amount of payment under this part for outpatient services 
furnished in a rural community hospital is, at the election 
of the hospital in the application referred to in section 
1861(ww)(1)(E)—
‘‘(1) the reasonable costs of providing such 
services, without regard to the amount of the cus-
tomary or other charge and any limitation under 
section 1861(v)(1)(U), or 
‘‘(2) the amount of payment provided for under 
the prospective payment system for covered OPD 
services under section 1833(t).’’. 
(3) HOME HEALTH SERVICES.—
(A) EXCLUSION
FROM
HOME
HEALTH 
PPS.—
(i) IN GENERAL.—Section 1895 (42 
U.S.C. 1395fff) is amended by adding at 
the end the following: 
‘‘(f) EXCLUSION.—
‘‘(1) IN GENERAL.—In determining payments 
under this title for home health services furnished on 
or after October 1, 2003, by a qualified RCH-based 
home health agency (as defined in paragraph (2))—
‘‘(A) the agency may make a one-time elec-
tion to waive application of the prospective pay-
ment system established under this section to
such services furnished by the agency shall not 
apply; and 
‘‘(B) in the case of such an election, pay-
ment shall be made on the basis of the reason-
able costs incurred in furnishing such services 
as determined under section 1861(v), but with-
out regard to the amount of the customary or 
other charges with respect to such services or 
the limitations established under paragraph 
(1)(L) of such section. 
‘‘(2) QUALIFIED
RCH-BASED
HOME
HEALTH 
AGENCY DEFINED.—For purposes of paragraph (1), 
a ‘qualified RCH-based home health agency’ is a 
home health agency that is a provider-based entity 
(as defined in section 404 of the Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection 
Act of 2000 (Public Law 106–554; Appendix F, 114 
Stat. 2763A–506) of a rural community hospital 
that is located—
‘‘(A) in a county in which no main or 
branch office of another home health agency is 
located; or 
‘‘(B) at least 35 miles from any main or 
branch office of another home health agency.’’. 
(ii) CONFORMING CHANGES.—
(I) PAYMENTS UNDER PART A.—
Section 1814(b) (42 U.S.C. 1395f(b)) 
is amended by inserting ‘‘or with re-
spect to services to which section 
1895(f) applies’’ after ‘‘equipment’’ in 
the matter preceding paragraph (1). 
(II) PAYMENTS
UNDER
PART 
B.—Section 1833(a)(2)(A) (42 U.S.C. 
1395l(a)(2)(A)) is amended by strik-
ing ‘‘the prospective payment system 
under’’. 
(III) PER VISIT LIMITS.—Section 
1861(v)(1)(L)(i) 
(42 
U.S.C. 
1395x(v)(1)(L)(i)) is amended by in-
serting ‘‘(other than by a qualified 
RCH-based home health agency (as 
defined in section 1895(f)(2))’’ after 
‘‘with respect to services furnished by 
home health agencies’’. 
(iii) CONSOLIDATED BILLING.—
(I) RECIPIENT
OF
PAYMENT.—
Section 1842(b)(6)(F) (42 U.S.C. 
1395u(b)(6)(F)) is amended by in-
serting ‘‘and excluding home health 
services to which section to which sec-
tion 1895(f) applies’’ after ‘‘provided 
for in such section’’. 
(II) EXCEPTION
TO
EXCLUSION 
FROM
COVERAGE.—Section 1862(a) 
(42 U.S.C. 1395y(a)) is amended by 
inserting before the period at the end 
of the second sentence the following: 
‘‘and paragraph (21) shall not apply 
to home health services to which sec-
tion 1895(f) applies’’. 
(4) 
RETURN
ON
EQUITY.—Section 
1861(v)(1)(P) (42 U.S.C. 1395x(v)(1)(P)) is amend-
ed—
(A) by inserting ‘‘(i)’’ after ‘‘(P)’’; and 
(B) by adding at the end the following: 
‘‘(ii)(I) Notwithstanding clause (i), subparagraph 
(S)(i), and section 1886(g)(2), such regulations shall pro-
vide, in determining the reasonable costs of the services 
described in subclause (II) furnished by a rural commu-
nity hospital on or after October 1, 2003, for payment 
of a return on equity capital at a rate of return equal to 
150 percent of the average specified in clause (i): 
‘‘(II) The services referred to in subclause (I) are in-
patient hospital services, outpatient hospital services, 
home health services furnished by an RCH-based home
health agency (as defined in section 1895(f)(2)), and am-
bulance services. 
‘‘(III) Payment under this clause shall be made with-
out regard to whether a provider is a proprietary pro-
vider.’’. 
(5) EXEMPTION FROM 30 PERCENT REDUCTION 
IN
REIMBURSEMENT
FOR
BAD
DEBT.—Section 
1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amend-
ed by inserting ‘‘(other than a rural community hos-
pital)’’ after ‘‘In determining such reasonable costs 
for hospitals’’. 
(c) BENEFICIARY COST-SHARING FOR OUTPATIENT 
SERVICES.—Section 1834(n) (as added by subsection 
(b)(2)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(n)’’; and 
(2) adding at the end the following: 
‘‘(2) The amounts of beneficiary cost sharing for out-
patient services furnished in a rural community hospital 
under this part shall be as follows: 
‘‘(A) For items and services that would have 
been paid under section 1833(t) if provided by a 
hospital, the amount of cost sharing determined 
under paragraph (8) of such section.