[Congressional Record Volume 147, Number 82 (Wednesday, June 13, 2001)]
[Senate]
[Pages S6221-S6226]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CONRAD (for himself, Mr. Thomas, Mr. Daschle, Mr. Roberts, 
        Mr. Johnson, Mr. Jeffords, Mr. Crapo, Mr. Rockefeller, Mr. 
        Harkin, Mr. Dorgan, Mr. Wellstone, Mr. Bond, Mr. Helms, Mr. 
        Cochran, Mr. Edwards, Mr. Hutchinson, Mr. Domenici, Mr. Burns, 
        Mr. Bingaman, and Mrs. Lincoln):
  S. 1030. A bill to improve health care in rural areas by amending 
title XVIII of the Social Security Act and the Public Health Service 
Act, and for other purposes; to the Committee on Finance.
  Mr. CONRAD. Mr. President, today, I am introducing the Rural Health 
Improvement Act of 2001. This proposal is the result of a bipartisan 
and bicameral effort. I am proud to be joined by Senator Thomas the 
lead cosponsor

[[Page S6222]]

of the bill, along with Senators Daschle, Roberts, Johnson, Lincoln, 
Jeffords, Crapo, Rockefeller, Harkin, Dorgan, Wellstone, Bond, Helms, 
Cochran, Edwards, Hutchinson, Domenici, Burns, and Bingaman. I would 
also like to thank our House companions, led by Representatives Moran 
and McIntyre.
  In addition, I would like to thank the National Rural Health 
Association, the Federation of American Hospitals, the National 
Association of Rural Health Clinics, the American Hospital Association, 
and the College of American Pathologists for their support of this 
effort.
  Working together, I believe we are taking important steps toward 
improving access to health care in our rural communities.
  Rural health care providers are often forced to operate with 
significantly fewer resources than larger, urban facilities. In my 
State of North Dakota, rural hospitals often receive only half the 
Medicare reimbursement of their urban counterparts. For example, a 
rural facility in North Dakota receives approximately $4,200 for 
treating pneumonia, while Our Lady of Mercy in New York city receives 
more than $8,500.
  This funding disparity is simply unfair and has placed many rural 
providers on shaky ground. And in my State, if these facilities close, 
rural communities will be left without access to needed health care 
services. We simply cannot allow this to happen.
  According to the Medicare Payment Advisory Commission, MedPAC, 
continued funding shortfalls have resulted in rural providers having 
much tighter Medicare margins than their urban counterparts. Today, the 
average rural hospital operates with a slim 4.1 percent inpatient 
margin, compared to 13.5 percent for urban providers.
  When you look at overall Medicare margins, the situation is even more 
bleak, rural providers are working with an average negative 2.9 percent 
Medicare margin compared to 6.9 percent for urban hospitals. Our rural 
facilities cannot continue to provide high-quality services it they 
lose nearly 3 percent on every Medicare patient they serve.
  To address these problems, the bill I am introducing today would take 
three important steps to erase inequities in the Medicare inpatient 
hospital payment system and provide new resources to rural health care 
providers.
  As you know, it is nearly impossible for hospitals serving small, 
rural areas to take advantage of economies of scale realized by 
facilities located in larger communities. This problem is compounded by 
the fact that Medicare does not adequately account for the higher 
costs of serving low-volume populations. According to MedPAC, the 
result of these factors is that the majority of small facilities 
operate in the red.

