I 
108TH CONGRESS 
1ST SESSION H. R. 2175
To amend title XVIII of the Social Security Act to enhance beneficiary 
access in rural areas to quality health care services under the Medicare 
Program. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 20, 2003
Mr. SANDLIN (for himself, Mr. BERRY, Mr. MCINTYRE, Mr. ROSS, and Mr. 
TURNER of Texas) 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 with-
in the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to enhance 
beneficiary access in rural areas to quality health care 
services under the Medicare Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Rural Healthcare Ac-
cess Improvement Act of 2003’’.
SEC. 2. EQUALIZING URBAN AND RURAL STANDARDIZED 
PAYMENT AMOUNTS UNDER THE MEDICARE 
INPATIENT 
HOSPITAL 
PROSPECTIVE 
PAY-
MENT SYSTEM. 
(a) IN GENERAL.—Section 1886(d)(3)(A)(iv) of the 
Social Security Act (42 U.S.C. 1395ww(d)(3)(A)(iv)) is 
amended—
(1) by striking ‘‘(iv) For discharges’’ and in-
serting ‘‘(iv)(I) Subject to subclause (II), for dis-
charges’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(II) For discharges occurring in a fiscal year 
beginning with fiscal year 2004, the Secretary shall 
compute a standardized amount for hospitals located 
in any area within the United States and within 
each region equal to the standardized amount com-
puted for the previous fiscal year under this sub-
paragraph for hospitals located in a large urban area 
(or, beginning with fiscal year 2005, for hospitals lo-
cated in any area) increased by the applicable per-
centage increase under subsection (b)(3)(B)(i) for 
the fiscal year involved.’’. 
(b) CONFORMING AMENDMENTS.—
(1) COMPUTING DRG-SPECIFIC RATES.—Section 
1886(d)(3)(D) of the Social Security Act (42 U.S.C. 
1395ww(d)(3)(D)) is amended—
(A) in the heading, by striking ‘‘IN DIF-
FERENT AREAS’’; 
(B) in the matter preceding clause (i), by 
striking ‘‘, each of’’; 
(C) in clause (i)—
(i) in the matter preceding subclause 
(I), by inserting ‘‘for fiscal years before fis-
cal year 2004,’’ before ‘‘for hospitals’’; and 
(ii) in subclause (II), by striking 
‘‘and’’ after the semicolon at the end; 
(D) in clause (ii)—
(i) in the matter preceding subclause 
(I), by inserting ‘‘for fiscal years before fis-
cal year 2004,’’ before ‘‘for hospitals’’; and 
(ii) in subclause (II), by striking the 
period at the end and inserting ‘‘; and’’; 
and 
(E) by adding at the end the following new 
clause: 
‘‘(iii) for a fiscal year beginning after fiscal 
year 2003, for hospitals located in all areas, to 
the product of—
‘‘(I) 
the 
applicable 
standardized 
amount (computed under subparagraph 
(A)), reduced under subparagraph (B), 
and adjusted or reduced under subpara-
graph (C) for the fiscal year; and 
‘‘(II) the weighting factor (determined 
under paragraph (4)(B)) for that diag-
nosis-related group.’’. 
(2) TECHNICAL CONFORMING SUNSET.—Section 
1886(d)(3) of the Social Security Act (42 U.S.C. 
1395ww(d)(3)) is amended—
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘, for fiscal years before fiscal 
year 1997,’’ before ‘‘a regional adjusted DRG 
prospective payment rate’’; and 
(B) in subparagraph (D), in the matter 
preceding clause (i), by inserting ‘‘, for fiscal 
years before fiscal year 1997,’’ before ‘‘a re-
gional DRG prospective payment rate for each 
region,’’. 
SEC. 3. FAIRNESS IN THE MEDICARE DISPROPORTIONATE 
SHARE HOSPITAL (DSH) ADJUSTMENT FOR 
RURAL HOSPITALS. 
(a) EQUALIZING DSH PAYMENT AMOUNTS.—
(1) IN
GENERAL.—Section 1886(d)(5)(F)(vii) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ww(d)(5)(F)(vii)) is amended by inserting ‘‘, 
and, after October 1, 2003, for any other hospital 
described in clause (iv),’’ after ‘‘clause (iv)(I)’’ in the 
matter preceding subclause (I). 
