[Congressional Record Volume 149, Number 56 (Tuesday, April 8, 2003)]
[Senate]
[Pages S4962-S4963]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CONRAD (for himself, Mr. Thomas, Mr. Harkin, Mr. Grassley, 
        Mr. Smith, Mr. Rockefeller, Mr. Roberts, Mr. Daschle, Mr. 
        Dorgan, Mr. Domenici, Mrs. Lincoln, Mr. Burns, Mr. Bingaman, 
        Mr. Jeffords, Mr. Johnson, Mr. Levin, Mr. Talent, Mr. Dayton, 
        Mr. Bond, Mr. Edwards, Mr. Cochran, Mr. Pryor, Mrs. Murray, Ms. 
        Snowe, Mr. Coleman, and Ms. Cantwell):
  S. 816. A bill to amend title XVII of the Social Security Act to 
protect and preserve access of Medicare beneficiaries to health care 
provided by hospitals in rural areas, and for other purposes; to the 
Committee on Finance.
  Mr. CONRAD. Mr. President, today, Senator Thomas and I would like to 
introduce the Health Care Access and Rural Equity, (H-CARE), Act of 
2003.
  This proposal is the result of a tripartisan and Bicameral effort. We 
are proud to be joined by 24 Members who also support the bill, 
including--Senators Harkin, Grassley, Roberts, Daschle, Dorgan, Smith, 
Johnson, Lincoln, Domenici, Rockefeller, Burns, Bingaman, Jeffords, 
Cochran, Levin, Talent, Edwards, Bond, Pryor, Dayton, Snowe, Cantwell 
and Murray. I would also like to thank our House companions, led by 
Representatives Moran (R-KS), and Pomeroy.
  Working together, I believe we are taking important steps toward 
improving access to health care in our rural communities.
  In addition, I would like to thank the National Rural Health 
Association, the Federation of American Hospitals, the American 
Hospital Association, Premier Hospital Alliance and the Coalition 
representing Sole Community Hospitals for their support of this effort.
  As my colleagues may know, rural health care providers are often 
forced to operate with significantly less resources that larger, urban 
facilities. In my State of North Dakota, rural hospitals often receive 
only half the reimbursement of their urban counterparts--for treating 
the same patient. For example, a rural facility in North Dakota 
receives approximately $4,200 for treating pneumona, while a hospital 
in New York City can receive more than $8,500.
  This funding disparity is simply unfair and has placed many rural 
providers on shaky ground. Continued funding shortfalls have resulted 
in rural providers having much tighter inpatient cost margins than 
their urban counterparts--today, the average rural hospital operates 
with a slim 3.9 percent cost margin compared to 11.3 percent for urban 
providers). This situation has resulted in more than 43 percent of 
rural hospitals operating in the red.
  When you look at overall cost margins, the situation is even more 
bleak--rural providers are working with an average negative 2.9 percent 
Medicare margin, compared to 6.3 percent for urban hospitals). Our 
rural facilities cannot continue to provide high quality services if 
they lose nearly 3 percent on every Medicare patient they serve.
  To address these problems, the bill we are introducing today would 
take many important steps to improve the rural health care system.
  First, it would provide a much-needed low-volume adjustment payment. 
Today, it is nearly impossible for rural hospitals to take advantage of 
economies of scale realized by facilities located in larger 
communities. This situation has resulted in the majority of small 
facilities losing money. To address this problem, our bill would 
provide a new, extra payment to hospitals serving less than 2,000 
patients per year. This provision would provide up to 25 percent in 
additional funding to help rural providers cover inpatient hospital 
services.
  Second, H-CARE would close the gap in payments hospitals receive for 
serving low-income patients. It would do this by allowing rural 
hospitals to receive the same level of special ``Disproportionate 
Share--or DISH Payments'' currently available to urban providers.
  Third, our legislation would take steps to permanently equalize the 
``base payment amount,'' which has been 1.6 times higher for urban 
facilities. The recent Omnibus bill temporarily fixed this problem--but 
only until the end of FY03. Our bill finishes the job.
  Fourth, this legislation would help hospitals better meet labor costs 
by making some needed improvements to the Medicare ``wage index'' 
calculation. Across the Nation, rural hospitals have reported that the 
wage index does not accurately account for labor costs in their area. 
Our bill takes steps to address this problem.
  Fifth, our bill would ensure that rural hospitals continue to be paid 
fairly for outpatient services. It does this by extending a provision 
in current law that protects these hospitals against losses under the 
current Medicare payment system. It also includes measures to protect 
rural hospitals' access to lab services.
  I am happy to say that this set of proposals would go a long way 
toward placing rural facilities on much sounder financial footing. Let 
me provide some examples.
  Today, the average small hospital located in the Midwest receives 
$3,926 as an average payment for inpatient services. If all the changes 
laid out in our bill are enacted, this will improve payments to smaller 
rural hospitals by about 25 percent.
  If you look at a more specific service--such as treating pneumonia--
this same hospital would see payments increase from about $4,326 to 
$5,405. These increases are clearly big improvements, which will bring 
reimbursements for rural hospitals more in line with their costs.
  Before I close, I'd also like to mention that this bill would 
establish a new grant program to help rural hospitals repair crumbling 
buildings. Under this program, rural providers

