```

[House Report 106-1019]
[From the U.S. Government Publishing Office]

106th Congress                                           Rept. 106-1019
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================

 
           BENEFICIARY IMPROVEMENT AND PROTECTION ACT OF 2000

                                _______
                                

                October 30, 2000.--Ordered to be printed

                                _______
                                

  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 5291]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Commerce, to whom was referred the bill 
(H.R. 5291) to amend titles XVIII, XIX, and XXI of the Social 
Security Act to make additional corrections and refinements in 
the Medicare, Medicaid, and State children's health insurance 
programs, as revised by the Balanced Budget Act of 1997, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    29
Background and Need for Legislation..............................    29
Hearings.........................................................    30
Committee Consideration..........................................    30
Committee Votes..................................................    30
Committee Oversight Findings.....................................    31
Committee on Government Reform Oversight Findings................    31
New Budget Authority, Entitlement Authority, and Tax Expenditures    31
Committee Cost Estimate..........................................    32
Congressional Budget Office Estimate.............................    32
Federal Mandates Statement.......................................    34
Advisory Committee Statement.....................................    34
Constitutional Authority Statement...............................    34
Applicability to Legislative Branch..............................    34
Section-by-Section Analysis of the Legislation...................    34
Changes in Existing Law Made by the Bill, as Reported............    67

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES 
                    TO OTHER ACTS; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Beneficiary 
Improvement and Protection Act of 2000''.
  (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
  (c) References to Other Acts.--In this Act:
          (1) Balanced budget act of 1997.--The term ``BBA'' means the 
        Balanced Budget Act of 1997 (Public Law 105-33).
          (2) Medicare, medicaid, and schip balanced budget refinement 
        act of 1999.--The term ``BBRA'' means the Medicare, Medicaid, 
        and SCHIP Balanced Budget Refinement Act of 1999, as enacted 
        into law by section 1000(a)(6) of Public Law 106-113 (Appendix 
        F).
  (d) Table of Contents.--The table of contents of this Act is as 
follows:
Sec. 1. Short title; amendments to Social Security Act; references to 
other Acts; table of contents.

                   TITLE I--BENEFICIARY IMPROVEMENTS

Sec. 101. Improving availability of QMB/SLMB application forms.
Sec. 102. Study on limitation on State payment for medicare cost-
sharing affecting access to services for qualified medicare 
beneficiaries.
Sec. 103. Election of periodic colonoscopy.
Sec. 104. Waiver of 24-month waiting period for medicare coverage of 
individuals disabled with amyotrophic lateral sclerosis (ALS).
Sec. 105. Elimination of time limitation on medicare benefits for 
immunosuppressive drugs.
Sec. 106. Preservation of coverage of drugs and biologicals under part 
B of the medicare program.
Sec. 107. Demonstration of medicare coverage of medical nutrition 
therapy services.

               TITLE II--OTHER MEDICARE PART B PROVISIONS

                    Subtitle A--Access to Technology

Sec. 201. Annual reports on national coverage determinations.
Sec. 202. National limitation amount equal to 100 percent of national 
median for new clinical laboratory test technologies; fee schedule for 
new clinical laboratory tests.
Sec. 203. Clarifying process and standards for determining eligibility 
of devices for pass-through payments under hospital outpatient PPS.
Sec. 204. Access to new technologies applied to screening mammography 
to enhance breast cancer detection.

         Subtitle B--Provisions Relating to Physicians Services

Sec. 211. GAO study of gastrointestinal endoscopic services furnished 
in physicians offices and hospital outpatient department services.
Sec. 212. Treatment of certain physician pathology services.
Sec. 213. Physician group practice demonstration.
Sec. 214. Designation of separate category for interventional pain 
management physicians.
Sec. 215. Evaluation of enrollment procedures for medical groups that 
retain independent contractor physicians.

                       Subtitle C--Other Services

Sec. 221. 3-year moratorium on SNF part B consolidated billing 
requirements.
Sec. 222. Ambulatory surgical centers.
Sec. 223. 1-year extension of moratorium on therapy caps.
Sec. 224. Revision of medicare reimbursement for telehealth services.
Sec. 225. Payment for ambulance services.
Sec. 226. Contrast enhanced diagnostic procedures under hospital 
prospective payment system.
Sec. 227. 10-Year phased-in increase from 55 percent to 80 percent in 
the proportion of hospital bad debt recognized.
Sec. 228. State accreditation of diabetes self-management training 
programs.
Sec. 229. Update in renal dialysis composite rate.

              TITLE III--MEDICARE PART A AND B PROVISIONS

Sec. 301. Home health services.
Sec. 302. Advisory opinions.
Sec. 303. Hospital geographic reclassification for labor costs for 
other PPS systems.
Sec. 304. Reclassification of a metropolitan statistical area for 
purposes of reimbursement under the medicare program.
Sec. 305. Making the medicare dependent, small rural hospital program 
permanent.
Sec. 306. Option to base eligibility on discharges during any of the 3 
most recent audited cost reporting periods.
Sec. 307. Identification and reduction of medical errors by peer review 
organizations.
Sec. 308. GAO report on impact of the emergency medical treatment and 
active labor act (EMTALA) on hospital emergency departments.

    TITLE IV--MEDICARE+CHOICE PROGRAM STABILIZATION AND IMPROVEMENTS

                      Subtitle A--Payment Reforms

Sec. 401. Increasing minimum payment amount.
Sec. 402. 3 percent minimum percentage update in 2001.
Sec. 403. 10-year phase in of risk adjustment based on data from 
substantially all settings.
Sec. 404. Transition to revised Medicare+Choice payment rates.

                   Subtitle B--Administrative Reforms

Sec. 411. Effectiveness of elections and changes of elections.
Sec. 412. Medicare+Choice program compatibility with employer or union 
group health plans.
Sec. 413. Uniform premium and benefits.

                           TITLE V--MEDICAID

Sec. 501. DSH payments.
Sec. 502. New prospective payment system for Federally-qualified health 
centers and rural health clinics.
Sec. 503. Optional coverage of legal immigrants under the medicaid 
program.
Sec. 504. Additional entities qualified to determine medicaid 
presumptive eligibility for low-income children.
Sec. 505. Improving welfare-to-work transition.
Sec. 506. Medicaid county-organized health systems.
Sec. 507. Medicaid recognition for services of physician assistants.

          TITLE VI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 601. Special rule for availability and redistribution of unused 
fiscal year 1998 and 1999 SCHIP allotments.
Sec. 602. Optional coverage of certain legal immigrants under SCHIP.

        TITLE VII--EXTENSION OF SPECIAL DIABETES GRANT PROGRAMS

Sec. 701. Extension of juvenile and Indian diabetes grant programs.

                   TITLE I--BENEFICIARY IMPROVEMENTS

SEC. 101. IMPROVING AVAILABILITY OF QMB/SLMB APPLICATION FORMS.

  (a) Through Local Social Security Offices.--
          (1) In general.--Section 1804 (42 U.S.C. 1395b-2) is amended 
        by adding at the end the following new subsection:
  ``(d) Availability of Application Forms for Medical Assistance for 
Medicare Cost-Sharing.--The Secretary shall make available to the 
Commissioner of Social Security appropriate forms for applying for 
medical assistance for medicare cost-sharing under a State plan under 
title XIX. Such Commissioner, through local offices of the Social 
Security Administration shall--
          ``(1) notify applicants and beneficiaries who present at a 
        local office orally of the availability of such forms and make 
        such forms available to such individuals upon request; and
          ``(2) provide assistance to such individuals in completing 
        such forms and, upon request, in submitting such forms to the 
        appropriate State agency.''.
          (2) Conforming amendment.--Section 1902(a)(8) (42 U.S.C. 
        1396a(a)(8)) is amended by inserting before the semicolon at 
        the end the following: ``and provide application forms for 
        medical assistance for medicare cost-sharing under the plan to 
        the Secretary in order to make them available through Federal 
        offices under section 1804(d) within the State''.
  (b) Streamlining Application Process.--
          (1) Requirement.--Section 1902(a)(8) (42 U.S.C. 1396a(a)(8)) 
        is amended by striking ``, and that'' and inserting ``permit 
        individuals to apply for and obtain medical assistance for 
        medicare cost-sharing using the simplified uniform application 
        form developed under section 1905(p)(5), make available such 
        forms to such individuals, permit such individuals to apply for 
        such assistance by mail (and, at the State option, by telephone 
        or other electronic means) and not require them to apply in 
        person, and provide that''.
          (2) Simplified application form.--Section 1905(p) (42 U.S.C. 
        1396d(p)) is amended by adding at the end the following new 
        paragraph:
  ``(5)(A) The Secretary shall develop a simplified application form 
for use by individuals (including both qualified medicare beneficiaries 
and specified low-income medicare beneficiaries) in applying for 
medical assistance for medicare cost-sharing under this title. Such 
form shall be easily readable by applicants and uniform nationally.
  ``(B) In developing such form, the Secretary shall consult with 
beneficiary groups and the States.
  ``(C) The Secretary shall make such application forms available--
          ``(i) to the Commissioner of Social Security for distribution 
        through local social security offices;
          ``(ii) at such other sites at the Secretary determines 
        appropriate; and
          ``(iii) to persons upon request.''.
  (c) Effective Dates.--
          (1) The amendments made by subsection (a) take effect on 
        January 1, 2004.
