PROSPECTIVE PAYMENT HOSPITALS.

SEC. 4002. PROSPECTIVE PAYMENT HOSPITALS. (a) Changes in Update Factors.— (1) In general.— Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended— (A) by striking “and” at the end of subclause (V); 104 STAT. 1388–32 (B) in subclause (VI)— (i) by striking “1991” and inserting “1994”, and (ii) by redesignating such subclause as subclause (IX); and (C) by inserting after subclause (V) the following new subclauses: “(VI) for fiscal year 1991, the market basket percentage in-crease minus 2.0 percentage points for hospitals in all areas, “(VII) for fiscal year 1992, the market basket percentage increase minus 1.6 percentage points for hospitals in all areas, “(VIII) for fiscal year 1993, the market basket percentage increase minus 1.55 percentage point for hospitals in all areas, and”. (2) Effective date.—The amendments made by paragraph (1) shall apply to payments for discharges occurring on or after January 1, 1991. (b) Changes in Disproportionate Share Payments— (1) Increase for urban hospitals with more than 100 beds.— Section 1886(d)(5)(F)(vii) (42 U.S.C. 1395ww(d)(5)(F)(vii)) is amended— (A) in subclause (I), by striking “greater than 20.2,” and all that follows and inserting the following: “greater than 20.2— “(a) for discharges occurring on or after April 1, 1990, and on or before December 31, 1990, (P-20.2)(.65) + 5.62, “(b) for discharges occurring on or after January 1, 1991, and on or before September 30, 1993, (P-20.2)(-7) + 5.62, “(c) for discharges occurring on or after October 1, 1993, and on or before September 30, 1994, (P-20.2)(.8) + 5.88, and “(d) for discharges occurring on or after October 1, 1994, (P-20.2)(.825) + 5.88; or”; and (B) in subclause (II), by striking “hospital, (P-15)(.6) + 2.5,” and inserting the following: “hospital— “(a) for discharges occurring on or after April 1, 1990, and on or before December 31, 1990, (P-15)(-6) + 2.5, “(b) for discharges occurring on or after January 1, 1991, and on or before September 30, 1993, (P-15)(.6) + 2.5, “(c) for discharges occurring on or after October 1, 1993, (P-15)(.65) + 2.5,”. (2) Increase for hospitals with disproportionate indigent care revenues.—Section 1886(d)(5)(F)(iii) (42 U.S.C. 1395ww(d)(5)(F)(iii)) is amended by striking “30 percent” and inserting “35 percent”. (3) Repeal of sunset.— (A) In general.— Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by striking “and before October 1, 1995,” each place it appears in paragraph (2)(C)(iv) and paragraph (5)(F)(i). (B) Conforming amendments.— (A) Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)) is amended to read as follows: “(ii) For purposes of clause (i)(H), the indirect teaching adjustment factor for discharges occurring on or after May 1, 1986, is equal to 1.89 )( (((1 + r) to the nth power) - 1), where ‘r’ is the ratio of the hospital’s full-time equivalent interns and residents to beds and ‘n’ equals .405.”. 104 STAT. 1388–33 (B) Section 1886(d)(3)(C)(ii) (42 U.S.C. 1395ww(d)(3)(C)(u)) is amended by striking “occurring—” and all that follows and inserting the following: “occurring on or after October 1, 1986, of an amount equal to the estimated reduction in the payment amounts under paragraph (5)(B) that would have resulted from the enactment of the amendments made by section 9104 of the Medicare and Medicaid Budget Reconciliation Amendments of 1985 and by section 4003(a)(D of the Omnibus Budget Reconciliation Act of 1987 if the factor described in clause (ii)(II) of paragraph (5)(B) (determined without regard to amendments made by the Omnibus Budget Reconciliation Act of 1990) were applied for dis-charges occurring on or after such date instead of the factor described in clause (ii) of that paragraph.”. (4) No restandardizing for recent adjustments.— (A) Adjustments under obra 1989.—Section 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)) is amended by striking the period at the end and inserting the following: “, except that the Secretary shall not exclude additional payments under such paragraph made as a result of the enactment of section 6003(c) of the Omnibus Budget Reconciliation Act of 1989.”. (B) Adjustments under obra 1990.—Section 1886(d)(2)(C)(iv), as amended by subparagraph (A), is further amended by striking “1989,” and inserting “1989 or the enactment of section 4002(b) of the Omnibus Budget Reconciliation Act of 1990.”. (5) Effective date.—The amendments made by paragraphs (1), (3), and (4)(B) shall apply to discharges occurring on or after January 1, 1991, the amendment made by paragraph (2) shall apply to discharges occurring on or after October 1, 1991, and the amendment made by paragraph (4)(A) shall take effect as if included in the enactment of the Omnibus Budget Reconciliation Act of 1989. (c) Payments to Rural Hospitals.