214 
section, including the outreach efforts of the Office of Mi-
nority Health and Health Disparity Elimination and the 
Centers for Disease Control and Prevention. 
(h) ADMINISTRATIVE
BURDENS.—The Secretary 
shall make every effort to minimize duplicative or unneces-
sary administrative burdens on grantees. 
(i) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
necessary to carry out this section. 
SEC. 422. CRITICAL ACCESS HOSPITAL IMPROVEMENTS. 
(a) ELIMINATION OF ISOLATION TEST FOR COST- 
BASED AMBULANCE REIMBURSEMENT.— 
(1) IN
GENERAL.—Section 1834(l)(8) of the 
Social Security Act (42 U.S.C. 1395m(l)(8)) is 
amended— 
(A) in subparagraph (B)— 
(i) by striking ‘‘owned and’’; and 
(ii) by inserting ‘‘(including when 
such services are provided by the entity 
under an arrangement with the hospital)’’ 
after ‘‘hospital’’; and 
(B) by striking the comma at the end of 
subparagraph (B) and all that follows and in-
serting a period. 
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(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to services furnished 
on or after January 1, 2012. 
(b) PROVISION OF A MORE FLEXIBLE ALTERNATIVE 
TO THE CAH DESIGNATION 25 INPATIENT BED LIMIT 
REQUIREMENT.— 
(1) IN
GENERAL.—Section 1820(c)(2) of the 
Social Security Act (42 U.S.C. 1395i–4(c)(2)) is 
amended— 
(A) in subparagraph (B)(iii), by striking 
‘‘provides not more than’’ and inserting ‘‘sub-
ject to subparagraph (F), provides not more 
than’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(F) ALTERNATIVE TO 25 INPATIENT BED 
LIMIT REQUIREMENT.— 
‘‘(i) IN GENERAL.—A State may elect 
to treat a facility, with respect to the des-
ignation of the facility for a cost reporting 
period, as satisfying the requirement of 
subparagraph (B)(iii) relating to a max-
imum number of acute care inpatient beds 
if the facility elects, in accordance with a 
method specified by the Secretary and be-
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fore the beginning of the cost reporting pe-
riod, to meet the requirement under clause 
(ii). 
‘‘(ii) ALTERNATE
REQUIREMENT.— 
The requirement under this clause, with 
respect to a facility and a cost reporting 
period, is that the total number of inpa-
tient bed days described in subparagraph 
(B)(iii) during such period will not exceed 
7,300. For purposes of this subparagraph, 
an individual who is an inpatient in a bed 
in the facility for a single day shall be 
counted as one inpatient bed day. 
‘‘(iii) WITHDRAWAL OF ELECTION.— 
The option described in clause (i) shall not 
apply to a facility for a cost reporting pe-
riod if the facility (for any two consecutive 
cost-reporting periods during the previous 
5 cost-reporting periods) was treated under 
such option and had a total number of in-
patient bed days for each of such two cost- 
reporting periods that exceeded the num-
ber specified in such clause.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to cost-reporting peri-
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ods beginning on or after the date of the enactment 
of this Act. 
SEC. 423. ESTABLISHMENT OF RURAL COMMUNITY HOS-
PITAL (RCH) PROGRAM. 
(a) IN GENERAL.—Section 1861 of the Social Secu-
rity Act (42 U.S.C. 1395x), as amended by section 
203(b)(1)(A), is amended by adding at the end of the fol-
lowing new subsection: 
‘‘Rural Community Hospital; Rural Community Hospital 
Services 
‘‘(jjj)(1) The term ‘rural community hospital’ means 
a hospital (as defined in subsection (e)) that— 
‘‘(A) is located in a rural area (as defined in 
section 1886(d)(2)(D)) or treated as being so lo-
cated pursuant to section 1886(d)(8)(E); 
‘‘(B) subject to paragraph (2), has less than 51 
acute care inpatient beds, as reported in its most re-
cent cost report; 
‘‘(C) makes available 24-hour emergency care 
services; 
‘‘(D) subject to paragraph (3), has a provider 
agreement in effect with the Secretary and is open 
to the public as of January 1, 2010; and 
‘‘(E) applies to the Secretary for such designa-
tion. 
