1.This Act may be cited as the
Hospital Fair Competition Act of
2005
.
2.Hospital payment
improvements
(a)Use of
estimated costs rather than average charges in establishing weighting factors
for diagnosis-Related groups under the inpatient hospital prospective payment
system
(1)Section 1886(d)(4)(B)
of the Social Security Act
(42
U.S.C. 1395ww(d)(4)(B)) is amended—
(A)by inserting (i)
after
(B)
; and
(B)by adding at the end the following new
clause:
(ii)For fiscal years beginning after fiscal
year 2006, in establishing the weighting factors under clause (i), the
Secretary shall ensure (to the extent feasible) that such factors reflect the
estimated costs of furnishing care in each diagnosis-related
group.
.
(2)No requirement
for annual adjustment for changes in costsSection 1886(d)(4)(C)(i) of the
Social Security Act (42 U.S.C.
1395ww(d)(4)(C)(i)) is amended by adding at the end the
following new sentence: Notwithstanding the preceding sentence, the
Secretary may adjust the weighting factors established under subparagraph (B)
less frequently than annually (but in no case less frequently than once every 5
years) in carrying out the requirement under clause (ii) of such
subparagraph.
.
(b)Calculation of
weighting factors at hospital level under the inpatient hospital prospective
payment systemSection
1886(d)(4)(B) of the Social Security
Act (42 U.S.C.
1395ww(d)(4)(B)), as amended by subsection (a)(1), is amended
by adding at the end the following new clause:
(iii)For fiscal years beginning after fiscal
year 2006, in establishing the weighting factors under clause (i), the
Secretary shall calculate such factors at a hospital level and then aggregate
such factors to a national
level.
.
(c)Adjustment of
weighting factors for diagnosis-Related groups under the inpatient hospital
prospective payment system To finance high-Cost outlier cases and To account
for changes in the distribution of such cases
(1)
(A)Section
1886(d)(3)(B) of the Social
Security Act (42 U.S.C.
1395ww(d)(3)(B)) is amended to read as follows:
(B)Reducing for value of outlier
payments
(i)Reduction of average standardized
amountsThe Secretary shall,
for discharges occurring before fiscal year 2007, reduce each of the average
standardized amounts determined under subparagraph (A) by a factor equal to the
proportion of payments under this subsection (as estimated by the Secretary)
based on DRG prospective payment amounts which are additional payments
described in paragraph (5)(A) (relating to outlier payments).
(ii)Reduction of weighting
factorsThe Secretary shall,
for discharges occurring after fiscal year 2006, reduce each of the weighting
factors determined under paragraph (4)(B) by a factor equal to the proportion
of payments in the diagnosis-related group under this subsection (as estimated
by the Secretary) based on DRG prospective payment amounts which are additional
payments described in paragraph (5)(A) (relating to outlier
payments).
.
(B)Annual
adjustment to account for projected changes in the distribution of outlier
payments within diagnosis-related groupsSection 1886(d)(4)(C)(i) of the
Social Security Act (42 U.S.C.
1395ww(d)(4)(C)(i)), as amended by subsection (a)(2), is
amended by inserting , including, for discharges occurring after fiscal
year 2006, projected changes in the distribution of additional payments
described in paragraph (5)(A) within diagnosis-related groups
before
the period at the end of the first sentence.
(C)Section
1886(d)(3)(D) of the Social
Security Act (42 U.S.C.
1395ww(d)(3)(D)) is amended—
(i)in clauses (i)(I), (ii)(I), and (iii)(I),
by striking reduced under subparagraph (B)
and inserting
reduced under subparagraph (B)(i)
; and
(ii)in clause (iii)(II), by inserting ,
and, in the case of a fiscal year beginning after 2006, reduced under
subparagraph (B)(ii)
before the period at the end.
(2)
(A)Computing
puerto rico drg-specific ratesSection 1886(d)(9)(C)(ii)
of the Social Security Act
(42
U.S.C. 1395ww(d)(9)(C)(ii)) is amended—
(i)by inserting , for discharges
occurring before fiscal year 2007,
after The Secretary
shall
; and
(ii)by striking fiscal year 2004 and
thereafter
and inserting fiscal years 2004, 2005, and
2006
.
(B)Section
1886(d)(9)(C)(iii)(II) of the Social Security Act (42 U.S.C.
1395ww(d)(9)(C)(iii)(II)) is amended by inserting and
reduced under paragraph (3)(B)(ii)
after paragraph
(4)(B)
.
(d)Ensuring that
diagnostic-Related groups appropriately capture the difference in severity of
illness of patientsSection
1886(d)(4)(A) of the Social Security
Act (42 U.S.C.
