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IN THE SENATE OF THE UNITED STATES
MAY 5 (legislative day, Arril 28), 1977 Mr. Talmadge (for hinself, Mr. Love, Mr. RibicorF, Mr. DOLE, Mr. Nunn,
Mr. EASTLAND, JIr. MATSUNAGA, Mr. RANDOLPII, Mr. IIOLLINGS, Mr. INOUYE, Mr. GRAVEL, Mr. Fort, Mr. Javits, Mr. Pell, Mr. Percy, Mr. BROOKE, Mr. BURDICK, Mr. STONE, Mr. METZENBAUM, and Mr. HATHAWAY) introduced the following bill; which was read twice and referred to the Committee on Finance
To provide for the reform of the administrative and reimburse
ment procedures currently employed under the medicare and medicaid programs, and for other purposes.
Be it enacted by the Senate and House of Representa
2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the “Medicare-Medicaid
4 Administrative and Reimbursement Reform Act”.
TABLE OF CONTENTS
HIOSPITAL REIMBURSEMENT REFORM
Sec. 2. Criteria for determining reasonable cost of hospital services.
Sec. 10. Agreement by physicians to accept assignments.
LONG-TERM CARE REFORMS
Sec. 20. Hospital providers of long-term care services.
and intermediate care facilities. Sec. 22. Medicaid certification and approval of skilled mursing and inter
mediate care facilities. Sec. 23. Visits away from institution by patients of skilled mursing or
intermediate care facilities.
Sec. 30. Establishment of I lealth Care Financing Aalministration.
Sec. 40. Procedure for determining reasonable cost and reasonable charge.
medicaid. Sec. 44. Disclosure of aggregate payments to physicians. Sec. 45. Resources of medicaid applicant to include property disposed of
to applicant's relative. Sec. 46. Rate of return on net equity for for-profit hospitals.
CRITERIA FOR DETERMINING REASONABLE COST OF
SEC. 2. (a) (1) The first sentence of section 1861 (v)
4 (1) (A) of the Social Security Act is amended by striking
5 out “The” and inserting “Subject to subsection (aa), the”.
(2) Section 1861 (v) of the Act is also amended by
7 adding at the end the following paragraph:
1 “(8) For additional requirements applicable to deter2 mination of reasonable cost for services provided by hos3 pitals, see subsection (aa).”. 4 (b) Section 186;1 of the Act is amended by adding 5 after subsection (2) the following subsection:
“CRITERIA FOR DETERMINING REASONABLE COST OF
8 “ (aa) (1) To more fairly and effectively determine 9 reasonable costs incurred in providing hospital services, the 10 Secretary shall, not later than April 1, 1978, after consult11 ing with appropriate national organizations, establish12
“(A) an accounting and uniform functional cost 13
reporting system (including uniform procedures for al14 location of costs) for determining operating and capi15 tal costs of hospitals providing services, and
“(i) by size, with each of the following groups of hospitals being classified in separate categories:
(I) those having more than 5, but fewer than
25, beds, (II) those having more than 24, but fewer than 50, beds, (III) those having more than 49, but fewer than 100, beds, (IV) those having more than 99, but fewer than 200, beds, (V)
those having more than 199, but fewer than 300,
beds, (VI) those having more than 299, but fewer
than 400, beds, (VII) those having more than 399, but fewer than 500, heils, and (VIII) those having more than 499 beds,
“ (ii) by type of hospital, with (I) shortterm general hospitals being in a separate category, (II) hospitals which are the primary affiliates of
accredited medical schools (with one hospital to
be nominated by each accredited medical school) being in one separate category (without regard to bed size), and (III) psychiatric, geriatric, maternity, pediatric, or other specialty hospitals being in the same or separate categories, as the Secretary may determine appropriate, in light of any differences in specialty which significantly affect the routine costs of the different types of hospitals, and
“ (iii) other criteria which the Secretary may find appropriate, including modification of bed-size
but the system of hospital classification shall not differ
entiate between hospitals on the basis of ownership.
“ (B) direct personel and supply costs of hospital
“(C) costs of interns, residents, and non-adminis4
trative physicians, 5
“(D) energy costs associated with heating and
cooling the hospital plant, and 7
“(E) malpractice insurance expense, or,
“(F) ancillary service costs.
“ (3) (A) During tlie calendar quarter beginning on 10 January 1 of each year, beginning with 1979, the Secretary 11 shall determine, for the hospitals in each category of the 12 system established under paragraph (1) (B), an average 13 per diem routine operating cost amount which shall (except
otherwise provided in this subsection) be used in deter15 mining payments to hospitals. 16 “(B) The determination shall be based upon the amount 17 of the hospitals' routine operating costs for the preceding 18 fiscal year.
“(C) In making a determination, the routine operating 20 costs of each hospital shall be divided into personnel and
21 nonpersonnel components.
22 “(D) (i) The personnel and nonpersonnel components 23 of routine operating costs for each of the hospitals (other
24 than for those excluded under clause (ii)) in each
25 category shall be added for all hospitals and then divided