I 
109TH CONGRESS 
1ST SESSION H. R. 2350 
To amend title XVIII of the Social Security Act to provide for improvements 
in access to services in rural hospitals and critical access hospitals. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 12, 2005 
Mr. MORAN of Kansas (for himself, Mr. HINOJOSA, Mr. MCHUGH, Mr. 
BERRY, Mr. BISHOP of Georgia, Mr. SHIMKUS, Mr. SANDERS, Mr. ROSS, 
Mr. KIND, Mr. OTTER, Mr. PICKERING, Mr. PAUL, Mr. OSBORNE, Mr. 
MCINTYRE, Mr. OBERSTAR, Mr. DICKS, and Mr. RENZI) introduced the 
following bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Energy and Commerce, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation 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 improvements in access to services in rural hospitals 
and critical access hospitals. 
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. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Rural Community Hospital Assistance Act of 2005’’.
(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 a reference to that section or other 
provision of the Social Security Act. 
SEC. 2. ESTABLISHMENT OF RURAL COMMUNITY HOSPITAL 
(RCH) PROGRAM. 
(a) IN GENERAL.—Section 1861 (42 U.S.C. 1395x) 
is amended by adding at the end of the following new sub-
section: 
‘‘Rural Community Hospital; Rural Community Hospital 
Services 
‘‘(bbb)(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, 2005; and 
‘‘(E) applies to the Secretary for such designa-
tion. 
‘‘(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) Subparagraph (1)(D) shall not be construed to 
prohibit any of the following from qualifying as a rural 
community hospital: 
‘‘(A) A replacement facility (as defined by the 
Secretary in regulations in effect on January 1, 
2005) 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, 2005. 
‘‘(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-
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 (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(bbb)(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).’’. 
(2) OUTPATIENT SERVICES.—Section 1834 (42 
U.S.C. 1395m) is amended by adding at the end the 
following new subsection: 
‘‘(n) 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(bbb)(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) HOME HEALTH SERVICES.— 
(A) EXCLUSION
FROM
HOME
HEALTH 
PPS.—
(i) IN GENERAL.—Section 1895 (42 
U.S.C. 1395fff) is amended by adding at 
the end the following: 
‘‘(f) EXCLUSION.— 
‘‘(1) IN GENERAL.—In determining payments 
under this title for home health services furnished on 
or after October 1, 2005, by a qualified RCH-based 
home health agency (as defined in paragraph (2))— 
‘‘(A) the agency may make a one-time elec-
tion to waive application of the prospective pay-
ment system established under this section to 
such services furnished by the agency; and 
‘‘(B) in the case of such an election, pay-
ment shall be made on the basis of 101 percent 
of the reasonable costs incurred in furnishing 
such services as determined under section 
1861(v), but without regard to the amount of 
the customary or other charges with respect to 
such services or the limitations established 
under paragraph (1)(L) of such section. 
‘‘(2) QUALIFIED
RCH-BASED
HOME
HEALTH 
AGENCY DEFINED.—For purposes of paragraph (1), 
a ‘qualified RCH-based home health agency’ is a 
home health agency that is a provider-based entity 
(as defined in section 404 of the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection 
Act of 2000 (Appendix F, 114 Stat. 2763A–506), as 
enacted into law by section 1(a)(6) of Public Law 
106–554) of a rural community hospital that is lo-
cated— 
‘‘(A) in a county in which no main or 
branch office of another home health agency is 
located; or 
‘‘(B) at least 35 miles from any main or 
branch office of another home health agency.’’. 
(ii) CONFORMING CHANGES.— 
(I) PAYMENT UNDER PART A.— 
Section 1814(b) (42 U.S.C. 1395f(b)) 
is amended by inserting ‘‘or with re-
spect to services to which section 
1895(f) applies’’ after ‘‘equipment’’ in 
the matter preceding paragraph (1). 
(II) PAYMENTS
UNDER
PART 
B.—Section 1833(a)(2)(A) (42 U.S.C. 
1395l(a)(2)(A)) is amended by strik-
ing ‘‘the prospective payment system 
under’’. 