  To ensure our smallest rural hospitals can keep their doors open, the 
Rural Health Care Improvement Act would provide a new, and much needed, 
extra payment to hospitals serving fewer than 800 patients per year. 
This new low-volume adjustment payment would provide up to 25 percent 
in additional funding to help rural providers cover inpatient hospital 
services.
  Second, this proposal would close the gap in payments hospitals 
receive for serving low-income patients. Today, hospitals are provided 
special payments to help cover the costs of serving the uninsured; 
these supplements are called disproportionate share payments, DSH. The 
problem is that under current law urban providers can receive unlimited 
DSH payments, while rural providers' add-ons are capped. There is no 
sound policy reason for this disparity. My bill closes this gap by 
allowing rural providers to also receive unlimited DSH payments.
  Third, this proposal would take steps to equalize another glaring 
Medicare disparity with no policy justification that provides larger 
hospitals a base payment amount 1.6 percent higher than rural 
hospitals. The Rural Health Care Improvement Act would address this 
disparity by increasing the rural hospital base payment amount to the 
level urban providers receive.
  I am happy to say that these improvements to Medicare's inpatient 
hospital reimbursement, combined with our rural health care efforts 
from last year, would significantly reduce the rural/urban payment gap 
by increasing rural providers' Medicare margins to approximately 11.8 
percent. In total, these changes would place our rural hospitals on 
much sounder financial footing.
  In addition to Medicare changes, the Rural Health Care Improvement 
Act would also establish three new rural health care programs.
  Our legislation would allow hospitals to apply for up to $5 million 
to help cover the cots of repairing crumbling buildings. It is my hope 
these resources will help strengthen the infrastructure of our nation's 
rural hospitals.
  In addition, our proposal would make $100,000 per facility available 
to help rural hospitals update or purchase new technology. Often, with 
limited budgets, rural hospitals cannot afford to buy quality, up-to-
date medical tools. This new program ensures rural citizens have access 
to modern and safe health care services.
  Third, our bill would provide funding to help establish Telehealth 
Resource Centers. Today, larger telehealth networks often work with 
fledgling networks to provide technical assistance. This grant program 
would provide new resources to support this collaboration and further 
expand telehealth services into the most remote, rural communities.
  Finally, the Rural Health Care Improvement Act also takes important 
steps to strengthen rural health clinics, RHCs. Today, there are more 
than 3,300 RHCs nationwide that provide health care to thousands of 
rural residents. However, while we recognize the importance of these 
clinics, we also know that more than 50 percent of RHCs are being 
significantly underpaid for their services, according to recent data. 
My bill addresses this funding shortfall by increasing rural health 
clinic payments by 25 percent.
  Thank you again to my Senate and House colleagues, as well as the 
organizations who worked with us, for your cooperation in developing 
this important health care proposal. It is my hope that this 
legislation will help to strengthen and sustain our nation's rural 
health care system.
  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:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Rural 
     Health Care Improvement Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                    TITLE I--RURAL MEDICARE REFORMS

Sec. 101. Medicare inpatient payment adjustment for low-volume 
              hospitals.
Sec. 102. Fairness in the medicare disproportionate share hospital 
              (DSH) adjustment for rural hospitals.
Sec. 103. Establishing a single standardized amount under the medicare 
              inpatient hospital PPS.
Sec. 104. Hospital geographic reclassification for labor costs for all 
              items and services reimbursed under medicare prospective 
              payment systems.
Sec. 105. Treatment of certain physician pathology services under 
              medicare.
Sec. 106. One-time opportunity of critical access hospitals to return 
              to the medicare inpatient hospital PPS.

TITLE II--RURAL GRANT AND LOAN PROGRAMS FOR INFRASTRUCTURE, TECHNOLOGY, 
                             AND TELEHEALTH

Sec. 201. Capital infrastructure revolving loan program.
Sec. 202. High technology acquisition grant and loan program.
Sec. 203. Establishment of telehealth resource centers.

              TITLE III--RURAL HEALTH CLINIC IMPROVEMENTS

Sec. 301. Improvement in rural health clinic reimbursement under 
              medicare.
Sec. 302. Exclusion of certain rural health clinic and Federally 
              qualified health center services from the medicare PPS 
              for skilled nursing facilities.

                    TITLE I--RURAL MEDICARE REFORMS

     SEC. 101. MEDICARE INPATIENT PAYMENT ADJUSTMENT FOR LOW-
                   VOLUME HOSPITALS.

       Section 1886(d) of the Social Security Act (42 U.S.C. 
     1395ww(d)) is amended by adding at the end the following new 
     paragraph:
       ``(12) Payment adjustment for low-volume hospitals.--

[[Page S6223]]

       ``(A) Payment adjustment.--
       ``(i) In general.--Notwithstanding any other provision of 
     this section, for each cost reporting period (beginning with 
     the cost reporting period that begins in fiscal year 2002), 
     the Secretary shall provide for an additional payment amount 
     to each low-volume hospital (as defined in clause (iii)) for 
     discharges occurring during that cost reporting period to 
     increase the amount paid to such hospital under this section 
     for such discharges by the applicable percentage increase 
     determined under clause (ii).
       ``(ii) Applicable percentage increase.--The Secretary shall 
     determine a percentage increase applicable under this 
     paragraph that ensures that--
       ``(I) no percentage increase in payments under this 
     paragraph exceeds 25 percent of the amount of payment that 
     would otherwise be made to a low-volume hospital under this 
     section for each discharge (but for this paragraph);
       ``(II) low-volume hospitals that have the lowest number of 
     discharges during a cost reporting period receive the highest 
     percentage increase in payments due to the application of 
     this paragraph; and
       ``(III) the percentage increase in payments due to the 
     application of this paragraph is reduced as the number of 
     discharges per cost reporting period increases.
       ``(iii) Low-volume hospital defined.--For purposes of this 
     paragraph, the term `low-volume hospital' means, for a cost 
     reporting period, a subsection (d) hospital (as defined in 
     paragraph (1)(B)) other than a critical access hospital (as 
     defined in section 1861(mm)(1)) that--
       ``(I) the Secretary determines--

