II 109th CONGRESS 2d Session S. 4017 IN THE SENATE OF THE UNITED STATES September 29, 2006 Mr. Specter (for himself and Mr. Santorum) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To provide for an appeals process for hospital wage index classification under the Medicare program, and for other purposes.

1.

Short title

This Act may be cited as the Hospital Payment Improvement and Equity Act of 2006.

2.

Appeals process for hospital wage index classification

(a)

Establishment of Process

(1)

In general

The Secretary shall establish not later than January 1, 2007, by instruction or otherwise, a process under which a hospital may appeal the wage index classification otherwise applicable to the hospital and select another area within the State (or, at the discretion of the Secretary, within a contiguous State) to which to be reclassified. (2)

Process requirements

The process established under paragraph (1) shall be consistent with the following: (A)Such an appeal may be filed as soon as possible after the date of the enactment of this Act but shall be filed by not later than February 15, 2007. (B)Such an appeal shall be heard by the Medicare Geographic Reclassification Review Board. (C)There shall be no further administrative or judicial review of a decision of such Board. (3)

Reclassification upon successful appeal

(A)

Reclassification

If the Medicare Geographic Reclassification Review Board determines that the hospital is a qualifying hospital (as defined in subsection (c)), the hospital shall be reclassified to the area selected under paragraph (1). (B)

Applicability

A reclassification under subparagraph (A) shall apply with respect to discharges occurring during the 3-year period beginning with April 1, 2007. (4)

Special rules

(A)

In general

Any qualifying hospital that is within 3 miles driving distance, starting at the hospital entrance and driving over improved roads, to the nearest Metropolitan Statistical Area in which a majority of the other qualifying hospitals located in the same Metropolitan Statistical Area as the hospital have been reclassified to (or if there is no majority, the Metropolitan Statistical Area in which at least one such other qualifying hospital has been reclassified to (as determined appropriate by the Secretary of Health and Human Services), the hospital shall be eligible to select to be reclassified to such nearest Metropolitan Statistical Area (or if no majority, to the area so determined appropriate by the Secretary). (B)

Competitively disadvantaged hospital in a single-hospital MSA surrounded by rural counties

(i)

In general

If a hospital meets the requirements described in clause (ii)— (I)such hospital shall be deemed to be a qualifying hospital; and (II)such hospital shall be reclassified to the closest urban area which is part of a Combined Statistical Area located in the same State as the hospital. (ii)

Requirements

The requirements described in this clause are the following: (I)The hospital is the only hospital in its urban area. (II)The hospital is in an urban area that is not adjacent to any other urban area. (III)The hospital is seeking reclassification to the closest urban area which is part of a Combined Statistical Area located in the same state as the hospital. (5)

Inapplicability of certain provisions

Except as the Secretary may provide, the provisions of paragraphs (8) and (10) of section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) shall not apply to an appeal under this section. (b)

Application of Reclassification

In the case of an appeal decided in favor of a qualifying hospital under subsection (a), the wage index reclassification shall not affect the wage index computation for any area or for any other hospital and shall not be effected in a budget neutral manner. The provisions of this section shall not affect payment for discharges occurring after the end of the 3-year-period referred to in subsection (a)(3)(B). (c)

Qualifying Hospital Defined

For purposes of this section, the term qualifying hospital means a subsection (d) hospital (as defined in section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B))) that— (1)does not qualify for a change in wage index classification under paragraph (8) or (10) of section 1886(d) of such Act (42 U.S.C. 1395ww(d)) on the basis of requirements relating to distance or commuting; and (2)meets such other criteria, such as quality, as the Secretary may specify by instruction or otherwise. The Secretary may modify the wage comparison guidelines promulgated under section 1886(d)(10)(D) of such Act (42 U.S.C. 1395ww(d)(10)(D)) in carrying out this section.(d)

Wage Index Classification

For purposes of this section, the term wage index classification means the geographic area in which the hospital is classified for purposes of determining for a fiscal year the factor used to adjust the DRG prospective payment rate under section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) for area differences in hospital wage levels that applies to such hospital under paragraph (3)(E) of such section. (e)

Special rule for rehabilitation hospitals and rehabilitation units

(1)

In general

Effective for discharges occurring during the 3-year period beginning with April 1, 2007, for purposes of making payments under section 1886(j) of the Social Security Act (42 U.S.C. 1395ww(j)) to a qualifying rehabilitation facility, such facility shall be deemed to be located in the area described in paragraph (3). (2)

Qualifying rehabilitation facility defined

For purposes of this subsection, the term qualifying rehabilitation facility means a rehabilitation hospital or a rehabilitation unit that is located in a Metropolitan Statistical Area in which all subsection (d) hospitals (as defined in subsection (d)(1)(B) of section 1886 of the Social Security Act (42 U.S.C. 1395ww)) that are not sole community hospitals (as defined in subsection (d)(5)(D)(iii) of such section) located in the area have been reclassified to another Metropolitan Statistical Area. (3)

Area described

The area described in this paragraph with respect to a qualifying rehabilitation facility is the Metropolitan Statistical Area in which the majority of the subsection (d) hospitals (as so defined) located in the same Metropolitan Statistical Area as the qualifying rehabilitation facility have been reclassified to (or if there is no majority, the Metropolitan Statistical Area in which at least one such subsection (d) hospital has been reclassified to (as determined appropriate by the Secretary of Health and Human Services).