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9511 CONGRESS

Ist SESSION

S. 1470

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

A BILL

To provide for the reform of the administrative and reimburse

ment procedures currently employed under the medicare and medicaid programs, and for other purposes.

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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. 3. Payments to promote closing and conversion of underutilized

facilities.
Sec. 4. Federal participation in hospital capital expenditures.

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Sec. 10. Agreement by physicians to accept assignments.
Sec. 11. Criteria for determining reasonablo charge for physicians

services.
Sec. 12. Hospital-associated physicians.
Sec. 13. Payment for certain antigens under part B of medicare.
Sec. 14. Payments on behalf of deceased individuals.
Sec. 15. Use of approved relative value schedules.

LONG-TERM CARE REFORMS

Sec. 20. Hospital providers of long-term care services.
Sec. 21. Reimbursement rates under inedicaid for skilled nursing facilities

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.

ADMINISTRATIVE REFORMS

Sec. 30. Establishment of I lealth Care Financing Aalministration.
Sec. 31. State medicaid administration.
Sec. 32. Regulations of the Secretary:
Sec. 33. Repeal of section 1867.

MISCELLANEOUS REFORMS

Sec. 40. Procedure for determining reasonable cost and reasonable charge.
Sec. 41. Ambulance service.
Sec. 42. Grants to regional pediatric pulmonary centers.
Sec. 43. Waiver of human experimentation provision for medicare and

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.

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CRITERIA FOR DETERMINING REASONABLE COST OF

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HOSPITAL SERVICES

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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”.

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(2) Section 1861 (v) of the Act is also amended by

7 adding at the end the following paragraph:

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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:

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“CRITERIA FOR DETERMINING REASONABLE COST OF

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IIOSPITAL SERVICES

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

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“(i) by size, with each of the following groups of hospitals being classified in separate categories:

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(I) those having more than 5, but fewer than

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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)

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those having more than 199, but fewer than 300,

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beds, (VI) those having more than 299, but fewer

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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

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accredited medical schools (with one hospital to

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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

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categories;

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but the system of hospital classification shall not differ

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entiate between hospitals on the basis of ownership.
“(2) The term “routine operating costs' used in this

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“ (B) direct personel and supply costs of hospital

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“(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

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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

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