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‘‘(2) For purposes of paragraph (1)(B), beds in a 
psychiatric or rehabilitation unit of the hospital which is 
a distinct part of the hospital shall not be counted. 
‘‘(3) Paragraph (1)(D) shall not be construed to pro-
hibit any of the following from qualifying as a rural com-
munity hospital: 
‘‘(A) A replacement facility (as defined by the 
Secretary in regulations in effect on January 1, 
2012) with the same service area (as defined by the 
Secretary in regulations in effect on such date). 
‘‘(B) A facility obtaining a new provider num-
ber pursuant to a change of ownership. 
‘‘(C) A facility which has a binding written 
agreement with an outside, unrelated party for the 
construction, reconstruction, lease, rental, or financ-
ing of a building as of January 1, 2012. 
‘‘(4) Nothing in this subsection shall be construed as 
prohibiting a critical access hospital from qualifying as a 
rural community hospital if the critical access hospital 
meets the conditions otherwise applicable to hospitals 
under subsection (e) and section 1866. 
‘‘(5) Nothing in this subsection shall be construed as 
prohibiting a rural community hospital participating in 
the demonstration program under section 410A of the 
Medicare Prescription Drug, Improvement, and Mod-
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ernization Act of 2003 (Public Law 108–173; 117 Stat. 
2313) from qualifying as a rural community hospital if 
the rural community hospital meets the conditions other-
wise applicable to hospitals under subsection (e) and sec-
tion 1866.’’. 
(b) PAYMENT.— 
(1) INPATIENT
HOSPITAL
SERVICES.—Section 
1814 of the Social Security Act (42 U.S.C. 1395f) 
is amended by adding at the end the following new 
subsection: 
‘‘Payment for Inpatient Services Furnished in Rural 
Community Hospitals 
‘‘(m) The amount of payment under this part for in-
patient hospital services furnished in a rural community 
hospital, other than such services furnished in a psy-
chiatric or rehabilitation unit of the hospital which is a 
distinct part, is, at the election of the hospital in the appli-
cation referred to in section 1861(jjj)(1)(E)— 
‘‘(1) 101 percent of the reasonable costs of pro-
viding such services, without regard to the amount 
of the customary or other charge, or 
‘‘(2) the amount of payment provided for under 
the prospective payment system for inpatient hos-
pital services under section 1886(d).’’. 
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(2) OUTPATIENT SERVICES.—Section 1834 of 
such Act (42 U.S.C. 1395m) is amended by adding 
at the end the following new subsection: 
‘‘(p) PAYMENT FOR OUTPATIENT SERVICES FUR-
NISHED
IN
RURAL
COMMUNITY
HOSPITALS.—The 
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(jjj)(1)(E)— 
‘‘(1) 101 percent of the reasonable costs of pro-
viding such services, without regard to the amount 
of the customary 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) EXEMPTION FROM 30-PERCENT REDUCTION 
IN
REIMBURSEMENT
FOR
BAD
DEBT.—Section 
1861(v)(1)(T) 
of 
such 
Act 
(42 
U.S.C. 
1395x(v)(1)(T)) is amended by inserting ‘‘(other 
than for a rural community hospital)’’ after ‘‘In de-
termining such reasonable costs for hospitals’’. 
(c) BENEFICIARY COST-SHARING FOR OUTPATIENT 
SERVICES.—Section 1834(p) of such Act (as added by 
subsection (b)(2)) is amended— 
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(1) by redesignating paragraphs (1) and (2) as 
subparagraphs (A) and (B), respectively; 
(2) by inserting ‘‘(1)’’ after ‘‘(p)’’; and 
(3) by adding at the end the following: 
‘‘(2) The amounts of beneficiary costsharing 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 costsharing determined 
under paragraph (8) of such section. 
‘‘(B) For items and services that would have 
been paid under section 1833(h) if furnished by a 
provider or supplier, no costsharing shall apply. 
