[Congressional Record Volume 148, Number 108 (Thursday, August 1, 2002)]
[Senate]
[Pages S7917-S7918]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Roberts, and Mr. Enzi):
  S. 2854. A bill to amend title XVIII of the Social Security Act to 
improve disproportionate share medicare payments to hospitals serving 
vulnerable populations; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, I am introducing bipartisan legislation 
today with Senators Roberts and Enzi that addresses some inequities in 
the current Medicare disproportionate share hospital, or DSH, program. 
The bill incorporates the recommendations by the Medicare Payment 
Advisory Commission, or MedPAC, to address the current inequities in 
the formula that harm rural hospitals and to better target the money to 
safety net hospitals.
  The Medicare DSH program was created with the purpose of assisting 
hospitals that provide a substantial amount of care to low-income 
beneficiaries, including seniors and disabled citizens served by 
Medicare. To protect access to low-income Medicare beneficiaries, DSH 
funds are provided to hospitals whose viability is threatened by 
providing care, including unreimbursed care, to low-income patients.
  Unfortunately, the current Medicare DSH formula does not adequately 
reflect or target money appropriately to these safety net institutions 
and it also inappropriately sets limits and inequities for rural 
hospitals, which are a life-line to many of our Nation's senior 
citizens and yet struggle due to such payment inequities in the 
Medicare system.
  This legislation adopts the recommendations of MedPAC to address 
these inequities. According to MedPAC from its March 2000 ``Report to 
the Congress: Medicare Payment Policy''--

       The Commission believes that special policy changes are 
     needed to ameliorate several problems inherent in the 
     existing disproportionate share payment system. The current 
     low-income share measure does not include care to all the 
     poor; most notably, it omits uncompensated care. Instead, the 
     measure relies on the share of resources devoted to treating 
     Medicaid recipients to represent the low-income patient load 
     for the entire nonelderly poor population.

  New Mexico leads the Nation in the percentage of uninsured in its 
populations, according to the Census Bureau. Consequently, as MedPAC 
has noted repeatedly, the hospitals in my state lose more money to 
uncompensated care than similarly situated hospitals in other states. 
Because the Medicare DSH formula fails to account for uncompensated 
care directly but instead uses Medicaid as a proxy, the hospitals in 
New Mexico are not fairly compensated by the Medicare DSH formula.
  To address this problem, MedPAC recommends the formula ``include the 
costs of all poor patients in calculating low-income shares used to 
distribute disproportionate share payments. . . .'' The legislation we 
are introducing today would make that important change on behalf of our 
Nation's safety net hospitals.
  In addition, MedPAC notes that the current Medicare DSH program has 
10 different formulas. MedPAC adds, ``In particular, current policy 
favors hospitals located in urban areas; almost half of urban hospitals 
receive DSH payments, compared with only one-fifth of rural 
facilities.''
  Although BIPA improved the equity of DSH payments by raising the 
minimum low-income share needed to qualify for a payment adjustment for 
rural hospitals to that of urban hospitals, BIPA capped the DSH add-on 
payments a rural hospital can receive at just 5.25 percent, except for 
those rural hospitals already receiving higher payments due to the sole 
community hospital or rural referral center status. While MedPAC 
estimated the change made about 840 additional rural hospitals, or 40 
percent of all rural facilities, eligible to receive DSH payments, the 
cap maintains some of the inequities between urban and rural hospitals.
  Again, according to MedPAC in its June 2001 ``Report to Congress: 
Medicare in Rural America'':

       Rural hospitals were responsible for 12.8 percent of the 
     care provided to Medicaid and uncompensated care patients 
     nationally in 1999. With the DSH payment rules in effect 
     through 2000, only 3.1 percent of payments went to rural 
     facilities; BIPA rules would increase that proportion to 6.9 
     percent.

  To address this problem, MedPAC also recommends using the ``same 
formula to distribute payments to all hospitals covered by prospective 
payment.''
  In incorporating the recommendations of MedPAC in this legislation, 
it is estimated the bill would increase rural DSH payments by 5.4 
percent across the country, including an 8.4 percent increase for rural 
hospitals with less than 50 beds. Our Nation's public hospitals would 
also benefit greatly, as urban public hospitals and rural government 
facilities are estimated to receive increases of 3.6 percent and 7.7 
percent, respectively, under this legislation.
  This legislation I am introducing with Senators Roberts and Enzi 
addresses some long-standing inequities in the Medicare DSH formula. I 
urge its adoption this year.
  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. 2854

       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 ``Medicare Safety Net Hospital 
     Improvement Act of 2002''.