       ``(aa) had an average of less than 800 discharges during 
     the 3 most recent cost reporting periods for which data are 
     available that precede the cost reporting period to which 
     this paragraph applies; and
       ``(bb) is located at least 15 miles from a similar 
     hospital; or

       ``(II) the Secretary deems meets the requirements of 
     subclause (I) by reason of such factors as the Secretary 
     determines appropriate, including the time required for an 
     individual to travel to the nearest alternative source of 
     appropriate inpatient care (taking into account the location 
     of such alternative source of inpatient care and any weather 
     or travel conditions that may affect such travel time).
       ``(B) Prohibiting certain reductions.--Notwithstanding 
     subsection (e), the Secretary shall not reduce the payment 
     amounts under this section to offset the increase in payments 
     resulting from the application of subparagraph (A).''.

     SEC. 102. FAIRNESS IN THE MEDICARE DISPROPORTIONATE SHARE 
                   HOSPITAL (DSH) ADJUSTMENT FOR RURAL HOSPITALS.

       (a) Equalizing DSH Payment Amounts.--
       (1) In general.--Section 1886(d)(5)(F)(vii) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(5)(F)(vii)) is amended by 
     inserting ``, and, after October 1, 2001, for any other 
     hospital described in clause (iv),'' after ``clause 
     (iv)(I)''.
       (2) Conforming amendments.--Section 1886(d)(5)(F) of such 
     Act (42 U.S.C. 1395ww(d)(5)(F)), as amended by section 211 of 
     the Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-483), as enacted into 
     law by section 1(a)(6) of Public Law 106-554, is amended--
       (A) in clause (iv)--
       (i) in subclause (II), by inserting ``or, for discharges 
     occurring on or after October 1, 2001, is equal to the 
     percent determined in accordance with the applicable formula 
     described in clause (vii)'' after ``clause (xiii)'';
       (ii) in subclause (III), by inserting ``or, for discharges 
     occurring on or after October 1, 2001, is equal to the 
     percent determined in accordance with the applicable formula 
     described in clause (vii)'' after ``clause (xii)'';
       (iii) in subclause (IV), by inserting ``or, for discharges 
     occurring on or after October 1, 2001, is equal to the 
     percent determined in accordance with the applicable formula 
     described in clause (vii)'' after ``clause (x) or (xi)'';
       (iv) in subclause (V), by inserting ``or, for discharges 
     occurring on or after October 1, 2001, is equal to the 
     percent determined in accordance with the applicable formula 
     described in clause (vii)'' after ``clause (xi)''; and
       (v) in subclause (VI), by inserting ``or, for discharges 
     occurring on or after October 1, 2001, is equal to the 
     percent determined in accordance with the applicable formula 
     described in clause (vii)'' after ``clause (x)'';
       (B) in clause (viii), by striking ``The formula'' and 
     inserting ``For discharges occurring before October 1, 2001, 
     the formula''; and
       (C) in each of clauses (x), (xi), (xii), and (xiii), by 
     striking ``For purposes'' and inserting ``With respect to 
     discharges occurring before October 1, 2001, for purposes''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to discharges occurring on or after 
     October 1, 2001.

     SEC. 103. ESTABLISHING A SINGLE STANDARDIZED AMOUNT UNDER THE 
                   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) in the matter preceding subclause (I), by inserting 
     ``for fiscal years before fiscal year 2002,'' before ``for 
     hospitals''; and
       (II) in subclause (II), by striking ``and'' after the 
     semicolon at the end;

       (iv) in clause (ii)--

       (I) in the matter preceding subclause (I), by inserting 
     ``for fiscal years before fiscal year 2002,'' before ``for 
     hospitals''; and
       (II) in subclause (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 adjusted DRG 
     prospective payment rate''.

     SEC. 104. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR LABOR 
                   COSTS FOR ALL ITEMS AND SERVICES REIMBURSED 
                   UNDER MEDICARE PROSPECTIVE PAYMENT SYSTEMS.

       Section 1886(d)(10)(D) of the Social Security Act (42 
     U.S.C. 1395ww(d)(10)(D)), as amended by section 304(a) of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-494), as enacted into 
     law by section 1(a)(6) of Public Law 106-554, is amended by 
     adding at the end the following new clause:
       ``(vii)(I) Any decision of the Board to reclassify a 
     subsection (d) hospital for purposes of the adjustment factor 
     described in subparagraph (C)(i)(II) for fiscal year 2001 or 
     any fiscal year thereafter shall apply for purposes of 
     adjusting payments for variations in costs that are 
     attributable to wages and wage-related costs for PPS-
     reimbursed items and services.
       ``(II) For purposes of subclause (I), the term `PPS-
     reimbursed items and services' means, for the fiscal year for 
     which the Board has made a decision described in such 
     subclause, each item and service for which payment is made 
     under this title on a prospective basis and adjusted for 
     variations in costs that are attributable to wages or wage-
     related costs that is furnished by the hospital to which such 
     decision applies, or by a provider-based entity or department 
     of that hospital (as determined by the Secretary).''.

