[Congressional Record Volume 149, Number 128 (Wednesday, September 17, 2003)]
[House]
[Pages H8290-H8292]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HOSPITAL MORTGAGE INSURANCE ACT OF 2003
Mr. NEY. Mr. Speaker, I move to suspend the rules and concur in the
Senate amendment to the bill (H.R. 659) to amend section 242 of the
National Housing Act regarding the requirements for mortgage insurance
under such Act for hospitals.
The Clerk read as follows:
Senate amendment:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Hospital Mortgage Insurance
Act of 2003''.
SEC. 2. STANDARDS FOR DETERMINING NEED AND FEASIBILITY FOR
HOSPITALS.
(a) In General.--Paragraph (4) of section 242(d) of the
National Housing Act (12 U.S.C. 1715z-7) is amended to read
as follows:
``(4)(A) The Secretary shall require satisfactory evidence
that the hospital will be located in a State or political
subdivision of a State with reasonable minimum standards of
licensure and methods of operation for hospitals and
satisfactory assurance that such standards will be applied
and enforced with respect to the hospital.
``(B) The Secretary shall establish the means for
determining need and feasibility for the hospital, if the
State does not have an official procedure for determining
need for hospitals. If the State has an official procedure
for determining need for hospitals, the Secretary shall
require that such procedure be followed before the
application for insurance is submitted, and the application
shall document that need has also been established under that
procedure.''.
(b) Effective Date.--
(1) In general.--The amendment made by this subsection (a)
shall take effect and apply as of the date of the enactment
of this Act.
(2) Effect of regulatory authority.--Any authority of the
Secretary of Housing and Urban Development to issue
regulations to carry out the amendment made by subsection (a)
may not be construed to affect the effectiveness or
applicability of such amendment under paragraph (1) of this
subsection.
SEC. 3. EXEMPTION FOR CRITICAL ACCESS HOSPITALS.
(a) In General.--Section 242 of the National Housing Act
(12 U.S.C.1715z-7) is amended--
(1) in subsection (b)(1)(B), by inserting ``, unless the
facility is a critical access hospital (as that term is
defined in section 1861(mm)(1) of the Social Security Act (42
U.S.C. 1395x(mm)(1)))'' after ``tuberculosis''; and
(2) by adding at the end the following:
``(i) Termination of Exemption for Critical Access
Hospitals.--
``(1) In general.--The exemption for critical access
hospitals under subsection (b)(1)(B) shall have no effect
after July 31, 2006.
``(2) Report to congress.--Not later than 3 years after
July 31, 2003, the Secretary shall submit a report to
Congress detailing the effects of the exemption of critical
access hospitals from the provisions of subsection (b)(1)(B)
on--
``(A) the provision of mortgage insurance to hospitals
under this section; and
``(B) the General Insurance Fund established under section
519.''.
SEC. 4. STUDY OF BARRIERS TO RECEIPT OF INSURED MORTGAGES BY
FEDERALLY QUALIFIED HEALTH CENTERS.
(a) In General.--The Secretary of Housing and Urban
Development shall conduct a study on the barriers to the
receipt of mortgage insurance by Federally qualified health
centers (as defined in section 1905(l)(2)(B) of the Social
Security Act (42 U.S.C. 1396d(l)(2)(B))) under section 1101
of the National Housing Act (12 U.S.C. 1749aaa), or other
programs under that Act.
(b) Report.--Not later than 6 months after the date of
enactment of this Act, the Secretary of Housing and Urban
Development shall submit a report regarding any appropriate
legislative and regulatory changes needed to enable Federally
qualified health centers to access mortgage insurance under
section 1101 of the National Housing Act (12 U.S.C. 1749aaa),
or other programs under that Act to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Ney) and the gentleman from Massachusetts (Mr. Frank) each
will control 20 minutes.
The Chair recognizes the gentleman from Ohio (Mr. Ney).
Mr. NEY. Mr. Speaker, I yield myself such time as I may consume.
This morning we are considering H.R. 659, the Hospital Mortgage
Insurance Act of 2003. This legislation will make substantial
improvements to the FHA Hospital Mortgage Program, making it easier for
hospitals to obtain mortgage insurance.
This vital program provides credit enhancement, merges public and
private resources, and makes available billions of dollars in new
hospital construction and improvements.