(III) PER VISIT LIMITS.—Section 
1861(v)(1)(L)(i) 
(42 
U.S.C. 
1395x(v)(1)(L)(i)) is amended by in-
serting ‘‘(other than by a qualified 
RCH-based home health agency (as 
defined in section 1895(f)(2))’’ after 
‘‘with respect to services furnished by 
home health agencies’’. 
(iii) CONSOLIDATED BILLING.— 
(I) RECIPIENT
OF
PAYMENT.— 
Section 1842(b)(6)(F) (42 U.S.C. 
1395u(b)(6)(F)) is amended by in-
serting ‘‘and excluding home health 
services to which section 1895(f) ap-
plies’’ after ‘‘provided for in such sec-
tion’’. 
(II) EXCEPTION
TO
EXCLUSION 
FROM
COVERAGE.—Section 1862(a) 
(42 U.S.C. 1395y(a)) is amended by 
inserting before the period at the end 
of the second sentence the following: 
‘‘and paragraph (21) shall not apply 
to home health services to which sec-
tion 1895(f) applies’’. 
(4) EXEMPTION FROM 30-PERCENT REDUCTION 
IN
REIMBURSEMENT
FOR
BAD
DEBT.—Section 
1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amend-
ed by inserting ‘‘(other than for a rural community
hospital)’’ after ‘‘In determining such reasonable 
costs for hospitals’’. 
(c) BENEFICIARY COST-SHARING FOR OUTPATIENT 
SERVICES.—Section 1834(n) (as added by subsection 
(b)(2)) is amended— 
(1) by redesignating paragraphs (1) and (2) as 
subparagraphs (A) and (B), respectively; 
(2) by inserting ‘‘(1)’’ after ‘‘(n)’’; and 
(3) by adding at the end the following: 
‘‘(2) The amounts of beneficiary cost-sharing 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 cost-sharing 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 cost-sharing shall apply. 
‘‘(C) For all other items and services, the 
amount of cost-sharing 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) (42 
U.S.C. 1395f(b)) is amended in the matter pre-
ceding paragraph (1) by inserting ‘‘other than inpa-
tient hospital services furnished by a rural commu-
nity hospital,’’ after ‘‘critical access hospital serv-
ices,’’. 
(2) PART B PAYMENT.— 
(A) IN
GENERAL.—Section 1833(a) (42 
U.S.C. 1395l(a)) is amended— 
(i) in paragraph (2), in the matter be-
fore subparagraph (A), by striking ‘‘and 
(I)’’ and inserting ‘‘(I), and (K)’’; 
(ii) by striking ‘‘and’’ at the end of 
paragraph (8); 
(iii) by striking the period at the end 
of paragraph (9) and inserting ‘‘; and’’; 
and 
(iv) by adding at the end the fol-
lowing: 
‘‘(10) in the case of outpatient services fur-
nished by a rural community hospital, the amounts 
described in section 1834(n).’’.
(B) 
AMBULANCE
SERVICES.—Section 
1834(l)(8) (42 U.S.C. 1395m(l)(8)) is amend-
ed— 
(i) in the heading, by striking ‘‘CRIT-
ICAL
ACCESS
HOSPITALS’’ and inserting 
‘‘CERTAIN FACILITIES’’; 
(ii) in the matter preceding subpara-
graph (A), by striking ‘‘the reasonable 
costs’’ and inserting ‘‘101 percent of the 
reasonable costs’’; 
(iii) by striking ‘‘or’’ at the end of 
subparagraph (A); 
(iv) by redesignating subparagraph 
(B) as subparagraph (C); 
(v) by inserting after subparagraph 
(A) the following new subparagraph: 
‘‘(B) by a rural community hospital (as de-
fined in section 1861(bbb)(1)), or’’; and 
(vi) in subparagraph (C), as so redes-
ignated, by inserting ‘‘or a rural commu-
nity hospital’’ after ‘‘critical access hos-
pital’’. 
(3) TECHNICAL AMENDMENTS.— 
(A) CONSULTATION
WITH
STATE
AGEN-
CIES.—Section 1863 (42 U.S.C. 1395z) is
amended by striking ‘‘and (dd)(2)’’ and insert-
ing ‘‘(dd)(2), (mm)(1), and (bbb)(1)’’. 