     SEC. 105. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES 
                   UNDER MEDICARE.

       (a) In General.--Section 1848(i) of the Social Security Act 
     (42 U.S.C. 1395w-4(i)) is amended by adding at the end the 
     following new paragraph:
       ``(4) Treatment of certain physician pathology services.--
       ``(A) In general.--With respect to services furnished on or 
     after January 1, 2001, if an independent laboratory furnishes 
     the technical component of a physician pathology service to a 
     fee-for-service medicare beneficiary who is an inpatient or 
     outpatient of a covered hospital, the Secretary shall treat 
     such component as a service for which payment shall be made 
     to the laboratory under this section and not as an inpatient 
     hospital service for which payment is made to the hospital 
     under section 1886(d) or as a hospital outpatient service for 
     which payment is made to the hospital under section 1834(t).
       ``(B) Definitions.--In this paragraph:
       ``(i) Covered hospital.--

       ``(I) In general.--The term `covered hospital' means, with 
     respect to an inpatient or outpatient, a hospital that had an 
     arrangement with an independent laboratory that

[[Page S6224]]

     was in effect as of July 22, 1999, under which a laboratory 
     furnished the technical component of physician pathology 
     services to fee-for-service medicare beneficiaries who were 
     hospital inpatients or outpatients, respectively, and 
     submitted claims for payment for such component to a carrier 
     with a contract under section 1842 and not to the hospital.
       ``(II) Change in ownership does not affect determination.--
     A change in ownership with respect to a hospital on or after 
     the date referred to in subclause (I) shall not affect the 
     determination of whether such hospital is a covered hospital 
     for purposes of such subclause.

       ``(ii) Fee-for-service medicare beneficiary.--The term 
     `fee-for-service medicare beneficiary' means an individual 
     who is entitled to benefits under part A, or enrolled under 
     this part, or both, but who is not enrolled in any of the 
     following:

       ``(I) A Medicare+Choice plan under part C.
       ``(II) A plan offered by an eligible organization under 
     section 1876.
       ``(III) A program of all-inclusive care for the elderly 
     (PACE) under section 1894.
       ``(IV) A social health maintenance organization (SHMO) 
     demonstration project established under section 4018(b) of 
     the Omnibus Budget Reconciliation Act of 1987 (Public Law 
     100-203).''.

       (b) Conforming Amendment.--Section 542 of the Medicare, 
     Medicaid, and SCHIP Benefits Improvement and Protection Act 
     of 2000 (114 Stat. 2763A-550), as enacted into law by section 
     1(a)(6) of Public Law 106-554, is repealed.
       (c) Effective Dates.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-463 et seq.), as 
     enacted into law by section 1(a)(6) of Public Law 106-554.

     SEC. 106. ONE-TIME OPPORTUNITY OF CRITICAL ACCESS HOSPITALS 
                   TO RETURN TO THE MEDICARE INPATIENT HOSPITAL 
                   PPS.

       (a) In General.--Notwithstanding section 1814(l) of the 
     Social Security Act (42 U.S.C. 1395f(l)), the Secretary of 
     Health and Human Services (in this section referred to as the 
     ``Secretary'') shall pay each critical access hospital having 
     an application approved under subsection (b)(2) under the 
     prospective payment system for inpatient hospital services 
     under section 1886(d) of such Act (42 U.S.C. 1395ww(d)) 
     rather than under such section 1814(l).
       (b) One-Time Application and Approval.--
       (1) Application.--Not later than the date that is 6 months 
     after the date of enactment of this Act, each eligible 
     critical access hospital (as defined in subsection (c)) that 
     desires to receive payment under the prospective payment 
     system for inpatient hospital services under section 1886(d) 
     of the Social Security Act (42 U.S.C. 1395ww(d)) instead of 
     receiving payment of the reasonable costs for such services 
     under section 1814(l) of such Act (42 U.S.C. 1395f(l)) shall 
     submit an application to the Secretary in such manner and 
     containing such information as the Secretary may require.
       (2) Approval.--Not later than the date that is 3 months 
     after the date on which the Secretary receives the 
     application submitted under paragraph (1), the Secretary 
     shall approve or deny the application.
       (c) Eligible Critical Access Hospital Defined.--In this 
     section, the term ``eligible critical access hospital'' means 
     a critical access hospital (as defined in section 1861(mm)(1) 
     of the Social Security Act (42 U.S.C. 1395x(mm)(1))) that 
     received payments under the prospective payment system for 
     inpatient hospital services under section 1886(d) of such Act 
     (42 U.S.C. 1395ww(d)) prior to its designation as a critical 
     access hospital under section 1820(c)(2) of such Act (42 
     U.S.C. 1395i-4(c)(2)).

