I
107TH CONGRESS
2D SESSION
H. R. 5234
To amend title XVIII of the Social Security Act to provide for fair payments
under the Medicare hospital outpatient department prospective payment
system.
IN THE HOUSE OF REPRESENTATIVES
JULY 25, 2002
Mr. SESSIONS (for himself, Mr. DINGELL, Mr. BROWN of Ohio, and Mr. BURR
of North Carolina) introduced the following bill; which was referred to
the Committee on Energy and Commerce, and in addition to the Com-
mittee on Ways and Means, 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 fair payments under the Medicare hospital outpatient
department prospective payment system.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Hospital Outpatient Department Fair Payment
Act of 2002’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Ensuring adequate OPD fee schedule amounts for clinic and emergency
visits.
Sec. 3. Limitation of pro rata reductions to pass-through payments.
Sec. 4. Clarifying application of OPD fee schedule increase factor.
Sec. 5. Limitation on budget neutrality adjustment for annual revisions to sys-
tem components.
Sec. 6. Outlier payments.
Sec. 7. Adjustment to limit decline in payment.
Sec. 8. Special increase in certain relative payment weights.
Sec. 9. Permanent extension of provider-based status.
SEC. 
2. 
ENSURING 
ADEQUATE 
OPD 
FEE 
SCHEDULE
AMOUNTS FOR CLINIC AND EMERGENCY VIS-
ITS.
(a) IN GENERAL.—Section 1833(t) of the Social Se-
curity Act (42 U.S.C. 1395l(t)) is amended—
(1) in paragraph (3)(C)(ii)—
(A) by striking ‘‘paragraph (8)(B)’’ and
inserting ‘‘paragraphs (11)(B) and (13)(A)(i)’’;
and
(B) by striking ‘‘clause (iii)’’ and inserting
‘‘clause (iv)’’;
(2) in paragraph (3)(C)(iii), by inserting ‘‘,
paragraph (11)(B), or paragraph (13)(B)’’ after
‘‘this subparagraph’’;
(3) in paragraph (3)(D)—
(A) in clause (i), by striking ‘‘conversion
factor computed under subparagraph (C) for
the year’’ and inserting ‘‘applicable conversion
factor computed under subparagraph (C), para-
graph (11)(B), or paragraph (13)(B) for the
year (or portion thereof)’’; and
(B) in clause (ii), by inserting ‘‘, para-
graph (9)(A), or paragraph (13)(C)’’ after
‘‘paragraph (2)(C)’’;
(4) in paragraph (9), by striking subparagraph
(B) and inserting the following new subparagraph:
‘‘(B) 
BUDGET
NEUTRALITY
ADJUST-
MENT.—
‘‘(i) IN
GENERAL.—If the Secretary
makes revisions under subparagraph (A),
then the revisions for a year may not cause
the estimated amount of expenditures
under this part for the year to increase or
decrease from the estimated amount of ex-
penditures under this part (including ex-
penditures attributable to the special rules
specified in paragraph (13)) that would
have been made if the revisions had not
been made.
‘‘(ii) 
EXEMPTION
FROM
REDUC-
TION.—The relative payment weights de-
termined under paragraph (13)(C) and the
conversion factor computed under para-
graph (13)(B) shall not be reduced by any
budget neutrality adjustment made pursu-
ant to this subparagraph.’’; and
(5) by redesignating paragraph (13) as para-
graph (14) and by inserting after paragraph (12)
the following new paragraph:
‘‘(13) SPECIAL RULES FOR CALCULATING MEDI-
CARE OPD FEE SCHEDULE AMOUNT FOR CLINIC AND
EMERGENCY VISITS.—
‘‘(A) IN
GENERAL.—In computing the
medicare OPD fee schedule amount under para-
graph (3)(D) for covered OPD services that are
furnished on or after April 1, 2002, and classi-
fied within a group established or revised under
paragraph (2)(B) or (9)(A), respectively, for
clinic or emergency visits (as described in sub-
paragraph (D)), the Secretary shall—
‘‘(i) substitute for the conversion fac-
tor calculated under paragraph (3)(C) the
conversion factor calculated under sub-
paragraph (B); and
‘‘(ii) substitute for the relative pay-
ment weight established or revised under
paragraph (2)(C) or (9)(A), respectively,
the relative payment weight determined
under subparagraph (C) for such group.
