A bill to improve health care in rural areas.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preserving Health Care in Rural 
America Act of 2002''.

SEC. 2. MEDICARE INPATIENT PAYMENT ADJUSTMENT FOR LOW-VOLUME HOSPITALS.

    Section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) is 
amended by adding at the end the following new paragraph:
    ``(12) Payment adjustment for low-volume hospitals.--
            ``(A) Payment adjustment.--
                    ``(i) In general.--Notwithstanding any other 
                provision of this section, for each cost reporting 
                period (beginning with the cost reporting period that 
                begins in fiscal year 2003), the Secretary shall 
                provide for an additional payment amount to each low-
                volume hospital (as defined in clause (iii)) for 
                discharges occurring during that cost reporting period 
                to increase the amount paid to such hospital under this 
                section for such discharges by the applicable 
                percentage increase determined under clause (ii).
                    ``(ii) Applicable percentage increase.--The 
                Secretary shall determine a percentage increase 
                applicable under this paragraph that ensures that--
                            ``(I) no percentage increase in payments 
                        under this paragraph exceeds 25 percent of the 
                        amount of payment that would otherwise be made 
                        to a low-volume hospital under this section for 
                        each discharge (but for this paragraph);
                            ``(II) low-volume hospitals that have the 
                        lowest number of discharges during a cost 
                        reporting period receive the highest percentage 
                        increase in payments due to the application of 
                        this paragraph; and
                            ``(III) the percentage increase in payments 
                        due to the application of this paragraph is 
                        reduced as the number of discharges per cost 
                        reporting period increases.
                    ``(iii) Low-volume hospital defined.--For purposes 
                of this paragraph, the term `low-volume hospital' 
                means, for a cost reporting period, a subsection (d) 
                hospital (as defined in paragraph (1)(B)) other than a 
                critical access hospital (as defined in section 
                1861(mm)(1)) that--
                            ``(I) the Secretary determines had an 
                        average of less than 800 discharges (determined 
                        with respect to all patients and not just 
                        individuals receiving benefits under this 
                        title) during the 3 most recent cost reporting 
                        periods for which data are available that 
                        precede the cost reporting period to which this 
                        paragraph applies; and
                            ``(II) is located at least 10 miles from a 
                        similar hospital (or is deemed by the Secretary 
                        to be so located by reason of such factors as 
                        the Secretary determines appropriate, including 
                        the time required for an individual to travel 
                        to the nearest alternative source of 
                        appropriate inpatient care (taking into account 
                        the location of such alternative source of 
                        inpatient care and any weather or travel 
                        conditions that may affect such travel time)).
            ``(B) Prohibiting certain reductions.--Notwithstanding 
        subsection (e), the Secretary shall not reduce the payment 
        amounts under this section to offset the increase in payments 
        resulting from the application of subparagraph (A).''.

SEC. 3. FAIRNESS IN THE MEDICARE DISPROPORTIONATE SHARE HOSPITAL (DSH) 
              ADJUSTMENT FOR RURAL HOSPITALS.

    (a) Equalizing DSH Payment Amounts.--
            (1) In general.--Section 1886(d)(5)(F)(vii) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(5)(F)(vii)) is amended by 
        inserting ``, and, after October 1, 2002, for any other 
        hospital described in clause (iv),'' after ``clause (iv)(I)''.
            (2) Conforming amendments.--Section 1886(d)(5)(F) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended--
                    (A) in clause (iv)--
                            (i) in subclause (II), by inserting ``or, 
                        for discharges occurring on or after October 1, 
                        2002, is equal to the percent determined in 
                        accordance with the applicable formula 
                        described in clause (vii)'' after ``clause 
                        (xiii)'';
                            (ii) in subclause (III), by inserting ``or, 
                        for discharges occurring on or after October 1, 
                        2002, is equal to the percent determined in 
                        accordance with the applicable formula 
                        described in clause (vii)'' after ``clause 
                        (xii)'';
                            (iii) in subclause (IV), by inserting ``or, 
                        for discharges occurring on or after October 1, 
                        2002, is equal to the percent determined in 
                        accordance with the applicable formula 
                        described in clause (vii)'' after ``clause (x) 
                        or (xi)'';
                            (iv) in subclause (V), by inserting ``or, 
                        for discharges occurring on or after October 1, 
                        2002, is equal to the percent determined in 
                        accordance with the applicable formula 
                        described in clause (vii)'' after ``clause 
                        (xi)''; and
                            (v) in subclause (VI), by inserting ``or, 
                        for discharges occurring on or after October 1, 
                        2002, is equal to the percent determined in 
                        accordance with the applicable formula 
                        described in clause (vii)'' after ``clause 
                        (x)'';
                    (B) in clause (viii), by striking ``The formula'' 
                and inserting ``For discharges occurring before October 
                1, 2002, the formula''; and
                    (C) in each of clauses (x), (xi), (xii), and 
                (xiii), by striking ``For purposes'' and inserting 
                ``With respect to discharges occurring before October 
                1, 2002, for purposes''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to discharges occurring on or after October 1, 2002.

