[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Extensions of Remarks]
[Pages 18772-18773]
[From the U.S. Government Publishing Office, www.gpo.gov]



     INTRODUCTION OF THE ESSENTIAL RURAL HOSPITAL PRESERVATION ACT

                                 ______
                                 

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                     Wednesday, September 20, 2000

  Mr. PAUL. Mr. Speaker, I rise to introduce the Essential Rural 
Hospital Preservation Act.

[[Page 18773]]

This legislation provides a cost-effective means of providing 
assistance to those small rural hospitals who are struggling with the 
unintended consequences of the Balanced Budget Act of 1997. As those of 
us who represent rural areas can attest to, rural hospitals are 
desperately in need of such assistance. According to a survey conducted 
by Texas CPAs in April of 2000, the operating margin for hospitals 
outside a Standard Metropolitan Area with under 50 licensed beds pre-
BBA was $26,000,000 while the operating margin post-BBA was negative 
$7,900,000. Reimbursement has been reduced by over $34 million since 
the BBA, while at the time the average rural hospital has incurred 
uncompensated and charity charges of $1.1 million since the changes 
contained in the Balanced Budget Act went into effect. Unless action is 
taken this year to provide assistance for these hospitals, many of them 
will be forced to close their doors, leaving many rural areas without 
access to hospital services.
  I believe I can speak for all of my colleagues when I say that while 
none of us want to endanger the Medicare trust fund, we also want to 
ensure that Medicare reforms do not drive valuable health care 
providers into bankruptcy. After all, denying Medicare recipients in 
rural areas access to quality health care breaks the promise the 
government makes to the American people when it requires them to pay 
taxes to finance the Medicare trust fund that they will receive quality 
health care in their golden years.
  Therefore, I am pleased to advance this proposal, which was developed 
by experts in rural health care in my district, which provides help for 
rural health care without endangering the soundness of the Medicare 
trust fund. The proposal consists of four simple changes in current 
Medicare laws for ``Essential Service Hospitals.'' An Essential Service 
Hospital is defined as a hospital located in a non-Metropolitan 
Statistical Area with 50 state-licensed beds or less. The specifics of 
the legislation are:
  1. A wage index for Essential Service Hospitals set at 1.0--Essential 
Service Hospitals receive 26 percent less Medicare Reimbursement than 
hospitals in MSA area. This places rural areas at disadvantage in 
competing for high-quality employees with hospitals in urban areas. 
Setting the wage index at 1.0 will enhance the ability of rural 
hospitals to attract the best personal and thus ensure residents of 
rural areas can continue to receive quality health care.
  2. Allow Essential Service Hospitals to treat 100 percent of Medicare 
copay and deductions which become hospital bad debts as an allowable 
cost--The BBA of 1997 reduced the amount of bad debts incurred because 
of uncollected Medicare copayments and deductions that hospitals can 
submit to Medicare for reimbursement as an allowable cost. This places 
an especially tough burden on Essential Service Hospitals which often 
have a high percentage of bad debts because they tend to have a high 
percentage of low-income populations among their clientele.
  3. Exempt Essential Service Hospitals from the Outpatient Payment 
System (PPS)--Since rural hospitals lack the volume necessary to 
achieve a fair reimbursement rate under PPS, it makes no sense to apply 
PPS to these hospitals. Exempting Essential Service Hospitals from PPS 
assures that they will have their reimbursement rate determined by a 
formula that matches their unique situation.
  4. Provides a 20 percent Medicare Disproportionate Share (DSH) 
payment to Essential Service Hospitals--Since small rural hospitals 
tend to serve a larger number of low-income persons than the average 
hospital, they have a particular need for Medicare DSH payments. 
However, many of these hospitals are not benefiting from the DSH 
program, this legislation will help ensure these hospitals received the 
support from Medicare they need to continue providing vital health care 
to low-income residents of rural areas.
  Considering that the BBA of 1997 has resulted in Medicare savings of 
over $50 billion more than projected by Congress surely it is not to 
much to ask that Congress ensure Medicare patients in rural areas are 
not denied access to quality health care services because of the 
unintended consequences of the Balanced Budget Amendment. I therefore 
call on my colleagues to stand up for rural hospitals by cosponsoring 
the Essential Rural Hospital Preservation Act.

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