[Congressional Record Volume 147, Number 66 (Tuesday, May 15, 2001)]
[Senate]
[Pages S4946-S4947]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HUTCHINSON (for himself, Mr. Cleland, and Mr. Miller):
  S. 885. A bill to amend title XVIII of the Social Security Act to 
provide for national standardized payment amounts for inpatient 
hospital services furnished under the medicare program; to the 
Committee on Finance.
  Mr. HUTCHINSON. Mr. President, I am pleased today to be joined by 
Senator Cleland of Georgia in introducing the Area Wage and Base 
Payment Improvement Act, which seeks to address Medicare payment 
inequities for rural and small hospitals so they may pay competitive 
wages to attract and retain health care personnel and provide quality 
health care.
  We all know that the health care workforce is shrinking, both in its 
own right and relative to the growing patient population. This is 
illustrated by the nursing profession. The average age of nurses today 
is 43.3 years, and less than 10 percent of the current nurse workforce 
is below age 30. Unfortunately, many nurses are leaving the occupation 
because of low pay, excessive paperwork burdens, a lack of respect, and 
other consequences of being short-staffed, such as overly long shifts, 
mandatory overtime, and the stress of having too many patients under 
their care. The result is that very few new nurses are getting into the 
pipeline to replace those who have retired or left the profession. The 
nursing shortage is being felt in virtually every part of the country, 
but especially in rural areas, where it is hard for hospitals to 
recruit and retain qualified personnel. In my home State of Arkansas, 
where nearly every county is considered a medically underserved area, 
hospitals are reporting over 750 nurse vacancies, this says nothing of 
the other personnel shortages they are experiencing as well.
  Such severe shortages in qualified health care personnel have 
``nationalized'' the market for health care professionals, and 
historically low labor costs in rural and small urban areas have 
disappeared. Hospitals in these areas must compete with large urban 
hospitals for qualified workers and pay higher wages as a result. In 
some cases, rural hospitals are being forced to pay health care 
personnel even more than urban hospitals. For example, a nurse 
practitioner in rural Arkansas is paid $29.04 per hours on average, 
while the same nurse practitioner would be paid $28.22 per hour in an 
urban hospital.
  The Area Wage and Base Payment Improvement Act would address this 
issue by establishing an area wage index floor of 0.925 in order to 
bring payments in areas with the lowest wage indexes up to just below 
the national average of 1.00. The wage index is intended to adjust 
Medicare hospital inpatient and outpatient payments to account for 
varying wage rates paid by hospitals for workers in different market 
areas across the country, but it has not been updated since 1997. In 
Arkansas, the area wage index for rural hospitals is as low as .7445. 
By creating an area wage index floor of .925, as many as 72 hospitals 
in Arkansas and 2,100 hospitals nationwide will see an increase in 
their Medicare payments and their ability to provide competitive wages 
for hospital labor.
  The legislation we are introducing also makes an important change to 
the Medicare payment formula by increasing the Medicare inpatient 
prospective payment system, PPS, base amount for rural and small urban 
hospitals. This base payment is primarily intended to cover labor 
costs. Today, there are two different base payment amounts for 
hospitals paid under the Medicare PPS, hospitals in large urban areas 
receive a base payment of $4,197, while hospitals located in all other 
areas receive a lower amount of $4,130. This legislation will eliminate 
this disparity and create one base payment of $4,197 for all hospitals. 
Nationwide, 2,600 hospitals will benefit from this payment increase.
  The Area Wage and Base Payment Improvement Act will provide critical 
payments to small and rural hospitals

[[Page S4947]]

striving to provide quality health care and put them on an equal 
footing with large urban hospitals in terms of competing for health 
care personnel. I urge my colleagues in the Senate to support this 
important, bipartisan legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 885

       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 ``Area Wage and Base Payment 
     Improvement Act''.

     SEC. 2. ESTABLISHING A SINGLE STANDARDIZED AMOUNT UNDER 
                   MEDICARE INPATIENT HOSPITAL PPS.

       (a) In General.--Section 1886(d)(3)(A) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(3)(A)) is amended--
       (1) in clause (iv), by inserting ``and ending on or before 
     September 30, 2001,'' after ``October 1, 1995,''; and
       (2) by redesignating clauses (v) and (vi) as clauses (vii) 
     and (viii), respectively, and inserting after clause (iv) the 
     following new clauses:
       ``(v) For discharges occurring in the fiscal year beginning 
     on October 1, 2001, the average standardized amount for 
     hospitals located in areas other than a large urban area 
     shall be equal to the average standardized amount for 
     hospitals located in a large urban area.
       ``(vi) For discharges occurring in a fiscal year beginning 
     on or after October 1, 2002, the Secretary shall compute an 
     average standardized amount for hospitals located in all 
     areas within the United States equal to the average 
     standardized amount computed under clause (v) or this clause 
     for the previous fiscal year increased by the applicable 
     percentage increase under subsection (b)(3)(B)(i) for the 
     fiscal year involved.''.
       (b) Conforming Amendments.--
       (1) Update factor.--Section 1886(b)(3)(B)(i)(XVII) of the 
     Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XVII)) is 
     amended by striking ``for hospitals in all areas,'' and 
     inserting ``for hospitals located in a large urban area,''.
       (2) Computing drg-specific rates.--
       (A) In general.--Section 1886(d)(3)(D) of such Act (42 
     U.S.C. 1395ww(d)(3)(D)) is amended--
       (i) in the heading by striking ``in different areas'';
       (ii) in the matter preceding clause (i)--

