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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1030 Introduced in Senate (IS)]

107th CONGRESS
  1st Session
                                S. 1030

 To improve health care in rural areas by amending title XVIII of the 
 Social Security Act and the Public Health Service Act, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 13, 2001

  Mr. Conrad (for himself, Mr. Thomas, Mr. Daschle, Mr. Roberts, Mr. 
  Johnson, Mr. Jeffords, Mr. Crapo, Mr. Rockefeller, Mr. Harkin, Mr. 
 Dorgan, Mr. Wellstone, Mr. Bond, Mr. Helms, Mr. Cochran, Mr. Edwards, 
    Mr. Hutchinson, Mr. Domenici, Mr. Burns, Mr. Bingaman, and Mrs. 
   Lincoln) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To improve health care in rural areas by amending title XVIII of the 
 Social Security Act and the Public Health Service Act, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Rural Health Care 
Improvement Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                    TITLE I--RURAL MEDICARE REFORMS

Sec. 101. Medicare inpatient payment adjustment for low-volume 
                            hospitals.
Sec. 102. Fairness in the medicare disproportionate share hospital 
                            (DSH) adjustment for rural hospitals.
Sec. 103. Establishing a single standardized amount under the medicare 
                            inpatient hospital PPS.
Sec. 104. Hospital geographic reclassification for labor costs for all 
                            items and services reimbursed under 
                            medicare prospective payment systems.
Sec. 105. Treatment of certain physician pathology services under 
                            medicare.
Sec. 106. One-time opportunity of critical access hospitals to return 
                            to the medicare inpatient hospital PPS.
TITLE II--RURAL GRANT AND LOAN PROGRAMS FOR INFRASTRUCTURE, TECHNOLOGY, 
                             AND TELEHEALTH

Sec. 201. Capital infrastructure revolving loan program.
Sec. 202. High technology acquisition grant and loan program.
Sec. 203. Establishment of telehealth resource centers.
              TITLE III--RURAL HEALTH CLINIC IMPROVEMENTS

Sec. 301. Improvement in rural health clinic reimbursement under 
                            medicare.
Sec. 302. Exclusion of certain rural health clinic and Federally 
                            qualified health center services from the 
                            medicare PPS for skilled nursing 
                            facilities.

                    TITLE I--RURAL MEDICARE REFORMS

SEC. 101. 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 2002), 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--
                                    ``(aa) had an average of less than 
                                800 discharges 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
                                    ``(bb) is located at least 15 miles 
                                from a similar hospital; or
                            ``(II) the Secretary deems meets the 
                        requirements of subclause (I) 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. 102. 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, 2001, for any other 
        hospital described in clause (iv),'' after ``clause (iv)(I)''.
            (2) Conforming amendments.--Section 1886(d)(5)(F) of such 
        Act (42 U.S.C. 1395ww(d)(5)(F)), as amended by section 211 of 
        the Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Protection Act of 2000 (114 Stat. 2763A-483), as enacted into 
        law by section 1(a)(6) of Public Law 106-554, is amended--
                    (A) in clause (iv)--
                            (i) in subclause (II), by inserting ``or, 
                        for discharges occurring on or after October 1, 
                        2001, 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, 
                        2001, 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, 
                        2001, 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, 
                        2001, 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, 
                        2001, 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, 2001, 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, 2001, for purposes''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to discharges occurring on or after October 1, 2001.

SEC. 103. ESTABLISHING A SINGLE STANDARDIZED AMOUNT UNDER THE MEDICARE 
              INPATIENT HOSPITAL PPS.