(2) 
CONFORMING
AMENDMENTS.—Section 
1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
1395ww(d)(5)(F)) is amended—
(A) in clause (iv)—
(i) in subclause (II)—
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (xiii)’’; 
(ii) in subclause (III)—
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (xii)’’; 
(iii) in subclause (IV)— 
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (x) or (xi)’’; 
(iv) in subclause (V)—
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (xi)’’; and 
(v) in subclause (VI)— 
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (x)’’; 
(B) in clause (viii), by striking ‘‘The for-
mula’’ and inserting ‘‘For discharges occurring 
before October 1, 2003, the formula’’; and 
(C) in each of clauses (x), (xi), (xii), and 
(xiii), by striking ‘‘For purposes’’ and inserting 
‘‘With respect to discharges occurring before 
October 1, 2003, for purposes’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to discharges occur-
ring on or after October 1, 2003.
SEC. 4. MEDICARE INPATIENT HOSPITAL PAYMENT AD-
JUSTMENT FOR LOW-VOLUME HOSPITALS. 
Section 1886(d) of the Social Security Act (42 U.S.C. 
1395ww(d)) is amended by adding at the end the following 
new paragraph: 
‘‘(12) PAYMENT
ADJUSTMENT
FOR
LOW-VOL-
UME HOSPITALS.—
‘‘(A) PAYMENT ADJUSTMENT.—
‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of this section, for each 
cost reporting period (beginning with the 
cost reporting period that begins in fiscal 
year 2005), the Secretary shall provide for 
an additional payment amount to each low-
volume hospital (as defined in clause (iii)) 
for discharges occurring during that cost 
reporting period to increase the amount 
paid to such hospital under this section for 
such discharges by the applicable percent-
age increase determined under clause (ii). 
‘‘(ii) APPLICABLE
PERCENTAGE
IN-
CREASE.—The Secretary shall determine a 
percentage increase applicable under this 
paragraph that ensures that—
‘‘(I) no percentage increase in 
payments under this paragraph ex-
ceeds 25 percent of the amount of 
payment that would otherwise be 
made to a low-volume hospital under 
this section for each discharge (but 
for this paragraph);
‘‘(II) low-volume hospitals that 
have the lowest number of discharges 
during a cost reporting period receive 
the highest percentage increase in 
payments due to the application of 
this paragraph; and 
‘‘(III) the percentage increase in 
payments due to the application of 
this paragraph is reduced as the num-
ber of discharges per cost reporting 
period increases. 
‘‘(iii) LOW-VOLUME
HOSPITAL
DE-
FINED.—For purposes of this paragraph, 
the term ‘low-volume hospital’ means, for a 
cost reporting period, a subsection (d) hos-
pital (as defined in paragraph (1)(B)) 
other than a critical access hospital (as de-
fined in section 1861(mm)(1)) that— 
‘‘(I) the Secretary determines 
had an average of less than 2,000 dis-
charges (determined with respect to 
all patients and not just individuals 
receiving benefits under this title) 
during the 3 most recent cost report-
ing periods for which data are avail-
able that precede the cost reporting 
period to which this paragraph ap-
plies; and 
‘‘(II) is located at least 15 miles 
from a similar hospital (or is deemed 
by the Secretary to be so located by 
reason of such factors as the Sec-
retary determines appropriate, includ-
ing the time required for an individual 
to travel to the nearest alternative 
source of appropriate inpatient care 
(taking into account the location of 
such alternative source of inpatient 
care and any weather or travel condi-
tions that may affect such travel 
time)). 
‘‘(B) 
PROHIBITING
CERTAIN
REDUC-
TIONS.—Notwithstanding subsection (e), the 
Secretary 
shall 
not 
reduce 
the 
payment 
amounts under this section to offset the in-
crease in payments resulting from the applica-
tion of subparagraph (A).’’. 
SEC. 5. ADJUSTMENT TO THE MEDICARE INPATIENT HOS-
PITAL PPS WAGE INDEX TO REVISE THE 
LABOR-RELATED SHARE OF SUCH INDEX. 
(a) IN GENERAL.—Section 1886(d)(3)(E) of the So-
cial Security Act (42 U.S.C. 1395ww(d)(3)(E)) is amend-
ed—
(1) by striking ‘‘WAGE
LEVELS.—The Sec-
retary’’ and inserting ‘‘WAGE LEVELS.—
‘‘(i) IN GENERAL.—Except as provided in 
clause (ii), the Secretary’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ii) ALTERNATIVE
PROPORTION
TO
BE 
ADJUSTED BEGINNING IN FISCAL YEAR 2004.—
‘‘(I) IN
GENERAL.—Except as pro-
vided in subclause (II), for discharges oc-
curring on or after October 1, 2003, the 
Secretary shall substitute ‘62 percent’ for 
the proportion described in the first sen-
tence of clause (i). 
