SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homebound Elderly Relief Opportunity 
Act of 1998''.

SEC. 2. MODIFICATION OF HOME HEALTH SERVICES PAYMENT LIMITS.

    (a) Moratorium on Implementation of Per Beneficiary Limits Under 
Interim Payment System.--Section 1861(v)(1)(L)(iv) of the Social 
Security Act (42 U.S.C. 1395x(v)(1)(L)(iv)) is amended to read as 
follows:
    ``(iv)(I) The interim system of payments under clause (v) shall 
apply only if aggregate expenditures for home health services in a 
fiscal year exceed the applicable amount described in subclause (II).
    ``(II) For purposes of subclause (I), the applicable amount for 
fiscal year 1998 is $18,200,000,000 and for fiscal year 1999 is 
$19,300,000,000.
    ``(III) In the case of an excess under subclause (I), the Secretary 
shall implement such system beginning January 1 of the year following 
the fiscal year in which such aggregate expenditures exceed the 
applicable amount. The Secretary shall adjust payments under such 
system so that aggregate expenditures for home health services for 
fiscal years 1998 through 2002 do not exceed $101,000,000,000.
    ``(IV) Not later than the October 31 that precedes a year in which 
such system is implemented, the Secretary shall publish in the Federal 
Register proposed per beneficiary limits for the subsequent year, along 
with the standards and methods utilized in calculating and applying the 
limits in compliance with the rulemaking provisions under section 553 
of the Administrative Procedures Act (5 U.S.C. 553). Not later than the 
December 31 that precedes such year, the Secretary shall publish in the 
Federal Register the per beneficiary limits for home health services 
furnished during cost reporting periods beginning in that year.''.
    (b) Establishment of Uniform Per Beneficiary Limits Under Interim 
Payment System.--Section 1861(v)(1)(L)(v) of such Act (42 U.S.C. 
1395x(v)(1)(L))(v)), is amended--
            (1) in the first sentence, by striking ``For'' and 
        inserting ``Subject to clause (iv), for''; and
            (2) in subclause (I), by striking ``calculated based 75 
        percent on 98 percent'' through ``periods ending during fiscal 
        year 1994, such costs'' and inserting ``equal to the greater of 
        75 percent of the standardized regional average of reasonable 
        costs (including nonroutine medical supplies) for cost 
        reporting periods ending during fiscal year 1994 for the 
        agency's census division and 25 percent of the standardized 
        national average of such costs or 25 percent of the 
        standardized regional average of such costs for the agency's 
        census division and 75 percent of the standardized national 
        average of such costs, such costs determined separately for 
        agencies in rural and nonrural areas and''.
    (c) Adjustment for Outliers.--Section 1861(v)(1)(L) of such Act (42 
U.S.C. 1395x(v)(1)(L)) is amended by adding at the end the following 
new clause:
    ``(viii)(I) Subject to subclause (II), in the case of a home health 
agency that exceeds the per beneficiary limit under clause (v), the 
Secretary shall provide for an additional payment where the reasonable 
cost for home health services provided to an individual exceeds such 
limit by a fixed number of standard deviations. Such additional payment 
amount shall be determined prior to the fiscal year in which subsection 
(iv) is applicable.
    ``(II) The aggregate amount of such additional payments in a fiscal 
year may not exceed 5 percent of the aggregate payments projected or 
estimated by the Secretary to be made under clause (v) in that year.''.
    (d) Per Visit Cost Limits.--Section 1861(v)(1)(L)(i)(IV) of such 
Act (42 U.S.C. 1395x(v)(1)(L)(i)(IV)) is amended to read as follows:
            ``(IV) October 1, 1997, 110 percent of such mean.''.
    (e) Elimination of Special Per Beneficiary Payment Rule for New 
Agencies.--Section 1861(v)(1)(L)(vi) of such Act (42 U.S.C. 
1395x(v)(1)(L)(vi)) is amended to read as follows:
    ``(vi) Where the Secretary establishes that beneficiaries use 
services furnished by more than one home health agency for purposes of 
circumventing the per beneficiary annual limitation under clause (v), 
the per beneficiary limitation shall be prorated among the agencies.''.
    (f) Publication of New Limits.--Section 1861(v)(1)(L)(vii) of such 
Act (42 U.S.C. 1395x(v)(1)(L)(vii)) is amended by adding at the end the 
following new subclause:
    ``(III) Notwithstanding subclause (II), in the case of per visit or 
per beneficiary limits for fiscal year 1999 established by reason of 
the Homebound Elderly Relief Opportunity Act of 1998, the Secretary 
shall establish such limits by not later than 90 days after the date of 
the enactment of such Act.''.

