[Congressional Record Volume 148, Number 77 (Wednesday, June 12, 2002)]
[Senate]
[Pages S5457-S5460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself and Mr. Wellstone):
  S. 2615. A bill to amend title XVII of the Social Security Act to 
provide for improvements in access to services in rural hospitals and 
critical access hospitals; to the Committee on Finance.

[[Page S5458]]

  Mr. MURKOWSKI. Mr. President, today I am introducing legislation that 
is designed to strengthen and improve the health care delivered to 
rural Medicare beneficiaries. The ``Rural Community Hospital Assistance 
Act of 2002'' ensures that our Nation's seniors will be able to receive 
the same quality of inpatient care throughout the country, regardless 
of whether they live in New York City or Petersburg, AK.
  The best insurance in the world is worthless if there is not a 
provider or facility nearby to deliver quality health care. Right now, 
in communities across the country, many Medicare beneficiaries are 
underserved because they have no access to care. This is wrong and 
intolerable. I remain committed to ensuring that all Americans, and 
especially those in currently underserved rural communities, received 
the care they deserve.
  Unfortunately, a number of the problems facing rural health care 
arise from the actions and construct of the federal Medicare system. 
Its historical one-size-fits-all approach to health care delivery and 
reimbursement has led to small community facilities that lack the 
ability to make payroll, expand services, add new technologies, and 
guarantee comparable care to more urban providers.
  In recent years, Congress has moved to even the playing field between 
urban and rural medicine. New classifications, such as Critical Access 
Hospitals, have allowed these truly safety-net facilities to remain in 
operation and serve their community. But more work must be done.
  In 1994, a new payment system for hospital inpatient services was 
created to bring efficiency and cost savings into the Medicare program. 
The new prospective payment system paid hospitals a fixed amount before 
services were provided, and severed the historical link between 
reimbursement and reasonable costs. In 2000, hospital outpatient 
services were added to this payment system.
  But what has this system meant for the small rural hospital that has 
only a handful of beds and cares for a small number of patients? Quite 
simply, lower volumes hurt the ability of rural hospitals to handle a 
prospective payment system. They have limited financial reserves, lack 
available funds to make capital improvements and, especially in the 
case of Alaska, have difficulty dealing with volume fluctuations that 
are often times tied to seasonal travel.
  The ``Rural Community Hospital Assistance Act'' seeks to remedy this 
problem and a few others that are facing rural America. This 
legislation would proved enhanced cost-based reimbursement for critical 
access hospitals. Cost-based reimbursement for inpatient and outpatient 
services would include a ``return on equity'' to assist the small 
facilities in addressing technology and infrastructure needs. It would 
also provide an option for rural hospitals with less than 50 inpatient 
beds to receive enhanced cost-based reimbursement for inpatient, 
outpatient, and select post-acute care services.
  Hospitals are resorting to Critical Access status for financial 
reasons. Rural hospitals are facing a financial crisis. In fact, rural 
facilities have a Medicare inpatient margin that is almost 10 
percentage points lower than urban hospitals. And with these financial 
constraints, they have often been forced to pass on facility upgrades 
and acquiring new technologies. Who suffers? The seniors who can't 
receive the same state-of-the-art care simply because they aren't 
fortunate to live in a urban zip code.
  This legislation is vital to the state of Alaska. Hospitals such as 
Petersburg Medical Center, Sitka Community, Valdez Community, Seward 
Medical Center, and Wrangell Medical Center will be able to modernize 
and expand services to their growing elderly population. Access and 
quality will increase. Seniors will reap the benefits.
  I would like to remind my colleagues that many Alaskan hospitals are 
not on a road system. They are true safety-net facilities. If they are 
not there, a need will go unmet.
  We must work together to strengthen Medicare. I encourage my 
colleagues to reflect upon the burdens placed upon rural hospitals and 
to consider this worthy bill. It is an incremental step towards 
leveling the playing field between rural and urban medicine. I urge my 
colleagues to act swiftly upon this bill.
  I ask unanimous consent that the text of the ``Rural Community 
Hospital Assistance Act of 2002'' be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2615

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT.

       (a) Short Title.--This Act may be cited as the ``Rural 
     Community Hospital Assistance Act of 2002''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this Act an amendment is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     a reference to that section or other provision of the Social 
     Security Act.

     SEC. 2. ESTABLISHMENT OF RURAL COMMUNITY HOSPITAL (RCH) 
                   PROGRAM.

