PAYMENTS FOR PPS HOSPITALS.

SEC. 13501. PAYMENTS FOR PPS HOSPITALS. (a) Reductions in Payments.— (1) Reductions in inflation updates.— Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended— (A) in subclause (IX)— (i) by inserting “minus 2.5 percentage points” after “market basket percentage increase” the first place it appears, and (ii) by striking “plus 1.5 percentage points” and inserting “minus 1.0 percentage point”; (B) in subclause (X)— (i) by inserting “minus 2.5 percentage points” after “market basket percentage increase”, and (ii) by striking “and” at the end; (C) in subclause (XI)— (i) by striking “and each subsequent fiscal year”, (ii) by inserting “minus 2.0 percentage points” after “market basket percentage increase”, and (iii) by striking the period at the end and inserting a comma; and (D) by adding at the end the following new subclauses: “(XII) for fiscal year 1997, the market basket percentage increase minus 0.5 percentage point for hospitals in all areas, and 107 STAT. 573 “(XIII) for fiscal year 1998 and each subsequent fiscal year, the market basket percentage increase for hospitals in all areas.”. (2) Updates for sole community hospitals and medicare-dependent, small rural hospitals.— (A) In general.— Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)) is amended by adding at the end the following new clause: “(iv) For purposes of subparagraphs (C) and (D), the ‘applicable percentage increase’ is— “(I) for 12-month cost reporting periods beginning during fiscal years 1986 through 1993, the applicable percentage increase specified in clause (ii), “(II) for fiscal year 1994, the market basket percentage increase minus 2.3 percentage points (taking into account any portion of the 12-month cost reporting period beginning during fiscal year 1993 that occurred during fiscal year 1994), “(III) for fiscal year 1995, the market basket percentage increase minus 2.2 percentage points, and “(IV) for fiscal year 1996 and each subsequent fiscal year, the applicable percentage increase under clause (i).”. (B) Conforming amendments.— Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)) is amended— (i) in subparagraph (B)(ii), by striking “, (C), (D),”; (ii) in subparagraph (C)(i)(II), by striking “or” at the end; (iii) in clause (ii) of subparagraph (C)— (I) by striking “period, the target” and inserting “period beginning before fiscal year 1994, the target”, (II) by striking “subparagraph (B)(ii)” and inserting “subparagraph (B)(iv)”, and (III) by striking the period at the end of such clause and inserting a comma; (iv) in subparagraph (C), by inserting after clause (ii) the following new clauses: “(iii) with respect to discharges occurring in fiscal year 1994, the target amount for the cost reporting period beginning in fiscal year 1993 increased by the applicable percentage increase under subparagraph (B)(iv), or “(iv) with respect to discharges occurring in fiscal year 1995 and each subsequent fiscal year, the target amount for the preceding year increased by the applicable percentage increase under subparagraph (B)(iv).”; (v) in clause (ii) of subparagraph (D)— (I) by striking “period, the target” and inserting “period beginning before fiscal year 1994, the target”, (II) by striking “(B)(ii)” and inserting “(B)(iv)”, and (III) by striking the period at the end of such clause and inserting “, and”; and (vi) in subparagraph (D), by inserting after clause (ii) the following new clause: “(iii) with respect to discharges occurring in fiscal year 1994, the target amount for the cost reporting period beginning 107 STAT. 574in fiscal year 1993 increased by the applicable percentage increase under subparagraph (B)(iv).”. (3) Reduction in federal portion of capital payment rate.— Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by adding at the end the following new sentence: “For discharges occurring after September 30, 1993, the Secretary shall reduce by 7.4 percent the unadjusted standard Federal capital payment rate (as described in 42 CFR 412.308(c), as in effect on the date of the enactment of the Omnibus Budget Reconciliation Act of 1993) and shall (for hospital cost reporting periods beginning on or after October 1, 1993) redetermine which payment methodology is applied to the hospital under such system to take into account such reduction.”. (b) Wage Index Hold Harmless Protection.— (1) In general.