SEC. 4. CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM.

    (a) In General.--Part A of title XVI of the Public Health Service 
Act (42 U.S.C. 300q et seq.) is amended by adding at the end the 
following new section:

            ``capital infrastructure revolving loan program

    ``Sec. 1603. (a) Authority To Make and Guarantee Loans.--
            ``(1) Authority to make loans.--The Secretary may make 
        loans from the fund established under section 1602(d) to any 
        rural entity for projects for capital improvements, including--
                    ``(A) the acquisition of land necessary for the 
                capital improvements;
                    ``(B) the renovation or modernization of any 
                building;
                    ``(C) the acquisition or repair of fixed or major 
                movable equipment; and
                    ``(D) such other project expenses as the Secretary 
                determines appropriate.
            ``(2) Authority to guarantee loans.--
                    ``(A) In general.--The Secretary may guarantee the 
                payment of principal and interest for loans made to 
                rural entities for projects for any capital improvement 
                described in paragraph (1) to any non-Federal lender.
                    ``(B) Interest subsidies.--In the case of a 
                guarantee of any loan made to a rural entity under 
                subparagraph (A), the Secretary may pay to the holder 
                of such loan and for and on behalf of the project for 
                which the loan was made, amounts sufficient to reduce 
                by not more than 3 percent of the net effective 
                interest rate otherwise payable on such loan.
    ``(b) Amount of Loan.--The principal amount of a loan directly made 
or guaranteed under subsection (a) for a project for capital 
improvement may not exceed $5,000,000.
    ``(c) Funding Limitations.--
            ``(1) Government credit subsidy exposure.--The total of the 
        Government credit subsidy exposure under the Credit Reform Act 
        of 1990 scoring protocol with respect to the loans outstanding 
        at any time with respect to which guarantees have been issued, 
        or which have been directly made, under subsection (a) may not 
        exceed $50,000,000 per year.
            ``(2) Total amounts.--Subject to paragraph (1), the total 
        of the principal amount of all loans directly made or 
        guaranteed under subsection (a) may not exceed $250,000,000 per 
        year.
    ``(d) Capital Assessment and Planning Grants.--
            ``(1) Nonrepayable grants.--Subject to paragraph (2), the 
        Secretary may make a grant to a rural entity, in an amount not 
        to exceed $50,000, for purposes of capital assessment and 
business planning.
            ``(2) Limitation.--The cumulative total of grants awarded 
        under this subsection may not exceed $2,500,000 per year.
    ``(e) Termination of Authority.--The Secretary may not directly 
make or guarantee any loan under subsection (a) or make a grant under 
subsection (d) after September 30, 2007.''.
    (b) Rural Entity Defined.--Section 1624 of the Public Health 
Service Act (42 U.S.C. 300s-3) is amended by adding at the end the 
following new paragraph:
            ``(15) The term `rural entity' includes--
                    ``(A) a rural health clinic, as defined in section 
                1861(aa)(2) of the Social Security Act;
                    ``(B) any medical facility with at least 1, but 
                less than 80, beds that is located, for purposes of 
                reimbursement under title XVIII of such Act, in--
                            ``(i) a county that is not part of a 
                        metropolitan statistical area; or
                            ``(ii) a rural census tract of a 
                        metropolitan statistical area (as determined 
                        under the most recent modification of the 
                        Goldsmith Modification, originally published in 
                        the Federal Register on February 27, 1992 (57 
                        Fed. Reg. 6725));
                    ``(C) a hospital that is classified as a rural, 
                regional, or national referral center under section 
                1886(d)(5)(C) of such Act; and
                    ``(D) a hospital that is a sole community hospital 
                (as defined in section 1886(d)(5)(D)(iii) of such 
                Act).''.
    (c) Conforming Amendments.--Section 1602 of the Public Health 
Service Act (42 U.S.C. 300q-2) is amended--
            (1) in subsection (b)(2)(D), by inserting ``or 
        1603(a)(2)(B)'' after ``1601(a)(2)(B)''; and
            (2) in subsection (d)--
                    (A) in paragraph (1)(C), by striking ``section 
                1601(a)(2)(B)'' and inserting ``sections 1601(a)(2)(B) 
                and 1603(a)(2)(B)''; and
                    (B) in paragraph (2)(A), by inserting ``or 
                1603(a)(2)(B)'' after ``1601(a)(2)(B)''.