          (2) Effective date.--The amendments made by subsection (b) 
        take effect 1 year after the date of the enactment of this Act, 
        regardless of whether regulations have been promulgated to 
        carry out such amendments by such date. Secretary of Health and 
        Human Services shall develop the uniform application form under 
        the amendment made by subsection (b)(2) by not later than 9 
        months after the date of the enactment of this Act.

SEC. 102. STUDY ON LIMITATION ON STATE PAYMENT FOR MEDICARE COST-
                    SHARING AFFECTING ACCESS TO SERVICES FOR QUALIFIED 
                    MEDICARE BENEFICIARIES.

  (a) In General.--The Secretary of Health and Human Services shall 
conduct a study to determine if access to certain services (including 
mental health services) for qualified medicare beneficiaries has been 
affected by limitations on a State's payment for medicare cost-sharing 
for such beneficiaries under section 1902(n) of the Social Security Act 
(42 U.S.C. 1396a(n)). As part of such study, the Secretary shall 
analyze the effect of such payment limitation on providers who serve a 
disproportionate share of such beneficiaries.
  (b) Report.--Not later than 1 year after the date of the enactment of 
this Act the Secretary shall submit to Congress a report on the study 
under subsection (a). The report shall include recommendations 
regarding any changes that should be made to the State payment limits 
under section 1902(n) for qualified medicare beneficiaries to ensure 
appropriate access to services.

SEC. 103. ELECTION OF PERIODIC COLONOSCOPY.

  (a) Coverage.--Section 1861(pp)(1)(C) (42 U.S.C. 1395x(pp)(1)(C)) is 
amended by inserting ``and in the case of an individual making the 
election described in section 1834(d)(4)'' after ``high risk for 
colorectal cancer''.
  (b) Election.--Section 1834(d) (42 U.S.C. 1395m(d)) is amended--
          (1) in paragraph (2)(E)--
                  (A) by striking ``or'' at the end of clause (i);
                  (B) by striking the period at the end of clause (ii) 
                and inserting ``; or''; and
                  (C) by adding at the end the following new clause:
                          ``(iii) if the procedure is performed within 
                        119 months after a screening colonoscopy under 
                        paragraph (4).'';
          (2) in paragraph (3)(A), by inserting ``and for individuals 
        making the election described in paragraph (4)'' after 
        ``1861(pp)(2))'';
          (3) in paragraph (3)(E), by adding at the end the following: 
        ``No payment may be made under this part for a colorectal 
        cancer screening test consisting of a screening colonoscopy for 
        individuals making the election described in paragraph (4) if 
        the procedure is performed within the 119 months after a 
        previous screening colonoscopy or within 47 months after a 
        screening flexible sigmoidoscopy.''; and
          (4) by adding at the end the following new paragraph:
          ``(4) Election of screening colonoscopy for individuals not 
        at high risk of colorectal cancer instead of screening 
        sigmoidoscopy.--An individual who is not at high risk of 
        colorectal cancer may elect to receive a screening colonoscopy 
        instead of a screening sigmoidoscopy.''.
  (c) Effective Date.--The amendments made by this section take effect 
on January 1, 2001.

SEC. 104. WAIVER OF 24-MONTH WAITING PERIOD FOR MEDICARE COVERAGE OF 
                    INDIVIDUALS DISABLED WITH AMYOTROPHIC LATERAL 
                    SCLEROSIS (ALS).

  (a) In General.--Section 226 (42 U.S.C. 426) is amended--
          (1) by redesignating subsection (h) as subsection (j) and by 
        moving such subsection to the end of the section, and
          (2) by inserting after subsection (g) the following new 
        subsection:
  ``(h) For purposes of applying this section in the case of an 
individual medically determined to have amyotrophic lateral sclerosis 
(ALS), the following special rules apply:
          ``(1) Subsection (b) shall be applied as if there were no 
        requirement for any entitlement to benefits, or status, for a 
        period longer than 1 month.
          ``(2) The entitlement under such subsection shall begin with 
        the first month (rather than twenty-fifth month) of entitlement 
        or status.
          ``(3) Subsection (f) shall not be applied.''.
  (b) Conforming Amendment.--Section 1837 (42 U.S.C. 1395p) is amended 
by adding at the end the following new subsection:
  ``(j) In applying this section in the case of an individual who is 
entitled to benefits under part A pursuant to the operation of section 
226(h), the following special rules apply:
          ``(1) The initial enrollment period under subsection (d) 
        shall begin on the first day of the first month in which the 
        individual satisfies the requirement of section 1836(1).
          ``(2) In applying subsection (g)(1), the initial enrollment 
        period shall begin on the first day of the first month of 
        entitlement to disability insurance benefits referred to in 
        such subsection.''.
  (c) Effective Date.--The amendments made by this section apply to 
benefits for months beginning after the date of the enactment of this 
Act.

SEC. 105. ELIMINATION OF TIME LIMITATION ON MEDICARE BENEFITS FOR 
                    IMMUNOSUPPRESSIVE DRUGS.

  (a) In General.--Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J)) is 
amended by striking ``, but only'' and all that follows up to the 
semicolon at the end.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
to drugs furnished on or after the date of the enactment of this Act.

SEC. 106. PRESERVATION OF COVERAGE OF DRUGS AND BIOLOGICALS UNDER PART 
                    B OF THE MEDICARE PROGRAM.

  (a) In General.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is 
amended, in each of subparagraphs (A) and (B), by striking ``(including 
drugs and biologicals which cannot, as determined in accordance with 
regulations, be self-administered)'' and inserting ``(including drugs 
and biologicals which are not usually self-administered by the 
patient)''.
  (b) Effective Date.--The amendment made by subsection (a) applies to 
drugs and biologicals administered on or after October 1, 2000.

SEC. 107. DEMONSTRATION OF MEDICARE COVERAGE OF MEDICAL NUTRITION 
                    THERAPY SERVICES.

  (a) In General.--The Secretary of Health and Human Services shall 
conduct a demonstration project (in this section referred to as the 
``project'') to examine the cost-effectiveness of providing medical 
nutrition therapy services under the medicare program and the financial 
impact of providing such services under the program.
  (b) Scope of Services.--
          (1) Time period and locations.--The project shall be 
        conducted--
                  (A) during a period of 5 fiscal years; and
                  (B) in the 5 States which have the highest proportion 
                of the population who are 65 years of age or older.
          (2) Funding.--The total amount of the payments that may be 
        made under this section shall not exceed $60,000,000 for each 
        of the 5 fiscal years of the project. Funding for the project 
        shall be made from the Federal Supplementary Medical Insurance 
        Trust Fund established under section 1841 of the Social 
        Security Act (42 U.S.C. 1395t).
  (c) Coverage as Medicare Part B Services.--
          (1) In general.--Subject to the succeeding provisions of this 
        subsection, medical nutrition therapy services furnished under 
        the project shall be considered to be services covered under 
        part B of title XVIII of the Social Security Act.
          (2) Payment.--Payment for such services shall be made at a 
        rate of 80 percent of the lesser of the actual charge for the 
        services or 85 percent of the amount determined under the fee 
        schedule established under section 1848(b) of the Social 
        Security Act (42 U.S.C. 1395w-4(b)) for the same services if 
        furnished by a physician.
          (3) Application of limits on billing.--The provisions of 
        section 1842(b)(18) of the Social Security Act (42 U.S.C. 
        1395u(b)(18)) shall apply to a registered dietitian or 
        nutrition professional furnishing services under the project in 
        the same manner as they to a practitioner described in 
        subparagraph (C) of such section furnishing services under 
        title XVIII of such Act.
  (d) Reports.--The Secretary shall submit to the Committee on Ways and 
Means and the Committee on Commerce of the House of Representatives and 
the Committee on Finance of the Senate interim reports on the project 
and a final report on the project within 6 months after the conclusion 
of the project. The final report shall include an evaluation of the 
impact of the use of medical nutrition therapy services on medicare 
beneficiaries and on the medicare program, including any impact on 
reducing costs under the program and improving the health of 
beneficiaries.
  (e) Definitions.--For purposes of this section:
          (1) Medical nutrition therapy services.--The term ``medical 
        nutrition therapy services'' means nutritional diagnostic, 
        therapy, and counseling services for the purpose of disease 
        management which are furnished by a registered dietitian or 
        nutrition professional (as defined in paragraph (2)) pursuant 
        to a referral by a physician (as defined in section 1861(r)(1) 
        of the Social Security Act, 42 U.S.C. 1395x(r)(1)).
          (2) Registered dietitian or nutrition professional.--
                  (A) In general.--Subject to subparagraph (B), the 
                term ``registered dietitian or nutrition professional'' 
                means an individual who--
                          (i) holds a baccalaureate or higher degree 
                        granted by a regionally accredited college or 
                        university in the United States (or an 
                        equivalent foreign degree) with completion of 
                        the academic requirements of a program in 
                        nutrition or dietetics, as accredited by an 
                        appropriate national accreditation organization 
                        recognized by the Secretary for this purpose;
                          (ii) has completed at least 900 hours of 
                        supervised dietetics practice under the 
                        supervision of a registered dietitian or 
                        nutrition professional; and
                          (iii)(I) is licensed or certified as a 
                        dietitian or nutrition professional by the 
                        State in which the services are performed, or
                          (II) in the case of an individual in a State 
                        which does not provide for such licensure or 
                        certification, meets such other criteria as the 
                        Secretary establishes.
                  (B) Exception.--Clauses (i) and (ii) of subparagraph 
                (A) shall not apply in the case of an individual who as 
                of the date of the enactment of this Act is licensed or 
                certified as a dietitian or nutrition professional by 
                the State in which medical nutrition therapy services 
                are performed.
