I

103D CONGRESS

1ST SESSION H. R. 286

To amend the Public Health Service Act to facilitate the entering into of

cooperative agreements between hospitals for the purpose of enabling

such hospitals to share expensive medical or high technology equipment

or services, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mrs. MORELLA introduced the following bill; which was referred to the

Committee on Energy and Commerce

A BILL

To amend the Public Health Service Act to facilitate the

entering into of cooperative agreements between hospitals

for the purpose of enabling such hospitals to share expensive medical or high technology equipment or services,

and for other purposes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Hospital Cooperative

5 Agreement Act’’.
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1 SEC. 2. PURPOSE.

2 It is the purpose of this Act to encourage cooperation

3 between hospitals in order to contain costs and achieve

4 a more efficient health care delivery system through the

5 elimination of unnecessary duplication and proliferation of

6 expensive medical or high technology services or equip7 ment.

8 SEC. 3. HOSPITAL TECHNOLOGY AND SERVICES SHARING

9 DEMONSTRATION PROGRAM.

10 Part D of title VI of the Public Health Service Act

11 (42 U.S.C. 291k et seq.) is amended by adding at the end

12 thereof the following new section:

13 ‘‘SEC. 647. HOSPITAL TECHNOLOGY AND SERVICES SHAR14 ING DEMONSTRATION PROGRAM.

15 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab16 lish a demonstration program under which the Secretary

17 shall in fiscal year 1994 award ten 5-year grants to eligi18 ble applicants to facilitate collaboration among two or

19 more hospitals with respect to the provision of expensive,

20 capital-intensive medical technology or other highly re21 source-intensive services. Such program shall be designed

22 to demonstrate the extent to which such agreements result

23 in a reduction in costs, an increase in access to care, and

24 improvements in the quality of care with respect to the

25 hospitals involved.

26 ‘‘(b) ELIGIBLE APPLICANTS.—
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1 ‘‘(1) IN GENERAL.—To be eligible to receive a

2 grant under subsection (a), an entity (or entities)

3 shall be a licensed hospital (or hospitals) and shall

4 prepare and submit to the Secretary an application

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

6 information as the Secretary may require, includ7 ing—

8 ‘‘(A) a statement that such hospital (or

9 hospitals) desires to negotiate and enter into a

10 voluntary cooperative agreement under which

11 such hospital (or hospitals) is operating in one

12 State or region for the sharing of medical tech13 nology or services;

14 ‘‘(B) a description of the nature and scope

15 of the activities contemplated under the cooper16 ative agreement;

17 ‘‘(C) a description of the financial arrange18 ment between the hospitals that are parties to

19 the agreement; and

20 ‘‘(D) any other information determined ap21 propriate by the Secretary.

22 ‘‘(2) DEVELOPMENT OF EVALUATION GUIDE23 LINES.—Not later than 90 days after the date of en24 actment of this section, the Administrator for

25 Health Care Policy and Research shall develop eval-
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1 uation guidelines with respect to applications sub2 mitted under paragraph (1).

3 ‘‘(3) EVALUATIONS OF APPLICATIONS.—The

4 Secretary, in consultation with the Administrator for

5 Health Care Policy and Research, shall evaluate ap6 plications submitted under paragraph (1). In deter7 mining which applications to approve for purposes of

8 awarding grants under subsection (a), the Secretary

9 shall consider whether the cooperative agreement de10 scribed in each such application meets guidelines de11 veloped under paragraph (2) and is likely to result

12 in—

13 ‘‘(A) the enhancement of the quality of

14 hospital or hospital-related care;

15 ‘‘(B) the preservation of hospital services

16 in geographical proximity to the communities

17 traditionally served by the applicant hospital (or

18 hospitals);

19 ‘‘(C) improvements in the cost-effectiveness

20 of high-technology services by the hospitals in21 volved;

22 ‘‘(D) improvements in the efficient utiliza23 tion of hospital resources and capital equip24 ment;
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1 ‘‘(E) the provision of services that would

2 not otherwise be available; or

3 ‘‘(F) the avoidance of duplication of hos4 pital resources.

5 ‘‘(c) ALLOCATION OF GRANT FUNDS.—

6 ‘‘(1) IN GENERAL.—Amounts provided under a

7 grant awarded under subsection (a) shall be used

8 only to facilitate collaboration among hospitals and

9 may not be used to purchase facilities or capital

10 equipment. Such permissible uses may include reim11 bursements for the expenses associated with special12 ized personnel, administrative services, support serv13 ices, and instructional programs.

14 ‘‘(2) GRANT AWARD AMOUNT.—Hospitals ap15 plying for grants under subsection (a) shall specify

16 the desired grant award amount. The Secretary shall

17 determine the appropriate amount in granting such

18 awards.

