42 U.S.C. § 1395xx — Payment of provider-based physicians

Page 3937 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1395xx than 30 days after the date of the enactment of this Act [July 18, 1984], including any changes which the Sec- retary determines to be necessary to provide for an ap- propriate index. ‘‘(b) The Secretary shall adjust the payment amounts for hospitals for discharges occurring on or after May 1, 1986, to reflect the changes the Secretary has promul- gated in final regulations (on September 3, 1985) relat- ing to the hospital wage index under section 1886(d)(3)(E) of the Social Security Act [42 U.S.C. 1395ww(d)(3)(E)]. For discharges occurring after Sep- tember 30, 1986, the Secretary shall provide for such periodic adjustments in the appropriate wage index used under that section as may be necessary, taking into account changes in the wage levels and relative proportions of full-time and part-time workers. ‘‘(c) The Secretary shall conduct a study and report to the Congress on proposed criteria under which, in the case of a hospital that demonstrates to the Sec- retary in a current fiscal year that the adjustment being made under paragraph (2)(H) or (3)(E) of section 1886(d) of the Social Security Act [42 U.S.C. 1395ww(d)(2)(H), (3)(E)] for that hospital’s discharges in that fiscal year does not accurately reflect the wage levels in the labor market serving the hospital, the Secretary, to the extent he deems appropriate, would modify such adjustment for that hospital for discharges in the subsequent fiscal year to take into account a dif- ference in payment amounts in that current fiscal year to the hospital that resulted from such inaccuracy.’’ [Pub. L. 99–272, title IX, § 9103(a)(2), Apr. 7, 1986, 100 Stat. 156, provided that: ‘‘The amendment made by paragraph (1) [amending this note] shall be effective as if it had been included in the Deficit Reduction Act of 1984 [Pub. L. 98–369].’’] DIFFERENT TREATMENT OF CAPITAL-PROJECTS-RELATED COSTS BEFORE AND AFTER IMPLEMENTATION OF SYS- TEM FOR INCLUDING SUCH COSTS UNDER PROSPEC- TIVELY DETERMINED PAYMENT RATE Pub. L. 98–21, title VI, § 601(a)(3), Apr. 20, 1983, 97 Stat. 149, provided that: ‘‘It is the intent of Congress that, in considering the implementation of a system for includ- ing capital-related costs under a prospectively deter- mined payment rate for inpatient hospital services, costs related to capital projects for which expenditures are obligated on or after the effective date of the imple- mentation of such a system, may or may not be distin- guished and treated differently from costs of projects for which expenditures were obligated before such date.’’ NEW ENGLAND HOSPITALS; CLASSIFICATION AS URBAN OR RURAL Pub. L. 98–21, title VI, § 601(g), Apr. 20, 1983, 97 Stat. 163, provided that: ‘‘In determining whether a hospital is in an urban or rural area for purposes of section 1886(d) of the Social Security Act [42 U.S.C. 1395ww(d)], the Secretary of Health and Human Services shall clas- sify any hospital located in New England as being lo- cated in an urban area if such hospital was classified as being located in an urban area under the Standard Met- ropolitan Statistical Area system of classification in effect in 1979.’’ REPORTS, EXPERIMENTS, AND DEMONSTRATION PROJ- ECTS RELATED TO INCLUSION IN PROSPECTIVE PAY- MENT AMOUNTS OF INPATIENT HOSPITAL SERVICE CAPITAL-RELATED COSTS Pub. L. 98–21, title VI, § 603(a), Apr. 20, 1983, 97 Stat. 166, as amended by Pub. L. 98–369, div. B, title III, § 2317, July 18, 1984, 98 Stat. 1081; Pub. L. 99–509, title IX, § 9305(i)(1), Oct. 21, 1986, 100 Stat. 1993; Pub. L. 104–66, title I, § 1061(d), Dec. 21, 1995, 109 Stat. 720, directed Sec- retary of Health and Human Services to report to Con- gress within 18 months after Apr. 20, 1983, on legislation by which capital-related costs associated with inpa- tient hospital services could be included within the prospective payment amounts computed under subsec. (d) of this section, further provided that the Secretary was to study and report to Congress on reimbursement of sole community hospitals based on variations in oc- cupancy, on coordination of an information transfer be- tween parts A and B of this subchapter, on treatment of uncompensated care costs and adjustments appro- priate for large rural teaching hospitals, and on advis- ability of having hospitals make cost-of-care informa- tion to certain patients, and further provided that the Secretary was