EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT AMOUNTS UNDER THE MEDICARE INPATIENT HOSPITAL PROSPECTIVE PAYMENT SYSTEM.

SEC. 401. EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT AMOUNTS UNDER THE MEDICARE INPATIENT HOSPITAL PROSPECTIVE PAYMENT SYSTEM.(a) In General.—Section 1886(d)(3)(A)(iv) (42 U.S.C. 1395ww(d)(3)(A)(iv)) is amended—(1) by striking “(iv) For discharges” and inserting “(iv)(I) Subject to subclause (II), for discharges”; and(2) by adding at the end the following new subclause:“(II) For discharges occurring in a fiscal year (beginning with fiscal year 2004), the Secretary shall compute a standardized amount for hospitals located in any area within the United States and within each region equal to the standardized amount computed for the previous fiscal year under this subparagraph for hospitals located in a large urban area (or, beginning with fiscal year 2005, for all hospitals in the previous fiscal year) increased by the applicable percentage increase under subsection (b)(3)(B)(i) for the fiscal year involved.”.(b) Conforming Amendments.—(1) Computing drg-specific rates.—Section 1886(d)(3)(D) (42 U.S.C. 1395ww(d)(3)(D)) is amended—(A) in the heading, by striking “in different areas”;(B) in the matter preceding clause (i), by striking “, each of”; (C) in clause (i)—(i) in the matter preceding subclause (I), by inserting “for fiscal years before fiscal year 2004,” before “for hospitals”; and(ii) in subclause (II), by striking “and” after the semicolon at the end;(D) in clause (ii)—(i) in the matter preceding subclause (I), by inserting “for fiscal years before fiscal year 2004,” before “for hospitals”; and117 STAT. 2263(ii) in subclause (II), by striking the period at the end and inserting “; and”; and(E) by adding at the end the following new clause:“(iii) for a fiscal year beginning after fiscal year 2003, for hospitals located in all areas, to the product of—“(I) the applicable standardized amount (computed under subparagraph (A)), reduced under subparagraph (B), and adjusted or reduced under subparagraph (C) for the fiscal year; and“(II) the weighting factor (determined under paragraph (4)(B)) for that diagnosis-related group.”.(2) Technical conforming sunset.—Section 1886(d)(3) (42 U.S.C. 1395ww(d)(3)) is amended—(A) in the matter preceding subparagraph (A), by inserting “, for fiscal years before fiscal year 1997,” before “a regional adjusted DRG prospective payment rate”; and(B) in subparagraph (D), in the matter preceding clause (i), by inserting “, for fiscal years before fiscal year 1997,” before “a regional DRG prospective payment rate for each region,”.(3) Additional technical amendment.—Section 1886(d)(3)(A)(iii) (42 U.S.C. 1395ww(d)(3)(A)(iii)) is amended by striking “in an other urban area” and inserting “in an urban area”.(c) Equalizing Urban and Rural Standardized Payment Amounts Under the Medicare Inpatient Hospital Prospective Payment System for Hospitals in Puerto Rico.—(1) In general.—Section 1886(d)(9)(A) (42 U.S.C. 1395ww(d)(9)(A)), as amended by section 504, is amended—(A) in clause (i), by striking “and” after the comma at the end; and(B) by striking clause (ii) and inserting the following new clause:“(ii) the applicable Federal percentage (specified in subparagraph (E)) of—“(I) for discharges beginning in a fiscal year beginning on or after October 1, 1997, and before October 1, 2003, the discharge-weighted average of—“(aa) the national adjusted DRG prospective payment rate (determined under paragraph (3)(D)) for hospitals located in a large urban area,“(bb) such rate for hospitals located in other urban areas, and“(cc) such rate for hospitals located in a rural area,for such discharges, adjusted in the manner provided in paragraph (3)(E) for different area wage levels; and“(II) for discharges in a fiscal year beginning on or after October 1, 2003, the national DRG prospective payment rate determined under paragraph (3)(D)(iii) for hospitals located in any area for such discharges, adjusted in the manner provided in paragraph (3)(E) for different area wage levels.117 STAT. 2264As used in this section, the term ‘subsection (d) Puerto Rico hospital’ means a hospital that is located in Puerto Rico and that would be a subsection (d) hospital (as defined in paragraph (1)(B)) if it were located in one of the 50 States.”. (2) Application of puerto rico standardized amount based on large urban areas.—Section 1886(d)(9)(C) (42 U.S.C. 1395ww(d)(9)(C)) is amended—(A) in clause (i)—(i) by striking “(i) The Secretary” and inserting “(i)(I) For discharges in a fiscal year after fiscal year 1988 and before fiscal year 2004, the Secretary”; and(ii) by adding at the end the following new subclause:“(II) For discharges occurring in a fiscal year (beginning with fiscal year 2004), the Secretary shall compute an average standardized amount for hospitals located in any area of Puerto Rico that is equal to the average standardized amount computed under subclause (I) for fiscal year 2003 for hospitals in a large urban area (or, beginning with fiscal year 2005, for all hospitals in the previous fiscal year) increased by the applicable percentage increase under subsection (b)(3)(B) for the fiscal year involved.”;(B) in clause (ii), by inserting “(or for fiscal year 2004 and thereafter, the average standardized amount)” after “each of the average standardized amounts”; and(C) in clause (iii)(I), by striking “for hospitals located in an urban or rural area, respectively”.(d) Implementation.—(1) In general.—The amendments made by subsections (a), (b), and (c)(1) of this section shall have no effect on the authority of the Secretary, under subsection (b)(2) of section 402 of Public Law 108–89, to delay implementation of the extension of provisions equalizing urban and rural standardized inpatient hospital payments under subsection (a) of such section 402.(2) Application of puerto rico standardized amount based on large urban areas.—The authority of the Secretary referred to in paragraph (1) shall apply with respect to the amendments made by subsection (c)(2) of this section in the same manner as that authority applies with respect to the extension of provisions equalizing urban and rural standardized inpatient hospital payments under subsection (a) of such section 402, except that any reference in subsection (b)(2)(A) of such section 402 is deemed to be a reference to April 1, 2004.