Hospitals, Mr. Speaker, face significant financial challenges when
providing care to patients, we all know that, who are covered by
Medicare and Medicaid. At the same time, improvements in technology and
health care knowledge necessitate capital improvements such as
additions and renovations to existing buildings. It is generally
accepted that modern health care facilities will improve the quality of
life and the health of the population.
In an effort to assist States to provide modern health care
facilities, Congress enacted section 242 of the National Housing Act in
1968.
Section 242 permits FHA to insure mortgages of hospital sponsors used
to finance the replacement, modernization and rehabilitation of
inefficient existing facilities. Low interest rate costs attributable
to FHA insured financing, as well as the development of more cost-
efficient facilities, substantially reduces both provider and Federal
and State reimbursement.
[[Page H8291]]
To be eligible for section 242 financing, a hospital must obtain a
Certificate of Need from a designated State agency, or in the absence
of a Certificate of Need authority, a State-commissioned feasibility
study. In addition, the hospital must demonstrate that there are
reasonable State or local minimum licensing and operating standards
already in effect.
However, as a result of continuing Federal policy encouraging
deregulation, Certificate of Need authority has ``sunset'' in some
States. In fact, over the last 20 years, at least 18 States have
repealed their Certificate of Need process and programs.
The problem has been further compounded by at least two other
factors. In some States retaining Certificate of Need authority, some
projects will not qualify for the CON process. In others, the relevant
State agency often lacks the authority to commission alternative
feasibility studies.
I remember addressing the Ohio Certificate of Need program for
indigent care while serving in the State Senate in Ohio. Ohio was not
alone in reforming that program. For example, several States repealed
their Certificate of Need program, including Arizona, California,
Indiana, Kansas, Minnesota, Missouri, Oregon, Pennsylvania, Texas and
Utah.
{time} 1030
One unintended consequence of those changes was to make it more
difficult for hospitals in these States, particularly in rural areas,
to obtain FHA insurance. This raised the cost of lending for hospitals,
making it more difficult for them to improve existing facilities or
build desperately needed new facilities.
This bill addresses that problem by giving HUD the freedom to devise
new requirements for hospitals to be eligible for FHA mortgage
insurance. It will significantly reduce the cost to providers of
complying with expensive, pre-deregulation Certificate of Need
eligibility requirements; and it will provide major economic stimulus
to State and local communities as well as construction and permanent
employment opportunities.
Two noncontroversial amendments have been added to the bill. One
exempts critical-access hospitals from meeting the 242 statutory
requirement that 50 percent of the patient-days in the facility be for
acute care.
This will allow FHA to insure mortgages for small, rural hospitals
with long-term care nursing facilities, an important change for
communities in which there is not a large enough population to support
two separate entities. This exemption will last for 3 years, during
which time HUD will submit a report to the authorizing committees
concerning its effect on the fund and eligibility.
The other amendment requires HUD to perform a study on the barriers
to insuring mortgages for federally qualified health centers. The
original amendment, to make them eligible for section 242 insurance,
was dropped and this was inserted.
In order to ensure our health care system remains the best in the
world, we must support continued advances in technology and improvement
in medical care. The Hospital Mortgage Insurance Act of 2003 seeks to
do just that by helping hospitals around the country, and especially in
our rural areas, to continue modernizing their facilities and improving
the quality of life for their patients.
Mr. Speaker, I urge Members to support this important piece of
legislation. I thank the gentleman from Ohio (Mr. Oxley), and I thank
our ranking member, the gentleman from Massachusetts (Mr. Frank), and
our staff for the work on this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as
I may consume.
Mr. Speaker, I am delighted to be here to support this effort to make
sure that the Federal Housing Administration is fully able to support
hospitals. I wish it were as available to support housing, but we will
deal with that in other settings.
As the gentleman from Ohio (Mr. Ney) has made clear, changes in
Certificate of Need and other changes at the State level dealing with
health care have put obstacles in the way of hospitals using FHA
mortgage insurance. This is not a cost to the Federal Government; it is
an example of trying to make medical care less expensive in ways that
do not drain the Federal Treasury. It is a matter really that leverages
the Federal system in ways that will help slow the increase in hospital
costs and makes a great deal of sense. It is the kind of technical fix
that is not terribly controversial, but is very important and will have
enormous benefit.
I am pleased that we are going to be doing this in this quick
fashion. I hope that this goes all of the way through the process; and
the sooner the President can sign this bill, the better we will have
treated the important cause of medical care.
