II 

110TH CONGRESS 

2D SESSION S. 3300 

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

improvements to the Medicare inpatient hospital payment adjustment 

for low-volume hospitals and to provide for the use of the non-wage 

adjusted PPS rate under the Medicare-dependent hospital (MDH) program, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 22, 2008 

Mr. GRASSLEY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend title XVIII of the Social Security Act to provide 

for temporary improvements to the Medicare inpatient 

hospital payment adjustment for low-volume hospitals 

and to provide for the use of the non-wage adjusted 

PPS rate under the Medicare-dependent hospital (MDH) 

program, 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 ‘‘Rural Hospital Assist5 ance Act of 2008’’. 


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1 SEC. 2. TEMPORARY IMPROVEMENTS TO THE MEDICARE 

2 INPATIENT HOSPITAL PAYMENT ADJUST3 MENT FOR LOW-VOLUME HOSPITALS. 

4 (a) IN GENERAL.—Section 1886(d)(12) of the Social 

5 Security Act (42 U.S.C. 1395ww(d)(12)) is amended— 

6 (1) in subparagraph (A), by inserting ‘‘or (D) 

7 (for discharges occurring in fiscal year 2009)’’ after 

8 ‘‘subparagraph (B)’’; 

9 (2) in subparagraph (B), by striking ‘‘The Sec10 retary’’ and inserting ‘‘Except as provided in sub11 paragraph (D), the Secretary’’; 

12 (3) in subparagraph (C)(i)— 

13 (A) by inserting ‘‘(or, with respect to fiscal 

14 year 2009, 15 road miles)’’ after ‘‘25 road 

15 miles’’; and 

16 (B) by inserting ‘‘(or, with respect to fiscal 

17 year 2009, 1,500 discharges of individuals enti18 tled to, or enrolled for, benefits under part A)’’ 

19 after ‘‘800 discharges’’; and 

20 (4) by adding at the end the following new sub21 paragraph: 

22 ‘‘(D) TEMPORARY APPLICABLE PERCENT23 AGE INCREASE.—For discharges occurring in 

24 fiscal year 2009, the Secretary shall determine 

25 an applicable percentage increase for purposes 

26 of subparagraph (A) using a continuous linear 


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1 sliding scale ranging from 25 percent for low2 volume hospitals with 200 or fewer discharges 

3 of individuals entitled to, or enrolled for, bene4 fits under part A in the fiscal year to 0 percent 

5 for low-volume hospitals with greater than 

6 1,500 discharges of such individuals in the fis7 cal year.’’. 

8 (b) IMPLEMENTATION.—Notwithstanding any other 

9 provision of law, the Secretary of Health and Human 

10 Services may implement the amendments made by sub11 section (a) by program instruction or otherwise. 

12 SEC. 3. USE OF NON-WAGE ADJUSTED PPS RATE UNDER 

13 THE MEDICARE-DEPENDENT HOSPITAL 

14 (MDH) PROGRAM. 

15 (a) IN GENERAL.—Section 1886(d)(5)(G) of the So16 cial Security Act (42 U.S.C. 1395ww(d)(5)(G)) is amend17 ed by adding at the end the following new clause: 

18 ‘‘(v) In the case of discharges occurring on or after 

19 October 1, 2008, and before October 1, 2009, in deter20 mining the amount under paragraph (1)(A)(iii) for pur21 poses of clauses (i) and (ii)(II), such amount shall, if it 

22 results in greater payments to the hospital, be determined 

23 without regard to any adjustment for different area wage 

24 levels under paragraph (3)(E).’’. 


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1 (b) IMPLEMENTATION.—Notwithstanding any other 

2 provision of law, the Secretary of Health and Human 

3 Services may implement the amendment made by sub4 section (a) by program instruction or otherwise. 

5 SEC. 4. LIMITATION ON MEDICARE EXCEPTION TO THE 

6 PROHIBITION ON CERTAIN PHYSICIAN RE7 FERRALS FOR HOSPITALS. 

8 (a) IN GENERAL.—Section 1877 of the Social Secu9 rity Act (42 U.S.C. 1395nn) is amended— 

10 (1) in subsection (d)(2)— 

11 (A) in subparagraph (A), by striking 

12 ‘‘and’’ at the end; 

13 (B) in subparagraph (B), by striking the 

14 period at the end and inserting ‘‘; and’’; and 

15 (C) by adding at the end the following new 

16 subparagraph: 

