Medicare Home Health Beneficiary Equity and Payment Simplification Act of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Home Health Beneficiary 
Equity and Payment Simplification Act of 1999''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Research has shown that medicare beneficiaries who are 
        in need of home health services that are covered under the 
        medicare program generally fall into 1 of the 4 following 
        categories:
                    (A) Post-hospital, short-stay beneficiaries.
                    (B) Medically stable, long-stay beneficiaries.
                    (C) Medically complex, long-stay beneficiaries.
                    (D) Medically unstable and complex, extremely high-
                use beneficiaries.
            (2) The interim payment system for home health services 
        under the medicare program, enacted as part of the Balanced 
        Budget Act of 1997 and amended by title V of the Tax and Trade 
        Relief Extension Act of 1998 (contained in Division J of Public 
        Law 105-277), is having the following unintended consequences:
                    (A) The sickest, most frail medicare beneficiaries 
                are losing access to medically necessary home health 
                services that are otherwise covered under the medicare 
                program.
                    (B) Many high quality, cost-effective home health 
                agencies have had per beneficiary limits under the 
                interim payment system set so low that such agencies 
                are finding it impossible to continue to provide home 
                health services under the medicare program.
                    (C) Many home health agencies are being subjected 
                to aggregate per beneficiary limits under the interim 
                payment system that do not accurately reflect the 
                current patient mix of such agencies, thereby making it 
                impossible for such agencies to compete with similarly 
                situated home health agencies.
                    (D) Medicare beneficiaries that reside in certain 
                States and regions of the country have far less access 
                to home health services under the medicare program than 
                individuals who have identical medical conditions but 
                reside in other States or regions of the country.
                    (E) The health status of home health beneficiaries 
                varies significantly in different regions of the 
                country, creating differing needs for home health 
                services.

SEC. 3. PAYMENTS TO HOME HEALTH AGENCIES UNDER MEDICARE.

    (a) Revision of Prospective Payment System.--
            (1) In general.--Section 1895 of the Social Security Act 
        (42 U.S.C. 1395fff) (as amended by section 5101 of the Tax and 
        Trade Relief Extension Act of 1998 (contained in Division J of 
        Public Law 105-277)) is amended--
                    (A) in subsection (a), by striking ``for portions 
                of cost reporting periods occurring on or after October 
                1, 2000'' and inserting ``for cost reporting periods 
                beginning on or after October 1, 1999''; and
                    (B) in subsection (b), by striking the last 
                sentence of paragraph (1) and all that follows and 
                inserting the following:
            ``(2) Payment basis.--
                    ``(A) In general.--The prospective payment amount 
                to be paid to a home health agency under this section 
                for all of the home health services (including medical 
                supplies) provided to a beneficiary under this title 
                during the 12-month period beginning on the date that 
                such services are first provided by such agency to such 
                beneficiary pursuant to a plan for furnishing such 
                services (and for each subsequent 12-month period that 
                services are provided under such plan) shall be an 
                amount equal to the applicable amount specified in 
                subparagraph (B) for the fiscal year in which the 12-
                month period begins.
                    ``(B) Applicable amount.--Subject to subparagraphs 
                (C), (D), and (E) and paragraph (5), for purposes of 
                this subsection, the applicable amount is equal to--
                            ``(i) $2,603 for a beneficiary described in 
                        subparagraphs (A) and (E) of paragraph (3);
                            ``(ii) $3,335 for a beneficiary described 
                        in paragraph (3)(B);
                            ``(iii) $4,228 for a beneficiary described 
                        in paragraph (3)(C); and
                            ``(iv) $21,864 for a beneficiary described 
                        in paragraph (3)(D).
                    ``(C) Annual update.--
                            ``(i) In general.--The applicable amount 
                        specified in subparagraph (B) shall be adjusted 
                        for each fiscal year (beginning with fiscal 
                        year 2001) in a prospective manner specified by 
                        the Secretary by the home health market basket 
                        percentage increase applicable to the fiscal 
                        year involved.