to study and report to Congress on a method for including hospitals outside the 50 States and the District of Columbia under a prospective pay- ment system. INAPPLICABILITY OF COORDINATION OF FEDERAL INFOR- MATION POLICY TO THE COLLECTION OF INFORMATION Pub. L. 97–248, title I, § 101(b)(2)(B), Sept. 3, 1982, 96 Stat. 335, as amended by Pub. L. 97–448, title III, § 309(a)(1), Jan. 12, 1983, 96 Stat. 2408, provided that: ‘‘Chapter 35 of title 44, United States Code, shall not apply, until January 1, 1984, to collection of informa- tion and information collection requests which the Sec- retary of Health and Human Services determines to be necessary to carry out the amendments made by this section [amendments by section 101(a) of Pub. L. 97–248, enacting this section and amending section 1395x of this title].’’ § 1395xx. Payment of provider-based physicians and payment under certain percentage ar- rangements (a) Criteria; amount of payments (1) The Secretary shall by regulation deter- mine criteria for distinguishing those services (including inpatient and outpatient services) rendered in hospitals or skilled nursing facili- ties— (A) which constitute professional medical services, which are personally rendered for an individual patient by a physician and which contribute to the diagnosis or treatment of an individual patient, and which may be reim- bursed as physicians’ services under part B, and (B) which constitute professional services which are rendered for the general benefit to patients in a hospital or skilled nursing facil- ity and which may be reimbursed only on a reasonable cost basis or on the bases described in section 1395ww of this title. (2)(A) For purposes of cost reimbursement, the Secretary shall recognize as a reasonable cost of a hospital or skilled nursing facility only that portion of the costs attributable to services ren- dered by a physician in such hospital or facility which are services described in paragraph (1)(B), apportioned on the basis of the amount of time actually spent by such physician rendering such services. (B) In determining the amount of the pay- ments which may be made with respect to serv- ices described in paragraph (1)(B), after appor- tioning costs as required by subparagraph (A), the Secretary may not recognize as reasonable (in the efficient delivery of health services) such portion of the provider’s costs for such services to the extent that such costs exceed the reason- able compensation equivalent for such services. The reasonable compensation equivalent for any service shall be established by the Secretary in regulations. (C) The Secretary may, upon a showing by a hospital or facility that it is unable to recruit or Page 3938 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 1395yy maintain an adequate number of physicians for the hospital or facility on account of the reim- bursement limits established under this sub- section, grant exceptions to such reimbursement limits as may be necessary to allow such pro- vider to provide a compensation level sufficient to provide adequate physician services in such hospital or facility. (b) Prohibition of recognition of payments under certain percentage agreements (1) Except as provided in paragraph (2), in the case of a provider of services which is paid under this subchapter on a reasonable cost basis, or other basis related to costs that are reasonable, and which has entered into a contract for the purpose of having services furnished for or on behalf of it, the Secretary may not include any cost incurred by the provider under the contract if the amount payable under the contract by the provider for that cost is determined on the basis of a percentage (or other proportion) of the pro- vider’s charges, revenues, or claim for reim- bursement. (2) Paragraph (1) shall not apply— (A) to services furnished by a physician and described in subsection (a)(1)(B) and covered by regulations in effect under subsection (a), and (B) under regulations established by the Sec- retary, where the amount involved under the percentage contract is reasonable and the con- tract— (i) is a customary commercial business practice, or (ii) provides incentives for the efficient and economical operation of the provider of services. (Aug. 14, 1935, ch. 531, title XVIII, § 1887, as added and amended Pub. L. 97–248, title I, §§ 108(a)[(1)], 109(a), Sept. 3, 1982, 96 Stat. 337, 338; Pub. L. 98–21, title VI, § 602(j), Apr. 20, 1983, 97 Stat. 165.) Editorial Notes AMENDMENTS 1983—Subsec. (a)(1)(B). Pub. L. 98–21 inserted ‘‘or on the bases described in section 1395ww of this title’’. 