‘‘(III) which consolidates into a single medicare
payment area noncontiguous counties (or equivalent
areas described in subparagraph (A)) within a State.
Such adjustment shall be effective for payments for
months beginning with January of the year following the
year in which the request is received.
‘‘(ii) In the case of a State requesting an adjustment
under this subparagraph, the Secretary shall adjust the
payment rates otherwise established under this section for
medicare payment areas in the State in a manner so that
the aggregate of the payments under this section in the
State shall be equal to the aggregate payments that would
have been made under this section for medicare payment
areas in the State in the absence of the adjustment under
this subparagraph.
‘‘(iii) The metropolitan based system described in this
clause is one in which—
‘‘(I) all the portions of each metropolitan statis-
tical area in the State or in the case of a consoli-
dated metropolitan statistical area, all of the por-
tions of each primary metropolitan statistical area
within the consolidated area within the State, are
treated as a single medicare payment area, and
‘‘(II) all areas in the State that do not fall
within a metropolitan statistical area are treated as
a single medicare payment area.
‘‘(iv) In clause (iii), the terms ‘metropolitan statis-
tical area’, ‘consolidated metropolitan statistical area’, and
‘primary metropolitan statistical area’ mean any area des-
ignated as such by the Secretary of Commerce.
‘‘(6) The payment to an eligible organization under
this section for individuals enrolled under this section with
the organization and entitled to benefits under part A and
enrolled under part B shall be made from the Federal
Hospital Insurance Trust Fund and the Federal Supple-
mentary Medical Insurance Trust Fund. The portion of
that payment to the organization for a month to be paid
by each trust fund shall be determined as follows:
‘‘(A) In regard to expenditures by eligible orga-
nizations having risk-sharing contracts, the alloca-
tion shall be determined each year by the Secretary
based on the relative weight that benefits from each
fund contribute to the adjusted average per capita
cost.
‘‘(B) In regard to expenditures by eligible orga-
nizations operating under a reasonable cost reim-
bursement contract, the initial allocation shall be
based on the plan’s most recent budget, such alloca-
tion to be adjusted, as needed, after cost settlement
to reflect the distribution of actual expenditures.
The remainder of that payment shall be paid by the
former trust fund.
‘‘(7) Subject to subsections (c)(2)(B)(ii) and (c)(7),
if an individual is enrolled under this section with an eligi-
ble organization having a risk-sharing contract, only the
eligible organization shall be entitled to receive payments
from the Secretary under this title for services furnished
to the individual.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on October 1, 1997.
SEC. 102. SENSE OF CONGRESS RELATING TO PAYMENTS
TO HEALTH MAINTENANCE ORGANIZATIONS
AND 
COMPETITIVE 
MEDICAL 
PLANS 
IN
RURAL AREAS.
It is the sense of the Congress that health mainte-
nance organizations or competitive medical plans in rural
areas receiving additional payments as a result of the
amendment to the Social Security Act made under section
101 of this Act should allocate those payments to provide
increased health care services to medicare beneficiaries or
to pay for health care service infrastructure needs.
TITLE II—EXPANSION OF GRANT
AUTHORITY 
TO 
INCLUDE
TECHNICAL ASSISTANCE FOR
RURAL HEALTH NETWORKS
SEC. 201. TECHNICAL ASSISTANCE GRANTS FOR RURAL
HEALTH NETWORKS.
Section 330A of the Public Health Service Act (42
U.S.C. 254c) is amended—
(1) by redesignating subsection(g) as subsection
(h); and
(2) by inserting after subsection (f) the follow-
ing new subsection:
‘‘(g) The Secretary may provide technical assistance
with respect to the planning, development, and operation
of any program or service carried out pursuant to this sec-
tion. The Secretary may provide such technical assistance
directly or through grants to, or contracts with, public and
private entities.’’.
TITLE 
III—MEDICARE 
RURAL
PRIMARY 
CARE 
HOSPITAL
PROGRAM
SEC. 301. DESIGNATION OF RURAL PRIMARY CARE HOS-
PITALS.
Section 1820 of the Social Security Act (42 U.S.C.
1395i–4) is amended to read as follows:
‘‘MEDICARE RURAL PRIMARY CARE HOSPITAL PROGRAM
‘‘SEC. 1820. (a) STATE DESIGNATION OF FACILI-
TIES.—
‘‘(1) IN GENERAL.—A State may designate one
or more facilities as a rural primary care hospital in
accordance with paragraph (2).
