[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 415 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 415

To amend the medicare program under title XVIII of the Social Security 
     Act to improve rural health services, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 10, 1997

Mr. Baucus (for himself, Mr. Grassley, Mr. Rockefeller, and Mr. Thomas) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the medicare program under title XVIII of the Social Security 
     Act to improve rural health services, and for other purposes.

    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 ``Rural Health Improvement Act of 
1997''.

SEC. 2. MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM.

    (a) Findings and Purpose.--
            (1) Findings.--Congress makes the following findings:
                    (A) One-quarter of the United States population, or 
                about 65,000,000 persons, reside in rural areas. Rural 
                areas have a larger proportion of elderly residents. 
                Rural populations have a higher infant mortality rate, 
                and a 40 percent higher rate of death from accidents.
                    (B) Rural hospitals are forced to comply with 
                burdensome and inflexible medicare requirements that do 
                not fit the realities of the rural environment.
                    (C) Rural hospitals are inadequately reimbursed by 
                the medicare program under title XVIII of the Social 
                Security Act (42 U.S.C. 1395 et seq.).
                    (D) Inadequate medicare reimbursement and 
                burdensome and inflexible requirements contribute to 
                the high closure rate among rural hospitals, resulting 
                in reduced access to primary care and emergency 
                services for millions of rural residents.
                    (E) Medical assistance facilities have been 
                operating in Montana since 1990, and rural primary care 
                hospitals have been operating since 1993. Both programs 
                help rural hospitals adapt to the changing health care 
                needs of the local community.
                    (F) The Inspector General of the Department of 
                Health and Human Services has found that medical 
                assistance facilities--
                            (i) provide access to health care in remote 
                        rural areas; and
                            (ii) are cost-efficient.
                    (G) The Inspector General of the Department of 
                Health and Human Services found that flexible medicare 
                requirements are key to the success of medical 
                assistance facilities.
                    (H) Twenty-one States applied to the Essential 
                Access Hospital (EACH) program authorized in the 
                Omnibus Budget Reconciliation Act of 1989 (Public Law 
                101-239). Seven States, West Virginia, California, 
                Colorado, Kansas, New York, North Carolina, and South 
                Dakota were awarded grants.
                    (I) Medical assistance facilities and rural primary 
                care hospitals promote the development of rural health 
                care networks and result in increased access for rural 
                residents to a variety of health care services.
            (2) Purpose.--The purpose of this section is to establish 
        the medicare rural hospital flexibility program and to allow 
        all States to develop critical access hospitals.
    (b) Medicare Rural Hospital Flexibility Program.--Section 1820 of 
the Social Security Act (42 U.S.C. 1395i-4) is amended to read as 
follows:

             ``medicare rural hospital flexibility program

    ``Sec. 1820. (a) Purpose.--The purpose of this section is to--
            ``(1) ensure access to health care services for rural 
        communities by allowing hospitals to be designated as critical 
        access hospitals if those hospitals limit the scope of 
        available inpatient acute care services;
            ``(2) provide more appropriate and flexible staffing and 
        licensure standards;
            ``(3) enhance the financial security of critical access 
        hospitals by requiring that those facilities be reimbursed 
        under this title on a reasonable cost basis; and
            ``(4) promote linkages between critical access hospitals 
        designated by the State under this section and broader programs 
        supporting the development of and transition to integrated 
        provider networks.
    ``(b) Establishment.--Any State that submits an application in 
accordance with subsection (c) may establish a medicare rural hospital 
flexibility program described in subsection (d).
    ``(c) Application.--A State may establish a medicare rural hospital 
flexibility program described in subsection (d) if the State submits to 
the Secretary at such time and in such form as the Secretary may 
require an application containing--
            ``(1) assurances that the State--
                    ``(A) has developed, or is in the process of 
                developing, a State rural health care plan that--
                            ``(i) provides for the creation of 1 or 
                        more rural health networks (as defined in 
                        subsection (e)) in the State;
                            ``(ii) promotes regionalization of rural 
                        health services in the State; and
                            ``(iii) improves access to hospital and 
                        other health services for rural residents of 
                        the State; and
                    ``(B) has developed the rural health care plan 
                described in subparagraph (A) in consultation with the 
                hospital association of the State, rural hospitals 
                located in the State, and the State Office of Rural 
                Health (or, in the case of a State in the process of 
                developing such plan, that assures the Secretary that 
                the State will consult with its State hospital 
                association, rural hospitals located in the State, and 
                the State Office of Rural Health in developing such 
                plan);
            ``(2) assurances that the State has designated (consistent 
        with the rural health care plan described in paragraph (1)(A)), 
        or is in the process of so designating, rural nonprofit or 
        public hospitals or facilities located in the State as critical 
        access hospitals; and
            ``(3) such other information and assurances as the 
        Secretary may require.
    ``(d) Medicare Rural Hospital Flexibility Program Described.--
            ``(1) In general.--A State that has submitted an 
        application in accordance with subsection (c), may establish a 
        medicare rural hospital flexibility program that provides 
        that--
                    ``(A) the State shall develop at least 1 rural 
                health network (as defined in subsection (e)) in the 
                State; and
                    ``(B) at least 1 facility in the State shall be 
                designated as a critical access hospital in accordance 
                with paragraph (2).
            ``(2) State designation of facilities.--
                    ``(A) In general.--A State may designate 1 or more 
                facilities as a critical access hospital in accordance 
                with subparagraph (B).
                    ``(B) Criteria for designation as critical access 
                hospital.--A State may designate a facility as a 
                critical access hospital if the facility--
                            ``(i) is located in a county (or equivalent 
                        unit of local government) in a rural area (as 
                        defined in section 1886(d)(2)(D)) that--
                                    ``(I) is located more than a 35-
                                mile drive from a hospital, or another 
                                facility described in this subsection; 
                                or
                                    ``(II) is certified by the State as 
                                being a necessary provider of health 
                                care services to residents in the area;
                            ``(ii) makes available 24-hour emergency 
                        care services that a State determines are 
                        necessary for ensuring access to emergency care 
                        services in each area served by a critical 
                        access hospital;
                            ``(iii) provides not more than 15 acute 
                        care inpatient beds (meeting such standards as 
                        the Secretary may establish) for providing 
                        inpatient care for a period not to exceed 96 
                        hours (unless a longer period is required 
                        because transfer to a hospital is precluded 
                        because of inclement weather or other emergency 
                        conditions), except that a peer review 
                        organization or equivalent entity may, on 
                        request, waive the 96-hour restriction on a 
                        case-by-case basis;
                            ``(iv) meets such staffing requirements as 
                        would apply under section 1861(e) to a hospital 
                        located in a rural area, except that--
                                    ``(I) the facility need not meet 
                                hospital standards relating to the 
                                number of hours during a day, or days 
                                during a week, in which the facility 
                                must be open and fully staffed, except 
                                insofar as the facility is required to 
                                make available emergency care services 
                                as determined under clause (ii) and 
                                must have nursing services available on 
                                a 24-hour basis, but need not otherwise 
                                staff the facility except when an 
                                inpatient is present;
                                    ``(II) the facility may provide any 
                                services otherwise required to be 
                                provided by a full-time, on site 
                                dietician, pharmacist, laboratory 
                                technician, medical technologist, and 
                                radiological technologist on a part-
                                time, off site basis under arrangements 
