[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2615 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2615

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 12, 2002

Mr. Murkowski (for himself and Mr. Wellstone) 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 
  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 2002''.
    (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 subparagraph (B), 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 subparagraph (C), has a provider agreement 
        in effect with the Secretary and is open to the public as of 
        January 1, 2002; 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)(C) 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, 2002) 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, 2002.
    ``(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)(D)--
            ``(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)(D)--
            ``(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, 2002, 
        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, 2002, 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, 2002.

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, 2002.

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, 
        2002, 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, 2002, 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 rural community hospital on or after October 1, 2002, 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) 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''.
    (h) Effective Dates.--
            (1) Elimination of requirements.--The amendment made by 
        subsections (a) and (b) shall apply to services furnished on or 
        after October 1, 2002.
            (2) Technical corrections.--
                    (A) BBRA.--The amendment made by subsection (f)(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 (f)(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.
                                 <all>