I 

109TH CONGRESS 

1ST SESSION H. R. 2350 

To amend title XVIII of the Social Security Act to provide for improvements 

in access to services in rural hospitals and critical access hospitals. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 12, 2005 

Mr. MORAN of Kansas (for himself, Mr. HINOJOSA, Mr. MCHUGH, Mr. 

BERRY, Mr. BISHOP of Georgia, Mr. SHIMKUS, Mr. SANDERS, Mr. ROSS, 

Mr. KIND, Mr. OTTER, Mr. PICKERING, Mr. PAUL, Mr. OSBORNE, Mr. 

MCINTYRE, Mr. OBERSTAR, Mr. DICKS, and Mr. RENZI) introduced the 

following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committee on Energy and Commerce, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To amend title XVIII of the Social Security Act to provide 

for improvements in access to services in rural hospitals 

and critical access hospitals. 

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; AMENDMENTS TO SOCIAL SECU4 RITY ACT. 

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

6 ‘‘Rural Community Hospital Assistance Act of 2005’’. 
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1 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex2 cept as otherwise specifically provided, whenever in this 

3 Act an amendment is expressed in terms of an amendment 

4 to, or repeal of, a section or other provision, the reference 

5 shall be considered a reference to that section or other 

6 provision of the Social Security Act. 

7 SEC. 2. ESTABLISHMENT OF RURAL COMMUNITY HOSPITAL 

8 (RCH) PROGRAM. 

9 (a) IN GENERAL.—Section 1861 (42 U.S.C. 1395x) 

10 is amended by adding at the end of the following new sub11 section: 

12 ‘‘Rural Community Hospital; Rural Community Hospital 

13 Services 

14 ‘‘(bbb)(1) The term ‘rural community hospital’ means 

15 a hospital (as defined in subsection (e)) that— 

16 ‘‘(A) is located in a rural area (as defined in 

17 section 1886(d)(2)(D)) or treated as being so lo18 cated pursuant to section 1886(d)(8)(E); 

19 ‘‘(B) subject to paragraph (2), has less than 51 

20 acute care inpatient beds, as reported in its most re21 cent cost report; 

22 ‘‘(C) makes available 24-hour emergency care 

23 services; 
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1 ‘‘(D) subject to paragraph (3), has a provider 

2 agreement in effect with the Secretary and is open 

3 to the public as of January 1, 2005; and 

4 ‘‘(E) applies to the Secretary for such designa5 tion. 

6 ‘‘(2) For purposes of paragraph (1)(B), beds in a 

7 psychiatric or rehabilitation unit of the hospital which is 

8 a distinct part of the hospital shall not be counted. 

9 ‘‘(3) Subparagraph (1)(D) shall not be construed to 

10 prohibit any of the following from qualifying as a rural 

11 community hospital: 

12 ‘‘(A) A replacement facility (as defined by the 

13 Secretary in regulations in effect on January 1, 

14 2005) with the same service area (as defined by the 

15 Secretary in regulations in effect on such date). 

16 ‘‘(B) A facility obtaining a new provider num17 ber pursuant to a change of ownership. 

18 ‘‘(C) A facility which has a binding written 

19 agreement with an outside, unrelated party for the 

20 construction, reconstruction, lease, rental, or financ21 ing of a building as of January 1, 2005. 

22 ‘‘(4) Nothing in this subsection shall be construed as 

23 prohibiting a critical access hospital from qualifying as a 

24 rural community hospital if the critical access hospital 
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1 meets the conditions otherwise applicable to hospitals 

2 under subsection (e) and section 1866. 

3 ‘‘(5) Nothing in this subsection shall be construed as 

4 prohibiting a rural community hospital participating in 

5 the demonstration program under Section 410A of the 

6 Medicare Prescription Drug, Improvement, and Mod7 ernization Act of 2003 (Public Law 108–173; 117 Stat. 

8 2313) from qualifying as a rural community hospital if 

9 the rural community hospital meets the conditions other10 wise applicable to hospitals under subsection (e) and sec11 tion 1866.’’. 

