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[House Report 107-540]
[From the U.S. Government Publishing Office]

107th Congress                                            Rept. 107-540
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================

 
 MEDICARE MODERNIZATION AND PRESCRIPTION DRUG ACT OF 2002 (TITLE III: 
                    RURAL HEALTH CARE IMPROVEMENTS)

                                _______
                                

                 June 26, 2002.--Ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4962]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4962) to amend title XVIII of the Social 
Security Act to make rural health care improvements under the 
medicare program, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     2
Committee Oversight Findings.....................................     4
Statement of General Performance Goals and Objectives............     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     4
Advisory Committee Statement.....................................     4
Constitutional Authority Statement...............................     4
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     8

                          Purpose and Summary

    The purpose of H.R. 4962 is to increase incentives for 
providers to serve beneficiaries in rural areas and communities 
to ensure that beneficiaries have continued access to the best 
medical care possible.

                  Background and Need for Legislation

    The geographic isolation, low population density, and poor 
economic conditions associated with rural areas often serve as 
impediments to Medicare beneficiaries getting the medical care 
they want and need. These barriers also impose financial 
hardships on providers and make it difficult to recruit 
physicians and other health professionals into rural areas. 
Concerned that Medicare beneficiaries living in rural areas may 
not receive the care they need while many rural providers 
continue to experience financial hardship, the Committee worked 
in collaboration with the Committee on Ways and Means to 
develop the provisions included in H.R. 4962.
    The financial status of rural hospitals and home health 
agencies continues to be a source of concern for the Committee. 
Rural hospitals rely more on Medicare and on outpatient 
services as sources of revenue than do urban hospitals. The 
home health prospective payment system may not adequately 
account for the unique conditions facing home health agencies 
that operate in rural areas.
    There are also differences in payment amounts under the 
physician fee schedule for physicians' services furnished in 
different geographical areas. Physician fees are made up of 
three components: work, practice expense, and malpractice. 
About 14% of the average physician fee is adjusted based on the 
value of their wages in the area of the country where they 
practice. While economists support this geographic adjustment 
of payment, many physicians feel they practice in a national 
market and therefore deserve a more level playing field for 
payment.

                                Hearings

    The Committee on Energy and Commerce has not held hearings 
on the legislation.

                        Committee Consideration

    On Wednesday, June 19, 2002, the Full Committee met in open 
markup session and favorably ordered reported a Committee Print 
on Rural Health Care Improvements. Chairman Tauzin then 
introduced H.R. 4962 to reflect the Committee's action.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
following are the recorded votes taken on the amendments 
offered to the measure, including the names of those members 
voting for and against. A motion by Mr. Tauzin to order H.R. 
4962 reported to the House, without amendment, was agreed to by 
a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The objective of H.R. 4962 is to increase incentives for 
providers to serve beneficiaries in rural areas and communities 
to ensure that these beneficiaries continue to have access to 
the best hospital, home health, hospice, physician, and health 
center services possible.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4962, to amend title XVIII of the Social Security Act to make 
rural health care improvements under the Medicare Program, 
would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974, which is 
included in the report to accompany H.R. 4984.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the cost estimate provided by the 
Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974 is included in the report to 
accompany H.R. 4984.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act. The estimate is included in the report to accompany H.R. 
4984.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 301. Reference to Full Market Basket Increase for Sole 
        Community Hospitals

    Section 301 will eliminate the reduction from the market 
based index (MBI) update specified in Section 401(a) for sole 
community hospitals (SCHs) for FY 2003 (see section 401).
    This section is effective upon enactment.

Section 302. Enhanced Disproportionate Share Hospital (DSH) Treatment 
        for Rural and Urban Hospitals with Fewer than 100 Beds

    Section 302 states that starting for discharges on or after 
October 1, 2002, the DSH adjustment that rural and small urban 
hospitals receive is based on a blend of their current DSH 
adjustment and the current DSH adjustment for large urban 
hospitals. However, the new DSH adjustment would not exceed 10% 
for any hospital that was not classified as a rural referral 
center. A hospital's new DSH adjustment will be calculated 
using 80% of the existing DSH adjustment in FY 2003; 60% in FY 
2004; 20% in FY 2006; and 0% in FY 2007 and subsequently.

