II

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Rural Health Care Improvement Act of 2001’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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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.

1 TITLE I—RURAL MEDICARE

2 REFORMS

3 SEC. 101. MEDICARE INPATIENT PAYMENT ADJUSTMENT

4 FOR LOW-VOLUME HOSPITALS.

5 Section 1886(d) of the Social Security Act (42 U.S.C.

6 1395ww(d)) is amended by adding at the end the following

7 new paragraph:

8 ‘‘(12) PAYMENT ADJUSTMENT FOR LOW-VOLUME

9 HOSPITALS.—

10 ‘‘(A) PAYMENT ADJUSTMENT.—

11 ‘‘(i) IN GENERAL.—Notwithstanding any

12 other provision of this section, for each cost re13 porting period (beginning with the cost report-
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1 ing period that begins in fiscal year 2002), the

2 Secretary shall provide for an additional pay3 ment amount to each low-volume hospital (as

4 defined in clause (iii)) for discharges occurring

5 during that cost reporting period to increase

6 the amount paid to such hospital under this

7 section for such discharges by the applicable

8 percentage increase determined under clause

9 (ii).

10 ‘‘(ii) APPLICABLE PERCENTAGE IN11 CREASE.—The Secretary shall determine a per12 centage increase applicable under this para13 graph that ensures that—

14 ‘‘(I) no percentage increase in pay15 ments under this paragraph exceeds 25

16 percent of the amount of payment that

17 would otherwise be made to a low-volume

18 hospital under this section for each dis19 charge (but for this paragraph);

20 ‘‘(II) low-volume hospitals that have

21 the lowest number of discharges during a

22 cost reporting period receive the highest

23 percentage increase in payments due to the

24 application of this paragraph; and
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1 ‘‘(III) the percentage increase in pay2 ments due to the application of this para3 graph is reduced as the number of dis4 charges per cost reporting period increases.

5 ‘‘(iii) LOW-VOLUME HOSPITAL DEFINED.—

6 For purposes of this paragraph, the term ‘low7 volume hospital’ means, for a cost reporting pe8 riod, a subsection (d) hospital (as defined in

9 paragraph (1)(B)) other than a critical access

10 hospital (as defined in section 1861(mm)(1))

11 that—

12 ‘‘(I) the Secretary determines—

13 ‘‘(aa) had an average of less than

14 800 discharges during the 3 most re15 cent cost reporting periods for which

16 data are available that precede the

17 cost reporting period to which this

18 paragraph applies; and

19 ‘‘(bb) is located at least 15 miles

20 from a similar hospital; or

21 ‘‘(II) the Secretary deems meets the

22 requirements of subclause (I) by reason of

23 such factors as the Secretary determines

24 appropriate, including the time required

25 for an individual to travel to the nearest
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1 alternative source of appropriate inpatient

2 care (taking into account the location of

3 such alternative source of inpatient care

4 and any weather or travel conditions that

5 may affect such travel time).

6 ‘‘(B) PROHIBITING CERTAIN REDUCTIONS.—

7 Notwithstanding subsection (e), the Secretary shall

8 not reduce the payment amounts under this section

9 to offset the increase in payments resulting from the

10 application of subparagraph (A).’’.

11 SEC. 102. FAIRNESS IN THE MEDICARE DISPROPOR12 TIONATE SHARE HOSPITAL (DSH) ADJUST13 MENT FOR RURAL HOSPITALS.

14 (a) EQUALIZING DSH PAYMENT AMOUNTS.—

15 (1) IN GENERAL.—Section 1886(d)(5)(F)(vii)

16 of the Social Security Act (42 U.S.C.

17 1395ww(d)(5)(F)(vii)) is amended by inserting ‘‘,

18 and, after October 1, 2001, for any other hospital

19 described in clause (iv),’’ after ‘‘clause (iv)(I)’’.

20 (2) CONFORMING AMENDMENTS.—Section

21 1886(d)(5)(F) of such Act (42 U.S.C.

