[Congressional Record Volume 146, Number 80 (Thursday, June 22, 2000)]
[Senate]
[Page S5666]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS:
  S. 2768. A bill to amend title XVIII of the Social Security Act to 
improve the Medicare-dependent, small rural hospital program; to the 
Committee on Finance.


              small rural hospital program improvement act

  Ms. COLLINS. Mr. President, I rise today to introduce the Small Rural 
Hospital Program Improvement Act, which is intended to make critically 
important changes to Medicare payment policies for rural hospitals.
  Mr. President, most hospitals in rural America serve a large number 
of Medicare patients. Medicare payments to these hospitals, however, 
are not always adequate to cover the cost of the services they provide. 
The legislation I am introducing today will increase Medicare payments 
to small, rural hospitals in Maine and elsewhere by enabling more of 
them to qualify for enhanced reimbursements under the Medicare 
Dependent, Small Rural Hospital Program.
  Rural hospitals are the anchors of small towns and communities across 
America. Not only are they the mainstay of the local health care 
delivery system, but they are also often the major employers in their 
communities. Rural communities have unique characteristics and special 
needs, and their hospitals face tremendous challenges every day as they 
work to provide the highest quality health care to their patients in 
the face of sometimes discouraging odds.
  Rural communities tend to have higher concentrations of elderly 
persons and higher levels of poverty. Rural residents also tend to have 
higher rates of certain health problems than people living in urban 
areas. For example, deaths and disabilities resulting from injury are 
more common, and rural residents also tend to experience higher rates 
of chronic disease and disability. Rural providers also face unique 
challenges in the delivery of health care services, given the great 
distances and extreme weather conditions that often prevail, 
particularly in states like Maine. Shortages of physicians, nurses and 
other health professionals make it difficult to ensure that rural 
residents have access to all of the care that they need. And finally, 
Medicare reimbursement policies tend to favor urban areas and fail to 
take the special needs of rural providers into account.
  The Balanced Budget Act of 1997 has posed additional challenges for 
rural areas. Deep Medicare payment reductions and mounting regulatory 
requirements have damaged our fragile rural health care delivery 
system, and, in particular, our rural hospitals and home health 
agencies. While the Balanced Budget Refinement Act of 1999 did provide 
some much-needed relief, we should take further steps to ensure that 
these rural providers receive more equitable Medicare payments.
  One relatively simple, but nevertheless important step we can take is 
to update the antiquated and arbitrary classification requirements that 
prevent otherwise-qualified hospitals from receiving assistance under 
the Medicare Dependent, Small Rural Hospital program. Under this 
program, small rural hospitals that treat relatively high proportions 
of Medicare patients qualify for enhanced Medicare reimbursements. To 
qualify as a Medicare Dependent Hospital, a hospital must be located in 
a rural area, not be a sole community hospital, have 100 or fewer beds, 
and have been dependent on Medicare for at least 60 percent of its 
inpatient days or discharges in 1987.
  The requirement that the hospital must have had at least 60 percent 
of its hospital discharges or patient days attributable to Medicare 
beneficiaries in 1987 is what creates the problem. Using 1987 as a base 
year erects an arbitrary barrier that prevents many small rural 
hospitals that otherwise meet the criteria from participating in this 
program. As an example, despite the fact that most of the small rural 
hospitals in Maine treat a disproportionate share of Medicare 
beneficiaries, none of them currently qualifies for this program. Not a 
single one.

  The legislation I am introducing today modifies and updates the 60 
percent requirement and bases eligibility for the Medicare Dependent, 
Small Rural Hospital program on Medicare discharges or patient days 
during any of the three most recently audited cost report periods 
rather than fiscal year 1987. In addition, the bill would make the 
program, which currently is only authorized through FY 2006, permanent. 
According to the Maine Hospital Association, if updated in this way, 
nine Maine hospitals will be eligible for the program, which would make 
them eligible for over $9 million additional Medicare dollars.
  Increasing Medicare payment rates is critically important to the 
hospitals in Maine. For the past several years, Maine has ranked 49th 
or 50th in the nation in terms of Medicare reimbursement-to-cost 
ratios. For example, while hospitals in some states received more from 
Medicare in 1996 than it cost them to provide care to older and 
disabled Medicare patients, Maine's hospitals were only reimbursed 80 
cents for every $1.00 they actually spent caring for Medicare 
beneficiaries.
  As a consequence, Maine's hospitals have experienced a serious 
Medicare shortfall in recent years. The Maine Hospital Association 
anticipates a $174 million Medicare shortfall in 2002, which will force 
Maine's hospitals to shift costs on to other payers in the form of 
higher hospital charges. This Medicare shortfall is one of the reasons 
that Maine has among the highest insurance premiums in the nation.
  Maine's poor Medicare margin is not due to high hospital costs. In 
fact, the current system tends to penalize Maine hospitals for their 
efficiency. For example, at $5,232, Maine's cost per discharge is 
slightly under the national average of $5,241, and is well below the 
Northeast average of $5,517.
  The legislation I am introducing today will not solve Maine's 
Medicare shortfall problem, but it will help to close the gap. It will 
also enable many more small rural hospitals across the country to 
benefit from this program, which will help to ensure continued access 
to high quality hospital care for all rural Americans.
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