Section 303. 2-Year Phased-In Increase in the Standardized Amount in 
        Rural and Small Urban Areas to Achieve a Single, Uniform 
        Standardized Amount

    Section 303 provides for discharges occurring in FY 2003, 
the average standardized amount for rural and small urban 
hospitals would be increased by half the difference between the 
current amount and the larger standardized amount paid to the 
hospitals in large urban areas. For discharges occurring in FY 
2004, the Secretary will compute one standardized amount for 
hospitals located in any area equal to the average standardized 
amount for hospitals in large urban areas computed for the 
previous year and increased by the applicable update. For 
discharges occurring in FY 2005, the Secretary will compute one 
standardized amount for hospitals located in any area equal to 
the average standardized amount computed for the previous year 
for all hospitals increased by the applicable update.
    This section is effective upon enactment.

Section 304. More Frequent Update in Weights Used in Hospital Market 
        Basket.

    Section 304 directs the Secretary to revise the MBI cost 
weights to reflect the most current data available and to 
establish a schedule for revising the cost weights with the 
most current data available more often than once every 5 years. 
The Secretary is required to submit a report to Congress by 
October 1, 2003 on the reasons for and the options considered 
in establishing such a schedule.
    This section is effective upon enactment.

Section 305. Improvement to Critical Access Hospital Program

    Section 305(a) states that starting with payments made on 
or after January 1, 2003, eligible critical access hospitals 
(CAHs) will be able to receive payments made on a PIP basis for 
inpatient services.
    This provision is effective starting with payments made on 
or after January 1, 2003.
    Section 305(b) precludes the Secretary from requiring that 
all physicians providing services in a CAH assign their billing 
right to the CAH in order for it to be able to be paid at 115% 
of the fee schedule for the professional services provided by 
the physicians. A CAH cannot receive payment based on 115% of 
the fee schedule for any individual physician who did not 
assign billing rights to the CAH.
    This provision is effective as if included in the Balanced 
Budget Refinement Act of 1999 (BBRA), P.L. 106-113.
    Section 305(c) requires the Secretary to specify standards 
for determining whether a CAH has seasonal variations in 
patient admissions that would justify a 5-bed increase in the 
number of beds it can maintain (and still retain its 
classification as a CAH).
    This provision applies to designations made on or after 
January 1, 2003, but would not apply to CAHs that were 
designated as of that date.
    Section 305(d) extends the grant program that permits 
annual appropriations from Medicare's Federal Hospital 
Insurance Trust Fund of $25 million through FY 2007.
    This section is effective upon enactment.

Section 306. Extension of Temporary Increase for Home Health Services 
        Furnished in a Rural Area

    Section 306 extends the 10% additional payment for home 
health services furnished in rural areas through the end of 
calendar year 2004.
    This section is effective upon enactment.

Section 307. Reference to 10 Percent Increase in Payment for Hospice 
        Care Furnished in a Frontier Area and Rural Hospice 
        Demonstration Project

