SEC. 1886.
[42 U.S.C. 1395ww] (a)(1)(A)(i)
The Secretary, in determining the
amount of the payments that may be made under this title with respect
to operating costs of inpatient hospital services (as defined in
paragraph (4)) shall not recognize as reasonable (in the efficient
delivery of health services) costs for the provision of such services
by a hospital for a cost reporting period to the extent such costs
exceed the applicable percentage (as determined under clause (ii))
of the average of such costs for all hospitals in the same grouping
as such hospital for comparable time periods.
(ii) For purposes of clause (i), the applicable percentage for
hospital cost reporting periods beginning—
-
(I) on or after October 1, 1982, and before October 1, 1983,
is 120 percent;
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(II) on or after October 1, 1983, and before October 1, 1984,
is 115 percent; and
-
(III) on or after October 1, 1984, is 110 percent.
(B)(i) For purposes of subparagraph (A) the Secretary shall
establish case mix indexes for all short-term hospitals, and shall
set limits for each hospital based upon the general mix of types
of medical cases with respect to which such hospital provides services
for which payment may be made under this title.
(ii) The Secretary shall set such limits for a cost reporting
period of a hospital—
-
(I) by updating available data for a previous period to the
immediate preceding cost reporting period by the estimated average
rate of change of hospital costs industry-wide, and
-
(II) by projecting for the cost reporting period by the applicable
percentage increase (as defined in subsection (b)(3)(B)).
(C) The limitation established under subparagraph (A) for any
hospital shall in no event be lower than the allowable operating
costs of inpatient hospital services (as defined in paragraph
(4)) recognized under this title for such hospital for such hospital's
last cost reporting period prior to the hospital's first cost reporting
period for which this section is in effect.
(D) Subparagraph (A) shall not apply to cost reporting periods
beginning on or after October 1, 1983.
(2) The Secretary shall provide for such exemptions from, and
exceptions and adjustments to, the limitation established under
paragraph (1)(A) as he deems appropriate, including those which
he deems necessary to take into account—
-
(A) the special needs of sole community hospitals, of new hospitals,
of risk based health maintenance organizations, and of hospitals
which provide atypical services or essential community services,
and to take into account extraordinary circumstances beyond the
hospital's control, medical and paramedical education costs, significantly
fluctuating population in the service area of the hospital, and
unusual labor costs,
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(B) the special needs of psychiatric hospitals and of public
or other hospitals that serve a significantly disproportionate
number of patients who have low income or are entitled to benefits
under part A of this title, and
-
(C) a decrease in the inpatient hospital services that a hospital
provides and that are customarily provided directly by similar hospitals
which results in a significant distortion in the operating costs
of inpatient hospital services.
(3) The limitation established under paragraph (1)(A) shall not
apply with respect to any hospital which—
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(A) is located outside of a standard metropolitan statistical
area, and
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(B)(i) has less than 50 beds, and
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(ii) was in operation and had less than 50 beds on the date
of the enactment of this section.[624]
(4) For purposes of this section, the term “operating
costs of inpatient hospital services” includes all routine
operating costs, ancillary service operating costs, and special
care unit operating costs with respect to inpatient hospital services
as such costs are determined on an average per admission or per
discharge basis (as determined by the Secretary), and includes the
costs of all services for which payment may be made under this title
that are provided by the hospital (or by an entity wholly owned
or operated by the hospital) to the patient during the 3 days (or,
in the case of a hospital that is not a subsection (d) hospital,
during the 1 day) immediately preceding the date of the patient's admission
if such services are diagnostic services (including clinical diagnostic laboratory
tests) or are other services related to the admission (as defined
by the Secretary). Such term does not include costs of approved
educational activities, a return on equity capital, other capital-related
costs (as defined by the Secretary for periods before October 1,
1987), or costs with respect to administering blood clotting factors
to individuals with hemophilia.[625]
(b)(1)[626]
Notwithstanding section 1814(b) but
subject to the provisions of section 1813, if the operating costs
of inpatient hospital services (as defined in subsection (a)(4))
of a hospital (other than a subsection (d) hospital, as defined in
subsection (d)(1)(B) and other than a rehabilitation facility described
in subsection (j)(1)) for a cost reporting period subject to this
paragraph—
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(A) are less than or equal to the target amount (as defined
in paragraph (3)) for that hospital for that period, the amount
of the payment with respect to such operating costs payable under
part A on a per discharge or per admission basis (as the case
may be) shall be equal to the amount of such operating costs, plus—
-
(i) 15 percent of the amount by which the target amount exceeds
the amount of the operating costs, or
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(ii) 2 percent of the target amount, whichever is less;
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(B) are greater than the target amount but do not exceed 110
percent of the target amount, the amount of the payment with respect
to those operating costs payable under part A on a per discharge
basis shall equal the target amount; or
-
whichever is less; or
-
(C) are greater than 110 percent of the target amount, the
amount of the payment with respect to such operating costs payable
under part A on a per discharge or per admission basis (as the case
may be) shall be equal to (i) the target amount, plus (ii) in the
case of cost reporting periods beginning on or after October 1,
1991, an additional amount equal to 50 percent of the amount by
which the operating costs exceed 110 percent of the target amount
(except that such additional amount may not exceed 10 percent of the
target amount) after any exceptions or adjustments are made to such target
amount for the cost reporting period;
plus the amount, if any, provided under paragraph (2), except
that in no case may the amount payable under this title (other than
on the basis of a DRG prospective payment rate determined under
subsection (d)) with respect to operating costs of inpatient hospital
services exceed the maximum amount payable with respect to such
costs pursuant to subsection (a).
(2)(A) Except as provided in subparagraph (E), in addition to
the payment computed under paragraph (1), in the case of an eligible
hospital (described in subparagraph (B)) for a cost reporting period
beginning on or after October 1, 1997, the amount of payment on
a per discharge basis under paragraph (1) shall be increased by
the lesser of—
-
(i) 50 percent of the amount by which the operating costs are
less than the expected costs (as defined in subparagraph (D))
for the period; or
-
(ii) 1 percent of the target amount for the period.
(B) For purposes of this paragraph, an “eligible hospital” means
with respect to a cost reporting period, a hospital—
-
(i) that has received payments under this subsection for at
least 3 full cost reporting periods before that cost reporting
period, and
-
(ii) whose operating costs for the period are less than the
least of its target amount, its trended costs (as defined in subparagraph
(C)), or its expected costs (as defined in subparagraph (D)) for
the period.
(C) For purposes of subparagraph (B)(ii), the term “trended
costs” means for a hospital cost reporting period ending
in a fiscal year—
-
(i) in the case of a hospital for which its cost reporting
period ending in fiscal year 1996 was its third or subsequent full
cost reporting period for which it receives payments under this
subsection, the lesser of the operating costs or target amount for
that hospital for its cost reporting period ending in fiscal year
1996, or
-
(ii) in the case of any other hospital, the operating costs
for that hospital for its third full cost reporting period for which
it receives payments under this subsection, increased (in a compounded
manner) for each succeeding fiscal year (through the fiscal year
involved) by the market basket percentage increase for the fiscal
year.
(D) For purposes of this paragraph, the term “expected
costs”, with respect to the cost reporting period ending
in a fiscal year, means the lesser of the operating costs of inpatient
hospital services or target amount per discharge for the previous
cost reporting period updated by the market basket percentage increase
(as defined in paragraph (3)(B)(iii)) for the fiscal year.
(E)(i) In the case of an eligible hospital that is a hospital
or unit that is within a class of hospital described in clause (ii)
with a 12-month cost reporting period beginning before
the enactment of this subparagraph, in determining the amount of
the increase under subparagraph (A), the Secretary shall substitute
for the percentage of the target amount applicable under subparagraph
(A)(ii)—
-
(I) for a cost reporting period beginning on or after October
1, 2000, and before September 30, 2001, 1.5 percent; and
-
(II) for a cost reporting period beginning on or after October
1, 2001, and before September 30, 2002, 2 percent.
(ii) For purposes of clause (i), each of the following shall
be treated as a separate class of hospital:
-
(I) Hospitals described in clause (i) of subsection (d)(1)(B)
and psychiatric units described in the matter following clause
(v) of such subsection.
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(II) Hospitals described in clause (iv) of such subsection.
(3)(A) Except as provided in subparagraph (C) and succeeding
subparagraphs and in paragraph (7)(A)(ii), for purposes of this
subsection, the term “target amount” means, with
respect to a hospital for a particular 12-month cost reporting
period—
-
(i) in the case of the first such reporting period for which
this subsection is in effect, the allowable operating costs of
inpatient hospital services (as defined in subsection (a)(4))
recognized under this title for such hospital for the preceding
12-month cost reporting period, and
-
(ii) in the case of a later reporting period, the target amount
for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under subparagraph
(B) for that particular cost reporting period.
(B)(i) For purposes of subsection (d) and subsection (j) for
discharges occurring during a fiscal year, the “applicable
percentage increase” shall be—
-
(I) for fiscal year 1986, 1/2 percent,
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(II) for fiscal year 1987, 1.15 percent,
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(III) for fiscal year 1988, 3.0 percent for hospitals located
in a rural area, 1.5 percent for hospitals located in a large urban
area (as defined in subsection (d)(2)(D)), and 1.0 percent for
hospitals located in other urban areas,
-
(IV) for fiscal year 1989, the market basket percentage increase
minus 1.5 percentage points for hospitals located in a rural area,
the market basket percentage increase minus 2.0 percentage points
for hospitals located in a large urban area, and the market basket
percentage increase minus 2.5 percentage points for hospitals located
in other urban areas,
-
(V) for fiscal year 1990, the market basket percentage increase
plus 4.22 percentage points for hospitals located in a rural area,
the market basket percentage increase plus 0.12 percentage points
for hospitals located in a large urban area, and the market basket
percentage increase minus 0.53 percentage points for hospitals located
in other urban areas,
-
(VI) for fiscal year 1991, the market basket percentage increase
minus 2.0 percentage points for hospitals 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,
-
(VII) for fiscal year 1992, the market basket percentage increase
minus 1.6 percentage points for hospitals 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,
-
(VIII) for fiscal year 1993, the market basket percentage increase
minus 1.55 percentage point for hospitals in a large urban or other
urban area, and the market basket percentage increase minus 0.55
for hospitals located in a rural area,
-
(IX) for fiscal year 1994, the market basket percentage increase
minus 2.5 percentage points for hospitals located in a large urban
or other urban area, and the market basket percentage increase minus
1.0 percentage point for hospitals located in a rural area,
-
(X) for fiscal year 1995, the market basket percentage increase
minus 2.5 percentage points 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),
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(XI) for fiscal year 1996, the market basket percentage increase
minus 2.0 percentage points for hospitals in all areas,
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(XII) for fiscal year 1997, the market basket percentage increase
minus 0.5 percentage point for hospitals in all areas,
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(XIII) for fiscal year 1998, 0 percent,
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(XIV) for fiscal year 1999, the market basket percentage increase
minus 1.9 percentage points for hospitals in all areas,
-
(XV) for fiscal year 2000, the market basket percentage increase
minus 1.8 percentage points for hospitals in all areas,
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(XVI) for fiscal year 2001, the market basket percentage increase
for hospitals in all areas,
-
(XVII) for fiscal year 2002, the market basket percentage increase
minus 0.55 percentage points for hospitals in all areas,
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(XVIII) for fiscal year 2003, the market basket percentage
increase minus 0.55 percentage points for hospitals in all areas, [627]
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(XIX)[628] for each of fiscal years 2004 through 2007, subject
to clause (vii), the market basket percentage increase for hospitals
in all areas; and
-
(XX) for fiscal year 2008 and each subsequent fiscal year, the
market basket percentage increase for hospitals in all areas.[629]
(ii) For purposes of subparagraphs (A) and (E), the “applicable
percentage increase” for 12-month cost reporting periods
beginning during—
-
(I) fiscal year 1986, is 0.5 percent,
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(II) fiscal year 1987, is 1.15 percent,
-
(III) fiscal year 1988, is the market basket percentage increase
minus 2.0 percentage points,
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(IV) a subsequent fiscal year ending on or before September
30, 1993, is the market basket percentage increase,
-
(V) fiscal years 1994 thorugh 1997, is the market basket percentage increase
minus the applicable reduction (as defined in clause (v)(II)), or
in the case of a hospital for a fiscal year for which the hospital's
update adjustment percentage (as defined in clause (v)(I)) is at
least 10 percent, the market basket percentage increase,
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(VI) for fiscal year 1998, is 0 percent,
-
(VII) for fiscal years 1999 through 2002, is the applicable
update factor specified under clause (vi) for the fiscal year,
and
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(VIII) subsequent fiscal years is the market basket percentage
increase.
(iii) For purposes of this subparagraph, the term “market
basket percentage increase” means, with respect to cost
reporting periods and discharges occurring in a fiscal year, the
percentage, estimated by the Secretary before the beginning of
the period or fiscal year, by which the cost of the mix of goods
and services (including personnel costs but excluding nonoperating
costs) comprising routine, ancillary, and special care unit inpatient
hospital services, based on an index of appropriately weighted indicators
of changes in wages and prices which are representative of the mix
of goods and services included in such inpatient hospital services,
for the period or fiscal year will exceed the cost of such mix of
goods and services for the preceding 12-month cost reporting
period or fiscal year.
(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 (adjusted to exclude any portion of
a cost reporting period beginning during fiscal year 1993 for
which the applicable percentage increase is determined under subparagraph
(I)),
-
(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).
(v) For purposes of clause (ii)(V)—
-
(I) a hospital's “update adjustment percentage” for
a fiscal year is the percentage by which the hospital's allowable
operating costs of inpatient hospital services recognized under
this title for the cost reporting period beginning in fiscal year
1990 exceeds the hospital's target amount (as determined under subparagraph
(A)) for such cost reporting period, increased for each fiscal year
(beginning with fiscal year 1994) by the sum of any of the hospital's
applicable reductions under subclause (V) for previous fiscal years;
and
-
(II) the “applicable reduction” with respect
to a hospital for a fiscal year is the lesser of 1 percentage point
or the percentage point difference between 10 percent and the
hospital's update adjustment percentage for the fiscal year.
(vi) For purposes of clause (ii)(VII) for a fiscal year, if a
hospital's allowable operating costs of inpatient hospital services
recognized under this title for the most recent cost reporting period
for which information is available—
-
(I) is equal to, or exceeds, 110 percent of the hospital's
target amount (as determined under subparagraph (A)) for such cost
reporting period, the applicable update factor specified under this
clause is the market basket percentage;
-
(II) exceeds 100 percent, but is less than 110 percent, of such
target amount for the hospital, the applicable update factor specified
under this clause is 0 percent or, if greater, the market basket
percentage minus 0.25 percentage points for each percentage point
by which such allowable operating costs (expressed as a percentage
of such target amount) is less than 110 percent of such target amount;
-
(III) is equal to, or less than 100 percent, but exceeds 2/3
of such target amount for the hospital, the applicable update factor
specified under this clause is 0 percent or, if greater, the market
basket percentage minus 2.5 percentage points; or
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(IV) does not exceed 2/3 of such target amount for
the hospital, the applicable update factor specified under this
clause is 0 percent.
(vii)[630](I) For purposes of clause (i)(XIX) for each of fiscal
years 2005 through 2007, in a case of a subsection (d) hospital
that does not submit data to the Secretary in accordance with subclause
(II) with respect to such a fiscal year, the applicable percentage
increase under such clause for such fiscal year shall be reduced
by 0.4 percentage points. Such reduction shall apply only with respect to
the fiscal year involved, and the Secretary shall not take into
account such reduction in computing the applicable percentage increase
under clause (i)(XIX) for a subsequent fiscal year.
(II) Each subsection (d) hospital shall submit to the Secretary
quality data (for a set of 10 indicators established by the Secretary
as of November 1, 2003) that relate to the quality of care furnished
by the hospital in inpatient settings in a form and manner, and
at a time, specified by the Secretary for purposes of this clause,
but with respect to fiscal year 2005, the Secretary shall provide
for a 30-day grace period for the submission of data by a hospital.
(C) In the case of a hospital that is a sole community hospital
(as defined in subsection (d)(5)(D)(iii)), subject to subparagraph
(I) the term “target amount” means—
-
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the hospital—
-
(I) the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
(in this subparagraph referred to as the “base cost reporting
period”) preceding the first cost reporting period for
which this subsection was in effect with respect to such hospital,
increased (in a compounded manner) by—
-
(II) the applicable percentage increases applied to such hospital
under this paragraph for cost reporting periods after the base cost
reporting period and up to and including such first 12-month
cost reporting period,
-
(ii) with respect to a later cost reporting period beginning
before fiscal year 1994, the target amount for the preceding 12-month
cost reporting period, increased by the applicable percentage increase
under subparagraph (B)(iv) for discharges occurring in the fiscal
year in which that later cost reporting period begins,
-
(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).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution results
in an increase in the target amount for the hospital.
(D) For cost reporting periods ending on or before September
30, 1994 and for cost reporting periods beginning on or after October
1, 1997, and before October 1, 2006, in the case of a hospital that
is a medicare-dependent, small rural hospital (as defined in subsection
(d)(5)(G)), the term “target amount” means—
-
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the hospital—
-
(I) the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
(in this subparagraph referred to as the “base cost reporting
period”) preceding the first cost reporting period for
which this subsection was in effect with respect to such hospital,
increased (in a compounded manner) by—
-
(II) the applicable percentage increases applied to such hospital
under this paragraph for cost reporting periods after the base cost
reporting period and up to and including such first 12-month
cost reporting period, or
-
(ii) with respect to a later cost reporting period beginning
before fiscal year 1994, the target amount for the preceding 12-month
cost reporting period, increased by the applicable percentage increase
under subparagraph (B)(iv) for discharges occurring in the fiscal
year in which that later cost reporting period begins,
-
(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), and
-
(iv) with respect to discharges occurring during fiscal year
1998 through fiscal year 2005, the target amount for the preceding
year increased by the applicable percentage increase under subparagraph
(B)(iv).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution results
in an increase in the target amount for the hospital.
(E) In the case of a hospital described in clause (v) of subsection
(d)(1)(B), the term “target amount” means—
-
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the hospital—
-
(I) the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
(in this subparagraph referred to as the “base cost reporting
period”) preceding the first cost reporting period for
which this subsection was in effect with respect to such hospital,
increased (in a compounded manner) by—
-
(II) the sum of the applicable percentage increases applied
to such hospital under this paragraph for cost reporting periods
after the base cost reporting period and up to and including such
first 12-month cost reporting period, or
-
(ii) with respect to a later cost reporting period, the target
amount for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under subparagraph
(B)(ii) for that later cost reporting period.
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution results
in an increase in the target amount for the hospital.
(F)(i) In the case of a hospital (or unit described in the matter
following clause (v) of subsection (d)(1)(B)) that received payment
under this subsection for inpatient hospital services furnished
during cost reporting periods beginning before October 1, 1990,
that is within a class of hospital described in clause (iii), and
that elects (in a form and manner determined by the Secretary) this subparagraph
to apply to the hospital, the target amount for the hospital's 12-month
cost reporting period beginning during fiscal year 1998 is equal
to the average described in clause (ii).
-
(ii) The average described in this clause for a hospital or
unit shall be determined by the Secretary as follows:
-
(I) The Secretary shall determine the allowable operating costs
for inpatient hospital services for the hospital or unit for each
of the 5 cost reporting periods for which the Secretary has the
most recent settled cost reports as of the date of the enactment
of this subparagraph.
-
(II) The Secretary shall increase the amount determined under
subclause (I) for each cost reporting period by the applicable
percentage increase under subparagraph (B)(ii) for each subsequent
cost reporting period up to the cost reporting period described
in clause (i).
-
(III) The Secretary shall identify among such 5 cost reporting
periods the cost reporting periods for which the amount determined
under subclause (II) is the highest, and the lowest.
-
(IV) The Secretary shall compute the averages of the amounts
determined under subclause (II) for the 3 cost reporting periods
not identified under subclause (III).
-
(iii) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
-
(I) Hospitals described in clause (i) of subsection (d)(1)(B)
and psychiatric units described in the matter following clause
(v) of such subsection.
-
(II) Hospitals described in clause (ii) of such subsection and
rehabilitation units described in the matter following clause
(v) of such subsection.
-
(III) Hospitals described in clause (iii) of such subsection.
-
(IV) Hospitals described in clause (iv) of such subsection.
-
(V) Hospitals described in clause (v) of such subsection.
(G)(i) In the case of a qualified long-term care hospital
(as defined in clause (ii)) that elects (in a form and manner
determined by the Secretary) this subparagraph to apply to the
hospital, the target amount for the hospital's 12-month
cost reporting period beginning during fiscal year 1998 is equal
to the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
beginning during fiscal year 1996, increased by the applicable
percentage increase for the cost reporting period beginning during
fiscal year 1997.