(B) 
PROVIDER
AGREEMENTS.—Section 
1866(a)(2)(A) (42 U.S.C. 1395cc(a)(2)(A)) is 
amended by inserting ‘‘section 1834(n)(2),’’ 
after ‘‘section 1833(b),’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after October 1, 2005. 
SEC. 3. REMOVING BARRIERS TO ESTABLISHMENT OF DIS-
TINCT PART UNITS BY RCH AND CAH FACILI-
TIES. 
(a) IN GENERAL.—Section 1886(d)(1)(B) (42 U.S.C. 
1395(d)(1)(B)) is amended by striking ‘‘a distinct part of 
the hospital (as defined by the Secretary)’’ in the matter 
following clause (v) and inserting ‘‘a distinct part (as de-
fined by the Secretary) of the hospital or of a critical ac-
cess hospital or a rural community hospital’’. 
(b) REVISION OF LIMITS ON AUTHORITY FOR CAHS 
TO ESTABLISH PSYCHIATRIC AND REHABILITATION DIS-
TINCT
PART
UNITS.—Section 1820(c)(2)(E)(iv) (42 
U.S.C. 1395i–4(c)(2)(E)(iv)) is amended— 
(1) by striking ‘‘If’’ and inserting ‘‘If the Sec-
retary finds that’’;
(2) by striking ‘‘with respect to a cost reporting 
period’’; and 
(3) by striking ‘‘during such period’’ and insert-
ing ‘‘after such finding is made’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to determinations with respect to 
distinct part unit status that are made on or after October 
1, 2005. 
SEC. 4. IMPROVEMENTS TO MEDICARE CRITICAL ACCESS 
HOSPITAL (CAH) PROGRAM. 
(a) PAYMENTS TO HOME HEALTH AGENCIES OWNED 
AND OPERATED BY A CAH.—Section 1895(f) (42 U.S.C. 
1395fff(f)), as added by section 2(b)(3), is further amend-
ed by inserting ‘‘or by a home health agency that is owned 
and operated by a critical access hospital (as defined in 
section 1861(mm)(1))’’ after ‘‘as defined in paragraph 
(2))’’. 
(b) PAYMENTS TO CAH-OWNED SNFS.— 
(1) IN GENERAL.—Section 1888(e) (42 U.S.C. 
1395yy(e)) is amended— 
(A) in paragraph (1), by striking ‘‘and 
(12)’’ and inserting ‘‘(12), and (13)’’; and 
(B) by adding at the end thereof the fol-
lowing:
‘‘(13) EXEMPTION OF CAH FACILITIES FROM 
PPS.—In determining payments under this part for 
covered skilled nursing facility services furnished on 
or after October 1, 2005, by a skilled nursing facil-
ity that is a distinct part unit of a critical access 
hospital (as defined in section 1861(mm)(1)) or is 
owned and operated by a critical access hospital— 
‘‘(A) the prospective payment system es-
tablished under this subsection shall not apply; 
and 
‘‘(B) payment shall be made on the basis 
of 101 percent of the reasonable costs incurred 
in furnishing such services as determined under 
section 1861(v), but without regard to the 
amount of the customary or other charges with 
respect to such services or the limitations estab-
lished under subsection (a)’’. 
(2) CONFORMING CHANGES.— 
(A) IN
GENERAL.—Section 1814(b) (42 
U.S.C. 1395f(b)), as amended by section 
2(d)(1), is amended in the matter preceding 
paragraph (1)— 
(i) by inserting ‘‘other than a skilled 
nursing facility providing covered skilled 
nursing facility services (as defined in sec-
tion 1888(e)(2)) or posthospital extended 
care services to which section 1888(e)(13) 
applies,’’ after ‘‘inpatient hospital services 
furnished by a rural community hospital,’’; 
and 
(ii) by striking ‘‘1813, 1886,’’ and in-
serting ‘‘1813, 1886, 1888,’’. 
