SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safety Net Preservation Act of 
1999''.

SEC. 2. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH 
              CENTERS AND RURAL HEALTH CLINICS.

    (a) In General.--Section 1902(a) of the Social Security Act (42 
U.S.C. 1396a(a)) is amended--
            (1) in paragraph (13)--
                    (A) in subparagraph (A), by adding ``and'' at the 
                end;
                    (B) in subparagraph (B), by striking ``and'' at the 
                end; and
                    (C) by striking subparagraph (C); and
            (2) by inserting after paragraph (14) the following new 
        paragraph:
            ``(15) for payment for services described in clause (B) or 
        (C) of section 1905(a)(2) under the plan in accordance with 
        subsection (aa);''.
    (b) New Prospective Payment System.--Section 1902 of the Social 
Security Act (42 U.S.C. 1396a) is amended by adding at the end the 
following:
    ``(aa) Payment for Services Provided by Federally-Qualified Health 
Centers and Rural Health Clinics.--
            ``(1) In general.--Beginning with fiscal year 2000 and each 
        succeeding fiscal year, the State plan shall provide for 
        payment for services described in section 1905(a)(2)(C) 
        furnished by a Federally-qualified health center and services 
        described in section 1905(a)(2)(B) furnished by a rural health 
        clinic in accordance with the provisions of this subsection.
            ``(2) Fiscal year 2000.--Subject to paragraph (4), for 
        services furnished during fiscal year 2000, the State plan 
        shall provide for payment for such services in an amount 
        (calculated on a per visit basis) that is equal to 100 percent 
        of the costs of the center or clinic of furnishing such 
        services during fiscal year 1999 which are reasonable and 
        related to the cost of furnishing such services, or based on 
        such other tests of reasonableness as the Secretary prescribes 
        in regulations under section 1833(a)(3), or, in the case of 
        services to which such regulations do not apply, the same 
        methodology used under section 1833(a)(3), adjusted to take 
        into account any increase in the scope of such services 
        furnished by the center or clinic during fiscal year 2000.
            ``(3) Fiscal year 2001 and succeeding fiscal years.--
        Subject to paragraph (4), for services furnished during fiscal 
        year 2001 or a succeeding fiscal year, the State plan shall 
        provide for payment for such services in an amount (calculated 
        on a per visit basis) that is equal to the amount calculated 
        for such services under this subsection for the preceding 
        fiscal year--
                    ``(A) increased by the percentage increase in the 
                MEI (as defined in section 1842(i)(3)) applicable to 
                primary care services (as defined in section 
                1842(i)(4)) for that fiscal year; and
                    ``(B) adjusted to take into account any increase in 
                the scope of such services furnished by the center or 
                clinic during that fiscal year.
            ``(4) Establishment of initial year payment amount for new 
        centers or clinics.--In any case in which an entity first 
        qualifies as a Federally-qualified health center or rural 
        health clinic after fiscal year 1999, the State plan shall 
        provide for payment for services described in section 
        1905(a)(2)(C) furnished by the center or services described in 
        section 1905(a)(2)(B) furnished by the clinic in the first 
        fiscal year in which the center or clinic so qualifies in an 
        amount (calculated on a per visit basis) that is equal to 100 
        percent of the costs of furnishing such services during such 
        fiscal year in accordance with the regulations and methodology 
        referred to in paragraph (2). For each fiscal year following 
        the fiscal year in which the entity first qualifies as a 
        Federally-qualified health center or rural health clinic, the 
        State plan shall provide for the payment amount to be 
        calculated in accordance with paragraph (3).
            ``(5) Administration in the case of managed care.--In the 
        case of services furnished by a Federally-qualified health 
        center or rural health clinic pursuant to a contract between 
        the center or clinic and a managed care entity (as defined in 
        section 1932(a)(1)(B)), the State plan shall provide for 
        payment to the center or clinic (at least quarterly) by the 
        State of a supplemental payment equal to the amount (if any) by 
        which the amount determined under paragraphs (2), (3), and (4) 
        of this subsection exceeds the amount of the payments provided 
        under the contract.
            ``(6) Alternative payment methodologies.--Notwithstanding 
        any other provision of this section, the State plan may provide 
        for payment in any fiscal year to a Federally-qualified health 
        center for services described in section 1905(a)(2)(C) or to a 
        rural health clinic for services described in section 
        1905(a)(2)(B) in an amount which is determined under an 
        alternative payment methodology that--
                    ``(A) is agreed to by the State and the center or 
                clinic; and
                    ``(B) results in payment to the center or clinic of 
                an amount which is at least equal to the amount 
                otherwise required to be paid to the center or clinic 
                under this section.''.
    (c) Conforming Amendments.--
            (1) Section 4712 of the Balanced Budget Act of 1997 (Public 
        Law 105-33; 111 Stat. 508) is amended by striking subsection 
        (c).
            (2) Section 1915(b) of the Social Security Act (42 U.S.C. 
        1396n(b)) is amended by striking ``1902(a)(13)(E)'' and 
        inserting ``1902(a)(15), 1902(aa),''.
    (d) Effective Date.--The amendments made by this section take 
effect on October 1, 1999, and apply to services furnished on or after 
such date.
Safety Net Preservation Act of 1999 - Amends title XIX (Medicaid) of the Social Security Act to establish a new prospective payment system for federally-qualified health centers and rural health clinics.
Safety Net Preservation Act of 1999