SEC. 5. HIGH TECHNOLOGY ACQUISITION GRANT AND LOAN PROGRAM.

    Subpart I of part D of title III of the Public Health Service Act 
(42 U.S.C. 241 et seq.) is amended by adding at the end the following 
section:

``SEC. 330I. HIGH TECHNOLOGY ACQUISITION GRANT AND LOAN PROGRAM.

    ``(a) Establishment of Program.--The Secretary, acting through the 
Director of the Office of Rural Health Policy of the Health Resources 
and Services Administration, shall establish a high technology 
acquisition grant and loan program for the purpose of--
            ``(1) improving the quality of health care in rural areas 
        through the acquisition of advanced medical technology;
            ``(2) fostering the development of the networks described 
        in section 330A;
            ``(3) promoting resource sharing between urban and rural 
        facilities; and
            ``(4) improving patient safety and outcomes through the 
        acquisition of high technology, including software, information 
        services, and staff training.
    ``(b) Grants and Loans.--Under the program established under 
subsection (a), the Secretary, acting through the Director of the 
Office of Rural Health Policy, may award grants and make loans to any 
eligible entity (as defined in subsection (d)(1)) for any costs 
incurred by the eligible entity in acquiring eligible equipment and 
services (as defined in subsection (d)(2)).
    ``(c) Limitations.--
            ``(1) In general.--Subject to paragraph (2), the total 
        amount of grants and loans made under this section to an 
        eligible entity may not exceed $100,000.
            ``(2) Federal sharing.--
                    ``(A) Grants.--The amount of any grant awarded 
                under this section may not exceed 70 percent of the 
                costs to the eligible entity in acquiring eligible 
                equipment and services.
                    ``(B) Loans.--The amount of any loan made under 
                this section may not exceed 90 percent of the costs to 
                the eligible entity in acquiring eligible equipment and 
                services.
    ``(d) Definitions.--In this section:
            ``(1) Eligible entity.--The term `eligible entity' means a 
        hospital, health center, or any other entity that the Secretary 
        determines is appropriate that is located in a rural area or 
        region.
            ``(2) Eligible equipment and services.--The term `eligible 
        equipment and services' includes--
                    ``(A) unit dose distribution systems;
                    ``(B) software, information services, and staff 
                training;
                    ``(C) wireless devices to transmit medical orders;
                    ``(D) clinical health care informatics systems, 
                including bar code systems designed to avoid medication 
                errors and patient tracking systems;
                    ``(E) telemedicine technology; and
                    ``(F) any other technology that improves the 
                quality of health care provided in rural areas 
                including systems to improve privacy and address 
                administrative simplification needs.
    ``(e) Authorization of Appropriations.--For the purpose of carrying 
out this section there are authorized to be appropriated $20,000,000 
for each of the fiscal years 2003 through 2008.''.

Summary: Preserving Health Care in Rural America Act of 2002 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to provide for: (1) payment adjustment for low-volume hospitals. And (2) revision in the Medicare disproportionate share hospital (DSH) payment adjustment for rural hospitals equalizing DSH payment amounts. Amends the Public Health Service Act (PHSA) to establish: (1) a capital infrastructure revolving loan program under which the Secretary of Health and Human Services may make described loans to any rural entity for projects for capital improvements from the loan and loan guarantee fund under PHSA. And (2) a high technology acquisition grant and loan program under which the Secretary may award grants and make loans to any eligible entity for any costs incurred by the entity in acquiring eligible equipment and services for improving the quality of health care in rural areas.