                            ``(ii) Home health market basket percentage 
                        increase.--For purposes of clause (i), the term 
                        `home health market basket percentage increase' 
                        means, with respect to a fiscal year, a 
                        percentage (estimated by the Secretary before 
                        the beginning of the fiscal year) determined 
                        and applied with respect to the mix of goods 
                        and services included in home health services 
                        in the same manner as the market basket 
                        percentage increase under section 
                        1886(b)(3)(B)(iii) is determined and applied to 
                        the mix of goods and services comprising 
                        inpatient hospital services for the fiscal 
                        year.
                    ``(D) Area wage adjustment.--
                            ``(i) In general.--The portion of the 
                        applicable amount specified in subparagraph (B) 
                        (as updated under subparagraph (C)) that the 
                        Secretary estimates to be attributable to wages 
                        and wage-related costs shall be adjusted for 
                        geographic differences in such costs by an area 
                        wage adjustment factor for the area in which 
                        the home health agency is located.
                            ``(ii) Establishment of area wage 
                        adjustment factors.--The Secretary shall 
                        establish area wage adjustment factors that 
                        reflect the relative level of wages and wage-
                        related costs applicable to the furnishing of 
                        home health services in a geographic area 
                        compared to the national average applicable 
                        level. Such factors may be the factors used by 
                        the Secretary for purposes of section 
                        1886(d)(3)(E).
                    ``(E) Medical supplies.--The applicable amount 
                specified in subparagraph (B) shall be adjusted for 
                each fiscal year (beginning with fiscal year 2001) in a 
                prospective manner specified by the Secretary by the 
                percentage increase (as determined by the Secretary) in 
                the average costs of medical supplies (as described in 
                section 1861(m)(5)) for the fiscal year involved.
            ``(3) Description of beneficiaries.--
                    ``(A) Post-hospital, short-stay beneficiary.--A 
                beneficiary described in this subparagraph is a 
                beneficiary under this title who--
                            ``(i) has experienced at least one 24-hour 
                        hospitalization within the 14-day period 
                        immediately preceding the date that the 
                        beneficiary is first provided services by the 
                        home health agency;
                            ``(ii) suffers from 1 or more illnesses or 
                        injuries which are post-operative or post-
                        trauma; and
                            ``(iii) has a prognosis of a prompt and 
                        substantial recovery.
                    ``(B) Medically stable, long-stay beneficiary.--A 
                beneficiary described in this subparagraph is a 
                beneficiary under this title who--
                            ``(i) has not been admitted to a hospital 
                        within the 6-month period immediately preceding 
                        the date that the beneficiary is first provided 
                        services by the home health agency;
                            ``(ii) suffers from 1 or more illnesses or 
                        injuries requiring acute medical treatment or 
                        management in the home; and
                            ``(iii) is experiencing 1 or more 
                        impairments in activities of daily living.
                    ``(C) Medically complex, long-stay beneficiary.--A 
                beneficiary described in this subparagraph is a 
                beneficiary under this title who--
                            ``(i) has experienced 2 or more 
                        hospitalizations or admissions to skilled 
                        nursing facilities within the 12-month period 
                        immediately preceding the date that the 
                        beneficiary is first provided services by the 
                        home health agency;
                            ``(ii) suffers from 1 or more illnesses or 
                        injuries requiring acute medical treatment or 
                        management in the home; and
                            ``(iii) is experiencing 1 or more 
                        impairments in activities of daily living.
                    ``(D) Medically unstable and complex, extremely 
                high-use beneficiaries.--A beneficiary described in 
                this subparagraph is a beneficiary under this title 
                who--
                            ``(i) has experienced 2 or more 
                        hospitalizations or admissions to skilled 
                        nursing facilities within the 6-month period 
                        immediately preceding the date that the 
                        beneficiary is first provided services by the 
                        home health agency;
                            ``(ii) suffers from 1 or more illnesses or 
                        injuries requiring acute medical treatment or 
                        management in the home; and
                            ``(iii) is experiencing 2 or more 
                        impairments in activities of daily living.