‘‘(B) CALCULATION OF CONVERSION FAC-
TOR.—For purposes of subparagraph (A)(i), the
conversion factor calculated under this subpara-
graph is—
‘‘(i) for services furnished on or after
April 1, 2002, and before January 1,
2003, an amount equal to 112.82 percent
of the conversion factor specified for such
period in the final rule published on March
1, 2002 (67 Fed. Reg. 9556 et seq.; enti-
tled ‘Medicare Program; Correction of Cer-
tain Calendar Year 2002 Payment Rates
Under the Hospital Outpatient Prospective
Payment System and the Pro Rata Reduc-
tion on Transitional Pass-Through Pay-
ments; Correction of Technical and Typo-
graphical Errors’) and not taking into ac-
count any subsequent amendments to such
final rule; and
‘‘(ii) for services furnished in a year
beginning after December 31, 2002, the
conversion factor computed under this sub-
paragraph for the previous year (or in the
case of 2003, for the previous 9 months)
increased by the OPD fee schedule in-
crease factor specified under paragraph
(3)(C)(iv) for the year involved.
‘‘(C) DETERMINATION OF RELATIVE PAY-
MENT
WEIGHTS.—For purposes of subpara-
graph (A)(ii), the relative payment weight de-
termined under this subparagraph for a covered
OPD service that is classified within such a
group is—
‘‘(i) for services furnished on or after
April 1, 2002, and before January 1,
2003, the relative payment weight specified
for such group for such period in Adden-
dum A of the final rule published on
March 1, 2002 (67 Fed. Reg. 9556 et seq.;
entitled ‘Medicare Program; Correction of
Certain Calendar Year 2002 Payment
Rates Under the Hospital Outpatient Pro-
spective Payment System and the Pro
Rata Reduction on Transitional Pass-
Through Payments; Correction of Tech-
nical and Typographical Errors’) and not
taking 
into 
account 
any 
subsequent
amendments to such final rule; and
‘‘(ii) for services furnished in a year
beginning on or after January 1, 2003—
‘‘(I) for ambulatory patient clas-
sification group 0601 (relating to mid-
level clinic visits), or a successor to
such group, the relative payment
weight specified for such group in the
final rule referred to in clause (i); and
‘‘(II) other ambulatory patient
classification groups described in sub-
paragraph (D), the relative payment
weight established or revised under
paragraph (2)(C) or (9)(A), respec-
tively, for such group for such year
(but without regard to any budget
neutrality adjustment under para-
graph (9)(B)).
‘‘(D) GROUPS
FOR
CLINIC
AND
EMER-
GENCY
VISITS.—For purposes of this para-
graph, the groups established or revised under
paragraph (2)(B) or (9)(A), respectively, for
clinic and emergency visits are ambulatory pa-
tient classification groups 0600, 0601, 0602,
0610, 0611, and 0612 as defined for purposes
of the final rule referred to in subparagraph
(C)(i) (and any successors to such groups).’’.
(b) LIMITATION
ON SECRETARIAL AUTHORITY.—
Notwithstanding section 1833(t) of the Social Security
Act (42 U.S.C. 1395l(t)), the Secretary of Health and
Human Services may not make any adjustment under—
(1) paragraph (2)(F), (3)(C)(iii), (9)(B), or
(9)(C) of section 1833(t) of the Social Security Act
(42 U.S.C. 1395l(t)); or
(2) any other provision of such section;
to ensure that the amendments made by subsection (a)
do not cause the estimated amount of expenditures under
part B of title XVIII of such Act (42 U.S.C. 1395j et
seq.) to exceed the estimated amount of expenditures that
would have been made under such part but for such
amendments.