— Section 1886(d)(8)(C) (42 U.S.C. 1395ww(d)(8)(C)) is amended by adding at the end the following new clause: “(iv) The application of subparagraph (B) or a decision of the Medicare Geographic Classification Review Board or of the Secretary under paragraph (1) may not result in a reduction in an urban area’s wage index if— “(I) the urban area has a wage index below the wage index for rural areas in the State in which it is located; or “(II) the urban area is located in a State that is composed of a single urban area.”. (2) No standardized amount adjustment.— The Secretary of Health and Human Services shall not revise the fiscal year 1992 or fiscal year 1993 standardized amounts pursuant to subsections (d)(3)(B) and (d)(8)(D) of section 1886 of the Social Security Act to account for the amendment made by paragraph (1). (3) Effective date.— The amendment made by paragraph (1) shall apply to discharges occurring on or after October 1, 1991. (c) Transition for Hospital Outlier Thresholds.— Section 1886(d)(5)(A) (42 U.S.C. 1395ww(d)(5)(A)) is amended— (1) in clause (i), by striking “The Secretary” and inserting “For discharges occurring during fiscal years ending on or before September 30, 1997, the Secretary”; (2) in clause (ii), by striking the period at the end and inserting the following: “, or, for discharges in fiscal years beginning on or after October 1, 1994, exceed the applicable DRG prospective payment rate plus a fixed dollar amount determined by the Secretary.”; (3) in clause (iii), by striking “shall approximate” and inserting “shall (except as payments under clause (i) are required to be reduced to take into account the requirements of clause (v)) approximate”; and (4) by adding at the end the following new clauses: “(v) The Secretary shall provide that— “(I) the day outlier percentage for fiscal year 1995 shall be 75 percent of the day outlier percentage for fiscal year 1994; “(II) the day outlier percentage for fiscal year 1996 shall be 50 percent of the day outlier percentage for fiscal year 1994; and 107 STAT. 575 “(III) the day outlier percentage for fiscal year 1997 shall be 25 percent of the day outlier percentage for fiscal year 1994. “(vi) For purposes of this subparagraph, the term ‘day outlier percentage’ means, for a fiscal year, the percentage of the total additional payments made by the Secretary under this subparagraph for discharges in that fiscal year which are additional payments under clause (i).”. (d) Extension for Regional Referral Centers.— (1) Extension of classification through fiscal year 1994.— Any hospital that is classified as a regional referral center under section 1886(d)(5)(C) of the Social Security Act as of September 30, 1992, shall continue to be so classified for cost reporting periods beginning during fiscal year 1993 or fiscal year 1994, unless the area in which the hospital is located is redesignated as a Metropolitan Statistical Area by the Office of Management and Budget for such a fiscal year. (2) Permitting hospitals to decline reclassification.— If any hospital fails to qualify as a rural referral center under section 1886(d)(5)(C) of the Social Security Act as a result of a decision by the Medicare Geographic Classification Review Board under section 1886(d)(10) of such Act to reclassify the hospital as being located in an urban area for fiscal year 1993 or fiscal year 1994, the Secretary of Health and Human Services shall— (A) notify such hospital of such failure to qualify, (B) provide an opportunity for such hospital to decline such reclassification, and (C) if the hospital— (i) declines such reclassification, administer the Social Security Act (other than section 1886(d)(8)(D)) for such fiscal year as if the decision by the Review Board had not occurred, or (ii) fails to decline such reclassification, administer the Social Security Act without regard to paragraph (1). (3) Requiring lump-sum retroactive payment for hospitals losing classification.— (A) In general.— In the case of a hospital described in paragraph (1), the Secretary of Health and Human Services shall make a lump-sum payment to the hospital equal to the difference between the aggregate payment made to the hospital under section 1886 of such Act (excluding outlier payments under subsection (d)(5)(A) of such section) during the period of applicability described in subparagraph (B) and the aggregate payment that would have been made to the hospital under such section if, during the period of applicability, the hospital was classified a regional referral center under section 1886(d)(5)(C) of such Act. (B) Period of applicability.