I 
108TH CONGRESS 
1ST SESSION 
H.R. 1675
To amend title XVIII of the Social Security Act to protect and preserve 
access of Medicare beneficiaries to health care provided by hospitals 
in rural areas, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 8, 2003
Mr. MORAN of Kansas (for himself, Mr. POMEROY, Mr. WALDEN of Oregon, 
Mr. STENHOLM, Mr. PETERSON of Pennsylvania, Mr. BERRY, Mr. KIND, 
Mr. MCHUGH, Mr. SANDLIN, Mr. EVANS, Mr. DAVIS of Alabama, and 
Mr. CASE) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Energy 
and Commerce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to protect 
and preserve access of Medicare beneficiaries to health 
care provided by hospitals in 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; AMENDMENTS TO SOCIAL SECU-
RITY ACT; REFERENCES TO BIPA; TABLE OF 
CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Health Care Access and Rural Equity Act of 2003’’. 
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this 
Act an amendment is expressed in terms of an amendment 
to or repeal of a section or other provision, the reference 
shall be considered to be made to that section or other 
provision of the Social Security Act. 
(c) REFERENCES TO BIPA.—In this Act, the term 
‘‘BIPA’’ means the Medicare, Medicaid, and SCHIP Ben-
efits Improvement and Protection Act of 2000, as enacted 
into law by section 1(a)(6) of Public Law 106–554 (114 
Stat. 2763). 
(d) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; table of contents. 
TITLE I—MEDICARE RURAL HEALTH CARE IMPROVEMENTS 
Sec. 101. Equalizing urban and rural standardized payment amounts under the 
Medicare inpatient hospital prospective payment system. 
Sec. 102. Fairness in the medicare disproportionate share hospital (DSH) ad-
justment for rural hospitals. 
Sec. 103. Adjustment to the medicare inpatient hospital PPS wage index to re-
vise the labor-related share of such index. 
Sec. 104. One-year extension of hold harmless provisions for small rural hos-
pitals under medicare prospective payment system for hospital 
outpatient department services. 
Sec. 105. One-year hold harmless treatment of certain sole community hospitals 
to limit decline in payment under the OPD PPS. 
Sec. 106. Critical access hospital (CAH) improvements.
Sec. 107. Permanent treatment of certain physician pathology services under 
medicare. 
TITLE II—OTHER RURAL HOSPITAL REFORMS 
Sec. 201. Capital infrastructure revolving loan program. 
Sec. 202. Five-year extension of the authorization for appropriations for certain 
medicare rural grants.
TITLE I—MEDICARE RURAL 
HEALTH CARE IMPROVEMENTS 
SEC. 101. EQUALIZING URBAN AND RURAL STANDARDIZED 
PAYMENT AMOUNTS UNDER THE MEDICARE 
INPATIENT 
HOSPITAL 
PROSPECTIVE 
PAY-
MENT SYSTEM. 
(a) IN GENERAL.—Section 1886(d)(3)(A)(iv) (42 
U.S.C. 1395ww(d)(3)(A)(iv)) is amended—
(1) by striking ‘‘(iv) For discharges’’ and in-
serting ‘‘(iv)(I) Subject to subclause (II), for dis-
charges’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(II) For discharges occurring in a fiscal year 
beginning with fiscal year 2004, the Secretary shall 
compute a standardized amount for hospitals located 
in any area within the United States and within 
each region equal to the standardized amount com-
puted for the previous fiscal year under this sub-
paragraph for hospitals located in a large urban area 
(or, beginning with fiscal year 2005, for hospitals lo-
cated in any area) increased by the applicable per-
centage increase under subsection (b)(3)(B)(i) for 
the fiscal year involved.’’. 