-
(ii) In clause (i), a “qualified long-term
care hospital” means, with respect to a cost reporting
period, a hospital described in clause (iv) of subsection (d)(1)(B)
during each of the 2 cost reporting periods for which the Secretary
has the most recent settled cost reports as of the date of the enactment
of this subparagraph for each of which—
-
(I) the hospital's allowable operating costs of inpatient hospital
services recognized under this title exceeded 115 percent of the
hospital's target amount, and
-
(II) the hospital would have a disproportionate patient percentage
of at least 70 percent (as determined by the Secretary under subsection (d)(5)(F)(vi))
if the hospital were a subsection (d) hospital.
(H)(i) In the case of a hospital or unit that is within a class
of hospital described in clause (iv), for a cost reporting period
beginning during fiscal years 1998 through 2002, the target amount
for such a hospital or unit may not exceed the amount as updated
up to or for such cost reporting period under clause (ii).
(ii)(I) In the case of a hospital or unit that is within a class
of hospital described in clause (iv), the Secretary shall estimate
the 75th percentile of the target amounts for such hospitals within
such class for cost reporting periods ending during fiscal year
1996, as adjusted under clause (iii).
-
(II) The Secretary shall update the amount determined under
subclause (I), for each cost reporting period after the cost reporting
period described in such subclause and up to the first cost reporting
period beginning on or after October 1, 1997, by a factor equal
to the market basket percentage increase.
-
(III) For cost reporting periods beginning during each of fiscal
years 1999 through 2002, subject to subparagraph (J), the Secretary
shall update such amount by a factor equal to the market basket
percentage increase.
-
(iii) In applying clause (ii)(I) in the case of a hospital or
unit, the Secretary shall provide for an appropriate adjustment
to the labor-related portion of the amount determined
under such subparagraph to take into account differences between
average wage-related costs in the area of the hospital
and the national average of such costs within the same class of
hospital.
-
(iv) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
-
(I) Hospitals described in clause (i) of subsection (d)(1)(B)
and psychiatric units described in the matter following clause
(v) of such subsection.
-
(II) Hospitals described in clause (ii) of such subsection and
rehabilitation units described in the matter following clause
(v) of such subsection.
-
(III) Hospitals described in clause (iv) of such subsection.
(I)(i) For cost reporting periods beginning on or after October
1, 2000, in the case of a sole community hospital there shall be
substituted for the amount otherwise determined under subsection
(d)(5)(D)(i), if such substitution results in a greater amount
of payment under this section for the hospital—
-
(I) with respect to discharges occurring in fiscal year 2001,
75 percent of the[631] amount otherwise applicable to the hospital
under subsection (d)(5)(D)(i) (referred to in this clause as the
“subsection (d)(5)(D)(i) amount”) (as defined
in clause (ii));
-
(II) with respect to discharges occurring in fiscal year 2002,
50 percent of the subsection (d)(5)(D)(i) amount and 50 percent
of the rebased target amount;
-
(III) with respect to discharges occurring in fiscal year 2003,
25 percent of the subsection (d)(5)(D)(i) amount and 75 percent
of the rebased target amount; and
-
(IV) with respect to discharges occurring after fiscal year
2003, 100 percent of the rebased target amount.
(ii) For purposes of this subparagraph, the “rebased
target amount” has the meaning given the term “target
amount” in subparagraph (C) except that—
-
(I) there shall be substituted for the base cost reporting
period the 12-month cost reporting period beginning during
fiscal year 1996;
-
(II) any reference in subparagraph (C)(i) to the “first
cost reporting period” described in such subparagraph
is deemed a reference to the first cost reporting period beginning
on or after October 1, 2000; and
-
(III) applicable increase percentage shall only be applied under
subparagraph (C)(iv) for discharges occurring in fiscal years
beginning with fiscal year 2002.
(iii)[632] In no case shall a hospital be denied treatment as
a sole community hospital or payment (on the basis of a target rate
as such as a hospital) because data are unavailable for any cost
reporting period due to changes in ownership, changes in fiscal
intermediaries, or other extraordinary circumstances, so long as
data for at least one applicable base cost reporting period is available.
(J) For cost reporting periods beginning during fiscal year
2001, for a hospital described in subsection (d)(1)(B)(iv)—
-
(i) the limiting or cap amount otherwise determined under subparagraph (H)
shall be increased by 2 percent; and
-
(ii) the target amount otherwise determined under subparagraph
(A) shall be increased by 25 percent (subject to the limiting or
cap amount determined under subparagraph (H), as increased by
clause (i)).
(4)(A)(i) The Secretary shall provide for an exemption (and in
the case of a hospital described in subsection (d)(1)(B)(iii),
may provide an exemption from) and adjustment to, the method under
this subsection for determining the amount of payment to a hospital
where events beyond the hospital's control or extraordinary circumstances,
including changes in the case mix of such hospital, create a distortion
in the increase in costs for a cost reporting period (including
any distortion in the costs for the base period against which such
increase is measured). The Secretary may provide for such other
exemptions from, and exceptions and adjustments to, such method
as the Secretary deems appropriate, including the assignment of
a new base period which is more representative, as determined by
the Secretary, of the reasonable and necessary cost of inpatient services
and including those which he deems necessary to take into account
a decrease in the inpatient hospital services that a hospital provides
and that are customarily provided directly by similar hospitals
which results in a significant distortion in the operating costs
of inpatient hospital services. The Secretary shall announce a decision
on any request for an exemption, exception, or adjustment under
this paragraph not later than 180 days after receiving a completed application
from the intermediary for such exemption, exception, or adjustment,
and shall include in such decision a detailed explanation of the
grounds on which such request was approved or denied.
(ii) The payment reductions under paragraph (3)(B)(ii)(V) shall
not be considered by the Secretary in making adjustments pursuant
to clause (i). In making such reductions, the Secretary shall treat
the applicable update factor described in paragraph (3)(B)(vi) for
a fiscal year as being equal to the market basket percentage for
that year.
(B) In determining under subparagraph (A) whether to assign a
new base period which is more representative of the reasonable
and necessary cost to a hospital of providing inpatient services,
the Secretary shall take into consideration—
-
(i) changes in applicable technologies and medical practices,
or differences in the severity of illness among patients, that
increase the hospital's costs;
-
(ii) whether increases in wages and wage-related costs for
hospitals located in the geographic area in which the hospital
is located exceed the average of the increases in such costs paid
by hospitals in the United States; and
-
(iii) such other factors as the Secretary considers appropriate
in determining increases in the hospital's costs of providing
inpatient services.
(C) Paragraph (1) shall not apply to payment of hospitals which
is otherwise determined under paragraph (3) of section 1814(b).
(5) In the case of any hospital having any cost reporting period
of other than a 12-month period, the Secretary shall determine
the 12-month period which shall be used for purposes of this section.
(6) In the case of any hospital which becomes subject to the
taxes under section 3111 of the Internal Revenue Code of 1954,[633] with
respect to any or all of its employees, for part or all of a cost
reporting period, and was not subject to such taxes with respect
to any or all of its employees for all or part of the 12-month
base cost reporting period referred to in subsection (b)(3)(A)(i),
the Secretary shall provide for an adjustment by increasing the
base period amount described in such subsection for such hospital
by an amount equal to the amount of such taxes which would have
been paid or accrued by such hospital for such base period if such
hospital had been subject to such taxes for all of such base period
with respect to all its employees, minus the amount of any such
taxes actually paid or accrued for such base period.
(7)(A) Notwithstanding paragraph (1), in the case of a hospital
or unit that is within a class of hospital described in subparagraph
(B) which first receives payments under this section on or after
October 1, 1997—
-
(i) for each of the first 2 cost reporting periods for which
the hospital has a settled cost report, the amount of the payment
with respect to operating costs described in paragraph (1) under
part A on a per discharge or per admission basis (as the case
may be) is equal to the lesser of—
-
(I) the amount of operating costs for such respective period,
or
-
(II) 110 percent of the national median (as estimated by the
Secretary) of the target amount for hospitals in the same class
as the hospital for cost reporting periods ending during fiscal
year 1996, updated by the hospital market basket increase percentage
to the fiscal year in which the hospital first received payments
under this section, as adjusted under subparagraph (C); and
-
(ii) for purposes of computing the target amount for the subsequent
cost reporting period, the target amount for the preceding cost
reporting period is equal to the amount determined under clause
(i) for such preceding period.
(B) For purposes of this paragraph, each of the following shall
be treated as a separate class of hospital:
-
(i) Hospitals described in clause (i) of subsection (d)(1)(B)
and psychiatric units described in the matter following clause
(v) of such subsection.
-
(ii) Hospitals described in clause (ii) of such subsection and
rehabilitation units described in the matter following clause
(v) of such subsection.
-
(iii) Hospitals described in clause (iv) of such subsection.
(C) In applying subparagraph (A)(i)(II) in the case of a hospital
or unit, the Secretary shall provide for an appropriate adjustment
to the labor-related portion of the amount determined under
such subparagraph to take into account differences between average
wage-related costs in the area of the hospital and the
national average of such costs within the same class of hospital.
(c)(1)
The Secretary may provide, in his discretion,
that payment with respect to services provided by a hospital in
a State may be made in accordance with a hospital reimbursement
control system in a State, rather than in accordance with the other
provisions of this title, if the chief executive officer of the State
requests such treatment and if—
-
(A) the Secretary determines that the system, if approved under
this subsection, will apply (i) to substantially all non-Federal
acute care hospitals (as defined by the Secretary) in the State
and (ii) to the review of at least 75 percent of all revenues or
expenses in the State for inpatient hospital services and of revenues
or expenses for inpatient hospital services provided under the State's
plan approved under title XIX;
-
(B) the Secretary has been provided satisfactory assurances
as to the equitable treatment under the system of all entities
(including Federal and State programs) that pay hospitals for inpatient
hospital services, of hospital employees, and of hospital patients;
-
(C) the Secretary has been provided satisfactory assurances
that under the system, over 36-month periods (the first such period
beginning with the first month in which this subsection applies
to that system in the State), the amount of payments made under
this title under such system will not exceed the amount of payments
which would otherwise have been made under this title not using
such system;
-
(D) the Secretary determines that the system will not preclude
an eligible organization (as defined in section 1876(b)) from
negotiating directly with hospitals with respect to the organization's
rate of payment for inpatient hospital services; and
-
(E) the Secretary determines that the system requires hospitals
to meet the requirement of section 1866(a)(1)(G) and the system
provides for the exclusion of certain costs in accordance with
section 1862(a)(14) (except for such waivers thereof as the Secretary
provides by regulation).
The Secretary cannot deny the application of a State under this
subsection on the ground that the State's hospital reimbursement
control system is based on a payment methodology other than on
the basis of a diagnosis-related group or on the ground that the
amount of payments made under this title under such system must
be less than the amount of payments which would otherwise have
been made under this title not using such system. If the Secretary
determines that the conditions described in subparagraph (C) are
based on maintaining payment amounts at no more than a specified
percentage increase above the payment amounts in a base period,
the State has the option of applying such test (for inpatient hospital
services under part A) on an aggregate payment basis or on the basis
of the amount of payment per inpatient discharge or admission. If the
Secretary determines that the conditions described in subparagraph
(C) are based on maintaining aggregate payment amounts below a national
average percentage increase in total payments under part A for
inpatient hospital services, the Secretary cannot deny the application
of a State under this subsection on the ground that the State's
rate of increase in such payments for such services must be less
than such national average rate of increase.
(2) In determining under paragraph (1)(C) the amount of payment
which would otherwise have been made under this title for a State,
the Secretary may provide for appropriate adjustment of such amount
to take into account previous reductions effected in the amount
of payments made under this title in the State due to the operation
of the hospital reimbursement control system in the State if the
system has resulted in an aggregate rate of increase in operating costs
of inpatient hospital services (as defined in subsection (a)(4))
under this title for hospitals in the State which is less than the
aggregate rate of increase in such costs under this title for hospitals
in the United States.
(3) The Secretary shall discontinue payments under a system
described in paragraph (1) if the Secretary—
-
(A) determines that the system no longer meets the requirements
of subparagraphs (A), (D), and (E) of paragraph (1) and, if applicable,
the requirements of paragraph (5), or
-
(B) has reason to believe that the assurances described in
subparagraph (B) or (C) of paragraph (1) (or, if applicable, in
paragraph (5)) are not being (or will not be) met.
(4) The Secretary shall approve the request of a State under
paragraph (1) with respect to a hospital reimbursement control
system if—
-
(A) the requirements of subparagraphs (A), (B), (C), (D), and
(E) of paragraph (1) have been met with respect to the system,
and
-
(B) with respect to that system a waiver of certain requirements
of title XVIII of the Social Security Act has been approved on
or before (and which is in effect as of) the date of the enactment
of the Social Security Amendments of 1983,[634] pursuant to section
402(a) of the Social Security Amendments of 1967[635] or section
222(a) of the Social Security Amendments of 1972.[636]
With respect to a State system described in this paragraph,
the Secretary shall judge the effectiveness of such system on the
basis of its rate of increase or inflation in inpatient hospital
payments for individuals under this title, as compared to the
national rate of increase or inflation for such payments, with
the State retaining the option to have the test applied on the
basis of the aggregate payments under the State system as compared
to aggregate payments which would have been made under the national
system since October 1, 1984, to the most recent date for which
annual data are available.
(5) The Secretary shall approve the request of a State under
paragraph (1) with respect to a hospital reimbursement control
system if—
-
(A) the requirements of subparagraphs (A), (B), (C), (D), and
(E) of paragraph (1) have been met with respect to the system;
-
(B) the Secretary determines that the system—
-
(i) is operated directly by the State or by an entity designated
pursuant to State law,
-
(ii) provides for payment of hospitals covered under the system
under a methodology (which sets forth exceptions and adjustments,
as well as any method for changes in the methodology) by which rates
or amounts to be paid for hospital services during a specified period
are established under the system prior to the defined rate period,
and
-
(iii) hospitals covered under the system will make such reports
(in lieu of cost and other reports, identified by the Secretary,
otherwise required under this title) as the Secretary may require
in order to properly monitor assurances provided under this subsection;
-
(C) the State has provided the Secretary with satisfactory
assurances that operation of the system will not result in any
change in hospital admission practices which result in—
-
(i) a significant reduction in the proportion of patients (receiving
hospital services covered under the system) who have no third-party
coverage and who are unable to pay for hospital services,
-
(ii) a significant reduction in the proportion of individuals
admitted to hospitals for inpatient hospital services for which
payment is (or is likely to be) less than the anticipated charges
for or costs of such services,
-
(iii) the refusal to admit patients who would be expected to
require unusually costly or prolonged treatment for reasons other
than those related to the appropriateness of the care available
at the hospital, or
-
(iv) the refusal to provide emergency services to any person
who is in need of emergency services if the hospital provides such
services;
-
(D) any change by the State in the system which has the effect
of materially reducing payments to hospitals can only take effect
upon 60 days notice to the Secretary and to the hospitals the payment
to which is likely to be materially affected by the change; and
-
(E) the State has provided the Secretary with satisfactory
assurances that in the development of the system the State has
consulted with local governmental officials concerning the impact
of the system on public hospitals.
The Secretary shall respond to requests of States under this
paragraph within 60 days of the date the request is submitted to
the Secretary.
(6) If the Secretary determines that the assurances described
in paragraph (1)(C) have not been met with respect to any 36-month
period, the Secretary may reduce payments under this title to
hospitals under the system in an amount equal to the amount by
which the payment under this title under such system for such period
exceeded the amount of payments which would otherwise have been
made under this title not using such system.
(7) In the case of a State which made a request under paragraph
(5) before December 31, 1984, for the approval of a State hospital
reimbursement control system and which request was approved—
-
(A) in applying paragraphs (1)(C) and (6), a reference to a
“36-month period” is deemed a reference
to a “48-month period”, and
-
(B) in order to allow the State the opportunity to provide the
assurances described in paragraph (1)(C) for a 48-month period,
the Secretary may not discontinue payments under the system, under
the authority of paragraph (3)(A) because the Secretary has reason
to believe that such assurances are not being (or will not be) met,
before July 1, 1986.[637]
(d)[638](1)(A)Notwithstanding section 1814(b)
but subject to the provisions of section 1813, the amount of the
payment with respect to the operating costs of inpatient hospital
services (as defined in subsection (a)(4)) of a subsection (d) hospital
(as defined in subparagraph (B)) for inpatient hospital discharges
in a cost reporting period or in a fiscal year— [639]
-
(i) beginning on or after October 1, 1983, and before October
1, 1984, is equal to the sum of—
-
(I) the target percentage (as defined in subparagraph (C)) of
the hospital's target amount for the cost reporting period (as
defined in subsection (b)(3)(A), but determined without the application
of subsection (a)), and
-
(II) the DRG percentage (as defined in subparagraph (C)) of
the regional adjusted DRG prospective payment rate determined under
paragraph (2) for such discharges;
-
(ii) beginning on or after October 1, 1984, and before October
1, 1987, is equal to the sum of—
-
(I) the target percentage (as defined in subparagraph (C)) of
the hospital's target amount for the cost reporting period (as
defined in subsection (b)(3)(A), but determined without the application
of subsection (a)), and
-
(II) the DRG percentage (as defined in subparagraph (C)) of
the applicable combined adjusted DRG prospective payment rate determined
under subparagraph (D) for such discharges; or
-
(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.
(B) As used in this section, the term “subsection (d)
hospital” means a hospital located in one of the fifty
States or the District of Columbia other than—
-
(i) a psychiatric hospital (as defined in section 1861(f)),
-
(ii) a rehabilitation hospital (as defined by the Secretary),
-
(iii) a hospital whose inpatients are predominantly individuals
under 18 years of age,
-
(iv)(I) a hospital which has an average inpatient length of
stay (as determined by the Secretary) of greater than 25 days, or
-
(II) a hospital that first received payment under this subsection
in 1986 which has an average inpatient length of stay (as determined
by the Secretary) of greater than 20 days and that has 80 percent
or more of its annual medicare inpatient discharges with a principal
diagnosis that reflects a finding of neoplastic disease in the 12-month
cost reporting period ending in fiscal year 1997, or
-
(v)(I) a hospital that the Secretary has classified, at any
time on or before December 31, 1990, (or, in the case of a hospital
that, as of the date of the enactment of this clause,[640] is
located in a State operating a demonstration project under section 1814(b), on or before December 31, 1991) for purposes of applying
exceptions and adjustments to payment amounts under this subsection,
as a hospital involved extensively in treatment for or research
on cancer,
-
(II) a hospital that was recognized as a comprehensive cancer
center or clinical cancer research center by the National Cancer
Institute of the National Institutes of Health as of April 20,
1983, that is located in a State which, as of December 19, 1989,
was not operating a demonstration project under section 1814(b),
that applied and was denied, on or before December 31, 1990, for
classification as a hospital involved extensively in treatment
for or research on cancer under this clause (as in effect on the
day before the date of the enactment of this subclause), that as
of the date of the enactment of this subclause, is licensed for
less than 50 acute care beds, and that demonstrates for the 4-year period
ending on December 31, 1996, that at least 50 percent of its total discharges
have a principal finding of neoplastic disease, as defined in subparagraph
(E), or[641]
-
(III) a hospital that was recognized as a clinical cancer research center
by the National Cancer Institute of the National Institutes of Health
as of February 18, 1998, that has never been reimbursed for inpatient
hospital services pursuant to a reimbursement system under a demonstration
project under section 1814(b), that is a freestanding facility organized
primarily for treatment of and research on cancer and is not a unit
of another hospital, that as of the date of the enactment of this
subclause, is licensed for 162 acute care beds, and that demonstrates
for the 4-year period ending on June 30, 1999, that at
least 50 percent of its total discharges have a principal finding
of neoplastic disease, as defined in subparagraph (E);
and, in accordance with regulations of the Secretary, does not
include a psychiatric or rehabilitation unit of the hospital which
is a distinct part of the hospital (as defined by the Secretary).
A hospital that was classified by the Secretary on or before September
30, 1995, as a hospital described in clause (iv) shall continue
to be so classified notwithstanding that it is located in the same
building as, or on the same campus as, another hospital.
(C) For purposes of this subsection, for cost reporting periods
beginning—
-
(i) on or after October 1, 1983, and before October 1, 1984,
the “target percentage” is 75 percent and the “DRG
percentage” is 25 percent;
-
(ii) on or after October 1, 1984, and before October 1, 1985,
the “target percentage” is 50 percent and the
“DRG percentage” is 50 percent;
-
(iii) on or after October 1, 1985, and before October 1, 1986,
the “target percentage” is 45 percent and the
“DRG percentage” is 55 percent; and
-
(iv) on or after October 1, 1986, and before October 1, 1987,
the “target percentage” is 25 percent and the
“DRG percentage” is 75 percent.