12 (b) PAYMENT.— 

13 (1) INPATIENT HOSPITAL SERVICES.—Section 

14 1814 (42 U.S.C. 1395f) is amended by adding at 

15 the end the following new subsection: 

16 ‘‘Payment for Inpatient Services Furnished in Rural 

17 Community Hospitals 

18 ‘‘(m) The amount of payment under this part for in19 patient hospital services furnished in a rural community 

20 hospital, other than such services furnished in a psy21 chiatric or rehabilitation unit of the hospital which is a 

22 distinct part, is, at the election of the hospital in the appli23 cation referred to in section 1861(bbb)(1)(E)— 
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1 ‘‘(1) 101 percent of the reasonable costs of pro2 viding such services, without regard to the amount 

3 of the customary or other charge, or 

4 ‘‘(2) the amount of payment provided for under 

5 the prospective payment system for inpatient hos6 pital services under section 1886(d).’’. 

7 (2) OUTPATIENT SERVICES.—Section 1834 (42 

8 U.S.C. 1395m) is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(n) PAYMENT FOR OUTPATIENT SERVICES FUR11 NISHED IN RURAL COMMUNITY HOSPITALS.—The 

12 amount of payment under this part for outpatient services 

13 furnished in a rural community hospital is, at the election 

14 of the hospital in the application referred to in section 

15 1861(bbb)(1)(E)— 

16 ‘‘(1) 101 percent of the reasonable costs of pro17 viding such services, without regard to the amount 

18 of the customary or other charge and any limitation 

19 under section 1861(v)(1)(U), or 

20 ‘‘(2) the amount of payment provided for under 

21 the prospective payment system for covered OPD 

22 services under section 1833(t).’’. 

23 (3) HOME HEALTH SERVICES.— 

24 (A) EXCLUSION FROM HOME HEALTH

25 PPS.— 
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1 (i) IN GENERAL.—Section 1895 (42 

2 U.S.C. 1395fff) is amended by adding at 

3 the end the following: 

4 ‘‘(f) EXCLUSION.— 

5 ‘‘(1) IN GENERAL.—In determining payments 

6 under this title for home health services furnished on 

7 or after October 1, 2005, by a qualified RCH-based 

8 home health agency (as defined in paragraph (2))— 

9 ‘‘(A) the agency may make a one-time elec10 tion to waive application of the prospective pay11 ment system established under this section to 

12 such services furnished by the agency; and 

13 ‘‘(B) in the case of such an election, pay14 ment shall be made on the basis of 101 percent 

15 of the reasonable costs incurred in furnishing 

16 such services as determined under section 

17 1861(v), but without regard to the amount of 

18 the customary or other charges with respect to 

19 such services or the limitations established 

20 under paragraph (1)(L) of such section. 

21 ‘‘(2) QUALIFIED RCH-BASED HOME HEALTH

22 AGENCY DEFINED.—For purposes of paragraph (1), 

23 a ‘qualified RCH-based home health agency’ is a 

24 home health agency that is a provider-based entity 

25 (as defined in section 404 of the Medicare, Medicaid, 
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1 and SCHIP Benefits Improvement and Protection 

2 Act of 2000 (Appendix F, 114 Stat. 2763A–506), as 

3 enacted into law by section 1(a)(6) of Public Law 

4 106–554) of a rural community hospital that is lo5 cated— 

6 ‘‘(A) in a county in which no main or 

7 branch office of another home health agency is 

8 located; or 

9 ‘‘(B) at least 35 miles from any main or 

10 branch office of another home health agency.’’. 

11 (ii) CONFORMING CHANGES.— 

12 (I) PAYMENT UNDER PART A.— 

13 Section 1814(b) (42 U.S.C. 1395f(b)) 

14 is amended by inserting ‘‘or with re15 spect to services to which section 

16 1895(f) applies’’ after ‘‘equipment’’ in 

17 the matter preceding paragraph (1). 

18 (II) PAYMENTS UNDER PART

19 B.—Section 1833(a)(2)(A) (42 U.S.C. 

20 1395l(a)(2)(A)) is amended by strik21 ing ‘‘the prospective payment system 

22 under’’. 

23 (III) PER VISIT LIMITS.—Section 

24 1861(v)(1)(L)(i) (42 U.S.C. 

25 1395x(v)(1)(L)(i)) is amended by in-
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1 serting ‘‘(other than by a qualified 

2 RCH-based home health agency (as 

3 defined in section 1895(f)(2))’’ after 

4 ‘‘with respect to services furnished by 

5 home health agencies’’. 

6 (iii) CONSOLIDATED BILLING.— 

7 (I) RECIPIENT OF PAYMENT.— 

8 Section 1842(b)(6)(F) (42 U.S.C. 

9 1395u(b)(6)(F)) is amended by in10 serting ‘‘and excluding home health 

11 services to which section 1895(f) ap12 plies’’ after ‘‘provided for in such sec13 tion’’. 

