I 

108TH CONGRESS 

1ST SESSION H. R. 937

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 

FEBRUARY 26, 2003

Mr. MORAN of Kansas (for himself, Mr. TURNER of Texas, Mr. BERRY, Mr. 

OTTER, Ms. BALDWIN, Mr. PICKERING, Mr. OSBORNE, Mr. HASTINGS of 

Washington, Mr. PAUL, Mr. MCINTYRE, Mr. SANDLIN, Mr. KIND, Mr. 

TIAHRT, Mr. MURTHA, Mr. WHITFIELD, Mr. STENHOLM, and Mr. 

FROST) 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 2003’’. 
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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 ‘‘(ww)(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, 2003; 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 2003) 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, 2003. 

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 (b) PAYMENT.—

4 (1) INPATIENT SERVICES.—Section 1814 (42 

5 U.S.C. 1395f) is amended by adding at the end the 

6 following new subsection: 

7 ‘‘Payment for Inpatient Services Furnished in Rural 

8 Community Hospitals 

9 ‘‘(m) The amount of payment under this part for in10 patient hospital services furnished in a rural community 

11 hospital, other than such services furnished in a psy12 chiatric or rehabilitation unit of the hospital which is a 

13 distinct part, is, at the election of the hospital in the appli14 cation referred to in section 1861(ww)(1)(E)—

15 ‘‘(1) the reasonable costs of providing such 

16 services, without regard to the amount of the cus17 tomary or other charge, or 

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

19 the prospective payment system for inpatient hos20 pital services under section 1886(d).’’. 

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

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

23 following new subsection: 

24 ‘‘(n) PAYMENT FOR OUTPATIENT SERVICES FUR25 NISHED IN RURAL COMMUNITY HOSPITALS.—The 
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1 amount of payment under this part for outpatient services 

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

3 of the hospital in the application referred to in section 

4 1861(ww)(1)(E)—

5 ‘‘(1) the reasonable costs of providing such 

6 services, without regard to the amount of the cus7 tomary or other charge and any limitation under 

8 section 1861(v)(1)(U), or 

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

10 the prospective payment system for covered OPD 

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

12 (3) HOME HEALTH SERVICES.—

13 (A) EXCLUSION FROM HOME HEALTH

14 PPS.—

15 (i) IN GENERAL.—Section 1895 (42 

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

17 the end the following: 

18 ‘‘(f) EXCLUSION.—

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

20 under this title for home health services furnished on 

21 or after October 1, 2003, by a qualified RCH-based 

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

23 ‘‘(A) the agency may make a one-time elec24 tion to waive application of the prospective pay25 ment system established under this section to 
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1 such services furnished by the agency shall not 

2 apply; and 

3 ‘‘(B) in the case of such an election, pay4 ment shall be made on the basis of the reason5 able costs incurred in furnishing such services 

6 as determined under section 1861(v), but with7 out regard to the amount of the customary or 

8 other charges with respect to such services or 

9 the limitations established under paragraph 

10 (1)(L) of such section. 

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

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

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

14 home health agency that is a provider-based entity 

15 (as defined in section 404 of the Medicare, Medicaid, 

16 and SCHIP Benefits Improvement and Protection 

17 Act of 2000 (Public Law 106–554; Appendix F, 114 

18 Stat. 2763A–506) of a rural community hospital 

19 that is located—

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

21 branch office of another home health agency is 

22 located; or 

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

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

25 (ii) CONFORMING CHANGES.—
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1 (I) PAYMENTS UNDER PART A.—

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

3 is amended by inserting ‘‘or with re4 spect to services to which section 

5 1895(f) applies’’ after ‘‘equipment’’ in 

6 the matter preceding paragraph (1). 

7 (II) PAYMENTS UNDER PART

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

9 1395l(a)(2)(A)) is amended by strik10 ing ‘‘the prospective payment system 

11 under’’. 

12 (III) PER VISIT LIMITS.—Section 

13 1861(v)(1)(L)(i) (42 U.S.C. 

14 1395x(v)(1)(L)(i)) is amended by in15 serting ‘‘(other than by a qualified 

16 RCH-based home health agency (as 

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

18 ‘‘with respect to services furnished by 

19 home health agencies’’. 

20 (iii) CONSOLIDATED BILLING.—

21 (I) RECIPIENT OF PAYMENT.—

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

23 1395u(b)(6)(F)) is amended by in24 serting ‘‘and excluding home health 

25 services to which section to which sec-
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1 tion 1895(f) applies’’ after ‘‘provided 

2 for in such section’’. 

3 (II) EXCEPTION TO EXCLUSION

4 FROM COVERAGE.—Section 1862(a) 

5 (42 U.S.C. 1395y(a)) is amended by 

6 inserting before the period at the end 

7 of the second sentence the following: 

8 ‘‘and paragraph (21) shall not apply 

9 to home health services to which sec10 tion 1895(f) applies’’. 