(D) For purposes of subparagraph (A)(ii)(II), the “applicable
combined adjusted DRG prospective payment rate” for discharges
occurring—
-
(i) on or after October 1, 1984, and before October 1, 1986,
is a combined rate consisting of 25 percent of the national adjusted
DRG prospective payment rate, and 75 percent of the regional adjusted
DRG prospective payment rate, determined under paragraph (3) for
such discharges; and
-
(ii) on or after October 1, 1986, and before October 1, 1987,
is a combined rate consisting of 50 percent of the national adjusted
DRG prospective payment rate, and 50 percent of the regional adjusted
DRG prospective payment rate, determined under paragraph (3) for
such discharges.
(E) For purposes of subclauses (II) and (III) of subparagraph
(B)(v) only, the term “principal finding of neoplastic
disease” means the condition established after study to
be chiefly responsible for occasioning the admission of a patient to
a hospital, except that only discharges with ICD-9-CM
principal diagnosis codes of 140 through 239, V58.0, V58.1, V66.1,
V66.2, or 990 will be considered to reflect such a principal diagnosis.
(2) The Secretary shall determine a national adjusted DRG prospective payment
rate, for each inpatient hospital discharge in fiscal year 1984
involving inpatient hospital services of a subsection (d) hospital
in the United States, and shall determine a regional adjusted DRG
prospective payment rate for such discharges in each region, for
which payment may be made under part A of this title. Each such
rate shall be determined for hospitals located in urban or rural areas
within the United States or within each such region, respectively,
as follows:
-
(A) DETERMINING ALLOWABLE INDIVIDUAL HOSPITAL COSTS
FOR BASE PERIOD.—The Secretary shall determine the
allowable operating costs per discharge of inpatient hospital
services for the hospital for the most recent cost reporting period
for which data are available.
-
(B) UPDATING FOR FISCAL YEAR 1984.—The
Secretary shall update each amount determined under subparagraph
(A) for fiscal year 1984 by—
-
(i) updating for fiscal year 1983 by the estimated average rate
of change of hospital costs industry-wide between the cost reporting period
used under such subparagraph and fiscal year 1983 and the most recent
case-mix data available, and
-
(ii) projecting for fiscal year 1984 by the applicable percentage increase
(as defined in subsection (b)(3)(B)) for fiscal year 1984.
-
(C) STANDARDIZING AMOUNTS.—The Secretary
shall standardize the amount updated under subparagraph (B) for
each hospital by—
-
(i) excluding an estimate of indirect medical education costs
(taking into account, for discharges occurring after September
30, 1986, the amendments made by section 9104(a) of the Medicare
and Medicaid Budget Reconciliation Amendments of 1985[642] ),
except that the Secretary shall not take into account any reduction
in the amount of additional payments under paragraph (5)(B)(ii)
resulting from the amendment made by section 4621(a)(1) of the Balanced
Budget Act of 1997 or any additional payments under such paragraph
resulting from the application of section 111 of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of 1999,[643] of section 302 of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, [644]or the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003,
-
(ii) adjusting for variations among hospitals by area in the
average hospital wage level,
-
(iii) adjusting for variations in case mix among hospitals,
or
-
(iv) for discharges occurring on or after October 1, 1986,
excluding an estimate of the additional payments to certain hospitals
to be made under paragraph (5)(F), 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, the enactment of section 4002(b) of the Omnibus Budget
Reconciliation Act of 1990, [645] the enactment of section 303
of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000, or the enactment of section 402(a)(1) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003.[646]
-
(D) COMPUTING URBAN AND RURAL AVERAGES.—The
Secretary shall compute an average of the standardized amounts
determined under subparagraph (C) for the United States and for
each region—
-
(i) for all subsection (d) hospitals located in an urban area
within the United States or that region, respectively, and
-
(ii) for all subsection (d) hospitals located in a rural area
within the United States or that region, respectively.
-
For purposes of this subsection, the term “region”
means one of the nine census divisions, comprising the fifty States
and the District of Columbia, established by the Bureau of the Census
for statistical and reporting purposes; the term “urban
area” means an area within a Metropolitan Statistical Area
(as defined by the Office of Management and Budget) or within such similar
area as the Secretary has recognized under subsection (a) by regulation;
the term “large urban area” means, with respect
to a fiscal year, such an urban area which the Secretary determines
(in the publications described in subsection (e)(5) before the fiscal
year) has a population of more than 1,000,000 (as determined by
the Secretary based on the most recent available population data
published by the Bureau of the Census); and the term “rural
area” means any area outside such an area or similar area.
A hospital located in a Metropolitan Statistical Area shall be
deemed to be located in the region in which the largest number
of the hospitals in the same Metropolitan Statistical Area are located,
or, at the option of the Secretary, the region in which the majority
of the inpatient discharges (with respect to which payments are
made under this title) from hospitals in the same Metropolitan Statistical
Area are made.[647]
-
(E) REDUCING FOR VALUE OF OUTLIER PAYMENTS.—The
Secretary shall reduce each of the average standardized amounts
determined under subparagraph (D) by a proportion equal to the proportion
(estimated by the Secretary) of the amount of payments under this
subsection based on DRG prospective payment rates which are additional
payments described in paragraph (5)(A) (relating to outlier payments).
-
(F) MAINTAINING BUDGET NEUTRALITY.—The
Secretary shall adjust each of such average standardized amounts
as may be required under subsection (e)(1)(B) for that fiscal
year.
-
(G) COMPUTING DRG-SPECIFIC RATES FOR URBAN
AND RURAL HOSPITALS IN THE UNITED STATES AND IN EACH REGION.—For
each discharge classified within a diagnosis-related group,
the Secretary shall establish a national DRG prospective payment
rate and shall establish a regional DRG prospective payment rate
for each region, each of which is equal—
-
(i) for hospitals located in an urban area in the United States
or that region (respectively), to the product of—
-
(I) the average standardized amount (computed under subparagraph
(D), reduced under subparagraph (E), and adjusted under subparagraph
(F)) for hospitals located in an urban area in the United States
or that region, and
-
(II) the weighting factor (determined under paragraph (4)(B))
for that diagnosis-related group; and
-
(ii) for hospitals located in a rural area in the United States
or that region (respectively), to the product of—
-
(I) the average standardized amount (computed under subparagraph
(D), reduced under subparagraph (E), and adjusted under subparagraph
(F)) for hospitals located in a rural area in the United States
or that region, and
-
(II) the weighting factor (determined under paragraph (4)(B))
for that diagnosis-related group.
-
(H) ADJUSTING FOR DIFFERENT AREA WAGE LEVELS.—The
Secretary shall adjust the proportion, (as estimated by the Secretary
from time to time) of hospitals' costs which are attributable to
wages and wage-related costs, of the national and regional
DRG prospective payment rates computed under subparagraph (G) for
area differences in hospital wage levels by a factor (established
by the Secretary) reflecting the relative hospital wage level in
the geographic area of the hospital compared to the national average
hospital wage level.
(3) The Secretary shall determine a national adjusted DRG prospective payment
rate, for each inpatient hospital discharge in a fiscal year after
fiscal year 1984 involving inpatient hospital services of a subsection
(d) hospital in the United States, and shall determine a regional
adjusted DRG prospective payment rate for such discharges in each
region for which payment may be made under part A of this title.
Each such rate shall be determined for hospitals located in large
urban, other urban, or rural areas within the United States and within
each such region, respectively, as follows:
-
(A) UPDATING PREVIOUS STANDARDIZED AMOUNTS.—
-
(i) For discharges occurring in a fiscal year beginning before
October 1, 1987, the Secretary shall compute an average standardized
amount for hospitals located in an urban area and for hospitals
located in a rural area within the United States and for hospitals
located in an urban area and for hospitals located in a rural area
within each region, equal to the respective average standardized
amount computed for the previous fiscal year under paragraph (2)(D)
or under this subparagraph, increased for the fiscal year involved
by the applicable percentage increase under subsection (b)(3)(B).
With respect to discharges occurring on or after October 1, 1987,
the Secretary shall compute urban and rural averages on the basis
of discharge weighting rather than hospital weighting, making appropriate
adjustments to ensure that computation on such basis does not result
in total payments under this section that are greater or less than
the total payments that would have been made under this section
but for this sentence, and making appropriate changes in the manner
of determining the reductions under subparagraph (C)(ii).
-
(ii) For discharges occurring in a fiscal year beginning on
or after October 1, 1987, and ending on or before September 30,
1994, the Secretary shall compute an average standardized amount
for hospitals located in a large urban area, for hospitals located
in a rural area, and for hospitals located in other urban 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) 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[648] urban area. For discharges
occurring on or after October 1, 1994, the Secretary shall adjust
the ratio of the labor portion to non-labor portion of each average
standardized amount to equal such ration for the national average
of all standardized amounts.
-
(iv)(I) Subject to subclause (II), for discharges[649] 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.
-
(II)[650] 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.
-
(v) Average standardized amounts computed under this paragraph
shall be adjusted to reflect the most recent case-mix data available.
-
(vi) Insofar as the Secretary determines that the adjustments
under paragraph (4)(C)(i) for a previous fiscal year (or estimates
that such adjustments for a future fiscal year) did (or are likely
to) result in a change in aggregate payments under this subsection
during the fiscal year that are a result of changes in the coding
or classification of discharges that do not reflect real changes
in case mix, the Secretary may adjust the average standardized amounts
computed under this paragraph for subsequent fiscal years so as
to eliminate the effect of such coding or classification changes.
-
(B) REDUCING FOR VALUE OF OUTLIER PAYMENTS.—The
Secretary shall reduce each of the average standardized amounts
determined under subparagraph (A) 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).
-
(C)(i) MAINTAINING BUDGET NEUTRALITY FOR FISCAL
YEAR 1985.—For discharges occurring in fiscal year
1985, the Secretary shall adjust each of such average standardized
amounts as may be required under subsection (e)(1)(B) for that fiscal
year.
-
(ii) REDUCING FOR SAVINGS FROM AMENDMENT TO INDIRECT
TEACHING ADJUSTMENT FOR DISCHARGES AFTER SEPTEMBER 30, 1986.—For
discharges occurring after September 30, 1986, the Secretary shall
further reduce each of the average standardized amounts (in a proportion
which takes into account the differing effects of the standardization
effected under paragraph (2)(C)(i)) so as to provide for a reduction
in the total of the payments (attributable to this paragraph) made
for discharges 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[651] and by section 4003(a)(1) of the Omnibus
Budget Reconciliation Act of 1987[652] 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[653]
) were applied for discharges occurring on or
after such date instead of the factor described in clause (ii) of
that paragraph.
-
(D) COMPUTING DRG-SPECIFIC RATES FOR HOSPITALS[654].—For each discharge classified within a diagnosis-related
group, the Secretary shall establish for the fiscal year a national
DRG prospective payment rate and shall establish a regional DRG
prospective payment rate for each region[655] which is equal—
-
(i) for fiscal years before fiscal year 2004,[656] for hospitals
located in a large urban area in the United States or that region
(respectively), to the product of—
-
(I) the average standardized amount (computed under subparagraph
(A), reduced under subparagraph (B), and adjusted or reduced under
subparagraph (C)) for the fiscal year for hospitals located in such
a large urban area in the United States or that region, and
-
(II) the weighting factor (determined under paragraph (4)(B))
for that diagnosis-related group;[657]
-
(ii) for fiscal years before fiscal year 2004,[658] for hospitals
located in other areas in the United States or that region (respectively),
to the product of—
-
(I) the average standardized amount (computed under subparagraph
(A), reduced under subparagraph (B), and adjusted or reduced under
subparagraph (C)) for the fiscal year for hospitals located in other
areas in the United States or that region, and
-
(II) the weighting factor (determined under paragraph (4)(B))
for that diagnosis-related group; and[659]
-
(iii)[660] 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.
-
(E) ADJUSTING FOR DIFFERENT AREA WAGE LEVELS.—
-
(i) IN GENERAL.—Except as provided
in clause (ii), the Secretary shall adjust the proportion, (as estimated
by the Secretary from time to time) of hospitals' costs which are
attributable to wages and wage-related costs, of the DRG prospective
payment rates computed under subparagraph (D) for area differences
in hospital wage levels by a factor (established by the Secretary)
reflecting the relative hospital wage level in the geographic area
of the hospital compared to the national average hospital wage level.
Not later than October 1, 1990, and October 1, 1993 (and at least
every 12 months thereafter), the Secretary shall update the factor
under the preceding sentence on the basis of a survey conducted
by the Secretary (and updated as appropriate) of the wages and
wage-related costs of subsection (d) hospitals in the United
States. Not less often than once every 3 years the Secretary (through
such survey or otherwise) shall measure the earnings and paid hours
of employment by occupational category and shall exclude data with respect
to the wages and wage-related costs incurred in furnishing
skilled nursing facility services. Any adjustments or updates made
under this subparagraph for a fiscal year (beginning with fiscal
year 1991) shall be made in a manner that assures that the aggregate
payments under this subsection in the fiscal year are not greater
or less than those that would have been made in the year without
such adjustment. The Secretary shall apply the previous sentence
for any period as if the amendments made by section 403(a)(1) of
the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 had not been enacted. [661][662]
-
(ii)[663] ALTERNATIVE PROPORTION TO BE ADJUSTED
BEGINNING IN FISCAL YEAR 2005.—For discharges occurring
on or after October 1, 2004, the Secretary shall substitute “62
percent” for the proportion described in the first sentence
of clause (i), unless the application of this clause would result in
lower payments to a hospital than would otherwise be made.
(4)(A) The Secretary shall establish a classification of inpatient
hospital discharges by diagnosis-related groups and a methodology
for classifying specific hospital discharges within these groups.
(B) For each such diagnosis-related group the Secretary
shall assign an appropriate weighting factor which reflects the
relative hospital resources used with respect to discharges classified
within that group compared to discharges classified within other
groups.
(C)(i) The Secretary shall adjust the classifications and weighting
factors established under subparagraphs (A) and (B), for discharges
in fiscal year 1988 and at least annually thereafter, to reflect
changes in treatment patterns, technology (including a new medical
service or technology under paragraph (5)(K)), and other factors
which may change the relative use of hospital resources.
(ii) For discharges in fiscal year 1990, the Secretary shall
reduce the weighting factor for each diagnosis-related
group by 1.22 percent.
(iii) Any such adjustment under clause (i) for discharges in
a fiscal year (beginning with fiscal year 1991) shall be made in
a manner that assures that the aggregate payments under this subsection
for discharges in the fiscal year are not greater or less than those
that would have been made for discharges in the year without such
adjustment.
(iv) The Secretary shall include recommendations with respect
to adjustments to weighting factors under clause (i) in the annual
report to Congress required under subsection (e)(3)(B).
(5)(A)(i) For discharges occurring during fiscal years ending
on or before September 30, 1997, the Secretary shall provide for
an additional payment for a subsection (d) hospital for any discharge
in a diagnosis-related group, the length of stay of which
exceeds the mean length of stay for discharges within that group
by a fixed number of days, or exceeds such mean length of stay by some
fixed number of standard deviations, whichever is the fewer number
of days.
(ii) For cases which are not included in clause (i), a subsection
(d) hospital may request additional payments in any case where charges,
adjusted to cost, exceed a fixed multiple of the applicable DRG
prospective payment rate, or exceed such other fixed dollar amount,
whichever is greater, or for discharges in fiscal years beginning
on or after October 1, 1994, exceed the sum of the applicable DRG
prospective payment rate plus any amounts payable under subparagraphs
(B) and (F) plus a fixed dollar amount determined by the Secretary.
(iii) The amount of such additional payment under clauses (i)
and (ii) shall be determined by the Secretary and shall (except
as payments under clause (i) are required to be reduced to take
into account the requirements of clause (v)) approximate the marginal
cost of care beyond the cutoff point applicable under clause (i)
or (ii).
(iv) The total amount of the additional payments made under this
subparagraph for discharges in a fiscal year may not be less than
5 percent nor more than 6 percent of the total payments projected
or estimated to be made based on DRG prospective payment rates for
discharges in that year.
(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
-
(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).
(B) The Secretary shall provide for an additional payment amount
for subsection (d) hospitals with indirect costs of medical education,
in an amount computed in the same manner as the adjustment for such
costs under regulations (in effect as of January 1, 1983) under
subsection (a)(2), except as follows:
(i) The amount of such additional payment shall be determined
by multiplying (I) the sum of the amount determined under paragraph
(1)(A)(ii)(II) (or, if applicable, the amount determined under
paragraph (1)(A)(iii)), for cases qualifying for additional payment
under subparagraph (A)(i), and the amount paid to the hospital under
subparagraph (A), by (II) the indirect teaching adjustment factor
described in clause (ii).
(ii) For purposes of clause (i)(II), the indirect teaching adjustment
factor is equal to c -0A (((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. Subject to clause (ix), for discharges[664] occurring—
-
(I) on or after October 1, 1988, and before October 1, 1997,
“c” is equal to 1.89;
-
(II) during fiscal year 1998, “c” is equal
to 1.72;
-
(III) during fiscal year 1999, “c” is equal
to 1.6;
-
(IV) during fiscal year 2000, “c” is equal
to 1.47;
-
(V) during fiscal year 2001, “c” is equal
to 1.54; and
-
(VI) during fiscal year 2002, “c” is equal
to 1.6; [665]
-
(VII) on or after October 1, 2002, and before April 1, 2004,[666] “c” is
equal to 1.35;[667]
-
(VIII)[668] on or after April 1, 2004, and before October 1,
2004, “c” is equal to 1.47;
-
(IX) during fiscal year 2005, “c” is equal
to 1.42;
-
(X) during fiscal year 2006, “c” is equal
to 1.37;
-
(XI) during fiscal year 2007, “c” is equal
to 1.32; and
-
(XII) on or after October 1, 2007, “c” is
equal to 1.35.
(iii) In determining such adjustment the Secretary shall not
distinguish between those interns and residents who are employees
of a hospital and those interns and residents who furnish services
to a hospital but are not employees of such hospital.
(iv) Effective for discharges occurring on or after October 1,
1997, all the time spent by an intern or resident in patient care
activities under an approved medical residency training program
at an entity in a nonhospital setting shall be counted towards the
determination of full-time equivalency if the hospital incurs
all, or substantially all, of the costs for the training program
in that setting.
(v) In determining the adjustment with respect to a hospital
for discharges occurring on or after October 1, 1997, the total
number of full-time equivalent interns and residents in
the fields of allopathic and osteopathic medicine in either a
hospital or nonhospital setting may not exceed the number (or,
130 percent of such number in the case of a hospital located in
a rural area) of such full-time equivalent interns and
residents in the hospital with respect to the hospital's most recent
cost reporting period ending on or before December 31, 1996. The
provisions of subsection (h)(7) shall apply with respect to the
first sentence of this clause in the same manner as it applies with
respect to subsection (h)(4)(F)(i).[669]
(vi) For purposes of clause (ii)—
-
(I) “r” may not exceed the ratio of the number
of interns and residents, subject to the limit under clause (v),
with respect to the hospital for its most recent cost reporting
period to the hospital's available beds (as defined by the Secretary)
during that cost reporting period, and
-
(II) for the hospital's cost reporting periods beginning on
or after October 1, 1997, subject to the limits described in clauses
(iv) and (v), the total number of full-time equivalent
residents for payment purposes shall equal the average of the actual
full-time equivalent resident count for the cost reporting
period and the preceding two cost reporting periods.
In the case of the first cost reporting period beginning on
or after October 1, 1997, subclause (II) shall be applied by using
the average for such period and the preceding cost reporting period.
(vii) If any cost reporting period beginning on or after October
1, 1997, is not equal to twelve months, the Secretary shall make
appropriate modifications to ensure that the average full-time
equivalent residency count pursuant to subclause (II) of clause
(vi) is based on the equivalent of full twelve-month cost reporting
periods.
(viii) Rules similar to the rules of subsection (h)(4)(H) shall
apply for purposes of clauses (v) and (vi).
(ix)[670] For discharges occurring on or after July 1, 2005,
insofar as an additional payment amount under this subparagraph
is attributable to resident positions redistributed to a hospital
under subsection (h)(7)(B), in computing the indirect teaching adjustment
factor under clause (ii) the adjustment shall be computed in a manner
as if “c” were equal to 0.66 with respect to such
resident positions.