    Section 307 increases by 10% the Medicare daily payment 
rate for hospice care furnished in a frontier area on or after 
January 1, 2003, and before January 1, 2008. A frontier area is 
defined as a county in which the population density is less 
than 7 persons per square mile. The GAO is required to submit a 
report to Congress, not later than January 1, 2007, on the 
costs of furnishing hospice care in frontier areas. The report 
must include recommendations regarding the appropriateness of 
extending, and modifying, the payment increase provided under 
this section (see section 422).
    This section requires the Secretary to conduct a 
demonstration project for the delivery of hospice care for 
beneficiaries in rural areas. Under the project, beneficiaries 
who are unable to receive hospice care at home because they 
lack an appropriate caregiver will be provided such care in a 
facility of 20 or fewer beds, which offers within its walls the 
full range of covered hospice benefits. The project is limited 
to three hospice programs over a period of 3 years for each. 
The hospice programs participating in the project will comply 
with requirements otherwise applicable to hospice care, except 
that they will not be required to offer services outside the 
home nor be subject to the limitation on inpatient days. 
Payments will be at the same rates. The Secretary may require 
the participating programs to comply with additional quality 
assurance standards for provisions of services in their 
facilities. The Secretary is required to submit a report to 
Congress, including recommendations regarding extension of such 
project to all programs serving rural areas upon completion of 
the project (see section 423).
    This section is effective upon enactment.

Section 308. Reference to Priority for Hospitals Located in Rural or 
        Small Urban Areas in Redistribution of Unused Graduate Medical 
        Education Residencies

    Section 308 redistributes unused resident positions. 
Starting on July 1, 2003, hospitals can apply to receive these 
unfilled positions and applications will be accepted through 
December 31, 2004. The Secretary will consider the need for an 
increase by specialty and location, first distributing an 
increase to programs or hospitals located in rural or small 
urban areas on a first-come, first-served basis, based on a 
demonstration that the hospital will fill the positions made 
available under this clause. No hospital can receive more than 
an increase of 25 full-time equivalent positions during this 
redistribution process. Hospitals will be reimbursed for direct 
graduate medical education costs for the new positions they 
receive at 100% of the adjusted national average per resident 
amount. Those hospitals that have unfilled positions (they have 
not reached their cap on the number of residents for which 
Medicare will pay direct graduate medical education costs) and 
have not met their cap over the past 3 cost reporting periods 
will have their cap adjusted. Starting January 1, 2003, their 
cap will be reduced by 75% of the difference between the cap 
and the highest number of filled positions over the past 3 cost 
reporting periods. In other words, their cap will be adjusted 
to reflect the highest number of filled positions over the past 
3 cost reporting periods, plus 25% of the remaining unfilled 
positions. Those hospitals that fill positions during the cost 
reporting period that includes July 1, 2002 can apply to the 
Secretary for an adjustment to reflect a greater number of 
filled positions than would otherwise be demonstrated based on 
their past 3 cost reporting periods.
    Reductions in resident counts would affect a hospital's 
indirect medical education (IME) adjustment. Any resulting 
increase in resident counts would not affect a hospital's IME 
adjustment.
    This section requires the Secretary to submit a report to 
Congress by July 1, 2004, which recommends whether to extend 
the application deadline for increases in resident limits.
    This section is effective upon enactment.

Section 309. GAO Study of Geographic Differences in Payments for 
        Physician Services

    Section 309 requires the Comptroller General to conduct a 
study of differences in payment amounts under the physician fee 
schedule for physicians' services furnished in different 
geographical areas. This study will include an assessment of 
the validity of the geographic adjustment factors used for each 
component of the fee schedule, an evaluation of the measures 
used for such adjustment (including the frequency of 
revisions), and an evaluation of the methods used to determine 
professional liability costs used in computing the malpractice 
component. Within 1 year of enactment, the Comptroller General 
will submit to Congress a report detailing the results of this 
study with recommendations regarding the use of more current 
data in computing geographic cost of practice indices and the 
use of data directly representative of physicians' costs 
(rather than proxy measures of such costs).
    This section is effective upon enactment.