‘‘(2) CRITERIA
FOR
DESIGNATION
AS
RURAL
PRIMARY CARE HOSPITAL.—A State may designate a
facility as a rural primary care hospital if the facil-
ity—
‘‘(A) is located in a county (or equivalent
unit of local government) in a rural area (as de-
fined in section 1886(d)(2)(D)) that—
‘‘(i) is located more than a 20-mile
drive from a hospital, or another facility
described in this subsection, or
‘‘(ii) is certified by the State as being
a necessary provider of health care services
to residents in the area because of local ge-
ography or service patterns;
‘‘(B) makes available 24-hour emergency
care services;
‘‘(C) provides not more than 15 acute care
inpatient beds (meeting such standards as the
Secretary may establish) for providing inpatient
care for a period not to exceed an average, for
all patients treated in the facility in a 12–
month period, of 96 hours (unless a longer pe-
riod than the average is required because trans-
fer to a hospital is precluded because of inclem-
ent weather or other emergency conditions), ex-
cept that a peer review organization or equiva-
lent entity may, on request, waive the 96-hour
average restriction on a case-by-case basis;
‘‘(D) meets such staffing requirements as
would apply under section 1861(e) to a hospital
located in a rural area, except that—
‘‘(i) the facility need not meet hospital
standards relating to the number of hours
during a day, or days during a week, in
which the facility must be open and fully
staffed, except insofar as the facility is re-
quired to make available emergency care
services as determined under subparagraph
(B) and must have nursing services avail-
able on a 24-hour basis, but need not oth-
erwise staff the facility except when an in-
patient is present,
‘‘(ii) the facility may provide any serv-
ices otherwise required to be provided by a
full-time, on-site dietitian, pharmacist, lab-
oratory technician, medical technologist,
and radiological technologist on a part-
time, off-site basis under arrangements as
defined in section 1861(w)(1), and
‘‘(iii) the inpatient care described in
subparagraph (C) may be provided by a
physician’s assistant, nurse practitioner, or
clinical nurse specialist subject to the over-
sight of a physician who need not be
present in the facility;
‘‘(E) meets the requirements of subpara-
graph (I) of paragraph (2) of section 1861(aa);
and
‘‘(F) has executed and in effect an agree-
ment described in subsection (b)(1).
‘‘(b) AGREEMENTS.—
‘‘(1) IN GENERAL.—Each rural primary care
hospital shall have an agreement with respect to
each item described in paragraph (2) with at least
1 hospital (as defined in section 1861(e)).
‘‘(2) ITEMS DESCRIBED.—The items described
in this paragraph are the following:
‘‘(A) Patient referral and transfer.
‘‘(B) The development and use of commu-
nications systems including (where feasible)—
‘‘(i) telemetry systems, and
‘‘(ii) systems for electronic sharing of
patient data.
‘‘(C) The provision of emergency and non-
emergency transportation among the facility
and the hospital.
‘‘(3) CREDENTIALING
AND
QUALITY
ASSUR-
ANCE.—Each rural primary care hospital shall have
an agreement with respect to credentialing and qual-
ity assurance with at least 1—
‘‘(A) hospital,
‘‘(B) peer review organization or equivalent
entity, or
‘‘(C) other appropriate and qualified entity
identified by the State.
‘‘(c) CERTIFICATION BY THE SECRETARY.—The Sec-
retary shall certify a facility as a rural primary care hos-
pital if the facility—
‘‘(1) is designated as a rural primary care hos-
pital by the State in which it is located; and
‘‘(2) meets such other criteria as the Secretary
may require.
‘‘(d) PERMITTING MAINTENANCE OF SWING BEDS.—
Nothing in this section shall be construed to prohibit a
State from designating or the Secretary from certifying
a facility as a rural primary care hospital solely because,
at the time the facility applies to the State for designation
as a rural primary care hospital, there is in effect an
agreement between the facility and the Secretary under
section 1883 under which the facility’s inpatient hospital
facilities are used for the furnishing of extended care serv-
ices, except that the number of beds used for the furnish-
ing of such services may not exceed 25 beds (minus the
number of inpatient beds used for providing inpatient care
in the facility pursuant to subsection (a)). For purposes
of the previous sentence, the number of beds of the facility
used for the furnishing of extended care services shall not
include any beds of a unit of the facility that is licensed
as a distinct-part skilled nursing facility at the time the
facility applies to the State for designation as a rural pri-
mary care hospital.
‘‘(e) WAIVER
OF CONFLICTING PART A PROVI-
SIONS.—The Secretary is authorized to waive such provi-
sions of this part and part C as are necessary to conduct
the program established under this section.’’.
SEC. 302. PAYMENT ON A REASONABLE COST BASIS.
