I

103D CONGRESS

2D SESSION H. R. 4378

To amend the Social Security Act to require the Secretary of Health and

Human Services to equalize the labor and non-labor portions of the

standardized amounts used to determine the amount of payment made

to rural and urban hospitals under part A of the medicare program

for the operating costs of inpatient hospital services, to amend the

Public Health Service Act to improve the capacity of rural hospitals

to provide health services, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 10, 1994

Mr. CLINGER (for himself, Mr. MCHUGH, Mr. PARKER and Mr. OBERSTAR)

introduced the following bill; which was referred jointly to the Committees

on Ways and Means, Energy and Commerce, the Judiciary, and Government Operations

A BILL

To amend the Social Security Act to require the Secretary

of Health and Human Services to equalize the labor

and non-labor portions of the standardized amounts used

to determine the amount of payment made to rural and

urban hospitals under part A of the medicare program

for the operating costs of inpatient hospital services,

to amend the Public Health Service Act to improve the

capacity of rural hospitals to provide health services,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Rural Hospital Survival Act of 1994’’.

4 (b) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

TITLE I—PROGRAMS OF HEALTH CARE FINANCING

ADMINISTRATION

Subtitle A—Medicare Program

Sec. 101. Equalization of labor and non-labor portions of standardized amounts

for hospitals in rural and other urban areas.

Sec. 102. Sense of Congress regarding disproportionate impact of reductions in

medicare reimbursements on rural providers.

Subtitle B—Other Programs

Sec. 111. Extension of authorization of appropriations for rural health transition grants.

TITLE II—PROGRAMS OF PUBLIC HEALTH SERVICE

Sec. 201. Demonstration grants for telecommunications to improve health care

in rural areas.

Sec. 202. Rural health outreach grant program.

TITLE III—ANTITRUST PROVISIONS

Sec. 301. Antitrust exemption applicable to hospitals.

TITLE IV—COMMISSION ON REDUCING THE BURDEN OF

REGULATIONS AND PAPERWORK ON SMALL RURAL

HOSPITALS.

Sec. 401. Establishment.

Sec. 402. Duties of commission.

Sec. 403. Membership.

Sec. 404. Director and staff of commission; experts and consultants.

Sec. 405. Powers of commission.

Sec. 406. Termination.

Sec. 407. Authorization of appropriations.

6 SEC. 2. FINDINGS.

7 The Congress finds as follows:
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1 (1) For the 27 percent of Americans living in

2 rural areas, certain geographic, demographic, and

3 epidemiologic characteristics can reduce the avail4 ability and quality of medical care.

5 (2) Rough terrain, bad weather conditions, de6 teriorating transportation infrastructure, long dis7 tances between medical facilities, and the lack of

8 public transportation systems all serve as geographic

9 barriers to adequate health care.

10 (3) Rural populations tend to be older and have

11 lower average per capita incomes, resulting in higher

12 concentrations of medicare, medicaid, and uninsured

13 patients.

14 (4) In rural regions, hospitals are the primary

15 sources of medical care and serve as hubs of the

16 local health care delivery systems.

17 (5) Rural hospitals generally have fewer beds,

18 fewer admissions, lower occupancy rates, and higher

19 per patient, per day expenses than urban hospitals.

20 (6) The medicare program continues to reim21 burse rural hospitals at lower rates than urban hos22 pitals.

23 (7) Because of the high proportion of medicare,

24 medicaid, and uninsured individuals in rural areas,

25 rural hospitals rely heavily on Federal funds in the
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1 form of medicare and medicaid reimbursements for

2 their survival.

3 (8) When the Congress cuts or freezes medicare

4 reimbursement, it reduces the primary source of rev5 enues for rural hospitals.

6 (9) The volume of uncompensated care that

7 rural hospitals provide continues to rise and places

8 serious financial burdens on the hospitals.

9 (10) Almost one third of all rural hospitals have

10 negative operating expenses.

11 (11) Almost 400 rural hospitals have been

12 closed since 1980.

13 (12) Besides providing medical care, rural hos14 pitals are integral parts of local economies because

15 they are usually one of the largest employers in the

16 area and play an important role in attracting new

17 businesses and residents to the area.