(C)(i) The Secretary shall provide for such exceptions and adjustments
to the payment amounts established under this subsection (other
than under paragraph (9)) as the Secretary deems appropriate to
take into account the special needs of regional and national referral
centers (including those hospitals of 275 or more beds located in
rural areas). A hospital which is classified as a rural hospital may
appeal to the Secretary to be classified as a rural referral center
under this clause on the basis of criteria (established by the
Secretary) which shall allow the hospital to demonstrate that it
should be so reclassified by reason of certain of its operating
characteristics being similar to those of a typical urban hospital located
in the same census region and which shall not require a rural osteopathic
hospital to have more than 3,000 discharges in a year in order to
be classified as a rural referral center. Such characteristics may
include wages, scope of services, service area, and the mix of medical
specialties. The Secretary shall publish the criteria not later
than August 17, 1984, for implementation by October 1, 1984. An
appeal allowed under this clause must be submitted to the Secretary
(in such form and manner as the Secretary may prescribe) during
the quarter before the first quarter of the hospital's cost reporting
period (or, in the case of a cost reporting period beginning during
October 1984, during the first quarter of that period), and the
Secretary must make a final determination with respect to such appeal
within 60 days after the date the appeal was submitted. Any payment
adjustments necessitated by a reclassification based upon the appeal
shall be effective at the beginning of such cost reporting period.
(ii) The Secretary shall provide, under clause (i), for the
classification of a rural hospital as a regional referral center
if the hospital has a case mix index equal to or greater than
the median case mix index for hospitals (other than hospitals with
approved teaching programs) located in an urban area in the same region
(as defined in paragraph (2)(D)), has at least 5,000 discharges
a year or, if less, the median number of discharges in urban hospitals
in the region in which the hospital is located (or, in the case
of a rural osteopathic hospital, meets the criterion established
by the Secretary under clause (i) with respect to the annual number
of discharges for such hospitals), and meets any other criteria
established by the Secretary under clause (i).[671]
(D)(i) For any cost reporting period beginning on or after April
1, 1990, with respect to a subsection (d) hospital which is a
sole community hospital, payment under paragraph (1)(A) shall be—
-
(I) an amount based on 100 percent of the hospital's target
amount for the cost reporting period, as defined in subsection
(b)(3)(C), or
-
(II) the amount determined under paragraph (1)(A)(iii),
whichever results in greater payment to the hospital.
(ii) In the case of a sole community hospital that experiences,
in a cost reporting period compared to the previous cost reporting
period, a decrease of more than 5 percent in its total number of
inpatient cases due to circumstances beyond its control, the Secretary
shall provide for such adjustment to the payment amounts under this
subsection (other than under paragraph (9)) as may be necessary
to fully compensate the hospital for the fixed costs it incurs in
the period in providing inpatient hospital services, including the
reasonable cost of maintaining necessary core staff and services.
(iii) For purposes of this title, the term “sole community
hospital” means any hospital—
-
(I) that the Secretary determines is located more than 35 road
miles from another hospital,
-
(II) that, by reason of factors such as the time required for
an individual to travel to the nearest alternative source of appropriate
inpatient care (in accordance with standards promulgated by the
Secretary), location, weather conditions, travel conditions, or
absence of other like hospitals (as determined by the Secretary),
is the sole source of inpatient hospital services reasonably available
to individuals in a geographic area who are entitled to benefits
under part A, or
-
(III) that is located in a rural area and designated by the
Secretary as an essential access community hospital under section 1820(i)(1) as in effect on September 30, 1997.
(iv) The Secretary shall promulgate a standard for determining
whether a hospital meets the criteria for classification as a
sole community hospital under clause (iii)(II) because of the time
required for an individual to travel to the nearest alternative
source of appropriate inpatient care.
(v) If the Secretary determines that, in the case of a hospital
located in a rural area and designated by the Secretary as an
essential access community hospital under section 1820(i)(1) as
in effect on September 30, 1997, the hospital has incurred increases
in reasonable costs during a cost reporting period as a result of
becoming a member of a rural health network (as defined in section 1820(d)) in the State in which it is located, and in incurring such
increases, the hospital will increase its costs for subsequent cost
reporting periods, the Secretary shall increase the hospital's target
amount under subsection (b)(3)(C) to account for such incurred increases.
(E)(i) The Secretary shall estimate the amount of reimbursement
made for services described in section 1862(a)(14) with respect
to which payment was made under part B in the base reporting periods
referred to in paragraph (2)(A) and with respect to which payment
is no longer being made.
(ii) The Secretary shall provide for an adjustment to the payment
for subsection (d) hospitals in each fiscal year so as appropriately
to reflect the net amount described in clause (i).
(F)(i) For discharges occurring on or after May 1, 1986, the
Secretary shall provide, in accordance with this subparagraph, for
an additional payment amount for each subsection (d) hospital which—
-
(I) serves a significantly disproportionate number of low-income
patients (as defined in clause (v)), or
-
(II) is located in an urban area, has 100 or more beds, and
can demonstrate that its net inpatient care revenues (excluding
any of such revenues attributable to this title or State plans
approved under title XIX), during the cost reporting period in
which the discharges occur, for indigent care from State and local
government sources exceed 30 percent of its total of such net inpatient
care revenues during the period.
(ii) Subject to clause (ix), the amount of such payment for each
discharge shall be determined by multiplying (I) the sum of the
amount determined under paragraph (1)(A)(ii)(II) (or, if applicable,
the amount determined under paragraph (1)(A)(iii)) and, for cases
qualifying for additional payment under subparagraph (A)(i), the
amount paid to the hospital under subparagraph (A) for that discharge,
by (II) the disproportionate share adjustment percentage established
under clause (iii) or (iv) for the cost reporting period in which
the discharge occurs.
(iii) The disproportionate share adjustment percentage for a
cost reporting period for a hospital described in clause (i)(II)
is equal to 35 percent.
(iv) The disproportionate share adjustment percentage for a cost
reporting period for a hospital that is not described in clause
(i)(II) and that—
-
(I) is located in an urban area and has 100 or more beds or
is described in the second sentence of clause (v), is equal to the
percent determined in accordance with the applicable formula described
in clause (vii);
-
(II) is located in an urban area and has less than 100 beds,
is equal to 5 percent or, subject to clause (xiv) and[672] for
discharges occurring on or after April 1, 2001, is equal to the
percent determined in accordance with clause (xiii);
-
(III) is located in a rural area and is not described in subclause
(IV) or (V) or in the second sentence of clause (v), is equal to
4 percent or, subject to clause (xiv) and[673] for discharges occurring
on or after April 1, 2001, is equal to the percent determined in
accordance with clause (xii);
-
(IV) is located in a rural area, is classified as a rural referral
center under subparagraph (C), and is classified as a sole community
hospital under subparagraph (D), is equal to 10 percent or, if greater,
the percent determined in accordance with the applicable formula
described in clause (viii) or, subject to clause (xiv) and[674] for
discharges occurring on or after April 1, 2001, is equal to the
percent determined in accordance with clause (x) or (xi);
-
(V) is located in a rural area, is classified as a rural referral
center under subparagraph (C), and is not classified as a sole community
hospital under subparagraph (D), is equal to the percent determined
in accordance with the applicable formula described in clause (viii)
or, subject to clause (xiv) and[675] for discharges occurring on
or after April 1, 2001, is equal to the percent determined in accordance
with clause (xi); or
-
(VI) is located in a rural area, is classified as a sole community
hospital under subparagraph (D), and is not classified as a rural
referral center under subparagraph (C), is 10 percent or, subject
to clause (xiv) and[676] for discharges occurring on or after April
1, 2001, is equal to the percent determined in accordance with clause
(x).
(v) In this subparagraph, a hospital “serves a significantly
disproportionate number of low income patients” for a cost
reporting period if the hospital has a disproportionate patient
percentage (as defined in clause (vi)) for that period which equals,
or exceeds—
-
(I) 15 percent, if the hospital is located in an urban area
and has 100 or more beds,
-
(II) 30 percent (or 15 percent, for discharges occurring on
or after April 1, 2001), if the hospital is located in a rural area
and has more than 100 beds, or is located in a rural area and is
classified as a sole community hospital under subparagraph (D),
-
(III) 40 percent (or 15 percent, for discharges occurring on
or after April 1, 2001), if the hospital is located in an urban
area and has less than 100 beds, or
-
(IV) 45 percent (or 15 percent, for discharges occurring on
or after April 1, 2001), if the hospital is located in a rural area
and is not described in subclause (II).
A hospital located in a rural area and with 500 or more beds
also “serves a significantly disproportionate number of
low income patients” for a cost reporting period if the
hospital has a disproportionate patient percentage (as defined
in clause (vi)) for that period which equals or exceeds a percentage
specified by the Secretary.
(vi) In this subparagraph, the term “disproportionate
patient percentage” means, with respect to a cost reporting
period of a hospital, the sum of—
-
(I) the fraction (expressed as a percentage), the numerator
of which is the number of such hospital's patient days for such
period which were made up of patients who (for such days) were
entitled to benefits under part A of this title and were entitled
to supplementary security income benefits (excluding any State supplementation)
under title XVI of this Act, and the denominator of which is the
number of such hospital's patient days for such fiscal year which
were made up of patients who (for such days) were entitled to benefits
under part A of this title, and
-
(II) the fraction (expressed as a percentage), the numerator
of which is the number of the hospital's patient days for such
period which consist of patients who (for such days) were eligible
for medical assistance under a State plan approved under title XIX,
but who were not entitled to benefits under part A of this title,
and the denominator of which is the total number of the hospital's
patient days for such period.
(vii) The formula used to determine the disproportionate share
adjustment percentage for a cost reporting period for a hospital
described in clause (iv)(I) is—
-
(I) in the case of such a hospital with a disproportionate
patient percentage (as defined in clause (vi)) 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
-
(II) in the case of any other such 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,
where “P” is the hospital's disproportionate
patient percentage (as defined in clause (vi)).
(viii) Subject to clause (xiv), the formula[677] used to determine
the disproportionate share adjustment percentage for a cost reporting
period for a hospital described in clause (iv)(IV) or (iv)(V) is
the percentage determined in accordance with the following formula:
(P-30)(.6) + 4.0, where “P” is the hospital's disproportionate
patient percentage (as defined in clause (vi)).[678]
(ix) In the case of discharges occurring—
-
(I) during fiscal year 1998, the additional payment amount
otherwise determined under clause (ii) shall be reduced by 1 percent;
-
(II) during fiscal year 1999, such additional payment amount
shall be reduced by 2 percent;
-
(III) during fiscal years 2000 and 2001, such additional payment
amount shall be reduced by 3 percent and 2 percent, respectively;
-
(IV) during fiscal year 2002, such additional payment amount
shall be reduced by 3 percent; and
-
(V) during fiscal year 2003 and each subsequent fiscal year,
such additional payment amount shall be reduced by 0 percent.
(x) Subject to clause (xiv), for purposes[679] of clause (iv)(VI)
(relating to sole community hospitals), in the case of a hospital
for a cost reporting period with a disproportionate patient percentage
(as defined in clause (vi)) that—
-
(I) is less than 19.3, the disproportionate share adjustment
percentage is determined in accordance with the following formula:
(P-15)(.65) + 2.5;
-
(II) is equal to or exceeds 19.3, but is less than 30.0, such
adjustment percentage is equal to 5.25 percent; or
-
(III) is equal to or exceeds 30, such adjustment percentage
is equal to 10 percent,
where “P” is the hospital's disproportionate
patient percentage (as defined in clause (vi)).
(xi) Subject to clause (xiv), for purposes[680] of clause (iv)(V)
(relating to rural referral centers), in the case of a hospital
for a cost reporting period with a disproportionate patient percentage
(as defined in clause (vi)) that—
-
(I) is less than 19.3, the disproportionate share adjustment
percentage is determined in accordance with the following formula:
(P-15)(.65) + 2.5;
-
(II) is equal to or exceeds 19.3, but is less than 30.0, such
adjustment percentage is equal to 5.25 percent; or
-
(III) is equal to or exceeds 30, such adjustment percentage
is determined in accordance with the following formula: (P-30)(.6)
+ 5.25,
where “P” is the hospital's disproportionate
patient percentage (as defined in clause (vi)).
(xii) Subject to clause (xiv), for purposes[681] of clause (iv)(III)
(relating to small rural hospitals generally), in the case of a
hospital for a cost reporting period with a disproportionate patient
percentage (as defined in clause (vi)) that—
-
(I) is less than 19.3, the disproportionate share adjustment
percentage is determined in accordance with the following formula:
(P-15)(.65) + 2.5; or
-
(II) is equal to or exceeds 19.3, such adjustment percentage
is equal to 5.25 percent,
where “P” is the hospital's disproportionate
patient percentage (as defined in clause (vi)).
(xiii) Subject to clause (xiv), for purposes[682] of clause
(iv)(II) (relating to urban hospitals with less than 100 beds),
in the case of a hospital for a cost reporting period with a disproportionate
patient percentage (as defined in clause (vi)) that—
-
(I) is less than 19.3, the disproportionate share adjustment
percentage is determined in accordance with the following formula:
(P-15)(.65) + 2.5; or
-
(II) is equal to or exceeds 19.3, such adjustment percentage
is equal to 5.25 percent,
where “P” is the hospital's disproportionate
patient percentage (as defined in clause (vi)).
(xiv)[683](I) In the case of discharges occurring on or after
April 1, 2004, subject to subclause (II), there shall be substituted
for the disproportionate share adjustment percentage otherwise determined
under clause (iv) (other than subclause (I)) or under clause (viii),
(x), (xi), (xii), or (xiii), the disproportionate share adjustment
percentage determined under clause (vii) (relating to large, urban hospitals).
-
(II) Under subclause (I), the disproportionate share adjustment
percentage shall not exceed 12 percent for a hospital that is not
classified as a rural referral center under subparagraph (C).
(G)(i) For any cost reporting period beginning on or after April
1, 1990, and before October 1, 1994, or discharges occurring on
or after October 1, 1997, and before October 1, 2006, in the case
of a subsection (d) 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). [684]
(ii) The amount determined under this clause is—
-
(I) for discharges occurring during the 36-month period beginning
with the first day of the cost reporting period that begins 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, or discharges
occurring on or after October 1, 1997, and before October 1, 2006,
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).
(iii) In the case of a medicare dependent, small rural hospital
that experiences, in a cost reporting period compared to the previous
cost reporting period, a decrease of more than 5 percent in its
total number of inpatient cases due to circumstances beyond its
control, the Secretary shall provide for such adjustment to the
payment amounts under this subsection (other than under paragraph (9))
as may be necessary to fully compensate the hospital for the fixed
costs it incurs in the period in providing inpatient hospital services,
including the reasonable cost of maintaining necessary core staff
and services.
(iv) The term “medicare-dependent, small rural hospital” means,
with respect to any cost reporting period to which clause (i) applies,
any hospital—
-
(I) located in a rural area,
-
(II) that has not more than 100 beds,
-
(III) that is not classified as a sole community hospital under
subparagraph (D), and
-
(IV) for which not less than 60 percent of its inpatient days
or discharges during the cost reporting period beginning in fiscal
year 1987, or two of the three most recently audited cost reporting
periods for which the Secretary has a settled cost report, were
attributable to inpatients entitled to benefits under part A.[685]
(H) The Secretary may provide for such adjustments to the payment
amounts under this subsection as the Secretary deems appropriate
to take into account the unique circumstances of hospitals located
in Alaska and Hawaii.
(I)(i) The Secretary shall provide by regulation for such other
exceptions and adjustments to such payment amounts under this
subsection as the Secretary deems appropriate.
(ii) In making adjustments under clause (i) for transfer cases
(as defined by the Secretary) in a fiscal year, not taking in
account the effect of subparagraph (J), the Secretary may make
adjustments to each of the average standardized amounts determined
under paragraph (3) to assure that the aggregate payments made under
this subsection for such fiscal year are not greater or lesser than those
that would have otherwise been made in such fiscal year.
(J)(i) The Secretary shall treat the term “transfer
case” (as defined in subparagraph (I)(ii)) as including
the case of a qualified discharge (as defined in clause (ii)),
which is classified within a diagnosis-related group
described in clause (iii), and which occurs on or after October
1, 1998. In the case of a qualified discharge for which a substantial
portion of the costs of care are incurred in the early days of the
inpatient stay (as defined by the Secretary), in no case may the payment
amount otherwise provided under this subsection exceed an amount equal
to the sum of—
-
-
(I) 50 percent of the amount of payment under this subsection
for transfer cases (as established under subparagraph (I)(i)),
and
-
(II) 50 percent of the amount of payment which would have been
made under this subsection with respect to the qualified discharge
if no transfer were involved.
-
(ii) For purposes of clause (i), subject to clause (iii), the
term “qualified discharge” means a discharge
classified with a diagnosis-related group (described in
clause (iii)) of an individual from a subsection (d) hospital,
if upon such discharge the individual—
-
(I) is admitted as an inpatient to a hospital or hospital unit
that is not a subsection (d) hospital for the provision of inpatient
hospital services;
-
(II) is admitted to a skilled nursing facility;
-
(III) is provided home health services from a home health
-
agency, if such services relate to the condition or diagnosis
for which such individual received inpatient hospital services
from the subsection (d) hospital, and if such services are provided
within an appropriate period (as determined by the Secretary); or
-
(IV) for discharges occurring on or after October 1, 2000, the
individual receives post discharge services described in clause
(iv)(I).
-
(iii) Subject to clause (iv), a diagnosis-related group
described in this clause is—
-
(I) 1 of 10 diagnosis-related groups selected by the
Secretary based upon a high volume of discharges classified within
such groups and a disproportionate use of post discharge services
described in clause (ii); and
-
(II) a diagnosis-related group specified by the Secretary
under clause (iv)(II).
-
(iv) The Secretary shall include in the proposed rule published
under subsection (e)(5)(A) for fiscal year 2001, a description
of the effect of this subparagraph. The Secretary may include in
the proposed rule (and in the final rule published under paragraph
(6)) for fiscal year 2001 or a subsequent fiscal year, a description
of—
-
(I) post-discharge services not described in subclauses
(I), (II), and (III) of clause (ii), the receipt of which results
in a qualified discharge; and
-
(II) diagnosis-related groups described in clause (iii)(I)
in addition to the 10 selected under such clause.
-
(K)(i)[686] Effective for discharges beginning on or after
October 1, 2001, the Secretary shall establish a mechanism to recognize
the costs of new medical services and technologies under the payment
system established under this subsection. Such mechanism shall
be established after notice and opportunity for public comment
(in the publications required by subsection (e)(5) for a fiscal
year or otherwise). Such mechanism shall be modified to meet the
requirements of clause (viii).
-
(ii) The mechanism established pursuant to clause (i) shall—
-
(I)[687] apply to a new medical service or technology if, based
on the estimated costs incurred with respect to discharges involving such
service or technology, the DRG prospective payment rate otherwise
applicable to such discharges under this subsection is inadequate
(applying a threshold specified by the Secretary that is the
lesser of 75 percent of the standardized amount (increased
to reflect the difference between cost and charges) or 75
percent of one standard deviation for the diagnosis-related
group involved);
-
(II) provide for the collection of data with respect to the
costs of a new medical service or technology described in subclause
(I) for a period of not less than two years and not more than three
years beginning on the date on which an inpatient hospital code
is issued with respect to the service or technology;
-
(III) [688]provide for additional payment to be made under
this subsection with respect to discharges involving a new medical
service or technology described in subclause (I) that occur during
the period described in subclause (II) in an amount that adequately reflects
the estimated average cost of such service or technology; and
-
(IV) provide that discharges involving such a service or technology
that occur after the close of the period described in subclause (II)
will be classified within a new or existing diagnosis-related group
with a weighting factor under paragraph (4)(B) that is derived from
cost data collected with respect to discharges occurring during
such period.
-
(iii) For purposes of clause (ii)(II), the term “inpatient
hospital code” means any code that is used with respect
to inpatient hospital services for which payment may be made under
this subsection and includes an alphanumeric code issued under
the International Classification of Diseases, 9th Revision, Clinical
Modification (“ICD-9-CM”) and
its subsequent revisions.
-
(iv) For purposes of clause (ii)(III), the term “additional
payment” means, with respect to a discharge for a new medical
service or technology described in clause (ii)(I), an amount that
exceeds the prospective payment rate otherwise applicable under
this subsection to discharges involving such service or technology
that would be made but for this subparagraph.
-
(v) The requirement under clause (ii)(III) for an additional
payment may be satisfied by means of a new-technology
group (described in subparagraph (L)), an add-on payment,
a payment adjustment, or any other similar mechanism for increasing
the amount otherwise payable with respect to a discharge under this
subsection. The Secretary may not establish a separate fee schedule
for such additional payment for such services and technologies,
by utilizing a methodology established under subsection (a) or (h)
of section 1834 to determine the amount of such additional payment,
or by other similar mechanisms or methodologies.
-
(vi) For purposes of this subparagraph and subparagraph (L),
a medical service or technology will be considered a “new
medical service or technology” if the service or technology
meets criteria established by the Secretary after notice and an
opportunity for public comment.
-
(vii)[689] Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and procedure
codes in April 1 of each year, but the addition of such codes shall
not require the Secretary to adjust the payment (or diagnosis-related
group classification) under this subsection until the fiscal year
that begins after such date.
