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107TH CONGRESS
1ST SESSION
H. R. 1609
To amend title XVIII of the Social Security Act to provide for national
standardized payment amounts for inpatient hospital services furnished
under the Medicare Program.
IN THE HOUSE OF REPRESENTATIVES
APRIL 26, 2001
Mr. ENGLISH (for himself, Mr. TANNER, Mr. RILEY, Mr. KENNEDY of Min-
nesota, Mr. HILLIARD, and Mr. CRAMER) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Energy and Commerce, for a period to be sub-
sequently 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 national standardized payment amounts for inpatient
hospital services furnished 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. ESTABLISHING A SINGLE STANDARDIZED
AMOUNT UNDER MEDICARE INPATIENT HOS-
PITAL PPS.
(a) IN GENERAL.—Section 1886(d)(3)(A) of the So-
cial Security Act (42 U.S.C. 1395ww(d)(3)(A)) is
amended—
(1) in clause (iv), by inserting ‘‘and ending on
or before September 30, 2001,’’ after ‘‘October 1,
1995,’’; and
(2) by redesignating clauses (v) and (vi) as
clauses (vii) and (viii), respectively, and inserting
after clause (iv) the following new clauses:
‘‘(v) For discharges occurring in the fiscal year
beginning on October 1, 2001, the average standard-
ized amount for hospitals located in areas other than
a large urban area shall be equal to the average
standardized amount for hospitals located in a large
urban area.
‘‘(vi) For discharges occurring in a fiscal year
beginning on or after October 1, 2002, the Secretary
shall compute an average standardized amount for
hospitals located in all areas within the United
States equal to the average standardized amount
computed under clause (v) or this clause for the pre-
vious fiscal year increased by the applicable percent-
age increase under subsection (b)(3)(B)(i) for the
fiscal year involved.’’.
(b) CONFORMING AMENDMENTS.—
(1) 
UPDATE
FACTOR.—Section
1886(b)(3)(B)(i)(XVII) of the Social Security Act
(42 U.S.C. 1395ww(b)(3)(B)(i)(XVII)) is amended
by striking ‘‘for hospitals in all areas,’’ and inserting
‘‘for hospitals located in a large urban area,’’.
(2) COMPUTING DRG-SPECIFIC RATES.—
(A) IN GENERAL.—Section 1886(d)(3)(D)
of such Act (42 U.S.C. 1395ww(d)(3)(D)) is
amended—
(i) in the heading by striking ‘‘IN DIF-
FERENT AREAS’’;
(ii) in the matter preceding clause
(i)—
(I) by inserting ‘‘for fiscal years
before fiscal year 1997’’ before ‘‘a re-
gional DRG prospective payment rate
for each region,’’; and
(II) by striking ‘‘each of which
is’’;
(iii) in clause (i)—
(I) by inserting ‘‘for fiscal years
before fiscal year 2002,’’ after ‘‘(i)’’;
and
(II) by striking ‘‘and’’ at the end;
(iv) in clause (ii)—
(I) by inserting ‘‘for fiscal years
before fiscal year 2002,’’ after ‘‘(ii)’’;
and
(II) by striking the period at the
end and inserting ‘‘; and’’; and
(v) by adding at the end the following
new clause:
‘‘(iii) for a fiscal year beginning after fiscal
year 2001, for hospitals located in all areas, to
the product of—
‘‘(I) the applicable average standard-
ized amount (computed under subpara-
graph (A)), reduced under subparagraph
(B), and adjusted or reduced under sub-
paragraph (C) for the fiscal year; and
‘‘(II) the weighting factor (determined
under paragraph (4)(B)) for that diag-
nosis-related group.’’.
(B) TECHNICAL CONFORMING SUNSET.—
Section 1886(d)(3) of such Act (42 U.S.C.
1395ww(d)(3)) is amended in the matter pre-
ceding subparagraph (A) by inserting ‘‘for fiscal
years before fiscal year 1997’’ before ‘‘a re-
gional DRG prospective payment rate’’.
SEC. 2. FLOOR ON AREA WAGE ADJUSTMENT FACTORS
USED UNDER MEDICARE PPS FOR INPATIENT
AND OUTPATIENT HOSPITAL SERVICES.
(a) INPATIENT PPS.—Section 1886(d)(3)(E) of the
Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) is
amended—
(1) by inserting ‘‘(i) IN GENERAL.—’’ before
‘‘The Secretary’’, and adjusting the margin two ems
to the right;
(2) by striking ‘‘The Secretary’’ and inserting
‘‘Subject to clause (ii), the Secretary’’; and
(3) by adding at the end the following:
‘‘(ii) FLOOR ON AREA WAGE ADJUSTMENT
FACTOR.—Notwithstanding clause (i), in deter-
mining payments under this subsection for dis-
charges occurring on or after October 1, 2001,
the Secretary shall substitute a factor of .925
for any factor that would otherwise apply under
such clause that is less than .925. Nothing in
this clause shall be construed as authorizing—
‘‘(I) the application of the last sen-
tence of clause (i) to any substitution made
pursuant to this clause, or
‘‘(II) the application of the preceding
sentence of this clause to adjustments for
area wage levels made under other pay-
ment systems established under this title
(other than the payment system under sec-
tion 1833(t)) to which the factors estab-
lished under clause (i) apply.’’.
(b) OUTPATIENT PPS.—Section 1833(t)(2) of the
Social Security Act (42 U.S.C. 1395l(t)(2)) is amended
by adding at the end the following: ‘‘For purposes of sub-
paragraph (D) for items and services furnished on or after
October 1, 2001, if the factors established under clause
(i) of section 1886(d)(3)(E) are used to adjust for relative
differences in labor and labor-related costs under the pay-
ment system established under this subsection, the provi-
sions of clause (ii) of such section (relating to a floor on
area wage adjustment factor) shall apply to such factors,
as used in this subsection, in the same manner and to
the same extent (including waiving the applicability of the
requirement for such floor to be applied in a budget neu-
tral manner) as they apply to factors under section
1886.’’.
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