I
105TH CONGRESS
1ST SESSION
H. R. 1189
To amend the Social Security Act and the Public Health Service Act with
respect to the health of residents of rural areas, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 20, 1997
Mr. NUSSLE (for himself, Mr. POSHARD, Mrs. EMERSON, Mr. BONILLA, Mr.
BEREUTER, Mr. DEFAZIO, Mr. HILLIARD, Mr. KIND of Wisconsin, Mrs.
JOHNSON of Connecticut, Mr. MINGE, Mr. POMEROY, Mr. MORAN of
Kansas, Mr. STENHOLM, Mr. PETERSON of Pennsylvania, Mr. BARRETT
of Nebraska, Mr. BOUCHER, Mr. CLYBURN, Mr. COSTELLO, Mr. CRAPO,
Mr. GANSKE, Mr. HILL, Mr. LATHAM, Mr. LEACH, Mr. OBERSTAR, Mr.
RAHALL, Mr. PETRI, Mr. THORNBERRY, Mr. WALSH, Mr. WATTS of
Oklahoma, and Mr. PETERSON of Minnesota) introduced the following
bill; which was referred to the Committee on Ways and Means, and in
addition to the Committee on Commerce, for a period to be subsequently
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Social Security Act and the Public Health
Service Act with respect to the health of residents of
rural areas, and for other purposes.
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 Health Improve-
ment Act of 1997’’.
SEC. 2. TABLE OF CONTENTS.
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Sense of Congress on the work of Bill Emerson.
TITLE I—EQUALIZATION OF MEDICARE REIMBURSEMENT RATES
TO HEALTH MAINTENANCE ORGANIZATIONS AND COMPETITIVE
MEDICAL PLANS
Sec. 101. Payments to health maintenance organizations and competitive medi-
cal plans.
Sec. 102. Sense of Congress relating to payments to health maintenance orga-
nizations and competitive medical plans in rural areas.
TITLE II—EXPANSION OF GRANT AUTHORITY TO INCLUDE
TECHNICAL ASSISTANCE FOR RURAL HEALTH NETWORKS
Sec. 201. Technical assistance grants for rural health networks.
TITLE III—MEDICARE RURAL PRIMARY CARE HOSPITAL
PROGRAM
Sec. 301. Designation of rural primary care hospitals.
Sec. 302. Payment on a reasonable cost basis.
Sec. 303. Lengthening maximum period of permitted inpatient stay.
Sec. 304. Payment continued to designated essential access community hos-
pitals and designated rural primary care hospitals.
Sec. 305. Effective date.
TITLE IV—INCENTIVES FOR HEALTH PROFESSIONALS TO
PRACTICE IN RURAL AREAS
Subtitle A—National Health Service Corps
Sec. 401. National health service corps scholarship and loan repayments ex-
cluded from gross income.
Sec. 402. Submission of report on study.
Sec. 403. Priority in assignment of corps members; community rural health
networks.
Subtitle B—Primary Care Services Furnished in Shortage Areas
Sec. 411. Additional payments under medicare for primary care services fur-
nished in rural shortage areas.
TITLE V—CLASSIFICATION AS RURAL REFERRAL CENTERS; GEO-
GRAPHIC RECLASSIFICATION FOR DISPROPORTIONATE SHARE
PAYMENT ADJUSTMENT.
Sec. 501. Classification of centers.
Sec. 502. Medicare hospital geographic reclassification permitted for purposes
of disproportionate share payment adjustments.
TITLE VI—MEDICARE PAYMENT METHODOLOGIES
Sec. 601. Telemedicine services.
TITLE VII—ANTITRUST
Sec. 701. Sense of Congress relating to application of guidelines.
TITLE VIII—FINANCING
Sec. 801. Extension of certain existing medicare secondary payer requirements
with respect to end stage renal disease.
SEC. 3. SENSE OF CONGRESS ON THE WORK OF BILL EMER-
SON.
It is the sense of the Congress that this Act reflects
the dedication of the late Representative Bill Emerson,
who served on the Steering Committee of the Rural Health
Care Coalition of the House of Representatives, to ensur-
ing health care access for all rural Americans.
TITLE 
I—EQUALIZATION 
OF
MEDICARE REIMBURSEMENT
RATES TO HEALTH MAINTE-
NANCE ORGANIZATIONS AND
COMPETITIVE 
MEDICAL
PLANS
SEC. 101. PAYMENTS TO HEALTH MAINTENANCE ORGANI-
ZATIONS AND COMPETITIVE MEDICAL PLANS.
(a) IN GENERAL.—Section 1876(a) of the Social Se-
curity Act (42 U.S.C. 1395mm(a)) is amended to read as
follows:
‘‘(a)(1)(A) The Secretary shall annually determine,
and shall announce (in a manner intended to provide no-
tice to interested parties) not later than August 1 before
the calendar year concerned—
‘‘(i) a per capita rate of payment for individuals
who are enrolled under this section with an eligible
organization which has entered into a risk-sharing
contract and who are entitled to benefits under part
A and enrolled under part B, and
‘‘(ii) a per capita rate of payment for individ-
uals who are so enrolled with such an organization
and who are enrolled under part B only.