14 (II) EXCEPTION TO EXCLUSION

15 FROM COVERAGE.—Section 1862(a) 

16 (42 U.S.C. 1395y(a)) is amended by 

17 inserting before the period at the end 

18 of the second sentence the following: 

19 ‘‘and paragraph (21) shall not apply 

20 to home health services to which sec21 tion 1895(f) applies’’. 

22 (4) EXEMPTION FROM 30-PERCENT REDUCTION

23 IN REIMBURSEMENT FOR BAD DEBT.—Section 

24 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amend25 ed by inserting ‘‘(other than for a rural community 
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1 hospital)’’ after ‘‘In determining such reasonable 

2 costs for hospitals’’. 

3 (c) BENEFICIARY COST-SHARING FOR OUTPATIENT

4 SERVICES.—Section 1834(n) (as added by subsection 

5 (b)(2)) is amended— 

6 (1) by redesignating paragraphs (1) and (2) as 

7 subparagraphs (A) and (B), respectively; 

8 (2) by inserting ‘‘(1)’’ after ‘‘(n)’’; and 

9 (3) by adding at the end the following: 

10 ‘‘(2) The amounts of beneficiary cost-sharing for out11 patient services furnished in a rural community hospital 

12 under this part shall be as follows: 

13 ‘‘(A) For items and services that would have 

14 been paid under section 1833(t) if provided by a 

15 hospital, the amount of cost-sharing determined 

16 under paragraph (8) of such section. 

17 ‘‘(B) For items and services that would have 

18 been paid under section 1833(h) if furnished by a 

19 provider or supplier, no cost-sharing shall apply. 

20 ‘‘(C) For all other items and services, the 

21 amount of cost-sharing that would apply to the item 

22 or service under the methodology that would be used 

23 to determine payment for such item or service if pro24 vided by a physician, provider, or supplier, as the 

25 case may be.’’. 
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1 (d) CONFORMING AMENDMENTS.— 

2 (1) PART A PAYMENT.—Section 1814(b) (42 

3 U.S.C. 1395f(b)) is amended in the matter pre4 ceding paragraph (1) by inserting ‘‘other than inpa5 tient hospital services furnished by a rural commu6 nity hospital,’’ after ‘‘critical access hospital serv7 ices,’’. 

8 (2) PART B PAYMENT.— 

9 (A) IN GENERAL.—Section 1833(a) (42 

10 U.S.C. 1395l(a)) is amended— 

11 (i) in paragraph (2), in the matter be12 fore subparagraph (A), by striking ‘‘and 

13 (I)’’ and inserting ‘‘(I), and (K)’’; 

14 (ii) by striking ‘‘and’’ at the end of 

15 paragraph (8); 

16 (iii) by striking the period at the end 

17 of paragraph (9) and inserting ‘‘; and’’; 

18 and 

19 (iv) by adding at the end the fol20 lowing: 

21 ‘‘(10) in the case of outpatient services fur22 nished by a rural community hospital, the amounts 

23 described in section 1834(n).’’. 
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1 (B) AMBULANCE SERVICES.—Section 

2 1834(l)(8) (42 U.S.C. 1395m(l)(8)) is amend3 ed— 

4 (i) in the heading, by striking ‘‘CRIT5 ICAL ACCESS HOSPITALS’’ and inserting 

6 ‘‘CERTAIN FACILITIES’’; 

7 (ii) in the matter preceding subpara8 graph (A), by striking ‘‘the reasonable 

9 costs’’ and inserting ‘‘101 percent of the 

10 reasonable costs’’; 

11 (iii) by striking ‘‘or’’ at the end of 

12 subparagraph (A); 

13 (iv) by redesignating subparagraph 

14 (B) as subparagraph (C); 

15 (v) by inserting after subparagraph 

16 (A) the following new subparagraph: 

17 ‘‘(B) by a rural community hospital (as de18 fined in section 1861(bbb)(1)), or’’; and 

19 (vi) in subparagraph (C), as so redes20 ignated, by inserting ‘‘or a rural commu21 nity hospital’’ after ‘‘critical access hos22 pital’’. 

23 (3) TECHNICAL AMENDMENTS.— 

24 (A) CONSULTATION WITH STATE AGEN25 CIES.—Section 1863 (42 U.S.C. 1395z) is 
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1 amended by striking ‘‘and (dd)(2)’’ and insert2 ing ‘‘(dd)(2), (mm)(1), and (bbb)(1)’’. 

