Prospective Payments for Medicare Inpatient Hospital Services
Amends title XVIII of the Social Security Act to eliminate the limits on operating costs of inpatient hospital services for cost reporting periods beginning on or after October 1, 1983. Excludes from the term "operating costs of inpatient hospital services": (1) capital-related costs; and (2) costs of approved educational activities. Provides as additional requirements for a hospital reimbursement control system that the Secretary of Health and Human Services shall determine that: (1) the system will not preclude an eligible health care organization from negotiating directly with hospitals with respect to the organization's rate of payment for inpatient hospital services; and (2) the system requires that hospitals meet certain requirements under agreements with providers of services and the system excludes specified costs. Prohibits the Secretary from denying a State's application to use a hospital reimbursement control system on the ground that: (1) such system is based on a payment methodology other than on the basis of a diagnosis-related group; or (2) the amount of payments made under such system will be less than payments made not using such system. Sets forth requirements with respect to the methods for projecting the allowable costs of inpatient hospital services under a State hospital reimbursement control system. Requires the Secretary to approve a State's hospital reimbursement control system if: (1) the system is operated directly by the State or a State entity; (2) the system provides for the prospective determination of rates; (3) hospitals under the system will monitor the State's performance; (4) the system will not result in a significant reduction of or refusal to admit patients who cannot pay for hospital services; (5) significant changes in the system will take effect only upon 60 days' notice to the Secretary and hospitals affected; and (6) the State has consulted with local governmental officials on the impact of the system on public hospitals. Provides that these requirements shall be in addition to: (1) current law requirements that a hospital reimbursement system apply to substantially all non-Federal acute care hospitals and to at least 75 percent of hospital inpatient revenues or expenses, provide equitable treatment of all payors, hospital employees, and patients, and not allow expenses under the Medicare system to exceed amounts which would have been incurred without the system; and (2) the requirement under this Act that such a system not preclude a health care organization from negotiating with hospitals over costs. Establishes a method for the payment of hospitals for operating costs of inpatient hospital services on the basis of DRG (diagnosis-related group) prospective rates. Specifies the hospitals to which such method would not apply. Requires the Secretary to establish a classification of inpatient hospital discharges by diagnosis-related groups and a methodology for classifying specific hospital discharges within these groups in order to compute DRG-specific payment rates. Requires the Secretary to make additional payments to hospitals for cases which are significantly different in terms of length of stay or unusual costs from cases within the same diagnosis-related group and for indirect costs of medical education. Requires the Secretary to adjust payment amounts where appropriate in the case of hospitals which serve a disproportionate number of low-income patients, sole community hospitals, and hospitals in Alaska and Hawaii. Requires adjustments for certain inpatient hospital services which were, but are no longer, paid for under part B of title XVIII of the Social Security Act. Requires the Secretary to publish yearly in the Federal Register the methods for computing the DRG prospective payment rates for the following fiscal year. Prohibits administrative and judicial review of: (1) certain adjustments in payments made to maintain budget neutrality; and (2) the Secretary's establishment of diagnosis-related groups. Requires that, for FY 1984 and 1985, expenditures under the Medicare system be equal to expenditures under the system before the enactment of this Act. Requires the Director of the Congressional Office of Technology Assessment to appoint a Prospective Payment Assessment Commission to review and report to the Secretary annually, beginning in FY 1986, on hospital costs and the appropriate increase in payments for hospitals. Requires the publication in the Federal Register of the Secretary's final determination of such increase for each fiscal year. Requires the Office to report to Congress annually on the functioning and progress of the Commission. Authorizes appropriations from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund for the Commission. Requires the Secretary to maintain through at least September 30, 1988, a system for the reporting of expenses of hospitals receiving payments under this Act. Permits the Secretary to deny Medicare payments or to require a hospital to take corrective actions if such hospital has taken actions which result in inappropriate admissions or unnecessary multiple admissions or other inappropriate medical practices. Prohibits the payment under this title of capital expenditures for inpatient hospital services in a State after three years following the enactment of this Act, unless the State has a capital expenditure review agreement with the Secretary under this Act and has recommended approval of such expenditures pursuant to such agreement. Requires the Secretary to phase out the allowance for return on equity capital for hospitals receiving payments under the DRG prospective rate system. Prohibits Medicare payments for inpatient hospital services not provided by a physician or a hospital unless the services are furnished under