          (3) Secretary.--The term ``Secretary'' means Secretary of 
        Health and Human Services.

               TITLE II--OTHER MEDICARE PART B PROVISIONS

                    Subtitle A--Access to Technology

SEC. 201. ANNUAL REPORTS ON NATIONAL COVERAGE DETERMINATIONS.

  (a) Annual Reports.--Not later than December 1 of each year, 
beginning in 2001, the Secretary of Health and Human Services shall 
submit to Congress a report that sets forth a detailed compilation of 
the actual time periods that were necessary to complete and fully 
implement any national coverage determinations that were made in the 
previous fiscal year for items, services, or medical devices not 
previously covered as a benefit under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.), including, with respect to each 
new item, service, or medical device, a statement of the time taken by 
the Secretary to make the necessary coverage, coding, and payment 
determinations, including the time taken to complete each significant 
step in the process of making such determinations.
  (b) Publication of Reports on the Internet.--The Secretary of Health 
and Human Services shall publish each report submitted under subsection 
(a) on the medicare Internet site of the Department of Health and Human 
Services.

SEC. 202. NATIONAL LIMITATION AMOUNT EQUAL TO 100 PERCENT OF NATIONAL 
                    MEDIAN FOR NEW CLINICAL LABORATORY TEST 
                    TECHNOLOGIES; FEE SCHEDULE FOR NEW CLINICAL 
                    LABORATORY TESTS.

  (a) In General.--Section 1833(h)(4)(B)(viii) (42 U.S.C. 
1395l(h)(4)(B)(viii)) is amended by inserting before the period the 
following: ``(or 100 percent of such median in the case of a clinical 
diagnostic laboratory test performed on or after January 1, 2001, that 
the Secretary determines is a new test for which no limitation amount 
has previously been established under this subparagraph)''.
  (b) Fee Schedule for New Clinical Lab Tests.--
          (1) Establishment of fee schedule for new tests.--Section 
        1833(h)(1) (42 U.S.C. 1395l(h)(1)) is amended--
                  (A) in subparagraph (B), by striking ``In'' and 
                inserting ``Except for tests described in subparagraph 
                (E), in''; and
                  (B) by inserting at the end the following new 
                subparagraph:
  ``(E) In the case of a clinical diagnostic laboratory test which is 
described by a new code in the Health Care Financing Administration 
Common Procedure Coding System (commonly referred to as `HCPCS'), for 
which the Secretary is not able to crosswalk with a similar test with 
an established schedule amount, the Secretary shall establish for 
purposes of subparagraph (A) a single fee schedule amount for all areas 
in the following manner:
          ``(i) By not later than December 1 of each year, beginning 
        with 2001, the Secretary shall cause to have published in the 
        Federal Register (which may include publication on an interim 
        final rule basis with a comment period) an interim fee schedule 
        amount for each such new test which shall apply for such new 
        tests furnished during the following year.
          ``(ii) The interim fee schedule amount for each such new test 
        shall be subject to a comment period of 60 days. The Secretary 
        shall review comments and data received and make appropriate 
        adjustments to the fee schedule for each test applicable 
        beginning with the following calendar year.
          ``(iii) For years beginning with 2002, the Secretary shall 
        also cause to have published in the Federal Register by not 
        later than December 1 of the year prior to its application, the 
        adjustments to the interim fee schedule amount described in 
        clause (ii) for each such new test for which an interim fee 
        schedule amount was established for a year, including 
        adjustments to such fee schedule amounts in response to 
        comments.''.
          (2) Conforming amendment to update provision.--Section 
        1833(h)(2)(A) (42 U.S.C. 1395l(h)(2)(A)) is amended by striking 
        ``July 1, 1984,'' and inserting the following: ``July 1, 1984. 
        The fee schedules established under the previous sentence and 
        paragraph (1)(E)(3) shall be''.

SEC. 203. CLARIFYING PROCESS AND STANDARDS FOR DETERMINING ELIGIBILITY 
                    OF DEVICES FOR PASS-THROUGH PAYMENTS UNDER HOSPITAL 
                    OUTPATIENT PPS.

  (a) In General.--Section 1833(t)(6) (42 U.S.C. 1395l(t)(6)) is 
amended--
          (1) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (D) and (E), respectively; and
          (2) by striking subparagraph (B) and inserting the following:
                  ``(B) Use of categories in determining eligibility of 
                a device for pass-through payments.--The Secretary 
                shall determine whether a medical device meets the 
                requirements of subparagraph (A)(iv) as follows:
                          ``(i) Establishment of categories.--The 
                        Secretary shall establish categories of medical 
                        devices based on type of medical device as 
                        follows:
                                  ``(I) In general.--The Secretary 
                                shall establish criteria that will be 
                                used for creation of categories through 
                                rulemaking (which may include use of an 
                                interim final rule with comment 
                                period). Such categories shall be 
                                established in a manner such that no 
                                medical device is described by more 
                                than one category. Such criteria shall 
                                include a test of whether the average 
                                cost of devices that would be included 
                                in a category, as estimated by the 
                                Secretary, is not insignificant as 
                                described in paragraph (A)(iv)(II).
                                  ``(II) Initial categories.--The 
                                categories to be applied as of the 
                                category-based pass-through 
                                implementation date specified pursuant 
                                to subclause (V) shall be established 
                                in a manner such that each medical 
                                device that meets the requirements of 
                                clause (ii) or (iv) of subparagraph (A) 
                                as of such date is included in a such a 
                                category. For purposes of the preceding 
                                sentence, whether a medical device 
                                meets the requirements of clause (ii) 
                                or (iv) of subparagraph (A) as of such 
                                date shall be determined without regard 
                                to clause (ii) of this subparagraph and 
                                on the basis of the program memoranda 
                                issued before such date identifying 
                                medical devices that meet such 
                                requirements.
                                  ``(III) Adding categories.--The 
                                Secretary shall promptly establish a 
                                new category of medical device under 
                                this clause for any medical device that 
                                meets the requirements of subparagraph 
                                (A)(iv) and for which none of the 
                                categories in effect or that were 
                                previously in effect (as described in 
                                subparagraph (C)(iii)) is appropriate. 
                                The Secretary shall only establish a 
                                new category for a medical device that 
                                is described by a category that was 
                                previously in effect if the Secretary 
                                determines, in accord with criteria 
                                established under subclause (I) of this 
                                clause, that the device represents a 
                                significant advance in medical 
                                technology that is expected to 
                                significantly improve the treatment of 
                                Medicare beneficiaries.
                                  ``(IV) Deleting categories.--The 
                                Secretary shall delete a category at 
                                the close of the period for which the 
                                category is in effect (as described in 
                                subparagraph (C)(iii)).
                                  ``(V) Category-based pass-through 
                                implementation date.--For purposes of 
                                this subparagraph and subparagraph (C), 
                                the `category-based pass-through 
                                implementation date' is a date 
                                specified by the Secretary as of which 
                                the categories established under this 
                                clause are first used for purposes of 
                                clause (ii)(I). Such date may not be 
                                later than July 1, 2000.
                          ``(ii) Requirements treated as met.--A 
                        medical device shall be treated as meeting the 
                        requirements of subparagraph (A)(iv) if--
                                  ``(I) the device is described by a 
                                category established under clause (i), 
                                and
                                  ``(II) an application under section 
                                515 of the Federal Food, Drug, and 
                                Cosmetic Act has been approved with 
                                respect to the device, or the device 
                                has been cleared for market under 
                                section 510(k) of such Act, or the 
                                device is exempt from the requirements 
                                of section 510(k) of such Act pursuant 
                                to subsection (l) or (m) of section 510 
                                of such Act or section 520(g) of such 
                                Act, without an additional requirement 
                                for application or prior approval.
                  ``(C) Limited period of payment.--
                          ``(i) Drugs and biologicals.--The payment 
                        under this paragraph with respect to a drug or 
                        biological shall only apply during a period of 
                        at least 2 years, but not more than 3 years, 
                        that begins--
                                  ``(I) on the first date this 
                                subsection is implemented in the case 
                                of a drug or biological described in 
                                clause (i), (ii), or (iii) of 
                                subparagraph (A) and in the case of a 
                                drug or biological described in 
                                subparagraph (A)(iv) and for which 
                                payment under this part is made as an 
                                outpatient hospital service before such 
                                first date; or
                                  ``(II) in the case of a drug or 
                                biological described in subparagraph 
                                (A)(iv) not described in subclause (I), 
                                on the first date on which payment is 
                                made under this part for the drug or 
                                biological as an outpatient hospital 
                                service.
                          ``(ii) Medical devices.--Except as provided 
                        in clause (iv), payment shall be made under 
                        this paragraph with respect to a medical device 
                        only if such device--
                                  ``(I) is described by a category of 
                                medical devices established under 
                                subparagraph (B)(i); and
                                  ``(II) is provided as part of a 
                                service (or group of services) paid for 
                                under this subsection and provided 
                                during the period for which such 
                                category is in effect (as described in 
                                clause (iii)).
                          ``(iii) Period for which category is in 
                        effect.--For purposes of this subparagraph and 
                        subparagraph (B), a category of medical devices 
                        established under subparagraph (B)(i) shall be 
                        in effect for a period of at least 2 years, but 
                        not more than 3 years, that begins--
                                  ``(I) in the case of a category 
                                established under subparagraph 
                                (B)(i)(II), on the first date on which 
                                payment was made under this paragraph 
                                for any device described by such 
                                category (including payments made 
                                during the period before the category-
                                based pass-through implementation 
                                date); and
                                  ``(II) in the case of a category 
                                established under subparagraph 
                                (B)(i)(III), on the first date on which 
                                payment is made under this paragraph 
                                for any medical device that is 
                                described by such category.