22 1395ww(d)(5)(F)), as amended by section 211 of

23 the Medicare, Medicaid, and SCHIP Benefits Im24 provement and Protection Act of 2000 (114 Stat.
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1 2763A–483), as enacted into law by section 1(a)(6)

2 of Public Law 106–554, is amended—

3 (A) in clause (iv)—

4 (i) in subclause (II), by inserting ‘‘or,

5 for discharges occurring on or after Octo6 ber 1, 2001, is equal to the percent deter7 mined in accordance with the applicable

8 formula described in clause (vii)’’ after

9 ‘‘clause (xiii)’’;

10 (ii) in subclause (III), by inserting

11 ‘‘or, for discharges occurring on or after

12 October 1, 2001, is equal to the percent

13 determined in accordance with the applica14 ble formula described in clause (vii)’’ after

15 ‘‘clause (xii)’’;

16 (iii) in subclause (IV), by inserting

17 ‘‘or, for discharges occurring on or after

18 October 1, 2001, is equal to the percent

19 determined in accordance with the applica20 ble formula described in clause (vii)’’ after

21 ‘‘clause (x) or (xi)’’;

22 (iv) in subclause (V), by inserting ‘‘or,

23 for discharges occurring on or after Octo24 ber 1, 2001, is equal to the percent deter25 mined in accordance with the applicable
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1 formula described in clause (vii)’’ after

2 ‘‘clause (xi)’’; and

3 (v) in subclause (VI), by inserting

4 ‘‘or, for discharges occurring on or after

5 October 1, 2001, is equal to the percent

6 determined in accordance with the applica7 ble formula described in clause (vii)’’ after

8 ‘‘clause (x)’’;

9 (B) in clause (viii), by striking ‘‘The for10 mula’’ and inserting ‘‘For discharges occurring

11 before October 1, 2001, the formula’’; and

12 (C) in each of clauses (x), (xi), (xii), and

13 (xiii), by striking ‘‘For purposes’’ and inserting

14 ‘‘With respect to discharges occurring before

15 October 1, 2001, for purposes’’.

16 (b) EFFECTIVE DATE.—The amendments made by

17 this section shall apply with respect to discharges occur18 ring on or after October 1, 2001.

19 SEC. 103. ESTABLISHING A SINGLE STANDARDIZED

20 AMOUNT UNDER THE MEDICARE INPATIENT

21 HOSPITAL PPS.

22 (a) IN GENERAL.—Section 1886(d)(3)(A) of the So23 cial Security Act (42 U.S.C. 1395ww(d)(3)(A)) is

24 amended—
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1 (1) in clause (iv), by inserting ‘‘and ending on

2 or before September 30, 2001,’’ after ‘‘October 1,

3 1995,’’; and

4 (2) by redesignating clauses (v) and (vi) as

5 clauses (vii) and (viii), respectively, and inserting

6 after clause (iv) the following new clauses:

7 ‘‘(v) For discharges occurring in the fiscal year

8 beginning on October 1, 2001, the average standard9 ized amount for hospitals located in areas other than

10 a large urban area shall be equal to the average

11 standardized amount for hospitals located in a large

12 urban area.

13 ‘‘(vi) For discharges occurring in a fiscal year

14 beginning on or after October 1, 2002, the Secretary

15 shall compute an average standardized amount for

16 hospitals located in all areas within the United

17 States equal to the average standardized amount

18 computed under clause (v) or this clause for the pre19 vious fiscal year increased by the applicable percent20 age increase under subsection (b)(3)(B)(i) for the

21 fiscal year involved.’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) UPDATE FACTOR.—Section

24 1886(b)(3)(B)(i)(XVII) of the Social Security Act

25 (42 U.S.C. 1395ww(b)(3)(B)(i)(XVII)) is amended
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1 by striking ‘‘for hospitals in all areas,’’ and inserting

2 ‘‘for hospitals located in a large urban area,’’.

