[Congressional Record Volume 149, Number 7 (Wednesday, January 15, 2003)]
[Senate]
[Pages S856-S859]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DAYTON:
  S. 172. A bill to amend title XVIII of the Social Security Act to 
improve the access of medicare beneficiaries to services in rural 
hospitals and critical access hospitals, and for other purposes; to the 
Committee on Finance.
  Mr. DAYTON. Mr. President, 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. 172

       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; AMENDMENTS TO THE 
                   SOCIAL SECURITY ACT.

       (a) Short Title.--This Act may be cited as the ``Rural 
     Health Care Equity Act of 2003''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Permitting hospitals to allocate swing beds and acute care 
              inpatient beds subject to a total limit of 25 beds.
Sec. 3. Elimination of isolation test for cost-based CAH ambulance 
              services.
Sec. 4. Adjustment to wage index.
Sec. 5. Establishing a single standardized amount under medicare 
              inpatient hospital PPS.
Sec. 6. Restoring full market basket update for inpatient PPS 
              hospitals.
Sec. 7. Freezing indirect medical education (IME) adjustment percentage 
              at 6.5 percent.
Sec. 8. Establishment of rural community hospital (RCH) program.
Sec. 9. Removing barriers to establishment of distinct part units by 
              RCH and CAH facilities.

[[Page S857]]

Sec. 10. Improvements to medicare critical access hospital (CAH) 
              program.
Sec. 11. 5-year extension of the authorization for appropriations grant 
              program.
Sec. 12. GAO study on wage indexing and placement of hospitals in MSAs.
       (c) Amendments to the 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. PERMITTING HOSPITALS TO ALLOCATE SWING BEDS AND ACUTE 
                   CARE INPATIENT BEDS SUBJECT TO A TOTAL LIMIT OF 
                   25 BEDS.

       (a) In General.--Section 1820(c)(2)(B)(iii) (42 U.S.C. 
     1395i-4(c)(2)(B)(iii)) is amended to read as follows:
       ``(iii) provides not more than a total of 25 extended care 
     service beds (pursuant to an agreement under subsection (f)) 
     or acute care inpatient beds (meeting such standards as the 
     Secretary may establish) for providing inpatient care for a 
     period that does not exceed, as determined on an annual, 
     average basis, 96 hours per patient;''.
       (b) Conforming Amendment.--Section 1820(f) (42 U.S.C. 
     1395i-4(f)) is amended by striking ``and the number of beds 
     used at any time for acute care inpatient services does not 
     exceed 15 beds''.

     SEC. 3. ELIMINATION OF ISOLATION TEST FOR COST-BASED CAH 
                   AMBULANCE SERVICES.

       Section 1834(l)(8) (42 U.S.C. 1395m(l)), 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 by striking the comma at the end of 
     subparagraph (B) and all that follows and inserting a period.

     SEC. 4. ADJUSTMENT TO WAGE INDEX.

       (a) In General.--Section 1886(d)(3)(E) (42 U.S.C. 
     1395ww(d)(3)(E)) is amended--
       (1) by striking ``wage levels.--The Secretary'' and 
     inserting ``wage levels.--
       ``(i) In general.--Except as provided in clause (ii), the 
     Secretary''; and
       (2) by adding at the end the following new clause:
       ``(ii) Alternative proportion to be adjusted in fiscal 
     years 2003, 2004, and 2005.--
       ``(I) In general.--Except as provided in subclause (II), 
     for discharges occurring on or after October 1, 2002, and 
     before October 1, 2005, the Secretary shall substitute `63 
     percent' for the proportion described in the first sentence 
     of clause (i).
       ``(II) Hold harmless for certain hospitals.--For discharges 
     occurring on or after October 1, 2002, and before October 1, 
     2005, if the application of subclause (I) would result in 
     lower payments to a hospital than would otherwise be made, 
     then this subparagraph shall be applied as if this clause had 
     not been enacted.
       (b) Waiving Budget Neutrality.--Section 1886(d)(3)(E) (42 
     U.S.C. 1395ww(d)(3)(E)), as amended by subsection (a), is 
     amended by adding at the end of clause (i) the following new 
     sentence: ``The Secretary shall apply the previous sentence 
     for any period as if clause (ii) had not been enacted.''.

     SEC. 5. ESTABLISHING A SINGLE STANDARDIZED AMOUNT UNDER 
                   MEDICARE INPATIENT HOSPITAL PPS.

