RURAL HOSPITALS.

SEC. 4005. RURAL HOSPITALS. (a) Revision of Standards for Including a Rural County in an Urban Area.— (1) Treating certain rural hospitals adjacent to urban areas as urban hospitals.— Section 1886(d)(8) of the Social Security Act (42 U.S.C. 1395ww(d)(8))— (A) by redesignating clauses (i) and (ii) of subparagraphs (A) and (B) as subclauses (I) and (II), respectively, (B) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, (C) by inserting “(A)” after “(8)”, and (D) by adding at the end the following new subparagraph: “(B) The Secretary shall treat a hospital located in a rural county adjacent to one or more urban areas as being located in the urban metropolitan statistical area to which the greatest number of workers in the county commute, if— “(i) the rural county would otherwise be considered part of an urban area but for the fact that the rural county does not meet the standard relating to the rate of commutation between the101 STAT. 1330–48 rural county and the central county or counties of any adjacent urban area; and “(ii) either (I) the number of residents of the rural county who commute for employment to the central county or counties of any adjacent urban area is equal to at least 15 percent of the number of residents of the rural county who are employed, or (II) the sum of the number of residents of the rural county who commute for employment to the central county or counties of any adjacent urban area and the number of residents of any adjacent urban area who commute for employment to the rural county is at least equal to 20 percent of the number of residents of the rural county who are employed. “(C) The Secretary shall make a proportional adjustment in the standardized amount determined under paragraph (3) for hospitals located in an urban area to assure that the provisions of subparagraph (B) do not result in aggregate payments under this section that are greater or less than those that would otherwise be made. The Secretary shall make such adjustment in payments under this section to hospitals located in rural areas as are necessary to assure that the aggregate of payments to rural hospitals not affected by subparagraph (B) are not changed as a result of the application of subparagraph (B).”. (2) Location of hospital.— For purposes of section 1886 of the Social Security Act, Watertown Memorial Hospital in Watertown, Wisconsin is deemed to be located in Jefferson County, Wisconsin. (3) Effective date.— This section, and the amendments made by paragraph (1), shall apply to discharges occurring on or after October 1, 1988. (b) Expansion of Swing-Bed Program.— (1) Expansion to hospitals with fewer than 100 beds.— Section 1883(b)(1) of the Social Security Act (42 U.S.C. 1395tt(b)(l)) is amended by striking “50 beds” and inserting “100 beds”. (2) Requirements for hospitals with more than 49 beds.— Section 1883(d) of such Act (42 U.S.C. 1395dd(d)) is amended— (A) by inserting “(1)” after “(d)”, and (B) by adding at the end the following new paragraphs: “(2) (A) Any agreement under this section with a hospital with more than 49 beds shall provide that no payment may be made for extended care services which are furnished to an extended care patient after the end of the 5-day period (excluding weekends and holidays) beginning on an availability date for a skilled nursing facility, unless the patient’s physician certifies, within such 5-day period, that the transfer of that patient to that facility is not medically appropriate on the availability date. The Secretary shall prescribe regulations to provide for notice by skilled nursing facilities of availability dates to hospitals which have agreements under this section and which are located within the same geographic region (as defined by the Secretary). “(B) In this paragraph: “(i) The term ‘availability date’ means, with respect to an extended care patient at a hospital, any date on which a bed is available for the patient in a skilled nursing facility located within the geographic region in which the hospital is located. 101 STAT. 1330–49 “(ii) The term ‘extended care patient’ means an individual being furnished extended care services at a hospital pursuant to an agreement with the Secretary under this section. “(3) In the case of an agreement for a cost reporting period under this section with a hospital that has more than 49 beds, payment may not be made in the period for patient-days of extended care services that exceed 15 percent of the product of the number of days in the period and the average number of licensed beds in the hospital in the period.”. (3) Report.— The Secretary of Health and Human Services shall report to Congress, not later than February 1, 1989, concerning— (A) the proportion of admissions to hospitals for extended care services under section 1883 of the Social Security Act which are denied or approved by a peer review organization under section 1154(a)(1) of such Act, and (B) on recommendations for methods of encouraging hospitals that— (i) have a low occupancy rate, (ii) are eligible to enter (but have not entered) into an agreement under section 1883 of such Act, and (iii) are located in areas with a need for additional providers of extended care services, to enter into such agreements. (4) Effective date.— The amendments made by paragraphs (1) and (2) shall apply to agreements under section 1883 of the Social Security Act entered into after March 31, 1988. (c) Payments to Sole Community Hospitals.— (1) Section 1886(d)(5)(C)(ii) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(C)(ii)) is amended— (A) by striking “1988” in the second sentence and inserting “1990”, and (B) by inserting after the second sentence the following: “A subsection (d) hospital that meets the criteria for classification as a sole community hospital and otherwise qualifies for the adjustment authorized by the preceding sentence may qualify for such an adjustment without regard to the formula by which payments are determined for the hospital under paragraph (1)(A).”. (2) (A) The amendments made by paragraph (1) shall apply to cost reporting periods beginning on or after October 1, 1987 (B) The Secretary of Health and Human Services shall take appropriate steps to ensure that the total amount paid in a fiscal year under title XVIII of the Social Security Act by reason of the amendment made by paragraph (1)(B) does not exceed $5,000,000 in the case of fiscal year 1988 and $10,000,000 for fiscal year 1989. (d) Medicare Classification of Rural Referral Centers.— (1) Extension of classification.— (A) In general.— The first sentence of section 1886(d)(5)(C)(i)(I) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(C)(i)(I)) is amended by striking “500” and inserting “275”. (B) Effective date.— The amendment made by subparagraph (A) shall apply to discharges occurring on or after April 1, 1988. (2) Study.— 101 STAT. 1330–50 (A) In general.