(B) CONSOLIDATED BILLING.— 
(i) RECIPIENT OF PAYMENT.—Section 
1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) 
is amended by inserting ‘‘services to which 
paragraph (7)(C) or (13) of section 
1888(e) applies and’’ after ‘‘other than’’. 
(ii) EXCEPTION TO EXCLUSION FROM 
COVERAGE.—Section 
1862(a)(18) 
(42 
U.S.C. 1395y(a)(18)) is amended by in-
serting ‘‘(other than services to which 
paragraph (7)(C) or (13) of section 
1888(e) 
applies)’’ 
after 
‘‘section 
1888(e)(2)(A)(i)’’. 
(c) PAYMENTS TO DISTINCT PART PSYCHIATRIC OR 
REHABILITATION UNITS OF CAHS.— 
(1) IN GENERAL.—Section 1886(b) (42 U.S.C. 
1395(b)) is amended—
(A) in paragraph (1), by inserting ‘‘, other 
than a distinct part psychiatric or rehabilitation 
unit to which paragraph (8) applies,’’ after 
‘‘subsection (d)(1)(B)’’; and 
(B) by adding at the end the following: 
‘‘(8) EXEMPTION OF CERTAIN DISTINCT PART 
PSYCHIATRIC
OR
REHABILITATION
UNITS
FROM 
COST LIMITS.—In determining payments under this 
part for inpatient hospital services furnished on or 
after October 1, 2005, by a distinct part psychiatric 
or rehabilitation unit (described in the matter fol-
lowing clause (v) of subsection (d)(1)(B)) of a crit-
ical 
access 
hospital 
(as 
defined 
in 
section 
1861(mm)(1))— 
‘‘(A) the limits imposed under the pre-
ceding paragraphs of this subsection shall not 
apply; and 
‘‘(B) payment shall be made on the basis 
of 101 percent of the reasonable costs incurred 
in furnishing such services as determined under 
section 1861(v), but without regard to the 
amount of the customary or other charges with 
respect to such services.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1814(l) (42 U.S.C. 1395f(l)) is amended by insert-
ing ‘‘furnished during fiscal year 2005’’ after ‘‘such 
unit’’. 
(d) ELIMINATION OF ISOLATION TEST FOR COST- 
BASED CAH AMBULANCE SERVICES.—Paragraph (8) of 
section 1834(l) (42 U.S.C. 1395m(l)) is amended by strik-
ing the comma at the end of subparagraph (B) and all 
that follows and inserting a period. 
(e) TECHNICAL CORRECTIONS.— 
(1) SECTION 403(b) OF BBRA 1999.—Section 
1820(b)(2) (42 U.S.C. 1395i-4(b)(2)) is amended by 
striking ‘‘nonprofit or public hospitals’’ and insert-
ing ‘‘hospitals’’. 
(2) SECTION 203(b) OF BIPA 2000.—Section 
1883(a)(3) (42 U.S.C. 1395tt(a)(3)) is amended— 
(A) by inserting ‘‘section 1861(v)(1)(G) 
or’’ after ‘‘Notwithstanding’’; and 
(B) by striking ‘‘covered skilled nursing fa-
cility’’. 
(f) EFFECTIVE DATES.— 
(1) ELIMINATION
OF
REQUIREMENTS.—The 
amendments made by subsections (a) and (c) shall 
apply to services furnished on or after October 1, 
2005. 
(2) TECHNICAL CORRECTIONS.—
(A) BBRA.—The amendment made by 
subsection (e)(1) shall be effective as if included 
in the enactment of section 403(b) of the Medi-
care, Medicaid, and SCHIP Balanced Budget 
Refinement Act of 1999 (Appendix F, 113 Stat. 
1501A–321), as enacted into law by section 
1000(a)(6) of Public Law 106–113. 
(B) BIPA.—The amendments made by 
subsection (e)(2) shall be effective as if included 
in the enactment of section 203(b) of the Medi-
care, Medicaid, and SCHIP Benefits Improve-
ment and Protection Act of 2000 (Appendix F, 
114 Stat. 2763A–463), as enacted into law by 
section 1(a)(6) of Public Law 106–554. 
Æ