    (a) In General.--Section 1886(d)(3)(A) of the Social Security Act 
(42 U.S.C. 1395ww(d)(3)(A)) is amended--
            (1) in clause (iv), by inserting ``and ending on or before 
        September 30, 2001,'' after ``October 1, 1995,''; and
            (2) by redesignating clauses (v) and (vi) as clauses (vii) 
        and (viii), respectively, and inserting after clause (iv) the 
        following new clauses:
            ``(v) For discharges occurring in the fiscal year beginning 
        on October 1, 2001, the average standardized amount for 
        hospitals located in areas other than a large urban area shall 
        be equal to the average standardized amount for hospitals 
        located in a large urban area.
            ``(vi) For discharges occurring in a fiscal year beginning 
        on or after October 1, 2002, the Secretary shall compute an 
        average standardized amount for hospitals located in all areas 
        within the United States equal to the average standardized 
        amount computed under clause (v) or this clause for the 
        previous fiscal year increased by the applicable percentage 
        increase under subsection (b)(3)(B)(i) for the fiscal year 
        involved.''.
    (b) Conforming Amendments.--
            (1) Update factor.--Section 1886(b)(3)(B)(i)(XVII) of the 
        Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XVII)) is 
        amended by striking ``for hospitals in all areas,'' and 
        inserting ``for hospitals located in a large urban area,''.
            (2) Computing drg-specific rates.--
                    (A) In general.--Section 1886(d)(3)(D) of such Act 
                (42 U.S.C. 1395ww(d)(3)(D)) is amended--
                            (i) in the heading, by striking ``in 
                        different areas'';
                            (ii) in the matter preceding clause (i)--
                                    (I) by inserting ``, for fiscal 
                                years before fiscal year 1997,'' before 
                                ``a regional DRG prospective payment 
                                rate for each region,''; and
                                    (II) by striking ``each of which 
                                is'';
                            (iii) in clause (i)--
                                    (I) in the matter preceding 
                                subclause (I), by inserting ``for 
                                fiscal years before fiscal year 2002,'' 
                                before ``for hospitals''; and
                                    (II) in subclause (II), by striking 
                                ``and'' after the semicolon at the end;
                            (iv) in clause (ii)--
                                    (I) in the matter preceding 
                                subclause (I), by inserting ``for 
                                fiscal years before fiscal year 2002,'' 
                                before ``for hospitals''; and
                                    (II) in subclause (II), by striking 
                                the period at the end and inserting ``; 
                                and''; and
                            (v) by adding at the end the following new 
                        clause:
                    ``(iii) for a fiscal year beginning after fiscal 
                year 2001, for hospitals located in all areas, to the 
                product of--
                            ``(I) the applicable average standardized 
                        amount (computed under subparagraph (A)), 
                        reduced under subparagraph (B), and adjusted or 
                        reduced under subparagraph (C) for the fiscal 
                        year; and
                            ``(II) the weighting factor (determined 
                        under paragraph (4)(B)) for that diagnosis-
                        related group.''.
                    (B) Technical conforming sunset.--Section 
                1886(d)(3) of such Act (42 U.S.C. 1395ww(d)(3)) is 
                amended in the matter preceding subparagraph (A), by 
                inserting ``, for fiscal years before fiscal year 
                1997,'' before ``a regional adjusted DRG prospective 
                payment rate''.

SEC. 104. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR LABOR COSTS FOR ALL 
              ITEMS AND SERVICES REIMBURSED UNDER MEDICARE PROSPECTIVE 
              PAYMENT SYSTEMS.

    Section 1886(d)(10)(D) of the Social Security Act (42 U.S.C. 
1395ww(d)(10)(D)), as amended by section 304(a) of the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(114 Stat. 2763A-494), as enacted into law by section 1(a)(6) of Public 
Law 106-554, is amended by adding at the end the following new clause:
    ``(vii)(I) Any decision of the Board to reclassify a subsection (d) 
hospital for purposes of the adjustment factor described in 
subparagraph (C)(i)(II) for fiscal year 2001 or any fiscal year 
thereafter shall apply for purposes of adjusting payments for 
variations in costs that are attributable to wages and wage-related 
costs for PPS-reimbursed items and services.
    ``(II) For purposes of subclause (I), the term `PPS-reimbursed 
items and services' means, for the fiscal year for which the Board has 
made a decision described in such subclause, each item and service for 
which payment is made under this title on a prospective basis and 
adjusted for variations in costs that are attributable to wages or 
wage-related costs that is furnished by the hospital to which such 
decision applies, or by a provider-based entity or department of that 
hospital (as determined by the Secretary).''.

