I

105TH CONGRESS

1ST SESSION H. R. 585

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

payment under the Medicare program for inpatient services of rehabilitation hospitals and units based on discharges classified by functionalrelated groups.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 5, 1997

Mr. LOBIONDO (for himself, Mr. CONDIT, Mrs. ROUKEMA, Mr. SAXTON, Mr.

STARK, Mr. STUPAK, and Mr. TRAFICANT) introduced the following bill;

which was referred to the Committee on Ways and Means

A BILL

To amend title XVIII of the Social Security Act to provide

for prospective payment under the Medicare program

for inpatient services of rehabilitation hospitals and units

based on discharges classified by functional-related

groups.

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 ‘‘Rehabilitation Hos5 pitals and Units Medicare Payment Equity Act of 1997’’.
2

•HR 585 IH

1 SEC. 2. PROSPECTIVE PAYMENT FOR INPATIENT REHABILI2 TATION HOSPITAL SERVICES BASED ON DIS3 CHARGES CLASSIFIED BY FUNCTIONAL-RE4 LATED GROUPS.

5 (a) IN GENERAL.—Section 1886 of the Social Secu6 rity Act (42 U.S.C. 1395ww) is amended by adding at the

7 end the following new subsection:

8 ‘‘(j) PROSPECTIVE PAYMENT FOR INPATIENT REHA9 BILITATION SERVICES.—

10 ‘‘(1) IN GENERAL.—Notwithstanding section

11 1814(b), but subject to the provisions of section

12 1813, the amount of the payment with respect to the

13 operating and capital costs of inpatient hospital

14 services of a rehabilitation hospital or a rehabilita15 tion unit (in this subsection referred to as a ‘reha16 bilitation facility’) for a discharge is equal to the per

17 discharge payment rate established under this sub18 section.

19 ‘‘(2) FUNCTIONAL-RELATED GROUPS.—

20 ‘‘(A) ESTABLISHMENT.—The Secretary

21 shall establish—

22 ‘‘(i) classes of discharges of rehabilita23 tion facilities by functional-related groups

24 (each in this subsection referred to as a

25 ‘functional-related group’ or ‘FRG’), based
3

•HR 585 IH

1 on impairment, age, and functional capa2 bility of the discharged individual and such

3 other factors as the Secretary deems ap4 propriate, and

5 ‘‘(ii) a method of classifying specific

6 discharges from rehabilitation facilities

7 within these groups.

8 ‘‘(B) WEIGHTING FACTORS.—For each

9 functional-related group the Secretary shall as10 sign an appropriate weighting which reflects the

11 relative facility resources used with respect to

12 discharges classified within that group com13 pared to discharges classified within other

14 groups.

15 ‘‘(C) ADJUSTMENTS.—The Secretary shall

16 from time to time adjust the classifications and

17 weighting factors established under this para18 graph as appropriate to correct for forecast er19 rors and to reflect changes in treatment pat20 terns, technology, case mix, number of dis21 charges for which payment is made under this

22 title, and other factors which may affect the rel23 ative use of resources.

24 ‘‘(D) DATA COLLECTION.—The Secretary

25 is authorized to require rehabilitation facilities
4

•HR 585 IH

1 that provide inpatient hospital services to sub2 mit data on discharges classified according to

3 functional related group or other rehabilitation

4 impairment groups, measurement of functional

5 disability, and such other patient assessment

6 factors as the Secretary deems necessary to es7 tablish and administer the prospective payment

8 system under this subsection.

9 ‘‘(3) PAYMENT RATE.—

10 ‘‘(A) IN GENERAL.—The Secretary shall

11 determine a prospective payment rate for each

12 rehabilitation facility discharge for which such

13 rehabilitation facility is entitled to receive pay14 ment under this title. Subject to subparagraph

15 (B), such rate for discharges during a fiscal

16 year shall be based on the average payment per

17 discharge under this title for inpatient operat18 ing and capital costs of rehabilitation facilities

19 in fiscal year 1996 (as estimated by the Sec20 retary) adjusted—

21 ‘‘(i) by updating such per-discharge

22 amount to the fiscal year involved by the

23 applicable percentage increases provided

24 under subsection (b)(3)(B)(i) for each year
5

•HR 585 IH

1 after fiscal year 1996 and up to the fiscal

2 year involved;

3 ‘‘(ii) by reducing such rates by a fac4 tor equal to the proportion of payments

5 under this subsection (as estimated by the

6 Secretary) based on FRG prospective pay7 ment amounts which are additional pay8 ments described in paragraph (4) (relating

9 to outlier and related payments) or para10 graph (7);

11 ‘‘(iii) for variations among rehabilita12 tion facilities by area under paragraph (6);

13 ‘‘(iv) by the weighting factors estab14 lished under paragraph (2)(B); and

15 ‘‘(v) by such other factors as the Sec16 retary determines are necessary to properly

17 reflect variations in necessary costs of

18 treatment among rehabilitation facilities.

19 ‘‘(B) BUDGET NEUTRAL RATES.—The Sec20 retary shall establish the prospective payment

21 amounts under this subsection for discharges

22 during each of fiscal years 1999 through 2003

23 at levels such that, in the Secretary’s esti24 mation, the amount of total payments under
6

•HR 585 IH

1 this subsection for each such fiscal year (includ2 ing any payment adjustments pursuant to para3 graph (7)) shall not exceed the amount of pay4 ments that would have been made under this

5 title during the fiscal year for operating and

6 capital costs of rehabilitation facilities had this

7 subsection not been enacted. In establishing

8 such payment amounts, the Secretary shall con9 sider the effects of the prospective payment sys10 tem established under this subsection on the

11 total number of discharges from rehabilitation

12 facilities and any previous errors in determining

13 weighting factors under paragraph (2)(B) and

14 other factors described in subparagraph (A).