(b) CONFORMING AMENDMENTS.—
(1) COMPUTING DRG-SPECIFIC RATES.—Section 
1886(d)(3)(D) (42 U.S.C. 1395ww(d)(3)(D)) is 
amended—
(A) in the heading, by striking ‘‘IN DIF-
FERENT AREAS’’; 
(B) in the matter preceding clause (i), by 
striking ‘‘, each of’’; 
(C) in clause (i)—
(i) in the matter preceding subclause 
(I), by inserting ‘‘for fiscal years before fis-
cal year 2004,’’ before ‘‘for hospitals’’; and 
(ii) in subclause (II), by striking 
‘‘and’’ after the semicolon at the end; 
(D) in clause (ii)—
(i) in the matter preceding subclause 
(I), by inserting ‘‘for fiscal years before fis-
cal year 2004,’’ before ‘‘for hospitals’’; and 
(ii) in subclause (II), by striking the 
period at the end and inserting ‘‘; and’’; 
and 
(E) by adding at the end the following new 
clause:
‘‘(iii) for a fiscal year beginning after fiscal 
year 2003, for hospitals located in all areas, to 
the product of—
‘‘(I) 
the 
applicable 
standardized 
amount (computed under subparagraph 
(A)), reduced under subparagraph (B), 
and adjusted or reduced under subpara-
graph (C) for the fiscal year; and 
‘‘(II) the weighting factor (determined 
under paragraph (4)(B)) for that diag-
nosis-related group.’’. 
(2) TECHNICAL CONFORMING SUNSET.—Section 
1886(d)(3) (42 U.S.C. 1395ww(d)(3)) is amended—
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘, for fiscal years before fiscal 
year 1997,’’ before ‘‘a regional adjusted DRG 
prospective payment rate’’; and 
(B) in subparagraph (D), in the matter 
preceding clause (i), by inserting ‘‘, for fiscal 
years before fiscal year 1997,’’ before ‘‘a re-
gional DRG prospective payment rate for each 
region,’’.
SEC. 
102. 
FAIRNESS 
IN 
THE 
MEDICARE 
DISPROPOR-
TIONATE SHARE HOSPITAL (DSH) ADJUST-
MENT FOR RURAL HOSPITALS. 
(a) EQUALIZING DSH PAYMENT AMOUNTS.—
(1) IN
GENERAL.—Section 1886(d)(5)(F)(vii) 
(42 U.S.C. 1395ww(d)(5)(F)(vii)) is amended by in-
serting ‘‘, and, after October 1, 2003, for any other 
hospital described in clause (iv),’’ after ‘‘clause 
(iv)(I)’’ in the matter preceding subclause (I). 
(2) 
CONFORMING
AMENDMENTS.—Section 
1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is 
amended—
(A) in clause (iv)—
(i) in subclause (II)—
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (xiii)’’; 
(ii) in subclause (III)—
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (xii)’’; 
(iii) in subclause (IV)— 
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (x) or (xi)’’; 
(iv) in subclause (V)—
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (xi)’’; and 
(v) in subclause (VI)— 
(I) by inserting ‘‘and before Oc-
tober 1, 2003,’’ after ‘‘April 1, 
2001,’’; and 
(II) by inserting ‘‘or, for dis-
charges occurring on or after October 
1, 2003, is equal to the percent deter-
mined in accordance with the applica-
ble formula described in clause (vii)’’ 
after ‘‘clause (x)’’; 
(B) in clause (viii), by striking ‘‘The for-
mula’’ and inserting ‘‘For discharges occurring 
before October 1, 2003, the formula’’; and 
(C) in each of clauses (x), (xi), (xii), and 
(xiii), by striking ‘‘For purposes’’ and inserting 
‘‘With respect to discharges occurring before 
October 1, 2003, for purposes’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to discharges occur-
ring on or after October 1, 2003.
(b) 
WAIVING
BUDGET
NEUTRALITY.—Section 
1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)), as amended 
by subsection (a), is amended by adding at the end of 
clause (i) the following new sentence: ‘‘The Secretary shall 
apply the previous sentence for any period as if the 
amendments made by section 103(a) of the Health Care 
Access and Rural Equity Act of 2003 had not been en-
acted.’’. 
SEC. 104. ONE-YEAR EXTENSION OF HOLD HARMLESS PRO-
VISIONS 
FOR 
SMALL 
RURAL 
HOSPITALS 
UNDER MEDICARE PROSPECTIVE PAYMENT 
SYSTEM FOR HOSPITAL OUTPATIENT DE-
PARTMENT SERVICES. 