‘‘(II) HOLD HARMLESS FOR CERTAIN 
HOSPITALS.—If the application of sub-
clause (I) would result in lower payments
to a hospital than would otherwise be 
made, then this subparagraph shall be ap-
plied as if this clause had not been en-
acted.’’. 
(b) 
WAIVING
BUDGET
NEUTRALITY.—Section 
1886(d)(3)(E) of the Social Security Act (42 U.S.C. 
1395ww(d)(3)(E)), as amended by subsection (a), is 
amended by adding at the end of clause (i) the following 
new sentence: ‘‘The Secretary shall apply the previous sen-
tence for any period as if the amendments made by section 
5(a) of the Rural Healthcare Access Improvement Act of 
2003 had not been enacted.’’. 
SEC. 6. ONE-YEAR EXTENSION OF HOLD HARMLESS PROVI-
SIONS FOR SMALL RURAL HOSPITALS AND 
TEMPORARY TREATMENT OF CERTAIN SOLE 
COMMUNITY HOSPITALS TO LIMIT DECLINE 
IN PAYMENT UNDER THE OPD PPS. 
(a) 
HOLD
HARMLESS
PROVISIONS.—Section 
1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C. 
1395l(t)(7)(D)(i)) is amended—
(1) in the heading, by striking ‘‘SMALL’’ and in-
serting ‘‘CERTAIN’’; 
(2) by inserting ‘‘or a sole community hospital 
(as defined in section 1886(d)(5)(D)(iii)) located in 
a rural area’’ after ‘‘100 beds’’; and
(3) by striking ‘‘2004’’ and inserting ‘‘2005’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a)(2) shall apply with respect to payment for 
OPD services furnished on and after January 1, 2004. 
SEC. 7. CRITICAL ACCESS HOSPITAL (CAH) IMPROVE-
MENTS. 
(a) PERMITTING HOSPITALS TO ALLOCATE SWING 
BEDS AND ACUTE CARE INPATIENT BEDS SUBJECT TO 
A TOTAL LIMIT OF 25 BEDS.—
(1) IN GENERAL.—Section 1820(c)(2)(B)(iii) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395i–
4(c)(2)(B)(iii)) is amended to read as follows: 
‘‘(iii) provides not more than a total 
of 25 extended care service beds (pursuant 
to an agreement under subsection (f)) or 
acute care inpatient beds (meeting such 
standards as the Secretary may establish) 
for providing inpatient care for a period 
that does not exceed, as determined on an 
annual, average basis, 96 hours per pa-
tient;’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1820(f) of the Social Security Act (42 U.S.C. 
1395i–4(f)) is amended by striking ‘‘and the number
of beds used at any time for acute care inpatient 
services does not exceed 15 beds’’. 
(b) ELIMINATION
OF
THE ISOLATION TEST
FOR 
COST-BASED CAH AMBULANCE SERVICES.—
(1) IN
GENERAL.—Section 1834(l)(8) of the 
Social Security Act (42 U.S.C. 1395m(l)(8)), as 
added by section 205(a) of the Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection 
Act of 2000 (114 Stat. 2763A–482), as enacted into 
law by section 1(a)(6) of Public Law 106–554 (114 
Stat. 2763), is amended by striking the comma at 
the end of subparagraph (B) and all that follows 
and inserting a period. 
(2) TECHNICAL CORRECTION.—Section 1834(l) 
of the Social Security Act (42 U.S.C. 1395m(l)) is 
amended by redesignating paragraph (8), as added 
by section 221(a) of the Medicare, Medicaid, and 
SCHIP Benefits Improvement and Protection Act of 
2000 (114 Stat. 2763A–486), as enacted into law by 
section 1(a)(6) of Public Law 106–554 (114 Stat. 
2763), as paragraph (9). 
(c) COVERAGE OF COSTS FOR CERTAIN EMERGENCY 
ROOM ON-CALL PROVIDERS.—
(1) IN GENERAL.—Section 1834(g)(5) of the 
Social Security Act (42 U.S.C. 1395m(g)(5)) is 
amended—
(A) in the heading—
(i) by inserting ‘‘CERTAIN’’ before 
‘‘EMERGENCY’’; and 
(ii) by striking ‘‘PHYSICIANS’’ and in-
serting ‘‘PROVIDERS’’; 
(B) by striking ‘‘emergency room physi-
cians who are on-call (as defined by the Sec-
retary)’’ and inserting ‘‘physicians, physician 
assistants, nurse practitioners, and clinical 
nurse specialists who are on-call (as defined by 
the Secretary) to provide emergency services’’; 
and 
(C) by striking ‘‘physicians’ services’’ and 
inserting ‘‘services covered under this title’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply with respect to costs 
incurred for services provided on or after January 1, 
2004. 