                          ``(iv) Payments made before category-based 
                        pass-through implementation date.--
                                  ``(I) in the case of a medical device 
                                provided as part of a service (or group 
                                of services) paid for under this 
                                subsection and provided during the 
                                period beginning on the first date on 
                                which the system under this subsection 
                                is implemented and ending on (and 
                                including) the day before the category-
                                based pass-through implementation date 
                                specified pursuant to subparagraph 
                                (B)(i)(V), payment shall be made in 
                                accordance with the provisions of this 
                                paragraph as in effect on the day 
                                before the date of the enactment of 
                                this subparagraph; and
                                  ``(II) notwithstanding subclause (I), 
                                the Secretary shall make payments under 
                                this paragraph during the period 
                                beginning one month after the date of 
                                enactment of the Beneficiary 
                                Improvement and Protection Act of 2000 
                                and ending on the same ending date in 
                                subclause (I) with respect to any 
                                medical device that is not included in 
                                a program memorandum referred to in 
                                subparagraph (B)(i)(II) but that is 
                                substantially similar (other than with 
                                respect to the restriction in 
                                subparagraph (A)(iv)(I)) to devices 
                                that are so included and that the 
                                Secretary determines is likely to be 
                                described by a initial category 
                                established under such subparagraph.''.
  (b) Conforming Amendments.--Section 1833(t) is further amended--
          (1) in paragraph (6)(D) (as redesignated by subsection 
        (a)(1)), by striking ``subparagraph (D)(iii)'' in the matter 
        preceding clause (i) and inserting ``subparagraph (E)(iii)'';
          (2) in paragraph (12)(E), by striking ``additional payments 
        (consistent with paragraph (6)(B))'' and inserting ``additional 
        payments, the determination and deletion of initial and new 
        categories (consistent with subparagraphs (B) and (C) of 
        paragraph (6))''; and
          (3) in paragraph (6)(A), by striking ``the cost of the 
        device, drug, or biological'' and inserting ``the cost of the 
        drug or biological or the average cost of the category of 
        devices''.
  (c) Effective Date.--The amendments made by this section shall become 
effective on the date of the enactment of this Act.

SEC. 204. ACCESS TO NEW TECHNOLOGIES APPLIED TO SCREENING MAMMOGRAPHY 
                    TO ENHANCE BREAST CANCER DETECTION.

  (a) $15 Initial Increase in Payment Limit.--Section 1834(c)(3) (42 
U.S.C. 1395m(c)(3)) is amended--
          (1) in subparagraph (A)--
                  (A) by striking ``subparagraph (B)'' and inserting 
                ``subparagraphs (B) and (D)''; and
                  (B) in clause (ii), by inserting ``(taking into 
                account, if applicable, subparagraph (D))'' after ``for 
                the preceding year''; and
          (2) by adding at the end the following new subparagraph:
                  ``(D) Increase in payment limit for new 
                technologies.--In the case of new technologies applied 
                to screening mammography performed beginning in 2001 
                and determined by the Secretary to enhance the 
                detection of breast cancer, the limit applied under 
                this paragraph for 2001 shall be increased by $15.''.
  (b) Change in Revision of Limit.--Subparagraph (B) of such section is 
amended--
          (1) by striking ``Reduction of'' and inserting ``Revisions 
        to'',
          (2) by inserting ``or new technologies described in paragraph 
        (1)(D)'' after ``1992'', and
          (3) by inserting ``increase or'' before ``reduce''.
  (c) Inclusion of New Technology.--Section 1861(jj) (42 U.S.C. 
1395x(jj)) is amended by inserting before the period at the end the 
following: ``, as well as new technology applied to such a procedure 
that the Secretary determines enhances the detection of breast 
cancer''.
  (d) Effective Date.--The amendments made by this section apply to 
mammography performed on or after January 1, 2001.

         Subtitle B--Provisions Relating to Physicians Services

SEC. 211. GAO STUDY OF GASTROINTESTINAL ENDOSCOPIC SERVICES FURNISHED 
                    IN PHYSICIANS OFFICES AND HOSPITAL OUTPATIENT 
                    DEPARTMENT SERVICES.

  (a) Study.--The Comptroller General of the United States shall 
conduct a study on the appropriateness of furnishing gastrointestinal 
endoscopic physicians services in physicians offices. In conducting 
this study, the Comptroller General shall--
          (1) review available scientific and clinical evidence about 
        the safety of performing procedures in physicians offices and 
        hospital outpatient departments;
          (2) assess whether resource-based practice expense relative 
        values established by the Secretary of Health and Human 
        Services under the Medicare physician fee schedule under 
        section 1848 of the Social Security Act (42 U.S.C. 1395w-4) for 
        gastrointestinal endoscopic services furnished in physicians 
        offices and hospital outpatient departments create an incentive 
        to furnish such services in physicians offices instead of 
        hospital outpatient departments; and
          (3) assess the implications for access to care for Medicare 
        beneficiaries if Medicare were not to cover gastrointestinal 
        endoscopic services in physicians offices.
  (b) Report.--The Comptroller General shall submit a report to 
Congress on such study no later than July 1, 2002 and include such 
recommendations as the Comptroller General determines to be 
appropriate.

SEC. 212. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES.

  (a) In General.--When an independent laboratory furnishes the 
technical component of a physician pathology service to a fee-for-
service medicare beneficiary who is a patient of a grandfathered 
hospital, the Secretary of Health and Human Services shall treat such 
component as a service for which payment shall be made to the 
laboratory under section 1848 of the Social Security Act (42 U.S.C. 
1395w-4) and not as an inpatient hospital service for which payment is 
made to the hospital under section 1886(d) of such Act (42 U.S.C. 
1395ww(d)) or as an outpatient hospital service for which payment is 
made to the hospital under section 1834(t) of such Act (42 U.S.C. 
1395l(t))..
  (b) Definitions.--For purposes of this section:
          (1) Grandfathered hospital.--The term ``grandfathered 
        hospital'' means a hospital that had an arrangement with an 
        independent laboratory that was in effect as of July 22, 1999, 
        under which a laboratory furnished the technical component of 
        physician pathology services to fee-for-service medicare 
        beneficiaries who were hospital patients and submitted claims 
        for payment for such component to a medicare carrier (and not 
        to the hospital).
          (2) Fee-for-service medicare beneficiary.--The term ``fee-
        for-service medicare beneficiary'' means an individual who--
                  (A) is entitled to benefits under part A, or enrolled 
                under part B, of title XVIII of the Social Security Act 
                (42 U.S.C. 1395c et seq.); and
                  (B) is not enrolled in (i) a Medicare+Choice plan 
                under part C of such title (42 U.S.C. 1395w-21 et 
                seq.), (ii) a plan offered by an eligible organization 
                under section 1876 of such Act (42 U.S.C. 1395mm), 
                (iii) a program of all-inclusive care for the elderly 
                (PACE) under section 1898 of such Act, or (iv) a social 
                health maintenance organization (SHMO) demonstration 
                project established under section 4018(b) of the 
                Omnibus Budget Reconciliation Act of 1987 (Public Law 
                100-203).
          (3) Medicare carrier.--The term ``medicare carrier'' means an 
        organization with a contract under section 1842 of such Act (42 
        U.S.C. 1395u).
  (c) Effective Date.--Subsection (a) applies to services furnished 
during the 2-year period beginning on January 1, 2001.
  (d) GAO Report.--
          (1) Study.--The Comptroller General of the United States 
        shall--
                  (A) analyze the types of hospitals that are 
                grandfathered under subsection (a); and
                  (B) study the effects of subsection (a) on hospitals, 
                laboratories, and medicare beneficiaries access to 
                physician pathology services.
          (2) Report.--The Comptroller General shall submit a report to 
        Congress on such analysis and study no later than July 1, 2002. 
        The report shall include recommendations about whether the 
        provisions of subsection (a) should apply after the 2-year 
        period under subsection (c) for grandfathered hospitals for 
        either (or both) inpatient and outpatient hospital services and 
        whether such subsection should be extended to apply to other 
        hospitals that have similar characteristics to grandfathered 
        hospitals.

SEC. 213. PHYSICIAN GROUP PRACTICE DEMONSTRATION.

  Title XVIII is amended by inserting after section 1866 the following 
new sections:
 ``demonstration of application of physician volume increases to group 
                               practices
  ``Sec. 1866A. (a) Demonstration Program Authorized.--
          ``(1) In general.--The Secretary shall conduct demonstration 
        projects to test and, if proven effective, expand the use of 
        incentives to health care groups participating in the program 
        under this title that--
                  ``(A) encourage coordination of the care furnished to 
                individuals under the programs under parts A and B by 
                institutional and other providers, practitioners, and 
                suppliers of health care items and services;
                  ``(B) encourage investment in administrative 
                structures and processes to ensure efficient service 
                delivery; and
                  ``(C) reward physicians for improving health 
                outcomes.
          ``(2) Administration by contract.--Except as otherwise 
        specifically provided, the Secretary may administer the program 
        under this section in accordance with section 1866B.
          ``(3) Definitions.--For purposes of this section, terms have 
        the following meanings:
                  ``(A) Physician.--Except as the Secretary may 
                otherwise provide, the term `physician' means any 
                individual who furnishes services which may be paid for 
                as physicians' services under this title.