18 (13) Any health care reform package adopted

19 by the Congress must include provisions that im20 prove the financial condition and ensure the survival

21 of our small, rural hospitals.
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1 TITLE I—PROGRAMS OF HEALTH

2 CARE FINANCING ADMINIS3 TRATION

4 Subtitle A—Medicare Program

5 SEC. 101. EQUALIZATION OF LABOR AND NON-LABOR POR6 TIONS OF STANDARDIZED AMOUNTS FOR

7 HOSPITALS IN RURAL AND OTHER URBAN

8 AREAS.

9 (a) IN GENERAL.—Section 1886(d)(3)(A)(iii) of the

10 Social Security Act (42 U.S.C. 1395ww(d)(3)(A)(iii)) is

11 amended by striking ‘‘average standardized amount’’ the

12 first place it appears and all that follows and inserting

13 the following: ‘‘portion of the average standardized

14 amount attributable to wages and wage-related costs and

15 the portion of such amount not attributable to wages and

16 wage-related costs for hospitals located in a rural area

17 shall be equal to such portions of such amount for hos18 pitals located in an other urban area.’’.

19 (b) LIMITATION ON SCOPE OF COSTS CONSIDERED

20 ATTRIBUTABLE TO WAGES AND WAGE-RELATED

21 COSTS.—The first sentence of section 1886(d)(3)(E) of

22 such Act (42 U.S.C. 1395ww(d)(3)(E)) by striking

23 ‘‘costs,’’ and inserting ‘‘costs (taking into account only

24 costs attributable to wages and salaries, employee benefits,

25 and professional fees),’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to discharges occurring on or after

3 October 1, 1994.

4 SEC. 102. SENSE OF CONGRESS REGARDING DISPROPOR5 TIONATE IMPACT OF REDUCTIONS IN MEDI6 CARE REIMBURSEMENTS ON RURAL PROVID7 ERS.

8 (a) FINDING.—Congress finds the following:

9 (1) The proportion of the revenues of rural hos10 pitals, physicians, and other providers of health care

11 services providers that is attributable to payments

12 under the medicare program is significantly higher

13 than the proportion of the revenues of urban hos14 pitals, physicians, and other providers that is attrib15 utable to such payments, because a higher propor16 tion of the residents of rural areas are age 65 or

17 older.

18 (2) As a result, any reductions in the payments

19 made to hospitals, physicians, and other providers

20 under the medicare program disproportionately af21 fects providers in rural areas.

22 (b) SENSE OF CONGRESS.—It is the sense of Con23 gress that any reductions in payments made to providers

24 under the medicare program should be adjusted so as to
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1 reduce the disproportionate impact such reductions have

2 on providers in rural areas.

3 Subtitle B—Other Programs

4 SEC. 111. EXTENSION OF AUTHORIZATION OF APPROPRIA5 TIONS FOR RURAL HEALTH TRANSITION

6 GRANTS.

7 Section 4005(e)(9) of the Omnibus Budget Reconcili8 ation Act of 1987 is amended—

9 (1) by striking ‘‘1989 and’’ and inserting

10 ‘‘1989,’’; and

11 (2) by striking ‘‘1992’’ and inserting ‘‘1992

12 and $50,000,000 for each of fiscal years 1993

13 through 1997’’.

14 TITLE II—PROGRAMS OF PUBLIC

15 HEALTH SERVICE

16 SEC. 201. DEMONSTRATION GRANTS FOR TELECOMMUNI17 CATIONS TO IMPROVE HEALTH CARE IN

18 RURAL AREAS.

19 Part D of title III of the Public Health Service Act

20 (42 U.S.C. 254b et seq.) is amended by adding at the end

21 the following section:

22 ‘‘USE OF TELECOMMUNICATIONS FOR IMPROVING

23 HEALTH OF RURAL POPULATIONS

24 ‘‘SEC. 340D. (a) IN GENERAL.—The Secretary may

25 make grants to public and nonprofit private entities to

26 carry out demonstration projects for the purpose of im-
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1 proving health services in rural areas through using tele2 communications to make available to the health profes3 sionals of such areas medical advice and knowledge, and

4 the use of medical technologies, that otherwise are not sig5 nificantly available to the professionals.