       (a) In General.--Section 1861 (42 U.S.C. 1395x) is amended 
     by adding at the end of the following new subsection:

     ``Rural Community Hospital; Rural Community Hospital Services

       ``(ww)(1) The term `rural community hospital' means a 
     hospital (as defined in subsection (e)) that--
       ``(A) is located in a rural area (as defined in section 
     1886(d)(2)(D)) or treated as being so located pursuant to 
     section 1886(d)(8)(E);
       ``(B) subject to subparagraph (B), has less than 51 acute 
     care inpatient beds, as reported in its most recent cost 
     report;
       ``(C) makes available 24-hour emergency care services;
       ``(D) subject to subparagraph (C), has a provider agreement 
     in effect with the Secretary and is open to the public as of 
     January 1, 2002; and
       ``(E) applies to the Secretary for such designation.
       ``(2) For purposes of paragraph (1)(B), beds in a 
     psychiatric or rehabilitation unit of the hospital which is a 
     distinct part of the hospital shall not be counted.
       ``(3) Subparagraph (1)(C) shall not be construed to 
     prohibit any of the following from qualifying as a rural 
     community hospital:
       ``(A) A replacement facility (as defined by the Secretary 
     in regulations in effect on January 1, 2002) with the same 
     service area (as defined by the Secretary in regulations in 
     effect on such date).
       ``(B) A facility obtaining a new provider number pursuant 
     to a change of ownership.
       ``(C) A facility which has a binding written agreement with 
     an outside, unrelated party for the construction, 
     reconstruction, lease, rental, or financing of a building as 
     of January 1, 2002.
       ``(4) Nothing in this subsection shall be construed as 
     prohibiting a critical access hospital from qualifying as a 
     rural community hospital if the critical access hospital 
     meets the conditions otherwise applicable to hospitals under 
     subsection (e) and section 1866.''.
       (b) Payment.--
       (1) Inpatient services.--Section 1814 (42 U.S.C. 1395f) is 
     amended by adding at the end the following new subsection:

``Payment for Inpatient Services Furnished in Rural Community Hospitals

       ``(m) The amount of payment under this part for inpatient 
     hospital services furnished in a rural community hospital, 
     other than such services furnished in a psychiatric or 
     rehabilitation unit of the hospital which is a distinct part, 
     is, at the election of the hospital in the application 
     referred to in section 1861(ww)(1)(D)--
       ``(1) the reasonable costs of providing such services, 
     without regard to the amount of the customary or other 
     charge, or
       ``(2) the amount of payment provided for under the 
     prospective payment system for inpatient hospital services 
     under section 1886(d).''.
       (2) Outpatient services.--Section 1834 (42 U.S.C. 1395m) is 
     amended by adding at the end the following new subsection:
       ``(n) Payment for Outpatient Services Furnished in Rural 
     Community Hospitals.--The amount of payment under this part 
     for outpatient services furnished in a rural community 
     hospital is, at the election of the hospital in the 
     application referred to in section 1861(ww)(1)(D)--
       ``(1) the reasonable costs of providing such services, 
     without regard to the amount of the customary or other charge 
     and any limitation under section 1861(v)(1)(U), or
       ``(2) the amount of payment provided for under the 
     prospective payment system for covered OPD services under 
     section 1833(t).''.
       (3) Home health services.--
       (A) Exclusion from home health pps.--
       (i) In general.--Section 1895 (42 U.S.C. 1395fff) is 
     amended by adding at the end the following:
       ``(f) Exclusion.--
       ``(1) In general.--In determining payments under this title 
     for home health services furnished on or after October 1, 
     2002, by a qualified RCH-based home health agency (as defined 
     in paragraph (2))--
       ``(A) the agency may make a one-time election to waive 
     application of the prospective payment system established 
     under this section to such services furnished by the agency 
     shall not apply; and

[[Page S5459]]

       ``(B) in the case of such an election, payment shall be 
     made on the basis of the reasonable costs incurred in 
     furnishing such services as determined under section 1861(v), 
     but without regard to the amount of the customary or other 
     charges with respect to such services or the limitations 
     established under paragraph (1)(L) of such section.
       ``(2) Qualified rch-based home health agency defined.--For 
     purposes of paragraph (1), a `qualified RCH-based home health 
     agency' is a home health agency that is a provider-based 
     entity (as defined in section 404 of the Medicare, Medicaid, 
     and SCHIP Benefits Improvement and Protection Act of 2000 
     (Public Law 106-554; Appendix F, 114 Stat. 2763A-506) of a 
     rural community hospital that is located--
       ``(A) in a county in which no main or branch office of 
     another home health agency is located; or
       ``(B) at least 35 miles from any main or branch office of 
     another home health agency.''.
       (ii) Conforming changes.--