11 (4) RETURN ON EQUITY.—Section 

12 1861(v)(1)(P) (42 U.S.C. 1395x(v)(1)(P)) is amend13 ed—

14 (A) by inserting ‘‘(i)’’ after ‘‘(P)’’; and 

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

16 ‘‘(ii)(I) Notwithstanding clause (i), subparagraph 

17 (S)(i), and section 1886(g)(2), such regulations shall pro18 vide, in determining the reasonable costs of the services 

19 described in subclause (II) furnished by a rural commu20 nity hospital on or after October 1, 2003, for payment 

21 of a return on equity capital at a rate of return equal to 

22 150 percent of the average specified in clause (i): 

23 ‘‘(II) The services referred to in subclause (I) are in24 patient hospital services, outpatient hospital services, 

25 home health services furnished by an RCH-based home 
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1 health agency (as defined in section 1895(f)(2)), and am2 bulance services. 

3 ‘‘(III) Payment under this clause shall be made with4 out regard to whether a provider is a proprietary pro5 vider.’’. 

6 (5) EXEMPTION FROM 30 PERCENT REDUCTION

7 IN REIMBURSEMENT FOR BAD DEBT.—Section 

8 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amend9 ed by inserting ‘‘(other than a rural community hos10 pital)’’ after ‘‘In determining such reasonable costs 

11 for hospitals’’. 

12 (c) BENEFICIARY COST-SHARING FOR OUTPATIENT

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

14 (b)(2)) is amended—

15 (1) by inserting ‘‘(1)’’ after ‘‘(n)’’; and 

16 (2) adding at the end the following: 

17 ‘‘(2) The amounts of beneficiary cost sharing for out18 patient services furnished in a rural community hospital 

19 under this part shall be as follows: 

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

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

22 hospital, the amount of cost sharing determined 

23 under paragraph (8) of such section. 
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1 ‘‘(B) For items and services that would have 

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

3 provider or supplier, no cost sharing shall apply. 

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

5 amount of cost sharing that would apply to the item 

6 or service under the methodology that would be used 

7 to determine payment for such item or service if pro8 vided by a physician, provider, or supplier, as the 

9 case may be.’’. 

10 (d) CONFORMING AMENDMENTS.—

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

12 U.S.C. 1395f(b)) is amended by inserting ‘‘other 

13 than inpatient hospital services furnished by a rural 

14 community hospital,’’ after ‘‘critical access hospital 

15 services,’’. 

16 (2) PART B PAYMENT.—

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

18 U.S.C. 1395l(a)) is amended—

19 (i) in paragraph (2), in the matter be20 fore subparagraph (A), by striking ‘‘and 

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

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

23 paragraph (8);
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1 (iii) by striking the period at the end 

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

3 and 

4 (iv) by adding at the end the fol5 lowing: 

6 ‘‘(10) in the case of outpatient services fur7 nished by a rural community hospital, the amounts 

8 described in section 1834(n).’’. 

9 (B) AMBULANCE SERVICES.—Section 

10 1834(l)(8) (42 U.S.C. 1395m(l)(8)), as added 

11 by section 205(a) of the Medicare, Medicaid, 

12 and SCHIP Benefits Improvement and Protec13 tion Act of 2000 (Appendix F, 114 Stat. 

14 2763A–463), as enacted into law by section 

15 1(a)(6) of Public Law 106–554, is amended—

16 (i) in the heading, by striking ‘‘CRIT17 ICAL ACCESS HOSPITALS’’ and inserting 

18 ‘‘CERTAIN FACILITIES’’; 

19 (ii) by striking ‘‘or’’ at the end of sub20 paragraph (A); 

21 (iii) by redesignating subparagraph 

22 (B) as subparagraph (C); 

23 (iv) by inserting after subparagraph 

24 (A) the following new subparagraph: 
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1 ‘‘(B) by a rural community hospital (as de2 fined in section 1861(ww)(1)), or’’; and 

3 (v) in subparagraph (C), as so redes4 ignated, by inserting ‘‘or a rural commu5 nity hospital’’ after ‘‘critical access hos6 pital’’. 

7 (3) TECHNICAL AMENDMENTS.—

8 (A) CONSULTATION WITH STATE AGEN9 CIES.—Section 1863 (42 U.S.C. 1395z) is 

10 amended by striking ‘‘and (dd)(2)’’ and insert11 ing ‘‘(dd)(2), (mm)(1), and (ww)(1)’’. 

12 (B) PROVIDER AGREEMENTS.—Section 

13 1866(a)(2)(A) (42 U.S.C. 1395cc(a)(2)(A)) is 

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

15 after ‘‘section 1833(b),’’. 

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

17 this section shall apply to items and services furnished on 

18 or after October 1, 2003. 