6 ‘‘(b) PREFERENCES IN MAKING GRANTS.—In mak7 ing grants under subsection (a), the Secretary shall give

8 preference to an otherwise qualified applicant if, in the

9 demonstration project under such subsection, the number

10 of health facilities and health professionals with respect

11 to which the purpose described in such subsection is to

12 be carried out constitutes a significant number of the

13 health facilities and health professionals of the rural area

14 involved.

15 ‘‘(c) AGREEMENTS AMONG PARTICIPATING HEALTH

16 PROFESSIONALS.—The Secretary may make a grant

17 under subsection (a) only if the health professionals with

18 respect to which the purpose described in such subsection

19 is to be carried out have entered into an agreement gov20 erning the use by the professionals of the telecommuni21 cations involved.

22 ‘‘(d) APPLICATION FOR GRANT.—The Secretary may

23 make a grant under subsection (a) only if an application

24 for the grant is submitted to the Secretary and the appli25 cation is in such form, is made in such manner, and con-
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1 tains such agreements, assurances, and information as the

2 Secretary determines to be necessary to carry out this sec3 tion.

4 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the

5 purpose of carrying out this section, there are authorized

6 to be appropriated such sums as may be necessary for

7 each of the fiscal years 1995 through 1997.’’.

8 SEC. 202. RURAL HEALTH OUTREACH GRANT PROGRAM.

9 Part D of title III of the Public Health Service Act,

10 as amended by section 201 of this Act, is amended by add11 ing at the end the following section:

12 ‘‘ACCESS OF RURAL POPULATIONS TO PRIMARY HEALTH

13 SERVICES

14 ‘‘SEC. 340E. (a) IN GENERAL.—The Secretary, act15 ing through the Director of the Office of Rural Health

16 Policy, may make grants to public and nonprofit private

17 health care entities to carry out demonstration projects

18 for the purposes of—

19 ‘‘(1) increasing the capacity of the residents of

20 rural areas to utilize primary health services (and

21 related health and social services) available under

22 Federal, State, and local programs through—

23 ‘‘(A) informing the residents of the exist24 ence of such programs;

25 ‘‘(B) assisting the residents in establishing

26 eligibility under the programs;
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1 ‘‘(C) providing transportation services for

2 the residents; and

3 ‘‘(D) such other services as the Secretary

4 determines to be appropriate; and

5 ‘‘(2) providing primary health services to such

6 residents, with priority given to the provision of pre7 ventive health services.

8 ‘‘(b) PREFERENCES IN MAKING GRANTS.—In mak9 ing grants under subsection (a), the Secretary shall give

10 preference to an otherwise qualified applicant if the appli11 cant has, with 2 or more other health care entities, entered

12 into an agreement under which—

13 ‘‘(1) the participants in the agreement collabo14 rate to carry out the demonstration project involved;

15 and

16 ‘‘(2) the participants will make significant ef17 forts to coordinate the delivery of primary health

18 services in the rural area involved, and to coordinate

19 the provision of such services with related health and

20 social services in the area.

21 ‘‘(c) IDENTIFICATION OF NEED FOR SERVICES.—The

22 Secretary may make a grant under subsection (a) only if

23 the applicant for the grant has identified the need in the

24 rural area involved for the services to be provided under

25 the grant.
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1 ‘‘(d) APPLICATION FOR GRANT.—The Secretary may

2 make a grant under subsection (a) only if an application

3 for the grant is submitted to the Secretary and the appli4 cation is in such form, is made in such manner, and con5 tains such agreements, assurances, and information as the

6 Secretary determines to be necessary to carry out this sec7 tion.

8 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the

9 purpose of carrying out this section, there is authorized

10 to be appropriated $50,000,000 for each of the fiscal years

11 1995 through 1997.’’.

12 TITLE III—ANTITRUST

13 PROVISIONS

14 SEC. 301. ANTITRUST EXEMPTION APPLICABLE TO HOS15 PITALS.

16 (a) EXEMPTION.—The antitrust laws shall not apply

17 with respect to—

18 (1) the combination of, or the attempt to com19 bine, 2 or more hospitals,

20 (2) a contract entered into solely by 2 or more

21 hospitals to allocate hospital services, or

22 (3) the attempt by only 2 or more hospitals to

23 enter into a contract to allocate hospital services,

24 if each of such hospitals satisfies all of the requirements

25 of subsection (b) at the time such hospitals engage in the
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1 conduct described in paragraph (1), (2), or (3), as the case

2 may be.