1982—Subsec. (b). Pub. L. 97–248, § 109(a)(2), added sub- sec. (b). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 98–21 applicable to items and services furnished by or under arrangement with a hos- pital beginning with its first cost reporting period that begins on or after Oct. 1, 1983, any change in a hos- pital’s cost reporting period made after November 1982 to be recognized for such purposes only if the Secretary finds good cause therefor, see section 604(a)(1) of Pub. L. 98–21, set out as a note under section 1395ww of this title. EFFECTIVE DATE OF 1982 AMENDMENT Pub. L. 97–248, title I, § 109(c)(1), (2), Sept. 3, 1982, 96 Stat. 339, provided that: ‘‘(1) The amendments made by this section [amending this section and section 1395x of this title] shall become effective on the date of the enactment of this Act [Sept. 3, 1982], except that section 1887(b)(1) of the So- cial Security Act [42 U.S.C. 1395xx(b)(1)] shall not apply before October 1, 1982, to services furnished by a physi- cian and described in section 1887(a)(1)(B) of such Act [42 U.S.C. 1395xx(a)(1)(B)]. ‘‘(2) In the case of a contract with a provider of serv- ices entered into prior to the date of the enactment of this Act [Sept. 3, 1982], the amendment made by sub- section (a) [amending this section] shall apply to pay- ments under such contract (A) 30 days after the first date (after such date of enactment) the provider of services may unilaterally terminate the contract, or (B) one year after the date of the enactment of this Act, whichever is earlier.’’ EFFECTIVE DATE OF REGULATIONS Pub. L. 97–248, title I, § 108(b), formerly § 108(c), Sept. 3, 1982, 96 Stat. 338, as redesignated by Pub. L. 97–448, title III, § 309(a)(3), Jan. 12, 1983, 96 Stat. 2408, provided that: ‘‘The Secretary of Health and Human Services shall first promulgate regulations to carry out section 1887(a) of the Social Security Act [42 U.S.C. 1395xx(a)] not later than October 1, 1982. Such regulations shall become effective on October 1, 1982, and shall be effec- tive with respect to cost reporting periods ending after September 30, 1982, but in the case of any cost reporting period beginning before October 1, 1982, any reduction in payments under title XVIII of the Social Security Act [42 U.S.C. 1395 et seq.] to a hospital or skilled nurs- ing facility resulting from such regulations shall be im- posed only in proportion to the part of the period which occurs after September 30, 1982.’’ § 1395yy. Payment to skilled nursing facilities for routine service costs (a) Per diem limitations The Secretary, in determining the amount of the payments which may be made under this subchapter with respect to routine service costs of extended care services shall not recognize as reasonable (in the efficient delivery of health services) per diem costs of such services to the extent that such per diem costs exceed the fol- lowing per diem limits, except as otherwise pro- vided in this section: (1) With respect to freestanding skilled nurs- ing facilities located in urban areas, the limit shall be equal to 112 percent of the mean per diem routine service costs for freestanding skilled nursing facilities located in urban areas. (2) With respect to freestanding skilled nurs- ing facilities located in rural areas, the limit shall be equal to 112 percent of the mean per diem routine service costs for freestanding skilled nursing facilities located in rural areas. (3) With respect to hospital-based skilled nursing facilities located in urban areas, the limit shall be equal to the sum of the limit for freestanding skilled nursing facilities located in urban areas, plus 50 percent of the amount by which 112 percent of the mean per diem routine service costs for hospital-based skilled nursing facilities located in urban areas ex- ceeds the limit for freestanding skilled nurs- ing facilities located in urban areas. (4) With respect to hospital-based skilled nursing facilities located in rural areas, the limit shall be equal to the sum of the limit for freestanding skilled nursing facilities located in rural areas, plus 50 percent of the amount by which 112 percent of the mean per diem routine service costs for hospital-based skilled nursing facilities located in rural areas ex- ceeds the limit for freestanding skilled nurs- ing facilities located in rural areas.