(c) 
PERIODIC
LUMP-SUM
RETROACTIVE
PAY-
MENTS.—The Secretary of Health and Human Services
shall, not later than 60 days after the date of enactment
of this Act (and at least every 90 days thereafter until
the amendments made by subsection (a) are imple-
mented)—
(1) estimate, for each hospital furnishing serv-
ices for which payment may be made under section
1833(t) of the Social Security Act (42 U.S.C.
1395l(t)) on or after April 1, 2002—
(A) the total amount of additional pay-
ments under such section that would have been
made to such hospital as of the date of such es-
timate if such amendments had been imple-
mented as of such date; and
(B) the total amount of additional pay-
ments under such section that have actually
been made to such hospital as of the date of
such estimate (including any amounts paid pur-
suant to this subsection); and
(2) make a lump-sum payment to such hospital
equal to the amount by which the amount estimated
under paragraph (1)(A) exceeds the amount esti-
mated under paragraph (1)(B).
SEC. 3. LIMITATION OF PRO RATA REDUCTIONS TO PASS-
THROUGH PAYMENTS.
(a) IN GENERAL.—Section 1833(t)(6)(E) of the So-
cial Security Act (42 U.S.C. 1395l(t)(6)(E)) is amended—
(1) in clause (i), by striking ‘‘The total’’ and in-
serting ‘‘Subject to clause (iv), the total’’;
(2) in clause (iii), by striking ‘‘If the Secretary’’
and inserting ‘‘Subject to clause (iv), if the Sec-
retary’’; and
(3) by adding at the end the following new
clause:
‘‘(iv) LIMITATION ON PRO RATA RE-
DUCTIONS.—Notwithstanding clauses (i),
(ii), and (iii), the Secretary may not reduce
the additional payments that would other-
wise be made under this paragraph (but
for this subparagraph) for items and serv-
ices furnished on or after April 1, 2002, by
a percentage that exceeds 20.0 percent.’’.
(b) 
PERIODIC
LUMP-SUM
RETROACTIVE
PAY-
MENTS.—The Secretary of Health and Human Services
shall, not later than 60 days after the date of enactment
of this Act (and at least every 90 days thereafter until
clause (iv) of section 1833(t)(6)(E) of the Social Security
Act (as added by subsection (a)(3)) is implemented)—
(1) estimate, for each hospital furnishing serv-
ices for which payment may be made under section
1833(t) of the Social Security Act (42 U.S.C.
1395l(t)) on or after April 1, 2002—
(A) the total amount of additional pay-
ments under paragraph (6) of such section that
would have been made to such hospital as of
the date of such estimate if such clause had
been implemented as of such date; and
(B) the total amount of additional pay-
ments under such paragraph that have actually
been made to such hospital as of the date of
such estimate (including any amounts paid pur-
suant to this subsection); and
(2) make a lump-sum payment to such hospital
equal to the amount by which the amount estimated
under paragraph (1)(A) exceeds the amount esti-
mated under paragraph (1)(B).
SEC. 4. CLARIFYING APPLICATION OF OPD FEE SCHEDULE
INCREASE FACTOR.
Section 1833(t)(3)(C)(iv) of the Social Security Act
(42 U.S.C. 1395l(t)(3)(C)(iv)) is amended by adding at
the end the following new sentence: ‘‘Effective for years
beginning with 2002, the OPD fee schedule increase factor
for a year shall take effect on January 1 of such year,
and nothing in this subsection shall be construed as au-
thorizing the Secretary to delay the date on which such
increase factor takes effect by reason of any delay in im-
plementing the revisions authorized by paragraph (9)(A)
for such year or for any other reason.’’.
SEC. 5. LIMITATION ON BUDGET NEUTRALITY ADJUST-
MENT FOR ANNUAL REVISIONS TO SYSTEM
COMPONENTS.