-
(viii)[690] The mechanism established pursuant to clause (i)
shall be adjusted to provide, before publication of a proposed rule,
for public input regarding whether a new service or technology represents
an advance in medical technology that substantially improves the
diagnosis or treatment of individuals entitled to benefits under
part A as follows:
-
(I) The Secretary shall make public and periodically update
a list of all the services and technologies for which an application
for additional payment under this subparagraph is pending.
-
(II) The Secretary shall accept comments, recommendations, and data
from the public regarding whether the service or technology represents
a substantial improvement.
-
(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, such individuals,
manufacturers, and any other interested party may present comments, recommendations,
and data to the clinical staff of the Centers for Medicare and Medicaid
Services before publication of a notice of proposed rulemaking regarding
whether service or technology represents a substantial improvement.
-
(ix)[691] Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary shall
seek to identify one or more diagnosis-related groups associated
with such technology, based on similar clinical or anatomical characteristics
and the cost of the technology. Within such groups the Secretary
shall assign an eligible new technology into a diagnosis-related
group where the average costs of care most closely approximate the
costs of care of using the new technology. No add-on payment under
this subparagraph shall be made with respect to such new technology
and this clause shall not affect the application of paragraph (4)(C)(iii).
-
(L)(i) In establishing the mechanism under subparagraph (K),
the Secretary may establish new-technology groups into
which a new medical service or technology will be classified if,
based on the estimated average costs incurred with respect to discharges
involving such service or technology, the DRG prospective payment
rate otherwise applicable to such discharges under this subsection
is inadequate.
-
(ii) Such groups—
-
(I) shall not be based on the costs associated with a specific
new medical service or technology; but
-
(II) shall, in combination with the applicable standardized
amounts and the weighting factors assigned to such groups under
paragraph (4)(B), reflect such cost cohorts as the Secretary determines
are appropriate for all new medical services and technologies that
are likely to be provided as inpatient hospital services in a fiscal
year.
-
(iii) The methodology for classifying specific hospital discharges within
a diagnosis-related group under paragraph (4)(A) or a new-technology
group shall provide that a specific hospital discharge may not be
classified within both a diagnosis-related group and a
new-technology group.
(6) The Secretary shall provide for publication in the Federal
Register, on or before the August 1 before each fiscal year (beginning
with fiscal year 1984), of a description of the methodology and
data used in computing the adjusted DRG prospective payment rates
under this subsection, including any adjustments required under
subsection (e)(1)(B).
(7) There shall be no administrative or judical review under
section 1878 or otherwise of—
-
(A) the determination of the requirement, or the proportional
amount, of any adjustment effected pursuant to subsection (e)(1)
or the determination of the applicable percentage increase under
paragraph (12)(A)(ii)[692], and
-
(B) the establishment of diagnosis-related groups, of the methodology
for the classification of discharges within such groups, and of
the appropriate weighting factors thereof under paragraph (4).[693]
(8)(A) In the case of any hospital which is located in an area
which is, at any time after April 20, 1983, reclassified from an
urban to a rural area, payments to such hospital for the first
two cost reporting periods for which such reclassification is
effective shall be made as follows:
-
(i) For the first such cost reporting period, payment shall
be equal to the amount payable to such hospital for such reporting
period on the basis of the rural classification, plus an amount
equal to two-thirds of the amount (if any) by which—
-
(I) the amount which would have been payable to such hospital
for such reporting period on the basis of an urban classification,
exceeds
-
(II) the amount payable to such hospital for such reporting
period on the basis of the rural classification.
-
(ii) For the second such cost reporting period, payment shall
be equal to the amount payable to such hospital for such reporting
period on the basis of the rural classification, plus an amount
equal to one-third of the amount (if any) by which—
-
(I) the amount which would have been payable to such hospital
for such reporting period on the basis of an urban classification,
exceeds
-
(II) the amount payable to such hospital for such reporting
period on the basis of the rural classification.[694]
(B)(i) For purposes of this subsection, 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
the rural county would otherwise be considered part of an urban
area, under the standards for designating Metropolitan Statistical Areas
(and for designating New England County Metropolitan Areas) described
in clause (ii), if the commuting rates used in determining outlying counties
(or, for New England, similar recognized areas) were determined
on the basis of the aggregate number of resident workers who commute
to (and, if applicable under the standards, from) the central county
or counties of all contiguous Metropolitan Statistical Areas (or
New England County Metropolitan Areas).
(ii) The standards described in this clause for cost reporting
periods beginning in a fiscal year—
-
(I) before fiscal year 2003, are the standards published in
the Federal Register on January 3, 1980, or, at the election of
the hospital with respect to fiscal years 2001 and 2002, standards
so published on March 30, 1990; and
-
(II) after fiscal year 2002, are the standards published in
the Federal Register by the Director of the Office of Management
and Budget based on the most recent available decennial population
data.
Subparagraphs (C) and (D) shall not apply with respect to the
application of subclause (I).
(C)(i) If the application of subparagraph (B) or a decision of
the Medicare Geographic Classification Review Board or the Secretary
under paragraph (10), by treating hospitals located in a rural county
or counties as being located in an urban area, or by treating hospitals
located in one urban area as being located in another urban area—
-
(I) reduces the wage index for that urban area (as applied under
this subsection) by 1 percentage point or less, the Secretary,
in calculating such wage index under this subsection, shall exclude
those hospitals so treated, or
-
(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).
(ii) If the application of subparagraph (B) or a decision of
the Medicare Geographic Classification Review Board or the Secretary
under paragraph (10), by treating hospitals located in a rural
county or counties as not being located in the rural area in a
State, reduces the wage index for that rural area (as applied under
this subsection), the Secretary shall calculate and apply such wage
index under this subsection as if the hospitals so treated had not
been excluded from calculation of the wage index for that rural
area.
(iii) The application of subparagraph (B) or a decision of the
Medicare Geographic Classification Review Board or the Secretary
under paragraph (10) may not result in the reduction of any county's
wage index to a level below the wage index for rural areas in the
State in which the county is located.
(iv) The application of subparagraph (B) or a decision of the
Medicare Geographic Classification Review Board or of the Secretary
under paragraph (10) 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.
(v) This subparagraph shall apply with respect to discharges
occurring in a fiscal year only if the Secretary uses a method
for making adjustments to the DRG prospective payment rate for
area differences in hospital wage levels under paragraph (3)(E)
for the fiscal year that is based on the use of Metropolitan Statistical
Area classifications.
(D) The Secretary shall make a proportional adjustment in the
standardized amounts determined under paragraph (3) to assure
that the provisions of subparagraphs (B) and (C) or a decision
of the Medicare Geographic Classification Review Board or the Secretary
under paragraph (10) do not result in aggregate payments under this
section that are greater or less than those that would otherwise
be made.[695]
(E)(i) For purposes of this subsection, not later than 60 days
after the receipt of an application (in a form and manner determined
by the Secretary) from a subsection (d) hospital described in clause
(ii), the Secretary shall treat the hospital as being located in
the rural area (as defined in paragraph (2)(D)) of the State in
which the hospital is located.
-
(ii) For purposes of clause (i), a subsection (d) hospital
described in this clause is a subsection (d) hospital that is located
in an urban area (as defined in paragraph (2)(D)) and satisfies
any of the following criteria:
-
(I) The hospital is located in a rural census tract of a metropolitan
statistical area (as determined under the most recent modification
of the Goldsmith Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725)).
-
(II) The hospital is located in an area designated by any law
or regulation of such State as a rural area (or is designated by
such State as a rural hospital).
-
(III) The hospital would qualify as a rural, regional, or national
referral center under paragraph (5)(C) or as a sole community hospital
under paragraph (5)(D) if the hospital were located in a rural area.
-
(IV) The hospital meets such other criteria as the Secretary
may specify.
(9)(A) Notwithstanding section 1814(b) but subject to the provisions
of section 1813, the amount of the payment with respect to the operating
costs of inpatient hospital services of a subsection (d) Puerto
Rico hospital for inpatient hospital discharges is equal to the
sum of—
-
(i) the applicable Puerto Rico percentage (specified in subparagraph(E))[696]
of the Puerto Rico adjusted DRG prospective payment
rate (determined under subparagraph (B) or (C)) for such discharges, [697]
-
(ii)[698] 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.
-
As 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.
(B) The Secretary shall determine a Puerto Rico adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in fiscal year 1988 involving inpatient hospital services of a
subsection (d) Puerto Rico hospital for which payment may be made
under part A of this title. Such rate shall be determined for such
hospitals located in urban or rural areas within Puerto Rico, as follows:
-
(i) The Secretary shall determine the target amount (as defined
in subsection (b)(3)(A)) for the hospital for the cost reporting
period beginning in fiscal year 1987 and increase such amount by
prorating the applicable percentage increase (as defined in subsection
(b)(3)(B)) to update the amount to the midpoint in fiscal year 1988.
-
(ii) The Secretary shall standardize the amount determined under
clause (i) for each hospital by—
-
(I) excluding an estimate of indirect medical education costs,
-
(II) adjusting for variations among hospitals by area in the
average hospital wage level,
-
(III) adjusting for variations in case mix among hospitals,
and
-
(IV) excluding an estimate of the additional payments to certain
subsection (d) Puerto Rico hospitals to be made under subparagraph (D)(iii)
(relating to disproportionate share payments).
-
(iii) The Secretary shall compute a discharge weighted average
of the standardized amounts determined under clause (ii) for all
hospitals located in an urban area and for all hospitals located
in a rural area (as such terms are defined in paragraph (2)(D)).
-
(iv) The Secretary shall reduce the average standardized amount
by a proportion equal to the proportion (estimated by the Secretary)
of the amount of payments under this paragraph which are additional
payments described in subparagraph (D)(i) (relating to outlier payments).
-
(v) For each discharge classified within a diagnosis-related
group for hospitals located in an urban or rural area, respectively,
the Secretary shall establish a Puerto Rico DRG prospective payment
rate equal to the product of—
-
(I) the average standardized amount (computed under clause (iii)
and reduced under clause (iv)) for hospitals located in an urban
or rural area, respectively, and
-
(II) the weighting factor (determined under paragraph (4)(B))
for that diagnosis-related group.
-
(vi) The Secretary shall adjust the proportion (as estimated
by the Secretary from time to time) of hospitals' costs which are
attributable to wages and wage-related costs, of the Puerto Rico
DRG prospective payment rate computed under clause (v) for area
differences in hospital wage levels by a factor (established by
the Secretary) reflecting the relative hospital wage level in
the geographic area of the hospital compared to the Puerto Rican
average hospital wage level.
(C) The Secretary shall determine a Puerto Rico adjusted DRG
prospective payment rate, for each inpatient hospital discharge
after fiscal year 1988 involving inpatient hospital services of
a subsection (d) Puerto Rico hospital for which payment may be
made under part A of this title. Such rate shall be determined
for hospitals located in urban or rural areas within Puerto Rico
as follows:
-
(i) The Secretary shall compute an average standardized amount
for hospitals located in an urban area and for hospitals located
in a rural area equal to the respective average standardized amount
computed for the previous fiscal year under subparagraph (B)(iii)
or under this clause, increased for fiscal year 1989 by the applicable
percentage increase under subsection (b)(3)(B), and adjusted for
subsequent fiscal years in accordance with the final determination
of the Secretary under subsection (e)(4), and adjusted to reflect
the most recent case-mix data available.
-
(ii) The Secretary shall reduce each of the average standardized
amounts by a proportion equal to the proportion (estimated by
the Secretary) of the amount of payments under this paragraph which
are additional payments described in subparagraph (D)(i) (relating
to outlier payments).
-
(iii) For each discharge classified within a diagnosis-related
group for hospitals located in an urban or rural area, respectively,
the Secretary shall establish a Puerto Rico DRG prospective payment
rate equal to the product of—
-
(I) the average standardized amount (computed under clause (i)
and reduced under clause (ii)) for hospitals located in an urban
or rural area, respectively, and
-
(II) the weighting factor (determined under paragraph (4)(B))
for that diagnosis-related group.
-
(iv)(I)[699] The Secretary shall adjust the proportion (as
estimated by the Secretary from time to time) of hospitals' costs
which are attributable to wages and wage-related costs, of the
Puerto Rico DRG prospective payment rate computed under clause
(iii) for area differences in hospital wage levels by a factor (established
by the Secretary) reflecting the relative hospital wage level in
the geographic area of the hospital compared to the Puerto Rico
average hospital wage level. The second and third sentences of paragraph
(3)(E)(i)[700] shall apply to subsection (d) Puerto Rico hospitals under
this clause in the same manner as they apply to subsection (d) hospitals
under such paragraph and, for purposes of this clause, any reference
in such paragraph to a subsection (d) hospital is deemed a reference
to a subsection (d) Puerto Rico hospital.
-
(II)[701] For discharges occurring on or after October 1, 2004,
the Secretary shall substitute “62 percent” for
the proportion described in the first sentence of clause (i), unless
the application of this subclause would result in lower payments
to a hospital than would otherwise be made.
(D) The following provisions of paragraph (5) shall apply to
subsection (d) Puerto Rico hospitals receiving payment under this
paragraph in the same manner and to the extent as they apply to
subsection (d) hospitals receiving payment under this subsection:
-
(i) Subparagraph (A) (relating to outlier payments).
-
(ii) Subparagraph (B) (relating to payments for indirect medical
education costs), except that for this purpose the sum of the
amount determined under subparagraph (A) of this paragraph and
the amount paid to the hospital under clause (i) of this subparagraph
shall be substituted for the sum referred to in paragraph (5)(B)(i)(I).
-
(iii) Subparagraph (F) (relating to disproportionate share
payments), except that for this purpose the sum described in clause
(ii) of this subparagraph shall be substituted for the sum referred
to in paragraph (5)(F)(ii)(I).
-
(iv) Subparagraph (H) (relating to exceptions and adjustments).
(E)[702] For purposes of subparagraph (A), for discharges occurring—
-
(i) on or after October 1, 1987, and before October 1, 1997,
the applicable Puerto Rico percentage is 75 percent and the applicable
Federal percentage is 25 percent;
-
(ii) on or after October 1, 1997, and before April 1, 2004,
the applicable Puerto Rico percentage is 50 percent and the applicable
Federal percentage is 50 percent;
-
(iii) on or after April 1, 2004, and before October 1, 2004,
the applicable Puerto Rico percentage is 37.5 percent and the applicable
Federal percentage is 62.5 percent; and
-
(iv) on or after October 1, 2004, the applicable Puerto Rico
percentage is 25 percent and the applicable Federal percentage is
75 percent.
(10)(A) There is hereby established the Medicare Geographic
Classification Review Board (hereinafter in this paragraph referred
to as the “Board”).
(B)(i) The Board shall be composed of 5 members appointed by
the Secretary without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service.
Two of such members shall be representative of subsection (d)
hospitals located in a rural area under paragraph (2)(D). At least
1 member shall be knowledgeable in the field of analyzing costs with
respect to the provision of inpatient hospital services.
(ii) The Secretary shall make initial appointments to the Board
as provided in this paragraph within 180 days after the date of
the enactment of this paragraph.[703]
(C)(i) The Board shall consider the application of any subsection
(d) hospital requesting that the Secretary change the hospital's
geographic classification for purposes of determining for a fiscal
year—
-
(I) the hospital's average standardized amount under paragraph
(2)(D), or
-
(II) the factor used to adjust the DRG prospective payment rate
for area differences in hospital wage levels that applies to such
hospital under paragraph (3)(E).
(ii) A hospital requesting a change in geographic classification
under clause (i) for a fiscal year shall submit its application
to the Board not later than the first day of the 13-month
period ending on September 30 of the preceding fiscal year.[704]
(iii)(I) The Board shall render a decision on an application
submitted under clause (i) not later than 180 days after the deadline
referred to in clause (ii).
(II) Appeal of decisions of the Board shall be subject to the
provisions of section 557b of title 5, United States Code. The
Secretary shall issue a decision on such an appeal not later than
90 days after the date on which the appeal is filed. The decision
of the Secretary shall be final and shall not be subject to judicial
review.
(D)(i) The Secretary shall publish guidelines to be utilized
by the Board in rendering decisions on applications submitted under
this paragraph, and shall include in such guidelines the following:
-
(I) Guidelines for comparing wages, taking into account (to
the extent the Secretary determines appropriate) occupational mix,
in the area in which the hospital is classified and the area in
which the hospital is applying to be classified.[705]
-
(II) Guidelines for determining whether the county in which
the hospital is located should be treated as being a part of a
particular Metropolitan Statistical Area.
-
(III) Guidelines for considering information provided by an
applicant with respect to the effects of the hospital's geographic
classification on access to inpatient hospital services by medicare
beneficiaries.
-
(IV) Guidelines for considering the appropriateness of the
criteria used to define New England County Metropolitan Areas.
(ii) Notwithstanding clause (i), if the Secretary uses a method
for making adjustments to the DRG prospective payment rate for
area differences in hospital wage levels under paragraph (3)(E)
that is not based on the use of Metropolitan Statistical Area
classifications, the Secretary may revise the guidelines published
under clause (i) to the extent such guidelines are used to determine the
appropriateness of the geographic area in which the hospital is
determined to be located for purposes of making such adjustments.
(iii) Under the guidelines published by the Secretary under
clause (i), in the case of a hospital which has ever been classified
by the Secretary as a rural referral center under paragraph (5)(C),
the Board may not reject the application of the hospital under this
paragraph on the basis of any comparison between the average hourly
wage of the hospital and the average hourly wage of hospitals in the
area in which it is located.
(iv) The Secretary shall publish the guidelines described in
clause (i) by July 1, 1990.
(v) Any decision of the Board to reclassify a subsection (d)
hospital for purposes of the adjustment factor described in subparagraph
(C)(i)(II) for fiscal year 2001 or any fiscal year thereafter shall
be effective for a period of 3 fiscal years, except that the Secretary
shall establish procedures under which a subsection (d) hospital
may elect to terminate such reclassification before the end of such
period.
(vi) Such guidelines shall provide that, in making decisions
on applications for reclassification for the purposes described
in clause (v) for fiscal year 2003 and any succeeding fiscal year,
the Board shall base any comparison of the average hourly wage
for the hospital with the average hourly wage for hospitals in
an area on—
-
(I) an average of the average hourly wage amount for the hospital
from the most recently published hospital wage survey data of the
Secretary (as of the date on which the hospital applies for reclassification)
and such amount from each of the two immediately preceding surveys;
and
-
(II) an average of the average hourly wage amount for hospitals
in such area from the most recently published hospital wage survey
data of the Secretary (as of the date on which the hospital applies
for reclassification) and such amount from each of the two immediately
preceding surveys.
(E)(i) The Board shall have full power and authority to make
rules and establish procedures, not inconsistent with the provisions
of this title or regulations of the Secretary, which are necessary
or appropriate to carry out the provisions of this paragraph. In
the course of any hearing the Board may administer oaths and affirmations.
The provisions of subsections (d) and (e) of section 205 with respect
to subpenas shall apply to the Board to the same extent as such
provisions apply to the Secretary with respect to title II.
(ii) The Board is authorized to engage such technical assistance
and to receive such information as may be required to carry out
its functions, and the Secretary shall, in addition, make available
to the Board such secretarial, clerical, and other assistance as
the Board may require to carry out its functions.
(F)(i) Each member of the Board who is not an officer or employee
of the Federal Government shall be compensated at a rate equal to
the daily equivalent of the annual rate of basic pay prescribed
for grade GS-18 of the General Schedule under section 5332 of title
5, United States Code, for each day (including travel time) during
which such member is engaged in the performance of the duties of
the Board. Each member of the Board who is an officer or employee of
the United States shall serve without compensation in addition to
that received for service as an officer or employee of the United
States.
(ii) Members of the Board shall be allowed travel expenses,
including per diem in lieu of subsistence, at rates authorized
for employees of agencies under subchapter I of chapter 57 of title
5, United States Code, while away from their homes or regular places
of business in the performance of services for the Board.[706]
(11) ADDITIONAL PAYMENTS FOR MANAGED CARE ENROLLEES.—
-
(A) IN GENERAL.—For portions of cost
reporting periods occurring on or after January 1, 1998, the Secretary
shall provide for an additional payment amount for each applicable
discharge of any subsection (d) hospital that has an approved medical
residency training program.
-
(B) APPLICABLE DISCHARGE.—For purposes
of this paragraph, the term “applicable discharge”
means the discharge of any individual who is enrolled under a risk-sharing
contract with an eligible organization under section 1876 and who
is entitled to benefits under part A or any individual who is enrolled
with a Medicare+Choice organization under part C.
-
(C) DETERMINATION OF AMOUNT.—The amount
of the payment under this paragraph with respect to any applicable
discharge shall be equal to the applicable percentage (as defined
in subsection (h)(3)(D)(ii)) of the estimated average per discharge
amount that would otherwise have been paid under paragraph (5)(B)
if the individuals had not been enrolled as described in subparagraph
(B).
