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[Congressional Record Volume 141, Number 81 (Tuesday, May 16, 1995)]
[Extensions of Remarks]
[Pages E1047-E1048]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

             MEDICARE DEPENDENT HOSPITAL RELIEF ACT OF 1995

                                 ______

                         HON. E. CLAY SHAW, JR.

                               of florida

                    in the house of representatives

                          Tuesday May 16, 1995
  Mr. SHAW. Mr. Speaker, I rise today to introduce timely legislation 
that will allow Medicare dependent hospitals, defined as hospitals with 
Medicare patient loads of 60 percent or more, to be reimbursed more 
fairly under the Prospective Payment System [PPS]. These hospitals, 
both rural and urban, have significantly higher Medicare losses and 
lower overall Medicare margins than other hospitals. This disparity 
threatens the viability of these hospitals and the access to, and the 
quality of, care for Medicare beneficiaries.
  This legislation, which I am introducing in conjunction with my good 
friend from Florida, Senator Bob Graham, is titled the Medicare 
Dependent Hospital Relief Act of 1995. To remedy the problem facing 
Medicare dependent hospitals, this bill includes three main provisions. 
First, Medicare dependent hospitals will be statutorily defined as 
hospitals with Medicare patients loads representing 60 percent or more 
of total patient days. Second, each year the Prospective Payment 
Assessment Commission [ProPAC] will compute, and the Health Care 
Financing Administration [HCFA] will implement, separate PPS updates 
for Medicare dependent hospitals and other hospitals. The update for 
Medicare dependent hospitals will have to make the average Medicare 
loss for those hospitals equal to the average Medicare loss for all 
hospitals. The computation and implementation will be budget neutral, 
thus this bill will not create additional costs. Third, ProPAC's annual 
report to Congress will include recommendations to ensure that 
beneficiaries served by Medicare dependent hospitals retain the same 
access and quality of care as Medicare hospital patients nationwide.
  The need for this legislation is simple. Between 1983 and 1988, 
Medicare phased in the PPS to replace cost-based reimbursements with 
prospective, or pre-determined, payments to contain costs and encourage 
efficiency. Various PPS adjustments have produced wide variations in 
hospital profits and losses from Medicare. Medicare dependent 
hospitals, as a group, have been at a distinct disadvantage. While 
hospitals on average lose 2.73 percent on their Medicare business, 
Medicare dependent hospitals lose much more: on average, those Medicare 
dependent hospitals with 60-64 percent Medicare loads lose 4.57 
percent, while those with 65 percent or greater Medicare loads lose 
5.45 percent. Medicare dependent hospitals have less ability to offset 
[[Page E1048]] Medicare losses with payments from other payors because 
of their high Medicare patient loads. With such low margins, Medicare 
dependent hospitals are faced with only two choices: either close or 
reduce services. In either case, the ultimate losers will be the 
Medicare beneficiaries these hospitals serve.
  I urge my colleagues to support this legislation and ask that this 
bill and these remarks be inserted into the Record.
                                 H.R.--

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Dependent Hospital 
     Relief Act of 1995''.

     SEC. 2. DEVELOPMENT OF SEPARATE APPLICABLE PERCENTAGE 
                   INCREASES FOR MEDICARE DEPENDENT HOSPITALS AND 
                   OTHER HOSPITALS BY THE PROSPECTIVE PAYMENT 
                   ASSESSMENT COMMISSION.