Section 310. Providing Safe Harbor for Certain Collaborative Efforts 
        that Benefit Medically Underserved Populations

    Section 310 creates a safe harbor for certain health center 
arrangements that contribute to the ability of such centers to 
maintain or increase the availability, or enhance the quality, 
of services provided to medically underserved populations 
served by the health center. Coverage under the safe harbor is 
limited to agreements between a health center receiving grant 
money under section 330 of the Public Health Service Act and 
any individual or entity providing goods, items, services, 
donations, or loans to the health center. As Section 330 
grantees, these health centers serve medically underserved 
areas or medically underserved populations and are obligated to 
provide primary care services to patients regardless of their 
ability to pay.
    The Committee is aware that health centers are required, as 
a condition of their grant, to establish and maintain 
collaborative agreements with other health care providers in 
their catchment area. To comply with this requirement and to 
assure access to a broad range of services for the increasing 
number of uninsured patients in their service area, some health 
centers seek out (and/or are offered) opportunities to enter 
into arrangements with hospitals or other providers, which 
promise to enhance service access or quality for their 
uninsured patients.
    It is the Committee's understanding that both health 
centers and the providers with whom they might contract have 
been reluctant to enter into these arrangements since they 
might be viewed as violating the federal anti-kickback law if 
there is any intent on the part of either of the parties to 
induce referrals or the purchase of goods or services in which 
federal health care program funds (such as Medicaid or 
Medicare) may be expended. The safe harbor provides that the 
agreement to provide such goods, items, services, donations, or 
loans will not be considered unlawful remuneration under the 
anti-kickback statute if the agreement satisfies standards 
established by the Secretary. The Committee expects the 
Secretary to establish a safe harbor under this section that 
contains protections necessary to minimize the possibility of 
abuse by the parties. The Secretary is required to publish an 
interim final rule, which would be effective immediately, 
within 180 days of enactment to establish these standards.
    This section is effective upon enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                         SOCIAL SECURITY ACT

           *       *       *       *       *       *       *

     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                            SIMPLIFICATION

           *       *       *       *       *       *       *

                      Part A--General Provisions

           *       *       *       *       *       *       *

   CRIMINAL PENALTIES FOR ACTS INVOLVING FEDERAL HEALTH CARE PROGRAMS

  Sec. 1128B. (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (3) Paragraphs (1) and (2) shall not apply to--
          (A) * * *

           *       *       *       *       *       *       *

          (E) any payment practice specified by the Secretary 
        in regulations promulgated pursuant to section 14(a) of 
        the Medicare and Medicaid Patient and Program 
        Protection Act of 1987; [and]
          (F) any remuneration between an organization and an 
        individual or entity providing items or services, or a 
        combination thereof, pursuant to a written agreement 
        between the organization and the individual or entity 
        if the organization is an eligible organization under 
        section 1876 or if the written agreement, through a 
        risk-sharing arrangement, places the individual or 
        entity at substantial financial risk for the cost or 
        utilization of the items or services, or a combination 
        thereof, which the individual or entity is obligated to 
        provide[.];
                  (G) any remuneration between a public or 
                nonprofit private health center entity 
                described under clause (i) or (ii) of section 
                1905(l)(2)(B) and any individual or entity 
                providing goods, items, services, donations or 
                loans, or a combination thereof, to such health 
                center entity pursuant to a contract, lease, 
                grant, loan, or other agreement, if such 
                agreement contributes to the ability of the 
                health center entity to maintain or increase 
                the availability, or enhance the quality, of 
                services provided to a medically underserved 
                population served by the health center entity.

           *       *       *       *       *       *       *

        TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *

     Part A--Hospital Insurance Benefits for the Aged and Disabled

           *       *       *       *       *       *       *

                    PAYMENT TO PROVIDERS OF SERVICES

  Sec. 1815. (a) * * *

           *       *       *       *       *       *       *

  (e)(1) * * *
  (2) The Secretary shall provide (or continue to provide) for 
payment on a periodic interim payment basis (under the 
standards established under section 405.454(j) of title 42, 
Code of Federal Regulations, as in effect on October 1, 1986) 
with respect to--
          (A) * * *

           *       *       *       *       *       *       *

          (C) extended care services; [and]
          (D) hospice care; and
          (E) inpatient critical access hospital services;
if the provider of such services elects to receive, and 
qualifies for, such payments.