TITLE II--RURAL GRANT AND LOAN PROGRAMS FOR INFRASTRUCTURE, TECHNOLOGY, 
                             AND TELEHEALTH

     SEC. 201. CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM.

       (a) In General.--Part A of title XVI of the Public Health 
     Service Act (42 U.S.C. 300q et seq.) is amended by adding at 
     the end the following new section:

            ``capital infrastructure revolving loan program

       ``Sec. 1603. (a) Authority To Make and Guarantee Loans.--
       ``(1) Authority to make loans.--The Secretary may make 
     loans from the fund established under section 1602(d) to any 
     rural entity for projects for capital improvements, 
     including--
       ``(A) the acquisition of land necessary for the capital 
     improvements;
       ``(B) the renovation or modernization of any building;
       ``(C) the acquisition or repair of fixed or major movable 
     equipment; and
       ``(D) such other project expenses as the Secretary 
     determines appropriate.
       ``(2) Authority to guarantee loans.--
       ``(A) In general.--The Secretary may guarantee the payment 
     of principal and interest for loans made to rural entities 
     for projects for any capital improvement described in 
     paragraph (1) to any non-Federal lender.
       ``(B) Interest subsidies.--In the case of a guarantee of 
     any loan made to a rural entity under subparagraph (A), the 
     Secretary may pay to the holder of such loan and for and on 
     behalf of the project for which the loan was made, amounts 
     sufficient to reduce by not more than 3 percent of the net 
     effective interest rate otherwise payable on such loan.
       ``(b) Amount of Loan.--The principal amount of a loan 
     directly made or guaranteed under subsection (a) for a 
     project for capital improvement may not exceed $5,000,000.
       ``(c) Funding Limitations.--
       ``(1) Government credit subsidy exposure.--The total of the 
     Government credit subsidy exposure under the Credit Reform 
     Act of 1990 scoring protocol with respect to the loans 
     outstanding at any time with respect to which guarantees have 
     been issued, or which have been directly made, under 
     subsection (a) may not exceed $50,000,000 per year.
       ``(2) Total amounts.--Subject to paragraph (1), the total 
     of the principal amount of all loans directly made or 
     guaranteed under subsection (a) may not exceed $250,000,000 
     per year.
       ``(d) Capital Assessment and Planning Grants.--
       ``(1) Nonrepayable grants.--Subject to paragraph (2), the 
     Secretary may make a grant to a rural entity, in an amount 
     not to exceed $50,000, for purposes of capital assessment and 
     business planning.
       ``(2) Limitation.--The cumulative total of grants awarded 
     under this subsection may not exceed $2,500,000 per year.
       ``(e) Termination of Authority.--The Secretary may not 
     directly make or guarantee any loan under subsection (a) or 
     make a grant under subsection (d) after September 30, 
     2006.''.
       (b) Rural Entity Defined.--Section 1624 of the Public 
     Health Service Act (42 U.S.C. 300s-3) is amended by adding at 
     the end the following new paragraph:
       ``(15)(A) The term `rural entity' includes--
       ``(i) a rural health clinic, as defined in section 
     1861(aa)(2) of the Social Security Act;
       ``(ii) any medical facility with at least 1, but less than 
     50 beds that is located in--
       ``(I) a county that is not part of a metropolitan 
     statistical area; or
       ``(II) a rural census tract of a metropolitan statistical 
     area (as determined under the most recent modification of the 
     Goldsmith Modification, originally published in the Federal 
     Register on February 27, 1992 (57 Fed. Reg. 6725));
       ``(iii) a hospital that is classified as a rural, regional, 
     or national referral center under section 1886(d)(5)(C) of 
     the Social Security Act; and
       ``(iv) a hospital that is a sole community hospital (as 
     defined in section 1886(d)(5)(D)(iii) of the Social Security 
     Act).
       ``(B) For purposes of subparagraph (A), the fact that a 
     clinic, facility, or hospital has been geographically 
     reclassified under the medicare program under title XVIII of 
     the Social Security Act shall not preclude a hospital from 
     being considered a rural entity under clause (i) or (ii) of 
     subparagraph (A).''.
       (c) Conforming Amendments.--Section 1602 of the Public 
     Health Service Act (42 U.S.C. 300q-2) is amended--
       (1) in subsection (b)(2)(D), by inserting ``or 
     1603(a)(2)(B)'' after ``1601(a)(2)(B)''; and
       (2) in subsection (d)--
       (A) in paragraph (1)(C), by striking ``section 
     1601(a)(2)(B)'' and inserting ``sections 1601(a)(2)(B) and 
     1603(a)(2)(B)''; and
       (B) in paragraph (2)(A), by inserting ``or 1603(a)(2)(B)'' 
     after ``1601(a)(2)(B)''.