(a) MEDICARE PART A.—Section 1814(l) of the So-
cial Security Act (42 U.S.C. 1395f(l)) is amended to read
as follows:
‘‘(l) PAYMENT
FOR INPATIENT RURAL PRIMARY
CARE HOSPITAL SERVICES.—The amount of payment
under this part for inpatient rural primary care hospital
services is the reasonable costs of the rural primary care
hospital in providing such services.’’.
(b) MEDICARE PART B.—Section 1834(g) of such
Act (42 U.S.C. 1395m(g)) is amended to read as follows:
‘‘(g) PAYMENT FOR OUTPATIENT RURAL PRIMARY
CARE HOSPITAL SERVICES.—The amount of payment
under this part for outpatient rural primary care hospital
services is the reasonable costs of the rural primary care
hospital in providing such services.’’.
SEC. 303. LENGTHENING MAXIMUM PERIOD OF PERMITTED
INPATIENT STAY.
Section 1814(a)(8) of the Social Security Act (42
U.S.C. 1395f(a)(8)) is amended by striking ‘‘72 hours’’
and inserting ‘‘96 hours’’.
SEC. 304. PAYMENT CONTINUED TO DESIGNATED ESSEN-
TIAL ACCESS COMMUNITY HOSPITALS AND
DESIGNATED RURAL PRIMARY CARE HOS-
PITALS.
(a) ESSENTIAL ACCESS COMMUNITY HOSPITALS.—
Section 1886(d)(5)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(D)) is amended—
(1) in clause (iii)(III), by inserting ‘‘as in effect
on September 30, 1997’’ before the period at the
end; and
(2) in clause (v), by inserting ‘‘as in effect on
September 30, 1997’’ after ‘‘1820(i)(1)’’ and after
‘‘1820(g)’’.
(b) RURAL PRIMARY CARE HOSPITALS.—Section
1861(mm)(1) of the Social Security Act (42 U.S.C.
1395x(mm)(1)) is amended by striking ‘‘1820(i)(2).’’ and
inserting ‘‘1820(c), and includes a facility designated by
the Secretary under section 1820(i)(2) as in effect on Sep-
tember 30, 1997.’’.
(c) MEDICAL ASSISTANCE FACILITY.—Any facility
that, as of March 1, 1997, operated as a limited service
rural hospital under a demonstration program described
in section 4008(i)(1) of the Omnibus Budget Reconcili-
ation Act of 1990 (42 U.S.C. 1395b-1 note) shall be treat-
ed as a rural primary care hospital for the purposes of
title XVIII of the Social Security Act.
SEC. 305. EFFECTIVE DATE.
The amendments made by this title shall apply to
services furnished on or after October 1, 1997.
TITLE 
IV—INCENTIVES 
FOR
HEALTH PROFESSIONALS TO
PRACTICE IN RURAL AREAS
Subtitle A—National Health
Service Corps
SEC. 401. NATIONAL HEALTH SERVICE CORPS SCHOLAR-
SHIP AND LOAN REPAYMENTS EXCLUDED
FROM GROSS INCOME.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 138 as section 139 and by insert-
ing after section 137 the following new section:
‘‘SEC. 138. NATIONAL HEALTH SERVICE CORPS SCHOLAR-
SHIP AND LOAN PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any qualified scholarship payment or any qualified
loan repayment.
‘‘(b) QUALIFIED PAYMENTS.—For purposes of this
section, the term ‘qualified scholarship payment’ means
any payment made on behalf of the taxpayer by the Na-
tional Health Service Corps Scholarship Program under
section 338A(g) of the Public Health Service Act, and the
term ‘qualified loan repayment’ means any payment made
on behalf of the taxpayer by the National Health Service
Corps Loan Repayment Program under section 338B(g)
of such Act.’’.
(b) CONFORMING AMENDMENT.—Paragraph (3) of
section 338B(g) of the Public Health Service Act is
amended by striking ‘‘Federal, State, or local’’ and insert-
ing ‘‘State or local’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 is amended by striking the item
relating to section 138 and inserting the following:
‘‘Sec. 138. National Health Service Corps scholarship and loan
payments.
‘‘Sec. 139. Cross references to other Acts.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments made under sections
338A(g) and 338B(g) of the Public Health Service Act
after the date of the enactment of this Act.
SEC. 402. SUBMISSION OF REPORT ON STUDY.
The Secretary of Health and Human Services shall
transmit to the Congress, by not later than 180 days after
the date of the enactment of this section, a report on the
study being conducted on the criteria for designation of
health professional shortage areas under subpart II of
part D of title III of the Public Health Service Act and
for designation of medically underserved areas under sec-
tion 330(b) of such Act.
