To amend title XVIII of the Social Security Act to provide for improvements in access to services in rural hospitals and critical access hospitals.

February 26, 2003

Mr. MORAN of Kansas (for himself, Mr. TURNER of Texas, Mr. BERRY, Mr. OTTER, Ms. BALDWIN, Mr. PICKERING, Mr. OSBORNE, Mr. HASTINGS of Washington, Mr. PAUL, Mr. MCINTYRE, Mr. SANDLIN, Mr. KIND, Mr. TIAHRT, Mr. MURTHA, Mr. WHITFIELD, Mr. STENHOLM, and Mr. FROST) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend title XVIII of the Social Security Act to provide for improvements in access to services in rural hospitals and critical access hospitals.

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

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT.

(a) SHORT TITLE- This Act may be cited as the `Rural Community Hospital Assistance Act of 2003'.

(b) AMENDMENTS TO SOCIAL SECURITY ACT- Except as otherwise specifically provided, whenever in this Act an amendment is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered a reference to that section or other provision of the Social Security Act.

SEC. 2. ESTABLISHMENT OF RURAL COMMUNITY HOSPITAL (RCH) PROGRAM.

(a) IN GENERAL- Section 1861 (42 U.S.C. 1395x) is amended by adding at the end of the following new subsection:

`Rural Community Hospital; Rural Community Hospital Services

`(ww)(1) The term `rural community hospital' means a hospital (as defined in subsection (e)) that--

`(A) is located in a rural area (as defined in section 1886(d)(2)(D)) or treated as being so located pursuant to section 1886(d)(8)(E);

`(B) subject to paragraph (2), has less than 51 acute care inpatient beds, as reported in its most recent cost report;

`(C) makes available 24-hour emergency care services;

`(D) subject to paragraph (3), has a provider agreement in effect with the Secretary and is open to the public as of January 1, 2003; and

`(E) applies to the Secretary for such designation.

`(2) For purposes of paragraph (1)(B), beds in a psychiatric or rehabilitation unit of the hospital which is a distinct part of the hospital shall not be counted.

`(3) Subparagraph (1)(D) shall not be construed to prohibit any of the following from qualifying as a rural community hospital:

`(A) A replacement facility (as defined by the Secretary in regulations in effect on January 1, 2003) with the same service area (as defined by the Secretary in regulations in effect on such date).

`(B) A facility obtaining a new provider number pursuant to a change of ownership.

`(C) A facility which has a binding written agreement with an outside, unrelated party for the construction, reconstruction, lease, rental, or financing of a building as of January 1, 2003.

`(4) Nothing in this subsection shall be construed as prohibiting a critical access hospital from qualifying as a rural community hospital if the critical access hospital meets the conditions otherwise applicable to hospitals under subsection (e) and section 1866.'.

(b) PAYMENT-

(1) INPATIENT SERVICES- Section 1814 (42 U.S.C. 1395f) is amended by adding at the end the following new subsection:

`Payment for Inpatient Services Furnished in Rural Community Hospitals

`(m) The amount of payment under this part for inpatient hospital services furnished in a rural community hospital, other than such services furnished in a psychiatric or rehabilitation unit of the hospital which is a distinct part, is, at the election of the hospital in the application referred to in section 1861(ww)(1)(E)--

`(1) the reasonable costs of providing such services, without regard to the amount of the customary or other charge, or

`(2) the amount of payment provided for under the prospective payment system for inpatient hospital services under section 1886(d).'.

(2) OUTPATIENT SERVICES- Section 1834 (42 U.S.C. 1395m) is amended by adding at the end the following new subsection:

`(n) PAYMENT FOR OUTPATIENT SERVICES FURNISHED IN RURAL COMMUNITY HOSPITALS- The amount of payment under this part for outpatient services furnished in a rural community hospital is, at the election of the hospital in the application referred to in section 1861(ww)(1)(E)--

`(1) the reasonable costs of providing such services, without regard to the amount of the customary or other charge and any limitation under section 1861(v)(1)(U), or

`(2) the amount of payment provided for under the prospective payment system for covered OPD services under section 1833(t).'.

(3) HOME HEALTH SERVICES-

(A) EXCLUSION FROM HOME HEALTH PPS-

(i) IN GENERAL- Section 1895 (42 U.S.C. 1395fff) is amended by adding at the end the following:

`(f) EXCLUSION-

`(1) IN GENERAL- In determining payments under this title for home health services furnished on or after October 1, 2003, by a qualified RCH-based home health agency (as defined in paragraph (2))--

`(A) the agency may make a one-time election to waive application of the prospective payment system established under this section to such services furnished by the agency shall not apply; and

`(B) in the case of such an election, payment shall be made on the basis of the reasonable costs incurred in furnishing such services as determined under section 1861(v), but without regard to the amount of the customary or other charges with respect to such services or the limitations established under paragraph (1)(L) of such section.