       (a) Development of Separate Applicable Percentage 
     Increases.--
       (1) In general.--The Prospective Payment Assessment 
     Commission established under section 1886(e)(2) of the Social 
     Security Act (42 U.S.C. 139ww(e)(2)) (in this section 
     referred to as the ``Commission'') shall, in accordance with 
     paragraph (2), develop for fiscal year 1997 and each fiscal 
     year thereafter separate applicable percentage increases 
     described in section 1886(b)(3)(B) of such Act (42 U.S.C. 
     1395ww(b)(3)(B)) for medicare dependent hospitals and 
     subsection (d) hospitals which are not medicare dependent 
     hospitals.
       (2) Equalization of medicare margins.--The Commission shall 
     develop separate applicable percentage increases under 
     paragraph (1) such that, if such factors were in effect, the 
     estimated average annual medicare margins of all medicare 
     dependent hospitals in furnishing inpatient hospital services 
     to medicare beneficiaries in such fiscal year would be equal 
     to the average annual medicare margins of all subsection (d) 
     hospitals which are not medicare dependent hospitals in 
     furnishing inpatient hospital services to medicare 
     beneficiaries in such fiscal year.
       Budget neutrality.--The Commission shall provide that the 
     separate applicable percentage increases developed under 
     paragraph (1) would, if in effect, not result in aggregate 
     payments under section 1886 of the Social Security Act (42 
     U.S.C. 1395ww) to medicare dependent hospitals and subsection 
     (d) hospitals which are not medicare dependent hospitals for 
     the furnishing of inpatient hospital services in a fiscal 
     year in excess of the aggregate payments under such section 
     to such hospitals in such fiscal year if such factors were 
     not in effect.
       (b) Reports.--
       (1) In general.--Beginning in March 1996, the Commission 
     shall, in each of the Commission's March reports to the 
     Congress required under section 1886(e)(3) of the Social 
     Security Act (42 U.S.C. 1395ww(e)(3)) include--
       (A) the separate applicable percentage increases developed 
     by the Commission under subsection (a)(1) for the upcoming 
     fiscal year; and
       (B) recommendations on methods to ensure that medicare 
     beneficiaries who receive services furnished by medicare 
     dependent hospitals have the same access and quality of care 
     as medicare beneficiaries who are furnished services by 
     subsection (d) hospitals which are not medicare dependent 
     hospitals.
       (2) Annual review of medicare margins.--The Commission 
     shall develop the recommended methods under paragraph (1)(B) 
     after annually reviewing the average medicare margins in 
     medicare dependent hospitals and the impact of such medicare 
     margins on the medicare dependent hospitals' overall profit 
     margins.

     SEC. 3. DEFINITIONS.

       In this Act, the following definitions apply:
       (1) Medicare beneficiary.--The term ``medicare 
     beneficiary'' means an individual who is entitled to benefits 
     under part A of title XVIII of the Social Security Act (42 
     U.S.C. 1395c et seq.).
       (2) Medicare dependent hospital.--The term ``medicare 
     dependent hospital'' means any subsection (d) hospital--
       (A) that is not classified as a sole community hospital 
     under section 1886(d)(5)(D) of the Social Security Act (42 
     U.S.C. 1395ww(d)(5)(D)); and
       (B) for which not less than 60 percent of its inpatient 
     days were attributable to medicare beneficiaries during 2 of 
     the last 3 preceding fiscal years for which data is 
     available.
       (3) Medicare margin.--
       (A) In general.--The term ``medicare margin'' means for a 
     fiscal year the ratio expressed as a percentage equal to--
       (i) the difference between all medicare revenues paid to a 
     hospital for the operating costs of inpatient hospital 
     services in a fiscal year and all medicare program eligible 
     expenses for such operating costs for such fiscal year (as 
     shown by each hospital's HCFA 2552 report submitted annually 
     to the Health Care Financing Administration); divided by
       (ii) all medicare revenues paid to the hospital for the 
     operating costs of inpatient hospital services for such 
     fiscal year.
       (B) Operating costs of inpatient hospital services.--The 
     term ``operating costs of inpatient hospital services'' has 
     the meaning given such term in section 1886(a)(4) of the 
     Social Security Act (42 U.S.C. 1395ww(a)(4)).
       (4) Subsection (d) hospital.--The term ``subsection (d) 
     hospital'' has the meaning given such term in section 
     1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
     1395ww(d)(1)(B)).
     

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