       (I) Payments under part a.--Section 1814(b) (42 U.S.C. 
     1395f(b)) is amended by inserting ``or with respect to 
     services to which section 1895(f) applies'' after 
     ``equipment'' in the matter preceding paragraph (1).
       (II) Payments under part b.--Section 1833(a)(2)(A) (42 
     U.S.C. 1395l(a)(2)(A)) is amended by striking ``the 
     prospective payment system under''.
       (III) Per visit limits.--Section 1861(v)(1)(L)(i) (42 
     U.S.C. 1395x(v)(1)(L)(i)) is amended by inserting ``(other 
     than by a qualified RCH-based home health agency (as defined 
     in section 1895(f)(2))'' after ``with respect to services 
     furnished by home health agencies''.

       (iii) Consolidated billing.--

       (I) Recipient of payment.--Section 1842(b)(6)(F) (42 U.S.C. 
     1395u(b)(6)(F)) is amended by inserting ``and excluding home 
     health services to which section to which section 1895(f) 
     applies'' after ``provided for in such section''.
       (II) Exception to exclusion from coverage.--Section 1862(a) 
     (42 U.S.C. 1395y(a)) is amended by inserting before the 
     period at the end of the second sentence the following: ``and 
     paragraph (21) shall not apply to home health services to 
     which section 1895(f) applies''.

       (4) Return on equity.--Section 1861(v)(1)(P) (42 U.S.C. 
     1395x(v)(1)(P)) is amended--
       (A) by inserting ``(i)'' after ``(P)''; and
       (B) by adding at the end the following:
       ``(ii)(I) Notwithstanding clause (i), subparagraph (S)(i), 
     and section 1886(g)(2), such regulations shall provide, in 
     determining the reasonable costs of the services described in 
     subclause (II) furnished by a rural community hospital on or 
     after October 1, 2002, for payment of a return on equity 
     capital at a rate of return equal to 150 percent of the 
     average specified in clause (i):
       ``(II) The services referred to in subclause (I) are 
     inpatient hospital services, outpatient hospital services, 
     home health services furnished by an RCH-based home health 
     agency (as defined in section 1895(f)(2)), and ambulance 
     services.
       ``(III) Payment under this clause shall be made without 
     regard to whether a provider is a proprietary provider.''.
       (5) Exemption from 30 percent reduction in reimbursement 
     for bad debt.--Section 1861(v)(1)(T) (42 U.S.C. 
     1395x(v)(1)(T)) is amended by inserting ``(other than a rural 
     community hospital)'' after ``In determining such reasonable 
     costs for hospitals''.
       (c) Beneficiary Cost-Sharing for Outpatient Services.--
     Section 1834(n) (as added by subsection (b)(2)) is amended--
       (1) by inserting ``(1)'' after ``(n)''; and
       (2) adding at the end the following:
       ``(2) The amounts of beneficiary cost sharing for 
     outpatient services furnished in a rural community hospital 
     under this part shall be as follows:
       ``(A) For items and services that would have been paid 
     under section 1833(t) if provided by a hospital, the amount 
     of cost sharing determined under paragraph (8) of such 
     section.
       ``(B) For items and services that would have been paid 
     under section 1833(h) if furnished by a provider or supplier, 
     no cost sharing shall apply.
       ``(C) For all other items and services, the amount of cost 
     sharing that would apply to the item or service under the 
     methodology that would be used to determine payment for such 
     item or service if provided by a physician, provider, or 
     supplier, as the case may be.''.
       (d) Conforming Amendments.--
       (1) Part a payment.--Section 1814(b) (42 U.S.C. 1395f(b)) 
     is amended by inserting ``other than inpatient hospital 
     services furnished by a rural community hospital,'' after 
     ``critical access hospital services,''.
       (2) Part b payment.--
       (A) In general.--Section 1833(a) (42 U.S.C. 1395l(a)) is 
     amended--
       (i) in paragraph (2), in the matter before subparagraph 
     (A), by striking ``and (I)'' and inserting ``(I), and (K)'';
       (ii) by striking ``and'' at the end of paragraph (8);
       (iii) by striking the period at the end of paragraph (9) 
     and inserting ``; and''; and
       (iv) by adding at the end the following:
       ``(10) in the case of outpatient services furnished by a 
     rural community hospital, the amounts described in section 
     1834(n).''.
       (B) Ambulance services.--Section 1834(l)(8) (42 U.S.C. 
     1395m(l)(8)), as added by section 205(a) of the Medicare, 
     Medicaid, and SCHIP Benefits Improvement and Protection Act 
     of 2000 (Appendix F, 114 Stat. 2763A-463), as enacted into 
     law by section 1(a)(6) of Public Law 106-554, is amended--
       (i) in the heading, by striking ``critical access 
     hospitals'' and inserting ``certain facilities'';
       (ii) by striking ``or'' at the end of subparagraph (A);
       (iii) by redesignating subparagraph (B) as subparagraph 
     (C);
       (iv) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) by a rural community hospital (as defined in section 
     1861(ww)(1)), or''; and
       (v) in subparagraph (C), as so redesignated, by inserting 
     ``or a rural community hospital'' after ``critical access 
     hospital''.
       (3) Technical amendments.--
       (A) Consultation with state agencies.--Section 1863 (42 
     U.S.C. 1395z) is amended by striking ``and (dd)(2)'' and 
     inserting ``(dd)(2), (mm)(1), and (ww)(1)''.
       (B) Provider agreements.--Section 1866(a)(2)(A) (42 U.S. C. 
     1395cc(a)(2)(A)) is amended by inserting ``section 
     1834(n)(2),'' after ``section 1833(b),''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     October 1, 2002.