‘‘(C) For all other items and services, the 
amount of costsharing that would apply to the item 
or service under the methodology that would be used 
to determine payment for such item or service if pro-
vided by a physician, provider, or supplier, as the 
case may be.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) PART
A
PAYMENT.—Section 1814(b) of 
such Act (42 U.S.C. 1395f(b)) is amended in the 
matter preceding paragraph (1) by inserting ‘‘other 
than inpatient hospital services furnished by a rural 
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community hospital,’’ after ‘‘critical access hospital 
services,’’. 
(2) PART
B
PAYMENT.—Section 1833(a) of 
such Act (42 U.S.C. 1395l(a)), as amended by sec-
tion 203(b)(2), is amended— 
(A) in paragraph (2), in the matter before 
subparagraph (A), by striking ‘‘and (I)’’ and in-
serting ‘‘(I), and (K)’’; 
(B) by striking ‘‘and’’ at the end of para-
graph (9); 
(C) by striking the period at the end of 
paragraph (10) and inserting ‘‘; and’’; and 
(D) by adding at the end the following: 
‘‘(11) in the case of outpatient services fur-
nished by a rural community hospital, the amounts 
described in section 1834(p).’’. 
(3) TECHNICAL AMENDMENTS.— 
(A) CONSULTATION
WITH
STATE
AGEN-
CIES.—Section 1863 of such Act (42 U.S.C. 
1395z) is amended by striking ‘‘and (dd)(2)’’ 
and inserting ‘‘(dd)(2), (mm)(1), and (jjj)(1)’’. 
(B) 
PROVIDER
AGREEMENTS.—Section 
1866(a)(2)(A) 
of 
such 
Act 
(42 
U.S.C. 
1395cc(a)(2)(A)) is amended by inserting ‘‘sec-
tion 1834(p)(2),’’ after ‘‘section 1833(b),’’. 
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(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after October 1, 2011. 
SEC. 
424. 
MEDICARE 
REMOTE 
MONITORING 
PILOT 
PROJECTS. 
(a) PILOT PROJECTS.— 
(1) IN
GENERAL.—Not later than 9 months 
after the date of enactment of this Act, the Sec-
retary of Health and Human Services (in this sec-
tion referred to as the ‘‘Secretary’’) shall conduct 
pilot projects under title XVIII of the Social Secu-
rity Act for the purpose of providing incentives to 
home health agencies to utilize home monitoring and 
communications technologies that— 
(A) enhance health outcomes for Medicare 
beneficiaries; and 
(B) reduce expenditures under such title. 
(2) SITE REQUIREMENTS.— 
(A) URBAN AND RURAL.—The Secretary 
shall conduct the pilot projects under this sec-
tion in both urban and rural areas. 
(B) SITE IN A SMALL STATE.—The Sec-
retary shall conduct at least 3 of the pilot 
projects in a State with a population of less 
than 1,000,000. 
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(3) DEFINITION OF HOME HEALTH AGENCY.— 
In this section, the term ‘‘home health agency’’ has 
the meaning given that term in section 1861(o) of 
the Social Security Act (42 U.S.C. 1395x(o)). 
(b) MEDICARE BENEFICIARIES WITHIN THE SCOPE 
OF PROJECTS.—The Secretary shall specify the criteria 
for identifying those Medicare beneficiaries who shall be 
considered within the scope of the pilot projects under this 
section for purposes of the application of subsection (c) 
and for the assessment of the effectiveness of the home 
health agency in achieving the objectives of this section. 
Such criteria may provide for the inclusion in the projects 
of Medicare beneficiaries who begin receiving home health 
services under title XVIII of the Social Security Act after 
the date of the implementation of the projects. 
(c) INCENTIVES.— 
(1) PERFORMANCE
TARGETS.—The Secretary 
shall establish for each home health agency partici-
pating in a pilot project under this section a per-
formance target using one of the following meth-
odologies, as determined appropriate by the Sec-
retary: 
(A) ADJUSTED HISTORICAL PERFORMANCE 
TARGET.—The Secretary shall establish for the 
agency— 
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(i) a base expenditure amount equal 
to the average total payments made to the 
agency under parts A and B of title XVIII 
of the Social Security Act for Medicare 
beneficiaries determined to be within the 
scope of the pilot project in a base period 
determined by the Secretary; and 
(ii) an annual per capita expenditure 
target for such beneficiaries, reflecting the 
base expenditure amount adjusted for risk 
and adjusted growth rates. 
