Hospital Cost Containment Act of 1979

Hospital Cost Containment Act of 1979 - Directs the Secretary of Health, Education, and Welfare to promulgate annually, beginning January, 1980: (1) a national voluntary percentage limit on hospital expenses; and (2) a voluntary percentage limit on hospital expenses for each State. Specifies the formulas for calculating such limits.

Includes as factors for determining the national limit: (1) the average wage increase paid to employees (excluding supervisors and doctors of medicine or osteopathy) of hospitals in the United States; (2) the average price increase in the U.S. paid in appropriate classes of goods and services (to be determined by the Secretary); (3) the percent of hospital expenses attributable to such wage and price increases; (4) the annual increase in the national population; and (5) a one percent allowance for the net increase in hospital service intensity.

Includes these factors in the formula for determining the State limits, except bases the average wage increase on employees of hospitals in each State and utilizes the population increase in each State.

Directs the Secretary to promulgate annually, beginning January 1980, a voluntary percentage limit for each hospital for the hospital's accounting period ending in 1979. Specifies the formula for calculating such limit.

Directs the Secretary to promulgate annually, beginning January, 1981, a voluntary percentage limit for each hospital not subject to a mandatory limit under this Act for the hospital's accounting period ending in the preceding year. Specifies the formula for calculating such limit.

Directs the Secretary to determine or estimate before July 1, 1980, and before July 1 of each succeeding year: (1) the difference in dollars between (A) the percentage increase in the expenses of each hospital not subject to a mandatory limit under this Act in the preceding year, and (B) the voluntary percentage limit for the hospital for the accounting period; and (2) the sum of such differences.

Provides that: (1) if such sum is zero or less, no hospital shall be subject to a mandatory limit under this Act for its accounting period ending the year; or (2) if such sum is greater than zero, then the Secretary shall determine the sum of the differences in each relevant State. Defines "relevant State" for such purposes.

Provides that: (1) if this sum is zero or less in a particular State, no hospital in that State shall be subject to a mandatory limit under this Act for its accounting period ending in the year; or (2) every hospital, for each accounting period beginning after January 1, 1979, and for each succeeding accounting period, shall be subject to a mandatory limit as prescribed by this Act, unless such hospital is otherwise exempted by this Act.

Requires the Secretary to exclude the hospitals in a particular State from such mandatory limits at the request of the chief executive of any State, under specified conditions. Authorizes the Secretary to exempt a hospital from such mandatory limit upon a determination that such exemption is necessary to facilitate certain experiments or demonstrations entered into under specified laws.

Specifies: (1) the formula for calculating mandatory limits; and (2) the circumstances under which the average reimbursement payable to a hospital by a cost payer per admission, and the average inpatient charges per admission of a hospital, for any accounting period of the hospital subject to a mandatory limit, exceed such limit.

Directs the Secretary, in calculating such mandatory limits, to develop: (1) a system of grouping hospitals by appropriate characteristics, such as patient case mix and metropolitan or nonmetropolitan setting; and (2) a method of measuring efficiency within each group that provides for setting a group norm defined in terms of all or certain hospital expenses. Requires the Secretary to assign to each hospital in a group a percentage bonus or penalty related to the extent to which a hospital's expenses differ from the group norm, according to a specified formula. Allows the Secretary to make further adjustments to such percentage bonus or penalty in order to allow for changes in admissions or other factors warranting special consideration. Sets for procedures by which a hospital may request the Secretary to exercise such discretion.

Prohibits the reimbursement for inpatient hospital services provided under Medicare (title XVIII of the Social Security Act) to the extent that it exceeds the applicable mandatory limits established under this Act or under a State mandatory hospital cost containment program of a State whose hospitals have been excluded under this Act. Provides that: (1) payment shall not be made to any State; and (2) payment shall not be required to be made by any State under title V (Maternal and Child Health and Crippled Children's Services) or title XIX (Medicaid) of the Social Security Act with respect to any amount paid for inpatient hospital services in excess of the applicable mandatory limits established under this Act.

Amends the Internal Revenue Code to impose on a hospital an excise tax equal to 150 percent of the amount of excess reimbursement which such hospital has with respect to a cost payer for an accounting period subject to a mandatory limit. Imposes such tax on a private cost payer, if a hospital has such excess reimbursement with respect to such payer.

Imposes on a hospital which has excess inpatient charges for an accounting period subject to a mandatory limit, an excise tax equal to the product of 150 percent of the amount of excess inpatient charges of the hospital for the accounting period, and the fraction of such charges not attributable to cost payers.

Sets forth procedures for the payment of such taxes, or for the deferral and abatement of such taxes, if a hospital has an escrow account approved by the Secretary.

Authorizes the Secretary to exclude from participation in Medicare, Medicaid, or the Maternal and Child Health and Crippled Children's Services program a hospital which changes its admission practices in a manner that tends to reduce the proportion of inpatients for whom reimbursement is less than the anticipated inpatient charges applicable to them.

Establishes a 15-member, part-time National Commission on Hospital Cost Containment to advise the Secretary with respect to the implementation of this Act, and other matters affecting hospital expenses or revenues.