SEC. 105. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES UNDER 
              MEDICARE.

    (a) In General.--Section 1848(i) of the Social Security Act (42 
U.S.C. 1395w-4(i)) is amended by adding at the end the following new 
paragraph:
            ``(4) Treatment of certain physician pathology services.--
                    ``(A) In general.--With respect to services 
                furnished on or after January 1, 2001, if an 
                independent laboratory furnishes the technical 
                component of a physician pathology service to a fee-
                for-service medicare beneficiary who is an inpatient or 
                outpatient of a covered hospital, the Secretary shall 
                treat such component as a service for which payment 
                shall be made to the laboratory under this section and 
                not as an inpatient hospital service for which payment 
                is made to the hospital under section 1886(d) or as a 
                hospital outpatient service for which payment is made 
                to the hospital under section 1834(t).
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Covered hospital.--
                                    ``(I) In general.--The term 
                                `covered hospital' means, with respect 
                                to an inpatient or outpatient, a 
                                hospital that had an arrangement with 
                                an independent laboratory that was in 
                                effect as of July 22, 1999, under which 
                                a laboratory furnished the technical 
                                component of physician pathology 
                                services to fee-for-service medicare 
                                beneficiaries who were hospital 
                                inpatients or outpatients, 
                                respectively, and submitted claims for 
                                payment for such component to a carrier 
                                with a contract under section 1842 and 
                                not to the hospital.
                                    ``(II) Change in ownership does not 
                                affect determination.--A change in 
                                ownership with respect to a hospital on 
                                or after the date referred to in 
                                subclause (I) shall not affect the 
                                determination of whether such hospital 
                                is a covered hospital for purposes of 
                                such subclause.
                            ``(ii) Fee-for-service medicare 
                        beneficiary.--The term `fee-for-service 
                        medicare beneficiary' means an individual who 
                        is entitled to benefits under part A, or 
                        enrolled under this part, or both, but who is 
                        not enrolled in any of the following:
                                    ``(I) A Medicare+Choice plan under 
                                part C.
                                    ``(II) A plan offered by an 
                                eligible organization under section 
                                1876.
                                    ``(III) A program of all-inclusive 
                                care for the elderly (PACE) under 
                                section 1894.
                                    ``(IV) A social health maintenance 
                                organization (SHMO) demonstration 
                                project established under section 
                                4018(b) of the Omnibus Budget 
                                Reconciliation Act of 1987 (Public Law 
                                100-203).''.
    (b) Conforming Amendment.--Section 542 of the Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat. 
2763A-550), as enacted into law by section 1(a)(6) of Public Law 106-
554, is repealed.
    (c) Effective Dates.--The amendments made by this section shall 
take effect as if included in the enactment of the Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat. 
2763A-463 et seq.), as enacted into law by section 1(a)(6) of Public 
Law 106-554.

SEC. 106. ONE-TIME OPPORTUNITY OF CRITICAL ACCESS HOSPITALS TO RETURN 
              TO THE MEDICARE INPATIENT HOSPITAL PPS.