-
(D) SPECIAL RULE FOR HOSPITALS UNDER REIMBURSEMENT
SYSTEM.—The Secretary shall establish rules for the
application of this paragraph to a hospital reimbursed under a
reimbursement system authorized under section 1814(b)(3) in the
same manner as it would apply to the hospital if it were not reimbursed
under such section.
(12)[707] Payment adjustment for low-volume hospitals.—
-
(A) In general.—In addition to any payments calculated
under this section for a subsection (d) hospital, for discharges
occurring during a fiscal year (beginning with fiscal year 2005),
the Secretary shall provide for an additional payment amount to
each low-volume hospital (as defined in subparagraph (C)(i)) for
discharges occurring during that fiscal year that is equal to the
applicable percentage increase (determined under subparagraph (B)
for the hospital involved) in the amount paid to such hospital under
this section for such discharges (determined without regard to this paragraph).
-
(B) Applicable percentage increase.—The Secretary shall
determine an applicable percentage increase for purposes of subparagraph
(A) as follows:
-
(i) The Secretary shall determine the empirical relationship
for subsection (d) hospitals between the standardized cost-per-case
for such hospitals and the total number of discharges of such hospitals
and the amount of the additional incremental costs (if any) that
are associated with such number of discharges.
-
(ii) The applicable percentage increase shall be determined
based upon such relationship in a manner that reflects, based upon
the number of such discharges for a subsection (d) hospital, such
additional incremental costs.
-
(iii) In no case shall the applicable percentage increase exceed
25 percent.
-
(C) Definitions.—
-
(i) Low-volume hospital.—For purposes of this paragraph,
the term “low-volume hospital” means, for a fiscal
year, a subsection (d) hospital (as defined in paragraph (1)(B))
that the Secretary determines is located more than 25 road miles
from another subsection (d) hospital and has less than 800 discharges
during the fiscal year.
-
(ii) Discharge.—For purposes of subparagraph (B) and
clause (i), the term `discharge' means an inpatient acute care discharge
of an individual regardless of whether the individual is entitled
to benefits under part A.
(13)[708](A) In order to recognize commuting patterns among
geographic areas, the Secretary shall establish a process through
application or otherwise for an increase of the wage index applied
under paragraph (3)(E) for subsection (d) hospitals located in a
qualifying county described in subparagraph (B) in the amount computed
under subparagraph (D) based on out-migration of hospital employees
who reside in that county to any higher wage index area.
-
(B) The Secretary shall establish criteria for a qualifying
county under this subparagraph based on the out-migration referred
to in subparagraph (A) and differences in the area wage indices.
Under such criteria the Secretary shall, utilizing such data as
the Secretary determines to be appropriate, establish—
-
(i) a threshold percentage, established by the Secretary, of
the weighted average of the area wage index or indices for the higher
wage index areas involved;
-
(ii) a threshold (of not less than 10 percent) for minimum out-migration
to a higher wage index area or areas; and
-
(iii) a requirement that the average hourly wage of the hospitals
in the qualifying county equals or exceeds the average qualifying
county is located.
-
(C) For purposes of this paragraph, the term `higher wage index
area' means, with respect to a county, an area with a wage index
that exceeds that of the county.
-
(D) The increase in the wage index under subparagraph (A) for
a qualifying county shall be equal to the percentage of the hospital
employees residing in the qualifying county who are employed in
any higher wage index area multiplied by the sum of the products,
for each higher wage index area of—
-
(i) the difference between—
-
(I) the wage index for such higher wage index area, and
-
(II) the wage index of the qualifying county; and
-
(ii) the number of hospital employees residing in the qualifying county
who are employed in such higher wage index area divided by the total
number of hospital employees residing in the qualifying county who
are employed in any higher wage index area.
-
(E) The process under this paragraph may be based upon the process
used by the Medicare Geographic Classification Review Board under
paragraph (10). As the Secretary determines to be appropriate to
carry out such process, the Secretary may require hospitals (including
subsection (d) hospitals and other hospitals) and critical access
hospitals, as required under section 1866(a)(1)(T), to submit data
regarding the location of residence, or the Secretary may use data
from other sources.
-
(F) A wage index increase under this paragraph shall be effective
for a period of 3 fiscal years, except that the Secretary shall
establish procedures under which a subsection (d) hospital may elect
to waive the application of such wage index increase.
-
(G) A hospital in a county that has a wage index increase under
this paragraph for a period and that has not waived the application
of such an increase under subparagraph (F) is not eligible for reclassification
under paragraph (8) or (10) during that period.
-
(H) Any increase in a wage index under this paragraph for a
county shall not be taken into account for purposes of—
-
(i) computing the wage index for portions of the wage index
area (not including the county) in which the county is located;
or
-
(ii) applying any budget neutrality adjustment with respect
to such index under paragraph (8)(D).
-
(I) The thresholds described in subparagraph (B), data on hospital employees
used under this paragraph, and any determination of the Secretary
under the process described in subparagraph (E) shall be final and
shall not be subject to judicial review.
(e)(1)(A)
For cost reporting periods of hospitals
beginning in fiscal year 1984 or fiscal year 1985, the Secretary
shall provide for such proportional adjustment in the applicable
percentage increase (otherwise applicable to the periods under subsection
(b)(3)(B)) as may be necessary to assure that—
-
(i) the aggregate payment amounts otherwise provided under
subsection (d)(1)(A)(i)(I) for that fiscal year for operating costs
of inpatient hospital services of hospitals (excluding payments
made under section 1866(a)(1)(F)),
are not greater or less than—
-
(ii) the target percentage (as defined in subsection (d)(1)(C))
of the payment amounts which would have been payable for such
services for those same hospitals for that fiscal year under this
section under the law as in effect before the date of the enactment
of the Social Security Amendments of 1983[709] (excluding payments
made under section 1866(a)(1)(F));
except that the adjustment made under this subparagraph shall
apply only to subsection (d) hospitals and shall not apply for
purposes of making computations under subsection (d)(2)(B)(ii)
or subsection (d)(3)(A).
(B) For discharges occurring in fiscal year 1984 or fiscal year
1985, the Secretary shall provide under subsections (d)(2)(F)
and (d)(3)(C) for such equal proportional adjustment in each of
the average standardized amounts otherwise computed for that fiscal
year as may be necessary to assure that—
-
(i) the aggregate payment amounts otherwise provided under
subsection (d)(1)(A)(i)(II) and (d)(5) for that fiscal year for
operating costs of inpatient hospital services of hospitals (excluding
payments made under section 1866(a)(1)(F)),
are not greater or less than—
-
(ii) the DRG percentage (as defined in subsection (d)(1)(C))
of the payment amounts which would have been payable for such services
for those same hospitals for that fiscal year under this section
under the law as in effect before the date of the enactment of the
Social Security Amendments of 1983[710] (excluding payments made
under section 1866(a)(1)(F)).
(C) For discharges occurring in fiscal year 1988, the Secretary
shall provide for such equal proportional adjustment in each of
the average standardized amounts otherwise computed under subsection
(d)(3) for that fiscal year as may be necessary to assure that—
-
(i) the aggregate payment amounts otherwise provided under
subsections (d)(1)(A)(iii), (d)(5), and (d)(9) for that fiscal
year for operating costs of inpatient hospital services of subsection
(d) hospitals and subsection (d) Puerto Rico hospitals,
are not greater or less than—
-
(ii) the payment amounts that would have been payable for such
services for those same hospitals for that fiscal year but for
the enactment of the amendments made by section 9304 of the Omnibus
Budget Reconciliation Act of 1986.[711]
[(2) Stricken.[712]]
(3) The Secretary, not later than April 1, 1987, for fiscal year
1988 and not later than March 1 before the beginning of each fiscal
year (beginning with fiscal year 1989), shall report to the Congress
the Secretary's initial estimate of the percentage change that the
Secretary will recommend under paragraph (4) with respect to that
fiscal year.
(4)(A) Taking into consideration the recommendations of the
Commission, the Secretary shall recommend for each fiscal year
(beginning with fiscal year 1988) an appropriate change factor
for inpatient hospital services for discharges in that fiscal year
which will take into account amounts necessary for the efficient
and effective delivery of medically appropriate and necessary care of
high quality. The appropriate change factor may be different for
all large urban subsection (d) hospitals, other urban subsection
(d) hospitals, urban subsection (d) Puerto Rico hospitals, rural
subsection (d) hospitals, and rural subsection (d) Puerto Rico hospitals,
and all other hospitals and units not paid under subsection (d),
and may vary among such other hospitals and units.
(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.
(5) The Secretary shall cause to have published in the Federal
Register, not later than—
-
(A) the April 1 before each fiscal year (beginning with fiscal
year 1986), the Secretary's proposed recommendations under paragraph
(4) for that fiscal year for public comment, and
-
(B) the August 1 before such fiscal year after such consideration
of public comment on the proposal as is feasible in the time available,
the Secretary's final recommendations under such paragraph for that
year.
The Secretary shall include in the publication referred to in
subparagraph (A) for a fiscal year the report of the Commission's
recommendations submitted under paragraph (3) for that fiscal year.
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.
(f)(1)(A)
The Secretary shall maintain a system
for the reporting of costs of hospitals receiving payments computed
under subsection (d).
(B)(i) Subject to clause (ii), the Secretary shall place into
effect a standardized electronic cost reporting format for hospitals
under this title.
(ii) The Secretary may delay or waive the implementation of such
format in particular instances where such implementation would
result in financial hardship (in particular with respect to hospitals
with a small percentage of inpatients entitled to benefits under
this title).
(2) If the Secretary determines, based upon information supplied
by a utilization and quality control peer review organization
under part B of title XI, that a hospital, in order to circumvent
the payment method established under subsection (b) or (d) of this
section, has taken an action that results in the admission of individuals
entitled to benefits under part A unnecessarily, unnecessary multiple
admissions of the same such individuals, or other inappropriate
medical or other practices with respect to such individuals, the
Secretary may—
-
(A) deny payment (in whole or in part) under part A with respect
to inpatient hospital services provided with respect to such an
unnecessary admission (or subsequent admission of the same individual),
or
-
(B) require the hospital to take other corrective action necessary
to prevent or correct the inappropriate practice.
(3) The provisions of subsections (c) through (g) of section 1128 shall apply to determinations made under paragraph (2) in
the same manner as they apply to exclusions effected under section 1128(b)(13).
(g)(1)(A)
Notwithstanding section 1861(v), instead
of any amounts that are otherwise payable under this title with
respect to the reasonable costs of subsection (d) hospitals and
subsection (d) Puerto Rico hospitals for capital-related costs of
inpatient hospital services, the Secretary shall, for hospital cost
reporting periods beginning on or after October 1, 1991, provide
for payments for such costs in accordance with a prospective payment
system established by the Secretary. Aggregate payments made under
subsection (d) and this subsection during fiscal years 1992 through
1995 shall be reduced in a manner that results in a reduction (as
estimated by the Secretary) in the amount of such payments equal
to a 10 percent reduction in the amount of payments attributable
to capital-related costs that would otherwise have been made during
such fiscal year had the amount of such payments been based on reasonable
costs (as defined in section 1861(v)). 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. In addition
to the reduction described in the preceding sentence, for discharges
occurring on or after October 1, 1997, the Secretary shall apply
the budget neutrality adjustment factor used to determine the Federal
capital payment rate in effect on September 30, 1995 (as described
in section 412.352 of title 42 of the Code of Federal Regulations),
to (i) the unadjusted standard Federal capital payment rate (as described
in section 412.308(c) of that title, as in effect on September 30, 1997),
and (ii) the unadjusted hospital-specific rate (as described
in section 412.328(e)(1) of that title, as in effect on September
30, 1997), and, for discharges occurring on or after October 1,
1997, and before October 1, 2002, reduce the rates described in
clauses (i) and (ii) by 2.1 percent.
(B) Such system—
-
(i) shall provide for (I) a payment on a per discharge basis,
and (II) an appropriate weighting of such payment amount as relates
to the classification of the discharge;
-
(ii) may provide for an adjustment to take into account variations
in the relative costs of capital and construction for the different
types of facilities or areas in which they are located;
-
(iii) may provide for such exceptions (including appropriate
exceptions to reflect capital obligations) as the Secretary determines
to be appropriate, and
-
(iv) may provide for suitable adjustment to reflect hospital
occupancy rate.
(C) In this paragraph, the term “capital-related costs” has
the meaning given such term by the Secretary under subsection (a)(4)
as of September 30, 1987, and does not include a return on equity
capital.
(2)(A) The Secretary shall provide that the amount which is
allowable, with respect to reasonable costs of inpatient hospital
services for which payment may be made under this title, for a return
on equity capital for hospitals shall, for cost reporting periods
beginning on or after the date of the enactment of this subsection,[713] be
equal to amounts otherwise allowable under regulations in effect
on March 1, 1983, except that the rate of return to be recognized
shall be equal to the applicable percentage (described in subparagraph
(B)) of the average of the rates of interest, for each of the months
any part of which is included in the reporting period, on obligations
issued for purchase by the Federal Hospital Insurance Trust Fund.
(B) In this paragraph, the “applicable percentage”
is—
-
(i) 75 percent, for cost reporting periods beginning during
fiscal year 1987,
-
(ii) 50 percent, for cost reporting periods beginning during
fiscal year 1988,
-
(iii) 25 percent, for cost reporting periods beginning during
fiscal year 1989, and
-
(iv) 0 percent, for cost reporting periods beginning on or after
October 1, 1989.
(3)(A) Except as provided in subparagraph (B), in determining
the amount of the payments that may be made under this title with
respect to all the capital-related costs of inpatient hospital services
of a subsection (d) hospital and a subsection (d) Puerto Rico hospital,
the Secretary shall reduce the amounts of such payments otherwise
established under this title by—
-
(i) 3.5 percent for payments attributable to portions of cost
reporting periods occurring during fiscal year 1987,
-
(ii) 7 percent for payments attributable to portions of cost
reporting periods or discharges (as the case may be) occurring
during fiscal year 1988 on or after October 1, 1987, and before
January 1, 1988,
-
(iii) 12 percent for payments attributable to portions of cost
reporting periods or discharges (as the case may be) in fiscal
year 1988, occurring on or after January 1, 1988,
-
(iv) 15 percent for payments attributable to portions of cost
reporting periods or discharges (as the case may be) occurring
during fiscal year 1989, and
-
(v) 15 percent for payments attributable to portions of cost
reporting periods or discharges (as the case may be) occurring
during the period beginning January 1, 1990, and ending September
30, 1991.
(B) Subparagraph (A) shall not apply to payments with respect
to the capital-related costs of any hospital that is a sole community
hospital (as defined in subsection (as defined in subsection (d)(5)(D)(iii))[714] or
a critical access hospital (as defined in section 1861(mm)(1)).
(4) In determining the amount of the payments that are attributable
to portions of cost reporting periods occurring during fiscal years
1998 through 2002 and that may be made under this title with respect
to capital-related costs of inpatient hospital services
of a hospital which is described in clause (i), (ii), or (iv) of
subsection (d)(1)(B) or a unit described in the matter after clause
(v) of such subsection, the Secretary shall reduce the amounts of
such payments otherwise determined under this title by 15 percent.
In addition to the reduction described in the preceding sentence,
for discharges occurring on or after October 1, 1997, the Secretary
shall apply the budget neutrality adjustment factor used to determine
the Federal capital payment rate in effect on September 30, 1995
(as described in section 412.352 of title 42 of the Code of Federal
Regulations), to (i) the unadjusted standard Federal capital payment
rate (as described in section 412.308(c) of that title, as in effect
on September 30, 1997), and (ii) the unadjusted hospital-specific
rate (as described in section 412.328(e)(1) of that title, as in
effect on September 30, 1997), and, for discharges occurring on
or after October 1, 1997, and before September 30, 2002, reduce
the rates described in clauses (i) and (ii) by 2.1 percent.
(h)
PAYMENTS FOR DIRECT GRADUATE MEDICAL
EDUCATION COSTS[715].—
-
(1) SUBSTITUTION OF SPECIAL PAYMENT RULES.—Notwithstanding section 1861(v), instead of any amounts that are otherwise payable under this
title with respect to the reasonable costs of hospitals for direct
graduate medical education costs, the Secretary shall provide for
payments for such costs in accordance with paragraph (3) of this
subsection. In providing for such payments, the Secretary shall
provide for an allocation of such payments between part A and part
B (and the trust funds established under the respective parts) as
reasonably reflects the proportion of direct graduate medical education
costs of hospitals associated with the provision of services under
each respective part.
-
(2) DETERMINATION OF HOSPITAL-SPECIFIC APPROVED
FTE RESIDENT AMOUNTS.—The Secretary shall determine,
for each hospital with an approved medical residency training program,
an approved FTE resident amount for each cost reporting period
beginning on or after July 1, 1985, as follows:
-
(A) DETERMINING ALLOWABLE AVERAGE COST PER FTE
RESIDENT IN A HOSPITAL'S BASE PERIOD.—The Secretary
shall determine, for the hospital's cost reporting period that
began during fiscal year 1984, the average amount recognized as
reasonable under this title for direct graduate medical education
costs of the hospital for each full-time-equivalent resident.
-
(B) UPDATING TO THE FIRST COST REPORTING PERIOD.—
-
(i) IN GENERAL.—The Secretary shall
update each average amount determined under subparagraph (A) by
the percentage increase in the consumer price index during the
12-month cost reporting period described in such subparagraph.
-
(ii) EXCEPTION.—The Secretary shall
not perform an update under clause (i) in the case of a hospital
if the hospital's reporting period, described in subparagraph (A),
began on or after July 1, 1984, and before October 1, 1984.
-
(C) AMOUNT FOR FIRST COST REPORTING PERIOD.—For
the first cost reporting period of the hospital beginning on or
after July 1, 1985, the approved FTE resident amount for the hospital
is equal to the amount determined under subparagraph (B) increased
by 1 percent.
-
(D) AMOUNT FOR SUBSEQUENT COST REPORTING PERIODS.—
-
(i) IN GENERAL.—Except as provided
in a subsequent clause, for each subsequent cost reporting period,
the approved FTE resident amount for the hospital is equal to the
approved FTE resident amount determined under this paragraph for
the previous cost reporting period updated, through the midpoint
of the period, by projecting the estimated percentage change in
the consumer price index during the 12-month period ending at that
midpoint, with appropriate adjustments to reflect previous under-or
over-estimations under this subparagraph in the projected
percentage change in the consumer price index.
-
(ii) FREEZE IN UPDATE FOR FISCAL YEARS 1994 AND
1995.—For cost reporting periods beginning during
fiscal year 1994 or fiscal year 1995, the approved FTE resident
amount for a hospital shall not be updated under clause (i) for
a resident who is not a primary care resident (as defined in paragraph
(5)(H)) or a resident enrolled in an approved medical residency
training program in obstetrics and gynecology.
-
(iii) FLOOR FOR LOCALITY ADJUSTED NATIONAL AVERAGE
PER RESIDENT AMOUNT.—The approved FTE resident amount
for a hospital for the cost reporting period beginning during fiscal
year 2001 shall not be less than 70 percent, and for the cost reporting period
beginning during fiscal year 2002 shall not be less than 85 percent,
of the locality adjusted national average per resident amount computed
under subparagraph (E) for the hospital and period.
-
(iv) ADJUSTMENT IN RATE OF INCREASE FOR HOSPITALS
WITH FTE APPROVED AMOUNT ABOVE 140 PERCENT OF LOCALITY ADJUSTED
NATIONAL AVERAGE PER RESIDENT AMOUNT.—
-
(I) FREEZE FOR FISCAL YEARS 2001 AND 2002 AND 2004 THROUGH
2013[716].—For a cost reporting period beginning during
fiscal year 2001 or fiscal year 2002 or during the period beginning
with fiscal year 2004 and ending with fiscal year 2013[717], if
the approved FTE resident amount for a hospital for the preceding
cost reporting period exceeds 140 percent of the locality adjusted
national average per resident amount computed under subparagraph
(E) for that hospital and period, subject to subclause (III), the
approved FTE resident amount for the period involved shall be
the same as the approved FTE resident amount for the hospital for
such preceding cost reporting period.
-
(II) 2 PERCENT DECREASE IN UPDATE FOR FISCAL YEARS
2003, 2004, AND 2005.— For the[718] cost reporting
period beginning during fiscal year 2003,[719] if the approved
FTE resident amount for a hospital for the preceding cost reporting
period exceeds 140 percent of the locality adjusted national average per
resident amount computed under subparagraph (E) for that hospital
and preceding period, the approved FTE resident amount for the period
involved shall be updated in the manner described in subparagraph
(D)(i) except that, subject to subclause (III), the consumer price
index applied for a 12-month period shall be reduced (but
not below zero) by 2 percentage points.