3 (2) COMPUTING DRG-SPECIFIC RATES.—

4 (A) IN GENERAL.—Section 1886(d)(3)(D)

5 of such Act (42 U.S.C. 1395ww(d)(3)(D)) is

6 amended—

7 (i) in the heading, by striking ‘‘IN

8 DIFFERENT AREAS’’;

9 (ii) in the matter preceding clause

10 (i)—

11 (I) by inserting ‘‘, for fiscal years

12 before fiscal year 1997,’’ before ‘‘a re13 gional DRG prospective payment rate

14 for each region,’’; and

15 (II) by striking ‘‘each of which

16 is’’;

17 (iii) in clause (i)—

18 (I) in the matter preceding sub19 clause (I), by inserting ‘‘for fiscal

20 years before fiscal year 2002,’’ before

21 ‘‘for hospitals’’; and

22 (II) in subclause (II), by striking

23 ‘‘and’’ after the semicolon at the end;

24 (iv) in clause (ii)—
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1 (I) in the matter preceding sub2 clause (I), by inserting ‘‘for fiscal

3 years before fiscal year 2002,’’ before

4 ‘‘for hospitals’’; and

5 (II) in subclause (II), by striking

6 the period at the end and inserting ‘‘;

7 and’’; and

8 (v) by adding at the end the following

9 new clause:

10 ‘‘(iii) for a fiscal year beginning after fiscal

11 year 2001, for hospitals located in all areas, to

12 the product of—

13 ‘‘(I) the applicable average standard14 ized amount (computed under subpara15 graph (A)), reduced under subparagraph

16 (B), and adjusted or reduced under sub17 paragraph (C) for the fiscal year; and

18 ‘‘(II) the weighting factor (determined

19 under paragraph (4)(B)) for that diag20 nosis-related group.’’.

21 (B) TECHNICAL CONFORMING SUNSET.—

22 Section 1886(d)(3) of such Act (42 U.S.C.

23 1395ww(d)(3)) is amended in the matter pre24 ceding subparagraph (A), by inserting ‘‘, for

25 fiscal years before fiscal year 1997,’’ before ‘‘a
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1 regional adjusted DRG prospective payment

2 rate’’.

3 SEC. 104. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR

4 LABOR COSTS FOR ALL ITEMS AND SERVICES

5 REIMBURSED UNDER MEDICARE PROSPEC6 TIVE PAYMENT SYSTEMS.

7 Section 1886(d)(10)(D) of the Social Security Act

8 (42 U.S.C. 1395ww(d)(10)(D)), as amended by section

9 304(a) of the Medicare, Medicaid, and SCHIP Benefits

10 Improvement and Protection Act of 2000 (114 Stat.

11 2763A–494), as enacted into law by section 1(a)(6) of

12 Public Law 106–554, is amended by adding at the end

13 the following new clause:

14 ‘‘(vii)(I) Any decision of the Board to reclassify a

15 subsection (d) hospital for purposes of the adjustment fac16 tor described in subparagraph (C)(i)(II) for fiscal year

17 2001 or any fiscal year thereafter shall apply for purposes

18 of adjusting payments for variations in costs that are at19 tributable to wages and wage-related costs for PPS-reim20 bursed items and services.

21 ‘‘(II) For purposes of subclause (I), the term ‘PPS22 reimbursed items and services’ means, for the fiscal year

23 for which the Board has made a decision described in such

24 subclause, each item and service for which payment is

25 made under this title on a prospective basis and adjusted
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1 for variations in costs that are attributable to wages or

2 wage-related costs that is furnished by the hospital to

3 which such decision applies, or by a provider-based entity

4 or department of that hospital (as determined by the Sec5 retary).’’.

6 SEC. 105. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY

7 SERVICES UNDER MEDICARE.

8 (a) IN GENERAL.—Section 1848(i) of the Social Se9 curity Act (42 U.S.C. 1395w–4(i)) is amended by adding

10 at the end the following new paragraph:

11 ‘‘(4) TREATMENT OF CERTAIN PHYSICIAN PA12 THOLOGY SERVICES.—

13 ‘‘(A) IN GENERAL.—With respect to serv14 ices furnished on or after January 1, 2001, if

15 an independent laboratory furnishes the tech16 nical component of a physician pathology serv17 ice to a fee-for-service medicare beneficiary who

18 is an inpatient or outpatient of a covered hos19 pital, the Secretary shall treat such component

20 as a service for which payment shall be made

21 to the laboratory under this section and not as

22 an inpatient hospital service for which payment

23 is made to the hospital under section 1886(d)

24 or as a hospital outpatient service for which
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1 payment is made to the hospital under section

2 1834(t).