For purposes of this section, the term ‘risk-sharing con-
tract’ means a contract entered into under subsection (g)
and the term ‘reasonable cost reimbursement contract’
means a contract entered into under subsection (h).
‘‘(B) The annual per capita rate of payment for each
medicare payment area (as defined in paragraph (5)) shall
be equal to the adjusted capitation rate (as defined in
paragraph (4)), adjusted by the Secretary for—
‘‘(i) individuals who are enrolled under this sec-
tion with an eligible organization which has entered
into a risk-sharing contract and who are enrolled
under part B only; and
‘‘(ii) such risk factors as age, disability status,
gender, institutional status, and such other factors
as the Secretary determines to be appropriate so as
to ensure actuarial equivalence. The Secretary may
add to, modify, or substitute for such factors, if such
changes will improve the determination of actuarial
equivalence.
‘‘(C) In the case of an eligible organization with a
risk-sharing contract, the Secretary shall make monthly
payments in advance and in accordance with the rate de-
termined under subparagraph (B) and except as provided
in subsection (g)(2), to the organization for each individ-
ual enrolled with the organization under this section.
‘‘(D) The Secretary shall establish a separate rate of
payment to an eligible organization with respect to any
individual determined to have end-stage renal disease and
enrolled with the organization. Such rate of payment shall
be actuarially equivalent to rates paid to other enrollees
in the payment area (or such other area as specified by
the Secretary).
‘‘(E)(i) The amount of payment under this paragraph
may be retroactively adjusted to take into account any dif-
ference between the actual number of individuals enrolled
in the plan under this section and the number of such
individuals estimated to be so enrolled in determining the
amount of the advance payment.
‘‘(ii)(I) Subject to subclause (II), the Secretary may
make retroactive adjustments under clause (i) to take into
account individuals enrolled during the period beginning
on the date on which the individual enrolls with an eligible
organization (which has a risk-sharing contract under this
section) under a health benefit plan operated, sponsored,
or contributed to by the individual’s employer or former
employer (or the employer or former employer of the indi-
vidual’s spouse) and ending on the date on which the indi-
vidual is enrolled in the plan under this section, except
that for purposes of making such retroactive adjustments
under this clause, such period may not exceed 90 days.
‘‘(II) No adjustment may be made under subclause
(I) with respect to any individual who does not certify that
the organization provided the individual with the expla-
nation described in subsection (c)(3)(E) at the time the
individual enrolled with the organization.
‘‘(F)(i) At least 45 days before making the announce-
ment under subparagraph (A) for a year, the Secretary
shall provide for notice to eligible organizations of pro-
posed changes to be made in the methodology or benefit
coverage assumptions from the methodology and assump-
tions used in the previous announcement and shall provide
such organizations an opportunity to comment on such
proposed changes.
‘‘(ii) In each announcement made under subpara-
graph (A) for a year, the Secretary shall include an expla-
nation of the assumptions (including any benefit coverage
assumptions) and changes in methodology used in the an-
nouncement in sufficient detail so that eligible organiza-
tions can compute per capita rates of payment for individ-
uals located in each county (or equivalent medicare pay-
ment area) which is in whole or in part within the service
area of such an organization.
‘‘(2) With respect to any eligible organization which
has entered into a reasonable cost reimbursement con-
tract, payments shall be made to such plan in accordance
with subsection (h)(2) rather than paragraph (1).
‘‘(3) Subject to subsections (c)(2)(B)(ii) and (c)(7),
payments under a contract to an eligible organization
under paragraph (1) or (2) shall be instead of the amounts
which (in the absence of the contract) would be otherwise
payable, pursuant to sections 1814(b) and 1833(a), for
services furnished by or through the organization to indi-
viduals enrolled with the organization under this section.
‘‘(4)(A) For purposes of this section, the ‘adjusted
capitation rate’ for a medicare payment area (as defined
in paragraph (5)) is equal to the greatest of the following:
‘‘(i) The sum of—
‘‘(I) the area-specific percentage for the
year (as specified under subparagraph (B) for
the year) of the area-specific adjusted capita-
tion rate for the year for the medicare payment
area, as determined under subparagraph (C),
and
‘‘(II) the national percentage (as specified
under subparagraph (B) for the year) of the
input-price-adjusted national adjusted capita-
tion rate for the year, as determined under sub-
paragraph (D),
multiplied by a budget neutrality adjustment factor
determined under subparagraph (E).
‘‘(ii) An amount equal to—
‘‘(I) in the case of 1998, 85 percent of the
input-price-adjusted national adjusted capita-
tion rate for the year, as determined under sub-
paragraph (D); and
‘‘(II) in the case of a succeeding year, the
amount specified in this clause for the preced-
ing year increased by the national average per
capita growth percentage specified under sub-
paragraph (F) for that succeeding year.
‘‘(iii) An amount equal to—
‘‘(I) in the case of 1998, 100 percent of
the annual per capita rate of payment for 1997
for the medicare payment area (determined
under this subsection, as in effect on the day
before the date of enactment of the Rural
Health Improvement Act of 1997); and
‘‘(II) in the case of a subsequent year, 100
percent of the adjusted capitation rate under
this subsection for the area for the previous
year.