(B) COMPARATIVE
PERFORMANCE
TAR-
GET.—The Secretary shall establish for the 
agency a comparative performance target equal 
to the average total payments under such parts 
A and B during the pilot project for comparable 
individuals in the same geographic area that 
are not determined to be within the scope of the 
pilot project. 
(2) INCENTIVE.—Subject to paragraph (3), the 
Secretary shall pay to each participating home care 
agency an incentive payment for each year under the 
pilot project equal to a portion of the Medicare sav-
ings realized for such year relative to the perform-
ance target under paragraph (1). 
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retary may initiate comparable projects in additional 
areas. 
(g) INCENTIVE PAYMENTS HAVE NO EFFECT ON 
OTHER MEDICARE PAYMENTS TO AGENCIES.—An incen-
tive payment under this section— 
(1) shall be in addition to the payments that a 
home health agency would otherwise receive under 
title XVIII of the Social Security Act for the provi-
sion of home health services; and 
(2) shall have no effect on the amount of such 
payments. 
SEC. 425. RURAL HEALTH QUALITY ADVISORY COMMISSION 
AND DEMONSTRATION PROJECTS. 
(a) RURAL HEALTH QUALITY ADVISORY COMMIS-
SION.— 
(1) 
ESTABLISHMENT.—Not 
later 
than 
months after the date of the enactment of this sec-
tion, the Secretary of Health and Human Services 
(in this section referred to as the ‘‘Secretary’’) shall 
establish a commission to be known as the Rural 
Health Quality Advisory Commission (in this section 
referred to as the ‘‘Commission’’). 
(2) DUTIES OF COMMISSION.— 
(A) NATIONAL
PLAN.—The Commission 
shall develop, coordinate, and facilitate imple-
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mentation of a national plan for rural health 
quality improvement. The national plan shall— 
(i) identify objectives for rural health 
quality improvement; 
(ii) identify strategies to eliminate 
known gaps in rural health system capacity 
and improve rural health quality; and 
(iii) provide for Federal programs to 
identify opportunities for strengthening 
and aligning policies and programs to im-
prove rural health quality. 
(B) 
DEMONSTRATION
PROJECTS.—The 
Commission shall design demonstration projects 
to test alternative models for rural health qual-
ity improvement, including with respect to both 
personal and population health. 
(C) MONITORING.—The Commission shall 
monitor progress toward the objectives identi-
fied pursuant to paragraph (1)(A). 
(3) MEMBERSHIP.— 
(A) NUMBER.—The Commission shall be 
composed of 11 members appointed by the Sec-
retary. 
(B) SELECTION.—The Secretary shall se-
lect the members of the Commission from 
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among individuals with significant rural health 
care and health care quality expertise, including 
expertise in clinical health care, health care 
quality research, population or public health, or 
purchaser organizations. 
(4) CONTRACTING AUTHORITY.—Subject to the 
availability of funds, the Commission may enter into 
contracts and make other arrangements, as may be 
necessary to carry out the duties described in para-
graph (2). 
(5) STAFF.—Upon the request of the Commis-
sion, the Secretary may detail, on a reimbursable 
basis, any of the personnel of the Office of Rural 
Health Policy of the Health Resources and Services 
Administration, the Agency for Health care Quality 
and Research, or the Centers for Medicare & Med-
icaid Services to the Commission to assist in car-
rying out this subsection. 
(6) REPORTS TO CONGRESS.—Not later than 1 
year after the establishment of the Commission, and 
annually thereafter, the Commission shall submit a 
report to the Congress on rural health quality. Each 
such report shall include the following: 
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(A) An inventory of relevant programs and 
recommendations for improved coordination and 
integration of policy and programs. 
(B) An assessment of achievement of the 
objectives identified in the national plan devel-
oped under paragraph (2) and recommenda-
tions for realizing such objectives. 
(C) Recommendations on Federal legisla-
tion, regulations, or administrative policies to 
enhance rural health quality and outcomes. 