3 ‘‘(B) DEFINITIONS.—In this paragraph:

4 ‘‘(i) COVERED HOSPITAL.—

5 ‘‘(I) IN GENERAL.—The term

6 ‘covered hospital’ means, with respect

7 to an inpatient or outpatient, a hos8 pital that had an arrangement with

9 an independent laboratory that was in

10 effect as of July 22, 1999, under

11 which a laboratory furnished the tech12 nical component of physician pathol13 ogy services to fee-for-service medi14 care beneficiaries who were hospital

15 inpatients or outpatients, respectively,

16 and submitted claims for payment for

17 such component to a carrier with a

18 contract under section 1842 and not

19 to the hospital.

20 ‘‘(II) CHANGE IN OWNERSHIP

21 DOES NOT AFFECT DETERMINA22 TION.—A change in ownership with

23 respect to a hospital on or after the

24 date referred to in subclause (I) shall

25 not affect the determination of wheth-
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1 er such hospital is a covered hospital

2 for purposes of such subclause.

3 ‘‘(ii) FEE-FOR-SERVICE MEDICARE

4 BENEFICIARY.—The term ‘fee-for-service

5 medicare beneficiary’ means an individual

6 who is entitled to benefits under part A, or

7 enrolled under this part, or both, but who

8 is not enrolled in any of the following:

9 ‘‘(I) A Medicare+Choice plan

10 under part C.

11 ‘‘(II) A plan offered by an eligi12 ble organization under section 1876.

13 ‘‘(III) A program of all-inclusive

14 care for the elderly (PACE) under

15 section 1894.

16 ‘‘(IV) A social health mainte17 nance organization (SHMO) dem18 onstration project established under

19 section 4018(b) of the Omnibus

20 Budget Reconciliation Act of 1987

21 (Public Law 100–203).’’.

22 (b) CONFORMING AMENDMENT.—Section 542 of the

23 Medicare, Medicaid, and SCHIP Benefits Improvement

24 and Protection Act of 2000 (114 Stat. 2763A–550), as
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1 enacted into law by section 1(a)(6) of Public Law 106–

2 554, is repealed.

3 (c) EFFECTIVE DATES.—The amendments made by

4 this section shall take effect as if included in the enact5 ment of the Medicare, Medicaid, and SCHIP Benefits Im6 provement and Protection Act of 2000 (114 Stat. 2763A–

7 463 et seq.), as enacted into law by section 1(a)(6) of Pub8 lic Law 106–554.

9 SEC. 106. ONE-TIME OPPORTUNITY OF CRITICAL ACCESS

10 HOSPITALS TO RETURN TO THE MEDICARE

11 INPATIENT HOSPITAL PPS.

12 (a) IN GENERAL.—Notwithstanding section 1814(l)

13 of the Social Security Act (42 U.S.C. 1395f(l)), the Sec14 retary of Health and Human Services (in this section re15 ferred to as the ‘‘Secretary’’) shall pay each critical access

16 hospital having an application approved under subsection

17 (b)(2) under the prospective payment system for inpatient

18 hospital services under section 1886(d) of such Act (42

19 U.S.C. 1395ww(d)) rather than under such section

20 1814(l).

21 (b) ONE-TIME APPLICATION AND APPROVAL.—

22 (1) APPLICATION.—Not later than the date

23 that is 6 months after the date of enactment of this

24 Act, each eligible critical access hospital (as defined

25 in subsection (c)) that desires to receive payment
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1 under the prospective payment system for inpatient

2 hospital services under section 1886(d) of the Social

3 Security Act (42 U.S.C. 1395ww(d)) instead of re4 ceiving payment of the reasonable costs for such

5 services under section 1814(l) of such Act (42

6 U.S.C. 1395f(l)) shall submit an application to the

7 Secretary in such manner and containing such infor8 mation as the Secretary may require.

9 (2) APPROVAL.—Not later than the date that is

10 3 months after the date on which the Secretary re11 ceives the application submitted under paragraph

12 (1), the Secretary shall approve or deny the applica13 tion.

