[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1783 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1783

   To amend title XVIII of the Social Security Act to provide for a 
 prospective payment system for inpatient long-stay hospital services 
                      under the medicare program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 25, 1999

  Mr. Cochran introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend title XVIII of the Social Security Act to provide for a 
 prospective payment system for inpatient long-stay hospital services 
                      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 ``Long-Stay Hospital Payment 
Improvement Act of 1999''.

SEC. 2. ESTABLISHMENT OF MEDICARE PROSPECTIVE PAYMENT RATE SYSTEM FOR 
              LONG-STAY HOSPITALS.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww) is amended by adding at the end the following new subsection:
    ``(l) Prospective Payment for Inpatient Long-Stay Hospital 
Services.--
            ``(1) Payment.--
                    ``(A) In general.--Notwithstanding sections 
                1814(b), subsection (b), and section 1861(v), but 
                subject to the provisions of section 1813, the amount 
                of the payment with respect to the operating costs and 
                capital costs of inpatient hospital services for 
                inpatient hospital discharges in a cost reporting 
                period--
                            ``(i) beginning on or after October 1, 
                        2001, and before October 1, 2005, is equal to 
                        the sum of the blended operating cost component 
                        (described in paragraph (2)(A)) and the 
                        blended, capital-related cost component 
                        (described in paragraph (2)(B)) for the cost 
                        reporting period and discharges occurring 
                        during the period; and
                            ``(ii) beginning on or after October 1, 
                        2005, is equal to the prospective payment rate 
                        established under paragraph (4) for the 
                        discharge.
                    ``(B) Long-stay hospital defined.--For purposes of 
                this subsection, the term `long-stay hospital' means a 
                hospital described in subsection (d)(1)(B)(iv).
                    ``(C) Operating and capital costs defined.--For 
                purposes of this subsection--
                            ``(i) the term `operating costs of 
                        inpatient hospital services' has the meaning 
                        given such term in subsection (a)(4), and
                            ``(ii) the term `capital-related costs of 
                        inpatient hospital services' has the meaning 
                        given such term by the Secretary under 
                        subsection (a)(4) as of September 30, 1987, and 
                        does not include return on equity capital.
            ``(2) Transitional payments.--
                    ``(A) Blended operating cost component.--
                            ``(i) In general.--The amount of the 
                        blended operating cost component under this 
subparagraph for a cost reporting period is equal to the sum of--
                                    ``(I) the TEFRA operating cost 
                                component percentage (as defined in 
                                clause (ii)) of the amount that would 
                                have been paid under part A with 
                                respect to such costs if this 
                                subsection did not apply for the 
                                period; and
                                    ``(II) the DRG operating cost 
                                component percentage (as defined in 
                                clause (ii)) of the applicable DRG per 
                                discharge prospective operating cost 
                                payment rate determined under clause 
                                (iii) for discharges occurring during 
                                such period.
                            ``(ii) TEFRA and drg operating cost 
                        component percentages.--For purposes of clause 
                        (i), for a cost reporting period beginning--
                                    ``(I) on or after October 1, 2001, 
                                and before October 1, 2002, the TEFRA 
                                operating cost component percentage is 
                                66\2/3\ percent and the DRG operating 
                                cost component percentage is 33\1/3\ 
                                percent;
                                    ``(II) on or after October 1, 2002, 
                                and before October 1, 2003, the TEFRA 
                                operating cost component percentage is 
                                33\1/3\ percent and DRG operating cost 
                                component percentage is 66\2/3\ 
                                percent; and
                                    ``(III) on or after October 1, 
                                2003, and before October 1, 2005, the 
                                TEFRA operating cost component 
                                percentage is 0 percent and the DRG 
                                operating cost component percentage is 
                                100 percent.
                            ``(iii) Applicable drg per discharge 
                        prospective operating cost payment rate.--For 
                        purposes of clause (i)(II), the applicable DRG 
                        per discharge prospective operating cost 
                        payment rate for a discharge is equal to the 
                        DRG prospective payment rate established under 
                        paragraph (4) for that discharge multiplied by 
                        the operating cost ratio determined under 
                        paragraph (4)(B)(i).