    (a) In General.--Notwithstanding section 1814(l) of the Social 
Security Act (42 U.S.C. 1395f(l)), the Secretary of Health and Human 
Services (in this section referred to as the ``Secretary'') shall pay 
each critical access hospital having an application approved under 
subsection (b)(2) under the prospective payment system for inpatient 
hospital services under section 1886(d) of such Act (42 U.S.C. 
1395ww(d)) rather than under such section 1814(l).
    (b) One-Time Application and Approval.--
            (1) Application.--Not later than the date that is 6 months 
        after the date of enactment of this Act, each eligible critical 
        access hospital (as defined in subsection (c)) that desires to 
        receive payment under the prospective payment system for 
        inpatient hospital services under section 1886(d) of the Social 
        Security Act (42 U.S.C. 1395ww(d)) instead of receiving payment 
        of the reasonable costs for such services under section 1814(l) 
        of such Act (42 U.S.C. 1395f(l)) shall submit an application to 
        the Secretary in such manner and containing such information as 
        the Secretary may require.
            (2) Approval.--Not later than the date that is 3 months 
        after the date on which the Secretary receives the application 
        submitted under paragraph (1), the Secretary shall approve or 
        deny the application.
    (c) Eligible Critical Access Hospital Defined.--In this section, 
the term ``eligible critical access hospital'' means a critical access 
hospital (as defined in section 1861(mm)(1) of the Social Security Act 
(42 U.S.C. 1395x(mm)(1))) that received payments under the prospective 
payment system for inpatient hospital services under section 1886(d) of 
such Act (42 U.S.C. 1395ww(d)) prior to its designation as a critical 
access hospital under section 1820(c)(2) of such Act (42 U.S.C. 1395i-
4(c)(2)).

TITLE II--RURAL GRANT AND LOAN PROGRAMS FOR INFRASTRUCTURE, TECHNOLOGY, 
                             AND TELEHEALTH

SEC. 201. 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, 2006.''.
    (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)(A) The term `rural entity' includes--
                    ``(i) a rural health clinic, as defined in section 
                1861(aa)(2) of the Social Security Act;
                    ``(ii) any medical facility with at least 1, but 
                less than 50 beds that is located 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));
                    ``(iii) a hospital that is classified as a rural, 
                regional, or national referral center under section 
                1886(d)(5)(C) of the Social Security Act; and
                    ``(iv) a hospital that is a sole community hospital 
                (as defined in section 1886(d)(5)(D)(iii) of the Social 
                Security Act).
            ``(B) For purposes of subparagraph (A), the fact that a 
        clinic, facility, or hospital has been geographically 
        reclassified under the medicare program under title XVIII of 
        the Social Security Act shall not preclude a hospital from 
        being considered a rural entity under clause (i) or (ii) of 
        subparagraph (A).''.
    (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. 202. 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.), as amended by section 1501 of the Children's 
Health Act of 2000 (Public Law 106-310; 114 Stat. 1146), 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 such sums as 
may be necessary for each of the fiscal years 2002 through 2007.''.

SEC. 203. ESTABLISHMENT OF TELEHEALTH RESOURCE CENTERS.

    Subpart I of part D of title III of the Public Health Service Act 
(42 U.S.C. 254b et seq.), as amended by section 202, is amended by 
adding at the end the following:

``SEC. 330J. TELEHEALTH RESOURCE CENTERS.