14 (c) ELIGIBLE CRITICAL ACCESS HOSPITAL DE15 FINED.—In this section, the term ‘‘eligible critical access

16 hospital’’ means a critical access hospital (as defined in

17 section 1861(mm)(1) of the Social Security Act (42

18 U.S.C. 1395x(mm)(1))) that received payments under the

19 prospective payment system for inpatient hospital services

20 under section 1886(d) of such Act (42 U.S.C. 1395ww(d))

21 prior to its designation as a critical access hospital under

22 section 1820(c)(2) of such Act (42 U.S.C. 1395i–4(c)(2)).
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1 TITLE II—RURAL GRANT AND

2 LOAN PROGRAMS FOR INFRA3 STRUCTURE, TECHNOLOGY,

4 AND TELEHEALTH

5 SEC. 201. CAPITAL INFRASTRUCTURE REVOLVING LOAN

6 PROGRAM.

7 (a) IN GENERAL.—Part A of title XVI of the Public

8 Health Service Act (42 U.S.C. 300q et seq.) is amended

9 by adding at the end the following new section:

10 ‘‘CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM

11 ‘‘SEC. 1603. (a) AUTHORITY TO MAKE AND GUAR12 ANTEE LOANS.—

13 ‘‘(1) AUTHORITY TO MAKE LOANS.—The Sec14 retary may make loans from the fund established

15 under section 1602(d) to any rural entity for

16 projects for capital improvements, including—

17 ‘‘(A) the acquisition of land necessary for

18 the capital improvements;

19 ‘‘(B) the renovation or modernization of

20 any building;

21 ‘‘(C) the acquisition or repair of fixed or

22 major movable equipment; and

23 ‘‘(D) such other project expenses as the

24 Secretary determines appropriate.

25 ‘‘(2) AUTHORITY TO GUARANTEE LOANS.—
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1 ‘‘(A) IN GENERAL.—The Secretary may

2 guarantee the payment of principal and interest

3 for loans made to rural entities for projects for

4 any capital improvement described in paragraph

5 (1) to any non-Federal lender.

6 ‘‘(B) INTEREST SUBSIDIES.—In the case

7 of a guarantee of any loan made to a rural enti8 ty under subparagraph (A), the Secretary may

9 pay to the holder of such loan and for and on

10 behalf of the project for which the loan was

11 made, amounts sufficient to reduce by not more

12 than 3 percent of the net effective interest rate

13 otherwise payable on such loan.

14 ‘‘(b) AMOUNT OF LOAN.—The principal amount of

15 a loan directly made or guaranteed under subsection (a)

16 for a project for capital improvement may not exceed

17 $5,000,000.

18 ‘‘(c) FUNDING LIMITATIONS.—

19 ‘‘(1) GOVERNMENT CREDIT SUBSIDY EXPO20 SURE.—The total of the Government credit subsidy

21 exposure under the Credit Reform Act of 1990 scor22 ing protocol with respect to the loans outstanding at

23 any time with respect to which guarantees have been

24 issued, or which have been directly made, under sub25 section (a) may not exceed $50,000,000 per year.
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1 ‘‘(2) TOTAL AMOUNTS.—Subject to paragraph

2 (1), the total of the principal amount of all loans di3 rectly made or guaranteed under subsection (a) may

4 not exceed $250,000,000 per year.

5 ‘‘(d) CAPITAL ASSESSMENT AND PLANNING

6 GRANTS.—

7 ‘‘(1) NONREPAYABLE GRANTS.—Subject to

8 paragraph (2), the Secretary may make a grant to

9 a rural entity, in an amount not to exceed $50,000,

10 for purposes of capital assessment and business

11 planning.

12 ‘‘(2) LIMITATION.—The cumulative total of

13 grants awarded under this subsection may not ex14 ceed $2,500,000 per year.

