To amend title XVIII of the Social Security Act to provide for national standardized payment amounts for inpatient hospital services furnished under the medicare program.

May 15, 2001

Mr. HUTCHINSON (for himself, Mr. CLELAND, and Mr. MILLER) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend title XVIII of the Social Security Act to provide for national standardized payment amounts for inpatient hospital services furnished under the medicare program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Area Wage and Base Payment Improvement Act'.

SEC. 2. ESTABLISHING A SINGLE STANDARDIZED AMOUNT UNDER MEDICARE INPATIENT HOSPITAL PPS.

(a) IN GENERAL- Section 1886(d)(3)(A) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(A)) is amended--

(1) in clause (iv), by inserting `and ending on or before September 30, 2001,' after `October 1, 1995,'; and

(2) by redesignating clauses (v) and (vi) as clauses (vii) and (viii), respectively, and inserting after clause (iv) the following new clauses:

`(v) For discharges occurring in the fiscal year beginning on October 1, 2001, the average standardized amount for hospitals located in areas other than a large urban area shall be equal to the average standardized amount for hospitals located in a large urban area.

`(vi) For discharges occurring in a fiscal year beginning on or after October 1, 2002, the Secretary shall compute an average standardized amount for hospitals located in all areas within the United States equal to the average standardized amount computed under clause (v) or this clause for the previous fiscal year increased by the applicable percentage increase under subsection (b)(3)(B)(i) for the fiscal year involved.'.

(b) CONFORMING AMENDMENTS-

(1) UPDATE FACTOR- Section 1886(b)(3)(B)(i)(XVII) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XVII)) is amended by striking `for hospitals in all areas,' and inserting `for hospitals located in a large urban area,'.

(2) COMPUTING DRG-SPECIFIC RATES-

(A) IN GENERAL- Section 1886(d)(3)(D) of such Act (42 U.S.C. 1395ww(d)(3)(D)) is amended--

(i) in the heading by striking `IN DIFFERENT AREAS';

(ii) in the matter preceding clause (i)--

(I) by inserting `for fiscal years before fiscal year 1997' before `a regional DRG prospective payment rate for each region,'; and

(II) by striking `each of which is';

(iii) in clause (i)--

(I) by inserting `for fiscal years before fiscal year 2002,' after `(i)'; and

(II) by striking `and' at the end;

(iv) in clause (ii)--

(I) by inserting `for fiscal years before fiscal year 2002,' after `(ii)'; and

(II) by striking the period at the end and inserting `; and'; and

(v) by adding at the end the following new clause:

`(iii) for a fiscal year beginning after fiscal year 2001, for hospitals located in all areas, to the product of--

`(I) the applicable average standardized amount (computed under subparagraph (A)), reduced under subparagraph (B), and adjusted or reduced under subparagraph (C) for the fiscal year; and

`(II) the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group.'.

(B) TECHNICAL CONFORMING SUNSET- Section 1886(d)(3) of such Act (42 U.S.C. 1395ww(d)(3)) is amended in the matter preceding subparagraph (A) by inserting `for fiscal years before fiscal year 1997' before `a regional DRG prospective payment rate'.

SEC. 3. FLOOR ON AREA WAGE ADJUSTMENT FACTORS USED UNDER MEDICARE PPS FOR INPATIENT AND OUTPATIENT HOSPITAL SERVICES.

(a) INPATIENT PPS- Section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) is amended--

(1) by inserting `(i) IN GENERAL- ' before `The Secretary', and adjusting the margin two ems to the right;

(2) by striking `The Secretary' and inserting `Subject to clause (ii), the Secretary'; and

(3) by adding at the end the following new clause:

`(ii) FLOOR ON AREA WAGE ADJUSTMENT FACTOR- Notwithstanding clause (i), in determining payments under this subsection for discharges occurring on or after October 1, 2001, the Secretary shall substitute a factor of .925 for any factor that would otherwise apply under such clause that is less than .925. Nothing in this clause shall be construed as authorizing--

`(I) the application of the last sentence of clause (i) to any substitution made pursuant to this clause, or

`(II) the application of the preceding sentence of this clause to adjustments for area wage levels made under other payment systems established under this title (other than the payment system under section 1833(t)) to which the factors established under clause (i) apply.'.

(b) OUTPATIENT PPS- Section 1833(t)(2) of the Social Security Act (42 U.S.C. 1395l(t)(2)) is amended by adding at the end the following: `For purposes of subparagraph (D) for items and services furnished on or after October 1, 2001, if the factors established under clause (i) of section 1886(d)(3)(E) are used to adjust for relative differences in labor and labor-related costs under the payment system established under this subsection, the provisions of clause (ii) of such section (relating to a floor on area wage adjustment factor) shall apply to such factors, as used in this subsection, in the same manner and to the same extent (including waiving the applicability of the requirement for such floor to be applied in a budget neutral manner) as they apply to factors under section 1886.'.

END