           *       *       *       *       *       *       *

              MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM

  Sec. 1820. (a) * * *

           *       *       *       *       *       *       *

  (c) Medicare Rural Hospital Flexibility Program Described.--
          (1) * * *
          (2) State designation of facilities.--
                  (A) * * *
                  (B) Criteria for designation as critical 
                access hospital.--A State may designate a 
                facility as a critical access hospital if the 
                facility--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) provides subject to paragraph 
                        (3) not more than 15 (or, in the case 
                        of a facility under an agreement 
                        described in subsection (f), 25) acute 
                        care inpatient beds (meeting such 
                        standards as the Secretary may 
                        establish) for providing inpatient care 
                        for a period that does not exceed, as 
                        determined on an annual, average basis, 
                        96 hours per patient;

           *       *       *       *       *       *       *

          (3) Increase in maximum number of beds for hospitals 
        with strong seasonal census fluctuations.--
                  (A) In general.--In the case of a hospital 
                that demonstrates that it meets the standards 
                established under subparagraph (B), the bed 
                limitations otherwise applicable under 
                paragraph (2)(B)(iii) and subsection (f) shall 
                be increased by 5 beds.
                  (B) Standards.--The Secretary shall specify 
                standards for determining whether a critical 
                access hospital has sufficiently strong 
                seasonal variations in patient admissions to 
                justify the increase in bed limitation provided 
                under subparagraph (A).

           *       *       *       *       *       *       *

  (j) Authorization of Appropriations.--There are authorized to 
be appropriated from the Federal Hospital Insurance Trust Fund 
for making grants to all States under subsection (g), 
$25,000,000 in each of the fiscal years 1998 through [2002] 
2007.

           *       *       *       *       *       *       *

   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *

        SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES

  Sec. 1834. (a) * * *

           *       *       *       *       *       *       *

  (g) Payment for Outpatient Critical Access Hospital 
Services.--
          (1) * * *
          (2) Election of cost-based hospital outpatient 
        service payment plus fee schedule for professional 
        services.--A critical access hospital may elect to be 
        paid for outpatient critical access hospital services 
        amounts equal to the sum of the following, less the 
        amount that such hospital may charge as described in 
        section 1866(a)(2)(A):
                  (A)  * * *
                  (B) Fee schedule for professional services.--
                With respect to professional services otherwise 
                included within outpatient critical access 
                hospital services, 115 percent of such amounts 
                as would otherwise be paid under this part if 
                such services were not included in outpatient 
                critical access hospital services.
        The Secretary may not require, as a condition for 
        applying subparagraph (B) with respect to a critical 
        access hospital, that each physician providing 
        professional services in the hospital must assign 
        billing rights with respect to such services, except 
        that such subparagraph shall not apply to those 
        physicians who have not assigned such billing rights.

           *       *       *       *       *       *       *

Part D--Miscellaneous Provisions

           *       *       *       *       *       *       *

          PAYMENT TO HOSPITALS FOR INPATIENT HOSPITAL SERVICES

  Sec. 1886. (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (3)(A) * * *
  (B)(i) For purposes of subsection (d) and subsection (j) for 
discharges occurring during a fiscal year, the ``applicable 
percentage increase'' shall be--
          (I) * * *

           *       *       *       *       *       *       *

          [(XVIII) for fiscal year 2003, the market basket 
        percentage increase minus 0.55 percentage points for 
        hospitals in all areas, and]
          (XVIII) for fiscal year 2003, the market basket 
        percentage increase for sole community hospitals and 
        such increase minus 0.25 percentage points for other 
        hospitals, and

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  (3) The Secretary shall determine a national adjusted DRG 
prospective payment rate, for each inpatient hospital discharge 
in a fiscal year after fiscal year 1984 involving inpatient 
hospital services of a subsection (d) hospital in the United 
States, and shall determine a regional adjusted DRG prospective 
payment rate for such discharges in each region for which 
payment may be made under part A of this title. Each such rate 
shall be determined for hospitals located in large urban, other 
urban, or rural areas within the United States and within each 
such region, respectively, as follows:
          (A) Updating previous standardized amounts.--(i) * * 
        *