     SEC. 3. REMOVING BARRIERS TO ESTABLISHMENT OF DISTINCT PART 
                   UNITS BY RCH AND CAH FACILITIES.

       (a) In General.--Section 1886(d)(1)(B) (42 U.S.C. 
     1395ww(d)(1)(B)) is amended by striking ``a distinct part of 
     the hospital (as defined by the Secretary)'' in the matter 
     following cause (v) and inserting ``a distinct part (as 
     defined by the Secretary) of the hospital or of a critical 
     access hospital or a rural community hospital''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to determinations with respect to distinct part 
     unit status that are made on or after October 1, 2002.

     SEC. 4. IMPROVEMENTS TO MEDICARE CRITICAL ACCESS HOSPITAL 
                   (CAH) PROGRAM.

       (a) Exclusion of Certain Beds From Bed Count.--Section 
     1820(c)(2) (42 U.S.C. 1395i-4(c)(2)) is amended by adding at 
     the end the following:
       ``(E) Exclusion of certain beds from bed count.--In 
     determining the number of beds of a facility for purposes of 
     applying the bed limitations referred to in subparagraph 
     (B)(iii) and subsection (f), the Secretary shall not take 
     into account any bed of a distinct part psychiatric or 
     rehabilitation unit (described in the matter following clause 
     (v) of section 1886(d)(1)(B)) of the facility, except that 
     the total number of beds that are not taken into account 
     pursuant to this subparagraph with respect to a facility 
     shall not exceed 10.''.
       (b) Payments to Home Health Agencies Owned and Operated by 
     a CAH.--Section 1895(f) (42 U.S.C. 1395fff(f)), as added by 
     section 2(b)(3), is further amended by inserting ``or by a 
     home health agency that is owned and operated by a critical 
     access hospital (as defined in section 1861(mm)(1))'' after 
     ``as defined in paragraph (2))''.
       (c) Payments to CAH-Owned SNFs.--
       (1) In general.--Section 1888(e) (42 U.S.C. 1395yy(e)) is 
     amended--
       (A) in paragraph (1), by striking ``and (12)'' and 
     inserting ``(12), and (13)''; and
       (B) by adding at the end thereof the following:
       ``(13) Exemption of cah facilities from pps.--In 
     determining payments under this part for covered skilled 
     nursing facility services furnished on or after October 1, 
     2002, by a skilled nursing facility that is a distinct part 
     unit of a critical access hospital (as defined in section 
     1861(mm)(1)) or is owned and operated by a critical access 
     hospital--
       ``(A) the prospective payment system established under this 
     subsection shall not apply; and
       ``(B) payment shall be made on the basis of the reasonable 
     costs incurred in furnishing such services as determined 
     under section 1861(v), but without regard to the amount of 
     the customary or other charges with respect to such 
     services or the limitations established under subsection 
     (a).''.
       (2) Conforming changes.--
       (A) In general.--Section 1814(b) (42 U.S.C. 1395f(b)), as 
     amended by subsection (b)(2)(A), is further amended in the 
     matter preceding paragraph (1)--
       (i) by inserting ``other than a skilled nursing facility 
     providing covered skilled nursing facility services (as 
     defined in section 1888(e)(2)) or posthospital extended care 
     services to which section 1888(e)(13) applies,'' after 
     ``inpatient critical access hospital services''; and
       (ii) by striking ``1813 1886,'' and inserting ``1813, 1886, 
     1888,''.
       (B) Consolidated billing.--
       (i) Recipient of payment.--Section 1842(b)(6)(E) (42 U.S.C. 
     1395u(b)(6)(E)) is amended by inserting ``services to which 
     paragraph (7)(C) or (13) of section 1888(e) applies and'' 
     after ``other than''.
       (ii) Exception to exclusion from coverage.--Section 
     1862(a)(18) (42 U.S.C. 1395y(a)(18)) is amended by inserting 
     ``(other than services to which paragraph (7)(C) or (13) of 
     section 1888(e) applies)'' after ``section 
     1888(e)(2)(A)(i)''.
       (d) Payments to Distinct Part Psychiatric or Rehabilitation 
     Units of CAHs.--Section 1886(b) (42 U.S.C. 1395ww(b)) is 
     amended--

