SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Hospital Outpatient Payment 
Equality (HOPE) Act of 1999''.

SEC. 2. REFINEMENTS TO MEDICARE PROSPECTIVE PAYMENT SYSTEM FOR 
              OUTPATIENT HOSPITAL SERVICES.

    (a) Special Payment Adjustment for Certain Visits.--Section 1833(t) 
of the Social Security Act (42 U.S.C. 1395l(t)) is amended--
            (1) by redesignating paragraph (9) as paragraph (10) and 
        inserting after paragraph (8) the following:
            ``(9) Special payment adjustment for certain visits.--
                    ``(A) In general.--Notwithstanding the preceding 
                paragraphs of this subsection, the amount of payment 
                made under this part for covered OPD services that are 
                classified within an ambulatory patient classification 
                group for--
                            ``(i) emergency room visits, or
                            ``(ii) clinic visits,
                shall be equal to the product of the amount of payment 
                determined under paragraph (4) for services classified 
                within such group and the adjustment factor determined 
                under subparagraph (B) or (C).
                    ``(B) Adjustment factor for er visits.--The 
                adjustment factor for covered OPD services that are 
                classified within ambulatory patient classification 
                groups for emergency room visits shall be determined as 
                follows:
                            ``(i) Estimate of aggregate reasonable 
                        costs.--The Secretary shall estimate the total 
                        amount that would be payable under this part 
                        for all covered OPD services that are 
                        classified within such groups and furnished in 
                        2000 if payment for such services was based on 
                        the reasonable costs incurred in furnishing 
                        such services.
                            ``(ii) Estimate of aggregate payments under 
                        opd pps.--The Secretary shall estimate the 
                        total amount that would be payable under this 
                        subsection for all covered OPD services that 
                        are classified within such groups and furnished 
                        in 2000, determined without regard to this 
                        paragraph.
                            ``(iii) Determination of adjustment 
                        factor.--The adjustment factor determined under 
                        this subparagraph shall equal the quotient 
                        obtained by dividing the amount determined 
                        under clause (i) by the amount determined under 
                        clause (ii).
                    ``(C) Adjustment factor for clinic visits.--In 
                determining the adjustment factor for covered OPD 
                services that are classified within ambulatory patient 
                classification groups for clinic visits, subparagraph 
                (B) shall be applied--
                            ``(i) by substituting `clinic' for `er' and 
                        `emergency room' each place either appears, and
                            ``(ii) by substituting `94.2 percent of 
                        reasonable costs' for `reasonable costs' in 
                        clause (i) of such subparagraph.
                    ``(D) Relation to other rules.--
                            ``(i) Part b, blood deductibles.--In 
                        applying the deductibles described in 
                        subsection (b), the amount of payment 
                        determined under this paragraph for a covered 
                        OPD service shall be substituted for the amount 
                        determined under paragraph (4) for such 
                        service.
                            ``(ii) Inapplicability of budget neutrality 
                        requirement.--The adjustments required by this 
                        paragraph shall not be subject to the budget 
                        neutrality requirements of paragraph (2)(E).
                            ``(iii) No effect on certain 
                        determinations.--The amounts payable by reason 
                        of this paragraph shall not be taken into 
                        account in determining--
                                    ``(I) copayment amounts under 
                                paragraph (3)(B),
                                    ``(II) medicare OPD fee schedule 
                                amounts under paragraph (3)(D),
                                    ``(III) pre-deductible payment 
                                percentages under paragraph (3)(E), or
                                    ``(IV) compliance with the volume 
                                control mechanism established pursuant 
                                to paragraph (2)(F).
                            ``(iv) Hold harmless.--The adjustments 
                        required by this paragraph shall be taken into 
                        account in applying the temporary limits on 
                        payment reductions established under subsection 
                        (e) of section 4523 of the Balanced Budget Act 
                        of 1997.''.
    (b) Elimination of Reduction in Market Basket.--Section 
1833(t)(3)(C)(iii) of the Social Security Act (42 U.S.C. 
1395l(t)(3)(C)(iii)) is amended by striking ``, reduced by 1 percentage 
point for such factor for services furnished in each of 2000, 2001, and 
2002''.
    (c) Temporary Limitation on Reductions.--
            (1) In general.--Section 4523 of the Balanced Budget Act of 
        1997 is amended by adding at the end the following:
    ``(e) Temporary Limit on Reductions in Federal Payments.--
            ``(1) In general.--Notwithstanding section 1833(t) of the 
        Social Security Act (42 U.S.C. 1395l(t)), as added by 
        subsection (a), the amount that is paid from the Federal 
        Supplementary Medical Insurance Trust Fund for covered OPD 
        services furnished by a hospital during a calendar year (or 
        portion thereof) specified in paragraph (2)(A) may not be less 
        than the applicable percentage of the case mix adjusted average 
        amount that would have been payable to such hospital for such 
        services (including cost sharing) if the prospective payment 
        system established under such section did not apply. Such 
        average amount may be determined on a prospective basis using 
        the Secretary's best estimate of the reasonable costs incurred 
        in furnishing covered OPD services or on a retrospective basis 
        using cost reports submitted by a hospital.
            ``(2) Definitions.--For purposes of paragraph (1):
                    ``(A) Applicable percentage.--Subject to paragraph 
                (3), the term `applicable percentage' means--
                            ``(i) with respect to covered OPD services 
                        furnished during the first full calendar year 
                        (and any portion of the immediately preceding 
                        calendar year) for which the prospective 
                        payment system established under section 
                        1833(t) of such Act is in effect, 95 percent,
                    ``(ii) with respect to the second full calendar 
                year for which such system is in effect, 90 percent, 
                and
                    ``(iii) with respect to the third full calendar 
                year for which such system is in effect, 85 percent.
                    ``(B) Covered opd services.--The term `covered OPD 
                services' has the meaning given to such term in section 
                1833(t)(1)(B) of such Act.
            ``(3) Application to certain hospitals.--In the case of 
        hospitals described in section 1833(t)(8) of such Act, the 
        `applicable percentage' for a calendar year (or portion 
        thereof) shall be the same applicable percentage that applies 
        to covered OPD services furnished by hospitals that are not 
        described in such section during such calendar year (or portion 
        thereof).
            ``(4) Rule of construction.--Nothing in this subsection 
        shall be construed as affecting the amount of cost sharing paid 
        by individuals enrolled under part B of title XVIII of the 
        Social Security Act for covered OPD services.''.
            (2) Conforming amendment.--Section 1833(t)(1)(A) of the 
        Social Security Act (42 U.S.C. 1395l(t)(1)(A)) is amended by 
        inserting ``except as provided in section 4523(e) of the 
        Balanced Budget Act of 1997,'' after ``1999,''.
    (d) Effective Date.--
            (1) Special adjustments for certain visits.--The amendments 
        made by subsection (a) shall apply to items and services 
        furnished on or after January 1, 2000.
            (2) Market basket; temporary limits on reductions.--The 
        amendments made by subsections (b) and (c) are effective as if 
        included in the enactment of the Balanced Budget Act of 1997.
Amends the Balanced Budget Act of 1997 to establish a temporary limitation on reductions in Federal payments for covered outpatient hospital services.
Provides for the retroactivity of certain portions of this Act.
Medicare Hospital Outpatient Payment Equality (HOPE) Act of 1999