3 (B) PROVIDER AGREEMENTS.—Section 

4 1866(a)(2)(A) (42 U.S.C. 1395cc(a)(2)(A)) is 

5 amended by inserting ‘‘section 1834(n)(2),’’ 

6 after ‘‘section 1833(b),’’. 

7 (e) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to items and services furnished on 

9 or after October 1, 2005. 

10 SEC. 3. REMOVING BARRIERS TO ESTABLISHMENT OF DIS11 TINCT PART UNITS BY RCH AND CAH FACILI12 TIES. 

13 (a) IN GENERAL.—Section 1886(d)(1)(B) (42 U.S.C. 

14 1395(d)(1)(B)) is amended by striking ‘‘a distinct part of 

15 the hospital (as defined by the Secretary)’’ in the matter 

16 following clause (v) and inserting ‘‘a distinct part (as de17 fined by the Secretary) of the hospital or of a critical ac18 cess hospital or a rural community hospital’’. 

19 (b) REVISION OF LIMITS ON AUTHORITY FOR CAHS

20 TO ESTABLISH PSYCHIATRIC AND REHABILITATION DIS21 TINCT PART UNITS.—Section 1820(c)(2)(E)(iv) (42 

22 U.S.C. 1395i–4(c)(2)(E)(iv)) is amended— 

23 (1) by striking ‘‘If’’ and inserting ‘‘If the Sec24 retary finds that’’; 
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1 (2) by striking ‘‘with respect to a cost reporting 

2 period’’; and 

3 (3) by striking ‘‘during such period’’ and insert4 ing ‘‘after such finding is made’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to determinations with respect to 

7 distinct part unit status that are made on or after October 

8 1, 2005. 

9 SEC. 4. IMPROVEMENTS TO MEDICARE CRITICAL ACCESS 

10 HOSPITAL (CAH) PROGRAM. 

11 (a) PAYMENTS TO HOME HEALTH AGENCIES OWNED

12 AND OPERATED BY A CAH.—Section 1895(f) (42 U.S.C. 

13 1395fff(f)), as added by section 2(b)(3), is further amend14 ed by inserting ‘‘or by a home health agency that is owned 

15 and operated by a critical access hospital (as defined in 

16 section 1861(mm)(1))’’ after ‘‘as defined in paragraph 

17 (2))’’. 

18 (b) PAYMENTS TO CAH-OWNED SNFS.— 

19 (1) IN GENERAL.—Section 1888(e) (42 U.S.C. 

20 1395yy(e)) is amended— 

21 (A) in paragraph (1), by striking ‘‘and 

22 (12)’’ and inserting ‘‘(12), and (13)’’; and 

23 (B) by adding at the end thereof the fol24 lowing: 
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1 ‘‘(13) EXEMPTION OF CAH FACILITIES FROM

2 PPS.—In determining payments under this part for 

3 covered skilled nursing facility services furnished on 

4 or after October 1, 2005, by a skilled nursing facil5 ity that is a distinct part unit of a critical access 

6 hospital (as defined in section 1861(mm)(1)) or is 

7 owned and operated by a critical access hospital— 

8 ‘‘(A) the prospective payment system es9 tablished under this subsection shall not apply; 

10 and 

11 ‘‘(B) payment shall be made on the basis 

12 of 101 percent of the reasonable costs incurred 

13 in furnishing such services as determined under 

14 section 1861(v), but without regard to the 

15 amount of the customary or other charges with 

16 respect to such services or the limitations estab17 lished under subsection (a)’’. 

18 (2) CONFORMING CHANGES.— 

19 (A) IN GENERAL.—Section 1814(b) (42 

20 U.S.C. 1395f(b)), as amended by section 

21 2(d)(1), is amended in the matter preceding 

22 paragraph (1)— 

23 (i) by inserting ‘‘other than a skilled 

24 nursing facility providing covered skilled 

25 nursing facility services (as defined in sec-
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1 tion 1888(e)(2)) or posthospital extended 

2 care services to which section 1888(e)(13) 

3 applies,’’ after ‘‘inpatient hospital services 

4 furnished by a rural community hospital,’’; 

5 and 

6 (ii) by striking ‘‘1813, 1886,’’ and in7 serting ‘‘1813, 1886, 1888,’’. 

