SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Rural Hospital Survival Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I—PROGRAMS OF HEALTH CARE FINANCING
ADMINISTRATION
Subtitle A—Medicare Program
Sec. 101. Equalization of labor and non-labor portions of standardized amounts
for hospitals in rural and other urban areas.
Sec. 102. Sense of Congress regarding disproportionate impact of reductions in
medicare reimbursements on rural providers.
Subtitle B—Other Programs
Sec. 111. Extension of authorization of appropriations for rural health transi-
tion grants.
TITLE II—PROGRAMS OF PUBLIC HEALTH SERVICE
Sec. 201. Demonstration grants for telecommunications to improve health care
in rural areas.
Sec. 202. Rural health outreach grant program.
TITLE III—ANTITRUST PROVISIONS
Sec. 301. Antitrust exemption applicable to hospitals.
TITLE IV—COMMISSION ON REDUCING THE BURDEN OF
REGULATIONS AND PAPERWORK ON SMALL RURAL
HOSPITALS.
Sec. 401. Establishment.
Sec. 402. Duties of commission.
Sec. 403. Membership.
Sec. 404. Director and staff of commission; experts and consultants.
Sec. 405. Powers of commission.
Sec. 406. Termination.
Sec. 407. Authorization of appropriations.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) For the 27 percent of Americans living in
rural areas, certain geographic, demographic, and
epidemiologic characteristics can reduce the avail-
ability and quality of medical care.
(2) Rough terrain, bad weather conditions, de-
teriorating transportation infrastructure, long dis-
tances between medical facilities, and the lack of
public transportation systems all serve as geographic
barriers to adequate health care.
(3) Rural populations tend to be older and have
lower average per capita incomes, resulting in higher
concentrations of medicare, medicaid, and uninsured
patients.
(4) In rural regions, hospitals are the primary
sources of medical care and serve as hubs of the
local health care delivery systems.
(5) Rural hospitals generally have fewer beds,
fewer admissions, lower occupancy rates, and higher
per patient, per day expenses than urban hospitals.
(6) The medicare program continues to reim-
burse rural hospitals at lower rates than urban hos-
pitals.
(7) Because of the high proportion of medicare,
medicaid, and uninsured individuals in rural areas,
rural hospitals rely heavily on Federal funds in the
form of medicare and medicaid reimbursements for
their survival.
(8) When the Congress cuts or freezes medicare
reimbursement, it reduces the primary source of rev-
enues for rural hospitals.
(9) The volume of uncompensated care that
rural hospitals provide continues to rise and places
serious financial burdens on the hospitals.
(10) Almost one third of all rural hospitals have
negative operating expenses.
(11) Almost 400 rural hospitals have been
closed since 1980.
(12) Besides providing medical care, rural hos-
pitals are integral parts of local economies because
they are usually one of the largest employers in the
area and play an important role in attracting new
businesses and residents to the area.
(13) Any health care reform package adopted
by the Congress must include provisions that im-
prove the financial condition and ensure the survival
of our small, rural hospitals.
TITLE I—PROGRAMS OF HEALTH
CARE 
FINANCING 
ADMINIS-
TRATION
Subtitle A—Medicare Program
SEC. 101. EQUALIZATION OF LABOR AND NON-LABOR POR-
TIONS OF STANDARDIZED AMOUNTS FOR
HOSPITALS IN RURAL AND OTHER URBAN
AREAS.
(a) IN GENERAL.—Section 1886(d)(3)(A)(iii) of the
Social Security Act (42 U.S.C. 1395ww(d)(3)(A)(iii)) is
amended by striking ‘‘average standardized amount’’ the
first place it appears and all that follows and inserting
the following: ‘‘portion of the average standardized
amount attributable to wages and wage-related costs and
the portion of such amount not attributable to wages and
wage-related costs for hospitals located in a rural area
shall be equal to such portions of such amount for hos-
pitals located in an other urban area.’’.
(b) LIMITATION ON SCOPE OF COSTS CONSIDERED
ATTRIBUTABLE
TO
WAGES
AND
WAGE-RELATED
COSTS.—The first sentence of section 1886(d)(3)(E) of
such Act (42 U.S.C. 1395ww(d)(3)(E)) by striking
‘‘costs,’’ and inserting ‘‘costs (taking into account only
costs attributable to wages and salaries, employee benefits,
and professional fees),’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to discharges occurring on or after
October 1, 1994.
SEC. 102. SENSE OF CONGRESS REGARDING DISPROPOR-
TIONATE IMPACT OF REDUCTIONS IN MEDI-
CARE REIMBURSEMENTS ON RURAL PROVID-
ERS.
