SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children's Hospitals Education and 
Research Act of 1998''.

SEC. 2. PROGRAM OF PAYMENTS TO CHILDREN'S HOSPITALS THAT OPERATE 
              GRADUATE MEDICAL EDUCATION PROGRAMS.

    (a) Payments.--
            (1) In general.--The Secretary shall make payment under 
        this section to each children's hospital for each hospital cost 
        reporting period beginning after fiscal year 1998 and before 
        fiscal year 2003 for the direct and indirect expenses 
        associated with operating approved medical residency training 
        programs.
            (2) Capped amount.--The payment to children's hospitals 
        established in this subsection for cost reporting periods 
        ending in a fiscal year is limited to the extent of funds 
        appropriated under subsection (d) for that fiscal year.
            (3) Pro rata reductions.--If the Secretary determines that 
        the amount of funds appropriated under subsection (d) for cost 
        reporting periods ending in a fiscal year is insufficient to 
        provide the total amount of payments otherwise due for such 
        periods, the Secretary shall reduce the amount payable under 
        this section for such period on a pro rata basis to reflect 
        such shortfall.
    (b) Amount of Payment.--
            (1) In general.--The amount payable under this section to a 
        children's hospital for direct and indirect expenses relating 
        to approved medical residency training programs for a cost 
        reporting period is equal to the sum of--
                    (A) the product of--
                            (i) the per resident rate for direct 
                        medical education, as determined under 
                        paragraph (2), for the cost reporting period; 
                        and
                            (ii) the weighted average number of full-
                        time equivalent residents in the hospital's 
                        approved medical residency training programs 
                        (as determined under section 1886(h)(4) of the 
                        Social Security Act) for the cost reporting 
                        period; and
                    (B) the product of--
                            (i) the per resident rate for indirect 
                        medical education, as determined under 
                        paragraph (3), for the cost reporting period; 
                        and
                            (ii) the number of full-time equivalent 
                        residents in the hospital's approved medical 
                        residency training programs for the cost 
                        reporting period.
            (2) Per resident rate for direct medical education.--
                    (A) In general.--The per resident rate for direct 
                medical education for a hospital for a cost reporting 
                period ending in or after fiscal year 1999 is the 
                updated rate determined under subparagraph (B), as 
                adjusted for the hospital under subparagraph (C).
                    (B) Computation of updated rate.--The Secretary 
                shall--
                            (i) compute a base national DME average per 
                        resident rate equal to the average of the per 
                        resident rates computed under section 
                        1886(h)(2) of the Social Security Act for cost 
                        reporting periods ending during fiscal year 
                        1998; and
                            (ii) update such rate by the applicable 
                        percentage increase determined under section 
                        1886(b)(3)(B)(i) of such Act for the fiscal 
                        year involved.
                    (C) Adjustment for variations in labor-related 
                costs.--The Secretary shall adjust for each hospital 
                the portion of such updated rate that is related to 
                labor and labor-related costs to account for variations 
                in wage costs in the geographic area in which the 
                hospital is located using the factor determined under 
                section 1886(d)(3)(E) of the Social Security Act.
            (3) Per resident rate for indirect medical education.--
                    (A) In general.--The per resident rate for indirect 
                medical education for a hospital for a cost reporting 
                period ending in or after fiscal year 1999 is the 
                updated amount determined under subparagraph (B).
                    (B) Computation of updated amount.--The Secretary 
                shall--
                            (i) determine, for each hospital with a 
                        graduate medical education program which is 
                        paid under section 1886(d) of the Social 
                        Security Act, the amount paid to that hospital 
                        pursuant to section 1886(d)(5)(B) of such Act 
                        for the equivalent of a full twelve-month cost 
                        reporting period ending during the preceding 
                        fiscal year and divide such amount by the 
                        number of full-time equivalent residents 
                        participating in its approved residency 
                        programs and used to calculate the amount of 
                        payment under such section in that cost 
                        reporting period;
                            (ii) take the sum of the amounts determined 
                        under clause (i) for all the hospitals 
                        described in such clause and divide that sum by 
                        the number of hospitals so described; and
                            (iii) update the amount computed under 
                        clause (ii) for a hospital by the applicable 
                        percentage increase determined under section 
                        1886(b)(3)(B)(i) of such Act for the fiscal 
                        year involved.
    (c) Making of Payments.--
            (1) Interim payments.--The Secretary shall estimate, before 
        the beginning of each cost reporting period for a hospital for 
        which a payment may be made under this section, the amount of 
        payment to be made under this section to the hospital for such 
        period and shall make payment of such amount, in 26 equal 
        interim installments during such period.
            (2) Final payment.--At the end of each such period, the 
        hospital shall submit to the Secretary such information as the 
        Secretary determines to be necessary to determine the final 
        payment amount due under this section for the hospital for the 
        period. Based on such determination, the Secretary shall recoup 
        any overpayments made, or pay any balance due. The final amount 
so determined shall be considered a final intermediary determination 
for purposes of applying section 1878 of the Social Security Act and 
shall be subject to review under that section in the same manner as the 
amount of payment under section 1886(d) is subject to review under such 
section.
    (d) Limitation on Expenditures.--
            (1) In general.--Subject to paragraph (2), there are hereby 
        appropriated, out of any money in the Treasury not otherwise 
        appropriated, for payments under this section for cost 
        reporting periods beginning in--
                    (A) fiscal year 1999 $100,000,000;
                    (B) fiscal year 2000, $285,000,000;
                    (C) fiscal year 2001, $285,000,000; and
                    (D) fiscal year 2002, $285,000,000.
            (2) Carryover of excess.--If the amount of payments under 
        this section for cost reporting periods ending in fiscal year 
        1999, 2000, or 2001 is less than the amount provided under this 
        subsection for such payments for such periods, then the amount 
        available under this subsection for cost reporting periods 
        ending in the following fiscal year shall be increased by the 
        amount of such difference.
    (e) Relation to Medicare and Medicaid Payments.--Notwithstanding 
any other provision of law, payments under this section to a hospital 
for a cost reporting period--
            (1) are in lieu of any amounts otherwise payable to the 
        hospital under section 1886(h) or 1886(d)(5)(B) of the Social 
        Security Act to the hospital for such cost reporting period, 
        but
            (2) shall not affect the amounts otherwise payable to such 
        hospitals under a State medicaid plan under title XIX of such 
        Act.
    (f) Definitions.--In this section:
            (1) Approved medical residency training program.--The term 
        ``approved medical residency training program'' has the meaning 
        given such term in section 1886(h)(5)(A) of the Social Security 
        Act (42 U.S.C. 1395ww(h)(5)(A)).
            (2) Children's hospital.--The term ``children's hospital'' 
        means a hospital described in section 1886(d)(1)(B)(iii) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iii)).
            (3) Direct graduate medical education costs.--The term 
        ``direct graduate medical education costs'' has the meaning 
        given such term in section 1886(h)(5)(C) of the Social Security 
        Act (42 U.S.C. 1395ww(h)(5)(C)).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
Children's Hospitals Education and Research Act of 1998 - Directs the Secretary of Health and Human Services to make payment as specified to each children's hospital for each hospital cost reporting period between FY 1998 and 2003 for the direct and indirect expenses associated with operating approved medical residency training programs. States that such payments are in lieu of certain Medicare payments to hospitals for inpatient hospital services, but shall not affect the amounts otherwise payable to such hospitals under a State Medicaid plan.  Makes appropriations for such payments for such fiscal years.
Children's Hospitals Education and Research Act of 1998