`(2) QUALIFIED RCH-BASED HOME HEALTH AGENCY DEFINED- For purposes of paragraph (1), a `qualified RCH-based home health agency' is a home health agency that is a provider-based entity (as defined in section 404 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Public Law 106-554; Appendix F, 114 Stat. 2763A-506) of a rural community hospital that is located--

`(A) in a county in which no main or branch office of another home health agency is located; or

`(B) at least 35 miles from any main or branch office of another home health agency.'.

(ii) CONFORMING CHANGES-

(I) PAYMENTS UNDER PART A- Section 1814(b) (42 U.S.C. 1395f(b)) is amended by inserting `or with respect to services to which section 1895(f) applies' after `equipment' in the matter preceding paragraph (1).

(II) PAYMENTS UNDER PART B- Section 1833(a)(2)(A) (42 U.S.C. 1395l(a)(2)(A)) is amended by striking `the prospective payment system under'.

(III) PER VISIT LIMITS- Section 1861(v)(1)(L)(i) (42 U.S.C. 1395x(v)(1)(L)(i)) is amended by inserting `(other than by a qualified RCH-based home health agency (as defined in section 1895(f)(2))' after `with respect to services furnished by home health agencies'.

(iii) CONSOLIDATED BILLING-

(I) RECIPIENT OF PAYMENT- Section 1842(b)(6)(F) (42 U.S.C. 1395u(b)(6)(F)) is amended by inserting `and excluding home health services to which section to which section 1895(f) applies' after `provided for in such section'.

(II) EXCEPTION TO EXCLUSION FROM COVERAGE- Section 1862(a) (42 U.S.C. 1395y(a)) is amended by inserting before the period at the end of the second sentence the following: `and paragraph (21) shall not apply to home health services to which section 1895(f) applies'.

(4) RETURN ON EQUITY- Section 1861(v)(1)(P) (42 U.S.C. 1395x(v)(1)(P)) is amended--

(A) by inserting `(i)' after `(P)'; and

(B) by adding at the end the following:

`(ii)(I) Notwithstanding clause (i), subparagraph (S)(i), and section 1886(g)(2), such regulations shall provide, in determining the reasonable costs of the services described in subclause (II) furnished by a rural community hospital on or after October 1, 2003, for payment of a return on equity capital at a rate of return equal to 150 percent of the average specified in clause (i):

`(II) The services referred to in subclause (I) are inpatient hospital services, outpatient hospital services, home health services furnished by an RCH-based home health agency (as defined in section 1895(f)(2)), and ambulance services.

`(III) Payment under this clause shall be made without regard to whether a provider is a proprietary provider.'.

(5) EXEMPTION FROM 30 PERCENT REDUCTION IN REIMBURSEMENT FOR BAD DEBT- Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amended by inserting `(other than a rural community hospital)' after `In determining such reasonable costs for hospitals'.

(c) BENEFICIARY COST-SHARING FOR OUTPATIENT SERVICES- Section 1834(n) (as added by subsection (b)(2)) is amended--

(1) by inserting `(1)' after `(n)'; and

(2) adding at the end the following:

`(2) The amounts of beneficiary cost sharing for outpatient services furnished in a rural community hospital under this part shall be as follows:

`(A) For items and services that would have been paid under section 1833(t) if provided by a hospital, the amount of cost sharing determined under paragraph (8) of such section.

`(B) For items and services that would have been paid under section 1833(h) if furnished by a provider or supplier, no cost sharing shall apply.

`(C) For all other items and services, the amount of cost sharing that would apply to the item or service under the methodology that would be used to determine payment for such item or service if provided by a physician, provider, or supplier, as the case may be.'.

(d) CONFORMING AMENDMENTS-

(1) PART A PAYMENT- Section 1814(b) (42 U.S.C. 1395f(b)) is amended by inserting `other than inpatient hospital services furnished by a rural community hospital,' after `critical access hospital services,'.

(2) PART B PAYMENT-

(A) IN GENERAL- Section 1833(a) (42 U.S.C. 1395l(a)) is amended--

(i) in paragraph (2), in the matter before subparagraph (A), by striking `and (I)' and inserting `(I), and (K)';

(ii) by striking `and' at the end of paragraph (8);

(iii) by striking the period at the end of paragraph (9) and inserting `; and'; and

(iv) by adding at the end the following:

`(10) in the case of outpatient services furnished by a rural community hospital, the amounts described in section 1834(n).'.