— (1) Phase-out of separate average standardized amounts—Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i», as amended by subsection (a)(D, is further amended— (A) in subclause (VI), by striking “in all areas,” and inserting “in a large urban or other urban area, and the market basket percentage increase minus 0.7 percentage point for hospitals located in a rural area”. (B) in subclause (VII), by striking “in all areas,” and inserting “in a large urban or other urban area, and the market basket percentage increase minus 0.6 percentage point for hospitals located in a rural area,”; (C) in subclause (VIII), by striking “in all areas, and” and inserting “in a large urban or other urban area, and the market basket percentage increase minus 0.55 for hospitals located in a rural area,”; (D) in subclause (IX)— (i) by striking “1994” and inserting “1996”, and (ii) by redesignating such subclause as subclause ()(I); and (E) by inserting after subclause (VIII) the following new subclauses: 104 STAT. 1388–34 “(IX) for fiscal year 1994, the market basket percentage in-crease for hospitals located in a large urban or other urban area, and the market basket percentage increase plus 1.5 percentage points for hospitals located in a rural area, “(X) for fiscal year 1995, the market basket percentage in-crease for hospitals located in a large urban or other urban area, and such percentage increase for hospitals located in a rural area as will provide for the average standardized amount determined under subsection (d)(3)(A) for hospitals located in a rural area being equal to such average standardized amount for hospitals located in an urban area (other than a large urban area), and”. (2) Conforming amendments.— (A) Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)) is amended— (i) in clause (ii), by striking “(A) and (E),” and inserting “(A), (C), (D), and (E),”; (ii) in subparagraphs (C)(ii) and (D)(ii), by striking “(B)(i)” each place it appears and inserting “(B)(ii)”. (B) Section 1886(d) (42 U.S.C. 1395ww(d)) is amended— (i) in paragraph (I)(A)(iii), by striking “rural, large urban, or other urban area” and inserting “large urban or other area”; (ii) in paragraph (3)(A)— (I) in clause (ii), by striking “the Secretary” and inserting “and ending on or before September 30, 1994, the Secretary”, (II) by redesignating clause (iii) as clause (v), and (III) by inserting after clause (ii) the following new clauses: “(iii) For discharges occurring in the fiscal year beginning on October 1, 1994, the average standardized amount for hospitals located in a rural area shall be equal to the average standardized amount for hospitals located in an other urban area. “(iv) For discharges occurring in a fiscal year beginning on or after October 1, 1995, the Secretary shall compute an average standardized amount for hospitals located in a large urban area and for hospitals located in other areas within the United States and within each region equal to the respective average standardized amount computed for the previous fiscal year under this subparagraph increased by the applicable percentage increase under subsection (b)(3)(B)(i) with respect to hospitals located in the respective areas for the fiscal year involved.”; (iii) in paragraph (3)(B), by striking “for hospitals located in an urban area” and all that follows and inserting the following: “by a factor equal to the proportion of payments under this subsection (as estimated by the Secretary) based on DRG prospective payment amounts which are additional payments described in paragraph (5)(A) (relating to outlier payments).”; (iv) in paragraph (3)(D)(D— (I) in the matter preceding subclause (I), by striking “an urban area (or,” and all that follows through “area),” and inserting “a large urban area”, and (II) in subclause (I), by striking “an urban area” and inserting “a large urban area”; (v) in paragraph (3)(D)(u), by striking “a rural area” each place it appears and inserting “other areas”; and 104 STAT. 1388–35 (vi) in paragraph (8)(D)— (I) in the first sentence, by striking “for hospitals located in an urban area”, and (II) by striking the second sentence. (3) Effective date.—The amendments made by paragraph (1) and paragraph (2)(A) shall apply to payments for discharges occurring on or after January 1, 1991, and the amendments made by paragraph (2)(B) shall take effect October 1, 1994. (d) Area Wage Index.— (1) Determination of area wage index.— (A) For purposes of section 1886(d)(3)(E) of the Social Security Act for discharges occurring on or after January 1, 1991, and before October 1, 1993, the Secretary of Health and Human Services shall apply an area wage index determined using the survey of the 1988 wages and wage-related costs of hospitals in the United States conducted under such section. (B) The Secretary shall apply the wage index described in subparagraph (A) without regard to a previous survey of wages and wage-related costs. (2) Study of area wage index adjustments based on Professional occupational component.— (A) Study.