                    ``(E) Other beneficiaries.--A beneficiary described 
                in this subparagraph is a beneficiary under this title 
                who is not otherwise described in subparagraphs (A) 
                through (D).
            ``(4) Determination.--
                    ``(A) In general.--The determination of which of 
                the subparagraphs under paragraph (3) applies to a 
                beneficiary under this title shall be based on the 
                diagnosis and assessment of a physician who shall have 
                no financial relationship with the home health agency 
                that is receiving payments under this title for the 
                provision of home health services to such beneficiary. 
                For purposes of the preceding sentence, any financial 
                relationship shall be determined under rules similar to 
                the rules with respect to referrals under section 1877.
                    ``(B) Regulations.--The Secretary shall issues 
                regulations to assist physicians in making the 
                determination described in subparagraph (A).
            ``(5) Additional payment amount.--The Secretary may 
        increase the applicable amount specified in paragraph (2)(B) to 
        be paid to a home health agency if the Secretary determines 
        that such agency is--
                    ``(A) experiencing higher than average costs for 
                providing home health services as compared to other 
                similarly situated home health agencies; or
                    ``(B) providing home health services that are not 
                reflected in the determination of the applicable 
                amount.
            ``(6) Notice of prospective payment rate.--Not later than 
        July 1 of each year (beginning in 2000), the Secretary shall 
        publish in the Federal Register the applicable amount to be 
        paid to home health agencies for home health services provided 
        to a beneficiary under this title during the fiscal year 
        beginning October 1 of the year.
            ``(7) Proration of prospective payment amounts.--If a 
        beneficiary elects to transfer to, or receive services from, 
        another home health agency within the period covered by the 
        prospective payment amount, the payment shall be prorated 
        between the home health agencies involved.''.
            (2) Conforming amendments.--Section 1895 of the Social 
        Security Act (42 U.S.C. 1395fff) (as amended by section 5101 of 
        the Tax and Trade Relief Extension Act of 1998 (contained in 
        Division J of Public Law 105-277)) is amended--
                    (A) by amending subsection (c) to read as follows:
    ``(c) Requirement for Payment Information.--With respect to home 
health services furnished on or after October 1, 1998, no claim for 
such a service may be paid under this title unless the claim has the 
unique identifier (provided under section 1842(r)) for the physician 
who prescribed the services or made the certification described in 
section 1814(a)(2) or 1835(a)(2)(A).''; and
                    (B) by striking subsection (d).
            (3) Change in effective date.--Section 4603(d) of the 
        Balanced Budget Act of 1997 (42 U.S.C. 1395fff note) (as 
        amended by section 5101(c)(2) of the Tax and Trade Relief 
        Extension Act of 1998 (contained in Division J of Public Law 
        105-277)) is amended by striking ``October 1, 2000'' and 
        inserting ``October 1, 1999''.
            (4) Elimination of contingency 15 percent reduction.--
        Subsection (e) of section 4603 of the Balanced Budget Act of 
        1997 (42 U.S.C. 1395fff note) is repealed.
            (5) Effective date.--The amendments made by this subsection 
        shall take effect on the date of enactment of this Act.
    (b) Payment Rates Based on Location of Home Health Agency Rather 
Than Patient.--
            (1) Conditions of participation.--Section 1891 of the 
        Social Security Act (42 U.S.C. 1395bbb) is amended by striking 
        subsection (g).
            (2) Wage adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
        1395x(v)(1)(L)(iii)) is amended by striking ``service is 
        furnished'' and inserting ``agency is located''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to services provided on or after October 1, 1999.

Summary: Divides patients, and PPS payments, into four categories: (1) post-hospital, short stay beneficiaries ($2,603), (2) medically stable, long-stay beneficiaries ($3,335), (3) medically complex, long-stay beneficiaries ($4,228). And (4) medically unstable and complex, extremely high use beneficiaries ($21,864). Specifies a formula for annual payment updates. Amends the Balanced Budget Act of 1997 to repeal the 15 percent reduction in Medicare home health reimbursement currently scheduled to go into effect on October 1, 2000.