1 2 3 2 PRACTITIONER REIMBURSEMENT REFORMS Sec. 10. Agreement by physicians to accept assignments. Sec. 11. Criteria for determining reasonable 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 medicaid for skilled nursing facilities and intermediate care facilities. Sec. 22. Medicaid certification and approval of skilled nursing and intermediate care facilities. Sec. 23. Visits away from institution by patients of skilled nursing or intermediate care facilities. ADMINISTRATIVE REFORMS Sec. 30. Establishment of Health Care Financing Administration. 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. CRITERIA FOR DETERMINING REASONABLE COST OF HOSPITAL SERVICES 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". 6 (2) Section 1861 (v) of the Act is also amended by 7 adding at the end the following paragraph: 3 1 "(8) For additional requirements applicable to deter2 mination of reasonable cost for services provided by hos 3 pitals, see subsection (aa).". 4 (b) Section 1864 of the Act is amended by adding 5 after subsection (z) the following subsection: 6 7 8 "CRITERIA FOR DETERMINING REASONABLE COST OF HOSPITAL SERVICES "(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, establish— "(A) an accounting and uniform functional cost reporting system (including uniform procedures for allocation of costs) for determining operating and capital costs of hospitals providing services, and "(B) a system of hospital classification under which hospitals furnishing services will initially be classified as follows: "(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) 1 2 3 4 5 7 8 9 10 11 121 13 343 14 15 16 17 18 19 4 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, beds, 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, mater nity, 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 rou tine costs of the different types of hospitals, and "(iii) other criteria which the Secretary may find appropriate, including modification of bed-size categories; but the system of hospital classification shall not differentiate between hospitals on the basis of ownership. "(2) The term 'routine operating costs' used in this 24 subsection does not include: 7 1 the general wage level in the area shall be deemed equal 2 to the wage level for hospitals in that area, but only during 3 fiscal year 1979. 4 “(4) (A) (i) The term 'adjusted per diem payment rate 5 for routine operating costs', means the per diem payment rate 6 for routine operating costs plus the average percentage 7 increase in prices determined under succeeding provisions 8 of this subparagraph. 9 "(ii) In making payments for services, the Secretary 10 shall add a semiannual average percentage increase in the 11 cost of the mix of goods and services (including personnel 12 and nonpersonnel costs) comprising routine operating costs, 13 equal to the lesser of: (I) the average percentage increase 14 estimated by the hospital, or (II) the average percentage 15 increase in the area estimated by the Secretary. 16 "(iii) At the end of the fiscal year, the amounts paid 17 under clause (ii) shall be adjusted to reflect the lesser of 18 (I) the actual cost increase experienced by the hospital 19 or (II) the actual increase in costs which occurred in the 20 mix of goods and services in the area. Adjustments shall also 21 be made to take account of unexpected changes in the hos22 pital's classification. 23 "(B) For purposes of payment the amount of routine 24 operating cost incurred by a hospital shall be deemed to 25 equal 92-202 - 77 - 2 6 1 by the total number of days of routine care provided by the 2 hospitals in the category to determine the average per diem 3 routine operating cost for each category. 7 66 4 "(ii) In making the calculations required by clause 5 (i), the Secretary shall exclude any hospital which has sig6 nificant understaffing problems or which otherwise experiences significant cost differentials resulting from failure of 8 the hospital to fully meet the standards and conditions of 9 participation as a provider of services as determined by the 10 Secretary. 11 "(E) There shall be determined for each hospital in 12 each category a per diem payment rate for routine operating 13 costs. That payment rate shall equal the average per diem 14 routine operating cost amount for the category in which 15 the hospital is expected to be classified during the subsequent 16 fiscal year, except that the personnel component shall be 17 adjusted using a wage index based upon general wage levels 18 (including fringe benefit costs) in the areas in which the 19 hospitals are located. If the Secretary finds that, in an area 20 where one or more hospitals in any category are located, 21 for the fiscal year ending June 30, 1977, the wage level 22 (including fringe benefit costs) for hospitals is significantly 23 higher than the general wage level (including fringe bene24 fit costs) in that area (relative to the relationship between 25 hospital wages and general wages in other areas), then |