(d) AUTHORIZATION
OF PERIODIC INTERIM PAY-
MENT (PIP).—
(1) IN
GENERAL.—Section 1815(e)(2) of the 
Social Security Act (42 U.S.C. 1395g(e)(2)) is 
amended—
(A) in subparagraph (C), by striking 
‘‘and’’ after the semicolon at the end; 
(B) in subparagraph (D), by adding ‘‘and’’ 
after the semicolon at the end; and 
(C) by inserting after subparagraph (D) 
the following new subparagraph: 
‘‘(E) inpatient critical access hospital services,’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply with respect to pay-
ments for inpatient critical access hospital services 
furnished on or after January 1, 2004. 
(e) EXCLUSION OF NEW CAHS FROM PPS HOS-
PITAL
WAGE
INDEX
CALCULATION.—Section 
1886(d)(3)(E)(i) of the Social Security Act (42 U.S.C. 
1395ww(d)(3)(E)(i)), as amended by section 5, is amend-
ed by inserting after the first sentence the following new 
sentence: ‘‘In calculating the hospital wage levels under 
the preceding sentence applicable with respect to cost re-
porting periods beginning on or after January 1, 2004, 
the Secretary shall exclude the wage levels of any hospital 
that became a critical access hospital prior to the cost re-
porting period for which such hospital wage levels are cal-
culated.’’. 
SEC. 8. TEMPORARY INCREASE FOR HOME HEALTH SERV-
ICES FURNISHED IN A RURAL AREA. 
(a) IN GENERAL.—In the case of home health serv-
ices furnished in a rural area (as defined in section 
1886(d)(2)(D) of the Social Security Act (42 U.S.C. 
1395ww(d)(2)(D))) on or after October 1, 2003, and be-
fore October 1, 2005, the Secretary of Health and Human 
Services shall increase the payment amount otherwise 
made under section 1895 of such Act (42 U.S.C. 1395fff ) 
for such services by 10 percent. 
(b) WAIVING BUDGET NEUTRALITY.—The Secretary 
of Health and Human Services shall not reduce the stand-
ard prospective payment amount (or amounts) under sec-
tion 1895 of the Social Security Act (42 U.S.C. 1395fff ) 
applicable to home health services furnished during a pe-
riod to offset the increase in payments resulting from the 
application of subsection (a). 
(c) NO EFFECT ON SUBSEQUENT PERIODS.—The 
payment increase provided under subsection (a) for a pe-
riod under such subsection, shall not apply to episodes and 
visits ending after such period, and shall not be taken into 
account in calculating the payment amounts applicable for 
episodes and visits occurring after such period.
SEC. 9. TEMPORARY INCREASE IN PAYMENTS FOR CERTAIN 
SERVICES FURNISHED BY SMALL RURAL 
HOSPITALS UNDER MEDICARE PROSPECTIVE 
PAYMENT 
SYSTEM 
FOR 
HOSPITAL 
OUT-
PATIENT DEPARTMENT SERVICES. 
(a) INCREASE.—
(1) IN GENERAL.—In the case of an applicable 
covered OPD service (as defined in paragraph (2)) 
that is furnished by a hospital described in para-
graph (7)(D)(i) of section 1833(t) of the Social Se-
curity Act (42 U.S.C. 1395l(t)) on or after January 
1, 2004, and before January 1, 2007, the Secretary 
of Health and Human Services (in this section re-
ferred to as the ‘‘Secretary’’) shall increase the 
medicare OPD fee schedule amount (as determined 
under paragraph (4)(A) of such section) that is ap-
plicable for such service in that year (determined 
without regard to any increase under this section in 
a previous year) by 5 percent. 
(2) APPLICABLE COVERED OPD SERVICES DE-
FINED.—For purposes of this section, the term ‘‘ap-
plicable covered OPD service’’ means a covered clinic 
or emergency room visit that is classified within the 
groups of covered OPD services (as defined in para-
graph (1)(B) of section 1833(t) of the Social Secu-
rity Act (42 U.S.C. 1395l(t))) established under 
paragraph (2)(B) of such section. 
