I
107TH CONGRESS
2D SESSION
H. R. 4962
To amend title XVIII of the Social Security Act to make rural health care
improvements under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
JUNE 19, 2002
Mr. TAUZIN 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 juris-
diction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to make
rural health care improvements under the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
TITLE III—RURAL HEALTH CARE
IMPROVEMENTS
SEC. 301. REFERENCE TO FULL MARKET BASKET INCREASE
FOR SOLE COMMUNITY HOSPITALS.
For provision eliminating any reduction from full
market basket in the update for inpatient hospital services
for sole community hospitals, see section 401.
SEC. 302. ENHANCED DISPROPORTIONATE SHARE HOS-
PITAL (DSH) TREATMENT FOR RURAL HOS-
PITALS AND URBAN HOSPITALS WITH FEWER
THAN 100 BEDS.
(a) BLENDING OF PAYMENT AMOUNTS.—
(1) IN GENERAL.—Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended by adding at
the end the following new clause:
‘‘(xiv)(I) In the case of discharges in a fiscal year
beginning on or after October 1, 2002, subject to sub-
clause (II), there shall be substituted for the dispropor-
tionate share adjustment percentage otherwise determined
under clause (iv) (other than subclause (I)) or under
clause (viii), (x), (xi), (xii), or (xiii), the old blend propor-
tion (specified under subclause (III)) of the dispropor-
tionate share adjustment percentage otherwise determined
under the respective clause and 100 percent minus such
old blend proportion of the disproportionate share adjust-
ment percentage determined under clause (vii) (relating
to large, urban hospitals).
‘‘(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 10 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).
‘‘(III) For purposes of subclause (I), the old blend
proportion for fiscal year 2003 is 80 percent, for each sub-
sequent year (through 2006) is the old blend proportion
under this subclause for the previous year minus 20 per-
centage points, and for each year beginning with 2007 is
0 percent.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is
amended—
(A) in each of subclauses (II), (III), (IV),
(V), and (VI) of clause (iv), by inserting ‘‘sub-
ject to clause (xiv) and’’ before ‘‘for discharges
occurring’’;
(B) in clause (viii), by striking ‘‘The for-
mula’’ and inserting ‘‘Subject to clause (xiv),
the formula’’; and
(C) in each of clauses (x), (xi), (xii), and
(xiii), by striking ‘‘For purposes’’ and inserting
‘‘Subject to clause (xiv), for purposes’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to discharges occur-
ring on or after October 1, 2002.
SEC. 303. 2-YEAR PHASED-IN INCREASE IN THE STANDARD-
IZED AMOUNT IN RURAL AND SMALL URBAN
AREAS TO ACHIEVE A SINGLE, UNIFORM
STANDARDIZED AMOUNT.
Section 
1886(d)(3)(A)(iv) 
(42 
U.S.C.
1395ww(d)(3)(A)(iv)) is amended—
(1) by striking ‘‘(iv) For discharges’’ and in-
serting ‘‘(iv)(I) Subject to the succeeding provisions
of this clause, for discharges’’; and
(2) by adding at the end the following new sub-
clauses:
‘‘(II) For discharges occurring during fiscal
year 2003, the average standardized amount for hos-
pitals located other than in a large urban area shall
be increased by 1⁄2 of the difference between the av-
erage standardized amount determined under sub-
clause (I) for hospitals located in large urban areas
for such fiscal year and such amount determined
(without regard to this subclause) for other hospitals
for such fiscal year.
‘‘(III) For discharges occurring in a fiscal year
beginning with fiscal year 2004, the Secretary shall
compute an average standardized amount for hos-
pitals located in any area within the United States
and within each region equal to the average stand-
ardized amount computed for the previous fiscal
(1) REINSTATEMENT
OF
PIP.—The amend-
ments made by subsection (a) shall apply to pay-
ments made on or after January 1, 2003.
(2) PHYSICIAN PAYMENT ADJUSTMENT CONDI-
TION.—The amendment made by subsection (b)
shall be effective as if included in the enactment of
section 403(d) of the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement Act of 1999
(113 Stat. 1501A–371).
(3) FLEXIBILITY
IN
BED
LIMITATION.—The
amendments made by subsection (c) shall apply to
designations made on or after January 1, 2003, but
shall not apply to critical access hospitals that were
designated as of such date.
SEC. 306. EXTENSION OF TEMPORARY INCREASE FOR
HOME HEALTH SERVICES FURNISHED IN A
RURAL AREA.
(a) IN GENERAL.—Section 508(a) BIPA (114 Stat.
2763A–533) is amended—
(1) by striking ‘‘24-MONTH INCREASE BEGIN-
NING APRIL 1, 2001’’ and inserting ‘‘IN GENERAL’’;
and
(2) by striking ‘‘April 1, 2003’’ and inserting
‘‘January 1, 2005’’.