19 SEC. 3. REMOVING BARRIERS TO ESTABLISHMENT OF DIS20 TINCT PART UNITS BY RCH AND CAH FACILI21 TIES. 

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

23 1395ww(d)(1)(B)) is amended by striking ‘‘a distinct part 

24 of the hospital (as defined by the Secretary)’’ in the mat25 ter following cause (v) and inserting ‘‘a distinct part (as 
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1 defined by the Secretary) of the hospital or of a critical 

2 access hospital or a rural community hospital’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall apply to determinations with respect 

5 to distinct part unit status that are made on or after Octo6 ber 1, 2003. 

7 SEC. 4. IMPROVEMENTS TO MEDICARE CRITICAL ACCESS 

8 HOSPITAL (CAH) PROGRAM. 

9 (a) EXCLUSION OF CERTAIN BEDS FROM BED

10 COUNT.—Section 1820(c)(2) (42 U.S.C. 1395i–4(c)(2)) is 

11 amended by adding at the end the following: 

12 ‘‘(E) EXCLUSION OF CERTAIN BEDS FROM

13 BED COUNT.—In determining the number of 

14 beds of a facility for purposes of applying the 

15 bed limitations referred to in subparagraph 

16 (B)(iii) and subsection (f), the Secretary shall 

17 not take into account any bed of a distinct part 

18 psychiatric or rehabilitation unit (described in 

19 the matter following clause (v) of section 

20 1886(d)(1)(B)) of the facility, except that the 

21 total number of beds that are not taken into ac22 count pursuant to this subparagraph with re23 spect to a facility shall not exceed 10.’’. 

24 (b) PAYMENTS TO HOME HEALTH AGENCIES OWNED

25 AND OPERATED BY A CAH.—Section 1895(f) (42 U.S.C. 
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1 1395fff(f)), as added by section 2(b)(3), is further amend2 ed by inserting ‘‘or by a home health agency that is owned 

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

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

5 (2))’’. 

6 (c) PAYMENTS TO CAH-OWNED SNFS.—

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

8 1395yy(e)) is amended—

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

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

11 (B) by adding at the end thereof the fol12 lowing: 

13 ‘‘(13) EXEMPTION OF CAH FACILITIES FROM

14 PPS.—In determining payments under this part for 

15 covered skilled nursing facility services furnished on 

16 or after October 1, 2003, by a skilled nursing facil17 ity that is a distinct part unit of a critical access 

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

19 owned and operated by a critical access hospital—

20 ‘‘(A) the prospective payment system es21 tablished under this subsection shall not apply; 

22 and 

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

24 of the reasonable costs incurred in furnishing 

25 such services as determined under section 
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1 1861(v), but without regard to the amount of 

2 the customary or other charges with respect to 

3 such services or the limitations established 

4 under subsection (a).’’. 

5 (2) CONFORMING CHANGES.—

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

7 U.S.C. 1395f(b)), as amended by subsection 

8 (b)(2)(A), is further amended in the matter 

9 preceding paragraph (1)—

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

11 nursing facility providing covered skilled 

12 nursing facility services (as defined in sec13 tion 1888(e)(2)) or posthospital extended 

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

15 applies,’’ after ‘‘inpatient critical access 

16 hospital services’’; and 

17 (ii) by striking ‘‘1813 1886,’’ and in18 serting ‘‘1813, 1886, 1888,’’. 

19 (B) CONSOLIDATED BILLING.—

20 (i) RECIPIENT OF PAYMENT.—Section 

21 1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) 

22 is amended by inserting ‘‘services to which 

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

24 1888(e) applies and’’ after ‘‘other than’’.
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1 (ii) EXCEPTION TO EXCLUSION FROM

2 COVERAGE.—Section 1862(a)(18) (42 

3 U.S.C. 1395y(a)(18)) is amended by in4 serting ‘‘(other than services to which 

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

6 1888(e) applies)’’ after ‘‘section 

7 1888(e)(2)(A)(i)’’. 

8 (d) PAYMENTS TO DISTINCT PART PSYCHIATRIC OR

9 REHABILITATION UNITS OF CAHS.—Section 1886(b) (42 

10 U.S.C. 1395ww(b)) is amended—

11 (1) in paragraph (1), by inserting ‘‘, other than 

12 a distinct part psychiatric or rehabilitation unit to 

13 which paragraph (8) applies,’’ after ‘‘subsection 

14 (d)(1)(B)’’; and 

15 (2) by adding at the end the following: 

16 ‘‘(8) EXEMPTION OF CERTAIN DISTINCT PART PSY17 CHIATRIC OR REHABILITATION UNITS FROM COST LIM18 ITS.—In determining payments under this part for inpa19 tient hospital services furnished on or after October 1, 

20 2003, by a distinct part psychiatric or rehabilitation unit 

21 (described in the matter following clause (v) of subsection 

22 (d)(1)(B)) of a critical access hospital (as defined in sec23 tion 1861(mm)(1))—

24 ‘‘(A) the limits imposed under the preceding 

25 paragraphs of this subsection shall not apply; and 
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1 ‘‘(B) payment shall be made on the basis of the 

2 reasonable costs incurred in furnishing such services 

3 as determined under section 1861(v), but without re4 gard to the amount of the customary or other 

5 charges with respect to such services.’’. 