                  ``(B) Health care group.--The term `health care 
                group' means a group of physicians (as defined in 
                subparagraph (A)) organized at least in part for the 
                purpose of providing physicians' services under this 
                title. As the Secretary finds appropriate, a health 
                care group may include a hospital and any other 
                individual or entity furnishing items or services for 
                which payment may be made under this title that is 
                affiliated with the health care group under an 
                arrangement structured so that such individual or 
                entity participates in a demonstration under this 
                section and will share in any bonus earned under 
                subsection (d).
  ``(b) Eligibility Criteria.--
          ``(1) In general.--The Secretary is authorized to establish 
        criteria for health care groups eligible to participate in a 
        demonstration under this section, including criteria relating 
        to numbers of health care professionals in, and of patients 
        served by, the group, scope of services provided, and quality 
        of care.
          ``(2) Payment method.--A health care group participating in 
        the demonstration under this section shall agree with respect 
        to services furnished to beneficiaries within the scope of the 
        demonstration (as determined under subsection (c))--
                  ``(A) to be paid on a fee-for-service basis; and
                  ``(B) that payment with respect to all such services 
                furnished by members of the health care group to such 
                beneficiaries shall (where determined appropriate by 
                the Secretary) be made to a single entity.
          ``(3) Data reporting.--A health care group participating in a 
        demonstration under this section shall report to the Secretary 
        such data, at such times and in such format as the Secretary 
        require, for purposes of monitoring and evaluation of the 
        demonstration under this section.
  ``(c) Patients Within Scope of Demonstration.--
          ``(1) In general.--The Secretary shall specify, in accordance 
        with this subsection, the criteria for identifying those 
        patients of a health care group who shall be considered within 
        the scope of the demonstration under this section for purposes 
        of application of subsection (d) and for assessment of the 
        effectiveness of the group in achieving the objectives of this 
        section.
          ``(2) Other criteria.--The Secretary may establish additional 
        criteria for inclusion of beneficiaries within a demonstration 
        under this section, which may include frequency of contact with 
        physicians in the group or other factors or criteria that the 
        Secretary finds to be appropriate.
          ``(3) Notice requirements.--In the case of each beneficiary 
        determined to be within the scope of a demonstration under this 
        section with respect to a specific health care group, the 
        Secretary shall ensure that such beneficiary is notified of the 
        incentives, and of any waivers of coverage or payment rules, 
        applicable to such group under such demonstration.
  ``(d) Incentives.--
          ``(1) Performance target.--The Secretary shall establish for 
        each health care group participating in a demonstration under 
        this section--
                  ``(A) a base expenditure amount, equal to the average 
                total payments under parts A and B for patients served 
                by the health care group on a fee-for-service basis in 
                a base period determined by the Secretary; and
                  ``(B) an annual per capita expenditure target for 
                patients determined to be within the scope of the 
                demonstration, reflecting the base expenditure amount 
                adjusted for risk and expected growth rates.
          ``(2) Incentive bonus.--The Secretary shall pay to each 
        participating health care group (subject to paragraph (4)) a 
        bonus for each year under the demonstration equal to a portion 
        of the Medicare savings realized for such year relative to the 
        performance target.
          ``(3) Additional bonus for process and outcome 
        improvements.--At such time as the Secretary has established 
        appropriate criteria based on evidence the Secretary determines 
        to be sufficient, the Secretary shall also pay to a 
        participating health care group (subject to paragraph (4)) an 
        additional bonus for a year, equal to such portion as the 
        Secretary may designate of the saving to the program under this 
        title resulting from process improvements made by and patient 
        outcome improvements attributable to activities of the group.
          ``(4) Limitation.--The Secretary shall limit bonus payments 
        under this section as necessary to ensure that the aggregate 
        expenditures under this title (inclusive of bonus payments) 
        with respect to patients within the scope of the demonstration 
        do not exceed the amount which the Secretary estimates would be 
        expended if the demonstration projects under this section were 
        not implemented.
        ``provisions for administration of demonstration program
  ``Sec. 1866B. (a) General Administrative Authority.--
          ``(1) Beneficiary eligibility.--Except as otherwise provided 
        by the Secretary, an individual shall only be eligible to 
        receive benefits under the program under section 1866A (in this 
        section referred to as the `demonstration program') if such 
        individual--
                  ``(A) is enrolled in under the program under part B 
                and entitled to benefits under part A; and
                  ``(B) is not enrolled in a Medicare+Choice plan under 
                part C, an eligible organization under a contract under 
                section 1876 (or a similar organization operating under 
                a demonstration project authority), an organization 
                with an agreement under section 1833(a)(1)(A), or a 
                PACE program under section 1894.
          ``(2) Secretary's discretion as to scope of program.--The 
        Secretary may limit the implementation of the demonstration 
        program to--
                  ``(A) a geographic area (or areas) that the Secretary 
                designates for purposes of the program, based upon such 
                criteria as the Secretary finds appropriate;
                  ``(B) a subgroup (or subgroups) of beneficiaries or 
                individuals and entities furnishing items or services 
                (otherwise eligible to participate in the program), 
                selected on the basis of the number of such 
                participants that the Secretary finds consistent with 
                the effective and efficient implementation of the 
                program;
                  ``(C) an element (or elements) of the program that 
                the Secretary determines to be suitable for 
                implementation; or
                  ``(D) any combination of any of the limits described 
                in subparagraphs (A) through (C).
          ``(3) Voluntary receipt of items and services.--Items and 
        services shall be furnished to an individual under the 
        demonstration program only at the individual's election.
          ``(4) Agreements.--The Secretary is authorized to enter into 
        agreements with individuals and entities to furnish health care 
        items and services to beneficiaries under the demonstration 
        program.
          ``(5) Program standards and criteria.--The Secretary shall 
        establish performance standards for the demonstration program 
        including, as applicable, standards for quality of health care 
        items and services, cost-effectiveness, beneficiary 
        satisfaction, and such other factors as the Secretary finds 
        appropriate. The eligibility of individuals or entities for the 
        initial award, continuation, and renewal of agreements to 
        provide health care items and services under the program shall 
        be conditioned, at a minimum, on performance that meets or 
        exceeds such standards.
          ``(6) Administrative review of decisions affecting 
        individuals and entities furnishing services.--An individual or 
        entity furnishing services under the demonstration program 
        shall be entitled to a review by the program administrator (or, 
        if the Secretary has not contracted with a program 
        administrator, by the Secretary) of a decision not to enter 
        into, or to terminate, or not to renew, an agreement with the 
        entity to provide health care items or services under the 
        program.
          ``(7) Secretary's review of marketing materials.--An 
        agreement with an individual or entity furnishing services 
        under the demonstration program shall require the individual or 
        entity to guarantee that it will not distribute materials 
        marketing items or services under the program without the 
        Secretary's prior review and approval;
          ``(8) Payment in full.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), an individual or entity receiving payment from the 
                Secretary under a contract or agreement under the 
                demonstration program shall agree to accept such 
                payment as payment in full, and such payment shall be 
                in lieu of any payments to which the individual or 
                entity would otherwise be entitled under this title.
                  ``(B) Collection of deductibles and coinsurance.--
                Such individual or entity may collect any applicable 
                deductible or coinsurance amount from a beneficiary.
  ``(b) Contracts for Program Administration.--
          ``(1) In general.--The Secretary may administer the 
        demonstration program through a contract with a program 
        administrator in accordance with the provisions of this 
        subsection.
          ``(2) Scope of program administrator contracts.--The 
        Secretary may enter into such contracts for a limited 
        geographic area, or on a regional or national basis.
          ``(3) Eligible contractors.--The Secretary may contract for 
        the administration of the program with--
                  ``(A) an entity that, under a contract under section 
                1816 or 1842, determines the amount of and makes 
                payments for health care items and services furnished 
                under this title; or
                  ``(B) any other entity with substantial experience in 
                managing the type of program concerned.
          ``(4) Contract award, duration, and renewal.--
                  ``(A)  In general.--A contract under this subsection 
                shall be for an initial term of up to three years, 
                renewable for additional terms of up to three years.
                  ``(B) Noncompetitive award and renewal for entities 
                administering part a or part b payments.--The Secretary 
                may enter or renew a contract under this subsection 
                with an entity described in paragraph (3)(A) without 
                regard to the requirements of section 5 of title 41, 
                United States Code.
          ``(5) Applicability of federal acquisition regulation.--The 
        Federal Acquisition Regulation shall apply to program 
        administration contracts under this subsection.
          ``(6) Performance standards.--The Secretary shall establish 
        performance standards for the program administrator including, 
        as applicable, standards for the quality and cost-effectiveness 
        of the program administered, and such other factors as the 
        Secretary finds appropriate. The eligibility of entities for 
        the initial award, continuation, and renewal of program 
        administration contracts shall be conditioned, at a minimum, on 
        performance that meets or exceeds such standards.
          ``(7) Functions of program administrator.--A program 
        administrator shall perform any or all of the following 
        functions, as specified by the Secretary:
                  ``(A) Agreements with entities furnishing health care 
                items and services.--Determine the qualifications of 
                entities seeking to enter or renew agreements to 
                provide services under the program, and as appropriate 
                enter or renew (or refuse to enter or renew) such 
                agreements on behalf of the Secretary.
                  ``(B) Establishment of payment rates.--Negotiate or 
                otherwise establish, subject to the Secretary's 
                approval, payment rates for covered health care items 
                and services.
                  ``(C) Payment of claims or fees.--Administer payments 
                for health care items or services furnished under the 
                program.
