II 

109TH CONGRESS 

2D SESSION S. 4017 

To provide for an appeals process for hospital wage index classification 

under the Medicare program, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 29, 2006 

Mr. SPECTER (for himself and Mr. SANTORUM) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To provide for an appeals process for hospital wage index 

classification under the Medicare 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 ‘‘Hospital Payment Im5 provement and Equity Act of 2006’’. 

6 SEC. 2. APPEALS PROCESS FOR HOSPITAL WAGE INDEX 

7 CLASSIFICATION. 

8 (a) ESTABLISHMENT OF PROCESS.— 

9 (1) IN GENERAL.—The Secretary shall establish 

10 not later than January 1, 2007, by instruction or 


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1 otherwise, a process under which a hospital may ap2 peal the wage index classification otherwise applica3 ble to the hospital and select another area within the 

4 State (or, at the discretion of the Secretary, within 

5 a contiguous State) to which to be reclassified. 

6 (2) PROCESS REQUIREMENTS.—The process es7 tablished under paragraph (1) shall be consistent 

8 with the following: 

9 (A) Such an appeal may be filed as soon 

10 as possible after the date of the enactment of 

11 this Act but shall be filed by not later than 

12 February 15, 2007. 

13 (B) Such an appeal shall be heard by the 

14 Medicare Geographic Reclassification Review 

15 Board. 

16 (C) There shall be no further administra17 tive or judicial review of a decision of such 

18 Board. 

19 (3) RECLASSIFICATION UPON SUCCESSFUL AP20 PEAL.— 

21 (A) RECLASSIFICATION.—If the Medicare 

22 Geographic Reclassification Review Board de23 termines that the hospital is a qualifying hos24 pital (as defined in subsection (c)), the hospital 


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1 shall be reclassified to the area selected under 

2 paragraph (1). 

3 (B) APPLICABILITY.—A reclassification 

4 under subparagraph (A) shall apply with re5 spect to discharges occurring during the 3-year 

6 period beginning with April 1, 2007. 

7 (4) SPECIAL RULES.— 

8 (A) IN GENERAL.—Any qualifying hospital 

9 that is within 3 miles driving distance, starting 

10 at the hospital entrance and driving over im11 proved roads, to the nearest Metropolitan Sta12 tistical Area in which a majority of the other 

13 qualifying hospitals located in the same Metro14 politan Statistical Area as the hospital have 

15 been reclassified to (or if there is no majority, 

16 the Metropolitan Statistical Area in which at 

17 least one such other qualifying hospital has 

18 been reclassified to (as determined appropriate 

19 by the Secretary of Health and Human Serv20 ices), the hospital shall be eligible to select to 

21 be reclassified to such nearest Metropolitan 

22 Statistical Area (or if no majority, to the area 

23 so determined appropriate by the Secretary). 


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1 (B) COMPETITIVELY DISADVANTAGED

2 HOSPITAL IN A SINGLE-HOSPITAL MSA SUR3 ROUNDED BY RURAL COUNTIES.— 

4 (i) IN GENERAL.—If a hospital meets 

5 the requirements described in clause (ii)— 

6 (I) such hospital shall be deemed 

7 to be a qualifying hospital; and 

8 (II) such hospital shall be reclas9 sified to the closest urban area which 

10 is part of a Combined Statistical Area 

11 located in the same State as the hos12 pital. 

13 (ii) REQUIREMENTS.—The require14 ments described in this clause are the fol15 lowing: 

16 (I) The hospital is the only hos17 pital in its urban area. 

18 (II) The hospital is in an urban 

19 area that is not adjacent to any other 

20 urban area. 

21 (III) The hospital is seeking re22 classification to the closest urban area 

23 which is part of a Combined Statis24 tical Area located in the same state as 

25 the hospital. 


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1 (5) INAPPLICABILITY OF CERTAIN PROVI2 SIONS.—Except as the Secretary may provide, the 

3 provisions of paragraphs (8) and (10) of section 

4 1886(d) of the Social Security Act (42 U.S.C. 

5 1395ww(d)) shall not apply to an appeal under this 

6 section. 

7 (b) APPLICATION OF RECLASSIFICATION.—In the 

8 case of an appeal decided in favor of a qualifying hospital 

9 under subsection (a), the wage index reclassification shall 

10 not affect the wage index computation for any area or for 

11 any other hospital and shall not be effected in a budget 

12 neutral manner. The provisions of this section shall not 

13 affect payment for discharges occurring after the end of 

14 the 3-year-period referred to in subsection (a)(3)(B). 

15 (c) QUALIFYING HOSPITAL DEFINED.—For purposes 

16 of this section, the term ‘‘qualifying hospital’’ means a 

17 subsection (d) hospital (as defined in section 

18 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 

19 1395ww(d)(1)(B))) that— 

20 (1) does not qualify for a change in wage index 

21 classification under paragraph (8) or (10) of section 

22 1886(d) of such Act (42 U.S.C. 1395ww(d)) on the 

23 basis of requirements relating to distance or com24 muting; and 


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1 (2) meets such other criteria, such as quality, 

2 as the Secretary may specify by instruction or other3 wise. 

4 The Secretary may modify the wage comparison guidelines 

5 promulgated under section 1886(d)(10)(D) of such Act 

6 (42 U.S.C. 1395ww(d)(10)(D)) in carrying out this sec7 tion. 

8 (d) WAGE INDEX CLASSIFICATION.—For purposes of 

9 this section, the term ‘‘wage index classification’’ means 

10 the geographic area in which the hospital is classified for 

11 purposes of determining for a fiscal year the factor used 

12 to adjust the DRG prospective payment rate under section 

13 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) 

14 for area differences in hospital wage levels that applies 

15 to such hospital under paragraph (3)(E) of such section. 

16 (e) SPECIAL RULE FOR REHABILITATION HOSPITALS

17 AND REHABILITATION UNITS.— 

18 (1) IN GENERAL.—Effective for discharges oc19 curring during the 3-year period beginning with 

20 April 1, 2007, for purposes of making payments 

21 under section 1886(j) of the Social Security Act (42 

22 U.S.C. 1395ww(j)) to a qualifying rehabilitation fa23 cility, such facility shall be deemed to be located in 

24 the area described in paragraph (3). 


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1 (2) QUALIFYING REHABILITATION FACILITY DE2 FINED.—For purposes of this subsection, the term 

3 ‘‘qualifying rehabilitation facility’’ means a rehabili4 tation hospital or a rehabilitation unit that is located 

5 in a Metropolitan Statistical Area in which all sub6 section (d) hospitals (as defined in subsection 

7 (d)(1)(B) of section 1886 of the Social Security Act 

8 (42 U.S.C. 1395ww)) that are not sole community 

9 hospitals (as defined in subsection (d)(5)(D)(iii) of 

10 such section) located in the area have been reclassi11 fied to another Metropolitan Statistical Area. 

12 (3) AREA DESCRIBED.—The area described in 

13 this paragraph with respect to a qualifying rehabili14 tation facility is the Metropolitan Statistical Area in 

15 which the majority of the subsection (d) hospitals 

16 (as so defined) located in the same Metropolitan 

17 Statistical Area as the qualifying rehabilitation facil18 ity have been reclassified to (or if there is no major19 ity, the Metropolitan Statistical Area in which at 

20 least one such subsection (d) hospital has been re21 classified to (as determined appropriate by the Sec22 retary of Health and Human Services). 

Æ 


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