                    ``(B) Blended capital-related cost component.--
                            ``(i) In general.--The amount of the 
                        blended capital-related cost component under 
                        this subparagraph for a cost reporting period 
                        is equal to the sum of--
                                    ``(I) the TEFRA capital-related 
                                cost component percentage (as defined 
                                in clause (ii)) of the amount that 
                                would have been paid under part A with 
                                respect to such costs if this 
                                subsection did not apply for the 
                                period; and
                                    ``(II) the DRG capital-related cost 
                                component percentage (as defined in 
                                clause (ii)) of the applicable DRG 
                                prospective capital payment rate 
                                determined under clause (iii) for 
                                discharges occurring during such 
                                period.
                            ``(ii) TEFRA and drg capital-related cost 
                        component percentages specified.--For purposes 
                        of clause (i), for a cost reporting period 
                        beginning--
                                    ``(I) on or after October 1, 2001, 
                                and before October 1, 2002, the TEFRA 
                                capital-related cost component 
                                percentage is 80 percent and the DRG 
                                capital-related cost component 
                                percentage is 20 percent;
                                    ``(II) on or after October 1, 2002, 
                                and before October 1, 2003, the TEFRA 
                                capital-related cost component 
                                percentage is 60 percent and the DRG 
                                capital-related cost component 
                                percentage is 40 percent;
                                    ``(III) on or after October 1, 
                                2003, and before October 1, 2004, the 
                                TEFRA capital-related cost component 
                                percentage is 40 percent and the DRG 
                                capital-related cost component 
                                percentage is 60 percent; and
                                    ``(IV) on or after October 1, 2004, 
                                and before October 1, 2005, the TEFRA 
                                capital-related cost component 
                                percentage is 20 percent and the DRG 
                                capital-related cost component 
                                percentage is 80 percent.
                            ``(iii) Applicable drg per discharge 
                        prospective capital cost payment rate.--For 
                        purposes of clause (i)(II), the applicable DRG 
                        per discharge prospective capital cost payment 
                        rate for a discharge is equal to the DRG 
                        prospective payment rate established under 
                        paragraph (4) for that discharge multiplied by 
                        the capital cost ratio determined under 
                        paragraph (4)(B)(ii).
            ``(3) Diagnosis-related groups; weighting factors.--
                    ``(A) Establishment.--The Secretary shall establish 
                classes of inpatient discharges by long-stay hospitals 
                by using the diagnosis-related groups established 
                pursuant to subsection (d)(4)(A), except that for those 
                diagnosis-related groups for which there are fewer than 
                25 inpatient discharges in any fiscal year used to 
                establish weighting factors under subparagraph (B), the 
                Secretary may combine such diagnosis-related groups 
                into one or more groups in a manner which the Secretary 
                deems to be appropriate.
                    ``(B) Weighting factors.--For each such diagnosis-
                related group, the Secretary shall assign an 
                appropriate weighting factor which shall be derived 
                from the relative hospital operating and capital costs 
                and resources used with respect to patients classified 
                within all groups based on data from the 2 most recent 
                fiscal years for which data are available to the 
                Secretary for long-stay hospitals.
                    ``(C) Adjustments.--The Secretary shall annually 
                adjust the classifications and weighting factors 
                established under this paragraph as appropriate to 
                reflect changes in treatment patterns, technology, case 
                mix, and other factors which may affect the relative 
                use of long-stay hospital resources.
                    ``(D) Data collection.--The Secretary may require 
                long-stay hospitals to submit data required to classify 
                inpatient discharges according to diagnosis-related 
                groups and such other patient assessment factors as the 
                Secretary deems necessary to establish and administer 
                the prospective payment system under this subsection.
            ``(4) DRG prospective payment rate.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, the prospective payment 
                rate described in this paragraph for a hospital 
                discharge classified within a diagnosis-related group 
                under paragraph (3) is equal to the product of--
                            ``(i) the applicable single national DRG 
                        prospective payment rate determined under 
                        paragraph (5); and
                            ``(ii) the weighting factor established 
                        under paragraph (3)(B) for the diagnosis-
                        related group.