19 ‘‘(3) CARE IN RURAL AREAS.—

20 ‘‘(A) IN GENERAL.—Not less than three of

21 the grants awarded under subsection (a) shall

22 be used to demonstrate the manner in which co23 operative agreements of the type described in

24 such subsection may be used to increase access

25 to or quality of care in rural areas.
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1 ‘‘(B) DEFINITION.—As used in subpara2 graph (A), the term ‘rural areas’ means those

3 areas located outside of metropolitan statistical

4 areas.

5 ‘‘(d) MEDICAL TECHNOLOGY AND SERVICES.—

6 ‘‘(1) IN GENERAL.—Cooperative agreements fa7 cilitated under this section shall provide for the

8 sharing of medical technology or eligible services

9 among the hospitals which are parties to such agree10 ments.

11 ‘‘(2) MEDICAL TECHNOLOGY.—For purposes of

12 this section, the term ‘medical technology’ includes

13 the drugs, devices, equipment and medical and sur14 gical procedures utilized in medical care, and the or15 ganizational and support systems within which such

16 care is provided, that—

17 ‘‘(A) have high capital costs or extremely

18 high annual operating costs; and

19 ‘‘(B) are technologies with respect to which

20 there is a reasonable expectation that shared

21 ownership will avoid a significant degree of the

22 potential excess capacity of such service in the

23 community or region to be served under such

24 agreement.
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1 ‘‘(3) ELIGIBLE SERVICES.—With respect to

2 services that may be shared under an agreement en3 tered into under this section, such services shall—

4 ‘‘(A) either have high capital costs or ex5 tremely high annual operating costs; and

6 ‘‘(B) be services with respect to which

7 there is a reasonable expectation that shared

8 ownership will avoid a significant degree of the

9 potential excess capacity of such services in the

10 community or region to be served under such

11 agreement.

12 Such services may include mobile services.

13 ‘‘(e) TERM.—The demonstration program established

14 under this section shall continue for a term of 5 years.

15 ‘‘(f) REPORTS.—

16 ‘‘(1) IN GENERAL.—Grantees shall submit an17 nual reports to the Secretary containing information

18 on the demonstration projects funded under this sec19 tion, as required by the Secretary.

20 ‘‘(2) TO CONGRESS.—On the date that occurs 5

21 years after the establishment of the demonstration

22 program under this section, the Secretary shall pre23 pare and submit to the appropriate committees of

24 Congress, a report concerning the potential for coop-
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1 erative agreements of the type entered into under

2 this section to—

3 ‘‘(A) contain health care costs;

4 ‘‘(B) increase the access of individuals to medi5 cal services; and

6 ‘‘(C) improve the quality of health care.

7 Such report shall also contain the recommendations of the

8 Secretary with respect to future programs to facilitate co9 operative agreements.

10 ‘‘(g) RELATION TO OTHER LAWS.—

11 ‘‘(1) IN GENERAL.—Notwithstanding any provi12 sion of the antitrust laws, it shall not be considered

13 a violation of the antitrust laws for a hospital to

14 enter into, and carry out activities under, a coopera15 tive agreement in accordance with this section.

16 ‘‘(2) DEFINITION.—For purposes of this sub17 section, the term ‘antitrust laws’ means—

18 ‘‘(A) the Act entitled ‘‘An Act to protect

19 trade and commerce against unlawful restraints

20 and monopolies’’, approved July 2, 1890, com21 monly known as the ‘‘Sherman Act’’ (26 Stat.

22 209; chapter 647; 15 U.S.C. 1 et seq.);

23 ‘‘(B) the Federal Trade Commission Act,

24 approved September 26, 1914 (38 Stat. 717;

25 chapter 311; 15 U.S.C. 41 et seq.);
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1 ‘‘(C) the Act entitled ‘‘An Act to supple2 ment existing laws against unlawful restraints

3 and monopolies, and for other purposes’’, ap4 proved October 15, 1914, commonly known as

5 the ‘‘Clayton Act’’ (38 Stat. 730; chapter 323;

6 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

7 3285, 3691; 29 U.S.C. 52, 53); and

8 ‘‘(D) any State antitrust laws that would

9 prohibit the activities described in paragraph

10 (1).

11 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There

12 are authorized to be appropriated to carry out this section,

13 $2,500,000 for each of the fiscal years 1994 through

14 1998. Any appropriation pursuant to the preceding sen15 tence shall be subject to section 601 of the Congressional

16 Budget Act of 1974 (relating to discretionary spending

17 limits).

18 ‘‘(i) EFFECTIVE DATE.—If the Agency for Health

19 Care Policy and Research fails to establish guidelines pur20 suant to subsection (b)(2), the Secretary shall award

21 grants under this section based on the criteria contained

22 in subsection (b)(3).’’.

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