                                as defined in section 1861(w)(1); and
                                    ``(III) the inpatient care 
                                described in clause (iii) may be 
                                provided by a physician's assistant, 
                                nurse practitioner, or clinical nurse 
                                specialist subject to the oversight of 
                                a physician who need not be present in 
                                the facility; and
                            ``(v) meets the requirements of section 
                        1861(aa)(2)(I).
    ``(e) Definition of Rural Health Network.--
            ``(1) In general.--In this section, the term `rural health 
        network' means, with respect to a State, an organization 
        consisting of--
                    ``(A) at least 1 facility that the State has 
                designated or plans to designate as a critical access 
                hospital; and
                    ``(B) at least 1 hospital that furnishes acute care 
                services.
            ``(2) Agreements.--
                    ``(A) In general.--Each critical access hospital 
                that is a member of a rural health network shall have 
                an agreement with respect to each item described in 
                subparagraph (B) with at least 1 hospital that is a 
                member of the network.
                    ``(B) Items described.--The items described in this 
                subparagraph are the following:
                            ``(i) Patient referral and transfer.
                            ``(ii) The development and use of 
                        communications systems including (where 
                        feasible)--
                                    ``(I) telemetry systems; and
                                    ``(II) systems for electronic 
                                sharing of patient data.
                            ``(iii) The provision of emergency and non-
                        emergency transportation among the facility and 
                        the hospital.
                    ``(C) Credentialing and quality assurance.--Each 
                critical access hospital that is a member of a rural 
                health network shall have an agreement with respect to 
                credentialing and quality assurance with at least--
                            ``(i) 1 hospital that is a member of the 
                        network;
                            ``(ii) 1 peer review organization or 
                        equivalent entity; or
                            ``(iii) 1 other appropriate and qualified 
                        entity identified in the State rural health 
                        care plan.
    ``(f) Certification by the Secretary.--The Secretary shall certify 
a facility as a critical access hospital if the facility--
            ``(1) is located in a State that has established a medicare 
        rural hospital flexibility program in accordance with 
        subsection (d);
            ``(2) is designated as a critical access hospital by the 
        State in which it is located; and
            ``(3) meets such other criteria as the Secretary may 
        require.
    ``(g) Permitting Maintenance of Swing Beds.--Nothing in this 
section shall be construed to prohibit a critical access hospital from 
entering into an agreement with the Secretary under section 1883 under 
which the facility's inpatient hospital facilities are used for the 
furnishing of extended care services.
    ``(h) Grants.--
            ``(1) Medicare rural hospital flexibility program.--The 
        Secretary may award grants to States that have submitted 
        applications in accordance with subsection (c) for--
                    ``(A) engaging in activities relating to planning 
                and implementing a rural health care plan;
                    ``(B) engaging in activities relating to planning 
                and implementing rural health networks; and
                    ``(C) designating facilities as critical access 
                hospitals.
            ``(2) Rural emergency medical services.--
                    ``(A) In general.--The Secretary may award grants 
                to States that have submitted applications in 
                accordance with subparagraph (B) for the establishment 
                or expansion of a program for the provision of rural 
                emergency medical services.
                    ``(B) Application.--An application is in accordance 
                with this subparagraph if the State submits to the 
                Secretary at such time and in such form as the 
                Secretary may require an application containing the 
                assurances described in subparagraphs (A)(ii), 
                (A)(iii), and (B) of subsection (c)(1) and paragraph 
                (3) of that subsection.
    ``(i) Grandfathering of Certain Facilities.--
            ``(1) In general.--Any medical assistance facility 
        operating in Montana and any rural primary care hospital 
        designated by the Secretary under this section prior to the 
        date of the enactment of the Rural Health Improvement Act of 
        1997 shall be deemed to have been certified by the Secretary 
        under subsection (f) as a critical access hospital if such 
        facility or hospital is otherwise eligible to be designated by 
        the State as a critical access hospital under subsection (d).
            ``(2) Continuation of medical assistance facility and rural 
        primary care hospital terms.--Notwithstanding any other 
        provision of this title, with respect to any medical assistance 
        facility or rural primary care hospital described in paragraph 
        (1), any reference in this title to a `critical access 
        hospital' shall be deemed to be a reference to a `medical 
        assistance facility' or `rural primary care hospital'.
    ``(j) Waiver of Conflicting Part A Provisions.--The Secretary is 
authorized to waive such provisions of this part and part C as are 
necessary to conduct the program established under this section.
    ``(k) Authorization of Appropriations.--There are authorized to be 
appropriated from the Federal Hospital Insurance Trust Fund for making 
grants to all States under subsection (h), $25,000,000 in each of the 
fiscal years 1998 through 2002.''.
    (c) Report on Alternative to 96-Hour Rule.--Not later than January 
1, 1998, the Administrator of the Health Care Financing Administration 
shall submit to Congress a report on the feasibility of, and 
administrative requirements necessary to establish an alternative for 
certain medical diagnoses (as determined by the Administrator) to the 
96-hour limitation for inpatient care in critical access hospitals 
required by section 1820(d)(2)(B)(iii) of the Social Security Act (42 
U.S.C. 1395i-4), as added by subsection (b) of this section.
    (d) Part A Amendments Relating to Rural Primary Care Hospitals and 
Critical Access Hospitals.--
            (1) Definitions.--Section 1861(mm) of the Social Security 
        Act (42 U.S.C. 1395x(mm)) is amended to read as follows:

     ``critical access hospital; critical access hospital services

    ``(mm)(1) The term `critical access hospital' means a facility 
certified by the Secretary as a critical access hospital under section 
1820(f).
    ``(2) The term `inpatient critical access hospital services' means 
items and services, furnished to an inpatient of a critical access 
hospital by such facility, that would be inpatient hospital services if 
furnished to an inpatient of a hospital by a hospital.''.
            (2) Coverage and payment.--
                    (A) Section 1812(a)(1) of the Social Security Act 
                (42 U.S.C. 1395d(a)(1)) is amended by striking ``or 
                inpatient rural primary care hospital services'' and 
                inserting ``or inpatient critical access hospital 
                services''.
                    (B) Section 1814 of the Social Security Act (42 
                U.S.C. 1395f) is amended--
                            (i) in subsection (a)(8)--
                                    (I) by striking ``rural primary 
                                care hospital'' each place it appears 
                                and inserting ``critical access 
                                hospital''; and
                                    (II) by striking ``72'' and 
                                inserting ``96'';
                            (ii) in subsection (b), by striking ``other 
                        than a rural primary care hospital providing 
                        inpatient rural primary care hospital 
                        services,'' and inserting ``other than a 
                        critical access hospital providing inpatient 
                        critical access hospital services,''; and
                            (iii) by amending subsection (l) to read as 
                        follows:

        Payment for Inpatient Critical Access Hospital Services

    ``(l) The amount of payment under this part for inpatient critical 
access hospital services is the reasonable costs of the critical access 
hospital in providing such services.''.
            (3) Treatment of critical access hospitals as providers of 
        services.--
                    (A) Section 1861(u) of the Social Security Act (42 
                U.S.C. 1395x(u)) is amended by striking ``rural primary 
                care hospital'' and inserting ``critical access 
                hospital''.
                    (B) The first sentence of section 1864(a) of the 
                Social Security Act (42 U.S.C. 1395aa(a)) is amended by 
                striking ``a rural primary care hospital'' and 
                inserting ``a critical access hospital''.
            (4) Conforming amendments.--
                    (A) Section 1128A(b)(1) of the Social Security Act 
                (42 U.S.C. 1320a-7a(b)(1)) is amended by striking 
                ``rural primary care hospital'' each place it appears 
                and inserting ``critical access hospital''.
                    (B) Section 1128B(c) of the Social Security Act (42 
                U.S.C. 1320a-7b(c)) is amended by striking ``rural 
                primary care hospital'' and inserting ``critical access 
                hospital''.
                    (C) Section 1134 of the Social Security Act (42 
                U.S.C. 1320b-4) is amended by striking ``rural primary 
                care hospitals'' each place it appears and inserting 
                ``critical access hospitals''.
                    (D) Section 1138(a)(1) of the Social Security Act 
                (42 U.S.C. 1320b-8(a)(1)) is amended--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``rural primary care 
                        hospital'' and inserting ``critical access 
                        hospital''; and
                            (ii) in the matter preceding clause (i) of 
                        subparagraph (A), by striking ``rural primary 
                        care hospital'' and inserting ``critical access 
                        hospital''.
                    (E) Section 1816(c)(2)(C) of the Social Security 
                Act (42 U.S.C. 1395h(c)(2)(C)) is amended by striking 
                ``rural primary care hospital'' and inserting 
                ``critical access hospital''.
                    (F) Section 1833 of the Social Security Act (42 
                U.S.C. 1395l) is amended--
                            (i) in subsection (h)(5)(A)(iii), by 
                        striking ``rural primary care hospital'' and 
                        inserting ``critical access hospital'';
                            (ii) in subsection (i)(1)(A), by striking 
                        ``rural primary care hospital'' and inserting 
                        ``critical access hospital'';
                            (iii) in subsection (i)(3)(A), by striking 
                        ``rural primary care hospital services'' and 
                        inserting ``critical access hospital 
                        services'';
                            (iv) in subsection (l)(5)(A), by striking 
                        ``rural primary care hospital'' each place it 
                        appears and inserting ``critical access 
                        hospital''; and
                            (v) in subsection (l)(5)(B), by striking 
                        ``rural primary care hospital'' each place it 
                        appears and inserting ``critical access 
                        hospital''.
                    (G) Section 1835(c) of the Social Security Act (42 
                U.S.C. 1395n(c)) is amended by striking ``rural primary 
                care hospital'' each place it appears and inserting 
                ``critical access hospital''.
                    (H) Section 1842(b)(6)(A)(ii) of the Social 
                Security Act (42 U.S.C. 1395u(b)(6)(A)(ii)) is amended 
                by striking ``rural primary care hospital'' and 
                inserting ``critical access hospital''.
                    (I) Section 1861 of the Social Security Act (42 
                U.S.C. 1395x) is amended--
                            (i) in the last sentence of subsection (e), 
                        by striking ``rural primary care hospital'' and 
                        inserting ``critical access hospital'';
                            (ii) in subsection (v)(1)(S)(ii)(III), by 
                        striking ``rural primary care hospital'' and 
                        inserting ``critical access hospital'';
                            (iii) in subsection (w)(1), by striking 
                        ``rural primary care hospital'' and inserting 
                        ``critical access hospital''; and
                            (iv) in subsection (w)(2), by striking 
                        ``rural primary care hospital'' each place it 
                        appears and inserting ``critical access 
                        hospital''.
                    (J) Section 1862(a)(14) of the Social Security Act 
                (42 U.S.C. 1395y(a)(14)) is amended by striking ``rural 
                primary care hospital'' each place it appears and 
                inserting ``critical access hospital''.
                    (K) Section 1866(a)(1) of the Social Security Act 
                (42 U.S.C 1395cc(a)(1)) is amended--
                            (i) in subparagraph (F)(ii), by striking 
                        ``rural primary care hospitals'' and inserting 
                        ``critical access hospitals'';
                            (ii) in subparagraph (H), in the matter 
                        preceding clause (i), by striking ``rural 
                        primary care hospitals'' and ``rural primary 
                        care hospital services'' and inserting 
                        ``critical access hospitals'' and ``critical 
                        access hospital services'', respectively;
                            (iii) in subparagraph (I), in the matter 
                        preceding clause (i), by striking ``rural 
                        primary care hospital'' and inserting 
                        ``critical access hospital''; and
                            (iv) in subparagraph (N)--
                                    (I) in the matter preceding clause 
                                (i), by striking ``rural primary 
                                hospitals'' and inserting ``critical 
                                access hospitals''; and
                                    (II) in clause (i), by striking 
                                ``rural primary care hospital'' and 
                                inserting ``critical access hospital''.
                    (L) Section 1866(a)(3) of the Social Security Act 
                (42 U.S.C 1395cc(a)(3)) is amended--
                            (i) by striking ``rural primary care 
                        hospital'' each place it appears in 
                        subparagraphs (A) and (B) and inserting 
                        ``critical access hospital''; and
                            (ii) in subparagraph (C)(ii)(II), by 
                        striking ``rural primary care hospitals'' each 
                        place it appears and inserting ``critical 
                        access hospitals''.
                    (M) Section 1867(e)(5) of the Social Security Act 
                (42 U.S.C. 1395dd(e)(5)) is amended by striking ``rural 
                primary care hospital'' and inserting ``critical access 
                hospital''.
    (e) Payment Continued to Designated EACHs.--Section 1886(d)(5)(D) 
of the Social Security Act (42 U.S.C. 1395ww(d)(5)(D)) is amended--
            (1) in clause (iii)(III), by inserting ``as in effect on 
        September 30, 1997'' before the period at the end; and
            (2) in clause (v)--
                    (A) by inserting ``as in effect on September 30, 
                1997'' after ``1820(i)(1)''; and
                    (B) by striking ``1820(g)'' and inserting 
                ``1820(e)''.
    (f) Part B Amendments Relating to Critical Access Hospitals.--
            (1) Coverage.--
                    (A) Section 1861(mm) of the Social Security Act (42 
                U.S.C. 1395x(mm)) (as amended by subsection (d)(1) of 
                this section) is amended by adding at the end the 
                following new paragraph:
    ``(3) The term `outpatient critical access hospital services' means 
medical and other health services furnished by a critical access 
hospital on an outpatient basis.''.
                    (B) Section 1832(a)(2)(H) of the Social Security 
                Act (42 U.S.C. 1395k(a)(2)(H)) is amended by striking 
                ``rural primary care hospital services'' and inserting 
                ``critical access hospital services''.
            (2) Payment.--
                    (A) Section 1833(a)(6) of the Social Security Act 
                (42 U.S.C. 1395l(a)(6)) is amended by striking 
                ``outpatient rural primary care hospital services'' and 
                inserting ``outpatient critical access hospital 
                services''.
                    (B) Section 1834(g) of the Social Security Act (42 
                U.S.C. 1395m(g)) is amended to read as follows:
    ``(g) Payment for Outpatient Critical Access Hospital Services.--
The amount of payment under this part for outpatient critical access 
hospital services is the reasonable costs of the critical access 
hospital in providing such services.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after October 1, 1997.
                                 <all>