Section 
1833(t)(7)(D)(i) 
(42 
U.S.C. 
1395l(t)(7)(D)(i)) is amended by striking ‘‘2004’’ and in-
serting ‘‘2005’’. 
SEC. 105. ONE-YEAR HOLD HARMLESS TREATMENT OF CER-
TAIN SOLE COMMUNITY HOSPITALS TO LIMIT 
DECLINE IN PAYMENT UNDER THE OPD PPS. 
(a) 
HOLD
HARMLESS
PROVISION.—Section 
1833(t)(7)(D)(i) (42 U.S.C. 1395l(t)(7)(D)(i)), as amend-
ed by section 104, is further amended—
(1) in the heading, by striking ‘‘SMALL’’ and in-
serting ‘‘CERTAIN’’; and
(2) by inserting ‘‘or a sole community hospital 
(as defined in section 1886(d)(5)(D)(iii)) located in 
a rural area’’ after ‘‘100 beds’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a)(2) shall apply with respect to payment for 
OPD services furnished on and after January 1, 2004. 
SEC. 106. CRITICAL ACCESS HOSPITAL (CAH) IMPROVE-
MENTS. 
(a) ELIMINATION
OF
THE ISOLATION TEST
FOR 
COST-BASED CAH AMBULANCE SERVICES.—
(1) IN
GENERAL.—Section 1834(l)(8) (42 
U.S.C. 1395m(l)), as added by section 205(a) of 
BIPA (114 Stat. 2763A–482), is amended by strik-
ing the comma at the end of subparagraph (B) and 
all that follows and inserting a period. 
(2) TECHNICAL CORRECTION.—Section 1834(l) 
(42 U.S.C. 1395m(l)) is amended by redesignating 
paragraph (8), as added by section 221(a) of BIPA 
(114 Stat. 2763A–486), as paragraph (9). 
(b) COVERAGE OF COSTS FOR CERTAIN EMERGENCY 
ROOM ON-CALL PROVIDERS.—
(1) IN
GENERAL.—Section 1834(g)(5) (42 
U.S.C. 1395m(g)(5)) is amended—
(A) in the heading—
(i) by inserting ‘‘CERTAIN’’ before 
‘‘EMERGENCY’’; and 
(ii) by striking ‘‘PHYSICIANS’’ and in-
serting ‘‘PROVIDERS’’; 
(B) by striking ‘‘emergency room physi-
cians who are on-call (as defined by the Sec-
retary)’’ and inserting ‘‘physicians, physician 
assistants, nurse practitioners, and clinical 
nurse specialists who are on-call (as defined by 
the Secretary) to provide emergency services’’; 
and 
(C) by striking ‘‘physicians’ services’’ and 
inserting ‘‘services covered under this title’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply with respect to costs 
incurred for services provided on or after January 1, 
2004. 
(c) AUTHORIZATION
OF PERIODIC INTERIM PAY-
MENT (PIP).—
(1) IN
GENERAL.—Section 1815(e)(2) (42 
U.S.C. 1395g(e)(2)) is amended—
(A) in subparagraph (C), by striking 
‘‘and’’ after the semicolon at the end; 
(B) in subparagraph (D), by adding ‘‘and’’ 
after the semicolon at the end; and
(C) by inserting after subparagraph (D) 
the following new subparagraph: 
‘‘(E) inpatient critical access hospital services,’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply with respect to pay-
ments for inpatient critical access hospital services 
furnished on or after January 1, 2004. 
(d) EXCLUSION OF NEW CAHS FROM PPS HOS-
PITAL
WAGE
INDEX
CALCULATION.—Section 
1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)), as amended 
by section 103(a), is further amended by inserting after 
the first sentence of clause (i) the following new sentence: 
‘‘In calculating the hospital wage levels under the pre-
ceding sentence applicable with respect to cost reporting 
periods beginning on or after January 1, 2004, the Sec-
retary shall exclude the wage levels of any hospital that 
became a critical access hospital prior to the cost reporting 
period for which such hospital wage levels are calculated.’’. 