—The Prospective Payment Assessment Commission shall examine available data from States and other sources measuring earnings and paid hours of employment of hospital workers by occupational category, and shall include in such examination an analysis of the impact of variation in occupational mix on the computation of the area wage index determined under section 1886(d)(3)(E) of the Social Security Act. (B) Report to congress.—In its March 1991 report, the Commission shall include recommendations regarding the feasibility and desirability of modifying such area wage index to take into account occupational mix, including variations in occupational mix resulting from differences in State codes and requirements. (e) Extension of Regional Floor on Standardized Amounts.— (1) In general.—Section 1886(d)(1)(A)(iii) (42 U.S.C. 1395ww(d)(1)(A)(iii)) is amended by striking “beginning on or after” and all that follows through “1990” and inserting “beginning on or after April 1, 1988, and ending on September 30, 1993,”. (2) Study.— (A) The Secretary of Health and Human Services shall collect sufficient data on the input prices associated with the non-wage-related portion of the adjusted average standardized amounts established under section 1886(d)(3) of the Social Security Act to identify the extent to which variations in such amounts among hospitals located in different geographic areas are attributable to differences in such prices. (B) Not later than June 1, 1993, the Secretary shall submit a report to Congress analyzing such data, and shall include in such report recommendations regarding a methodology for adjusting such average standardized amounts to reflect such variations. (C) The provisions of chapter 35 of title 44, United States Code, shall not apply to data collected by the Secretary under subparagraph (A). 104 STAT. 1388–36 (4) Effective date.—The amendment made by paragraph (1) shall apply to discharges occurring on or after October 1, 1990. (f) Elimination of Hospital Off-Set for Services of Physician Assistants.— (1) In general.—Section 9338 of the Omnibus Budget Reconciliation Act of 1986 is amended by striking subsection (d). (2) Effective date.—The amendment made by paragraph (1) shall take effect as if included in the enactment of the Omnibus Budget Reconciliation Act of 1986. (g) Responsibilities and Reporting Requirements of Prospective Payment Assessment Commission.— (1) Expansion of responsibilities 33So in original. Probably should be “responsibilities”..—Section 1886(e)(2) (42 U.S.C. 1395ww(e)(2)) is amended— (A) by striking “(2)” and inserting “(2)(A)”; and (B) by adding at the end the following new subparagraphs: “(B) In order to promote the efficient and effective delivery of high-quality health care services, the Commission shall, in addition to carrying out its functions under subparagraph (A), study and make recommendations for each fiscal year regarding changes in each existing reimbursement policy under this title under which payments to an institution are based upon prospectively determined rates and the development of new institutional reimbursement policies under this title, including recommendations relating to payments during such fiscal year under the prospective payment system established under this section for determining payments for the operating costs of inpatient hospital services, including changes in the number of diagnosis-re la ted groups used to classify inpatient hospital discharges under subsection (d), adjustments to such groups to reflect severity of illness, and changes in the methods by which hospitals are reimbursed for capital-related costs, together with general recommendations on the effectiveness and quality of health care delivery systems in the United States and the effects on such systems of institutional reimbursements under this title. “(C) By not later than June 1 of each year, the Commission shall submit a report to Congress containing an examination of issues affecting health care delivery in the United States, including issues relating to— “(i) trends in health care costs; “(ii) the financial condition of hospitals and the effect of the level of payments made to hospitals under this title on such condition; “(iii) trends in the use of health care services; and “(iv) new methods used by employers, insurers, and others to constrain growth in health care costs.”. (2) Reporting requirements for commission and secretary; eumination of ota reporting requirements.