(B) AMBULANCE SERVICES- Section 1834(l)(8) (42 U.S.C. 1395m(l)(8)), as added by section 205(a) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Appendix F, 114 Stat. 2763A-463), as enacted into law by section 1(a)(6) of Public Law 106-554, is amended--

(i) in the heading, by striking `CRITICAL ACCESS HOSPITALS' and inserting `CERTAIN FACILITIES';

(ii) by striking `or' at the end of subparagraph (A);

(iii) by redesignating subparagraph (B) as subparagraph (C);

(iv) by inserting after subparagraph (A) the following new subparagraph:

`(B) by a rural community hospital (as defined in section 1861(ww)(1)), or'; and

(v) in subparagraph (C), as so redesignated, by inserting `or a rural community hospital' after `critical access hospital'.

(3) TECHNICAL AMENDMENTS-

(A) CONSULTATION WITH STATE AGENCIES- Section 1863 (42 U.S.C. 1395z) is amended by striking `and (dd)(2)' and inserting `(dd)(2), (mm)(1), and (ww)(1)'.

(B) PROVIDER AGREEMENTS- Section 1866(a)(2)(A) (42 U.S.C. 1395cc(a)(2)(A)) is amended by inserting `section 1834(n)(2),' after `section 1833(b),'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply to items and services furnished on or after October 1, 2003.

SEC. 3. REMOVING BARRIERS TO ESTABLISHMENT OF DISTINCT PART UNITS BY RCH AND CAH FACILITIES.

(a) IN GENERAL- Section 1886(d)(1)(B) (42 U.S.C. 1395ww(d)(1)(B)) is amended by striking `a distinct part of the hospital (as defined by the Secretary)' in the matter following cause (v) and inserting `a distinct part (as defined by the Secretary) of the hospital or of a critical access hospital or a rural community hospital'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to determinations with respect to distinct part unit status that are made on or after October 1, 2003.

SEC. 4. IMPROVEMENTS TO MEDICARE CRITICAL ACCESS HOSPITAL (CAH) PROGRAM.

(a) EXCLUSION OF CERTAIN BEDS FROM BED COUNT- Section 1820(c)(2) (42 U.S.C. 1395i-4(c)(2)) is amended by adding at the end the following:

`(E) EXCLUSION OF CERTAIN BEDS FROM BED COUNT- In determining the number of beds of a facility for purposes of applying the bed limitations referred to in subparagraph (B)(iii) and subsection (f), the Secretary shall not take into account any bed of a distinct part psychiatric or rehabilitation unit (described in the matter following clause (v) of section 1886(d)(1)(B)) of the facility, except that the total number of beds that are not taken into account pursuant to this subparagraph with respect to a facility shall not exceed 10.'.

(b) PAYMENTS TO HOME HEALTH AGENCIES OWNED AND OPERATED BY A CAH- Section 1895(f) (42 U.S.C. 1395fff(f)), as added by section 2(b)(3), is further amended by inserting `or by a home health agency that is owned and operated by a critical access hospital (as defined in section 1861(mm)(1))' after `as defined in paragraph (2))'.

(c) PAYMENTS TO CAH-OWNED SNFS-

(1) IN GENERAL- Section 1888(e) (42 U.S.C. 1395yy(e)) is amended--

(A) in paragraph (1), by striking `and (12)' and inserting `(12), and (13)'; and

(B) by adding at the end thereof the following:

`(13) EXEMPTION OF CAH FACILITIES FROM PPS- In determining payments under this part for covered skilled nursing facility services furnished on or after October 1, 2003, by a skilled nursing facility that is a distinct part unit of a critical access hospital (as defined in section 1861(mm)(1)) or is owned and operated by a critical access hospital--

`(A) the prospective payment system established under this subsection shall not apply; and

`(B) payment shall be made on the basis of the reasonable costs incurred in furnishing such services as determined under section 1861(v), but without regard to the amount of the customary or other charges with respect to such services or the limitations established under subsection (a).'.

(2) CONFORMING CHANGES-

(A) IN GENERAL- Section 1814(b) (42 U.S.C. 1395f(b)), as amended by subsection (b)(2)(A), is further amended in the matter preceding paragraph (1)--

(i) by inserting `other than a skilled nursing facility providing covered skilled nursing facility services (as defined in section 1888(e)(2)) or posthospital extended care services to which section 1888(e)(13) applies,' after `inpatient critical access hospital services'; and

(ii) by striking `1813 1886,' and inserting `1813, 1886, 1888,'.

(B) CONSOLIDATED BILLING-

(i) RECIPIENT OF PAYMENT- Section 1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) is amended by inserting `services to which paragraph (7)(C) or (13) of section 1888(e) applies and' after `other than'.

(ii) EXCEPTION TO EXCLUSION FROM COVERAGE- Section 1862(a)(18) (42 U.S.C. 1395y(a)(18)) is amended by inserting `(other than services to which paragraph (7)(C) or (13) of section 1888(e) applies)' after `section 1888(e)(2)(A)(i)'.