    ``(a) Program Authorized.--The Secretary, acting through the 
Director of the Office for the Advancement of Telehealth of the Health 
Resources and Services Administration, shall award grants to eligible 
entities to establish telehealth resource centers in accordance with 
this section.
    ``(b) Definitions.--In this section:
            ``(1) Eligible entity.--The term `eligible entity' means a 
        public or nonprofit private entity.
            ``(2) Telehealth.--The term `telehealth' means the use of 
        electronic information and telecommunications technologies to 
        support long-distance clinical health care, patient and 
        professional health-related education, public health, and 
        health administration.
    ``(c) Amount.--Each entity that receives a grant under subsection 
(a) shall receive an amount not to exceed $1,500,000.
    ``(d) Equitable Distribution.--In awarding grants under subsection 
(a), the Secretary shall ensure, to the greatest extent possible, that 
such grants are equitably distributed among the geographical regions of 
the United States.
    ``(e) Preference.--In awarding grants under subsection (a), the 
Secretary shall give preference to eligible entities that have a 
demonstrated record of providing or supporting the provision of health 
care services for populations in rural areas.
    ``(f) Use of Funds.--An entity that receives a grant under 
subsection (a) shall use funds from such grant to establish a 
telehealth resource center that shall--
            ``(1) provide technical assistance, training, and support 
        to health care providers and a range of health care entities 
        that provide or will provide telehealth services for a 
        medically underserved community, including hospitals, 
        ambulatory care entities, long-term care facilities, public 
health clinics, and schools;
            ``(2) provide for the dissemination of information and 
        research findings related to the use of telehealth 
        technologies;
            ``(3) provide for the dissemination of information 
        regarding the latest developments in health care;
            ``(4) conduct evaluations to determine the best application 
        of telehealth technologies to meet the health care needs of the 
        medically underserved community;
            ``(5) promote the integration of clinical information 
        systems with other telehealth technologies;
            ``(6) foster the use of telehealth technologies to provide 
        health care information and education for health care 
        professionals and consumers in a more effective manner; and
            ``(7) provide timely and appropriate evaluations to the 
        Office for the Advancement of Telehealth on lessons learned and 
        best telehealth practices in any areas served.
    ``(g) Collaboration.--In providing the services described in 
subsection (f)(5), such entity shall collaborate, if feasible, with 
private and public organizations and centers or programs that receive 
Federal assistance and provide telehealth services.
    ``(h) Application.--An entity that desires a grant under subsection 
(a) shall submit an application to the Secretary at such time, in such 
manner, and containing such information as the Secretary may require, 
including--
            ``(1) a description of the manner in which the entity shall 
        establish and administer a telehealth resource center to meet 
        the requirements of this subsection; and
            ``(2) a description of the manner in which the activities 
        carried out by such center will meet the health care needs of 
        individuals in rural communities.
    ``(i) Report.--Not later than 5 years after the date of enactment 
of this section, the Secretary shall submit to the appropriate 
committees of Congress a report on each activity funded with a grant 
under this section.
    ``(j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section--
            ``(1) for fiscal year 2002, $30,000,000; and
            ``(2) for fiscal years 2003 through 2008, such sums as may 
        be necessary.''.

              TITLE III--RURAL HEALTH CLINIC IMPROVEMENTS

SEC. 301. IMPROVEMENT IN RURAL HEALTH CLINIC REIMBURSEMENT UNDER 
              MEDICARE.

    Section 1833(f) of the Social Security Act (42 U.S.C. 1395l(f)) is 
amended--
            (1) in paragraph (1), by striking ``, and'' at the end and 
        inserting a semicolon;
            (2) in paragraph (2)--
                    (A) by striking ``in a subsequent year'' and 
                inserting ``in 1989 through 2001''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (3) by adding at the end the following new paragraphs:
            ``(3) in 2002, at $79 per visit; and
            ``(4) in a subsequent year, at the limit established under 
        this subsection for the previous year increased by the 
        percentage increase in the MEI (as so defined) applicable to 
        primary care services (as so defined) furnished as of the first 
        day of that year.''.

SEC. 302. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND FEDERALLY 
              QUALIFIED HEALTH CENTER SERVICES FROM THE MEDICARE PPS 
              FOR SKILLED NURSING FACILITIES.

    (a) In General.--Section 1888(e) of the Social Security Act (42 
U.S.C. 1395yy(e)) is amended--
            (1) in paragraph (2)(A)(i)(II), by striking ``clauses (ii) 
        and (iii)'' and inserting ``clauses (ii), (iii), and (iv)''; 
        and
            (2) by adding at the end of paragraph (2)(A) the following 
        new clause:
                            ``(iv) Exclusion of certain rural health 
                        clinic and federally qualified health center 
                        services.--Services described in this clause 
                        are--
                                    ``(I) rural health clinic services 
                                (as defined in paragraph (1) of section 
                                1861(aa)); and
                                    ``(II) Federally qualified health 
                                center services (as defined in 
                                paragraph (3) of such section);
                        that would be described in clause (ii) if such 
                        services were not furnished by an individual 
                        affiliated with a rural health clinic or a 
                        Federally qualified health center.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to services furnished on or after January 1, 2002.
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