(b) RURAL
HEALTH
QUALITY
DEMONSTRATION 
PROJECTS.— 
(1) IN
GENERAL.—Not later than 270 days 
after the date of the enactment of this section, the 
Secretary, in consultation with the Rural Health 
Quality Advisory Commission, the Office of Rural 
Health Policy of the Health Resources and Services 
Administration, the Agency for Healthcare Research 
and Quality, and the Centers for Medicare & Med-
icaid Services, shall make grants to eligible entities 
for 5 demonstration projects to implement and 
evaluate methods for improving the quality of health 
care in rural communities. Each such demonstration 
project shall include— 
(A) alternative community models that— 
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(i) will achieve greater integration of 
personal and population health services; 
and 
(ii) 
address 
safety, 
effectiveness, 
patient- or community-centeredness, timeli-
ness, efficiency, and equity (the 6 aims 
identified by the Institute of Medicine of 
the National Academies in its report enti-
tled ‘‘Crossing the Quality Chasm: A New 
Health System for the 21st Century’’ re-
leased on March 1, 2001); 
(B) innovative approaches to the financing 
and delivery of health services to achieve rural 
health quality goals; and 
(C) development of quality improvement 
support structures to assist rural health sys-
tems and professionals (such as workforce sup-
port structures, quality monitoring and report-
ing, clinical care protocols, and information 
technology applications). 
(2) ELIGIBLE
ENTITIES.—In this subsection, 
the term ‘‘eligible entity’’ means a consortium 
that— 
(A) shall include— 
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(i) at least one health care provider or 
health care delivery system located in a 
rural area; and 
(ii) at least one organization rep-
resenting multiple community stakeholders; 
and 
(B) may include other partners such as 
rural research centers. 
(3) CONSULTATION.—In developing the pro-
gram for awarding grants under this subsection, the 
Secretary shall consult with the Administrator of the 
Agency for Healthcare Research and Quality, rural 
health care providers, rural health care researchers, 
and private and nonprofit groups (including national 
associations) which are undertaking similar efforts. 
(4) EXPEDITED WAIVERS.—The Secretary shall 
expedite the processing of any waiver that— 
(A) is authorized under title XVIII or XIX 
of the Social Security Act (42 U.S.C. 1395 et 
seq.); and 
(B) is necessary to carry out a demonstra-
tion project under this subsection. 
(5) DEMONSTRATION
PROJECT
SITES.—The 
Secretary shall ensure that the 5 demonstration 
projects funded under this subsection are conducted 
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at a variety of sites representing the diversity of 
rural communities in the Nation. 
(6) DURATION.—Each demonstration project 
under this subsection shall be for a period of 4 
years. 
(7) INDEPENDENT
EVALUATION.—The Sec-
retary shall enter into an arrangement with an enti-
ty that has experience working directly with rural 
health systems for the conduct of an independent 
evaluation of the program carried out under this 
subsection. 
(8) REPORT.—Not later than 1 year after the 
conclusion of all of the demonstration projects fund-
ed under this subsection, the Secretary shall submit 
a report to the Congress on the results of such 
projects. The report shall include— 
(A) an evaluation of patient access to care, 
patient outcomes, and an analysis of the cost 
effectiveness of each such project; and 
(B) recommendations on Federal legisla-
tion, regulations, or administrative policies to 
enhance rural health quality and outcomes. 
(c) APPROPRIATION.— 
(1) IN GENERAL.—Out of funds in the Treas-
ury not otherwise appropriated, there are appro-
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priated to the Secretary to carry out this section 
$30,000,000 for the period of fiscal years 2012 
through 2016. 
(2) AVAILABILITY.— 
(A) IN
GENERAL.—Funds appropriated 
under paragraph (1) shall remain available for 
expenditure through fiscal year 2016. 
(B) REPORT.—For purposes of carrying 
out subsection (b)(8), funds appropriated under 
paragraph (1) shall remain available for ex-
penditure through fiscal year 2017. 
(3) RESERVATION.—Of the amount appro-
priated under paragraph (1), the Secretary shall re-
serve— 
(A) $5,000,000 to carry out subsection (a); 
and 
(B) $25,000,000 to carry out subsection 
(b), of which— 
(i) 2 percent shall be for the provision 
of technical assistance to grant recipients; 
and 
(ii) 5 percent shall be for independent 
evaluation under subsection (b)(7). 
