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 and to make other rural health care improvements.

May 5, 2003

Mr. DORGAN (for himself and Mr. BURNS) 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 and to make other rural health care improvements.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Rural Health Care Fairness and Medicare Equity Act of 2003'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Equalizing urban and rural standardized payment amounts under the medicare inpatient hospital prospective payment system.

Sec. 3. Adjustment to wage index.

Sec. 4. Floor on area wage adjustment factors used under medicare PPS for inpatient and outpatient hospital services.

Sec. 5. Establishment of alternative guidelines for geographic reclassification of certain hospitals located in sparsely populated States.

Sec. 6. Establishment of floor on work geographic adjustment.

SEC. 2. EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT AMOUNTS UNDER THE MEDICARE INPATIENT HOSPITAL PROSPECTIVE PAYMENT SYSTEM.

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

(1) by striking `(iv) For discharges' and inserting `(iv)(I) Subject to subclause (II), for discharges'; and

(2) by adding at the end the following new subclause:

`(II) For discharges occurring in a fiscal year beginning with fiscal year 2004, the Secretary shall compute a standardized amount for hospitals located in any area within the United States and within each region equal to the standardized amount computed for the previous fiscal year under this subparagraph for hospitals located in a large urban area (or, beginning with fiscal year 2005, for hospitals located in any area) increased by the applicable percentage increase under subsection (b)(3)(B)(i) for the fiscal year involved.'.

(b) CONFORMING AMENDMENTS-

(1) COMPUTING DRG-SPECIFIC RATES- Section 1886(d)(3)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(D)) is amended--

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

(B) in the matter preceding clause (i), by striking `each of which is';

(C) in clause (i)--

(i) in the matter preceding subclause (I), by inserting `for fiscal years before fiscal year 2004,' before `for hospitals'; and

(ii) in subclause (II), by striking `and' after the semicolon at the end;

(D) in clause (ii)--

(i) in the matter preceding subclause (I), by inserting `for fiscal years before fiscal year 2004,' before `for hospitals'; and

(ii) in subclause (II), by striking the period at the end and inserting `; and'; and

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

`(iii) for a fiscal year beginning after fiscal year 2003, for hospitals located in all areas, to the product of--

`(I) the applicable operating 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.'.

(2) TECHNICAL CONFORMING SUNSET- Section 1886(d)(3) of the Social Security Act (42 U.S.C. 1395ww(d)(3)) is amended--

(A) in the matter preceding subparagraph (A), by inserting `, for fiscal years before fiscal year 1997,' before `a regional adjusted DRG prospective payment rate'; and

(B) in subparagraph (D), in the matter preceding clause (i), by inserting `, for fiscal years before fiscal year 1997,' before `a regional DRG prospective payment rate for each region,'.

SEC. 3. ADJUSTMENT TO WAGE INDEX.

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

(1) by striking `WAGE LEVELS- The Secretary' and inserting `WAGE LEVELS-

`(i) IN GENERAL- Except as provided in clause (ii), the Secretary'; and

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

`(ii) ALTERNATIVE PROPORTION TO BE ADJUSTED BEGINNING IN FISCAL YEAR 2004-

`(I) IN GENERAL- Except as provided in subclause (II), for discharges occurring on or after October 1, 2003, the Secretary shall substitute `62 percent' for the proportion described in the first sentence of clause (i).

`(II) HOLD HARMLESS FOR CERTAIN HOSPITALS- If the application of subclause (I) would result in lower payments to a hospital than would otherwise be made, then this subparagraph shall be applied as if this clause had not been enacted.

(b) WAIVING BUDGET NEUTRALITY- Section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)), as amended by subsection (a), is

amended by adding at the end of clause (i) the following new sentence: `The Secretary shall apply the previous sentence for any period as if the amendments made by section 3(a) of the Rural Health Care Fairness and Medicare Equity Act of 2003 had not been enacted.'.

SEC. 4. 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)), as amended by section 3(a), is amended--

(1) in clause (i), by striking `clause (ii)' and inserting `clauses (ii) and (iii)'; and

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

`(iii) FLOOR ON AREA WAGE ADJUSTMENT FACTOR-

`(I) IN GENERAL- Notwithstanding clause (i), in determining payments under this subsection for discharges occurring on or after October 1, 2003, the Secretary shall substitute a factor of 0.85 for any factor that would otherwise apply under such clause that is less than 0.85.

`(II) APPLICABILITY- Nothing in this clause shall be construed as authorizing the application of subclause (I) 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 new sentence: `For purposes of subparagraph (D) for items and services furnished on or after October 1, 2003, 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 (iii) 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.'.

(c) WAIVING BUDGET NEUTRALITY- The last sentence of section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)), as added by section 3(b), is amended by striking `section 3(a)' and inserting `sections 3(a) and 4(a)'.

SEC. 5. ESTABLISHMENT OF ALTERNATIVE GUIDELINES FOR GEOGRAPHIC RECLASSIFICATION OF CERTAIN HOSPITALS LOCATED IN SPARSELY POPULATED STATES.

(a) ALTERNATIVE GUIDELINES FOR RECLASSIFICATION- Notwithstanding the guidelines published under section 1886(d)(10)(D)(i)(I) of the Social Security Act (42 U.S.C. 1395ww(d)(10)(D)(i)(I)), the Secretary of Health and Human Services shall publish and use alternative guidelines under which--

(1) a hospital or a group of hospitals described in subsection (b) qualifies for geographic reclassification under such section for a fiscal year beginning with fiscal year 2005 for the purposes of using the other area's standardized amount for inpatient operating costs, wage index value, or both, or, in the case of a group of hospitals, for the purposes of using both the other area's standardized amount for inpatient operating costs and wage index value; and

(2) a hospital or group of hospitals seeking to be reclassified is required to demonstrate that the hospital meets the criteria to be reclassified to the area to which such hospital seeks to be reclassified, except that, in the case of an individual hospital, the hospital does not meet the proximity criteria applicable with respect to such area, or, in the case of a group of hospitals, the group does not meet the adjacency criteria applicable with respect to such area.

(b) HOSPITALS COVERED- A hospital or a group of hospitals described in this subsection is a hospital or group of hospitals that--

(1) is located in a State with less than 20 people per square mile (as determined by the Secretary); and

(2) seeks to be reclassified to an area within the State in which such hospital or group is located.

SEC. 6. ESTABLISHMENT OF FLOOR ON WORK GEOGRAPHIC ADJUSTMENT.

Section 1848(e)(1) of the Social Security Act (42 U.S.C. 1395w-4(e)(1)) is amended by adding at the end the following new subparagraph:

`(E) FLOOR AT 1.0 ON WORK GEOGRAPHIC INDICES- After calculating the work geographic indices in subparagraph (A)(iii), for purposes of payment for services furnished on or after January 1, 2004, the Secretary shall increase the work geographic index to 1.00 for any locality for which such geographic index is less than 1.00.'.

END