Mr. Speaker, I reserve the balance of my time.
General Leave
Mr. NEY. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on this legislation, and insert extraneous material thereon.
The SPEAKER pro tempore (Mr. Culberson). Is there objection to the
request of the gentleman from Ohio?
There was no objection.
Mr. NEY. Mr. Speaker, I yield myself such time as I may consume.
I thank the ranking member of the committee, and I also thank the
ranking member of the subcommittee, the gentlewoman from California
(Ms. Waters). There has been a great bipartisan spirit on this bill and
others, and we appreciate Members working together for the betterment
of the people.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as
I may consume.
Mr. Speaker, the gentlewoman from Texas (Ms. Jackson-Lee) will later
be managing on the Democratic side a bill from the Subcommittee on
Immigration dealing with religious workers which I sponsored, and I
would now like to express my appreciation to the gentlewoman and to the
majority on the Committee on the Judiciary for bringing it forward. I
will be back at a hearing on the Committee on Financial Services on the
Sarbanes-Oxley bill, and so I take this opportunity to thank the
gentlewoman.
Mr. Speaker, I yield 3 minutes to the gentlewoman from Texas (Ms.
Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for
yielding me this time. I will take just a moment to thank the gentleman
from Massachusetts (Mr. Frank) for his leadership on the religious
immigration bill that will be brought up later. Without the gentleman's
leadership, we would not be here, and he is helping thousands of
religious communities and others serve this Nation in a humanitarian
way.
Mr. Speaker, I think the biggest point of this S. 659 is that it
affects the Nation's health insurance program for 34 million seniors
and 5 million disabled persons. Every Member in our congressional
districts deals constantly with the need for increased and improved
benefits for senior citizens and disabled persons.
A particular case I am grappling with in my office now is a young man
injured severely a few years ago in the prime of his life and needs the
kind of resources that can be provided by the enhancement of this
legislation. My words are that this is an important move, and we thank
the Committee on Financial Services for this amendment, as well as to
emphasize that it is imperative that we move the Medicare logjam in the
United States Congress so we can begin to holistically address the
needs of those in nursing homes, senior citizens who have prescription
drug needs, and how we deal with those who are least able to provide
for themselves.
Mr. Speaker, I rise in support of H.R. 659, amending the National
Housing Act. I support this legislation in the name of safeguarding
Medicare and Medicaid. This bill affects a program that is the nation's
health insurance program for 34 million senior citizens and 5 million
disabled persons; therefore, I must contribute to every effort to
sustain it. When hospitals, especially rural facilities, assess the
need to make improvements and renovations
[[Page H8292]]
to existing buildings or structures, the more relaxed feasibility
standards for approving mortgage insurance will allow investors and
hospital board members to more comfortably initiate proposed
improvements without contemplating an impact on the federal healthcare
assistance programs that we have worked so hard to preserve.
Specifically, H.R. 659 will allow for a uniform set of eligibility
requirements that will protect FHA insurance funds while also spurring
insurance premium revenues which, in turn, translate into improvements
to hospital facilities. It will also further the cost reduction goals
of the federal regulation scheme. Furthermore, this bill will provide
protection for hospitals in states where there is neither ``sunset'' or
state-authorized deregulation by way of the certificate of need (CON)
requirements. Most importantly, H.R. 659 will provide significant
economic rejuvenation to state and local healthcare communities.
In our troubled economy, it is not surprising that many hospitals
struggle to secure its capital. For smaller, rural hospitals, it is
almost impossible to do so.
The Department of Housing and Urban Development's Section 242
mortgage bond program has been drafted and amended this legislation to
help hospitals in this area, but 80 percent of its clients have been
from New York and 10 percent from New Jersey, according to the Greater
New York Hospital Association. We must ensure that the help reaches
areas like the Greater Houston area.
Since its start in 1968, Section 242, which provides Federal Housing
Administration insurance to back hospital capital improvement bonds,
has secured over 300 hospital loans in 40 states and Puerto Rico. In
practice, however, that has meant hundreds of loans in the Northeast
and very few elsewhere.
However, the program has recently insured a tax-exempt proposal in
Texas, and others are beginning the process. Applications are currently
under review in Oklahoma and Wisconsin, and facilities in California,
Colorado, and Minnesota will soon turn their interest into action.