     SEC. 2. COLLECTION OF DATA AND MODIFICATION OF 
                   DISPROPORTIONATE SHARE MEDICARE PAYMENTS TO 
                   HOSPITALS SERVING VULNERABLE POPULATIONS.

       (a) Collection of Data.--Section 1886(d)(5)(F) of the 
     Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended by 
     adding at the end the following new clause:
       ``(xiv) The Secretary shall collect from each subsection 
     (d) hospital annual data on inpatient and outpatient charges, 
     including all such charges for each of the following 
     categories:
       ``(I) All patients.
       ``(II) Patients who are entitled to benefits under part A 
     and are entitled to benefits (excluding any State 
     supplementation) under the supplemental security income 
     program under title XVI.
       ``(III) Patients who are entitled to (or, if they applied, 
     would be eligible for) medical assistance under title XIX or 
     child health assistance under title XXI.
       ``(IV) Patients who are beneficiaries of indigent care 
     programs sponsored by State or local governments (including 
     general assistance programs) which are funded solely by local 
     or State funds or by a combination of local, State, or 
     Federal funding.
       ``(V) The amount of charity care charges and bad debt.''.
       (b) Modification.--Section 1886(d)(5)(F) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(5)(F)), as amended by 
     subsection (a), is amended--
       (1) by striking all the matter preceding clause (xiv) and 
     inserting the following:
       ``(F)(i) The Secretary shall provide, in accordance with 
     this subparagraph, for an additional payment amount for each 
     subsection (d) hospital which serves a significantly 
     disproportionate number of low-income patients (as defined in 
     clause (iv)).
       ``(ii) The amount of the payment described in clause (i) 
     for each discharge shall be determined by multiplying--
       ``(I) the sum of the amount determined under paragraph 
     (1)(A)(ii)(II) (or, if applicable, the amount determined 
     under paragraph (1)(A)(iii)) and, for cases qualifying for 
     additional payment under subparagraph (A)(i), the amount paid 
     to the hospital under subparagraph (A) for that discharge, by
       ``(II) the disproportionate share adjustment percentage 
     established under clause (iii) for the cost reporting period 
     in which the discharge occurs.
       ``(iii) The disproportionate share adjustment percentage 
     for a cost reporting period for a hospital is equal to (P-
     T)(C), where--
       ``(I) `P' is equal to the hospital's disproportionate 
     patient percentage (as defined in clause (v)) for the period;
       ``(II) `T' is equal to the threshold percentage established 
     by the Secretary under clause (iv); and
       ``(III) `C' is equal to a conversion factor established by 
     the Secretary in a manner so that, in applying such 
     conversion factor for cost reporting periods beginning in 
     fiscal year 2002--

[[Page S7918]]

