HBA-MPM H.B. 2423 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2423 By: Hawley Public Health 6/29/2001 Enrolled BACKGROUND AND PURPOSE Provisions of the Federal Balanced Budget Refinement Act of 1999 allow a hospital in an urban county to be reclassified as a rural hospital if the hospital meets specific criteria. Under Medicare payment policies, the designation of a hospital as rural or urban can affect payment amounts. For some Texas hospitals, reclassification of a hospital as a rural hospital may result in increased Medicare payments to that hospital. A hospital seeking reclassification from urban to rural must apply with the regional office of the federal Health Care Financing Administration (HCFA) and must include documentation satisfying one of the criteria for reclassification. While the determination is ultimately made by HCFA, a state may designate an area as a rural area or certain hospitals as rural hospitals through state legislation or regulations. Allowing hospitals to apply for reclassification directly through the state provides Texas hospitals with the opportunity to take advantage of more favorable Medicare payment rates in a more timely manner. House Bill 2423 establishes a procedure through the Center for Rural Initiatives by which a hospital may obtain a rural classification. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Center for Rural Initiatives in SECTION 1 (Section 531.055, Government Code) of this bill. ANALYSIS House Bill 2423 amends the Health and Safety Code to require the Center for Rural Initiatives (center) to adopt rules that establish a procedure for designating a hospital as a rural hospital in order for the hospital to qualify for funding assistance under federal law that establishes a prospective payment system for the operating costs of inpatient hospital services furnished to certain Medicare beneficiaries. The bill requires the center to designate a hospital as a rural hospital at the hospital's request if it meets the requirements under the center's rule. EFFECTIVE DATE September 1, 2001.