Hospitals want Section 242-protected loans, in part, because the
lenders have made the application process less cumbersome. The
Department streamlined its business processes during the late 1990s to
make the program easier for hospitals and their bankers. Therefore,
states that don't require certificates of need have become more willing
to accept commissioned studies of need and feasibility. As a result,
the program is now accessible to many more hospitals nationwide.
Rural hospitals, long cut off from capital, are now using a program
that could make a dramatic difference. Under the Medicare Rural
Hospital Flexibility Program, part of the Balanced Budget Act of 1997,
Medicare can designate critical-access hospitals--hospitals that
receive cost-based rather than formula-based reimbursements from
Medicare for inpatient and outpatient services. That allows the
hospitals to recoup capital costs and improve their bottom line. HUD
has streamlined the Section 242 process for them by covering financial
feasibility studies and working with the hospitals to ensure success by
hiring consultants to develop transition plans.
Many rural hospitals were build during the 1950s and 1960s with loans
and grants from the Hill-Burton Program (Title VI of the Public Health
Service Act). But appropriations for the program ended in 1974, and
since then the hospitals have had trouble getting access to capital.
The loans under Section 242 may be used for construction refinancing,
remodeling, or expansion of new and existing facilities. Architect
fees, planner fees, title and recording fees, and other costs normally
associated with a capital improvement project are also eligible. Also,
up to 4.5 percent of the loan amount may be used for financing and
placement fees, and 2 percent for working capital.
An FHA-insured mortgage can cover up to 90 percent of the replacement
value of the assets pledged as security for the debt. Because the
pledged assets include all of the hospitals' assets, not just the
current project, the insured mortgage may cover the full costs.
The threshold qualification for the program is a certificate of need
(CON) issued or pending for the project. If a state does not have a CON
process, HUD will work with the state to establish guidelines for
conducting an independent feasibility study.
With respect to the Baptist Hospitals of Southeast Texas, the Texas
Department of Health conducted a feasibility study under guidelines it
established in an agreement with the FHA. Pursuant to this agreement,
the borrower is responsible for the cost of the feasibility study,
which can be paid directly by the borrower or from the mortgage
proceeds. During construction, the annual insurance premium is charged
on the full amount of the approved mortgage and is capitalized in the
loan for the full construction period.
The Section 242 program is of paramount importance because it is a
credit-enhancement vehicle that can be of tremendous use to large
health systems. This program has distinct applications which can be
used by a whole litany of hospitals--community and critical-access
hospitals, proprietary institutions.
Mr. Speaker, for the above reasons, I support H.R. 659.
Mr. OXLEY. Mr. Speaker, I'd like to thank Housing Subcommittee
Chairman Bob Ney for introducing this important legislation. This bill
is a great example of common sense triumphing over bureaucratic
impediments.
The Federal Housing Administration has been helping Americans buy
homes for nearly 70 years. This backing helps American families
struggling with the costs of homeownership to obtain lower interest
rates on their mortgages and for many, may be the difference between
securing a home loan or not.
Today we're here to ensure that these same benefits are available for
hospitals across the country. In the 1970s, Congress enacted
legislation to provide mortgage insurance to hospitals making capital
improvements, provided they submitted an approved certificate of need
from their state government. Too many hospitals are unable to take
advantage of the significant benefits incurred by FHA insurance because
their states no longer provide the certificates of need necessary to
qualify for FHA-backed mortgages. This bill responds to the changes in
state programs over the past twenty years.
By allowing the Department of Housing and Urban Development to craft
guidelines for qualifying hospitals without certificate of need
programs, this bill will improve healthcare in communities across
America. This legislation will build new maternity wards, modernize
facilities and put hospitals in communities that do not have reasonable
access to these services locally.
With this bill, we can move toward ensuring that quality, affordable
medical care is readily available in rural and urban communities where
financing is most needed.
I command Congressman Ney for his leadership and thank Committee and
Subcommittee Ranking Members Congressman Frank and Congresswoman Waters
for their help and support with this legislation.
Mr. FRANK of Massachusetts. Mr. Speaker, I yield back the balance of
my time.
Mr. NEY. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Ohio (Mr. Ney) that the House suspend the rules and
concur in the Senate amendment to the bill, H.R. 659.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate amendment was
concurred in.
A motion to reconsider was laid on the table.
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