15 ‘‘(e) TERMINATION OF AUTHORITY.—The Secretary

16 may not directly make or guarantee any loan under sub17 section (a) or make a grant under subsection (d) after

18 September 30, 2006.’’.

19 (b) RURAL ENTITY DEFINED.—Section 1624 of the

20 Public Health Service Act (42 U.S.C. 300s–3) is amended

21 by adding at the end the following new paragraph:

22 ‘‘(15)(A) The term ‘rural entity’ includes—

23 ‘‘(i) a rural health clinic, as defined in sec24 tion 1861(aa)(2) of the Social Security Act;
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1 ‘‘(ii) any medical facility with at least 1,

2 but less than 50 beds that is located in—

3 ‘‘(I) a county that is not part of a

4 metropolitan statistical area; or

5 ‘‘(II) a rural census tract of a metro6 politan statistical area (as determined

7 under the most recent modification of the

8 Goldsmith Modification, originally pub9 lished in the Federal Register on February

10 27, 1992 (57 Fed. Reg. 6725));

11 ‘‘(iii) a hospital that is classified as a

12 rural, regional, or national referral center under

13 section 1886(d)(5)(C) of the Social Security

14 Act; and

15 ‘‘(iv) a hospital that is a sole community

16 hospital (as defined in section

17 1886(d)(5)(D)(iii) of the Social Security Act).

18 ‘‘(B) For purposes of subparagraph (A), the

19 fact that a clinic, facility, or hospital has been geo20 graphically reclassified under the medicare program

21 under title XVIII of the Social Security Act shall not

22 preclude a hospital from being considered a rural en23 tity under clause (i) or (ii) of subparagraph (A).’’.
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1 (c) CONFORMING AMENDMENTS.—Section 1602 of

2 the Public Health Service Act (42 U.S.C. 300q–2) is

3 amended—

4 (1) in subsection (b)(2)(D), by inserting ‘‘or

5 1603(a)(2)(B)’’ after ‘‘1601(a)(2)(B)’’; and

6 (2) in subsection (d)—

7 (A) in paragraph (1)(C), by striking ‘‘sec8 tion 1601(a)(2)(B)’’ and inserting ‘‘sections

9 1601(a)(2)(B) and 1603(a)(2)(B)’’; and

10 (B) in paragraph (2)(A), by inserting ‘‘or

11 1603(a)(2)(B)’’ after ‘‘1601(a)(2)(B)’’.

12 SEC. 202. HIGH TECHNOLOGY ACQUISITION GRANT AND

13 LOAN PROGRAM.

14 Subpart I of part D of title III of the Public Health

15 Service Act (42 U.S.C. 241 et seq.), as amended by section

16 1501 of the Children’s Health Act of 2000 (Public Law

17 106–310; 114 Stat. 1146), is amended by adding at the

18 end the following section:

19 ‘‘SEC. 330I. HIGH TECHNOLOGY ACQUISITION GRANT AND

20 LOAN PROGRAM.

21 ‘‘(a) ESTABLISHMENT OF PROGRAM.—The Sec22 retary, acting through the Director of the Office of Rural

23 Health Policy of the Health Resources and Services Ad24 ministration, shall establish a high technology acquisition

25 grant and loan program for the purpose of—
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1 ‘‘(1) improving the quality of health care in

2 rural areas through the acquisition of advanced med3 ical technology;

4 ‘‘(2) fostering the development of the networks

5 described in section 330A;

6 ‘‘(3) promoting resource sharing between urban

7 and rural facilities; and

8 ‘‘(4) improving patient safety and outcomes

9 through the acquisition of high technology, including

10 software, information services, and staff training.

11 ‘‘(b) GRANTS AND LOANS.—Under the program es12 tablished under subsection (a), the Secretary, acting

13 through the Director of the Office of Rural Health Policy,

14 may award grants and make loans to any eligible entity

15 (as defined in subsection (d)(1)) for any costs incurred

16 by the eligible entity in acquiring eligible equipment and

17 services (as defined in subsection (d)(2)).