Section 1833(t)(9)(B) of the Social Security Act (42
U.S.C. 1395l(t)(9)(B)), as amended by section 2(a)(4), is
amended—
(1) in clause (i), by striking ‘‘If the Secretary’’
and inserting ‘‘Subject to clause (iii), if the Sec-
retary’’; and
(2) by adding at the end the following new
clause:
‘‘(iii) LIMITATION ON ADJUSTMENT.—
For years after 2001, the budget neu-
trality adjustment under this subparagraph
may not reduce the payments that would
otherwise be made under this part but for
this subparagraph by more than 2.0 per-
cent.’’.
SEC. 6. OUTLIER PAYMENTS.
Section 1833(t)(5) of the Social Security Act (42
U.S.C. 1395l(t)(5)) is amended—
(1) in subparagraph (C)—
(A) in clause (i), by striking ‘‘exceed the
applicable’’ and inserting ‘‘exceed a percentage
specified by the Secretary that is not less than
the applicable minimum percentage or greater
than the applicable maximum’’; and
(B) by striking clause (ii) and inserting the
following new clause:
‘‘(ii) APPLICABLE
PERCENTAGES.—
For purposes of clause (i)—
‘‘(I) the term ‘applicable min-
imum percentage’ for a year means
zero percent for years before 2003
and 2.0 percent for years after 2002;
and
‘‘(II) the term ‘applicable max-
imum percentage’ for a year means
2.5 percent for years before 2003 and
3.0 percent for years after 2002.’’;
and
(2) in subparagraph (D)—
(A) in the heading, by striking ‘‘TRANSI-
TIONAL
AUTHORITY’’ and inserting ‘‘FLEXI-
BILITY’’; and
(B) in the matter preceding clause (i), by
striking ‘‘for covered OPD services furnished
before January 1, 2002,’’.
SEC. 7. ADJUSTMENT TO LIMIT DECLINE IN PAYMENT.
Section 1833(t)(7) of the Social Security Act (42
U.S.C. 1395l(t)(7)) is amended—
(1) in the heading, by striking ‘‘TRANSITIONAL
ADJUSTMENT’’ and inserting ‘‘ADJUSTMENT’’;
(2) in subparagraph (A)—
(A) in the heading, by striking ‘‘BEFORE
2002’’ and inserting ‘‘IN GENERAL’’;
(B) in the matter preceding clause (i)—
(i) by striking ‘‘subparagraph (D)’’
and inserting ‘‘subparagraph (B)’’;
(ii) by striking ‘‘furnished before Jan-
uary 1, 2002,’’; and
(iii) by striking ‘‘subparagraph (E)’’
and inserting ‘‘subparagraph (C)’’; and
(C) in clause (i), by striking ‘‘subpara-
graph (F)’’ and inserting ‘‘subparagraph (D)’’;
(3) by striking subparagraph (D) and inserting
the following new subparagraph:
‘‘(D) HOLD HARMLESS PROVISIONS.—
‘‘(i) 
CANCER, 
CHILDREN’S, 
AND
SMALL RURAL HOSPITALS.—In the case of
a hospital that is described in clause (iii)
or (v) of section 1886(d)(1)(B) or is lo-
cated in a rural area and has not more
than 100 beds, for covered OPD services—
‘‘(I) that are furnished on or
after the date on which payment is
first made under this subsection; and
‘‘(II) for which the PPS amount
is less than the pre-BBA amount (or
for services furnished on or after Jan-
uary 1, 2002, is less than the greater
of the pre-BBA amount or the reason-
able costs incurred in furnishing such
services),
the amount of payment under this sub-
section shall be increased by the amount of
such difference.
‘‘(ii) EYE AND EAR HOSPITALS.—In
the case of a hospital or unit described in
subsection 
(i)(4), 
for 
covered 
OPD
services—
‘‘(I) that are furnished on or
after January 1, 2002; and
‘‘(II) for which the PPS amount
is less than the greater of the base
year amount (which for purposes of
this subparagraph shall be determined
in the same manner as the pre-BBA
amount under subparagraph (D), ex-