           *       *       *       *       *       *       *

          [(iv) For discharges] (iv)(I) Subject to the 
        succeeding provisions of this clause, for discharges 
        occurring in a fiscal year beginning on or after 
        October 1, 1995, the Secretary shall compute an average 
        standardized amount for hospitals located in a large 
        urban area and for hospitals located in other areas 
        within the United States and within each region equal 
        to the respective average standardized amount computed 
        for the previous fiscal year under this subparagraph 
        increased by the applicable percentage increase under 
        subsection (b)(3)(B)(i) with respect to hospitals 
        located in the respective areas for the fiscal year 
        involved.
          (II) For discharges occurring during fiscal year 
        2003, the average standardized amount for hospitals 
        located other than in a large urban area shall be 
        increased by \1/2\ of the difference between the 
        average standardized amount determined under subclause 
        (I) for hospitals located in large urban areas for such 
        fiscal year and such amount determined (without regard 
        to this subclause) for other hospitals for such fiscal 
        year.
          (III) For discharges occurring in a fiscal year 
        beginning with fiscal year 2004, the Secretary shall 
        compute an average standardized amount for hospitals 
        located in any area within the United States and within 
        each region equal to the average standardized amount 
        computed for the previous fiscal year under this 
        subparagraph for hospitals located in a large urban 
        area (or, beginning with fiscal year 2005, for 
        hospitals located in any area) increased by the 
        applicable percentage increase under subsection 
        (b)(3)(B)(i).

           *       *       *       *       *       *       *

  (F)(i) * * *

           *       *       *       *       *       *       *

  (iv) The disproportionate share adjustment percentage for a 
cost reporting period for a hospital that is not described in 
clause (i)(II) and that--
          (I) * * *
          (II) is located in an urban area and has less than 
        100 beds, is equal to 5 percent or, subject to clause 
        (xiv) and for discharges occurring on or after April 1, 
        2001, is equal to the percent determined in accordance 
        with clause (xiii);
          (III) is located in a rural area and is not described 
        in subclause (IV) or (V) or in the second sentence of 
        clause (v), is equal to 4 percent or, subject to clause 
        (xiv) and for discharges occurring on or after April 1, 
        2001, is equal to the percent determined in accordance 
        with clause (xii);
          (IV) is located in a rural area, is classified as a 
        rural referral center under subparagraph (C), and is 
        classified as a sole community hospital under 
        subparagraph (D), is equal to 10 percent or, if 
        greater, the percent determined in accordance with the 
        applicable formula described in clause (viii) or, 
        subject to clause (xiv) and for discharges occurring on 
        or after April 1, 2001, the greater of the percentages 
        determined under clause (x) or (xi);
          (V) is located in a rural area, is classified as a 
        rural referral center under subparagraph (C), and is 
        not classified as a sole community hospital under 
        subparagraph (D), is equal to the percent determined in 
        accordance with the applicable formula described in 
        clause (viii) or, subject to clause (xiv) and for 
        discharges occurring on or after April 1, 2001, is 
        equal to the percent determined in accordance with 
        clause (xi); or
          (VI) is located in a rural area, is classified as a 
        sole community hospital under subparagraph (D), and is 
        not classified as a rural referral center under 
        subparagraph (C), is 10 percent or, subject to clause 
        (xiv) and for discharges occurring on or after April 1, 
        2001, is equal to the percent determined in accordance 
        with clause (x).

           *       *       *       *       *       *       *

  (viii) [The formula] Subject to clause (xiv), the formula 
used to determine the disproportionate share adjustment 
percentage for a cost reporting period for a hospital described 
in clause (iv)(IV) or (iv)(V) is the percentage determined in 
accordance with the following formula:(P-30)(.6) + 4.0, where 
``P'' is the hospital's disproportionate patient percentage (as 
defined in clause (vi)).