                  ``(D) Payment of bonuses.--Using such guidelines as 
                the Secretary shall establish, and subject to the 
                approval of the Secretary, make bonus payments as 
                described in subsection (c)(2)(A)(ii) to entities 
                furnishing items or services for which payment may be 
                made under the program.
                  ``(E) Oversight.--Monitor the compliance of 
                individuals and entities with agreements under the 
                program with the conditions of participation.
                  ``(F) Administrative review.--Conduct reviews of 
                adverse determinations specified in subsection (a)(6).
                  ``(G) Review of marketing materials.--Conduct a 
                review of marketing materials proposed by an entity 
                furnishing services under the program.
                  ``(H) Additional functions.--Perform such other 
                functions as the Secretary may specify.
          ``(8) Limitation of liability.--The provisions of section 
        1157(b) shall apply with respect to activities of contractors 
        and their officers, employees, and agents under a contract 
        under this subsection.
          ``(9) Information sharing.--Notwithstanding section 1106 and 
        section 552a of title 5, United States Code, the Secretary is 
        authorized to disclose to an entity with a program 
        administration contract under this subsection such information 
        (including medical information) on individuals receiving health 
        care items and services under the program as the entity may 
        require to carry out its responsibilities under the contract.
  ``(c) Rules Applicable to Both Program Agreements and Program 
Administration Contracts.--
          ``(1) Records, reports, and audits.--The Secretary is 
        authorized to require entities with agreements to provide 
        health care items or services under the demonstration program, 
        and entities with program administration contracts under 
        subsection (b), to maintain adequate records, to afford the 
        Secretary access to such records (including for audit 
        purposes), and to furnish such reports and other materials 
        (including audited financial statements and performance data) 
        as the Secretary may require for purposes of implementation, 
        oversight, and evaluation of the program and of individuals' 
        and entities' effectiveness in performance of such agreements 
        or contracts.
          ``(2) Bonuses.--Notwithstanding any other provision of law, 
        but subject to subparagraph (B)(ii), the Secretary may make 
        bonus payments under the program from the Federal Health 
        Insurance Trust Fund and the Federal Supplementary Medical 
        Insurance Trust Fund in amounts that do not exceed the amounts 
        authorized under the program in accordance with the following:
                  ``(A) Payments to program administrators.--The 
                Secretary may make bonus payments under the program to 
                program administrators.
                  ``(B) Payments to entities furnishing services.--
                          ``(i) In general.--Subject to clause (ii), 
                        the Secretary may make bonus payments to 
                        individuals or entities furnishing items or 
                        services for which payment may be made under 
                        the program, or may authorize the program 
                        administrator to make such bonus payments in 
                        accordance with such guidelines as the 
                        Secretary shall establish and subject to the 
                        Secretary's approval.
                          ``(ii) Limitations.--The Secretary may 
                        condition such payments on the achievement of 
                        such standards related to efficiency, 
                        improvement in processes or outcomes of care, 
                        or such other factors as the Secretary 
                        determines to be appropriate.
          ``(3) Antidiscrimination limitation.--The Secretary shall not 
        enter into an agreement with an entity to provide health care 
        items or services under the program, or with an entity to 
        administer the program, unless such entity guarantees that it 
        will not deny, limit, or condition the coverage or provision of 
        benefits under the program, for individuals eligible to be 
        enrolled under such program, based on any health status-related 
        factor described in section 2702(a)(1) of the Public Health 
        Service Act.
  ``(d) Limitations on Judicial Review.--The following actions and 
determinations with respect to the demonstration program shall not be 
subject to review by a judicial or administrative tribunal:
          ``(1) Limiting the implementation of the program under 
        subsection (a)(2).
          ``(2) Establishment of program participation standards under 
        subsection (a)(5) or the denial or termination of, or refusal 
        to renew, an agreement with an entity to provide health care 
        items and services under the program.
          ``(3) Establishment of program administration contract 
        performance standards under subsection (b)(6), the refusal to 
        renew a program administration contract, or the noncompetitive 
        award or renewal of a program administration contract under 
        subsection (b)(4)(B).
          ``(5) Establishment of payment rates, through negotiation or 
        otherwise, under a program agreement or a program 
        administration contract.
          ``(6) A determination with respect to the program (where 
        specifically authorized by the program authority or by 
        subsection (c)(2))--
                  ``(A) as to whether cost savings have been achieved, 
                and the amount of savings; or
                  ``(B) as to whether, to whom, and in what amounts 
                bonuses will be paid.
  ``(e) Application Limited to Parts A and B.--None of the provisions 
of this section or of the demonstration program shall apply to the 
programs under part C.
  ``(f) Reports to Congress.--Not later than two years after the date 
of enactment of this section, and biennially thereafter for six years, 
the Secretary shall report to the Congress on the use of authorities 
under the demonstration program. Each report shall address the impact 
of the use of those authorities on expenditures, access, and quality 
under the programs under this title.''.

SEC. 214. DESIGNATION OF SEPARATE CATEGORY FOR INTERVENTIONAL PAIN 
                    MANAGEMENT PHYSICIANS.

  With respect to services furnished on or after January 1, 2002, the 
Secretary of Health and Human Services shall provide for the 
designation under section 1848(c)(3)(A) of the Social Security Act (42 
U.S.C. 1395w-4(c)(3)(A)) of interventional pain management physicians 
as a separate category of physician specialists.

SEC. 215. EVALUATION OF ENROLLMENT PROCEDURES FOR MEDICAL GROUPS THAT 
                    RETAIN INDEPENDENT CONTRACTOR PHYSICIANS.

  (a) In General.--The Secretary of Health and Human Services shall 
conduct an evaluation of the current medicare enrollment process for 
medical groups that retain independent contractor physicians with 
particular emphasis on hospital-based physicians, such as emergency 
department staffing groups. In conducting the evaluation, the Secretary 
shall--
          (1) review the increase of individual medicare provider 
        numbers issued and the possible medicare program integrity 
        vulnerabilities of the current process;
          (2) assess how program integrity could be enhanced by the 
        enrollment of groups that retain independent contractor 
        hospital-based physicians; and
          (3) develop suggested procedures for the enrollment of these 
        groups.
  (b) Report.--Not later than 1 year after the date of the enactment of 
this Act, the Secretary shall submit to Congress a report on the 
evaluation conducted under subsection (a).

                       Subtitle C--Other Services

SEC. 221. 3-YEAR MORATORIUM ON SNF PART B CONSOLIDATED BILLING 
                    REQUIREMENTS.

  (a) Moratorium in Application of Consolidated Billing to SNF 
Residents in Non-covered Stays.--Section 1842(b)(6)(E) (42 U.S.C. 
1395u(b)(6)(E)) is amended by inserting ``(on or after October 1, 
2003)'' after ``furnished to an individual''.
  (b) Moratorium in Provider Agreement Provision.--Section 
1866(a)(1)(H)(ii)(I) (42 U.S.C. 1395cc(a)(1)(H)(ii)(I) is amended by 
inserting ``in the case of a resident who is in a stay covered under 
part A, and for services furnished on or after October 1, 2003, in the 
case of a resident who is not in a stay covered under such part'' 
before the comma.
  (c) Moratorium in Requirement for SNF Billing of Part B Services.--
Section 1862(a)(18) (42 U.S.C. 1395y(a)(18)) is amended to read as 
follows:
          ``(18) which are covered skilled nursing facility services 
        described in section 1888(e)(2)(A)(i) and which are furnished 
        to an individual who is a resident--
                  ``(A) of a skilled nursing facility in the case of a 
                resident who is in a stay covered under part A; or
                  ``(B) of a skilled nursing facility or of a part of a 
                facility that includes a skilled nursing facility (as 
                determined under regulations) for services furnished on 
                or after October 1, 2003, in the case of a resident who 
                is not in a stay covered under such part,
        by an entity other than the skilled nursing facility, unless 
        the services are furnished under arrangements (as defined in 
        section 1861(w)(1)) with the entity made by the skilled nursing 
        facility;''.
  (d) Effective Date.--The amendments made by subsections (a), (b) and 
(c) are effective as if included in the enactment of BBA.
  (e) Report.--Not later than October 1, 2002, the Comptroller General 
of the United States shall submit to Congress a report that includes an 
analysis and recommendations on--
          (1) alternatives, if any, to consolidated billing for part B 
        items and services described in section 1842(b)(6) of the 
        Social Security Act (42 U.S.C. 1395u(b)(6)) to ensure 
        accountability by skilled nursing facilities and accuracy in 
        claims submitted for all services and items provided to skilled 
        nursing facility residents under part B of the medicare 
        program;
          (2) the costs expected to be incurred by skilled nursing 
        facilities under such alternative approaches, compared with the 
        costs associated with the implementation of consolidated 
        billing; and
          (3) the costs incurred by the medicare program in 
        implementing such alternative approaches and their effect on 
        utilization review, compared with the costs and effect on 
        utilization review expected with consolidated billing.

SEC. 222. AMBULATORY SURGICAL CENTERS.

  (a) Delay in Implementation of Prospective Payment System.--The 
Secretary of Health and Human Services may not implement a revised 
prospective payment system for services of ambulatory surgical 
facilities under section 1833(i) of the Social Security Act (42 U.S.C. 
1395l(i)) before January 1, 2002.