arrangements with the entity providing such services made by the hospital pursuant to title XVIII of the Social Security Act. Requires hospitals receiving Medicare payments to maintain an agreement with a utilization and quality control peer review organization under which such organization will review quality care, admissions, and discharges, with respect to Medicare patients. Prohibits such hospitals from charging for inpatient hospital services for which payment is denied because of inappropriate admission or medical practices. Requires that all items and services furnished to a patient of a hospital receiving Medicare payments be furnished only by such hospital or under arrangements made by the hospital. Permits health maintenance organizations which have risk-sharing contracts with the Secretary to elect to have hospital payments made directly to hospitals and subtracted from Medicare payments to be made to the organizations. Requires the Provider Reimbursement Review Board to review complaints with respect to the Secretary's final determination of Medicare payments to hospitals. Permits a hospital which has followed a practice since before October 1, 1982, of allowing direct billing under part B of title XVIII of the Social Security Act for services to continue such practice under certain conditions. Requires that the Medicare payments to such a hospital under part A of title XVIII of such Act be reduced by the amount of the billings under part B. Requires the Secretary to report to Congress on the method by which capital-related costs associated with inpatient hospital services can be included in the prospective payment amounts computed under this Act. Requires the Secretary to report annually to Congress on: (1) the impact of the Medicare payment methodology under this Act on individual hospitals, classes of hospitals, beneficiaries, and other payors for inpatient hospital services; and (2) the impact of computing DRG prospective payment rates by census division rather than on a national average basis. Specifies particular studies which the Secretary shall include in the annual report to Congress for 1984, 1985, and 1986. Requires the Secretary to study and report to Congress by April 1, 1985, on: (1) an equitable method of reimbursing sole community hospitals; (2) ways to coordinate an information transfer between parts A and B of title XVIII of the Social Security Act; (3) the appropriate treatment of uncompensated care costs and appropriate adjustments for large teaching hospitals located in rural areas; and (4) the advisability of having hospitals make available information on the cost of patient care financed by both public programs and private payors. Requires the Secretary to study and make recommendations to Congress before April 1, 1984, with respect to a method for including hospitals outside of the 50 States and the District of Columbia under a prospective payment system. Requires the Secretary to modify certain Medicare demonstration projects entered into by States after August 1982 and in effect as of March 1, 1983, so that the projects are not required to maintain the rate of increase in Medicare hospital costs in those States below the national rate of increase in Medicare hospital costs. Directs the Secretary to approve within the 30 days after the enactment of this Act: (1) the risk-sharing application of On Lok Senior Health Services for waivers of certain requirements under title XVIII of the Social Security Act in order to carry out a long-term care demonstration project; and (2) the application of the Department of Health Services of California for the waiver of certain requirements under title XIX (Medicaid) of the Social Security Act in order to carry out a demonstration project for capitated reimbursement for comprehensive long-term care services involving On Lok Senior Health Services. Requires the Secretary to conduct demonstrations with hospitals in areas with critical shortages of skilled nursing facilities to study the feasibility of providing alternative systems of care or methods of payment. Amends the Tax Equity and Fiscal Responsibility Act of 1982 to delay the effective date for the single reimbursement limit for hospital-based and free-standing skilled nursing facilities from cost reporting periods beginning on or after October 1, 1982, to cost reporting periods beginning on or after October 1, 1983. Requires the Secretary to study and report to Congress before December 31, 1983, on: (1) the effect of the single reimbursement limit on hospital-based skilled nursing facilities; and (2) the impact on such facilities of hospital prospective payment systems and recommendations with respect to payment of such facilities. Amends title XVIII of the Social Security Act to require the Secretary of Health and Human Services to promulgate the monthly actuarial rates and premiums for Medicare enrollees in September of each year, beginning in 1983. Amends part A (General Provisions) of title XI of the Social Security Act to require that reimbursement to States of capital expenditures be made out of the general fund of the Treasury rather than out of the Federal Hospital Insurance Trust Fund. Increases from $100,000 to $600,000 the maximum threshold for determining which capital projects are subject to the review process under title XI of such Act. Sets forth conditions which must be met in order for a health care facility, where 75 percent of the patients are enrolled in health maintenance organizations, to be exempt from such review process because needed services and facilities are not otherwise available. Amends title XVIII of the Social Security Act to require hospitals to make their overall expenditure plans and capital budgets available to a reviewing agency designated under title XI of such Act or an appropriate State health planning agency.