(b) NO EFFECT ON COPAYMENT AMOUNT.—The Sec-
retary shall compute the copayment amount for applicable 
covered OPD services under section 1833(t)(8)(A) of the 
Social Security Act (42 U.S.C. 1395l(t)(8)(A)) as if this 
section had not been enacted. 
(c) NO EFFECT ON INCREASE UNDER HOLD HARM-
LESS
OR OUTLIER PROVISIONS.—The Secretary shall 
apply the temporary hold harmless provision under para-
graph (7)(D)(i) of section 1833(t) of the Social Security 
Act (42 U.S.C. 1395l(t)) and the outlier provision under 
paragraph (5) of such section as if this section had not 
been enacted. 
(d) WAIVING BUDGET NEUTRALITY AND NO REVI-
SION OR ADJUSTMENTS.—The Secretary shall not make 
any revision or adjustment under subparagraph (A), (B), 
or (C) of section 1833(t)(9) of the Social Security Act (42 
U.S.C. 1395l(t)(9)) because of the application of sub-
section (a)(1). 
(e) NO EFFECT ON PAYMENTS AFTER INCREASE PE-
RIOD ENDS.—The Secretary shall not take into account 
any payment increase provided under subsection (a)(1) in 
determining payments for covered OPD services (as de-
fined in paragraph (1)(B) of section 1833(t) of the Social
Security Act (42 U.S.C. 1395l(t))) under such section that 
are furnished after January 1, 2007. 
(f) FINDINGS.—The Congress finds the following: 
(1) The medicare program has a responsibility 
to pay enough for beneficial new technologies in 
order to ensure that medicare beneficiaries have ac-
cess to care; however, such program must also be a 
prudent purchaser of health care items and services. 
(2) The 2003 Medicare Hospital Outpatient 
Prospective Payment System Regulation may have 
resulted in limiting beneficiary access to care. 
(3) A methodology should be developed under 
the medicare outpatient prospective payment system 
under section 1833(t) of the Social Security Act (42 
U.S.C. 1395l(t)) with appropriate resources and 
such methodology should be implemented January 1, 
2004. This will ensure that all hospitals are appro-
priately reimbursed for the drugs and biologics that 
are used in the outpatient setting which in turn will 
ensure patient access to new technologies.
(g) 
TECHNICAL
AMENDMENT.—Section 
1833(t)(2)(B) (42 U.S.C. 1395l(t)(2)(B)) is amended by 
inserting ‘‘(and periodically revise such groups pursuant 
to paragraph (9)(A))’’ after ‘‘establish groups’’.
SEC. 10. TEMPORARY INCREASE FOR GROUND AMBULANCE 
SERVICES FURNISHED IN A RURAL AREA. 
Section 1834(l) of the Social Security Act (42 U.S.C. 
1395m(l)), as amended by section 7(b)(2), is amended by 
adding at the end the following new paragraph: 
‘‘(10) TEMPORARY INCREASE FOR GROUND AM-
BULANCE
SERVICES
FURNISHED
IN
A
RURAL 
AREA.—
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this subsection, in the case of 
ground ambulance services furnished on or 
after January 1, 2004, and before January 1, 
2007, for which the transportation originates in 
a rural area described in paragraph (9) or in a 
rural census tract described in such paragraph, 
the fee schedule established under this section 
shall provide that the rate for the service other-
wise established, after application of any in-
crease under such paragraph, shall be increased 
by 5 percent. 
‘‘(B) APPLICATION
OF
INCREASED
PAY-
MENTS AFTER 2006.—The increased payments 
under subparagraph (A) shall not be taken into 
account in calculating payments for services 
furnished on or after the period specified in 
such subparagraph.’’.
SEC. 11. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC 
AND FEDERALLY QUALIFIED HEALTH CEN-
TER SERVICES FROM THE MEDICARE PPS 
FOR SKILLED NURSING FACILITIES. 
(a) IN GENERAL.—Section 1888(e) of the Social Se-
curity Act (42 U.S.C. 1395yy(e)) is amended—
(1) in paragraph (2)(A)(i)(II), by striking 
‘‘clauses (ii) and (iii)’’ and inserting ‘‘clauses (ii), 
(iii), and (iv)’’; and 
(2) by adding at the end of paragraph (2)(A) 
the following new clause: 
‘‘(iv) EXCLUSION OF CERTAIN RURAL 
HEALTH CLINIC AND FEDERALLY QUALI-
FIED
HEALTH
CENTER
SERVICES.—Serv-
ices described in this clause are—
‘‘(I) rural health clinic services 
(as defined in paragraph (1) of sec-
tion 1861(aa)); and 
‘‘(II) Federally qualified health 
center services (as defined in para-
graph (3) of such section); 
that would be described in clause (ii) if 
such services were furnished by a physician 
or practitioner not affiliated with a rural 
health clinic or a Federally qualified health 
center.’’.