(a) FINDING.—Congress finds the following:
(1) The proportion of the revenues of rural hos-
pitals, physicians, and other providers of health care
services providers that is attributable to payments
under the medicare program is significantly higher
than the proportion of the revenues of urban hos-
pitals, physicians, and other providers that is attrib-
utable to such payments, because a higher propor-
tion of the residents of rural areas are age 65 or
older.
(2) As a result, any reductions in the payments
made to hospitals, physicians, and other providers
under the medicare program disproportionately af-
fects providers in rural areas.
(b) SENSE OF CONGRESS.—It is the sense of Con-
gress that any reductions in payments made to providers
under the medicare program should be adjusted so as to
reduce the disproportionate impact such reductions have
on providers in rural areas.
Subtitle B—Other Programs
SEC. 111. EXTENSION OF AUTHORIZATION OF APPROPRIA-
TIONS 
FOR 
RURAL 
HEALTH 
TRANSITION
GRANTS.
Section 4005(e)(9) of the Omnibus Budget Reconcili-
ation Act of 1987 is amended—
(1) by striking ‘‘1989 and’’ and inserting
‘‘1989,’’; and
(2) by striking ‘‘1992’’ and inserting ‘‘1992
and $50,000,000 for each of fiscal years 1993
through 1997’’.
TITLE II—PROGRAMS OF PUBLIC
HEALTH SERVICE
SEC. 201. DEMONSTRATION GRANTS FOR TELECOMMUNI-
CATIONS TO IMPROVE HEALTH CARE IN
RURAL AREAS.
Part D of title III of the Public Health Service Act
(42 U.S.C. 254b et seq.) is amended by adding at the end
the following section:
‘‘USE OF TELECOMMUNICATIONS FOR IMPROVING
HEALTH OF RURAL POPULATIONS
‘‘SEC. 340D. (a) IN GENERAL.—The Secretary may
make grants to public and nonprofit private entities to
carry out demonstration projects for the purpose of im-
proving health services in rural areas through using tele-
communications to make available to the health profes-
sionals of such areas medical advice and knowledge, and
the use of medical technologies, that otherwise are not sig-
nificantly available to the professionals.
‘‘(b) PREFERENCES IN MAKING GRANTS.—In mak-
ing grants under subsection (a), the Secretary shall give
preference to an otherwise qualified applicant if, in the
demonstration project under such subsection, the number
of health facilities and health professionals with respect
to which the purpose described in such subsection is to
be carried out constitutes a significant number of the
health facilities and health professionals of the rural area
involved.
‘‘(c) AGREEMENTS AMONG PARTICIPATING HEALTH
PROFESSIONALS.—The Secretary may make a grant
under subsection (a) only if the health professionals with
respect to which the purpose described in such subsection
is to be carried out have entered into an agreement gov-
erning the use by the professionals of the telecommuni-
cations involved.
‘‘(d) APPLICATION FOR GRANT.—The Secretary may
make a grant under subsection (a) only if an application
for the grant is submitted to the Secretary and the appli-
cation is in such form, is made in such manner, and con-
tains such agreements, assurances, and information as the
Secretary determines to be necessary to carry out this sec-
tion.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of carrying out this section, there are authorized
to be appropriated such sums as may be necessary for
each of the fiscal years 1995 through 1997.’’.
SEC. 202. RURAL HEALTH OUTREACH GRANT PROGRAM.
Part D of title III of the Public Health Service Act,
as amended by section 201 of this Act, is amended by add-
ing at the end the following section:
‘‘ACCESS OF RURAL POPULATIONS TO PRIMARY HEALTH
SERVICES
‘‘SEC. 340E. (a) IN GENERAL.—The Secretary, act-
ing through the Director of the Office of Rural Health
Policy, may make grants to public and nonprofit private
health care entities to carry out demonstration projects
for the purposes of—
‘‘(1) increasing the capacity of the residents of
rural areas to utilize primary health services (and
related health and social services) available under
Federal, State, and local programs through—
‘‘(A) informing the residents of the exist-
ence of such programs;
‘‘(B) assisting the residents in establishing
eligibility under the programs;
‘‘(C) providing transportation services for
the residents; and
‘‘(D) such other services as the Secretary
determines to be appropriate; and
‘‘(2) providing primary health services to such
residents, with priority given to the provision of pre-
ventive health services.