SEC. 403. PRIORITY IN ASSIGNMENT OF CORPS MEMBERS;
COMMUNITY RURAL HEALTH NETWORKS.
Section 333A(a)(1)(B) of the Public Health Service
Act (42 U.S.C. 254f–1(a)(1)(B)) is amended—
(1) in clause (iii), by striking ‘‘and’’ after the
semicolon at the end;
(2) in clause (iv), by adding ‘‘and’’ after the
semicolon at the end; and
(3) by adding at the end the following clause:
‘‘(v) is a participant in an eligible net-
work described in section 330A(c).’’.
Subtitle B—Primary Care Services
Furnished in Shortage Areas
SEC. 411. ADDITIONAL PAYMENTS UNDER MEDICARE FOR
PRIMARY CARE SERVICES FURNISHED IN
RURAL SHORTAGE AREAS.
(a) INCREASE
IN AMOUNT
OF ADDITIONAL PAY-
MENT.—Section 1833(m) of the Social Security Act (42
U.S.C. 1395l(m)) is amended by striking ‘‘10 percent’’
and inserting ‘‘20 percent’’.
(b) RESTRICTION TO PRIMARY CARE SERVICES.—
Section 1833(m) of the Social Security Act (42 U.S.C.
1395l(m)) is amended—
(1) by striking ‘‘physicians’ services’’ and in-
serting ‘‘primary care services (as defined in section
1842(i)(4) and including services described in such
section that are furnished by a physician assistant,
nurse practitioner, or nurse midwife and that would
be physicians’ services if furnished by a physician)’’,
(2) by striking ‘‘in an area’’ and inserting ‘‘in
a rural area’’, and
(3) by inserting ‘‘or physician assistant, nurse
practitioner, or nurse midwife furnishing the serv-
ice’’ after ‘‘physician’’.
(c) EXTENSION OF PAYMENT FOR FORMER SHORT-
AGE AREAS.—
(1) IN GENERAL.—Section 1833(m) of the So-
cial Security Act (42 U.S.C. 1395l(m)) is amended
by striking ‘‘area,’’ and inserting ‘‘area (or, in the
case of an area for which the designation as a health
professional shortage area under such section is
withdrawn, in the case of such services furnished to
such an individual during the 3-year period begin-
ning on the effective date of the withdrawal of such
designation),’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished in
an area for which the designation as a health profes-
sional shortage area under section 332(a)(1)(A) of
the Public Health Service Act is withdrawn on or
after October 1, 1997.
(d) REQUIRING CARRIERS TO REPORT ON SERVICES
PROVIDED.—Section 1842(b)(3) of the Social Security
Act (42 U.S.C. 1395u(b)(3)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I); and
(2) by inserting after subparagraph (I) the fol-
lowing new subparagraph:
‘‘(J) will provide information to the Secretary
not later than 30 days after the end of the contract
year on the types of providers to whom the carrier
made additional payments during the year for cer-
tain services pursuant to section 1833(m), together
with a description of the services furnished by such
providers during the year; and’’.
(e) EFFECTIVE DATE.—The amendments made by
subsections (a), (b), and (d) shall apply to services fur-
nished on or after October 1, 1997.
TITLE 
V—CLASSIFICATION 
AS
RURAL REFERRAL CENTERS;
GEOGRAPHIC RECLASSIFICA-
TION FOR DISPROPORTION-
ATE 
SHARE 
PAYMENT 
AD-
JUSTMENT.
SEC. 501. CLASSIFICATION OF CENTERS.
(a) PROHIBITING DENIAL OF REQUEST FOR RECLAS-
SIFICATION ON BASIS OF COMPARABILITY OF WAGES.—
(1) IN GENERAL.—Section 1886(d)(10)(D) of
the 
Social 
Security 
Act 
(42 
U.S.C.
1395ww(d)(10)(D)) is amended—
(A) by redesignating clause (iii) as clause
(iv); and
(B) by inserting after clause (ii) the follow-
ing new clause:
‘‘(iii) Under the guidelines published by the Secretary
under clause (i), in the case of a hospital which is classi-
fied by the Secretary as a rural referral center under para-
graph (5)(C), the Board may not reject the application
of the hospital under this paragraph on the basis of any
comparison between the average hourly wage of the hos-
pital and the average hourly wage of hospitals in the area
in which it is located.’’.