  (b) Extending Phase-In to 4 Years.--Section 226 of the BBRA is 
amended by striking paragraphs (1) and (2) and inserting the following:
          ``(1) in the first year of its implementation, only a 
        proportion (specified by the Secretary and not to exceed \1/4\) 
        of the payment for such services shall be made in accordance 
        with such system and the remainder shall be made in accordance 
        with current regulations; and
          ``(2) in each of the following 2 years a proportion 
        (specified by the Secretary and not to exceed \1/2\, and \3/4\, 
        respectively) of the payment for such services shall be made 
        under such system and the remainder shall be made in accordance 
        with current regulations.''.
  (c) Deadline for Use of 1999 or Later Cost Surveys.--Section 226 of 
BBRA is amended by adding at the end the following:
``By not later than January 1, 2003, the Secretary shall incorporate 
data from a 1999 Medicare cost survey or a subsequent cost survey for 
purposes of implementing or revising such system.''.

SEC. 223. 1-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS.

  (a) In General.--Section 1833(g)(4) (42 U.S.C. 1395l(g)), as added by 
section 221(a) of BBRA, is amended by striking ``and 2001'' and 
inserting ``, 2001, and 2002''.
  (b) Conforming Amendment To Continue Focused Medical Reviews of 
Claims during Moratorium Period.--Section 221(a)(2) of BBRA is amended 
by striking ``(under the amendment made by paragraph (1)(B))''.

SEC. 224. REVISION OF MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.

  The text of section 4206 of the Balanced Budget Act of 1997 (42 
U.S.C. 1395l note) is amended to read as follows:
  ``(a) Telehealth Services Reimbursed.--
          ``(1) In general.--Not later than April 1, 2001, the 
        Secretary of Health and Human Services shall make payments from 
        the Federal Supplementary Medical Insurance Trust Fund in 
        accordance with the methodology described in subsection (b) for 
        services for which payment may be made under part B of title 
        XVIII of the Social Security Act (42 U.S.C. 1395j et seq.) that 
        are furnished via a telecommunications system by a physician or 
        practitioner to an eligible telehealth beneficiary.
          ``(2) Use of store-and-forward technologies.--For purposes of 
        paragraph (1), in the case of any Federal telemedicine 
        demonstration program in Alaska or Hawaii, the term 
        `telecommunications system' includes store-and-forward 
        technologies that provide for the asynchronous transmission of 
        health care information in single or multimedia formats.
  ``(b) Methodology for Determining Amount of Payments.--
          ``(1) In general.--The Secretary shall make payment under 
        this section as follows:
                  ``(A) Subject to subparagraph (B), with respect to a 
                physician or practitioner located at a distant site 
                that furnishes a service to an eligible medicare 
                beneficiary under subsection (a), an amount equal to 
                the amount that such physician or practitioner would 
                have been paid had the service been furnished without 
                the use of a telecommunications system.
                  ``(B) With respect to an originating site, a facility 
                fee equal to--
                          ``(i) for 2001 (beginning with April 1, 2001) 
                        and 2002, $20; and
                          ``(ii) for a subsequent year, the facility 
                        fee under this subsection for the previous year 
                        increased by the percentage increase in the MEI 
                        (as defined in section 1842(i)(3)) for such 
                        subsequent year.
          ``(2) Application of part b coinsurance and deductible.--Any 
        payment made under this section shall be subject to the 
        coinsurance and deductible requirements under subsections 
        (a)(1) and (b) of section 1833 of the Social Security Act (42 
        U.S.C. 1395l).
          ``(3) Application of nonparticipating physician payment 
        differential and balance billing limits.--The payment 
        differential of section 1848(a)(3) of such Act (42 U.S.C. 
        1395w-4(a)(3)) shall apply to services furnished by non-
        participating physicians. The provisions of section 1848(g) of 
        such Act (42 U.S.C. 1395w-4(g)) and section 1842(b)(18) of such 
        Act (42 U.S.C. 1395u(b)(18)) shall apply. Payment for such 
        service shall be increased annually by the update factor for 
        physicians' services determined under section 1848(d) of such 
        Act (42 U.S.C. 1395w-4(d)).
  ``(c) Telepresenter Not Required.--Nothing in this section shall be 
construed as requiring an eligible telehealth beneficiary to be 
presented by a physician or practitioner at the originating site for 
the furnishing of a service via a telecommunications system, unless it 
is medically necessary as determined by the physician or practitioner 
at the distant site.
  ``(d) Coverage of Additional Services.--
          ``(1) Study and report on additional services.--
                  ``(A) Study.--The Secretary of Health and Human 
                Services shall conduct a study to identify services in 
                addition to those described in subsection (a)(1) that 
                are appropriate for payment under this section.
                  ``(B) Report.--Not later than 2 years after the date 
                of enactment of this Act, the Secretary shall submit to 
                Congress a report on the study conducted under 
                subparagraph (A) together with such recommendations for 
                legislation that the Secretary determines are 
                appropriate.
          ``(2) In general.--The Secretary shall provide for payment 
        under this section for services identified in paragraph (1).
  ``(e) Construction Relating to Home Health Services.--
          ``(1) In general.--Nothing in this section or in section 1895 
        of the Social Security Act (42 U.S.C. 1395fff) shall be 
        construed as preventing a home health agency furnishing a home 
        health unit of service for which payment is made under the 
        prospective payment system established in such section from 
        furnishing the service via a telecommunications system.
          ``(2) Limitation.--The Secretary shall not consider a home 
        health service provided in the manner described in paragraph 
        (1) to be a home health visit for purposes of--
                  ``(A) determining the amount of payment to be made 
                under such prospective payment system; or
                  ``(B) any requirement relating to the certification 
                of a physician required under section 1814(a)(2)(C) or 
                section 1835(a)(2)(A) of such Act (42 U.S.C. 
                1395f(a)(2)(C), 1395n(a)(2)(A)).
          ``(3) Construction.--Nothing in this section shall be 
        construed as waiving the requirement for a physician 
        certification under section 1814(a)(2)(C) or section 
        1835(a)(2)(A) of such Act (42 U.S.C. 1395f(a)(2)(C), 
        1395n(a)(2)(A)) for the payment for home health services, 
        whether or not furnished via a telecommunications system.
  ``(f) Coverage of Items and Services.--
          ``(1) In general.--Subject to paragraph (2), payment for 
        items and services provided pursuant to subsection (a) shall 
        include payment for professional consultations, office visits, 
        office psychiatry services, including any service identified as 
        of July 1, 2000, by HCPCS codes 99241-99275, 99201-99215, 
        90804-90809, and 90862, and any additional item or service 
        specified by the Secretary.
          ``(2) Yearly update.--The Secretary shall provide a process 
        that provides, on at least an annual basis, for the review and 
        revision of services (and HCPCS codes) to those specified in 
        paragraph (1) for authorized payment under subsection (a).
  ``(g) Definitions.--In this section:
          ``(1) Eligible telehealth beneficiary.--The term `eligible 
        telehealth beneficiary' means an individual enrolled under part 
        B of title XVIII of the Social Security Act (42 U.S.C. 1395j et 
        seq.) that receives a service originating--
                  ``(A) in an area that is designated as a health 
                professional shortage area under section 332(a)(1)(A) 
                of the Public Health Service Act (42 U.S.C. 
                254e(a)(1)(A));
                  ``(B) in a county that is not included in a 
                Metropolitan Statistical Area;
                  ``(C) effective January 1, 2002, in an inner-city 
                area that is medically underserved (as defined in 
                section 330(b)(3) of the Public Health Service Act (42 
                U.S.C. 254b(b)(3))); or
                  ``(D) in a service which originated in a facility 
                which participates in a Federal telemedicine 
                demonstration project.
          ``(2) Physician.--The term `physician' has the meaning given 
        that term in section 1861(r) of the Social Security Act (42 
        U.S.C. 1395x(r))
          ``(3) Practitioner.--The term `practitioner' means a 
        practitioner described in section 1842(b)(18)(C) of the Social 
        Security Act (42 U.S.C. 1395u(b)(18)(C)).
          ``(4) Distant site.--The term `distant site' means the site 
        at which the physician or practitioner is located at the time 
        the service is provided via a telecommunications system.
          ``(5) Originating site.--
                  ``(A) In general.--The term `originating site' means 
                any site described in subparagraph (B) at which the 
                eligible telehealth beneficiary is located at the time 
                the service is furnished via a telecommunications 
                system.
                  ``(B) Sites described.--The sites described in this 
                subparagraph are as follows:
                          ``(i) On or after April 1, 2001--
                                  ``(I) the office of a physician or a 
                                practitioner,
                                  ``(II) a critical access hospital (as 
                                defined in section 1861(mm)(1) of the 
                                Social Security Act (42 U.S.C. 
                                1395x(mm)(1))),
                                  ``(III) a rural health clinic (as 
                                defined in section 1861(aa)(2) of such 
                                Act (42 U.S.C. 1395x(aa)(2))), and
                                  ``(IV) a Federally qualified health 
                                center (as defined in section 
                                1861(aa)(4) of such Act (42 U.S.C. 
                                1395x(aa)(4))).
                          ``(ii) On or after January 1, 2002--
                                  ``(I) a hospital (as defined in 
                                section 1861(e) of such Act (42 U.S.C. 
                                1395x(e))),
                                  ``(II) a skilled nursing facility (as 
                                defined in section 1861(j) of such Act 
                                (42 U.S.C. 1395x(j))),
                                  ``(III) a comprehensive outpatient 
                                rehabilitation facility (as defined in 
                                section 1861(cc)(2) of such Act (42 
                                U.S.C. 1395x(cc)(2))),
                                  ``(IV) a renal dialysis facility 
                                (described in section 1881(b)(1) of 
                                such Act (42 U.S.C. 1395rr(b)(1))),
                                  ``(V) an ambulatory surgical center 
                                (described in section 1833(i)(1)(A) of 
                                such Act (42 U.S.C. 1395l(i)(1)(A))),
                                  ``(VI) a hospital or skilled nursing 
                                facility of the Indian Health Service 
                                (under section 1880 of such Act (42 
                                U.S.C. 1395qq)), and
                                  ``(VII) a community mental health 
                                center (as defined in section 
                                1861(ff)(3)(B) of such Act (42 U.S.C. 