15 ‘‘(4) OUTLIER AND SPECIAL PAYMENTS.—

16 ‘‘(A) OUTLIERS.—

17 ‘‘(i) DAY OUTLIERS.—The Secretary

18 shall provide for an additional payment to

19 a rehabilitation facility for discharges in a

20 functional-related group, the lengths of

21 stay of which exceeded the mean length of

22 stay for discharges within that group by a

23 fixed number of days or exceeds such mean
7

•HR 585 IH

1 length of stay by some fixed number of de2 viations, whichever is the fewer number of

3 days.

4 ‘‘(ii) REQUESTING ADDITIONAL PAY5 MENTS.—For cases not included in clause

6 (i), a rehabilitation facility may request ad7 ditional payments in any case in which

8 charges, adjusted to cost, exceed a fixed

9 multiple of the applicable prospective pay10 ment rate, or exceed such other fixed dol11 lar amount, whichever is greater, or exceed

12 the prospective payment rate plus a fixed

13 dollar amount determined by the Sec14 retary.

15 ‘‘(iii) PAYMENT BASED ON MARGINAL

16 COST OF CARE.—The amount of such addi17 tional payment under clauses (i) and (ii)

18 shall be determined by the Secretary and

19 shall approximate the marginal cost of care

20 beyond the cutoff point applicable under

21 clause (i) or (ii).

22 ‘‘(iv) TOTAL PAYMENTS.—The total

23 amount of the additional payments made

24 under this subparagraph for discharges in
8

•HR 585 IH

1 a fiscal year may not be less than 5 per2 cent nor more than 6 percent of the total

3 payments projected or estimated to be

4 made based on FRG prospective payment

5 rates for discharges in that year.

6 ‘‘(B) ADJUSTMENT.—The Secretary may

7 provide for such adjustments to the payment

8 amounts under this subsection as the Secretary

9 deems appropriate to take into account the

10 unique circumstances of rehabilitation facilities

11 located in Alaska and Hawaii.

12 ‘‘(5) PUBLICATION.—The Secretary shall pro13 vide for publication in the Federal Register, on or

14 before September 1 before each fiscal year (begin15 ning with fiscal year 2000), of the classification and

16 weighting factors for FRGs under paragraph (2) for

17 such fiscal year and a description of the methodol18 ogy and data used in computing the prospective pay19 ment rates under this subsection for that fiscal year.

20 ‘‘(6) AREA WAGE ADJUSTMENT.—The Secretary

21 shall adjust the proportion (as estimated by the Sec22 retary from time to time) of rehabilitation facilities’

23 costs which are attributable to wages and wage-re24 lated costs, of the prospective payment rates com25 puted under paragraph (3) for area differences in
9

•HR 585 IH

1 wage levels by a factor (established by the Sec2 retary) reflecting the relative hospital wage level in

3 the geographic area of the rehabilitation facility

4 compared to the national average wage level for such

5 facilities. Not later than October 1, 1999 (and at

6 least every 12 months thereafter), the Secretary

7 shall update the factor under the preceding sentence

8 on the basis of a survey conducted by the Secretary

9 (and updated as appropriate) of the wages and

10 wage-related costs incurred in furnishing rehabilita11 tion services. Any adjustments or updates made

12 under this paragraph for a fiscal year shall be made

13 in a manner that assures that the aggregated pay14 ments under this subsection in the fiscal year are

15 not greater or less than those that would have been

16 made in the year without such adjustment.

17 ‘‘(7) ADDITIONAL ADJUSTMENTS.—The Sec18 retary shall provide by regulation for—

19 ‘‘(A) an additional payment to take into

20 account indirect costs of medical education and

21 the special circumstances of hospitals that serve

22 a significantly disproportionate number of low23 income patients in a manner similar to that

24 provided under subparagraphs (B) and (F), re25 spectively, of subsection (d)(5); and
10

•HR 585 IH

1 ‘‘(B) such other exceptions and adjust2 ments to payment amounts under this sub3 section in a manner similar to that provided

4 under subsection (d)(5)(I) in relation to pay5 ments under subsection (d).

6 ‘‘(8) LIMITATION ON REVIEW.—There shall be

7 no administrative or judicial review under section

8 1878 or otherwise of—

9 ‘‘(A) the establishment of FRGs, of the

10 methodology for the classification of discharges

11 within such groups, and of the appropriate

12 weighting factors thereof under paragraph (2),

13 and

14 ‘‘(B) the establishment of the prospective

15 payment rates under paragraph (3).’’.

16 (b) CONFORMING AMENDMENTS.—Section 1886(b)

17 of such Act (42 U.S.C. 1395ww(b)) is amended—

18 (1) in paragraph (1), by inserting ‘‘and other

19 than a rehabilitation facility described in subsection

20 (j)(1)’’ after ‘‘subsection (d)(1)(B)’’, and

21 (2) in paragraph (3)(B)(i), by inserting ‘‘and

22 subsection (j)’’ after ‘‘For purposes of subsection

23 (d)’’.

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

25 this section shall apply to cost reporting periods beginning
11

•HR 585 IH

1 on or after October 1, 1998, except that the Secretary of

2 Health and Human Services may require the submission

3 of data under section 1886(j)(2)(D) of the Social Security

4 Act (as added by subsection (a)) on and after the date

5 of the enactment of this Act.

Æ