3 (b) REQUIREMENTS.—The requirements referred to

4 in subsection (a) are as follows:

5 (1) The hospital is located outside of a city, or

6 in a city that has less than 25,000 inhabitants, as

7 determined in accordance with the most recent data

8 available from the Bureau of the Census.

9 (2) In the most recently concluded calendar

10 year, the hospital received more than 40 percent of

11 its gross revenue from payments made under Fed12 eral programs.

13 (3) There is in effect with respect to the hos14 pital a certificate issued by the Health Care Financ15 ing Administration specifying that such Administra16 tion has determined that Federal expenditures would

17 be reduced, and consumer costs would not increase,

18 if the 2 or more hospitals that request such certifi19 cate merge, or allocate the hospital services specified

20 in such request, as the case may be.

21 (c) DEFINITION.—For purposes of this section, the

22 term ‘‘antitrust laws’’ has the meaning given such term

23 in subsection (a) of the first section of the Clayton Act

24 (15 U.S.C. 12), except that such term includes section 5

25 of the Federal Trade Commission Act (15 U.S.C. 45) to
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1 the extent that such section 5 applies with respect to un2 fair methods of competition.

3 TITLE IV—COMMISSION ON RE4 DUCING THE BURDEN OF

5 REGULATIONS AND PAPER6 WORK ON SMALL RURAL HOS7 PITALS.

8 SEC. 401. ESTABLISHMENT.

9 There is hereby established the Advisory Commission

10 on Reducing the Burden of Regulations and Paperwork

11 on Small Rural Hospitals (hereafter referred to as the

12 ‘‘Commission’’).

13 SEC. 402. DUTIES OF COMMISSION.

14 (a) ANALYSIS OF IMPACT OF REGULATIONS AND

15 PAPERWORK.—The Commission shall analyze the impact

16 of Federal, State, and local government regulations and

17 paperwork requirements on small rural hospitals.

18 (b) REPORTS AND RECOMMENDATIONS.—

19 (1) INTERIM REPORTS.—During the first 2

20 years after the initial appointment of its members,

21 the Commission shall—

22 (A) submit reports to the Secretary of

23 Health and Human Services (hereafter referred

24 to as the ‘‘Secretary’’) on its activities under
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1 subsection (a) at such times as the Secretary

2 may require; and

3 (B) submit to the Secretary and Congress

4 recommendations for regulatory and legislative

5 proposals to reduce the burden of government

6 regulations and paperwork requirements on

7 small rural hospitals.

8 (2) FINAL REPORT.—Not later than January 1,

9 1998, the Commission shall submit a final report to

10 the Secretary and Congress on its activities under

11 this title, and shall include in the report its final rec12 ommendations for proposals described in paragraph

13 (1)(B).

14 SEC. 403. MEMBERSHIP.

15 (a) NUMBER AND APPOINTMENT.—

16 (1) IN GENERAL.—The Commission shall be

17 composed of 8 members appointed by the Secretary

18 from individuals who possess extensive leadership ex19 perience in and knowledge of State and local govern20 ment, intergovernmental relations, and the adminis21 tration and operation of small rural hospitals.

22 (2) LIMITATION.—An individual who is a Mem23 ber or employee of the Congress may not be ap24 pointed or serve as a member of the Commission.
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1 (b) WAIVER OF LIMITATION ON EXECUTIVE SCHED2 ULE POSITIONS.—Appointments may be made under this

3 section without regard to section 5311(b) of title 5, United

4 States Code.

5 (c) POLITICAL AFFILIATION.—Not more than 4

6 members of the Commission may be of the same political

7 party.

8 (d) TERMS.—

9 (1) IN GENERAL.—Each member of the Com10 mission shall be appointed for the life of the Com11 mission.

12 (2) VACANCIES.—A vacancy in the Commission

13 shall be filled in the manner in which the original

14 appointment was made.

15 (e) BASIC PAY.—

16 (1) RATES OF PAY.—Members of the Commis17 sion shall serve without pay.

18 (2) PROHIBITION OF COMPENSATION OF FED19 ERAL EMPLOYEES.—Members of the Commission

20 who are full-time officers or employees of the United

21 States may not receive additional pay, allowances, or

22 benefits by reason of their service on the Commis23 sion.