       (I) by inserting ``for fiscal years before fiscal year 
     1997'' before ``a regional DRG prospective payment rate for 
     each region,''; and
       (II) by striking ``each of which is'';

       (iii) in clause (i)--

       (I) by inserting ``for fiscal years before fiscal year 
     2002,'' after ``(i)''; and
       (II) by striking ``and'' at the end;

       (iv) in clause (ii)--

       (I) by inserting ``for fiscal years before fiscal year 
     2002,'' after ``(ii)''; and
       (II) by striking the period at the end and inserting ``; 
     and''; and

       (v) by adding at the end the following new clause:
       ``(iii) for a fiscal year beginning after fiscal year 2001, 
     for hospitals located in all areas, to the product of--
       ``(I) the applicable average standardized amount (computed 
     under subparagraph (A)), reduced under subparagraph (B), and 
     adjusted or reduced under subparagraph (C) for the fiscal 
     year; and
       ``(II) the weighting factor (determined under paragraph 
     (4)(B)) for that diagnosis-related group.''.
       (B) Technical conforming sunset.--Section 1886(d)(3) of 
     such Act (42 U.S.C. 1395ww(d)(3)) is amended in the matter 
     preceding subparagraph (A) by inserting ``for fiscal years 
     before fiscal year 1997'' before ``a regional DRG prospective 
     payment rate''.

     SEC. 3. FLOOR ON AREA WAGE ADJUSTMENT FACTORS USED UNDER 
                   MEDICARE PPS FOR INPATIENT AND OUTPATIENT 
                   HOSPITAL SERVICES.

       (a) Inpatient PPS.--Section 1886(d)(3)(E) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(3)(E)) is amended--
       (1) by inserting ``(i) In general.--'' before ``The 
     Secretary'', and adjusting the margin two ems to the right;
       (2) by striking ``The Secretary'' and inserting ``Subject 
     to clause (ii), the Secretary''; and
       (3) by adding at the end the following new clause:
       ``(ii) Floor on area wage adjustment factor.--
     Notwithstanding clause (i), in determining payments under 
     this subsection for discharges occurring on or after October 
     1, 2001, the Secretary shall substitute a factor of .925 for 
     any factor that would otherwise apply under such clause that 
     is less than .925. Nothing in this clause shall be construed 
     as authorizing--
       ``(I) the application of the last sentence of clause (i) to 
     any substitution made pursuant to this clause, or
       ``(II) the application of the preceding sentence of this 
     clause to adjustments for area wage levels made under other 
     payment systems established under this title (other than the 
     payment system under section 1833(t)) to which the factors 
     established under clause (i) apply.''.
       (b) Outpatient PPS.--Section 1833(t)(2) of the Social 
     Security Act (42 U.S.C. 1395l(t)(2)) is amended by adding at 
     the end the following: ``For purposes of subparagraph (D) for 
     items and services furnished on or after October 1, 2001, if 
     the factors established under clause (i) of section 
     1886(d)(3)(E) are used to adjust for relative differences in 
     labor and labor-related costs under the payment system 
     established under this subsection, the provisions of clause 
     (ii) of such section (relating to a floor on area wage 
     adjustment factor) shall apply to such factors, as used in 
     this subsection, in the same manner and to the same extent 
     (including waiving the applicability of the requirement for 
     such floor to be applied in a budget neutral manner) as they 
     apply to factors under section 1886.''.

  Mr. CLELAND. Mr. President. I want to thank my distinguished 
colleague from Arkansas, Senator Tim Hutchinson, for his leadership on 
the Area Wage and Base Payment Improvement Act. I am very pleased to 
join Senator Hutchinson in this bipartisan measure to address Medicare 
inequities in the wage index for rural and community hospitals.
  The severe shortage of nurses and other crucial health care workers 
has driven salaries higher to compete for these employees. The current 
Medicare wage index for rural areas reimburses at a lower rate which is 
based on 1997 data. In an increasingly competitive market for health 
care workers, rural area hospitals are in their ability to provide 
quality care.
  Our proposal establishes a ``floor'' on the area wage index and will 
adjust Medicare inpatient and outpatient prospective payments (PPS) for 
rural and small metropolitan hospitals. By setting a floor on the area 
wage index of 0.925, our proposed correction would bring Medicare 
payments in areas with the lowest wage index up to just below the 
national average which is established at 1.00. The impact of the 0.925 
floor is estimated to help more than 2100 mostly rural, but also some 
urban hospitals across the country.
  This measure also increases the Medicare PPS base, of which a 
significant portion is to cover hospital labor costs. Today's 
competitive labor market has reduced the disparity in wages between 
large urban hospitals and rural and small metropolitan facilities. It 
makes sense that Medicare needs to move to one base payment for the 
inpatient PPS. The key issue here should be access to health care. For 
states like Georgia and Arkansas, with a large number of residents 
living in rural areas, the closing or downsizing of hospital beds 
because of out-of-date Medicare payment rates and insufficient health 
workers to provide safe care is creating a health care catastrophe.
  Our measure is the companion bill to H.R. 1609. We urge our 
colleagues to support this bicameral, bipartisan effort to ensure 
access to rural and smaller metropolitan hospitals for Medicare 
beneficiaries.
                                 ______