[[Page S4963]]

could apply for up to $5m in loan assistance. It is my hope these 
resources will help strengthen the infrastructure of our Nation's rural 
hospitals.
  Finally, our bill includes a set of provisions that will make small--
but important--changes to the Critical Access Hospital, CAH, program. 
These include measures to ensure CAHs have 24-hour emergency on-call 
providers and to ensure they can afford to provide quality ambulance 
care.
  In total, the changes laid out in our bill will bring more than $72 
million in new resources to my State of North Dakota over the next ten 
years. The bill will provide similar benefits to other rural States.
  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.
  Mr. THOMAS. Mr. President, I am pleased to rise today to introduce 
the ``Health Care Access and Rural Equity Act (H-CARE) of 2003'' with 
Senator Conrad and fellow Senate Rural Health Caucus members, Senators 
Harkin, Grassley, Johnson, Roberts, Domenici, Daschle, Bingaman, Bond, 
Lincoln, Cochran, Burns, Rockefeller, Jeffords, Talent, Levin, Smith, 
Dayton, Snowe, Edwards, Cantwell, Dorgan, Coleman and Murray. As 
always, it is important to note that rural health care legislation has 
a long history of bipartisan and bicameral collaboration and 
cooperation.
  The ``Health Care Access and Rural Equity Act of 2003'' 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 them and their urban counterparts.
  Rural hospitals are more dependent on Medicare payments as part of 
their total revenue. In fact, Medicare accounts for almost 70 percent 
of total revenue for small, rural hospitals. Rural hospitals have lower 
patient volumes, but must compete nationally to recruit providers due 
to the nursing and other health professional workforce shortages.
  Additional burdens are placed on rural hospitals because of higher 
uninsured rates in rural America. Also, seniors living in rural areas 
tend to be poorer and have more chronic conditions than their urban and 
suburban counterparts.
  H-CARE recognizes the special circumstances faced by rural hospitals 
and addresses these issues by equalizing 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. Current law allows urban facilities to receive 
unlimited add-ons based on the percentage of these types of patients 
served. However, small, rural hospital add-on payments are capped at 10 
percent. H-CARE eliminates the Sole Community Hospital and small rural 
hospital caps, bringing their payments in line with the benefits urban 
facilities received.
  This legislation permanently 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. The fiscal year 2003 appropriations bill 
corrected the 1.6 percent disparity, but the provision expires at the 
end of the fiscal year.

  Our bill also acknowledges that low-volume hospitals have a higher 
cost per case, which results in negative operation margins. To 
alleviate this problem, H-CARE creates a low-volume inpatient payment 
adjustment for hospitals that have less than 2,000 annual discharges 
per year and are located more than 15 miles from another hospital. This 
provision will improve payments for more than one-third of all rural 
hospitals. Almost two-thirds of Wyoming hospitals would qualify for the 
low-volume provisions in H-CARE, which would result in $26.5 million in 
increased payments over 10 years.
  Rural hospitals have long sought changes to the wage index which 
adjusts hospital inpatient payments to reflect the effect of their 
labor costs. Currently, the labor-related share of hospital inpatient 
payments is set nationally at 71 percent. As rural hospitals generally 
have a lower wage index than their urban counterparts, their inpatient 
payment is adjusted downward. H-CARE would lower the labor-related 
percent from 71 percent to 62 percent, which will increase payments to 
rural hospitals.
  There are now more than 700 hospitals nationwide that have converted 
to Critical Access Hospital status. This program was created in the 
Balanced Budget Act of 1997 and allows our smallest communities crucial 
access to 24 hour emergency services and some hospital care in their 
home towns. Almost 25 percent of my State's hospitals have downsized to 
Critical Access Hospital status. H-CARE contains several provisions to 
strengthen this important rural hospital program.
  It is time for the Federal Government to recognize that rural 
hospitals are long overdue for a fair shake from the Medicare program. 
Rural providers care for patients under different circumstances than 
urban hospitals and H-CARE ensures that rural hospitals are paid 
accurately and fairly. I strongly encourage all my colleagues with an 
interest in rural health to cosponsor this legislation.
  I also want to thank the American Hospital Association, the 
Federation of American Hospitals, Premier and the National Rural Health 
Association for their work and support in this effort.
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