17 ‘‘(C) in the case where the entity is a hos18 pital, the hospital meets the requirements of 

19 paragraph (3)(D).’’; 

20 (2) in subsection (d)(3)— 

21 (A) in subparagraph (B), by striking 

22 ‘‘and’’ at the end; 

23 (B) in subparagraph (C), by striking the 

24 period at the end and inserting ‘‘; and’’; and 


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1 (C) by adding at the end the following new 

2 subparagraph: 

3 ‘‘(D) the hospital meets the requirements 

4 described in subsection (i)(1) not later than 18 

5 months after the date of the enactment of this 

6 subparagraph.’’; and 

7 (3) by adding at the end the following new sub8 section: 

9 ‘‘(i) REQUIREMENTS FOR HOSPITALS TO QUALIFY

10 FOR HOSPITAL EXCEPTION TO OWNERSHIP OR INVEST11 MENT PROHIBITION.— 

12 ‘‘(1) REQUIREMENTS DESCRIBED.—For pur13 poses of subsection (d)(3)(D), the requirements de14 scribed in this paragraph for a hospital are as fol15 lows: 

16 ‘‘(A) PROVIDER AGREEMENT.—The hos17 pital had— 

18 ‘‘(i) physician ownership on Sep19 tember 1, 2008; and 

20 ‘‘(ii) a provider agreement under sec21 tion 1866 in effect on such date. 

22 ‘‘(B) LIMITATION ON EXPANSION OF FA23 CILITY CAPACITY.—Except as provided in para24 graph (3), the number of operating rooms, pro25 cedure rooms, and beds of the hospital at any 


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1 time on or after the date of the enactment of 

2 this subsection are no greater than the number 

3 of operating rooms, procedure rooms, and beds 

4 as of such date. 

5 ‘‘(C) PREVENTING CONFLICTS OF INTER6 EST.— 

7 ‘‘(i) The hospital submits to the Sec8 retary an annual report containing a de9 tailed description of— 

10 ‘‘(I) the identity of each physi11 cian owner and any other owners of 

12 the hospital; and 

13 ‘‘(II) the nature and extent of all 

14 ownership interests in the hospital. 

15 ‘‘(ii) The hospital has procedures in 

16 place to require that any referring physi17 cian owner discloses to the patient being 

18 referred, by a time that permits the pa19 tient to make a meaningful decision re20 garding the receipt of care, as determined 

21 by the Secretary— 

22 ‘‘(I) the ownership interest of 

23 such referring physician in the hos24 pital; and 


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1 ‘‘(II) if applicable, any such own2 ership interest of the treating physi3 cian. 

4 ‘‘(iii) The hospital does not condition 

5 any physician ownership interests either di6 rectly or indirectly on the physician owner 

7 making or influencing referrals to the hos8 pital or otherwise generating business for 

9 the hospital. 

10 ‘‘(iv) The hospital discloses the fact 

11 that the hospital is partially owned by phy12 sicians— 

13 ‘‘(I) on any public website for the 

14 hospital; and 

15 ‘‘(II) in any public advertising 

16 for the hospital. 

17 ‘‘(D) ENSURING BONA FIDE INVEST18 MENT.— 

19 ‘‘(i) Physician owners in the aggregate 

20 do not own more than the greater of— 

21 ‘‘(I) 40 percent of the total value 

22 of the investment interests held in the 

23 hospital or in an entity whose assets 

24 include the hospital; or 


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1 ‘‘(II) the percentage of such total 

2 value determined on the date of enact3 ment of this subsection. 

4 ‘‘(ii) Any ownership or investment in5 terests that the hospital offers to a physi6 cian owner are not offered on more favor7 able terms than the terms offered to a per8 son who is not a physician owner. 

9 ‘‘(iii) The hospital (or any investors in 

10 the hospital) does not directly or indirectly 

11 provide loans or financing for any physi12 cian owner investments in the hospital. 

13 ‘‘(iv) The hospital (or any investors in 

14 the hospital) does not directly or indirectly 

15 guarantee a loan, make a payment toward 

16 a loan, or otherwise subsidize a loan, for 

17 any individual physician owner or group of 

18 physician owners that is related to acquir19 ing any ownership interest in the hospital. 