1395ww(d)(4)(A)) is amended by adding at the end the following
new sentence: In establishing the classification of inpatient discharges
by diagnosis-related groups under the preceding sentence, the Secretary shall
ensure that such groups appropriately capture the difference in severity of
illness of patients.
.
(e)Phase-In of
changes to the inpatient hospital prospective payment systemSection 1886(d) of the
Social Security Act (42 U.S.C.
1395ww(d)) is amended by adding at the end the following new
paragraph:
(14)Notwithstanding the preceding provisions of
this subsection, the Secretary shall phase in the application of the amendments
made by subsections (a), (b), (c), and (d) of section 2 of the
Hospital Fair Competition Act of
2005 over a 3-fiscal year period beginning with fiscal year 2007.
In implementing the phase-in under the preceding sentence, the Secretary shall
take into account the negative impact that the phase-in may have on certain
hospitals.
.
3.Prohibition on certain
physician self referrals
(a)Section 1877(d) of the
Social Security Act (42 U.S.C.
1395nn(d)) is amended in each of paragraphs (2)(B) and (3)(B)
by striking effective for the 18-month period beginning on the date of
enactment of the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
and inserting on and after December 8,
2003
.
(b)Revisions to
the requirements to qualify for the exception to the definition of specialty
hospitalSection 1877(h)(7)(B)
of the Social Security
Act (42 U.S.C.
1395nn(h)(7)(B)) is amended—
(1)by redesignating clauses (iii), (iv), and
(v) as clauses (vi), (vii), and (viii), respectively;
(2)by inserting after clause (ii) the
following new clauses:
(iii)for which the percent of investment in the
hospital by physician investors at any time on or after June 8, 2005, is no
greater than the percent of such investment by physician investors as of such
date;
(iv)for which the percent of investment in the
hospital by any physician investor at any time on or after June 8, 2005, is no
greater than the percent of such investment by such physician as of such
date;
(v)for which the number of operating rooms at
the hospital at any time on or after June 8, 2005, is no greater than the
number of such rooms as of such date;
;
and
(3)by striking clause (vii), as so
redesignated, and inserting the following:
(vii)for which—
(I)during the period beginning on December 8,
2003, and ending on June 7, 2005, any increase in the number of beds occurs
only in the facilities on the main campus of the hospital and does not exceed
50 percent of the number of beds in the hospital as of November 18, 2003, or 5
beds, whichever is greater; and
(II)the number of beds at the hospital at any
time on or after June 8, 2005, is no greater than the number of such beds as of
such date;
and
.
(c)The amendments made by
this section shall take effect on June 8, 2005.
4.Permissible
coordinated care incentive arrangements between hospitals and
physicians
(a)Establishment
of requirements for arrangements and exemption from imposition of civil
monetary penaltiesSection
1128A of the Social Security Act (42 U.S.C. 1320a–7a) is amended by adding at
the end the following new subsection:
(o)Arrangements
between hospitals and physicians
(1)Subsection (b) shall
not apply to an arrangement that meets the requirements under paragraph
(2).
(2)
(A)The Secretary shall establish requirements
for arrangements between hospitals or critical access hospitals and physicians
in which physicians share in the savings experienced by the hospital or
critical access hospital by reason of cost-reduction efforts that involve the
physicians.
(B)In establishing the requirements under
subparagraph (A), the Secretary shall ensure that—
(i)the quality of care provided to individuals
is protected under the arrangement; and
(ii)financial incentives that could affect
physician referrals are minimized.
(C)The Secretary shall establish procedures to
monitor arrangements described in subparagraph (A) to ensure that such
agreements meet the requirements under such
subparagraph.
.
(b)Exemption from
criminal penaltiesSection
1128B(b)(3) of the Social Security Act (42 U.S.C. 1320a–7b(b)(3)) is
amended—
(1)in subparagraph (G), by striking
and
at the end;
(2)in subparagraph (H), as added by section
237(d) of the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (Public Law 108–173; 117 Stat. 2213)—
(A)by moving such subparagraph 2 ems to the
left; and
(B)by striking the period at the end and
inserting a semicolon;
(3)by redesignating subparagraph (H), as added
by section 431(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2287), as subparagraph
(I);
(4)in subparagraph (I), as so
redesignated—
(A)by moving such subparagraph 2 ems to the
left; and
(B)by striking the period at the end and
inserting ; and
; and
(5)by adding at the end the following new
subparagraph:
(J)an arrangement that meets the requirements
established under section
1128A(o).
.
(c)Exemption from
limitation on certain physician referralsSection 1877(e) of the
Social Security Act (42 U.S.C.
1395nn(e)) is amended by adding at the end the following new
paragraph:
(9)Arrangements
between hospitals and physiciansAn arrangement that meets the requirements
established under section
1128A(o).
.