‘‘(b) PREFERENCES IN MAKING GRANTS.—In mak-
ing grants under subsection (a), the Secretary shall give
preference to an otherwise qualified applicant if the appli-
cant has, with 2 or more other health care entities, entered
into an agreement under which—
‘‘(1) the participants in the agreement collabo-
rate to carry out the demonstration project involved;
and
‘‘(2) the participants will make significant ef-
forts to coordinate the delivery of primary health
services in the rural area involved, and to coordinate
the provision of such services with related health and
social services in the area.
‘‘(c) IDENTIFICATION OF NEED FOR SERVICES.—The
Secretary may make a grant under subsection (a) only if
the applicant for the grant has identified the need in the
rural area involved for the services to be provided under
the grant.
‘‘(d) APPLICATION FOR GRANT.—The Secretary may
make a grant under subsection (a) only if an application
for the grant is submitted to the Secretary and the appli-
cation is in such form, is made in such manner, and con-
tains such agreements, assurances, and information as the
Secretary determines to be necessary to carry out this sec-
tion.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of carrying out this section, there is authorized
to be appropriated $50,000,000 for each of the fiscal years
1995 through 1997.’’.
TITLE III—ANTITRUST
PROVISIONS
SEC. 301. ANTITRUST EXEMPTION APPLICABLE TO HOS-
PITALS.
(a) EXEMPTION.—The antitrust laws shall not apply
with respect to—
(1) the combination of, or the attempt to com-
bine, 2 or more hospitals,
(2) a contract entered into solely by 2 or more
hospitals to allocate hospital services, or
(3) the attempt by only 2 or more hospitals to
enter into a contract to allocate hospital services,
if each of such hospitals satisfies all of the requirements
of subsection (b) at the time such hospitals engage in the
conduct described in paragraph (1), (2), or (3), as the case
may be.
(b) REQUIREMENTS.—The requirements referred to
in subsection (a) are as follows:
(1) The hospital is located outside of a city, or
in a city that has less than 25,000 inhabitants, as
determined in accordance with the most recent data
available from the Bureau of the Census.
(2) In the most recently concluded calendar
year, the hospital received more than 40 percent of
its gross revenue from payments made under Fed-
eral programs.
(3) There is in effect with respect to the hos-
pital a certificate issued by the Health Care Financ-
ing Administration specifying that such Administra-
tion has determined that Federal expenditures would
be reduced, and consumer costs would not increase,
if the 2 or more hospitals that request such certifi-
cate merge, or allocate the hospital services specified
in such request, as the case may be.
(c) DEFINITION.—For purposes of this section, the
term ‘‘antitrust laws’’ has the meaning given such term
in subsection (a) of the first section of the Clayton Act
(15 U.S.C. 12), except that such term includes section 5
of the Federal Trade Commission Act (15 U.S.C. 45) to
the extent that such section 5 applies with respect to un-
fair methods of competition.
TITLE IV—COMMISSION ON RE-
DUCING 
THE 
BURDEN 
OF
REGULATIONS 
AND 
PAPER-
WORK ON SMALL RURAL HOS-
PITALS.
SEC. 401. ESTABLISHMENT.
There is hereby established the Advisory Commission
on Reducing the Burden of Regulations and Paperwork
on Small Rural Hospitals (hereafter referred to as the
‘‘Commission’’).
SEC. 402. DUTIES OF COMMISSION.
(a) ANALYSIS
OF IMPACT
OF REGULATIONS
AND
PAPERWORK.—The Commission shall analyze the impact
of Federal, State, and local government regulations and
paperwork requirements on small rural hospitals.
(b) REPORTS AND RECOMMENDATIONS.—
(1) INTERIM
REPORTS.—During the first 2
years after the initial appointment of its members,
the Commission shall—
(A) submit reports to the Secretary of
Health and Human Services (hereafter referred
to as the ‘‘Secretary’’) on its activities under
subsection (a) at such times as the Secretary
may require; and
(B) submit to the Secretary and Congress
recommendations for regulatory and legislative
proposals to reduce the burden of government
regulations and paperwork requirements on
small rural hospitals.
(2) FINAL REPORT.—Not later than January 1,
1998, the Commission shall submit a final report to
the Secretary and Congress on its activities under
this title, and shall include in the report its final rec-
ommendations for proposals described in paragraph
(1)(B).
SEC. 403. MEMBERSHIP.
(a) NUMBER AND APPOINTMENT.—
(1) IN
GENERAL.—The Commission shall be
composed of 8 members appointed by the Secretary
from individuals who possess extensive leadership ex-
perience in and knowledge of State and local govern-
ment, intergovernmental relations, and the adminis-
tration and operation of small rural hospitals.
(2) LIMITATION.—An individual who is a Mem-
ber or employee of the Congress may not be ap-
pointed or serve as a member of the Commission.