                    ``(B) Computation of operating cost and capital 
                ratios.--For purposes of paragraph (2)(A)(iii) and 
                (2)(B)(iii)--
                            ``(i) the operating cost ratio is equal to 
                        the proportion of the single national DRG 
                        prospective payment rate under paragraph (5)(A) 
                        that is attributable to operating costs of 
                        inpatient hospital services; and
                            ``(ii) the capital cost ratio is equal to 1 
                        minus the operating cost ratio determined under 
                        clause (i).
                    ``(C) Area wage adjustment.--The Secretary shall 
                adjust the proportion (as estimated by the Secretary 
                from time to time) of long-stay hospitals' costs which 
                are attributable to wages and wage-related costs of the 
                DRG prospective payment rate computed under 
                subparagraph (A) for area differences in wage levels by 
                a factor (established by the Secretary) reflecting 
the relative hospital wage level in the geographic area of the long-
stay hospital compared to the national average wage level for such 
long-stay hospitals. The Secretary may use the area wage adjustments 
applicable to a subsection (d) hospital or may develop a distinct 
adjustment for long-stay hospitals. Not later than October 1, 2001 (and 
at least every 12 months thereafter), the Secretary shall update the 
factor under this subparagraph on the basis of information available to 
the Secretary (and updated as appropriate) of the wages and wage-
related costs incurred in furnishing long-stay hospital services. Any 
adjustments or updates made under this paragraph for a fiscal year 
shall be made in a manner that assures that the aggregate payments 
under this subsection in the fiscal year are not greater or less than 
those that would have been made in the year without such adjustment.
                    ``(D) Outlier payments.--
                            ``(i) In general.--The Secretary shall 
                        provide for an additional payment to a long-
                        stay hospital for patients in a diagnosis-
                        related group, based upon the patient being 
                        classified as an outlier based on unusual costs 
                        or other factors specified by the Secretary 
                        beyond cut off points established by the 
                        Secretary.
                            ``(ii) Payments based on cost of care.--The 
                        amount of such additional payment under clause 
                        (i) shall be determined by the Secretary and 
                        shall equal 80 percent of the cost of care 
                        beyond the cut off points established pursuant 
                        to clause (i).
                            ``(iii) Total payments.--The total amount 
                        of the additional payments made under this 
                        subparagraph in a fiscal year shall be 
                        projected by the Secretary to be 10 percent of 
                        the total payments projected or estimated by 
                        the Secretary to be made to long-stay hospitals 
                        based on the per discharge prospective payment 
                        system under this paragraph in that year.
                    ``(E) Disproportionate share.--The Secretary shall 
                provide by regulation for an additional payment under 
                this paragraph to take into account the special 
                circumstances of long-stay hospitals that serve a 
                significantly disproportionate number of low-income 
                patients in a manner similar to that provided under 
                subsection (d)(5)(F) except that a long-stay hospital 
                shall be considered to `serve a significantly 
                disproportionate number of low income patients' for a 
                cost reporting period if the hospital has a 
                disproportionate patient percentage (as defined in 
                clause (vi) of such subsection) for that period which 
                equals, or exceeds, 15 percent, regardless of location 
                or number of beds of the hospital. The total amount of 
                payments made under this subparagraph in a fiscal year 
                may not exceed, stated as a percentage of the total 
                payments projected or estimated by the Secretary to be 
                made to long-stay hospitals based on the per discharge 
                prospective payment system under this paragraph in that 
                year, the percentage that payments made to subsection 
                (d) hospitals pursuant to subsection (d)(5)(F) 
                represents of the total prospective payment rate 
                payments made to subsection (d) hospitals in the most 
                recent fiscal year for which the Secretary has data.
                    ``(F) Transfers.--The Secretary shall provide by 
                regulation for such other exceptions and adjustments to 
                payment amounts under this paragraph for transfers in a 
                manner similar to that provided under subparagraphs (I) 
                and (J) of subsection (d)(5) in relation to payments 
                under subsection (d), except that the provisions of 
                subsection (d)(5)(J) shall apply to all qualified 
                discharges from a long-stay hospital (as defined in 
                clause (ii) of such subsection) without regard to 
                whether the discharge is classified as a diagnosis-
                related group described in clause (iii) of such 
                subsection and only where, upon discharge, the 
                individual receives the services expressed in such 
                clause (ii), for which payment is made under this 
                title.
