The organization must have used due care not to delegate substantial discretionary authority to individuals whom the organization knew, or should have known through the exercise of due diligence, had a propensity to engage in criminal, civil, and administrative violations under this Act.

'[IV] The organization must have taken steps to communicate effectively its standards and procedures to all employees and other agents, such as by requiring participation in training programs or by disseminating publications that explain in a practical manner what is required.

'[V] The organization must have taken reasonable steps to achieve compliance with its standards, such as by utilizing monitoring and auditing systems reasonably designed to detect criminal, civil, and administrative violations under this Act by its employees and other agents and by having in place and publicizing a reporting system whereby employees and other agents could report violations by others within the organization without fear of retribution.

'[VI] The standards must have been consistently enforced through appropriate disciplinary mechanisms, including, as appropriate, discipline of individuals responsible for the failure to detect an offense.

'[VII] After an offense has been detected, the organization must have taken all reasonable steps to respond appropriately to the offense and to prevent further similar offenses, including repayment of any funds to which it was not entitled and any necessary modification to its program to prevent and detect criminal, civil, and administrative violations under this Act.

'[VIII] The organization must periodically undertake reassessment of its compliance program to identify changes necessary to reflect changes within the organization and its facilities.

'[v] COORDINATION- The provisions of this subparagraph shall apply with respect to a skilled nursing facility in lieu of section 1874[d].'.

[2] NURSING FACILITIES- Section- 1919[d][1] of the Social Security Act [42 U.S.C. 1396r[d][1]], as amended by section 1411[c][2], is amended by adding at the end the following new subparagraph:

'[C] COMPLIANCE AND ETHICS PROGRAM-

'[i] REQUIREMENT- On or after the date that is 36 months after the date of the enactment of this subparagraph, a nursing facility shall, with respect to the entity that operates the facility [in this subparagraph referred to as the 'operating organization' or 'organization'], have in operation a compliance and ethics program that is effective in preventing and detecting criminal, civil, and administrative violations under this Act and in promoting quality of care consistent with regulations developed under clause [ii].

'[ii] DEVELOPMENT OF REGULATIONS-

'[I] IN GENERAL- Not later than the date that is 2 years after such date of the enactment, the Secretary, in consultation with the Inspector General of the Department of Health and Human Services, shall develop regulations for an effective compliance and ethics program for operating organizations, which may include a model compliance program.

'[II] DESIGN OF REGULATIONS- Such regulations with respect to specific elements or formality of a program may vary with the size of the organization, such that larger organizations should have a more formal and rigorous program and include established written policies defining the standards and procedures to be followed by its employees. Such requirements may specifically apply to the corporate level management of multi-unit nursing home chains.

'[III] EVALUATION- Not later than 3 years after the date of promulgation of regulations under this clause the Secretary shall complete an evaluation of the compliance and ethics programs required to be established under this subparagraph. Such evaluation shall determine if such programs led to changes in deficiency citations, changes in quality performance, or changes in other metrics of resident quality of care.

The Secretary shall submit to Congress a report on such evaluation and shall include in such report such recommendations regarding changes in the requirements for such programs as the Secretary determines appropriate.

'[iii] REQUIREMENTS FOR COMPLIANCE AND ETHICS PROGRAMS- In this subparagraph, the term 'compliance and ethics program' means, with respect to a nursing facility, a program of the operating organization that--

'[I] has been reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal, civil, and administrative violations under this Act and in promoting quality of care; and

'[II] includes at least the required components specified in clause [iv].

'[iv] REQUIRED COMPONENTS OF PROGRAM- The required components of a compliance and ethics program of an organization are the following:

'[I] The organization must have established compliance standards and procedures to be followed by its employees and other agents that are reasonably capable of reducing the prospect of criminal, civil, and administrative violations under this Act.

'[II] Specific individuals within high-level personnel of the organization must have been assigned overall responsibility to oversee compliance with such standards and procedures and has sufficient resources and authority to assure such compliance.

'[III] The organization must have used due care not to delegate substantial discretionary authority to individuals whom the organization knew, or should have known through the exercise of due diligence, had a propensity to engage in criminal, civil, and administrative violations under this Act.

'[IV] The organization must have taken steps to communicate effectively its standards and procedures to all employees and other agents, such as by requiring participation in training programs or by disseminating publications that explain in a practical manner what is required.

'[V] The organization must have taken reasonable steps to achieve compliance with its standards, such as by utilizing monitoring and auditing systems reasonably designed to detect criminal, civil, and administrative violations under this Act by its employees and other agents and by having in place and publicizing a reporting system whereby employees and other agents could report violations by others within the organization without fear of retribution.

'[VI] The standards must have been consistently enforced through appropriate disciplinary mechanisms, including, as appropriate, discipline of individuals responsible for the failure to detect an offense.

'[VII] After an offense has been detected, the organization must have taken all reasonable steps to respond appropriately to the offense and to prevent further similar offenses, including repayment of any funds to which it was not entitled and any necessary modification to its program to prevent and detect criminal, civil, and administrative violations under this Act.