(b) CONFORMING AMENDMENT.—Section 547(c)(2)
of BIPA (114 Stat. 2763A–553) is amended by striking
‘‘the period beginning on April 1, 2001, and ending on
September 30, 2002,’’ and inserting ‘‘a period under such
section’’.
SEC. 307. REFERENCE TO 10 PERCENT INCREASE IN PAY-
MENT FOR HOSPICE CARE FURNISHED IN A
FRONTIER AREA AND RURAL HOSPICE DEM-
ONSTRATION PROJECT.
For—
(1) provision of 10 percent increase in payment
for hospice care furnished in a frontier area, see sec-
tion 422; and
(2) provision of a rural hospice demonstration
project, see section 423.
SEC. 308. REFERENCE TO PRIORITY FOR HOSPITALS LO-
CATED IN RURAL OR SMALL URBAN AREAS IN
REDISTRIBUTION 
OF 
UNUSED 
GRADUATE
MEDICAL EDUCATION RESIDENCIES.
For provision providing priority for hospitals located
in rural or small urban areas in redistribution of unused
graduate medical education residencies, see section 612.
SEC. 309. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN
PAYMENTS FOR PHYSICIANS’ SERVICES.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study of differences in payment
amounts under the physician fee schedule under section
1848 of the Social Security Act (42 U.S.C. 1395w–4) for
physicians’ services in different geographic areas. Such
study shall include—
(1) an assessment of the validity of the geo-
graphic adjustment factors used for each component
of the fee schedule;
(2) an evaluation of the measures used for such
adjustment, including the frequency of revisions; and
(3) an evaluation of the methods used to deter-
mine professional liability insurance costs used in
computing the malpractice component, including a
review of increases in professional liability insurance
premiums and variation in such increases by State
and physician specialty and methods used to update
the geographic cost of practice index and relative
weights for the malpractice component.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Comptroller General shall
submit to Congress a report on the study conducted under
subsection (a). The report shall include recommendations
regarding the use of more current data in computing geo-
graphic cost of practice indices as well as the use of data
directly representative of physicians’ costs (rather than
proxy measures of such costs).
SEC. 310. PROVIDING SAFE HARBOR FOR CERTAIN COL-
LABORATIVE EFFORTS THAT BENEFIT MEDI-
CALLY UNDERSERVED POPULATIONS.
(a) IN GENERAL.—Section 1128B(b)(3) (42 U.S.C.
1320a–7(b)(3)) is amended—
(1) in subparagraph (E), by striking ‘‘and’’
after the semicolon at the end;
(2) in subparagraph (F), by striking the period
at the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(G) any remuneration between a public or
nonprofit private health center entity described
under clause (i) or (ii) of section 1905(l)(2)(B)
and any individual or entity providing goods,
items, services, donations or loans, or a com-
bination thereof, to such health center entity
pursuant to a contract, lease, grant, loan, or
other agreement, if such agreement contributes
to the ability of the health center entity to
maintain or increase the availability, or enhance
the quality, of services provided to a medically
underserved population served by the health
center entity.’’.
(b) RULEMAKING
FOR EXCEPTION
FOR HEALTH
CENTER ENTITY ARRANGEMENTS.—
(1) ESTABLISHMENT.—
(A) 
IN
GENERAL.—The 
Secretary 
of
Health and Human Services (in this subsection
referred to as the ‘‘Secretary’’) shall establish,
on an expedited basis, standards relating to the
exception described in section 1128B(b)(3)(G)
of the Social Security Act, as added by sub-
section (a), for health center entity arrange-
ments to the antikickback penalties.
(B) FACTORS
TO
CONSIDER.—The Sec-
retary shall consider the following factors,
among others, in establishing standards relating
to the exception for health center entity ar-
rangements under subparagraph (A):
(i) Whether the arrangement between
the health center entity and the other
party results in savings of Federal grant
funds or increased revenues to the health
center entity.
(ii) Whether the arrangement between
the health center entity and the other
party expands or enhances a patient’s free-
dom of choice.
(iii) Whether the arrangement be-
tween the health center entity and the
other party protects a health care profes-
sional’s independent medical judgment re-
garding medically appropriate treatment.
The Secretary may also include other standards
and criteria that are consistent with the intent
of Congress in enacting the exception estab-
lished under this section.
(2) INTERIM
FINAL
EFFECT.—No later than
180 days after the date of enactment of this Act, the
Secretary shall publish a rule in the Federal Reg-
ister consistent with the factors under paragraph
(1)(B). Such rule shall be effective and final imme-
diately on an interim basis, subject to such change
and revision, after public notice and opportunity (for
a period of not more than 60 days) for public com-
ment, as is consistent with this subsection.
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