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108th CONGRESS
  1st Session
                                H. R. 937

    To amend title XVIII of the Social Security Act to provide for 
  improvements in access to services in rural hospitals and critical 
                           access hospitals.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 26, 2003

 Mr. Moran of Kansas (for himself, Mr. Turner of Texas, Mr. Berry, Mr. 
    Otter, Ms. Baldwin, Mr. Pickering, Mr. Osborne, Mr. Hastings of 
Washington, Mr. Paul, Mr. McIntyre, Mr. Sandlin, Mr. Kind, Mr. Tiahrt, 
Mr. Murtha, Mr. Whitfield, Mr. Stenholm, and Mr. Frost) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
 and in addition to the Committee on Energy and Commerce, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
    To amend title XVIII of the Social Security Act to provide for 
  improvements in access to services in rural hospitals and critical 
                           access hospitals.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT.

    (a) Short Title.--This Act may be cited as the ``Rural Community 
Hospital Assistance Act of 2003''.
    (b) Amendments to 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. 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 paragraph (2), 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 paragraph (3), has a provider agreement in 
        effect with the Secretary and is open to the public as of 
        January 1, 2003; 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)(D) 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, 2003) 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, 2003.
    ``(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)(E)--
            ``(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:
    ``(n) Payment for Outpatient Services Furnished in Rural Community 
Hospitals.--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)(E)--
            ``(1) 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
            ``(2) the amount of payment provided for under the 
        prospective payment system for covered OPD services under 
        section 1833(t).''.
            (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, 2003, 
        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 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, 2003, 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 referred to in subclause (I) are inpatient 
hospital services, outpatient hospital services, home health services 
furnished by an 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) Beneficiary Cost-Sharing for Outpatient Services.--Section 
1834(n) (as added by subsection (b)(2)) is amended--
            (1) by inserting ``(1)'' after ``(n)''; and
            (2) adding at the end the following:
    ``(2) 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.''.
    (d) Conforming Amendments.--
            (1) Part a payment.--Section 1814(b) (42 U.S.C. 1395f(b)) 
        is amended by inserting ``other than inpatient hospital 
        services furnished by a rural community hospital,'' after 
        ``critical access hospital services,''.
            (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 before 
                        subparagraph (A), by striking ``and (I)'' and 
                        inserting ``(I), and (K)'';
                            (ii) by striking ``and'' at the end of 
                        paragraph (8);
                            (iii) by striking the period at the end of 
                        paragraph (9) and inserting ``; and''; and
                            (iv) by adding at the end the following:
            ``(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.--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),''.
    (e) Effective Date.--The amendments made by this section shall 
apply to items and services furnished on or after October 1, 2003.

SEC. 3. 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)'' in the matter following cause (v) and inserting ``a 
distinct part (as defined by the Secretary) of the hospital or of a 
critical access hospital or a rural community hospital''.
    (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, 2003.

SEC. 4. 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:
                    ``(E) Exclusion of certain beds from bed count.--In 

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