SEC. 107. PERMANENT TREATMENT OF CERTAIN PHYSI-
CIAN PATHOLOGY SERVICES UNDER MEDI-
CARE. 
(a) IN
GENERAL.—Section 1848(i) (42 U.S.C. 
1395w–4(i)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) TREATMENT OF CERTAIN PHYSICIAN PA-
THOLOGY SERVICES.—
‘‘(A) IN GENERAL.—With respect to serv-
ices furnished on or after January 1, 2001, if 
an independent laboratory furnishes the tech-
nical component of a physician pathology serv-
ice to a fee-for-service medicare beneficiary who 
is an inpatient or outpatient of a covered hos-
pital, the Secretary shall treat such component 
as a service for which payment shall be made 
to the laboratory under this section and not as 
an inpatient hospital service for which payment 
is made to the hospital under section 1886(d) 
or as a hospital outpatient service for which 
payment is made to the hospital under section 
1833(t). 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) COVERED HOSPITAL.—
‘‘(I) IN
GENERAL.—The term 
‘covered hospital’ means, with respect 
to an inpatient or outpatient, a hos-
pital that had an arrangement with 
an independent laboratory that was in 
effect as of July 22, 1999, under 
which a laboratory furnished the tech-
nical component of physician pathol-
ogy services to fee-for-service medi-
care beneficiaries who were hospital 
inpatients or outpatients, respectively, 
and submitted claims for payment for 
such component to a carrier with a 
contract under section 1842 and not 
to the hospital. 
‘‘(II) CHANGE
IN
OWNERSHIP 
DOES
NOT
AFFECT
DETERMINA-
TION.—A change in ownership with 
respect to a hospital on or after the 
date referred to in subclause (I) shall 
not affect the determination of wheth-
er such hospital is a covered hospital 
for purposes of such subclause. 
‘‘(ii) 
FEE-FOR-SERVICE
MEDICARE 
BENEFICIARY.—The term ‘fee-for-service 
medicare beneficiary’ means an individual 
who is entitled to (or enrolled for) benefits 
under part A, or enrolled under this part, 
or both, but who is not enrolled in any of 
the following: 
‘‘(I) A Medicare+Choice plan 
under part C.
TITLE II—OTHER RURAL 
HOSPITAL REFORMS 
SEC. 201. CAPITAL INFRASTRUCTURE REVOLVING LOAN 
PROGRAM. 
(a) IN GENERAL.—Part A of title XVI of the Public 
Health Service Act (42 U.S.C. 300q et seq.) is amended 
by adding at the end the following new section: 
‘‘CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM 
‘‘SEC. 1603. (a) AUTHORITY TO MAKE AND GUAR-
ANTEE LOANS.—
‘‘(1) AUTHORITY TO MAKE LOANS.—The Sec-
retary may make loans from the fund established 
under section 1602(d) to any rural entity for 
projects for capital improvements, including—
‘‘(A) the acquisition of land necessary for 
the capital improvements; 
‘‘(B) the renovation or modernization of 
any building; 
‘‘(C) the acquisition or repair of fixed or 
major movable equipment; and 
‘‘(D) such other project expenses as the 
Secretary determines appropriate. 
‘‘(2) AUTHORITY TO GUARANTEE LOANS.—
‘‘(A) IN
GENERAL.—The Secretary may 
guarantee the payment of principal and interest
for loans made to rural entities for projects for 
any capital improvement described in paragraph 
(1) to any non-Federal lender. 
‘‘(B) INTEREST SUBSIDIES.—In the case 
of a guarantee of any loan made to a rural enti-
ty under subparagraph (A), the Secretary may 
pay to the holder of such loan, for and on be-
half of the project for which the loan was made, 
amounts sufficient to reduce (by not more than 
3 percent) the net effective interest rate other-
wise payable on such loan. 
‘‘(b) AMOUNT OF LOAN.—The principal amount of 
a loan directly made or guaranteed under subsection (a) 
for a project for capital improvement may not exceed 
$5,000,000. 
