Medicare Long-Term Care Hospital Improvement Act of 2006

Medicare Long-Term Care Hospital Improvement Act of 2006 - Amends title XVIII (Medicare) of the Social Security Act to prescribe requirements for a long-term care hospital (LTCH) and patient criteria for prospective payment to an LTCH.

Directs the Secretary of Health and Human Services to: (1) determine the LTCH diagnosis related groups (LTCH-DRGs) associated with a high severity of illness for specified medical conditions; and (2) study and report to Congress on appropriate quality measures for Medicare patients receiving care in LTCHs.

Directs the Secretary to choose three quality measures from the study for LTCHs to report.

Amends the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 to require annual updates of LTCH base rates and wage indices and the reweighting of LTCH-DRGs.

Prohibits the Secretary from extending application of the 25% (or applicable percentage) patient threshold payment adjustment to freestanding LTCHs.