       (a) In General.--Section 1886(d)(3)(A) (42 U.S.C. 
     1395ww(d)(3)(A)) is amended--
       (1) in clause (iv), by inserting ``and ending on or before 
     September 30, 2002,'' 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, 2002, 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, 2003, 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) (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) (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 
     2003,'' after ``(i)''; and
       (II) in subclause (II), by striking ``and'' after the 
     semicolon at the end;

       (iv) in clause (ii)--

       (I) by inserting ``for fiscal years before fiscal year 
     2003,'' after ``(ii)''; 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 2002, 
     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. 6. RESTORING FULL MARKET BASKET UPDATE FOR INPATIENT PPS 
                   HOSPITALS.

       Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is 
     amended--
       (1) in subclause (XV), by adding ``and'' at the end;
       (2) in subclause (XVI)--
       (A) by inserting ``and each subsequent fiscal year'' after 
     ``for fiscal year 2001''; and
       (B) by striking the comma at the end and inserting a 
     period; and
       (3) by striking subclauses (XVII), (XVIII), and (XIX).

     SEC. 7. FREEZING INDIRECT MEDICAL EDUCATION (IME) ADJUSTMENT 
                   PERCENTAGE AT 6.5 PERCENT.

       (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
     1395ww(d)(5)(B)(ii)) is amended--
       (1) in subclause (V), by adding ``and'' at the end; and
       (2) by striking subclauses (VI) and (VII) and inserting the 
     following:
       ``(VI) on or after October 1, 2001, `c' is equal to 1.6.''.
       (b) Conforming Amendment Relating to Determination of 
     Standardized Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 
     1395ww(d)(2)(C)(i)) is amended--
       (1) by striking ``1999 or'' and inserting ``1999,''; and
       (2) by inserting ``, or of section 7 of the Rural Health 
     Care Equity Act of 2003'' after ``2000''.

     SEC. 8. 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:

[[Page S858]]

       ``(n) Payment for Outpatient Services Furnished in Rural 
     Community Hospitals.--
       ``(1) In general.--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)--
       ``(A) 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
       ``(B) the amount of payment provided for under the 
     prospective payment system for covered OPD services under 
     section 1833(t).
       ``(2) Beneficiary cost sharing for outpatient services 
     furnished in a rural community hospital.--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.''.
       (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
       ``(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 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 described in this subparagraph are 
     inpatient hospital services, outpatient hospital services, 
     home health services furnished by a qualified 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) Conforming Amendments.--
       (1) Part a payment.--Section 1814(b) (42 U.S.C. 1395f(b)) 
     is amended by inserting ``other than a rural community 
     hospital furnishing inpatient hospital services,'' after 
     ``critical access hospital services,'' in the matter 
     preceding paragraph (1).
       (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 preceding subparagraph 
     (A), by striking ``and (I)'' and inserting ``(I), and (K)'';
       (ii) in paragraph (8), by striking ``and'' after the 
     semicolon at the end;
       (iii) in paragraph (9), by striking the period at the end 
     and inserting ``; and''; and
       (iv) by adding at the end the following new paragraph:
       ``(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.--The first sentence of 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),''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     October 1, 2002.

     SEC. 9. 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)'' and inserting 
     ``a distinct part (as defined by the Secretary) of the 
     hospital, critical access hospital, or rural community 
     hospital'' in the matter following clause (v)(III).
       (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. 10. 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 new subparagraph:
       ``(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)(1) (42 U.S.C. 1395fff(f)(1)), as 
     added by this title, 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))'' in the matter preceding 
     subparagraph (A).
       (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 the following new paragraph:
       ``(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).''.

[[Page S859]]

       (2) Conforming changes.--
       (A) In general.--Section 1814(b) (42 U.S.C. 1395f(b)), as 
     amended by section 8(c)(1), 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--
       (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 new paragraph:
       ``(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) Return on Equity.--Section 1861(v)(1)(P) (42 U.S.C. 
     1395x(v)(1)(P)), as amended by section 8(b)(4), is further 
     amended by adding at the end the following new clause:
       ``(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 described in this subclause 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.''.
       (f) 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''.
       (g) 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.

     SEC. 11. 5-YEAR EXTENSION OF THE AUTHORIZATION FOR 
                   APPROPRIATIONS FOR GRANT PROGRAM.

       Section 1820(j) (42 U.S.C. 1395i-4(j)) is amended by 
     striking ``through 2002'' and inserting ``through 2007''.

     SEC. 12. GAO STUDY ON WAGE INDEXING AND PLACEMENT OF 
                   HOSPITALS IN MSAS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study on the reformation of wage indexing and 
     the rules governing the placement of hospitals in 
     metropolitan statistical areas.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under subsection 
     (a) together with recommendations for such legislation or 
     administrative actions as the Comptroller General considers 
     appropriate.
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