-
(III) NO ADJUSTMENT BELOW 140 PERCENT.—In
no case shall subclause (I) or (II) reduce an approved FTE resident
amount for a hospital for a cost reporting period below 140 percent
of the locality adjusted national average per resident amount computed
under subparagraph (E) for such hospital and period.
-
(E) DETERMINATION OF LOCALITY ADJUSTED NATIONAL
AVERAGE PER RESIDENT AMOUNT.—The Secretary shall
determine a locality adjusted national average per resident amount
with respect to a cost reporting period of a hospital beginning
during a fiscal year as follows:
-
(i) DETERMINING HOSPITAL SINGLE PER RESIDENT AMOUNT.—The
Secretary shall compute for each hospital operating an approved
graduate medical education program a single per resident amount
equal to the average (weighted by number of full-time equivalent
residents, as determined under paragraph (4)) of the primary care
per resident amount and the non-primary care per resident
amount computed under paragraph (2) for cost reporting periods ending
during fiscal year 1997.
-
(ii) STANDARDIZING PER RESIDENT AMOUNTS.—The
Secretary shall compute a standardized per resident amount for
each such hospital by dividing the single per resident amount
computed under clause (i) by an average of the 3 geographic index
values (weighted by the national average weight for each of the
work, practice expense, and malpractice components) as applied under section 1848(e) for 1999 for the fee schedule area in which the hospital
is located.
-
(iii) COMPUTING OF WEIGHTED AVERAGE.—The
Secretary shall compute the average of the standardized per resident
amounts computed under clause (ii) for such hospitals, with the
amount for each hospital weighted by the average number of full-time
equivalent residents at such hospital (as determined under paragraph
(4)).
-
(iv) COMPUTING NATIONAL AVERAGE PER RESIDENT AMOUNT.—The
Secretary shall compute the national average per resident amount,
for a hospital's cost reporting period that begins during fiscal
year 2001, equal to the weighted average computed under clause (iii)
increased by the estimated percentage increase in the consumer price
index for all urban consumers during the period beginning with the
month that represents the midpoint of the cost reporting periods
described in clause (i) and ending with the midpoint of the hospital's
cost reporting period that begins during fiscal year 2001.
-
(v) ADJUSTING FOR LOCALITY.—The Secretary
shall compute the product of—
-
(I) the national average per resident amount computed under
clause (iv) for the hospital, and
-
(II) the geographic index value average (described and applied
under clause (ii)) for the fee schedule area in which the hospital
is located.
-
(vi) COMPUTING LOCALITY ADJUSTED AMOUNT.—The
locality adjusted national per resident amount for a hospital
for—
-
(I) the cost reporting period beginning during fiscal year 2001
is the product computed under clause (v); or
-
(II) each subsequent cost reporting period is equal to the locality
adjusted national per resident amount for the hospital for the previous
cost reporting period (as determined under this clause) updated,
through the midpoint of the period, by projecting the estimated
percentage change in the consumer price index for all urban consumers
during the 12-month period ending at that midpoint.
-
(F) TREATMENT OF CERTAIN HOSPITALS.—In
the case of a hospital that did not have an approved medical residency
training program or was not participating in the program under this
title for a cost reporting period beginning during fiscal year 1984,
the Secretary shall, for the first such period for which it has
such a residency training program and is participating under this
title, provide for such approved FTE resident amount as the Secretary
determines to be appropriate, based on approved FTE resident amounts
for comparable programs.
-
(3) HOSPITAL PAYMENT AMOUNT PER RESIDENT.—
-
(A) IN GENERAL.—The payment amount,
for a hospital cost reporting period beginning on or after July
1, 1985, is equal to the product of—
-
(i) the aggregate approved amount (as defined in subparagraph
(B)) for that period, and
-
(ii) the hospital's medicare patient load (as defined in subparagraph
(C)) for that period.
-
(B) AGGREGATE APPROVED AMOUNT.—As used
in subparagraph (A), the term “aggregate approved amount” means,
for a hospital cost reporting period, the product of—
-
(i) the hospital's approved FTE resident amount (determined
under paragraph (2)) for that period, and
-
(ii) the weighted average number of full-time-equivalent residents
(as determined under paragraph (4)) in the hospital's approved medical
residency training programs in that period.
-
The Secretary shall reduce the aggregate approved amount to
the extent payment is made under subsection (k) for residents included
in the hospital's count of full-time equivalent residents.
-
(C) MEDICARE PATIENT LOAD.—As used
in subparagraph (A), the term “medicare patient load”
means, with respect to a hospital's cost reporting period, the
fraction of the total number of inpatient-bed-days (as established
by the Secretary) during the period which are attributable to patients
with respect to whom payment may be made under part A.
-
(D) PAYMENT FOR MANAGED CARE ENROLLEES.—
-
(i) IN GENERAL.—For portions of cost
reporting periods occurring on or after January 1, 1998, the Secretary
shall provide for an additional payment amount under this subsection
for services furnished to individuals who are enrolled under a risk-sharing
contract with an eligible organization under section 1876 and who
are entitled to part A or with a Medicare+Choice organization under part
C. The amount of such a payment shall equal the applicable percentage
of the product of—
-
(I) the aggregate approved amount (as defined in subparagraph
(B)) for that period; and
-
(II) the fraction of the total number of inpatient-bed
days (as established by the Secretary) during the period which
are attributable to such enrolled individuals.
-
(ii) APPLICABLE PERCENTAGE.—For purposes
of clause (i), the applicable percentage is—
-
(I) 20 percent in 1998,
-
(II) 40 percent in 1999,
-
(III) 60 percent in 2000, [720]
-
(IV) 80 percent in 2001, and
-
(V) 100 percent in 2002 and subsequent years.
-
(iii) SPECIAL RULE FOR HOSPITALS UNDER REIMBURSEMENT
SYSTEM.—The Secretary shall establish rules for the
application of this subparagraph to a hospital reimbursed under
a reimbursement system authorized under section 1814(b)(3) in
the same manner as it would apply to the hospital if it were not
reimbursed under such section.
-
(4) DETERMINATION OF FULL-TIME-EQUIVALENT RESIDENTS.—
-
(A) RULES.—The Secretary shall establish
rules consistent with this paragraph for the computation of the
number of full-time-equivalent residents in an approved medical
residency training program.
-
(B) ADJUSTMENT FOR PART-YEAR OR PART-TIME RESIDENTS.—Such rules
shall take into account individuals who serve as residents for only a
portion of a period with a hospital or simultaneously with more
than one hospital.
-
(C) WEIGHTING FACTORS FOR CERTAIN RESIDENTS.—Subject
to subparagraph (D), such rules shall provide, in calculating the
number of full-time-equivalent residents in an approved residency
program—
-
(i) before July 1, 1986, for each resident the weighting factor
is 1.00,
-
(ii) on or after July 1, 1986, for a resident who is in the
resident's initial residency period (as defined in paragraph (5)(F)),
the weighting factor is 1.00,
-
(iii) on or after July 1, 1986, and before July 1, 1987, for
a resident who is not in the resident's initial residency period
(as defined in paragraph (5)(F)), the weighting factor is .75,
and
-
(iv) on or after July 1, 1987, for a resident who is not in
the resident's initial residency period (as defined in paragraph
(5)(F)), the weighting factor is .50.
-
(D) FOREIGN MEDICAL GRADUATES REQUIRED TO PASS FMGEMS
EXAMINATION.—
-
(i) IN GENERAL.—Except as provided
in clause (ii), such rules shall provide that, in the case of an
individual who is a foreign medical graduate (as defined in paragraph
(5)(D)), the individual shall not be counted as a resident on or
after July 1, 1986, unless—
-
(I) the individual has passed the FMGEMS examination (as defined
in paragraph (5)(E)), or
-
(II) the individual has previously received certification from,
or has previously passed the examination of, the Educational Commission
for Foreign Medical Graduates.
-
(ii) TRANSITION FOR CURRENT FMGS.—On
or after July 1, 1986, but before July 1, 1987, in the case of a
foreign medical graduate who—
-
(I) has served as a resident before July 1, 1986, and is serving
as a resident after that date, but
-
(II) has not passed the FMGEMS examination or a previous examination
of the Educational Commission for Foreign Medical Graduates before
July 1, 1986,
-
the individual shall be counted as a resident at a rate equal
to one-half of the rate at which the individual would otherwise
be counted.
-
(E) COUNTING TIME SPENT IN OUTPATIENT SETTINGS.—Such
rules shall provide that only time spent in activities relating
to patient care shall be counted and that all the time so spent
by a resident under an approved medical residency training program
shall be counted towards the determination of full-time equivalency,
without regard to the setting in which the activities are performed,
if the hospital incurs all, or substantially all, of the costs for
the training program in that setting.
-
(F) LIMITATION ON NUMBER OF RESIDENTS IN ALLOPATHIC
AND OSTEOPATHIC MEDICINE.—IN GENERAL.—
-
(i) Such rules shall provide that for purposes of a cost reporting period
beginning on or after October 1, 1997, subject to paragraph (7),[721] the
total number of full-time equivalent residents before application
of weighting factors (as determined under this paragraph) with respect
to a hospital's approved medical residency training program in the
fields of allopathic medicine and osteopathic medicine may not exceed
the number (or, 130 percent of such number in the case of a hospital
located in a rural area) of such full-time equivalent residents
for the hospital's most recent cost reporting period ending on
or before December 31, 1996.
-
(ii) COUNTING PRIMARY CARE RESIDENTS ON CERTAIN
APPROVED LEAVES OF ABSENCE IN BASE YEAR FTE COUNT.—
-
(I) IN GENERAL.—In determining the
number of such full-time equivalent residents for a hospital's
most recent cost reporting period ending on or before December 31,
1996, for purposes of clause (i), the Secretary shall count an individual
to the extent that the individual would have been counted as a primary
care resident for such period but for the fact that the individual,
as determined by the Secretary, was on maternity or disability
leave or a similar approved leave of absence.
-
(II) LIMITATION TO 3 FTE RESIDENTS FOR ANY HOSPITAL.—The
total number of individuals counted under subclause (I) for a hospital
may not exceed 3 full-time equivalent residents.
-
(G) COUNTING INTERNS AND RESIDENTS FOR FY 1998 AND
SUBSEQUENT YEARS.—
-
(i) IN GENERAL.—For cost reporting
periods beginning during fiscal years beginning on or after October
1, 1997, subject to the limit described in subparagraph (F), the
total number of full-time equivalent residents for determining
a hospital's graduate medical education payment shall equal the
average of the actual full-time equivalent resident counts
for the cost reporting period and the preceding two cost reporting
periods.
-
(ii) ADJUSTMENT FOR SHORT PERIODS.—If
any cost reporting period beginning on or after October 1, 1997,
is not equal to twelve months, the Secretary shall make appropriate
modifications to ensure that the average full-time equivalent
resident counts pursuant to clause (i) are based on the equivalent
of full twelve-month cost reporting periods.
-
(iii) TRANSITION RULE FOR 1998.—In
the case of a hospital's first cost reporting period beginning on
or after October 1, 1997, clause (i) shall be applied by using the
average for such period and the preceding cost reporting period.
-
(H) SPECIAL RULES FOR APPLICATION OF SUBPARAGRAPHS
(F) AND (G).—
-
(i) NEW FACILITIES.—The Secretary shall,
consistent with the principles of subparagraphs (F) and (G) and
subject to paragraph (7),[722] prescribe rules for the application
of such subparagraphs in the case of medical residency training
programs established on or after January 1, 1995. In promulgating
such rules for purposes of subparagraph (F), the Secretary shall
give special consideration to facilities that meet the needs of
underserved rural areas.
-
(ii) AGGREGATION.—The Secretary may
prescribe rules which allow institutions which are members of
the same affiliated group (as defined by the Secretary) to elect
to apply the limitation of subparagraph (F) on an aggregate basis.
-
(iii) DATA COLLECTION.—The Secretary
may require any entity that operates a medical residency training
program and to which subparagraphs (F) and (G) apply to submit
to the Secretary such additional information as the Secretary
considers necessary to carry out such subparagraphs.
-
(iv) NONRURAL HOSPITALS OPERATING TRAINING PROGRAMS
IN RURAL AREAS.—In the case of a hospital that is not
located in a rural area but establishes separately accredited approved
medical residency training programs (or rural tracks) in an rural
area or has an accredited training program with an integrated rural
track, the Secretary shall adjust the limitation under subparagraph
(F) in an appropriate manner insofar as it applies to such programs
in such rural areas in order to encourage the training of physicians
in rural areas.
-
(5) DEFINITIONS AND SPECIAL RULES.—As
used in this subsection:
-
(A) APPROVED MEDICAL RESIDENCY TRAINING PROGRAM.—The term “approved
medical residency training program” means a residency or
other postgraduate medical training program participation in which
may be counted toward certification in a specialty or subspecialty
and includes formal postgraduate training programs in geriatric medicine
approved by the Secretary.
-
(B) CONSUMER PRICE INDEX.—The term
“consumer price index” refers to the Consumer
Price Index for All Urban Consumers (United States city average),
as published by the Secretary of Commerce.
-
(C) DIRECT GRADUATE MEDICAL EDUCATION COSTS.—The
term “direct graduate medical education costs” means
direct costs of approved educational activities for approved medical
residency training programs.
-
(D) FOREIGN MEDICAL GRADUATE.—The term
“foreign medical graduate” means a resident who
is not a graduate of—
-
(i) a school of medicine accredited by the Liaison Committee
on Medical Education of the American Medical Association and the
Association of American Medical Colleges (or approved by such Committee
as meeting the standards necessary for such accreditation),
-
(ii) a school of osteopathy accredited by the American Osteopathic
Association, or approved by such Association as meeting the standards
necessary for such accreditation, or
-
(iii) a school of dentistry or podiatry which is accredited
(or meets the standards for accreditation) by an organization recognized
by the Secretary for such purpose.
-
(E) FMGEMS EXAMINATION.—The term “FMGEMS
examination” means parts I and II of the Foreign Medical
Graduate Examination in the Medical Sciences or any successor examination
recognized by the Secretary for this purpose.
-
(F) INITIAL RESIDENCY PERIOD.—The term
“initial residency period” means the period of
board eligibility, except that—
-
(i) except as provided in clause (ii), in no case shall the
initial period of residency exceed an aggregate period of formal
training of more than five years for any individual, and
-
(ii) a period, of not more than two years, during which an
individual is in a geriatric residency or fellowship program or
a preventive medicine residency or fellowship program which meets such
criteria as the Secretary may establish, shall be treated as part of
the initial residency period, but shall not be counted against any limitation
on the initial residency period.
-
Subject to subparagraph (G)(v), the initial residency period
shall be determined, with respect to a resident, as of the time
the resident enters the residency training program.
-
(G) PERIOD OF BOARD ELIGIBILITY.—
-
(i) GENERAL RULE.—Subject to clauses
(ii), (iii), (iv) and (v) the term “period of board eligibility” means,
for a resident, the minimum number of years of formal training necessary
to satisfy the requirements for initial board eligibility in the
particular specialty for which the resident is training.
-
(ii) APPLICATION OF 1985-1986 DIRECTORY .—Except
as provided in clause (iii), the period of board eligibility shall
be such period specified in the 1985-1986 Directory of
Residency Training Programs published by the Accreditation Council
on Graduate Medical Education.
-
(iii) CHANGES IN PERIOD OF BOARD ELIGIBILITY.—On
or after July 1, 1989, if the Accreditation Council on Graduate
Medical Education, in its Directory of Residency Training Programs—
-
(I) increases the minimum number of years of formal training
necessary to satisfy the requirements for a specialty, above the
period specified in its 1985-1986 Directory, the Secretary
may increase the period of board eligibility for that specialty,
but not to exceed the period of board eligibility specified in
that later Directory, or
-
(II) decreases the minimum number of years of formal training
necessary to satisfy the requirements for a specialty, below the
period specified in its 1985-1986 Directory, the Secretary
may decrease the period of board eligibility for that specialty,
but not below the period of board eligibility specified in that
later Directory.
-
(iv) SPECIAL RULE FOR CERTAIN PRIMARY CARE COMBINED
RESIDENCY PROGRAMS.—(I) In the case of a resident
enrolled in a combined medical residency training program in which
all of the individual programs (that are combined) are for training
a primary care resident (as defined in subparagraph (H)), the period
of board eligibility shall be the minimum number of years of formal
training required to satisfy the requirements for initial board
eligibility in the longest of the individual programs plus one additional
year.
-
(II) A resident enrolled in a combined medical residency training program
that includes an obstetrics and gynecology program shall qualify
for the period of board eligibility under subclause (I) if the other
programs such resident combines with such obstetrics and gynecology
program are for training a primary care resident.
-
(v) CHILD NEUROLOGY TRAINING PROGRAMS.—In
the case of a resident enrolled in a child neurology residency
training program, the period of board eligibility and the initial
residency period shall be the period of board eligibility for pediatrics
plus 2 years.
-
(H) PRIMARY CARE RESIDENT.—The term
“primary care resident” means a resident enrolled
in an approved medical residency training program in family medicine,
general internal medicine, general pediatrics, preventive medicine,
geriatric medicine, or osteopathic general practice.
-
(I) RESIDENT.—The term “resident” includes
an intern or other participant in an approved medical residency
training program.
-
(J) ADJUSTMENTS FOR CERTAIN FAMILY PRACTICE RESIDENCY
PROGRAMS.—
-
(i) IN GENERAL.—In the case of an approved
medical residency training program (meeting the requirements of
clause (ii)) of a hospital which received funds from the United
States, a State, or a political subdivision of a State or an instrumentality
of such a State or political subdivision (other than payments under
this title or a State plan under title XIX) for the program during
the cost reporting period that began during fiscal year 1984, the
Secretary shall—
-
(I) provide for an average amount under paragraph (2)(A) that
takes into account the Secretary's estimate of the amount that
would have been recognized as reasonable under this title if the
hospital had not received such funds, and
-
(II) reduce the payment amount otherwise provided under this
subsection in an amount equal to the proportion of such program
funds received during the cost reporting period involved that is
allocable to this title.
-
(ii) ADDITIONAL REQUIREMENTS.—A hospital's
approved medical residency program meets the requirements of this
clause if—
-
(I) the program is limited to training for family and community
medicine;
-
(II) the program is the only approved medical residency program
of the hospital; and
-
(III) the average amount determined under paragraph (2)(A) for
the hospital (as determined without regard to the increase in such
amount described in clause (i)(I)) does not exceed $10,000.
-
(6) INCENTIVE PAYMENT UNDER PLANS FOR VOLUNTARY
REDUCTION IN NUMBER OF RESIDENTS.—
-
(A) IN GENERAL.—In the case of a voluntary
residency reduction plan for which an application is approved
under subparagraph (B), subject to subparagraph (F), each hospital
which is part of the qualifying entity submitting the plan shall
be paid an applicable hold harmless percentage (as specified in
subparagraph (E)) of the sum of—
-
(i) the amount (if any) by which—
-
(I) the amount of payment which would have been made under this
subsection if there had been a 5-percent reduction in the
number of full-time equivalent residents in the approved
medical education training programs of the hospital as of June
30, 1997, exceeds
-
(II) the amount of payment which is made under this subsection,
taking into account the reduction in such number effected under
the reduction plan; and
-
(ii) the amount of the reduction in payment under subsection
(d)(5)(B) for the hospital that is attributable to the reduction
in number of residents effected under the plan below 95 percent
of the number of full-time equivalent residents in such
programs of the hospital as of June 30, 1997.
-
The determination of the amounts under clauses (i) and (ii)
for any year shall be made on the basis of the provisions of this
title in effect on the application deadline date for the first
calendar year to which the reduction plan applies.
-
(B) APPROVAL OF PLAN APPLICATIONS.—The
Secretary may not approve the application of an qualifying entity
unless—
-
(i) the application is submitted in a form and manner specified
by the Secretary and by not later than November 1, 1999,
-
(ii) the application provides for the operation of a plan for
the reduction in the number of full-time equivalent residents
in the approved medical residency training programs of the entity
consistent with the requirements of subparagraph (D);
-
(iii) the entity elects in the application the period of residency training
years (not greater than 5) over which the reduction will occur;
-
(iv) the entity will not reduce the proportion of its residents
in primary care (to the total number of residents) below such
proportion as in effect as of the applicable time described in
subparagraph (D)(v); and
-
(v) the Secretary determines that the application and the entity
and such plan meet such other requirements as the Secretary specifies
in regulations.
-
(C) QUALIFYING ENTITY.—For purposes
of this paragraph, any of the following may be a qualifying entity:
-
(i) Individual hospitals operating one or more approved medical
residency training programs.
-
(ii) Two or more hospitals that operate such programs and apply
for treatment under this paragraph as a single qualifying entity.