     SEC. 202. HIGH TECHNOLOGY ACQUISITION GRANT AND LOAN PROGRAM.

       Subpart I of part D of title III of the Public Health 
     Service Act (42 U.S.C. 241 et seq.), as amended by section 
     1501 of the Children's Health Act of 2000 (Public Law 106-
     310; 114 Stat. 1146), is amended by adding at the end the 
     following section:

     ``SEC. 330I. HIGH TECHNOLOGY ACQUISITION GRANT AND LOAN 
                   PROGRAM.

       ``(a) Establishment of Program.--The Secretary, acting 
     through the Director of the Office of Rural Health Policy of 
     the Health Resources and Services Administration, shall 
     establish a high technology acquisition grant and loan 
     program for the purpose of--
       ``(1) improving the quality of health care in rural areas 
     through the acquisition of advanced medical technology;
       ``(2) fostering the development of the networks described 
     in section 330A;
       ``(3) promoting resource sharing between urban and rural 
     facilities; and
       ``(4) improving patient safety and outcomes through the 
     acquisition of high technology, including software, 
     information services, and staff training.
       ``(b) Grants and Loans.--Under the program established 
     under subsection (a), the Secretary, acting through the 
     Director of the Office of Rural Health Policy, may award 
     grants and make loans to any eligible entity (as defined in 
     subsection (d)(1)) for any costs incurred by the eligible 
     entity in acquiring eligible equipment and services (as 
     defined in subsection (d)(2)).
       ``(c) Limitations.--
       ``(1) In general.--Subject to paragraph (2), the total 
     amount of grants and loans made under this section to an 
     eligible entity may not exceed $100,000.
       ``(2) Federal sharing.--
       ``(A) Grants.--The amount of any grant awarded under this 
     section may not exceed 70 percent of the costs to the 
     eligible entity in acquiring eligible equipment and services.
       ``(B) Loans.--The amount of any loan made under this 
     section may not exceed 90 percent of the costs to the 
     eligible entity in acquiring eligible equipment and services.
       ``(d) Definitions.--In this section:

[[Page S6225]]

       ``(1) Eligible entity.--The term `eligible entity' means a 
     hospital, health center, or any other entity that the 
     Secretary determines is appropriate that is located in a 
     rural area or region.
       ``(2) Eligible equipment and services.--The term `eligible 
     equipment and services' includes--
       ``(A) unit dose distribution systems;
       ``(B) software, information services, and staff training;
       ``(C) wireless devices to transmit medical orders;
       ``(D) clinical health care informatics systems, including 
     bar code systems designed to avoid medication errors and 
     patient tracking systems;
       ``(E) telemedicine technology; and
       ``(F) any other technology that improves the quality of 
     health care provided in rural areas including systems to 
     improve privacy and address administrative simplification 
     needs.
       ``(e) Authorization of Appropriations.--For the purpose of 
     carrying out this section there are authorized to be 
     appropriated such sums as may be necessary for each of the 
     fiscal years 2002 through 2007.''.

     SEC. 203. ESTABLISHMENT OF TELEHEALTH RESOURCE CENTERS.

       Subpart I of part D of title III of the Public Health 
     Service Act (42 U.S.C. 254b et seq.), as amended by section 
     202, is amended by adding at the end the following:

     ``SEC. 330J. TELEHEALTH RESOURCE CENTERS.