— The Secretary of Health and Human Services shall provide for a study of the criteria used for the classification of hospitals as rural referral centers under section 1886(d)(5)(C)(i) of the Social Security Act. The study shall include an examination of— (i) the extent that hospitals classified as rural referral centers receive more or less than their actual costs of providing inpatient hospital services, and (ii) the appropriateness of providing for payment for such centers at a rate other than the rate for a hospital located in an other urban area. (B) Report.— The Secretary shall report to Congress, by not later than March 1, 1989, on the study conducted under subparagraph (A) and on recommendations for the criteria that should be applied under section 1886(d)(5)(C)(i) of the Social Security Act for the classification of hospitals as rural referral centers for cost reporting periods beginning on or after October 1, 1989. (e) Grant Program for Rural Health Care Transition.— (1) The Administrator of the Health Care Financing Administration, in consultation with the Assistant Secretary for Health (or a designee), shall establish a program of grants to assist eligible small rural hospitals and their communities in the planning and implementation of projects to modify the type and extent of services such hospitals provide in order to adjust for one or more of the following factors: (A) Changes in clinical practice patterns. (B) Changes in service populations. (C) Declining demand for acute-care inpatient hospital capacity. (D) Declining ability to provide appropriate staffing for inpatient hospitals. (E) Increasing demand for ambulatory and emergency services. (F) Increasing demand for appropriate integration of community health services. (G) The need for adequate access (including appropriate transportation) to emergency care and inpatient care in areas in which a significant number of underutilized hospital beds are being eliminated. (H) The Administrator shall submit a final report on the program to the Congress not later than 180 days after all projects receiving a grant under the program are completed. Each demonstration project under this subsection shall demonstrate methods of strengthening the financial and managerial capability of the hospital involved to provide necessary services. Such methods may include programs of cooperation with other health care providers, of diversification in services furnished (including the provision of home health services), of physician recruitment, and of improved management systems. (2) For purposes of this subsection, the term “eligible small rural hospital”1818Copy read “ ‘eligible small rural hospital’ ”. means any non-Federal, short-term general acute care hospital that— 101 STAT. 1330–51 (A) is located in a rural area (as determined in accordance with subsection (d)), (B) has less than 100 beds, and (C) is not for profit. (3) (A) Any eligible small rural hospital that desires to modify the type or extent of health care services that it provides in order to adjust for one or more of the factors specified in paragraph (1) may submit an application to the Governor of the State in which it is located. The application shall specify the nature of the project proposed by the hospital, the data and information on which the project is based, and a timetable (of not more than 24 months) for completion of the project. The application shall be submitted on or before a date specified by the Administrator and shall be in such form as the Administrator may require. (B) The Governor shall transmit any application submitted pursuant to subparagraph (A) to the Secretary not later than 30 days after it is received by the Governor, accompanied by any comments with respect to the application that the Governor deems appropriate. (C) The Governor of a State may designate an appropriate State agency to receive and comment on applications submitted under subparagraph (A). (4) A hospital shall be considered to be located in a rural area for purposes of this subsection if it is treated as being located in a rural area for purposes of section 1886(d)(3)(D) of the Social Security Act. (5) In determining which hospitals making application under paragraph (3) will receive grants under this subsection, the Administrator shall take into account— (A) any comments received under paragraph (3)(B) with respect to a proposed project; (B) the effect that the project will have on— (i) reducing expenditures from the Federal Hospital Insurance Trust Fund, (ii) improving the access of medicare beneficiaries to health care of a reasonable quality; (C) the extent to which the proposal of the hospital, using appropriate data, demonstrates an understanding of— (i) the primary market or service area of the hospital, and (ii) the health care needs of the elderly and disabled that are not currently being met by providers in such market or area, and (D) the degree of coordination that may be expected between the proposed project and— (i) other local or regional health care providers, and (ii) community and government leaders, as evidenced by the availability of support for the project (in cash or in kind) and other relevant factors. (6) A grant to a hospital under this subsection may not exceed $50,000 a year and may not exceed a term of 2 years. (7) (A) Except as provided in subparagraphs (D) and (C), a hospital receiving a grant under this subsection may use the grant for any of expenses incurred in planning and implementing the project with respect to which the grant is made. 101 STAT. 1330–52 (B) A hospital receiving a grant under this subsection for a project may not use the grant to retire debt incurred with respect to any capital expenditure made prior to the date on which the project is initiated. (C) Not more than one-third of any grant made under this subsection may be expended for capital-related costs (as defined by the Secretary for purposes of section 1886(a)(4) of the Social Security Act) of the project. (8) (A) A hospital receiving a grant under this section shall furnish the Administrator with such information as the Administrator may require to evaluate the project with respect to which the grant is made and to ensure that the grant is expended for the purposes for which it was made. (B) The Administrator shall report to the Congress at least once every 6 months on the program of grants established under this subsection. The report shall assess the functioning and status of the program, shall evaluate the progress made toward achieving the purposes of the program, and shall include any recommendations the Secretary may deem appropriate with respect to the program. In preparing the report, the Secretary shall solicit and include the comments and recommendations of private and public entities with an interest in rural health care. (C) The Administrator shall submit a final report on the program to the Congress not later than 180 days after all projects receiving a grant under the program are completed. (9) For purposes of carrying out the program of grants under this subsection, there are authorized to be appropriated from the Federal Hospital Insurance Trust Fund $15,000,000 for each of the fiscal years 1989 and 1990.