‘‘(c) FUNDING LIMITATIONS.—
‘‘(1) GOVERNMENT
CREDIT
SUBSIDY
EXPO-
SURE.—The total of the Government credit subsidy 
exposure under the Credit Reform Act of 1990 scor-
ing protocol with respect to the loans outstanding at 
any time with respect to which guarantees have been 
issued, or which have been directly made, under sub-
section (a) may not exceed $50,000,000 per year. 
‘‘(2) TOTAL AMOUNTS.—Subject to paragraph 
(1), the total of the principal amount of all loans di-
rectly made or guaranteed under subsection (a) may 
not exceed $250,000,000 per year. 
‘‘(d) 
CAPITAL
ASSESSMENT
AND
PLANNING 
GRANTS.—
‘‘(1) NONREPAYABLE
GRANTS.—Subject to 
paragraph (2), the Secretary may make a grant to 
a rural entity, in an amount not to exceed $50,000, 
for purposes of capital assessment and business 
planning. 
‘‘(2) LIMITATION.—The cumulative total of 
grants awarded under this subsection may not ex-
ceed $2,500,000 per year. 
‘‘(e) TERMINATION OF AUTHORITY.—The Secretary 
may not directly make or guarantee any loan under sub-
section (a) or make a grant under subsection (d) after 
September 30, 2008.’’. 
(b) RURAL ENTITY DEFINED.—Section 1624 of the 
Public Health Service Act (42 U.S.C. 300s–3) is amended 
by adding at the end the following new paragraph: 
‘‘(14)(A) The term ‘rural entity’ includes—
‘‘(i) a rural health clinic, as defined in sec-
tion 1861(aa)(2) of the Social Security Act; 
‘‘(ii) any medical facility with at least 1 
bed, but with less than 50 beds, that is located 
in—
‘‘(I) a county that is not part of a 
metropolitan statistical area; or 
‘‘(II) a rural census tract of a metro-
politan statistical area (as determined 
under the most recent modification of the 
Goldsmith Modification, originally pub-
lished in the Federal Register on February 
27, 1992 (57 Fed. Reg. 6725)); 
‘‘(iii) a hospital that is classified as a 
rural, regional, or national referral center under 
section 1886(d)(5)(C) of the Social Security 
Act; and 
‘‘(iv) a hospital that is a sole community 
hospital 
(as 
defined 
in 
section 
1886(d)(5)(D)(iii) of the Social Security Act). 
‘‘(B) For purposes of subparagraph (A), the 
fact that a clinic, facility, or hospital has been geo-
graphically reclassified under the medicare program 
under title XVIII of the Social Security Act shall not 
preclude a hospital from being considered a rural en-
tity under clause (i) or (ii) of subparagraph (A).’’. 
(c) CONFORMING AMENDMENTS.—Section 1602 of 
the Public Health Service Act (42 U.S.C. 300q–2) is 
amended—
(1) in subsection (b)(2)(D), by inserting ‘‘or 
1603(a)(2)(B)’’ after ‘‘1601(a)(2)(B)’’; and 
(2) in subsection (d)—
(A) in paragraph (1)(C), by striking ‘‘sec-
tion 1601(a)(2)(B)’’ and inserting ‘‘sections 
1601(a)(2)(B) and 1603(a)(2)(B)’’; and 
(B) in paragraph (2)(A), by inserting ‘‘or 
1603(a)(2)(B)’’ after ‘‘1601(a)(2)(B)’’. 
SEC. 202. FIVE-YEAR EXTENSION OF THE AUTHORIZATION 
FOR APPROPRIATIONS FOR CERTAIN MEDI-
CARE RURAL GRANTS. 
Section 1820(j) (42 U.S.C. 1395i–4(j)) is amended 
by striking ‘‘subsection (g)’’ and all that follows and in-
serting ‘‘subsection (g)—
‘‘(1) $25,000,000 in each of the fiscal years 
1998 through 2003; and 
‘‘(2) $40,000,000 in each of the fiscal years 
2004 through 2008.’’.
Æ