6 (e) ELIMINATION OF ISOLATION TEST FOR COST7 BASED CAH AMBULANCE SERVICES.—Paragraph (8) of 

8 section 1834(l) (42 U.S.C. 1395m(l)), as added by section 

9 205(a) of BIPA, is amended by striking the comma at 

10 the end of the last subparagraph and all that follows and 

11 inserting a period. 

12 (f) RETURN ON EQUITY.—Section 1861(v)(1)(P) (42 

13 U.S.C. 1395x(v)(1)(P)), as amended by section 2(b)(4), 

14 is further amended by adding at the end the following: 

15 ‘‘(iii)(I) Notwithstanding clause (i), subparagraph 

16 (S)(i), and section 1886(g)(2), such regulations shall pro17 vide, in determining the reasonable costs of the services 

18 described in subclause (II) furnished by a critical access 

19 hospital on or after October 1, 2003, for payment of a 

20 return on equity capital at a rate of return equal to 150 

21 percent of the average specified in clause (i). 

22 ‘‘(II) The services referred to in subclause (I) are in23 patient critical access hospital services (as defined in sec24 tion 1861(mm)(2)), outpatient critical access hospital 

25 services (as defined in section 1861(mm)(3)), extended 
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1 care services provided pursuant to an agreement under 

2 section 1883, posthospital extended care services to which 

3 section 1888(e)(13) applies, home health services to which 

4 section 1895(f) applies, ambulance services to which sec5 tion 1834(l) applies, and inpatient hospital services to 

6 which section 1886(b)(8) applies. 

7 ‘‘(III) Payment under this clause shall be made with8 out regard to whether a provider is a proprietary pro9 vider.’’. 

10 (g) COVERAGE OF COSTS FOR EMERGENCY ROOM

11 ON-CALL PHYSICIAN ASSISTANTS AND NURSE PRACTI12 TIONERS.—Section 1834(g) (42 U.S.C. 1395m(g)) is 

13 amended by adding at the end the following new para14 graph: 

15 ‘‘(6) COVERAGE OF COSTS FOR EMERGENCY

16 ROOM ON-CALL PHYSICIAN ASSISTANTS AND NURSE

17 PRACTITIONERS.—In determining the reasonable 

18 costs of outpatient critical access hospital services 

19 under paragraphs (1) and (2)(A), the Secretary shall 

20 recognize as allowable costs, amounts (as defined by 

21 the Secretary) for reasonable compensation and re22 lated costs for emergency room physician assistants 

23 and nurse practitioners who are on-call (as defined 

24 by the Secretary for purposes of paragraph (5)) but 

25 who are not present on the premises of the critical 
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1 access hospital involved, and are not otherwise fur2 nishing services which would be physicians’ services 

3 if furnished by a physician and are not on-call at 

4 any other provider or facility.’’. 

5 (h) TECHNICAL CORRECTIONS.—

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

7 1820(b)(2) (42 U.S.C. 1395i–4(b)(2)) is amended 

8 by striking ‘‘nonprofit or public hospitals’’ and in9 serting ‘‘hospitals’’. 

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

11 1883(a)(3) (42 U.S.C. 1395tt(a)(3)) is amended—

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

13 or’’ after ‘‘Notwithstanding’’; and 

14 (B) by striking ‘‘covered skilled nursing fa15 cility’’. 

16 (i) EFFECTIVE DATES.—

17 (1) ELIMINATION OF REQUIREMENTS.—The 

18 amendment made by subsections (a) and (b) shall 

19 apply to services furnished on or after October 1, 

20 2003. 

21 (2) TECHNICAL CORRECTIONS.—

22 (A) BBRA.—The amendment made by 

23 subsection (h)(1) shall be effective as if in24 cluded in the enactment of section 403(b) of the 

25 Medicare, Medicaid, and SCHIP Balanced 
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1 Budget Refinement Act of 1999 (Appendix F, 

2 113 Stat. 1501A–321), as enacted into law by 

3 section 1000(a)(6) of Public Law 106–113. 

4 (B) BIPA.—The amendment made by sub5 section (h)(2) shall be effective as if included in 

6 the enactment of section 203(b) of the Medi7 care, Medicaid, and SCHIP Benefits Improve8 ment and Protection Act of 2000 (Appendix F, 

9 114 Stat. 2763A–463), as enacted into law by 

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

Æ