       ``(aa) the total of the additional payments that would have 
     been made under this subparagraph for cost reporting periods 
     beginning in fiscal year 2002 if the amendment made by 
     section 2(b) of the Medicare Safety Net Hospital Improvement 
     Act of 2002 had been in effect; are equal to
       ``(bb) the total of the additional payments that would have 
     been made under this subparagraph for cost reporting periods 
     beginning in fiscal year 2002 if such amendment was not in 
     effect but if the disproportionate share adjustment 
     percentage (as defined in clause (iv) (as in effect during 
     such cost reporting periods)) for all hospitals was equal to 
     the percent determined in accordance with the applicable 
     formulae described in clause (vii) (as so in effect).
     The Secretary shall establish the conversion factor under 
     subclause (III) based upon the data described in clause (iv) 
     that is collected by the Secretary.
       ``(iv) For purposes of this subparagraph, a hospital 
     `serves a significantly disproportionate number of low-income 
     patients' for a cost reporting period if the hospital has a 
     disproportionate patient percentage (as defined in clause 
     (v)) for that period which equals or exceeds a threshold 
     percentage, as established by the Secretary in a manner so 
     that, if the amendment made by section 2(b) of the Medicare 
     Safety Net Hospital Improvement Act of 2002 had been in 
     effect for cost reporting periods beginning in fiscal year 
     2002 and if the disproportionate share adjustment percentage 
     (as defined in clause (iv) (as in effect during such 
     periods)) for all hospitals was equal to the percent 
     determined in accordance with the applicable formulae 
     described in clause (vii) (as so in effect), 60 percent of 
     subsection (d) hospitals would have been eligible for an 
     additional payment under this subparagraph for such periods. 
     The Secretary shall establish such threshold percentage based 
     upon the data described in clause (iv) that is collected by 
     the Secretary.
       ``(v) In this subparagraph, the term `disproportionate 
     patient percentage' means, with respect to a cost reporting 
     period of a hospital (expressed as a percentage)--
       ``(I) the charges described in subclauses (II) through (V) 
     of clause (vi) for such period; divided by
       ``(II) the charges described in subclause (I) of such 
     clause for such period.''; and
       (2) by redesignating clause (xiv) as clause (vi).
       (c) Conforming Amendments.--
       (1) Medicare.--
       (A) Qualified long-term care hospital.--Section 
     1886(b)(3)(G)(ii)(II) of the Social Security Act (42 U.S.C. 
     1395ww(b)(3)(G)(ii)(II)) is amended by striking ``of at least 
     70 percent (as determined by the Secretary under subsection 
     (d)(5)(F)(vi))'' and inserting ``under subsection 
     (d)(5)(F)(v) equal to or greater than an appropriate 
     percentage (as determined by the Secretary)''.
       [(B) Provider-based status.--Section 404(b)(2)(B) of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (114 Stat. 2763A-507), as enacted into 
     law by section 1(a)(6) of Public Law 106-554, is amended by 
     striking ``greater than 11.75 percent or is described in 
     clause (i)(II) of such section'' and inserting ``greater than 
     an appropriate percent (as determined by the Secretary)''.]
       (2) Medicaid.--Section 1923(c) of the Social Security Act 
     (42 U.S.C. 1396r-4(c)) is amended--
       (A) in paragraph (1), by striking ``section 
     1886(d)(5)(F)(iv)'' and inserting ``section 
     1886(d)(5)(F)(iii)''; and
       (B) by striking the second sentence.
       (3) Public health service act.--Section 340B(a)(4)(L)(ii) 
     of the Public Health Service Act (42 U.S.C. 
     256b(a)(4)(L)(ii)) is amended to read as follows:
       ``(ii) for the most recent cost reporting period that ended 
     before the calendar quarter involved--

       ``(I) in the case of a calendar quarter involved that 
     begins prior to April 1, 2004, had a disproportionate share 
     adjustment percentage (as determined under section 
     1886(d)(5)(F) of the Social Security Act) greater than 11.75 
     percent or was described in section 1886(d)(5)(F)(i)(II) of 
     such Act; and
       ``(II) in the case of a calendar quarter involved that 
     begins on or after April 1, 2004, had a disproportionate 
     share adjustment percentage (as so determined) that is 
     greater than an appropriate percent, as established by the 
     Secretary in a manner so that, with respect to the 12-month 
     period beginning on such date, the number of hospitals that 
     are described in this subparagraph is the same as, or greater 
     than, the number of hospitals that would have been described 
     in this subparagraph if the Medicare Safety Net Hospital 
     Improvement Act of 2002 had not been enacted; and''.

       (d) Technical Amendments.--Section 1815(e)(1)(B) of the 
     Social Security Act (42 U.S.C. 1395g(e)(1)(B)) is amended--
       (1) in the matter preceding clause (i), by inserting ``a'' 
     before ``hospital''; and
       (2) in clause (i), by striking ``(as established in clause 
     (iv) of such section)'' and inserting ``(as established in 
     section 1886(d)(5)(F)(iv), as in effect during fiscal year 
     1987)''.
       (e) Effective Dates.--
       (1) Collection.--The amendment made by subsection (a) shall 
     take effect on the date of enactment of this Act.
       (2) Modification and conforming amendments.--The amendments 
     made by subsections (b) and (c) shall apply to payments for 
     discharges occurring on or after April 1, 2004.
       (3) Technical amendments.--The amendments made by 
     subsection (d) shall take effect as if included in the 
     enactment of section 9311(a) of the Omnibus Budget 
     Reconciliation Act of 1986 (Public Law 99-509; 100 Stat. 
     1996).
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