       ``(a) Program Authorized.--The Secretary, acting through 
     the Director of the Office for the Advancement of Telehealth 
     of the Health Resources and Services Administration, shall 
     award grants to eligible entities to establish telehealth 
     resource centers in accordance with this section.
       ``(b) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means a 
     public or nonprofit private entity.
       ``(2) Telehealth.--The term `telehealth' means the use of 
     electronic information and telecommunications technologies to 
     support long-distance clinical health care, patient and 
     professional health-related education, public health, and 
     health administration.
       ``(c) Amount.--Each entity that receives a grant under 
     subsection (a) shall receive an amount not to exceed 
     $1,500,000.
       ``(d) Equitable Distribution.--In awarding grants under 
     subsection (a), the Secretary shall ensure, to the greatest 
     extent possible, that such grants are equitably distributed 
     among the geographical regions of the United States.
       ``(e) Preference.--In awarding grants under subsection (a), 
     the Secretary shall give preference to eligible entities that 
     have a demonstrated record of providing or supporting the 
     provision of health care services for populations in rural 
     areas.
       ``(f) Use of Funds.--An entity that receives a grant under 
     subsection (a) shall use funds from such grant to establish a 
     telehealth resource center that shall--
       ``(1) provide technical assistance, training, and support 
     to health care providers and a range of health care entities 
     that provide or will provide telehealth services for a 
     medically underserved community, including hospitals, 
     ambulatory care entities, long-term care facilities, public 
     health clinics, and schools;
       ``(2) provide for the dissemination of information and 
     research findings related to the use of telehealth 
     technologies;
       ``(3) provide for the dissemination of information 
     regarding the latest developments in health care;
       ``(4) conduct evaluations to determine the best application 
     of telehealth technologies to meet the health care needs of 
     the medically underserved community;
       ``(5) promote the integration of clinical information 
     systems with other telehealth technologies;
       ``(6) foster the use of telehealth technologies to provide 
     health care information and education for health care 
     professionals and consumers in a more effective manner; and
       ``(7) provide timely and appropriate evaluations to the 
     Office for the Advancement of Telehealth on lessons learned 
     and best telehealth practices in any areas served.
       ``(g) Collaboration.--In providing the services described 
     in subsection (f)(5), such entity shall collaborate, if 
     feasible, with private and public organizations and centers 
     or programs that receive Federal assistance and provide 
     telehealth services.
       ``(h) Application.--An entity that desires a grant under 
     subsection (a) shall submit an application to the Secretary 
     at such time, in such manner, and containing such information 
     as the Secretary may require, including--
       ``(1) a description of the manner in which the entity shall 
     establish and administer a telehealth resource center to meet 
     the requirements of this subsection; and
       ``(2) a description of the manner in which the activities 
     carried out by such center will meet the health care needs of 
     individuals in rural communities.
       ``(i) Report.--Not later than 5 years after the date of 
     enactment of this section, the Secretary shall submit to the 
     appropriate committees of Congress a report on each activity 
     funded with a grant under this section.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section--
       ``(1) for fiscal year 2002, $30,000,000; and
       ``(2) for fiscal years 2003 through 2008, such sums as may 
     be necessary.''.

              TITLE III--RURAL HEALTH CLINIC IMPROVEMENTS

     SEC. 301. IMPROVEMENT IN RURAL HEALTH CLINIC REIMBURSEMENT 
                   UNDER MEDICARE.

       Section 1833(f) of the Social Security Act (42 U.S.C. 
     1395l(f)) is amended--
       (1) in paragraph (1), by striking ``, and'' at the end and 
     inserting a semicolon;
       (2) in paragraph (2)--
       (A) by striking ``in a subsequent year'' and inserting ``in 
     1989 through 2001''; and
       (B) by striking the period at the end and inserting a 
     semicolon; and
       (3) by adding at the end the following new paragraphs:
       ``(3) in 2002, at $79 per visit; and
       ``(4) in a subsequent year, at the limit established under 
     this subsection for the previous year increased by the 
     percentage increase in the MEI (as so defined) applicable to 
     primary care services (as so defined) furnished as of the 
     first day of that year.''.

     SEC. 302. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND 
                   FEDERALLY QUALIFIED HEALTH CENTER SERVICES FROM 
                   THE MEDICARE PPS FOR SKILLED NURSING 
                   FACILITIES.

       (a) In General.--Section 1888(e) of the Social Security Act 
     (42 U.S.C. 1395yy(e)) is amended--
       (1) in paragraph (2)(A)(i)(II), by striking ``clauses (ii) 
     and (iii)'' and inserting ``clauses (ii), (iii), and (iv)''; 
     and
       (2) by adding at the end of paragraph (2)(A) the following 
     new clause:
       ``(iv) Exclusion of certain rural health clinic and 
     federally qualified health center services.--Services 
     described in this clause are--

       ``(I) rural health clinic services (as defined in paragraph 
     (1) of section 1861(aa)); and
       ``(II) Federally qualified health center services (as 
     defined in paragraph (3) of such section);

     that would be described in clause (ii) if such services were 
     not furnished by an individual affiliated with a rural health 
     clinic or a Federally qualified health center.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to services furnished on or after January 1, 
     2002.