20 ‘‘(v) Investment returns are distrib21 uted to each investor in the hospital in an 

22 amount that is directly proportional to the 

23 ownership interest of such investor in the 

24 hospital. 


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1 ‘‘(vi) Physician owners do not receive, 

2 directly or indirectly, any guaranteed re3 ceipt of or right to purchase other business 

4 interests related to the hospital, including 

5 the purchase or lease of any property 

6 under the control of other investors in the 

7 hospital or located near the premises of the 

8 hospital. 

9 ‘‘(vii) The hospital does not offer a 

10 physician owner the opportunity to pur11 chase or lease any property under the con12 trol of the hospital or any other investor in 

13 the hospital on more favorable terms than 

14 the terms offered to an individual who is 

15 not a physician owner. 

16 ‘‘(E) PATIENT SAFETY.— 

17 ‘‘(i) Insofar as the hospital admits a 

18 patient and does not have any physician 

19 available on the premises to provide serv20 ices during all hours in which the hospital 

21 is providing services to such patient, before 

22 admitting the patient— 

23 ‘‘(I) the hospital discloses such 

24 fact to a patient; and 


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1 ‘‘(II) following such disclosure, 

2 the hospital receives from the patient 

3 a signed acknowledgment that the pa4 tient understands such fact. 

5 ‘‘(ii) The hospital has the capacity 

6 to— 

7 ‘‘(I) provide assessment and ini8 tial treatment for patients; and 

9 ‘‘(II) refer and transfer patients 

10 to hospitals with the capability to 

11 treat the needs of the patient in12 volved. 

13 ‘‘(F) LIMITATION ON APPLICATION TO

14 CERTAIN CONVERTED FACILITIES.—The hos15 pital was not converted from an ambulatory 

16 surgical center to a hospital on or after the date 

17 of enactment of this subsection. 

18 ‘‘(2) PUBLICATION OF INFORMATION RE19 PORTED.—The Secretary shall publish, and update 

20 on an annual basis, the information submitted by 

21 hospitals under paragraph (1)(C)(i) on the public 

22 Internet website of the Centers for Medicare & Med23 icaid Services. 

24 ‘‘(3) EXCEPTION TO PROHIBITION ON EXPAN25 SION OF FACILITY CAPACITY.— 


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1 ‘‘(A) PROCESS.— 

2 ‘‘(i) ESTABLISHMENT.—The Secretary 

3 shall establish and implement a process 

4 under which an applicable hospital (as de5 fined in subparagraph (E)) may apply for 

6 an exception from the requirement under 

7 paragraph (1)(B). 

8 ‘‘(ii) OPPORTUNITY FOR COMMUNITY

9 INPUT.—The process under clause (i) shall 

10 provide individuals and entities in the com11 munity that the applicable hospital apply12 ing for an exception is located with the op13 portunity to provide input with respect to 

14 the application. 

15 ‘‘(iii) TIMING FOR IMPLEMENTA16 TION.—The Secretary shall implement the 

17 process under clause (i) on November 1, 

18 2009. 

19 ‘‘(iv) REGULATIONS.—Not later than 

20 November 1, 2009, the Secretary shall pro21 mulgate regulations to carry out the proc22 ess under clause (i). 

23 ‘‘(B) FREQUENCY.—The process described 

24 in subparagraph (A) shall permit an applicable 


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1 hospital to apply for an exception up to once 

2 every 2 years. 

3 ‘‘(C) PERMITTED INCREASE.— 

4 ‘‘(i) IN GENERAL.—Subject to clause 

5 (ii) and subparagraph (D), an applicable 

6 hospital granted an exception under the 

7 process described in subparagraph (A) may 

8 increase the number of operating rooms, 

9 procedure rooms, and beds of the applica10 ble hospital above the baseline number of 

11 operating rooms, procedure rooms, and 

12 beds of the applicable hospital (or, if the 

13 applicable hospital has been granted a pre14 vious exception under this paragraph, 

15 above the number of operating rooms, pro16 cedure rooms, and beds of the hospital 

17 after the application of the most recent in18 crease under such an exception). 

19 ‘‘(ii) LIFETIME 100 PERCENT IN20 CREASE LIMITATION.—The Secretary shall 

21 not permit an increase in the number of 

22 operating rooms, procedure rooms, and 

23 beds of an applicable hospital under clause 

24 (i) to the extent such increase would result 

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1 dure rooms, and beds of the applicable 

2 hospital exceeding 200 percent of the base3 line number of operating rooms, procedure 

4 rooms, and beds of the applicable hospital. 