            ``(5) Determination of single national DRG prospective 
        payment rate.--The Secretary shall determine a single national 
        DRG prospective payment rate for each inpatient hospital 
        discharge in a fiscal year (beginning with fiscal year 2002) 
        involving inpatient hospital services of a long-stay hospital 
        in the United States for which payment may be made under part A 
        of this title. Such rate shall be determined as follows:
                    ``(A) Determination of base rate and operating 
                components.--The Secretary shall determine the average 
                payments per discharge under this title for operating 
                costs and capital costs of inpatient hospital services 
                of long-stay hospitals. The Secretary shall determine 
                such average using data from the most recent fiscal 
                year for which data are available to the Secretary as 
                of the date of the enactment of this subsection. In 
                applying this subparagraph, the Secretary alternatively 
                may use the standardized payment amount described in 
                subsection (d)(1)(C), with appropriate compensating 
                increases to the weighting factors described in 
                paragraph (3)(B) and other appropriate adjustments to 
                effect budget neutrality under subparagraph (C).
                    ``(B) Updating components.--Subject to subparagraph 
                (C), the Secretary shall update such rate to the year 
                involved by an appropriate increase factor, which is 
                based on an appropriate percentage increase in a market 
                basket of goods and services comprising services for 
                which payment is made under this subsection, which may 
                be the market basket percentage increase described in 
                subsection (b)(3)(B)(iii).
                    ``(C) Budget neutral rates.--For each fiscal year, 
                the Secretary shall provide for such adjustment in such 
                rate otherwise computed for that fiscal year as may be 
                necessary to assure that--
                            ``(i) the aggregate payment amounts 
                        otherwise provided under this subsection for 
                        that fiscal year for operating and capital 
                        costs of inpatient hospital services of long-
                        stay hospitals, taking into account payment 
                        adjustments and additions made under paragraph 
                        (4) and under subsequent provisions of this 
                        subsection,
                are not greater or less than--
                            ``(ii) the payment amounts which would have 
                        been payable for such services for those same 
                        hospitals for that fiscal year under part A had 
                        this subsection not been enacted.
            ``(6) Adjustment.--The Secretary may provide such 
        adjustments to the payment amounts under this subsection as the 
        Secretary deems appropriate to take into account the unique 
        circumstances of long-stay hospitals located in Alaska and 
        Hawaii.
            ``(7) Publication.--The Secretary shall provide for 
        publication in the Federal Register, on or before August 1 
        before each fiscal year (beginning with fiscal year 2002), of 
        the classification and weighting factors for the diagnosis-
        related groups under paragraph (3) for such fiscal year and a 
        description of the methodology and data used in computing the 
        prospective payment rates under this subsection for that fiscal 
        year.
            ``(8) Limitation on review.--There shall be no 
        administrative or judicial review under section 1878 or 
        otherwise of--
                    ``(A) the establishment of diagnosis-related 
                groups, of the methodology for the classification of 
                discharges within such groups, and of the appropriate 
                weighting factors thereof under paragraph (3); and
                    ``(B) the establishment of the prospective payment 
                rates under paragraphs (4) and (5).''.
    (b) Conforming Amendment.--Section 1886(b)(1) of such Act (42 
U.S.C. 1395ww(b)(1)) is amended in paragraph (1), by striking ``and 
other than a rehabilitation facility described in subsection (j)(1)'' 
and inserting ``, a rehabilitation facility described in subsection 
(j)(1), and a long-stay hospital described in subsection 
(d)(1)(B)(iv),''.
    (c) Effective Date.--The amendments made by this section apply to 
cost reporting periods beginning on or after October 1, 2001, except 
that the Secretary of Health and Human Services may require the 
submission of data under section 1886(l)(3)(D) of the Social Security 
Act (as added by subsection (a)) on and after the date of the enactment 
of this Act.
                                 <all>