18 ‘‘(c) LIMITATIONS.—

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

20 the total amount of grants and loans made under

21 this section to an eligible entity may not exceed

22 $100,000.

23 ‘‘(2) FEDERAL SHARING.—

24 ‘‘(A) GRANTS.—The amount of any grant

25 awarded under this section may not exceed 70
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1 percent of the costs to the eligible entity in ac2 quiring eligible equipment and services.

3 ‘‘(B) LOANS.—The amount of any loan

4 made under this section may not exceed 90 per5 cent of the costs to the eligible entity in acquir6 ing eligible equipment and services.

7 ‘‘(d) DEFINITIONS.—In this section:

8 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en9 tity’ means a hospital, health center, or any other

10 entity that the Secretary determines is appropriate

11 that is located in a rural area or region.

12 ‘‘(2) ELIGIBLE EQUIPMENT AND SERVICES.—

13 The term ‘eligible equipment and services’

14 includes—

15 ‘‘(A) unit dose distribution systems;

16 ‘‘(B) software, information services, and

17 staff training;

18 ‘‘(C) wireless devices to transmit medical

19 orders;

20 ‘‘(D) clinical health care informatics sys21 tems, including bar code systems designed to

22 avoid medication errors and patient tracking

23 systems;

24 ‘‘(E) telemedicine technology; and
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1 ‘‘(F) any other technology that improves

2 the quality of health care provided in rural

3 areas including systems to improve privacy and

4 address administrative simplification needs.

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

6 purpose of carrying out this section there are authorized

7 to be appropriated such sums as may be necessary for

8 each of the fiscal years 2002 through 2007.’’.

9 SEC. 203. ESTABLISHMENT OF TELEHEALTH RESOURCE

10 CENTERS.

11 Subpart I of part D of title III of the Public Health

12 Service Act (42 U.S.C. 254b et seq.), as amended by sec13 tion 202, is amended by adding at the end the following:

14 ‘‘SEC. 330J. TELEHEALTH RESOURCE CENTERS.

15 ‘‘(a) PROGRAM AUTHORIZED.—The Secretary, acting

16 through the Director of the Office for the Advancement

17 of Telehealth of the Health Resources and Services Ad18 ministration, shall award grants to eligible entities to es19 tablish telehealth resource centers in accordance with this

20 section.

21 ‘‘(b) DEFINITIONS.—In this section:

22 ‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en23 tity’ means a public or nonprofit private entity.

24 ‘‘(2) TELEHEALTH.—The term ‘telehealth’

25 means the use of electronic information and tele-
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1 communications technologies to support long-dis2 tance clinical health care, patient and professional

3 health-related education, public health, and health

4 administration.

5 ‘‘(c) AMOUNT.—Each entity that receives a grant

6 under subsection (a) shall receive an amount not to exceed

7 $1,500,000.

8 ‘‘(d) EQUITABLE DISTRIBUTION.—In awarding

9 grants under subsection (a), the Secretary shall ensure,

10 to the greatest extent possible, that such grants are equi11 tably distributed among the geographical regions of the

12 United States.

13 ‘‘(e) PREFERENCE.—In awarding grants under sub14 section (a), the Secretary shall give preference to eligible

15 entities that have a demonstrated record of providing or

16 supporting the provision of health care services for popu17 lations in rural areas.

18 ‘‘(f) USE OF FUNDS.—An entity that receives a grant

19 under subsection (a) shall use funds from such grant to

20 establish a telehealth resource center that shall—

21 ‘‘(1) provide technical assistance, training, and

22 support to health care providers and a range of

23 health care entities that provide or will provide tele24 health services for a medically underserved commu25 nity, including hospitals, ambulatory care entities,
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1 long-term care facilities, public health clinics, and

2 schools;

3 ‘‘(2) provide for the dissemination of informa4 tion and research findings related to the use of tele5 health technologies;

6 ‘‘(3) provide for the dissemination of informa7 tion regarding the latest developments in health

8 care;

9 ‘‘(4) conduct evaluations to determine the best

10 application of telehealth technologies to meet the

11 health care needs of the medically underserved com12 munity;

13 ‘‘(5) promote the integration of clinical infor14 mation systems with other telehealth technologies;

15 ‘‘(6) foster the use of telehealth technologies to

16 provide health care information and education for

17 health care professionals and consumers in a more

18 effective manner; and

19 ‘‘(7) provide timely and appropriate evaluations

20 to the Office for the Advancement of Telehealth on

21 lessons learned and best telehealth practices in any

22 areas served.