(d) PAYMENTS TO DISTINCT PART PSYCHIATRIC OR REHABILITATION UNITS OF CAHS- Section 1886(b) (42 U.S.C. 1395ww(b)) is amended--

(1) in paragraph (1), by inserting `, other than a distinct part psychiatric or rehabilitation unit to which paragraph (8) applies,' after `subsection (d)(1)(B)'; and

(2) by adding at the end the following:

`(8) EXEMPTION OF CERTAIN DISTINCT PART PSYCHIATRIC OR REHABILITATION UNITS FROM COST LIMITS- In determining payments under this part for inpatient hospital services furnished on or after October 1, 2003, by a distinct part psychiatric or rehabilitation unit (described in the matter following clause (v) of subsection (d)(1)(B)) of a critical access hospital (as defined in section 1861(mm)(1))--

`(A) the limits imposed under the preceding paragraphs of this subsection shall not apply; and

`(B) payment shall be made on the basis of the reasonable costs incurred in furnishing such services as determined under section 1861(v), but without regard to the amount of the customary or other charges with respect to such services.'.

(e) ELIMINATION OF ISOLATION TEST FOR COST-BASED CAH AMBULANCE SERVICES- Paragraph (8) of section 1834(l) (42 U.S.C. 1395m(l)), as added by section 205(a) of BIPA, is amended by striking the comma at the end of the last subparagraph and all that follows and inserting a period.

(f) RETURN ON EQUITY- Section 1861(v)(1)(P) (42 U.S.C. 1395x(v)(1)(P)), as amended by section 2(b)(4), is further amended by adding at the end the following:

`(iii)(I) Notwithstanding clause (i), subparagraph (S)(i), and section 1886(g)(2), such regulations shall provide, in determining the reasonable costs of the services described in subclause (II) furnished by a critical access hospital on or after October 1, 2003, for payment of a return on equity capital at a rate of return equal to 150 percent of the average specified in clause (i).

`(II) The services referred to in subclause (I) are inpatient critical access hospital services (as defined in section 1861(mm)(2)), outpatient critical access hospital services (as defined in section 1861(mm)(3)), extended care services provided pursuant to an agreement under section 1883, posthospital extended care services to which section 1888(e)(13) applies, home health services to which section 1895(f) applies, ambulance services to which section 1834(l) applies, and inpatient hospital services to which section 1886(b)(8) applies.

`(III) Payment under this clause shall be made without regard to whether a provider is a proprietary provider.'.

(g) COVERAGE OF COSTS FOR EMERGENCY ROOM ON-CALL PHYSICIAN ASSISTANTS AND NURSE PRACTITIONERS- Section 1834(g) (42 U.S.C. 1395m(g)) is amended by adding at the end the following new paragraph:

`(6) COVERAGE OF COSTS FOR EMERGENCY ROOM ON-CALL PHYSICIAN ASSISTANTS AND NURSE PRACTITIONERS- In determining the reasonable costs of outpatient critical access hospital services under paragraphs (1) and (2)(A), the Secretary shall recognize as allowable costs, amounts (as defined by the Secretary) for reasonable compensation and related costs for emergency room physician assistants and nurse practitioners who are on-call (as defined by the Secretary for purposes of paragraph (5)) but who are not present on the premises of the critical access hospital involved, and are not otherwise furnishing services which would be physicians' services if furnished by a physician and are not on-call at any other provider or facility.'.

(h) TECHNICAL CORRECTIONS-

(1) SECTION 403(b) OF BBRA 1999- Section 1820(b)(2) (42 U.S.C. 1395i-4(b)(2)) is amended by striking `nonprofit or public hospitals' and inserting `hospitals'.

(2) SECTION 203(b) OF BIPA 2000- Section 1883(a)(3) (42 U.S.C. 1395tt(a)(3)) is amended--

(A) by inserting `section 1861(v)(1)(G) or' after `Notwithstanding'; and

(B) by striking `covered skilled nursing facility'.

(i) EFFECTIVE DATES-

(1) ELIMINATION OF REQUIREMENTS- The amendment made by subsections (a) and (b) shall apply to services furnished on or after October 1, 2003.

(2) TECHNICAL CORRECTIONS-

(A) BBRA- The amendment made by subsection (h)(1) shall be effective as if included in the enactment of section 403(b) of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (Appendix F, 113 Stat. 1501A-321), as enacted into law by section 1000(a)(6) of Public Law 106-113.

(B) BIPA- The amendment made by subsection (h)(2) shall be effective as if included in the enactment of section 203(b) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Appendix F, 114 Stat. 2763A-463), as enacted into law by section 1(a)(6) of Public Law 106-554.

END