5 ‘‘(iii) BASELINE NUMBER OF OPER6 ATING ROOMS, PROCEDURE ROOMS, AND

7 BEDS.—In this paragraph, the term ‘base8 line number of operating rooms, procedure 

9 rooms, and beds’ means the number of op10 erating rooms, procedure rooms, and beds 

11 of the applicable hospital as of the date of 

12 enactment of this subsection. 

13 ‘‘(D) INCREASE LIMITED TO FACILITIES

14 ON THE MAIN CAMPUS OF THE HOSPITAL.— 

15 Any increase in the number of operating rooms, 

16 procedure rooms, and beds of an applicable hos17 pital pursuant to this paragraph may only occur 

18 in facilities on the main campus of the applica19 ble hospital. 

20 ‘‘(E) APPLICABLE HOSPITAL.—In this 

21 paragraph, the term ‘applicable hospital’ means 

22 a hospital— 

23 ‘‘(i) that is located in a county in 

24 which the percentage increase in the popu25 lation during the most recent 5-year period 


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1 (as of the date of the application under 

2 subparagraph (A)) is at least 150 percent 

3 of the percentage increase in the popu4 lation growth of the State in which the 

5 hospital is located during that period, as 

6 estimated by Bureau of the Census; 

7 ‘‘(ii) whose annual percent of total in8 patient admissions that represent inpatient 

9 admissions under the program under title 

10 XIX is equal to or greater than the aver11 age percent with respect to such admis12 sions for all hospitals located in the county 

13 in which the hospital is located; 

14 ‘‘(iii) that does not discriminate 

15 against beneficiaries of Federal health care 

16 programs and does not permit physicians 

17 practicing at the hospital to discriminate 

18 against such beneficiaries; 

19 ‘‘(iv) that is located in a State in 

20 which the average bed capacity in the 

21 State is less than the national average bed 

22 capacity; and 

23 ‘‘(v) that has an average bed occu24 pancy rate that is greater than the average 


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1 bed occupancy rate in the State in which 

2 the hospital is located. 

3 ‘‘(F) PROCEDURE ROOMS.—In this sub4 section, the term ‘procedure rooms’ includes 

5 rooms in which catheterizations, angiographies, 

6 angiograms, and endoscopies are performed, ex7 cept such term shall not include emergency 

8 rooms or departments (exclusive of rooms in 

9 which catheterizations, angiographies, 

10 angiograms, and endoscopies are performed). 

11 ‘‘(G) PUBLICATION OF FINAL DECI12 SIONS.—Not later than 60 days after receiving 

13 a complete application under this paragraph, 

14 the Secretary shall publish in the Federal Reg15 ister the final decision with respect to such ap16 plication. 

17 ‘‘(H) LIMITATION ON REVIEW.—There 

18 shall be no administrative or judicial review 

19 under section 1869, section 1878, or otherwise 

20 of the process under this paragraph (including 

21 the establishment of such process). 

22 ‘‘(4) COLLECTION OF OWNERSHIP AND INVEST23 MENT INFORMATION.—For purposes of subpara24 graphs (A)(i) and (D)(i) of paragraph (1), the SecVerDate Aug 31 2005 02:13 Jul 23, 2008 Jkt 069200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S3300.IS S3300

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1 retary shall collect physician ownership and invest2 ment information for each hospital. 

3 ‘‘(5) PHYSICIAN OWNER DEFINED.—For pur4 poses of this subsection, the term ‘physician owner’ 

5 means a physician (or an immediate family member 

6 of such physician) with a direct or an indirect own7 ership interest in the hospital.’’. 

8 (b) ENFORCEMENT.— 

9 (1) ENSURING COMPLIANCE.—The Secretary of 

10 Health and Human Services shall establish policies 

11 and procedures to ensure compliance with the re12 quirements described in subsection (i)(1) of section 

13 1877 of the Social Security Act, as added by sub14 section (a)(3), beginning on the date such require15 ments first apply. Such policies and procedures may 

16 include unannounced site reviews of hospitals. 

17 (2) AUDITS.—Beginning not later than January 

18 1, 2010, the Secretary of Health and Human Serv19 ices shall conduct audits to determine if hospitals 

20 violate the requirements referred to in paragraph 

21 (1). 

Æ 


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