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SEC. 426. RURAL HEALTH CARE SERVICES. 
Section 330A of the Public Health Service Act (42 
U.S.C. 254c) is amended to read as follows: 
‘‘SEC. 330A. RURAL HEALTH CARE SERVICES OUTREACH, 
RURAL HEALTH NETWORK DEVELOPMENT, 
DELTA RURAL DISPARITIES AND HEALTH 
SYSTEMS DEVELOPMENT, AND SMALL RURAL 
HEALTH CARE PROVIDER QUALITY IMPROVE-
MENT GRANT PROGRAMS. 
‘‘(a) PURPOSE.—The purpose of this section is to 
provide for grants— 
‘‘(1) under subsection (b), to promote rural 
health care services outreach; 
‘‘(2) under subsection (c), to provide for the 
planning and implementation of integrated health 
care networks in rural areas; 
‘‘(3) under subsection (d), to assist rural com-
munities in the Delta Region to reduce health dis-
parities and to promote and enhance health system 
development; and 
‘‘(4) under subsection (e), to provide for the 
planning and implementation of small rural health 
care provider quality improvement activities. 
‘‘(b) RURAL HEALTH CARE SERVICES OUTREACH 
GRANTS.— 
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‘‘(1) GRANTS.—The Director of the Office of 
Rural Health Policy of the Health Resources and 
Services Administration may award grants to eligible 
entities to promote rural health care services out-
reach by expanding the delivery of health care serv-
ices to include new and enhanced services in rural 
areas. The Director may award the grants for peri-
ods of not more than 3 years. 
‘‘(2) ELIGIBILITY.—To be eligible to receive a 
grant under this subsection for a project, an enti-
ty— 
‘‘(A) shall be a rural public or rural non-
profit private entity, a facility that qualifies as 
a rural health clinic under title XVIII of the 
Social Security Act, a public or nonprofit entity 
existing exclusively to provide services to mi-
grant and seasonal farm workers in rural areas, 
or a tribal government whose grant-funded ac-
tivities will be conducted within federally recog-
nized tribal areas; 
‘‘(B) shall represent a consortium com-
posed of members— 
‘‘(i) that include 3 or more independ-
ently owned health care entities; and 
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‘‘(ii) that may be nonprofit or for- 
profit entities; and 
‘‘(C) shall not previously have received a 
grant under this subsection for the same or a 
similar project, unless the entity is proposing to 
expand the scope of the project or the area that 
will be served through the project. 
‘‘(3) APPLICATIONS.—To be eligible to receive a 
grant under this subsection, an eligible entity shall 
prepare and submit to the Director an application at 
such time, in such manner, and containing such in-
formation as the Director may require, including— 
‘‘(A) a description of the project that the 
eligible entity will carry out using the funds 
provided under the grant; 
‘‘(B) a description of the manner in which 
the project funded under the grant will meet 
the health care needs of rural populations in 
the local community or region to be served; 
‘‘(C) a plan for quantifying how health 
care needs will be met through identification of 
the target population and benchmarks of service 
delivery or health status, such as— 
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‘‘(i) quantifiable measurements of 
health status improvement for projects fo-
cusing on health promotion; or 
‘‘(ii) benchmarks of increased access 
to primary care, including tracking factors 
such as the number and type of primary 
care visits, identification of a medical 
home, or other general measures of such 
access; 
‘‘(D) a description of how the local com-
munity or region to be served will be involved 
in the development and ongoing operations of 
the project; 
‘‘(E) a plan for sustaining the project after 
Federal support for the project has ended; 
‘‘(F) a description of how the project will 
be evaluated; 
‘‘(G) the administrative capacity to submit 
annual performance data electronically as speci-
fied by the Director; and 
‘‘(H) other such information as the Direc-
tor determines to be appropriate. 
‘‘(c) RURAL
HEALTH
NETWORK
DEVELOPMENT 
GRANTS.— 
‘‘(1) GRANTS.— 
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