           *       *       *       *       *       *       *

  (x) [For purposes] Subject to clause (xiv), for purposes of 
clause (iv)(VI) (relating to sole community hospitals), in the 
case of a hospital for a cost reporting period with a 
disproportionate patient percentage (as defined in clause (vi)) 
that--
          (I) * * *

           *       *       *       *       *       *       *

  (xi) [For purposes] Subject to clause (xiv), for purposes of 
clause (iv)(V) (relating to rural referral centers), in the 
case of a hospital for a cost reporting period with a 
disproportionate patient percentage (as defined in clause (vi)) 
that--
          (I) * * *

           *       *       *       *       *       *       *

  (xii) [For purposes] Subject to clause (xiv), for purposes of 
clause (iv)(III) (relating to small rural hospitals generally), 
in the case of a hospital for a cost reporting period with a 
disproportionate patient percentage (as defined in clause (vi)) 
that--
          (I) * * *

           *       *       *       *       *       *       *

  (xiii) [For purposes] Subject to clause (xiv), for purposes 
of clause (iv)(II) (relating to urban hospitals with less than 
100 beds), in the case of a hospital for a cost reporting 
period with a disproportionate patient percentage (as defined 
in clause (vi)) that--
          (I) * * *

           *       *       *       *       *       *       *

  (xiv)(I) In the case of discharges in a fiscal year beginning 
on or after October 1, 2002, subject to subclause (II), there 
shall be substituted for the disproportionate share adjustment 
percentage otherwise determined under clause (iv) (other than 
subclause (I)) or under clause (viii), (x), (xi), (xii), or 
(xiii), the old blend proportion (specified under subclause 
(III)) of the disproportionate share adjustment percentage 
otherwise determined under the respective clause and 100 
percent minus such old blend proportion of the disproportionate 
share adjustment percentage determined under clause (vii) 
(relating to large, urban hospitals).
  (II) Under subclause (I), the disproportionate share 
adjustment percentage shall not exceed 10 percent for a 
hospital that is not classified as a rural referral center 
under subparagraph (C).
  (III) For purposes of subclause (I), the old blend proportion 
for fiscal year 2003 is 80 percent, for each subsequent year 
(through 2006) is the old blend proportion under this subclause 
for the previous year minus 20 percentage points, and for each 
year beginning with 2007 is 0 percent.

           *       *       *       *       *       *       *

                              ----------                              

 MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT 
                            OF 2000 (BIPA)

           *       *       *       *       *       *       *

             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                   Subtitle A--Home Health Services

           *       *       *       *       *       *       *

SEC. 508. TEMPORARY INCREASE FOR HOME HEALTH SERVICES FURNISHED IN A 
                    RURAL AREA.

  (a) [24-Month Increase Beginning April 1, 2001] In General.--
In the case of home health services furnished in a rural area 
(as defined in section 1886(d)(2)(D) of the Social Security Act 
(42 U.S.C. 1395ww(d)(2)(D))) on or after April 1, 2001, and 
before [April 1, 2003] January 1, 2005, the Secretary of Health 
and Human Services shall increase the payment amount otherwise 
made under section 1895 of such Act (42 U.S.C. 1395fff ) for 
such services by 10 percent.

           *       *       *       *       *       *       *

                      Subtitle E--Other Provisions

           *       *       *       *       *       *       *

SEC. 547. CLARIFICATION OF APPLICATION OF TEMPORARY PAYMENT INCREASES 
                    FOR 2001.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Home Health Services.--
          (1) * * *
          (2) Temporary increase for rural home health 
        services.--The payment increase provided under section 
        508(a) for [the period beginning on April 1, 2001, and 
        ending on September 30, 2002,] a period under such 
        section shall not apply to episodes and visits ending 
        after such period, and shall not be taken into account 
        in calculating the payment amounts applicable for 
        episodes and visits occurring after such period.

           *       *       *       *       *       *       *

                              ----------                              

                                  
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