— Section 1886 (42 U.S.C. 1395ww) is amended— (A) by striking subparagraph (D) of subsection (d)(4); (B) in the second sentence of subsection (e)(2)(A), as amended by paragraph (1)(A), by striking “In addition” and all that follows through “the Commission” and inserting “The Commission”; (C) in subsection (e)(3)(A)— (i) by striking “the Secretary” and inserting “Congress”, and 104 STAT. 1388–37 (ii) by striking the period at the end and inserting the following: “, together with its general recommendations under paragraph (2)(B) regarding the effectiveness and quality of health care delivery systems in the United States.”; (D) in subsection (e)(4)— (i) by striking “(4)” and inserting “(4)(A)”, and (ii) by adding at the end the following new subparagraph: “(B) In addition to the recommendation made under subparagraph (A), the Secretary shall, taking into consideration the recommendations of the Commission under paragraph (2)(B), recommend for each fiscal year (beginning with fiscal year 1992) other appropriate changes in each existing reimbursement policy under this title under which payments to an institution are based upon prospectively determined rates.”; (E) in subsection (e)(5)— (i) by striking “recommendation” each place it appears and inserting “recommendations”, and (ii) by adding at the end the following new sentence: “To the extent that the Secretary’s recommendations under paragraph (4) differ from the Commission’s recommendations for that fiscal year, the Secretary shall include in the publication referred to in subparagraph (A) an explanation of the Secretary’s grounds for not following the Commission’s recommendations.”; and (F) in subsection (e)(6)(G)— (i) by striking clause (i), and (ii) by redesignating clauses (ii) and (iii) as clauses (i) and (H). (3) Conforming amendment.—Section 1845(c)(l)(D) (42 U.S.C. 1395w-l(c)(l)(D)) is amended by striking “reports and”. (4) PROPAC study of medicaid payments to hospitals.— (A) Study.—The Prospective Payment Assessment Commission shall conduct a study of hospital payment rates under State plans for medical assistance under title XIX of the Social Security Act, and shall specifically examine in such study the relationship between payments under such plans and payments made to hospitals under title XVIII of such Act, and the financial condition of hospitals receiving payments under such plans, with particular attention to hospitals in urban areas which treat large numbers of individuals eligible for medical assistance under title XIX of such Act and other low-income individuals. (B) Report.—By not later than October 1, 1991, the Commission shall submit a report to Congress on the study conducted under subparagraph (A) and shall include in such report such recommendations relating to requirements for payments to hospitals under title XIX of such Act as the Commission deems appropriate. (5) Effective date.—The amendments made by this subsection shall take effect on the date of the enactment of this Act. (h) Provisions Relating to Geographic Classification of Hospitals.— (1) Payments to reclassified hospitals.— (A) In general.— Section 1886(d)(8)(O (42 U.S.C. 1395ww(d)(8)(C)) is amended— 104 STAT. 1388–38 (i) in clause (i), in the matter preceding subclause (I), by striking “area—” and inserting “area, or by treating hospitals located in one urban area as being located in another urban area—” (ii) by amending clause (i)(I) to read as follows: “(II) reduces the wage index for that urban area by more than 1 percentage point (as applied under this subsection), the Secretary shall calculate and apply such wage index under this subsection separately to hospitals located in such urban area (excluding all the hospitals so treated) and to the hospitals so treated (as if such hospitals were located in such urban area).”; (iii) by striking clause (ii); and (iv) by redesignating clauses (iii) and (iv) as clauses (ii) and (iii). (B) Effective date.—The amendments made by subparagraph (A) shall apply to discharges occurring on or after January 1, 1991. (2) Geographic classification review board.— (A) Deadline for submission of applications.—For purposes of determining whether a hospital requesting a change in geographic classification for fiscal year 1992 under section 1886(d)(10) of the Social Security Act has met the deadline described in subparagraph (C)(ii) of such section, an application submitted under such subparagraph shall be considered to have been submitted by the first day of the preceding fiscal year if it is submitted within 60 days of the date of publication of the guidelines described in subparagraph (D)(D of such section. (B) Technical corrections.— Section 1886(d)(10) (42 U.S.C. 1395ww(d)(10)) is amended— (i) in subparagraph (A), by striking “Geographical” and inserting “Geographic”; (ii) in subparagraph (B)(i)— (I) by striking “representatives” and inserting “representative”, and (II) by striking “1 member shall be a member of the Prospective Payment Assessment Commission, and at least”; (iii) in subparagraph (B)(ii), by striking “all” and inserting “initial”; and (iv) in subparagraph (10)(C)(iii)(II)— (I) by striking the first 2 sentences and inserting the following: “Appeal of decisions of the Board shall be subject to the provisions of section 557b of title 5, United States Code.”, and (II) by striking “after” and inserting “after the date on which”.