23 ‘‘(g) COLLABORATION.—In providing the services de24 scribed in subsection (f)(5), such entity shall collaborate,

25 if feasible, with private and public organizations and cen-
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1 ters or programs that receive Federal assistance and pro2 vide telehealth services.

3 ‘‘(h) APPLICATION.—An entity that desires a grant

4 under subsection (a) shall submit an application to the

5 Secretary at such time, in such manner, and containing

6 such information as the Secretary may require,

7 including—

8 ‘‘(1) a description of the manner in which the

9 entity shall establish and administer a telehealth re10 source center to meet the requirements of this sub11 section; and

12 ‘‘(2) a description of the manner in which the

13 activities carried out by such center will meet the

14 health care needs of individuals in rural commu15 nities.

16 ‘‘(i) REPORT.—Not later than 5 years after the date

17 of enactment of this section, the Secretary shall submit

18 to the appropriate committees of Congress a report on

19 each activity funded with a grant under this section.

20 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There

21 are authorized to be appropriated to carry out this

22 section—

23 ‘‘(1) for fiscal year 2002, $30,000,000; and

24 ‘‘(2) for fiscal years 2003 through 2008, such

25 sums as may be necessary.’’.
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1 TITLE III—RURAL HEALTH

2 CLINIC IMPROVEMENTS

3 SEC. 301. IMPROVEMENT IN RURAL HEALTH CLINIC REIM4 BURSEMENT UNDER MEDICARE.

5 Section 1833(f) of the Social Security Act (42 U.S.C.

6 1395l(f)) is amended—

7 (1) in paragraph (1), by striking ‘‘, and’’ at the

8 end and inserting a semicolon;

9 (2) in paragraph (2)—

10 (A) by striking ‘‘in a subsequent year’’ and

11 inserting ‘‘in 1989 through 2001’’; and

12 (B) by striking the period at the end and

13 inserting a semicolon; and

14 (3) by adding at the end the following new

15 paragraphs:

16 ‘‘(3) in 2002, at $79 per visit; and

17 ‘‘(4) in a subsequent year, at the limit estab18 lished under this subsection for the previous year in19 creased by the percentage increase in the MEI (as

20 so defined) applicable to primary care services (as so

21 defined) furnished as of the first day of that year.’’.
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1 SEC. 302. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC

2 AND FEDERALLY QUALIFIED HEALTH CEN3 TER SERVICES FROM THE MEDICARE PPS

4 FOR SKILLED NURSING FACILITIES.

5 (a) IN GENERAL.—Section 1888(e) of the Social Se6 curity Act (42 U.S.C. 1395yy(e)) is amended—

7 (1) in paragraph (2)(A)(i)(II), by striking

8 ‘‘clauses (ii) and (iii)’’ and inserting ‘‘clauses (ii),

9 (iii), and (iv)’’; and

10 (2) by adding at the end of paragraph (2)(A)

11 the following new clause:

12 ‘‘(iv) EXCLUSION OF CERTAIN RURAL

13 HEALTH CLINIC AND FEDERALLY QUALI14 FIED HEALTH CENTER SERVICES.—Serv15 ices described in this clause are—

16 ‘‘(I) rural health clinic services

17 (as defined in paragraph (1) of sec18 tion 1861(aa)); and

19 ‘‘(II) Federally qualified health

20 center services (as defined in para21 graph (3) of such section);

22 that would be described in clause (ii) if

23 such services were not furnished by an in24 dividual affiliated with a rural health clinic

25 or a Federally qualified health center.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall apply to services furnished on or after

3 January 1, 2002.

Æ