I
105TH CONGRESS
1ST SESSION
H. R. 582
To amend title XVIII of the Social Security Act to correct beneficiary over-
charges for hospital outpatient department services and to provide for
prospective payment for such services and to eliminate the formula-
driven overpayments for certain hospital outpatient services.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 4, 1997
Mr. STARK (for himself and Mr. COYNE) introduced the following bill; which
was referred to the Committee on Commerce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to correct
beneficiary overcharges for hospital outpatient depart-
ment services and to provide for prospective payment
for such services and to eliminate the formula-driven
overpayments for certain hospital outpatient services.
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 ‘‘Medicare Hospital
Outpatient Reform Act of 1997’’.
SEC. 2. ELIMINATION OF FORMULA-DRIVEN OVERPAY-
MENTS FOR CERTAIN OUTPATIENT HOSPITAL
SERVICES.
(a) 
AMBULATORY
SURGICAL
CENTER
PROCE-
DURES.—Section 1833(i)(3)(B)(i)(II) of the Social Secu-
rity Act (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is amended—
(1) by striking ‘‘of 80 percent’’; and
(2) by striking the period at the end and insert-
ing the following: ‘‘, less the amount a provider may
charge as described in clause (ii) of section
1866(a)(2)(A).’’.
(b) RADIOLOGY SERVICES AND DIAGNOSTIC PROCE-
DURES.—Section 1833(n)(1)(B)(i)(II) of such Act (42
U.S.C. 1395l(n)(1)(B)(i)(II)) is amended—
(1) by striking ‘‘of 80 percent’’; and
(2) by striking the period at the end and insert-
ing the following: ‘‘, less the amount a provider may
charge as described in clause (ii) of section
1866(a)(2)(A).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished during por-
tions of cost reporting periods occurring on or after Janu-
ary 1, 1998.
SEC. 3. PROSPECTIVE PAYMENT FOR HOSPITAL OUT-
PATIENT DEPARTMENT SERVICES.
(a) IN GENERAL.—Section 1833 of the Social Secu-
rity Act (42 U.S.C. 1395l) is amended by adding at the
end the following:
‘‘(t) PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL
OUTPATIENT DEPARTMENT SERVICES.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this title, with respect to hospital out-
patient services designated by the Secretary and fur-
nished during years beginning with January 1,
1998, the amount of payment made for the services
determined under this part shall be determined
under a prospective payment system established by
the Secretary in accordance with this subsection.
‘‘(2) SYSTEM REQUIREMENTS.—Under the sys-
tem established by the Secretary under this sub-
section, the Secretary shall—
‘‘(A) develop a classification system to re-
flect the hospital outpatient services furnished
under this part;
‘‘(B) establish groups of procedures and
visits so that procedures and visits within each
group are comparable clinically and with re-
spect to the use of resources;
‘‘(C) using data from the most recent year
available, establish relative payment weights for
groups based on median hospital costs and shall
determine the frequency of utilization of each
group;
‘‘(D) adjust the proportion, (as estimated
by the Secretary from time to time) of hos-
pitals’ costs which are attributable to wages
and wage-related costs, of the fee schedule
amounts applied under paragraph (3) for area
differences in hospital wage levels by the factor
(established by the Secretary under section
1886(d)(3)(E)) reflecting the relative hospital
wage level in the geographic classification area
of the hospital compared to the national aver-
age hospital wage level;
‘‘(E) establish other adjustments as deter-
mined to be necessary to ensure equitable pay-
ments, and establish a reduced payment for the
performance of multiple procedures where the
marginal cost of providing a second procedure
during a single visit may be less than the indi-
vidual cost of both procedures combined; and
‘‘(F) identify and implement methodologies
to control for unnecessary increases in the vol-
ume of the services subject to payment under
this section, and report to Congress on such
methodologies before January 1, 1999.
‘‘(3) MEDICARE
PAYMENT
AMOUNT.—Subject
to the deductible under section 1833(b), the amount
of payment made under this part for outpatient de-
partment services classified within a group and pro-
vided in any year shall be equal to 80 percent of the
Medicare OPD fee schedule amount for the group
and the year, as determined under paragraph (5).
‘‘(4) COMPUTATION
OF
CONVERSION
FAC-
TORS.—
‘‘(A) ESTIMATES OF CERTAIN AMOUNTS.—
The Secretary shall estimate the total projected
Medicare payments that would have been made
under this part to hospitals for outpatient de-
partment services in 1998.
‘‘(B) CALCULATION OF CONVERSION FAC-
TOR.—
‘‘(i) FOR 1998.—On the basis of the
weights and frequencies of utilization de-
scribed in paragraph (2)(C), the Secretary