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to services furnished on or after 
January 1, 2004. 
SEC. 12. MEDICARE INCENTIVE PAYMENT PROGRAM IM-
PROVEMENTS. 
(a) PROCEDURES FOR SECRETARY, AND NOT PHYSI-
CIANS, TO DETERMINE WHEN BONUS PAYMENTS UNDER 
MEDICARE INCENTIVE PAYMENT PROGRAM SHOULD BE 
MADE.—Section 1833(m) of the Social Security Act (42 
U.S.C. 1395l(m)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(m)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) The Secretary shall establish procedures under 
which the Secretary, and not the physician furnishing the 
service, is responsible for determining when a payment is 
required to be made under paragraph (1).’’. 
(b) EDUCATIONAL PROGRAM REGARDING THE MEDI-
CARE INCENTIVE PAYMENT PROGRAM.—The Secretary 
shall establish and implement an ongoing educational pro-
gram to provide education to physicians under the medi-
care program on the medicare incentive payment program 
under section 1833(m) of the Social Security Act (42 
U.S.C. 1395l(m)).
(c) ONGOING STUDY AND ANNUAL REPORT ON THE 
MEDICARE INCENTIVE PAYMENT PROGRAM.—
(1) ONGOING STUDY.—The Secretary shall con-
duct an ongoing study on the medicare incentive 
payment program under section 1833(m) of the So-
cial Security Act (42 U.S.C. 1395l(m)). Such study 
shall focus on whether such program increases the 
access of medicare beneficiaries who reside in an 
area that is designated (under section 332(a)(1)(A) 
of the Public Health Service Act (42 U.S.C. 
254e(a)(1)(A))) as a health professional shortage 
area to physicians’ services under the medicare pro-
gram. 
(2) ANNUAL REPORTS.—Not later than 1 year 
after the date of enactment of this Act, and annually 
thereafter, the Secretary shall submit to Congress a 
report on the study conducted under paragraph (1), 
together with recommendations for such legislation 
and administrative action as the Secretary considers 
appropriate. 
SEC. 13. TWO-YEAR TREATMENT OF CERTAIN CLINICAL DI-
AGNOSTIC LABORATORY TESTS FURNISHED 
BY A SOLE COMMUNITY HOSPITAL. 
Notwithstanding subsections (a)(1)(D) and (h) of 
section 1833 of the Social Security Act (42 U.S.C. 1395l)
and section 1834(d)(1) of such Act (42 U.S.C. 
1395m(d)(1)), in the case of a clinical diagnostic labora-
tory test covered under part B of title XVIII of such Act 
that is furnished in 2004 or 2005 by a sole community 
hospital (as defined in section 1886(d)(5)(D)(iii) of such 
Act (42 U.S.C. 1395ww(d)(5)(D)(iii))) as part of services 
provided to patients of the hospital, the following rules 
shall apply: 
(1) PAYMENT BASED ON REASONABLE COSTS.—
The amount of payment for such test shall be 100 
percent of the reasonable costs of the hospital in fur-
nishing such test. 
(2) NO BENEFICIARY COST-SHARING.—No coin-
surance, deductible, copayment, or other cost-shar-
ing otherwise applicable under such part B shall 
apply with respect to such test. 
SEC. 14. ESTABLISHMENT OF FLOOR ON GEOGRAPHIC AD-
JUSTMENTS OF PAYMENTS FOR PHYSICIANS’ 
SERVICES. 
Section 1848(e)(1) of the Social Security Act (42 
U.S.C. 1395w–4(e)(1)) is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graphs (B) and (C)’’ and inserting ‘‘subparagraphs 
(B), (C), and (E)’’; and
(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) FLOOR
FOR
PRACTICE
EXPENSE, 
MALPRACTICE, AND
WORK
GEOGRAPHIC
INDI-
CES.—For purposes of payment for services 
furnished on or after January 1, 2004, after 
calculating the practice expense, malpractice, 
and work geographic indices in clauses (i), (ii), 
and (iii) of subparagraph (A) and in subpara-
graph (B), the Secretary shall increase any 
such index to 1.00 for any locality for which 
such index is less than 1.00.’’.
Æ