[[Page S5460]]

       (1) in paragraph (1), by inserting ``, other than a 
     distinct part psychiatric or rehabilitation unit to which 
     paragraph (8) applies,'' after ``subsection (d)(1)(B)''; and
       (2) by adding at the end the following:
       ``(8) Exemption of certain distinct part psychiatric or 
     rehabilitation units from cost limits.--In determining 
     payments under this part for inpatient hospital services 
     furnished on or after October 1, 2002, by a distinct part 
     psychiatric or rehabilitation unit (described in the matter 
     following clause (v) of subsection (d)(1)(B)) of a critical 
     access hospital (as defined in section 1861(mm)(1))--
       ``(A) the limits imposed under the preceding paragraphs of 
     this subsection shall not apply; and
       ``(B) payment shall be made on the basis of the reasonable 
     costs incurred in furnishing such services as determined 
     under section 1861(v), but without regard to the amount of 
     the customary or other charges with respect to such 
     services.''.
       (e) Elimination of Isolation Test for Cost-Based CAH 
     Ambulance Services.--Paragraph (8) of section 1834(l) (42 
     U.S.C. 1395m(l)), as added by section 205(a) of BIPA, is 
     amended by striking the comma at the end of the last 
     subparagraph and all that follows and inserting a period.
       (f) Return on Equity.--Section 1861(v)(1)(P) (42 U.S.C. 
     1395x(v)(1)(P)), as amended by section 2(b)(4), is further 
     amended by adding at the end the following:
       ``(iii)(I) Notwithstanding clause (i), subparagraph (S)(i), 
     and section 1886(g)(2), such regulations shall provide, in 
     determining the reasonable costs of the services described in 
     subclause (II) furnished by a rural community hospital on or 
     after October 1, 2002, for payment of a return on equity 
     capital at a rate of return equal to 150 percent of the 
     average specified in clause (i):
       ``(II) The services referred to in subclause (I) are 
     inpatient critical access hospital services (as defined in 
     section 1861(mm)(2)), outpatient critical access hospital 
     services (as defined in section 1861(mm)(3)), extended care 
     services provided pursuant to an agreement under section 
     1883, posthospital extended care services to which section 
     1888(e)(13) applies, home health services to which section 
     1895(f) applies, ambulance services to which section 1834(l) 
     applies, and inpatient hospital services to which section 
     1886(b)(8) applies.
       ``(III) Payment under this clause shall be made without 
     regard to whether a provider is a proprietary provider.''.
       (g) Technical Corrections.--
       (1) Section 403(b) of bbra 1999.--Section 1820(b)(2) (42 
     U.S.C. 1395i-4(b)(2)) is amended by striking ``nonprofit or 
     public hospitals'' and inserting ``hospitals''.
       (2) Section 203(b) of bipa 2000.--Section 1883(a)(3) (42 
     U.S.C. 1395tt(a)(3)) is amended--
       (A) by inserting ``section 1861(v)(1)(G) or'' after 
     ``Notwithstanding''; and
       (B) by striking ``covered skilled nursing facility''.
       (h) Effective Dates.--
       (1) Elimination of requirements.--The amendment made by 
     subsections (a) and (b) shall apply to services furnished on 
     or after October 1, 2002.
       (2) Technical corrections.--
       (A) BBRA.--The amendment made by subsection (f)(1) shall be 
     effective as if included in the enactment of section 403(b) 
     of the Medicare, Medicaid, and SCHIP Balanced Budget 
     Refinement Act of 1999 (Appendix F, 113 Stat. 1501A-321), as 
     enacted into law by section 1000(a)(6) of Public Law 106-113.
       (B) BIPA.--The amendment made by subsection (f)(2) shall be 
     effective as if included in the enactment of section 203(b) 
     of the Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (Appendix F, 114 Stat. 2763A-463), as 
     enacted into law by section 1(a)(6) of Public Law 106-554.