— In subparagraph (A), the “period of applicability” is the period that begins on October 1, 1992, and ends on the date of the enactment of this Act. (e) Extension for Medicare-Dependent, Small Rural Hospitals.— 107 STAT. 576 (1) Extension of additional payments.— Section 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amended— (A) in clause (i) in the matter preceding subclause (I), by striking “ending on or before March 31, 1993,” and all that follows and inserting the following: “before October 1, 1994, in the case of a subsection (a) hospital which is a medicare-dependent, small rural hospital, payment under paragraph (1)(A) shall be equal to the sum of the amount determined under clause (ii) and the amount determined under paragraph (1)(A)(iii).”; (B) by redesignating clauses (ii) and (iii) as clauses (iii) and (iv); and (C) by inserting after clause (i) the following new clause: “(ii) The amount determined under this clause is— “(I) for discharges occurring during the first 3 12-month cost reporting periods that begin on or after April 1, 1990, the amount by which the hospital’s target amount for the cost reporting period (as defined in subsection (b)(3)(D)) exceeds the amount determined under paragraph (1)(A)(iii); and “(II) for discharges occurring during any subsequent cost reporting period (or portion thereof) and before October 1, 1994, 50 percent of the amount by which the hospital’s target amount for the cost reporting period (as defined in subsection (b)(3)(D)) exceeds the amount determined under paragraph (1)(A)(iii).” (2) Permitting hospitals to decline reclassification.— If any hospital fails to qualify as a medicare-dependent, small rural hospital under section 1886(d)(5)(G)(i) of the Social Security Act as a result of a decision by the Medicare Geographic Classification Review Board under section 1886(d)(10) of such Act to reclassify the hospital as being located in an urban area for fiscal year 1993 or fiscal year 1994, the Secretary of Health and Human Services shall— (A) notify such hospital of such failure to qualify, (B) provide an opportunity for such hospital to decline such reclassification, and (C) if the hospital declines such reclassification, administer the Social Security Act (other than section 1886(d)(8)(D)) for such fiscal year as if the decision by the Review Board had not occurred. (3) Requiring lump-sum retroactive payment.— (A) In general.— In the case of a hospital treated as a medicare-dependent, small rural hospital under section 1886(d)(5)(G) of the Social Security Act, the Secretary of Health and Human Services shall make a lump-sum payment to the hospital equal to the difference between the aggregate payment made to the hospital under section 1886 of such Act (excluding outlier payments under subsection (d)(5)(A) of such section) during the period of applicability described in subparagraph (B) and the aggregate payment that would have been made to the hospital under such section if, during the period of applicability, section 1886(d)(5)(G) of such Act had been applied as if the amendments made by paragraph (1) had been in effect. (B) Period of applicability.— In subparagraph (A), the “period of applicability” is, with respect to a hospital, the period that begins on the first day of the hospital’s 107 STAT. 577first 12-month cost reporting period that begins after April 1, 1992, and ends on the date of the enactment of this Act. (f) Extension of Regional Floor.— Section 1886(d)(1)(A)(iii) (42 U.S.C. 1395ww(d)(1)(A)(iii)) is amended to read as follows: “(iii) beginning on or after April 1, 1988, is equal to— “(I) the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges, or “(II) for discharges occurring during a fiscal year ending on or before September 30, 1996, the sum of 85 percent of the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges and 15 percent of the regional adjusted DRG prospective payment rate determined under such paragraph, but only if the average standardized amount (described in clause (i)(I) or clause (ii)(I) of paragraph (3)(D)) for hospitals within the region of, and in the same large urban or other area (or, for discharges occurring during a fiscal year ending on or before September 30, 1994, the same rural, large urban, or other urban area) as, the hospital is greater than the average standardized amount (described in the respective clause) for hospitals within the United States in that type of area for discharges occurring during such fiscal year.”.