'[VIII] The organization must periodically undertake reassessment of its compliance program to identify changes necessary to reflect changes within the organization and its facilities.

'[v] COORDINATION- The provisions of this subparagraph shall apply with respect to a nursing facility in lieu of section 1902[a][77].'.

[b] Quality Assurance and Performance Improvement Program-

[1] SKILLED NURSING FACILITIES- Section- 1819[b][1][B] of the Social Security Act [42 U.S.C. 1396r[b][1][B]] is amended--

[A] by striking 'ASSURANCE' and inserting 'ASSURANCE AND QUALITY ASSURANCE AND PERFORMANCE IMPROVEMENT PROGRAM';

[B] by designating the matter beginning with 'A nursing facility' as a clause [i] with the heading 'IN GENERAL- ' and the appropriate indentation; and

[C] by adding at the end the following new clause:

'[ii] QUALITY ASSURANCE AND PERFORMANCE IMPROVEMENT PROGRAM-

'[I] IN GENERAL- Not later than December 31, 2011, the Secretary shall establish and implement a quality assurance and performance improvement program [in this clause referred to as the 'QAPI program'] for skilled nursing facilities, including multi-unit chains of such facilities. Under the QAPI program, the Secretary shall establish standards relating to such facilities and provide technical assistance to such facilities on the development of best practices in order to meet such standards. Not later than 1 year after the date on which the regulations are promulgated under subclause [II], a skilled nursing facility must submit to the Secretary a plan for the facility to meet such standards and implement such best practices, including how to coordinate the implementation of such plan with quality assessment and assurance activities conducted under clause [i].

'[II] REGULATIONS- The Secretary shall promulgate regulations to carry out this clause.'.

[2] NURSING FACILITIES- Section- 1919[b][1][B] of the Social Security Act [42 U.S.C. 1396r[b][1][B]] is amended--

[A] by striking 'ASSURANCE' and inserting 'ASSURANCE AND QUALITY ASSURANCE AND PERFORMANCE IMPROVEMENT PROGRAM';

[B] by designating the matter beginning with 'A nursing facility' as a clause [i] with the heading 'IN GENERAL- ' and the appropriate indentation; and

[C] by adding at the end the following new clause:

'[ii] QUALITY ASSURANCE AND PERFORMANCE IMPROVEMENT PROGRAM-

'[I] IN GENERAL- Not later than December 31, 2011, the Secretary shall establish and implement a quality assurance and performance improvement program [in this clause referred to as the 'QAPI program'] for nursing facilities, including multi-unit chains of such facilities. Under the QAPI program, the Secretary shall establish standards relating to such facilities and provide technical assistance to such facilities on the development of best practices in order to meet such standards. Not later than 1 year after the date on which the regulations are promulgated under subclause [II], a nursing facility must submit to the Secretary a plan for the facility to meet such standards and implement such best practices, including how to coordinate the implementation of such plan with quality assessment and assurance activities conducted under clause [i].

'[II] REGULATIONS- The Secretary shall promulgate regulations to carry out this clause.'.

[3] PROPOSAL TO REVISE QUALITY ASSURANCE AND PERFORMANCE IMPROVEMENT PROGRAMS- The Secretary shall include in the proposed rule published under section 1888[e] of the Social Security Act [42 U.S.C. 1395yy[e][5][A]] for the subsequent fiscal year to the extent otherwise authorized under section 1819[b][1][B] or 1819[d][1][C] of the Social Security Act or other statutory or regulatory authority, one or more proposals for skilled nursing facilities to modify and strengthen quality assurance and performance improvement programs in such facilities. At the time of publication of such proposed rule and to the extent otherwise authorized under section 1919[b][1][B] or 1919[d][1][C] of such Act or other regulatory authority.

[4] FACILITY PLAN- Not later than 1 year after the date on which the regulations are promulgated under subclause [II] of clause [ii] of sections 1819[b][1][B] and 1919[b][1][B] of the Social Security Act, as added by paragraphs [1] and [2], a skilled nursing facility and a nursing facility must submit to the Secretary a plan for the facility to meet the standards under such regulations and implement such best practices, including how to coordinate the implementation of such plan with quality assessment and assurance activities conducted under clause [i] of such sections.

[c] GAO Study on Nursing Facility Undercapitalization-

[1] IN GENERAL- The Comptroller General of the United States shall conduct a study that examines the following:

[A] The extent to which corporations that own or operate large numbers of nursing facilities, taking into account ownership type [including private equity and control interests], are undercapitalizing such facilities.

[B] The effects of such undercapitalization on quality of care, including staffing and food costs, at such facilities.

[C] Options to address such undercapitalization, such as requirements relating to surety bonds, liability insurance, or minimum capitalization.

[2] REPORT- Not later than 18 months after the date of the enactment of this Act, the Comptroller General shall submit to Congress a report on the study conducted under paragraph [1].

[3] NURSING FACILITY- In this subsection, the term 'nursing facility' includes a skilled nursing facility.