  Mr. WELLSTONE. Mr. President, I rise today along with my colleague, 
the Senator from Alaska, to introduce the Rural Community Hospital 
Assistance Act. Senator Murkowski and I don't agree on a lot of issues. 
But one thing we both care very deeply about is the health of this 
Nation's rural hospitals. Rural hospitals provide essential care for 
more than 54 million people. They provide essential inpatient, 
outpatient and post-acute care, including skilled nursing, home health 
and rehabilitation services. Minnesota has more rural hospitals than 
any other state in the United States with the exception of Texas. The 
hospitals of rural America are the heart of our health care system. In 
rural America, how far away you are from your community hospital can be 
a matter of life and death.
  But the health of our rural hospitals in 2002 is not good. Many are 
struggling to survive. Rural hospitals have Medicare inpatient margins 
that are 10 percent less than urban hospitals. Rural hospital total 
Medicare margins have declined significantly, falling to an average of 
negative 3.2 percent since 1999, and even lower margins, negative 5.4 
percent, for rural hospitals with 50 or fewer beds. Rural hospital 
costs are increasing at a greater rate than urban hospitals. They can't 
survive on the Medicare prospective payment system that we've set up 
for them. That payment system provides a fixed hospital payment 
established in advance of the provisions of services, rather than 
providing reimbursement retroactively on the basis of costs. The 
Medicare Payment Advisory Commission (MedPAC) told the Congress last 
June that the Prospective Payment System is not working for small rural 
hospitals. We set up that system to contain costs and save money. But 
we can't have the kind of healthcare system that the people who live in 
the small towns and on the farms of America deserve, if we try to 
finance it on the cheap. This is about values. This is about 
priorities. This is about giving people who work hard all their lives 
the healthcare they deserve.
  I voted against the Balanced Budget Act of 1997 because I was worried 
that it would lead to significant harm for our healthcare system. I was 
worried that it would hurt healthcare in our rural areas, in our 
cities, and that it would damage our healthcare safety net. 
Unfortunately, I was right and we have seen exactly the kind of 
problems I warned about. But one good thing we included was the 
Medicare Rural Hospital Flexibility Act which set up ``Critical Access 
Hospitals.'' The Critical Access Hospital (CAH) program provides cost 
based Medicare reimbursement for qualifying rural hospitals with 15 of 
fewer inpatient beds. Small rural hospitals face unique circumstances 
that require special consideration when developing Medicare payment 
policies. Because of their small size, a median of 58 beds compared to 
186 beds for urban hospitals, rural hospitals have a much more 
difficult time surviving within a prospective payment system. Rural 
hospitals have fewer financial reserves and greater volume fluctuations 
than urban hospitals. They rely on Medicare as a source of revenue more 
than other hospitals. They have to deal with isolation, high levels of 
poverty, and shortages of critical health care professionals, making it 
much more difficult for small rural hospitals to absorb the impact of 
policy and market changes.
  The Critical Access Hospital Program has done a good job. There are 
43 Critical Access Hospitals in Minnesota. But this program needs to be 
updated and it needs to be extended and enhanced if we are going to 
restore our rural hospitals to financial health. The Rural Community 
Hospital Assistance Act will provide enhanced cost based reimbursement 
for Critical Access Hospitals, and extend such reimbursement to post 
acute care services. It will permit and extend enhanced reimbursement 
fore geriatric psychiatric care. It will provide enhanced cost based 
reimbursement for ambulance services. It would also provide an option 
for rural hospitals with less than 50 acute care beds to receive cost 
based reimbursement for inpatient, outpatient, and ambulance services. 
This is very important because so many rural hospitals with less than 
50 beds are struggling just to survive. It is essential that the doors 
of our rural hospitals remain open. I ask my colleagues to join Senator 
Murkowski and me in supporting this important legislation for rural 
America.
                                 ______