8 (B) CONSOLIDATED BILLING.— 

9 (i) RECIPIENT OF PAYMENT.—Section 

10 1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) 

11 is amended by inserting ‘‘services to which 

12 paragraph (7)(C) or (13) of section 

13 1888(e) applies and’’ after ‘‘other than’’. 

14 (ii) EXCEPTION TO EXCLUSION FROM

15 COVERAGE.—Section 1862(a)(18) (42 

16 U.S.C. 1395y(a)(18)) is amended by in17 serting ‘‘(other than services to which 

18 paragraph (7)(C) or (13) of section 

19 1888(e) applies)’’ after ‘‘section 

20 1888(e)(2)(A)(i)’’. 

21 (c) PAYMENTS TO DISTINCT PART PSYCHIATRIC OR

22 REHABILITATION UNITS OF CAHS.— 

23 (1) IN GENERAL.—Section 1886(b) (42 U.S.C. 

24 1395(b)) is amended— 
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1 (A) in paragraph (1), by inserting ‘‘, other 

2 than a distinct part psychiatric or rehabilitation 

3 unit to which paragraph (8) applies,’’ after 

4 ‘‘subsection (d)(1)(B)’’; and 

5 (B) by adding at the end the following: 

6 ‘‘(8) EXEMPTION OF CERTAIN DISTINCT PART

7 PSYCHIATRIC OR REHABILITATION UNITS FROM

8 COST LIMITS.—In determining payments under this 

9 part for inpatient hospital services furnished on or 

10 after October 1, 2005, by a distinct part psychiatric 

11 or rehabilitation unit (described in the matter fol12 lowing clause (v) of subsection (d)(1)(B)) of a crit13 ical access hospital (as defined in section 

14 1861(mm)(1))— 

15 ‘‘(A) the limits imposed under the pre16 ceding paragraphs of this subsection shall not 

17 apply; and 

18 ‘‘(B) payment shall be made on the basis 

19 of 101 percent of the reasonable costs incurred 

20 in furnishing such services as determined under 

21 section 1861(v), but without regard to the 

22 amount of the customary or other charges with 

23 respect to such services.’’. 

24 (2) CONFORMING AMENDMENT.—Section 

25 1814(l) (42 U.S.C. 1395f(l)) is amended by insert-
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1 ing ‘‘furnished during fiscal year 2005’’ after ‘‘such 

2 unit’’. 

3 (d) ELIMINATION OF ISOLATION TEST FOR COST4 BASED CAH AMBULANCE SERVICES.—Paragraph (8) of 

5 section 1834(l) (42 U.S.C. 1395m(l)) is amended by strik6 ing the comma at the end of subparagraph (B) and all 

7 that follows and inserting a period. 

8 (e) TECHNICAL CORRECTIONS.— 

9 (1) SECTION 403(b) OF BBRA 1999.—Section 

10 1820(b)(2) (42 U.S.C. 1395i-4(b)(2)) is amended by 

11 striking ‘‘nonprofit or public hospitals’’ and insert12 ing ‘‘hospitals’’. 

13 (2) SECTION 203(b) OF BIPA 2000.—Section 

14 1883(a)(3) (42 U.S.C. 1395tt(a)(3)) is amended— 

15 (A) by inserting ‘‘section 1861(v)(1)(G) 

16 or’’ after ‘‘Notwithstanding’’; and 

17 (B) by striking ‘‘covered skilled nursing fa18 cility’’. 

19 (f) EFFECTIVE DATES.— 

20 (1) ELIMINATION OF REQUIREMENTS.—The 

21 amendments made by subsections (a) and (c) shall 

22 apply to services furnished on or after October 1, 

23 2005. 

24 (2) TECHNICAL CORRECTIONS.— 
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1 (A) BBRA.—The amendment made by 

2 subsection (e)(1) shall be effective as if included 

3 in the enactment of section 403(b) of the Medi4 care, Medicaid, and SCHIP Balanced Budget 

5 Refinement Act of 1999 (Appendix F, 113 Stat. 

6 1501A–321), as enacted into law by section 

7 1000(a)(6) of Public Law 106–113. 

8 (B) BIPA.—The amendments made by 

9 subsection (e)(2) shall be effective as if included 

10 in the enactment of section 203(b) of the Medi11 care, Medicaid, and SCHIP Benefits Improve12 ment and Protection Act of 2000 (Appendix F, 

13 114 Stat. 2763A–463), as enacted into law by 

14 section 1(a)(6) of Public Law 106–554. 

Æ