SEC. 3. MODIFICATION OF CALCULATION OF PAYMENT AMOUNT FOR HOME HEALTH 
              SERVICES UNDER THE PROSPECTIVE PAYMENT SYSTEM.

    (a) Establishment of Equitable Limits for Calculating Prospective 
Payment Rates.--
            (1) In general.--Section 1895(b)(3)(A)(i) of the Social 
        Security Act (42 U.S.C. 1395fff(b)(3)(A)(i)) is amended by 
        inserting ``the greater of $19,000,000,000 or'' after ``equal 
        to''.
            (2) Contingency.--Section 4603(e) of the Balanced Budget 
        Act of 1997 (42 U.S.C. 1395fff note) is amended to read as 
        follows:
    ``(e) Contingency.--
            ``(1) In general.--If the Secretary of Health and Human 
        Services for any reason does not establish and implement the 
        prospective payment system for home health services described 
        in section 1895(b) of the Social Security Act (as added by 
        subsection (a)) for cost reporting periods described in 
        subsection (d), the Secretary shall provide--
                    ``(A) for such cost reporting periods that begin 
                before October 1, 2002, an adjustment to the cost 
                limits described in section 1861(v)(1)(L) of such Act 
                (42 U.S.C. 1395x(v)(1)(L)) so that the aggregate 
                amounts payable for such services in a fiscal year do 
                not exceed the greater of--
                            ``(i) the applicable amount (as defined in 
                        paragraph (2)); or
                            ``(ii) the aggregate amount of payments for 
                        such services that would have been made in such 
                        fiscal year if such cost limits (as those 
                        limits would otherwise be in effect on 
                        September 30, 1999) had been reduced by 15 
                        percent; and
                    ``(B) for such cost reporting periods that begin on 
                or after October 1, 2002, a reduction by 15 percent in 
                such cost limits (as so in effect).
            ``(2) Applicable amount defined.--In paragraph (1) the term 
        `applicable amount' means, with respect to a fiscal year, the 
        following amount:
            ``(A) For fiscal year 2000, $19,000,000,000.
            ``(B) For fiscal year 2001, $21,400,000,000.
            ``(C) For fiscal year 2002, $23,100,000,000.''.
    (b) Temporary Restoration of Periodic Interim Payment for Home 
Health Services.--Section 1815(e)(2) of the Social Security Act (42 
U.S.C. 1395g(e)(2)) is amended--
            (1) in subparagraph (C), by striking ``and'' at the end;
            (2) by redesignating subparagraph (D) as subparagraph (E); 
        and
            (3) by inserting after subparagraph (C) the following:
            ``(D) home health services until the end of the 12-month 
        period following the date that the prospective payment system 
        for such services is implemented under section 1895; and''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall take effect as if included in 
the enactment of the Balanced Budget Act of 1997.
Homebound Elderly Relief Opportunity Act of 1998 - Amends title XVIII (Medicare) of the Social Security Act (SSA), as amended by the Balanced Budget Act of 1997 (BBA '97), with respect to the computation formula of the interim system of limited payments for services provided by home health agencies.  Declares that such interim system shall apply only if aggregate expenditures for home health services in a fiscal year exceed specified applicable amounts for FY 1998 and 1999 (with adjustments through FY 2002).  Requires the Secretary of Health and Human Services, in the case of such an excess, to implement such system beginning January 1 of the year following the fiscal year in which such aggregate expenditures exceed the applicable amount. 
Includes in the computation formula the separate determination of costs for agencies in rural and nonrural areas. 
Provides for adjustment of payments (up to five percent of the aggregate projected or estimated payments) for outliers where the reasonable cost for home health services to an individual exceeds the per beneficiary limit by a fixed number of standard deviations. 
Eliminates the special rule for new agencies with respect to determination of the reasonable cost of home health services. 
Provides for a five percent increase in per-visit cost limits for cost reporting periods beginning on or after October 1, 1997. 
Amends SSA title XVIII (Medicare) to modify calculation of the payment amount for home health services under the prospective payment system (PPS) for them created under BBA '97. 
Provides for an adjustment in the current 15 percent reduction in cost and per beneficiary limits for cost reporting periods beginning before October 1, 2002, if the PPS is not established for the pertinent cost reporting periods, with a return of the current reduction for cost reporting periods beginning on or after such date. 
Amends SSA title XVIII to provide for temporary restoration of periodic interim payment for home health services until the PPS for such services is implemented under Medicare.
Homebound Elderly Relief Opportunity Act of 1998