  Mr. THOMAS. Mr. President, I am pleased to rise today to introduce 
the Rural Health Care Improvement Act of 2001 with Senator Conrad and 
fellow Senate Rural Health Caucus members Senators Roberts, Johnson, 
Helms, Dorgan, Domenici, Daschle, Crapo, Bingaman, Bond, Lincoln, 
Cochran, Wellstone, Burns, Rockefeller, Hutchinson, Edwards, Harkin, 
and Jeffords. As always, it is important to note that rural health care 
legislation has a long history of bipartisan collaboration and 
cooperation.
  I want to thank the National Rural Health Association, the Federation 
of American Hospitals, the National Association of Rural Health 
Clinics, the American Hospital Association and the College of American 
Pathologists for their work and support in this effort.
  The Rural Health Care Improvement Act of 2001 will go a long way in 
addressing current inequities in the Medicare payment system that 
continually place rural providers at a disadvantage. This legislation 
recognizes the unique needs of rural hospitals and levels the playing 
field between rural and urban providers.
  First, the bill equalizes Medicare Disproportionate Share Hospital, 
DSH, payments. These add-on payments help hospitals cover the costs of 
serving a high proportion of low-income and uninsured patients. While 
urban facilities can receive unlimited add-ons corresponding with the 
amount of these types of patients served, rural add-on payments are 
capped at 5.25 percent. The ``Rural Health Care Improvement Act of 
2001'' eliminates the rural hospital cap, bringing their payments in 
line with the benefits urban facilities receive.
  Second, this legislation closes the gap between urban and rural 
``standardized payment'' levels. Inpatient hospital payments are 
calculated by multiplying several different factors, including a 
standardized payment amount. Under current law, hospitals located in 
cities with a population over 1 million receive a base payment amount 
1.3 percent higher than those serving smaller populations, $4,130 vs. 
$4,197. This disparity is corrected in our bill by bringing the rural 
base payment up to the urban payment level.
  Third, the bill recognizes that low-volume hospitals have a higher 
cost per case, which results in negative operating margins. To address 
this problem, the Rural Health Care Improvement Act of 2001 establishes 
a low-volume inpatient payment adjustment for hospitals that have less 
than 800 annual discharges per year and are located more than 15 miles 
from another

[[Page S6226]]

hospital. This provision will improve payments for approximately 900 
rural facilities nationwide, which is just over one-third of all rural 
hospitals.
  In addition to these Medicare payment reforms, this legislation 
strengthens the over 3,000 rural health clinics that serve many rural 
Americans. Under current law, rural health clinics receive an all-
inclusive payment rate that is capped at approximately $63. This 
payment has not been adjusted, except for inflation, since 1988. To 
recognize the rising costs of health care this bill raises the rural 
health clinic cap to $79.
  Certain provider services, such as those offered by physicians, nurse 
practitioners, physician assistants, and qualified psychologists are 
excluded from the consolidated payments made to skilled nursing 
facilities, SNFs, under the prospective payment system. However, the 
same services provided to SNFs by physicians and other providers 
employed by rural health clinics and federally qualified health centers 
are not excluded from the consolidated SNF payment. This bill includes 
a provision that ensures skilled nursing services, offered by rural 
health clinic and qualified health center providers, will receive the 
same payment treatment as services offered by providers employed in 
other settings.
  It is time for the Federal Government to recognize that the ``one 
payment system does not fit all.'' Rural providers care for patients 
under different circumstances than their urban counterparts and the 
Rural Health Care Improvement Act of 2001 ensures that rural hospitals, 
rural health clinics and qualified health centers are paid accurately 
and fairly. I strongly encourage all my colleagues with an interest in 
rural health to cosponsor this legislation.
  Mr. BURNS. Mr. President, I rise today to detail my support of the 
Rural Health Care Improvement Act of 2001, which was introduced today 
by Senator Conrad and is cosponsored by myself and a number of my 
colleagues from rural States across this Nation.
  The Rural Health Care Improvement Act of 2001 will increase payments 
for low-volume hospitals, equalize Medicare Disproportionate Share, 
DSH, payments, close the gap between urban and rural ``standardized 
payment'' levels, streamline wage index re-classification, ensure rural 
communities access to independent lab services, provide grant and loan 
programs for infrastructure and technology improvement projects, and 
strengthen rural health clinics.
  Those of us from rural and frontier areas recognize that rural health 
care is in a state of crisis. Through mismanagement of Medicare 
reimbursement policies and an unwillingness to truly evaluate the 
obstacles inherent in providing quality health care in rural areas, we 
have allowed rural health care to reach the brink of complete 
breakdown. The Rural Health Care Improvement Act of 2001 will go a long 
way towards rectifying this dire situation.
  The investments through the Rural Health Care Improvement Act of 2001 
will address the kernel problem of health care in America. Next week 
the Senate will engage in a healthy debate about patients' rights 
legislation and it is likely that Congress will tackle Medicare reform 
within the near future as well. These arguments will be academic for 
many of my constituents if rural hospitals, clinics, and other 
providers across my State can no longer afford to serve their 
communities.
  By passing the Rural Health Care Improvement Act of 2001, we can 
defuse the time bomb which is rural America's health care crisis. I 
urge each of my colleagues to consider this legislation carefully and 
hope for its prompt passage.
                                 ______