-
(iii) A qualifying consortium (as described in section 4628
of the Balanced Budget Act of 1997).
-
(D) RESIDENCY REDUCTION REQUIREMENTS.—
-
(i) INDIVIDUAL HOSPITAL APPLICANTS.—In
the case of a qualifying entity described in subparagraph (C)(i),
the number of full-time equivalent residents in all the
approved medical residency training programs operated by or through
the entity shall be reduced as follows:
-
(I) If the base number of residents exceeds 750 residents, by a
number equal to at least 20 percent of such base number.
-
(II) Subject to subclause (IV), if the base number of residents
exceeds 600 but is less than 750 residents, by 150 residents.
-
(III) Subject to subclause (IV), if the base number of residents
does not exceed 600 residents, by a number equal to at least 25
percent of such base number.
-
(IV) In the case of a qualifying entity which is described in
clause (v) and which elects treatment under this subclause, by
a number equal to at least 20 percent of the base number.
-
(ii) JOINT APPLICANTS.—In the case
of a qualifying entity described in subparagraph (C)(ii), the number
of full-time equivalent residents in the aggregate for
all the approved medical residency training programs operated by
or through the entity shall be reduced as follows:
-
(I) Subject to subclause (II), by a number equal to at least
25 percent of the base number.
-
(II) In the case of such a qualifying entity which is described
in clause (v) and which elects treatment under this subclause,
by a number equal to at least 20 percent of the base number.
-
(iii) CONSORTIA.—In the case of a qualifying
entity described in subparagraph (C)(iii), the number of full-time
equivalent residents in the aggregate for all the approved medical
residency training programs operated by or through the entity shall
be reduced by a number equal to at least 20 percent of the base
number.
-
(iv) MANNER OF REDUCTION.—The reductions
specified under the preceding provisions of this subparagraph
for a qualifying entity shall be below the base number of residents
for that entity and shall be fully effective not later than the
5th residency training year in which the application under subparagraph
(B) is effective.
-
(v) ENTITIES PROVIDING ASSURANCE OF INCREASE IN
PRIMARY CARE RESIDENTS.—An entity is described in
this clause if—
-
(I) the base number of residents for the entity is less than
750 or the entity is described in subparagraph (C)(ii); and
-
(II) the entity represents in its application under subparagraph
(B) that it will increase the number of full-time equivalent
residents in primary care by at least 20 percent (from such number
included in the base number of residents) by not later than the
5th residency training year in which the application under subparagraph
(B) is effective.
-
If a qualifying entity fails to comply with the representation
described in subclause (II) by the end of such 5th residency training year,
the entity shall be subject to repayment of all amounts paid under
this paragraph, in accordance with procedures established to carry
out subparagraph (F).
-
(vi) BASE NUMBER OF RESIDENTS DEFINED.—For
purposes of this paragraph, the term “base number of
residents” means, with respect to a qualifying entity (or
its participating hospitals) operating approved medical residency
training programs, the number of full-time equivalent residents
in such programs (before application of weighting factors) of the
entity as of the most recent residency training year ending before
June 30, 1997, or, if less, for any subsequent residency training
year that ends before the date the entity makes application under
this paragraph.
-
(E) APPLICABLE HOLD HARMLESS PERCENTAGE.—For
purposes of subparagraph (A), the “applicable hold harmless
percentage” for the—
-
(i) first and second residency training years in which the
reduction plan is in effect, 100 percent,
-
(ii) third such year, 75 percent,
-
(iii) fourth such year, 50 percent, and
-
(iv) fifth such year, 25 percent.
-
(F) PENALTY FOR NONCOMPLIANCE.—
-
(i) IN GENERAL.—No payment may be made
under this paragraph to a hospital for a residency training year
if the hospital has failed to reduce the number of full-time
equivalent residents (in the manner required under subparagraph
(D)) to the number agreed to by the Secretary and the qualifying
entity in approving the application under this paragraph with
respect to such year.
-
(ii) INCREASE IN NUMBER OF RESIDENTS IN SUBSEQUENT
YEARS.—If payments are made under this paragraph to
a hospital, and if the hospital increases the number of full-time
equivalent residents above the number of such residents permitted
under the reduction plan as of the completion of the plan, then,
as specified by the Secretary, the entity is liable for repayment
to the Secretary of the total amounts paid under this paragraph
to the entity.
-
(G) TREATMENT OF ROTATING RESIDENTS.—In
applying this paragraph, the Secretary shall establish rules regarding
the counting of residents who are assigned to institutions the medical
residency training programs in which are not covered under approved
applications under this paragraph.[723]
-
(7) [724]REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.—
-
(A) REDUCTION IN LIMIT BASED ON UNUSED POSITIONS—
-
(i) PROGRAMS SUBJECT TO REDUCTION.—
-
(I) IN GENERAL.—Except as provided
in subclause (II), if a hospital's
reference resident level (specified in clause (ii)) is less than
the otherwise applicable resident limit
(as defined in subparagraph (C)(ii)), effective for portions
of cost reporting periods occurring on or after July 1,
2005, the otherwise applicable resident
limit shall be reduced by 75 percent of the difference between such
otherwise applicable resident limit and such reference resident
level.
-
(II) EXCEPTION FOR SMALL RURAL HOSPITALS.—This
subparagraph shall not apply to a hospital located in a rural
area (as defined in subsection (d)(2)(D)(ii))
with fewer than 250 acute care inpatient beds.
-
(ii) REFERENCE RESIDENT LEVEL.—
-
(I) IN GENERAL.—Except as otherwise
provided in subclauses (II) and (III), the reference resident level
specified in this clause for a hospital is the resident level for
the most recent cost reporting period of
the hospital ending on or before September 30, 2002, for which a
cost report has been settled (or,
if not, submitted (subject to audit)), as determined by the Secretary.
-
(II) USE OF MOST RECENT ACCOUNTING PERIOD TO RECOGNIZE
EXPANSION OF EXISTING PROGRAMS.—If a hospital submits
a timely request to increase its resident level due to an expansion
of an existing residency training program that
is not reflected on the most recent settled cost report,
after audit and subject to the discretion of the Secretary, the
reference resident level for such hospital is the resident level
for the cost reporting period that
includes July 1, 2003, as determined by the Secretary.
-
(III) Expansions under newly approved programs.--Upon the timely
request of a hospital, the Secretary
shall adjust the reference resident level specified under subclause
(I) or (II) to include the number of medical residents that
were approved in an application for
a medical residency training program that was approved by an appropriate
accrediting organization (as determined by the Secretary) before
January 1, 2002, but which was not
in operation during the cost reporting period used under subclause
(I) or (II), as the case may be, as
determined by the Secretary.
-
(iii) AFFILIATION.—The provisions of
clause (i) shall be applied to hospitals which are members of the
same affiliated group (as defined by the Secretary under paragraph
(4)(H)(ii)) as of July 1, 2003.
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(B) REDISTRIBUTION.—
-
(i) IN GENERAL.—The Secretary is authorized
to increase the otherwise applicable resident limit for each qualifying
hospital that submits a timely application under this subparagraph
by such number as the Secretary may approve
for portions of cost reporting periods occurring on or after July
1, 2005. The aggregate number of increases in the otherwise applicable
resident limits under this subparagraph may
not exceed the Secretary's estimate of the aggregate reduction in
such limits attributable to subparagraph (A).
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(ii) CONSIDERATIONS IN REDISTRIBUTION.—In
determining for which hospitals the increase
in the otherwise applicable resident limit is provided under clause
(i), the Secretary shall take into account
the demonstrated likelihood of the hospital filling the positions
within the first 3 cost reporting periods beginning on or after
July 1, 2005, made available under this subparagraph, as determined
by the Secretary.
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(iii) PRIORITY FOR RURAL AND SMALL URBAN AREAS.—In
determining for which hospitals and residency training programs
an increase in the otherwise applicable resident limit is provided
under clause (i), the Secretary shall distribute the increase to
programs of hospitals located in the following priority order:
-
(I) First, to hospitals located in rural areas (as defined in
subsection (d)(2)(D)(ii)).
-
(II) Second, to hospitals located in urban areas that are not large
urban areas (as defined for purposes of
subsection (d)).
-
(III) Third, to other hospitals in a State if the residency
training program involved is in a specialty for which there are
not other residency training programs in the State.
Increases of residency limits within the same priority
category under this clause shall be determined by the Secretary.
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(iv) LIMITATION.—In no case shall more
than 25 full-time equivalent additional residency positions be made
available under this subparagraph with respect to any hospital.
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(v) APPLICATION OF LOCALITY ADJUSTED NATIONAL AVERAGE PER
RESIDENT AMOUNT.—With respect to additional residency positions
in a hospital attributable to the increase provided under this subparagraph,
notwithstanding any other provision of this
subsection, the approved FTE resident amount is
deemed to be equal to the locality adjusted national average
per resident amount computed under paragraph (4)(E) for that hospital.
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(vi) CONSTRUCTION.—Nothing in this
subparagraph shall be construed as permitting the redistribution
of reductions in residency positions attributable
to voluntary reduction programs under paragraph (6), under a demonstration
project approved as of October 31, 2003, under the authority of
section 402 of Public Law 90-248, or as affecting
the ability of a hospital to establish new medical residency training
programs under paragraph (4)(H).
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(C) RESIDENT LEVEL AND LIMIT DEFINED.—In
this paragraph:
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(i) RESIDENT LEVEL.—The term “resident
level” means, with respect to a hospital, the total number
of full-time equivalent residents, before the application of weighting
factors (as determined under paragraph (4)),
in the fields of allopathic and osteopathic medicine for the hospital.
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(ii) OTHERWISE APPLICABLE RESIDENT LIMIT.—The
term “otherwise applicable resident limit” means,
with respect to a hospital, the limit otherwise applicable under
subparagraphs (F)(i) and (H) of paragraph (4)
on the resident level for the hospital determined without regard
to this paragraph.
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(D) JUDICIAL REVIEW.—There shall be
no administrative or judicial review under section 1869, 1878, or
otherwise, with respect to determinations made under this paragraph..
(i)
AVOIDING DUPLICATIVE PAYMENTS
TO HOSPITALS PARTICIPATING IN RURAL DEMONSTRATION PROGRAMS.—The
Secretary shall reduce any payment amounts otherwise determined
under this section to the extent necessary to avoid duplication
of any payment made under section 4005(e) of the Omnibus Budget
Reconciliation Act of 1987.[725]
(j)
PROSPECTIVE PAYMENT FOR INPATIENT
REHABILITATION SERVICES.—
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(1) PAYMENT DURING TRANSITION PERIOD.—
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(A) IN GENERAL.—Notwithstanding section 1814(b), but subject to the provisions of section 1813, the amount
of the payment with respect to the operating and capital costs of
inpatient hospital services of a rehabilitation hospital or a rehabilitation
unit (in this subsection referred to as a “rehabilitation
facility”), other than a facility making an election under
subparagraph (F) in a cost reporting period beginning on or after
October 1, 2000, and before October 1, 2002, is equal to the sum
of—
-
(i) the TEFRA percentage (as defined in subparagraph (C)) of
the amount that would have been paid under part A with respect to
such costs if this subsection did not apply, and
-
(ii) prospective payment percentage (as defined in subparagraph
(C)) of the product of (I) the per unit payment rate established
under this subsection for the fiscal year in which the payment
unit of service occurs, and (II) the number of such payment units
occurring in the cost reporting period.
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(B) FULLY IMPLEMENTED SYSTEM.—Notwithstanding
section 1814(b), but subject to the provisions of section 1813,
the amount of the payment with respect to the operating and capital
costs of inpatient hospital services of a rehabilitation facility
for a payment unit in a cost reporting period beginning on or after
October 1, 2002, or, in the case of a facility making an election
under subparagraph (F), for any cost reporting period described
in such subparagraph, is equal to the per unit payment rate established
under this subsection for the fiscal year in which the payment unit
of service occurs.
-
(C) TEFRA AND PROSPECTIVE PAYMENT PERCENTAGES SPECIFIED.—For
purposes of subparagraph (A), for a cost reporting period beginning—
-
(i) on or after October 1, 2000, and before October 1, 2001,
the “TEFRA percentage” is 66 2/3 percent
and the “prospective payment percentage” is 33 1/3
percent; and
-
(ii) on or after October 1, 2001, and before October 1, 2002,
the “TEFRA percentage” is 33 1/3 percent
and the “prospective payment percentage” is 66 2/3
percent.
-
(D) PAYMENT UNIT.—For purposes of this
subsection, the term “payment unit” means a
discharge.
-
(E) CONSTRUCTION RELATING TO TRANSFER AUTHORITY.—Nothing in
this subsection shall be construed as preventing the Secretary from providing
for an adjustment to payments to take into account the early transfer
of a patient from a rehabilitation facility to another site of care.
-
(F) ELECTION TO APPLY FULL PROSPECTIVE PAYMENT
SYSTEM.—A rehabilitation facility may elect, not later
than 30 days before its first cost reporting period for which
the payment methodology under this subsection applies to the facility,
to have payment made to the facility under this subsection under
the provisions of subparagraph (B) (rather than subparagraph (A))
for each cost reporting period to which such payment methodology
applies.
-
(2) PATIENT CASE MIX GROUPS.—
-
(A) ESTABLISHMENT.—The Secretary shall
establish—
-
(i) classes of patient discharges of rehabilitation facilities
by functional-related groups (each in this subsection
referred to as a “case mix group”), based on
impairment, age, comorbidities, and functional capability of the
patient and such other factors as the Secretary deems appropriate
to improve the explanatory power of functional independence measure-function
related groups; and
-
(ii) a method of classifying specific patients in rehabilitation
facilities within these groups.
-
(B) WEIGHTING FACTORS.—For each case
mix group the Secretary shall assign an appropriate weighting which
reflects the relative facility resources used with respect to
patients classified within that group compared to patients classified
within other groups.
-
(C) ADJUSTMENTS FOR CASE MIX.—
-
(i) IN GENERAL.—The Secretary shall
from time to time adjust the classifications and weighting factors
established under this paragraph as appropriate to reflect changes
in treatment patterns, technology, case mix, number of payment units
for which payment is made under this title, and other factors which
may affect the relative use of resources. Such adjustments shall
be made in a manner so that changes in aggregate payments under
the classification system are a result of real changes and are not
a result of changes in coding that are unrelated to real changes
in case mix.
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(ii) ADJUSTMENT.—Insofar as the Secretary
determines that such adjustments for a previous fiscal year (or
estimates that such adjustments for a future fiscal year) did
(or are likely to) result in a change in aggregate payments under
the classification system during the fiscal year that are a result
of changes in the coding or classification of patients that do not
reflect real changes in case mix, the Secretary shall adjust the
per payment unit payment rate for subsequent years so as to eliminate
the effect of such coding or classification changes.
-
(D) DATA COLLECTION.—The Secretary
is authorized to require rehabilitation facilities that provide
inpatient hospital services to submit such data as the Secretary
deems necessary to establish and administer the prospective payment
system under this subsection.
-
(3) PAYMENT RATE.—
-
(A) IN GENERAL.—The Secretary shall
determine a prospective payment rate for each payment unit for
which such rehabilitation facility is entitled to receive payment
under this title. Subject to subparagraph (B), such rate for payment
units occurring during a fiscal year shall be based on the average
payment per payment unit under this title for inpatient operating
and capital costs of rehabilitation facilities using the most recent
data available (as estimated by the Secretary as of the date of
establishment of the system) adjusted—
-
(i) by updating such per-payment-unit amount
to the fiscal year involved by the weighted average of the applicable
percentage increases provided under subsection (b)(3)(B)(ii) (for
cost reporting periods beginning during the fiscal year) covering
the period from the midpoint of the period for such data through
the midpoint of fiscal year 2000 and by an increase factor (described
in subparagraph (C)) specified by the Secretary for subsequent fiscal
years up to the fiscal year involved;
-
(ii) by reducing such rates by a factor equal to the proportion
of payments under this subsection (as estimated by the Secretary) based
on prospective payment amounts which are additional payments described
in paragraph (4) (relating to outlier and related payments);
-
(iii) for variations among rehabilitation facilities by area
under paragraph (6);
-
(iv) by the weighting factors established under paragraph (2)(B); and
-
(v) by such other factors as the Secretary determines are necessary
to properly reflect variations in necessary costs of treatment among
rehabilitation facilities.
-
(B) BUDGET NEUTRAL RATES.—The Secretary
shall establish the prospective payment amounts under this subsection
for payment units during fiscal years 2001 and 2002 at levels such
that, in the Secretary's estimation, the amount of total payments
under this subsection for such fiscal years (including any payment
adjustments pursuant to paragraphs (4) and (6) but not taking into
accounting any payment adjustment resulting from an election permitted
under paragraph (i)(F)) shall be equal to 98 percent of the amount
of payments that would have been made under this title during the
fiscal years for operating and capital costs of rehabilitation
facilities had this subsection not been enacted. In establishing
such payment amounts, the Secretary shall consider the effects
of the prospective payment system established under this subsection
on the total number of payment units from rehabilitation facilities
and other factors described in subparagraph (A).
-
(C) INCREASE FACTOR.—For purposes of
this subsection for payment units in each fiscal year (beginning
with fiscal year 2001), the Secretary shall establish an increase
factor. Such factor shall be based on an appropriate percentage
increase in a market basket of goods and services comprising services
for which payment is made under this subsection, which may be the
market basket percentage increase described in subsection (b)(3)(B)(iii).
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(4) OUTLIER AND SPECIAL PAYMENTS.—
-
(A) OUTLIERS.—
-
(i) IN GENERAL.—The Secretary may provide
for an additional payment to a rehabilitation facility for patients
in a case mix group, based upon the patient being classified as
an outlier based on an unusual length of stay, costs, or other factors
specified by the Secretary.
-
(ii) PAYMENT BASED ON MARGINAL COST OF CARE.—The
amount of such additional payment under clause (i) shall be determined
by the Secretary and shall approximate the marginal cost of care beyond
the cutoff point applicable under clause (i).
-
(iii) TOTAL PAYMENTS.—The total amount
of the additional payments made under this subparagraph for payment
units in a fiscal year may not exceed 5 percent of the total payments
projected or estimated to be made based on prospective payment rates
for payment units in that year.
-
(B) ADJUSTMENT.—The Secretary may provide
for such adjustments to the payment amounts under this subsection
as the Secretary deems appropriate to take into account the unique
circumstances of rehabilitation facilities located in Alaska and
Hawaii.
-
(5) PUBLICATION.—The Secretary shall
provide for publication in the Federal Register, on or before August
1 before each fiscal year (beginning with fiscal year 2001), of
the classification and weighting factors for case mix groups under
paragraph (2) for such fiscal year and a description of the methodology
and data used in computing the prospective payment rates under this
subsection for that fiscal year.
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(6) AREA WAGE ADJUSTMENT.—The Secretary
shall adjust the proportion (as estimated by the Secretary from
time to time) of rehabilitation facilities' costs which are attributable
to wages and wage-related costs, of the prospective payment
rates computed under paragraph (3) for area differences in wage
levels by a factor (established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the rehabilitation facility
compared to the national average wage level for such facilities.
Not later than October 1, 2001 (and at least every 36 months thereafter),
the Secretary shall update the factor under the preceding sentence
on the basis of information available to the Secretary (and updated
as appropriate) of the wages and wage-related costs incurred
in furnishing rehabilitation services. Any adjustments or updates
made under this paragraph for a fiscal year shall be made in a manner
that assures that the aggregated payments under this subsection
in the fiscal year are not greater or less than those that would have
been made in the year without such adjustment.
-
(7) LIMITATION ON REVIEW.—There shall
be no administrative or judicial review under section 1869, 1878,
or otherwise of the establishment of—
-
(A) case mix groups, of the methodology for the classification
of patients within such groups, and of the appropriate weighting
factors thereof under paragraph (2),
-
(B) the prospective payment rates under paragraph (3),
-
(C) outlier and special payments under paragraph (4), and
-
(D) area wage adjustments under paragraph (6).
(k)
PAYMENT TO NONHOSPITAL PROVIDERS.—
-
(1) IN GENERAL.—For cost reporting
periods beginning on or after October 1, 1997, the Secretary may
establish rules for payment to qualified nonhospital providers
for their direct costs of medical education, if those costs are
incurred in the operation of an approved medical residency training
program described in subsection (h). Such rules shall specify the amounts,
form, and manner in which such payments will be made and the portion
of such payments that will be made from each of the trust funds under
this title.
-
(2) QUALIFIED NONHOSPITAL PROVIDERS.—For
purposes of this subsection, the term “qualified nonhospital
providers” means—
-
(A) a Federally qualified health center, as defined in section 1861(aa)(4);
-
(B) a rural health clinic, as defined in section 1861(aa)(2);
-
(C) Medicare+Choice organizations; and
-
(D) such other providers (other than hospitals) as the Secretary
determines to be appropriate.