(2) EFFECTIVE
DATE.—Notwithstanding sec-
tion 1886(d)(10)(C)(ii) of the Social Security Act, a
hospital may submit an application to the Medicare
Geographic Classification Review Board during the
60-day period beginning on the date of the enact-
ment of this Act requesting a change in its classi-
fication for purposes of determining the area wage
index applicable to the hospital under section
1886(d)(3)(D) of such Act for fiscal year 1998, if
the hospital would be eligible for such a change in
its classification under the standards described in
section 1886(d)(10)(D) (as amended by paragraph
(1)) but for its failure to meet the deadline for appli-
cations under section 1886(d)(10)(C)(ii).
(b) CONTINUING TREATMENT OF PREVIOUSLY DES-
IGNATED CENTERS.—Any hospital classified as a rural re-
ferral center by the Secretary of Health and Human Serv-
ices under section 1886(d)(5)(C) of the Social Security
Act for fiscal year 1991 shall be classified as such a rural
referral center for fiscal year 1998 and each subsequent
fiscal year.
SEC. 502. MEDICARE HOSPITAL GEOGRAPHIC RECLASSI-
FICATION PERMITTED FOR PURPOSES OF
DISPROPORTIONATE SHARE PAYMENT AD-
JUSTMENTS.
(a) IN GENERAL.—Section 1886(d)(10)(C)(i) of the
Social Security Act (42 U.S.C. 1395ww(d)(10)(C)(i)) is
amended—
(1) by striking ‘‘or’’ at the end of subclause (I);
(2) by striking the period at the end of sub-
clause (II) and inserting ‘‘, or’’;
(3) by inserting after subclause (II) the follow-
ing:
‘‘(III) eligibility for and amount of additional
payment amounts under paragraph (5)(F).’’; and
(4) by adding at the end the following:
‘‘Any application approved for purposes of subclause (I)
for a fiscal year is deemed to be approved for purposes
of subclause (III) for that fiscal year.’’.
(b) EFFECTIVE
DATE.—Notwithstanding section
1886(d)(10)(C)(ii) of the Social Security Act, a hospital
may submit an application to the Medicare Geographic
Classification Review Board during the 60-day period be-
ginning on the date of the enactment of this Act request-
ing a change in its classification for purposes of determin-
ing the disproportionate share hospital payment applicable
to the hospital under section 1886(d)(5)(F) of such Act
for fiscal year 1998 if the hospital would be eligible for
such a change in its classification under the guidelines de-
scribed in subsection (c) of this section but for its failure
to meet the deadline for applications under section
1886(d)(10(C)(ii).
(c) APPLICABLE GUIDELINES.—Such Board shall
apply the guidelines established for reclassification under
subclause (I) of section 1886(d)(10)(C)(i) of such Act to
reclassification under subclause (III) of such section until
the Secretary of Health and Human Services promulgates
separate guidelines for reclassification under such sub-
clause (III).
TITLE VI—MEDICARE PAYMENT
METHODOLOGIES
SEC. 601. TELEMEDICINE SERVICES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall implement a methodology for mak-
ing payments under part B of the medicare program for
telemedicine services. Such methodology shall be based
upon the proposal submitted by the Secretary to the Con-
gress under section 192 of the Health Insurance Port-
ability and Accountability Act of 1996.
(b) EFFECTIVE DATE.—The Secretary shall imple-
ment the methodology described in subsection (a) not later
than 365 days after the date of the enactment of this Act.
TITLE VII—ANTITRUST
SEC. 701. SENSE OF CONGRESS RELATING TO APPLICATION
OF GUIDELINES.
It is the sense of the Congress that—
(1) physician and hospital networks in rural
areas are working to develop alternative means of
providing accessible, affordable, and quality health
care services to Americans living and working in
rural areas; and
(2) the Federal Trade Commission, in conjunc-
tion with the Justice Department, should, when im-
plementing antitrust guidelines with respect to phy-
sician and hospital networks in rural areas, give spe-
cial consideration to and provide appropriate relief
for such networks.
TITLE VIII—FINANCING
SEC. 801. EXTENSION OF CERTAIN EXISTING MEDICARE
SECONDARY PAYER REQUIREMENTS WITH
RESPECT TO END STAGE RENAL DISEASE.
Section 1862(b)(1)(C) of the Social Security Act (42
U.S.C. 1395y(b)(1)(C)) is amended—
(1) in the last sentence by striking ‘‘October 1,
1998’’ and inserting ‘‘the date of the enactment of
the Rural Health Improvement Act of 1997’’; and
(2) by adding at the end the following new sen-
tence: ‘‘Effective for items and services furnished on
or after the date of the enactment of the Rural
Health Improvement Act of 1997, (with respect to
periods beginning on or after the date that is 18
months prior to such date), clauses (i) and (ii) shall
be applied by substituting ‘30-month’ for ‘12-month’
each place it appears.’’.
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