‘‘(B) For purposes of subparagraph (A)(i)—
‘‘(i) for 1998, the ‘area-specific percentage’ is
85 percent and the ‘national percentage’ is 15 per-
cent,
‘‘(ii) for 1999, the ‘area-specific percentage’ is
75 percent and the ‘national percentage’ is 25 per-
cent,
‘‘(iii) for 2000, the ‘area-specific percentage’ is
65 percent and the ‘national percentage’ is 35 per-
cent,
‘‘(iv) for 2001, the ‘area-specific percentage’ is
55 percent and the ‘national percentage’ is 45 per-
cent, and
‘‘(v) for a year after 2001, the ‘area-specific
percentage’ is 50 percent and the ‘national percent-
age’ is 50 percent.
‘‘(C) For purposes of subparagraph (A)(i), the area-
specific adjusted capitation rate for a medicare payment
area—
‘‘(i) for 1998, is the average of the annual per
capita rates of payment for the area for 1995
through 1997, after adjusting the 1995 and 1996
rates of payment to 1997 dollars, increased by the
national average per capita growth percentage for
1998 (as defined in subparagraph (F)); or
‘‘(ii) for a subsequent year, is the area-specific
adjusted capitation rate for the previous year deter-
mined under this subparagraph for the area, in-
creased by the national average per capita growth
percentage for such subsequent year.
‘‘(D)(i) For purposes of subparagraph (A)(i) and
subparagraph (A)(ii), the input-price-adjusted national
adjusted capitation rate for a medicare payment area for
a year is equal to the sum, for all the types of medicare
services (as classified by the Secretary), of the product
(for each such type of service) of—
‘‘(I) the national standardized adjusted capita-
tion rate (determined under clause (ii)) for the year,
‘‘(II) the proportion of such rate for the year
which is attributable to such type of services, and
‘‘(III) an index that reflects (for that year and
that type of services) the relative input price of such
services in the area compared to the national aver-
age input price of such services.
In applying subclause (III), the Secretary shall, subject
to clause (iii), apply those indices under this title that are
used in applying (or updating) national payment rates for
specific areas and localities.
‘‘(ii) In clause (i)(I), the ‘national standardized ad-
justed capitation rate’ for a year is equal to—
‘‘(I) the sum (for all medicare payment areas)
of the product of (aa) the area-specific adjusted
capitation rate for that year for the area under sub-
paragraph (C), and (bb) the average number of
standardized medicare beneficiaries residing in that
area in the year; divided by
‘‘(II) the total average number of standardized
medicare beneficiaries residing in all the medicare
payment areas for that year.
‘‘(iii) In applying this subparagraph for 1998—
‘‘(I) medicare services shall be divided into 2
types of services: part A services and part B serv-
ices;
‘‘(II) the proportions described in clause (i)(II)
for such types of services shall be—
‘‘(aa) for part A services, the ratio (ex-
pressed as a percentage) of the national average
annual per capita rate of payment for part A
for 1997 to the total average annual per capita
rate of payment for parts A and B for 1997,
and
‘‘(bb) for part B services, 100 percent
minus the ratio described in item (aa);
‘‘(III) for part A services, 70 percent of pay-
ments attributable to such services shall be adjusted
by the index used under section 1886(d)(3)(E) to
adjust payment rates for relative hospital wage levels
for hospitals located in the payment area involved;
and
‘‘(IV) for part B services—
‘‘(aa) 66 percent of payments attributable
to such services shall be adjusted by the index
of the geographic area factors under section
1848(e) used to adjust payment rates for physi-
cians’ services furnished in the payment area,
and
‘‘(bb) of the remaining 34 percent of the
amount of such payments, 70 percent shall be
adjusted by the index described in subclause
(III).
The Secretary may continue to apply the rules described
in this clause (or similar rules) for 1999.
‘‘(E) For each year, the Secretary shall compute a
budget neutrality adjustment factor so that the aggregate
of the payments under this section shall be equal to the
aggregate payments that would have been made under this
section if the area-specific percentage for the year had
been 100 percent and the national percentage had been
0 percent.
‘‘(F) In this section, the ‘national average per capita
growth percentage’ is equal to the percentage growth in
medicare fee-for-service per capita expenditures, which the
Secretary shall project for each year.
‘‘(5)(A) In this section, except as provided in sub-
paragraph (C), the term ‘medicare payment area’ means
a county, or equivalent area specified by the Secretary.
‘‘(B) In the case of individuals who are determined
to have end stage renal disease, the medicare payment
area shall be specified by the Secretary.
‘‘(C)(i) Upon written request of the Chief Executive
Officer of a State for a contract year (beginning after
1998) made at least 7 months before the beginning of the
year, the Secretary shall adjust the system under which
medicare payment areas in the State are otherwise deter-
mined under subparagraph (A) to a system which—
‘‘(I) has a single statewide medicare payment
area,
‘‘(II) is a metropolitan based system described
in clause (iii), or