24 (f) TRAVEL EXPENSES.—Each member of the Com25 mission shall receive travel expenses, including per diem
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1 in lieu of subsistence, in accordance with sections 5702

2 and 5703 of title 5, United States Code.

3 (g) CHAIRPERSON.—The President shall designate a

4 member of the Commission as Chairperson at the time of

5 the appointment of that member.

6 (h) MEETINGS.—

7 (1) IN GENERAL.—Subject to paragraph (2),

8 the Commission shall meet at the call of the Chair9 person or a majority of its members.

10 (2) FIRST MEETING.—The Commission shall

11 convene its first meeting by not later than 45 days

12 after the date of the completion of appointment of

13 the member of the Commission.

14 (3) QUORUM.—A majority of members of the

15 Commission shall constitute a quorum but a lesser

16 number may hold hearings.

17 SEC. 404. DIRECTOR AND STAFF OF COMMISSION; EXPERTS

18 AND CONSULTANTS.

19 (a) DIRECTOR.—The Commission shall, without re20 gard to section 5311(b) of title 5, United States Code,

21 have a Director who shall be appointed by the Commis22 sion. The Director shall be paid at the rate of basic pay

23 payable for level IV of the Executive Schedule.

24 (b) STAFF.—With the approval of the Commission,

25 and without regard to section 5311(b) of title 5, United
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1 States Code, the Director may appoint and fix the pay

2 of such staff as is sufficient to enable the Commission to

3 carry out its duties.

4 (c) APPLICABILITY OF CERTAIN CIVIL SERVICE

5 LAWS.—The Director and staff of the Commission may

6 be appointed without regard to the provisions of title 5,

7 United States Code, governing appointments in the com8 petitive service, and may be paid without regard to the

9 provisions of chapter 51 and subchapter III of chapter 53

10 of that title relating to classification and General Schedule

11 pay rates, except that an individual so appointed may not

12 receive pay in excess of the annual rate of basic pay pay13 able for GS–18 of the General Schedule.

14 (d) EXPERTS AND CONSULTANTS.—The Commission

15 may procure temporary and intermittent services of ex16 perts or consultants under section 3109(b) of title 5,

17 United States Code.

18 (e) STAFF OF FEDERAL AGENCIES.—Upon request

19 of the Director, the head of any Federal department or

20 agency may detail, on a reimbursable basis, any of the

21 personnel of that department or agency to the Commission

22 to assist it in carrying out its duties under this title.

23 SEC. 405. POWERS OF COMMISSION.

24 (a) HEARINGS AND SESSIONS.—The Commission

25 may, for the purpose of carrying out this title, hold hear-
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1 ings, sit and act at times and places, take testimony, and

2 receive evidence as the Commission considers appropriate.

3 (b) POWERS OF MEMBERS AND AGENTS.—Any mem4 ber or agent of the Commission may, if authorized by the

5 Commission, take any action which the Commission is au6 thorized to take by this section.

7 (c) OBTAINING OFFICIAL DATA.—The Commission

8 may secure directly from any department or agency of the

9 United States information necessary to enable it to carry

10 out this title. Upon request of the Chairperson of the Com11 mission, the head of that department or agency shall fur12 nish that information to the Commission.

13 (d) MAILS.—The Commission may use the United

14 States mails in the same manner and under the same con15 ditions as other departments and agencies of the United

16 States.

17 (e) ADMINISTRATIVE SUPPORT SERVICES.—Upon

18 the request of the Commission, the Administrator of Gen19 eral Services shall provide to the Commission, on a reim20 bursable basis, the administrative support services nec21 essary for the Commission to carry out its duties under

22 this title.

23 (f) CONTRACT AUTHORITY.—The Commission may,

24 subject to appropriations, contract with and compensate
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1 government and private agencies or persons for property

2 and services used to carry out its duties under this title.

3 SEC. 406. TERMINATION.

4 The Commission shall terminate 90 days after sub5 mitting its final report pursuant to section 402(b)(2).

6 SEC. 407. AUTHORIZATION OF APPROPRIATIONS.

7 There are authorized to be appropriated to the Com8 mission such sums as may be necessary for the Commis9 sion to carry out its duties under this title.

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