                                1395x(ff)(3)(B))).
          ``(6) Federal supplementary medical insurance trust fund.--
        The term `Federal Supplementary Medical Insurance Trust Fund' 
        means the trust fund established under section 1841 of the 
        Social Security Act (42 U.S.C. 1395t).''.

SEC. 225. PAYMENT FOR AMBULANCE SERVICES.

  (a) Eliminating BBA Reduction.--Section 1834(l)(3) (42 U.S.C. 
1395m(l)(3)) is amended, in subparagraphs (A) and (B), by striking 
``reduced in the case of 2001 and 2002 by 1.0 percentage points'' both 
places it appears.
  (b) Mileage Payments.--Section 1834(l)(2)(E) (42 U.S.C. 
1395m(l)(2)(E)) is amended by inserting before the period at the end 
the following: ``, except that such phase-in shall provide for full 
payment of any national mileage rate beginning with the effective date 
of the fee schedule for ambulance services provided by suppliers in any 
State where payment for such services did not include a separate amount 
for all mileage prior to the implementation of the fee schedule''.
  (c) GAO Study on Costs of Ambulance Services.--
          (1) Study.--The Comptroller General of the United States 
        shall conduct a study of the costs of providing ambulance 
        services covered under the medicare program under title XVIII 
        of the Social Security Act across the range of service levels 
        for which such services are provided.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall submit a 
        report to the Secretary of Health and Human Services and 
        Congress on the study conducted under paragraph (1). Such 
        report shall include recommendations for any changes in 
        methodology or payment levels necessary to fairly compensate 
        suppliers of ambulance services and to ensure the access of 
        medicare beneficiaries to such services under the medicare 
        program.

SEC. 226. CONTRAST ENHANCED DIAGNOSTIC PROCEDURES UNDER HOSPITAL 
                    PROSPECTIVE PAYMENT SYSTEM.

  (a) Separate Classification.--Section 1833(t)(2) (42 U.S.C. 
1395l(t)(2)) is amended--
          (1) by striking ``and'' at the end of subparagraph (E);
          (2) by striking the period at the end of subparagraph (F) and 
        inserting ``; and''; and
          (3) by inserting after subparagraph (F) the following new 
        subparagraph:
                  ``(G) the Secretary shall create additional groups of 
                covered OPD services that classify separately those 
                procedures that utilize contrast media from those that 
                do not.''.
  (b) Conforming Amendment.--Section 1861(t)(1) (42 U.S.C. 1395x(t)(1)) 
is amended by inserting ``(including contrast agents)'' after ``only 
such drugs''.
  (c) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of BBA.

SEC. 227. 10-YEAR PHASED IN INCREASE FROM 55 PERCENT TO 80 PERCENT IN 
                    THE PROPORTION OF HOSPITAL BAD DEBT RECOGNIZED.

  Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amended--
          (1) by striking ``and'' at the end of clause (ii);
          (2) in clause (iii) by striking ``a subsequent fiscal year'' 
        and inserting ``fiscal year 2000'' and by striking the period 
        at the end and inserting a semicolon; and
          (3) by adding at the end the following new clauses:
          ``(iv) for cost reporting periods beginning during fiscal 
        year 2001 and each subsequent fiscal year (before fiscal year 
        2011), by the percent specified in clause (iii) or this clause 
        for the preceding fiscal year reduced by 2.5 percentage points, 
        of such amount otherwise allowable; and
          ``(v) for cost reporting periods beginning during fiscal year 
        2011 or a subsequent fiscal year, by 20 percent of such amount 
        otherwise allowable.''.

SEC. 228. STATE ACCREDITATION OF DIABETES SELF-MANAGEMENT TRAINING 
                    PROGRAMS.

  Section 1861(qq)(2) (42 U.S.C. 1395x(qq)(2)) is amended--
          (1) in the matter preceding subparagraph (A) by striking 
        ``paragraph (1)--'' and inserting ``paragraph (1):'';
          (2) in subparagraph (A)--
                  (A) by striking ``a `certified provider' '' and 
                inserting ``A `certified provider' ''; and
                  (B) by striking ``; and'' and inserting a period; and
          (3) in subparagraph (B)--
                  (A) by striking ``a physician, or such other 
                individual'' and inserting ``(i) A physician, or such 
                other individual'';
                  (B) by inserting ``(I)'' before ``meets applicable 
                standards'';
                  (C) by inserting ``(II)'' before ``is recognized'';
                  (D) by inserting ``, or by a program described in 
                clause (ii),'' after ``recognized by an organization 
                that represents individuals (including individuals 
                under this title) with diabetes''; and
                  (E) by adding at the end the following:
          ``(ii) Notwithstanding any reference to `a national 
        accreditation body' in section 1865(b), for purposes of clause 
        (i), a program described in this clause is a program operated 
        by a State for the purposes of accrediting diabetes self-
        management training programs, if the Secretary determines that 
        such State program has established quality standards that meet 
        or exceed the standards established by the Secretary under 
        clause (i) or the standards originally established by the 
        National Diabetes Advisory Board and subsequently revised as 
        described in clause (i).''.

SEC. 229. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

  (a) In General.--The last sentence of section 1881(b)(7) (42 U.S.C. 
1395rr(b)(7)) is amended by striking ``2001, by 1.2 percent'' and 
inserting ``2001, by 2.4 percent''.
  (b) Report on Literature Review.--The Secretary of Health and Human 
Services shall conduct a literature review of studies on the impact of 
oral self-administered prescription non-calcium phosphate binding drugs 
in reducing the incidence of hospitalization under the medicare program 
for medicare beneficiaries with end stage renal disease. Not later than 
6 months after the date of the enactment of this Act, the Secretary 
shall transmit to the Committees on Commerce and Ways and Means of the 
House of Representatives and the Committee on Finance of the Senate a 
summary of the literature review conducted under this subsection.

              TITLE III--MEDICARE PART A AND B PROVISIONS

SEC. 301. HOME HEALTH SERVICES.

  (a) 1-Year Delay in 15 Percent Reduction in Payment Rates Under the 
Medicare Prospective Payment System for Home Health Services.--Section 
1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)) is amended--
          (1) by redesignating subparagraph (II) as subparagraph (III);
          (2) in subparagraph (III), as redesignated, by striking 
        ``described in subclause (I)'' and inserting ``described in 
        subclause (II)''; and
          (3) by inserting after subclause (I) the following new 
        subclause:
                                  ``(II) For the 12-month period 
                                beginning after the period described in 
                                subclause (I), such amount (or amounts) 
                                shall be equal to the amount (or 
                                amounts) determined under subclause 
                                (I), updated under subparagraph (B).''.
  (b) Treatment of Branch Offices.--
          (1) In general.--Notwithstanding any other provision of law, 
        in determining for purposes of title XVIII of the Social 
        Security Act whether an office of a home health agency 
        constitutes a branch office or a separate home health agency, 
        neither the time nor distance between a parent office of the 
        home health agency and a branch office shall be the sole 
        determinant of a home health agency's branch office status.
          (2) Consideration of forms of technology in definition of 
        supervision.--The Secretary of Health and Human Services shall 
        include forms of technology in determining what constitutes 
        ``supervision'' for purposes of determining a home heath 
        agency's branch office status under paragraph (1).
  (c) Clarification of the Definition of Homebound.--
          (1) In general.--The last sentence of sections 1814(a) and 
        1835(a) (42 U.S.C. 1395f(a); 1395n(a)) are each amended by 
        striking the period and inserting ``, including participating 
        in an adult day care program licensed or certified by a State, 
        or accredited, to furnish adult day care services in the State 
        for the purposes of therapeutic treatment for Alzheimer's 
        disease or a related dementia.''.
          (2) Effective date.--The amendments made by paragraph (1) 
        apply to items and services provided on or after October 1, 
        2001.
  (d) 1-Year Delay in Report.--Section 302(c) of the BBRA is amended by 
striking ``six months'' and inserting ``18 months''.

SEC. 302. ADVISORY OPINIONS.

  (a) Making Permanent Existing Advisory Opinion Authority.--Section 
1128D(b)(6) (42 U.S.C. 1320a-7d(b)(6)) is amended by striking ``and 
before the date which is 4 years after such date of enactment''.
  (b) Nondisclosure of Requests and Supporting Materials.--
          (1) In general.--Section 1128D(b) (42 U.S.C. 1320a-7d(b)) is 
        amended by adding at the end the following new paragraph:
          ``(7) Nondisclosure of requests and supporting materials.--A 
        request for an advisory opinion under this subsection and any 
        supporting written materials submitted by the party requesting 
        the opinion shall not be subject to disclosure under section 
        552 of title 5, United States Code.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        applies to requests made before, on, or after the date of the 
        enactment of this Act.

SEC. 303. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR LABOR ---COSTS FOR 
                    OTHER PPS SYSTEMS.

  (a) Hospital Geographic Reclassification for Labor Costs Applicable 
to Other PPS Systems.--
          (1) In general.--Notwithstanding the geographic adjustment 
        factor otherwise established under title XVIII of the Social 
        Security Act for items and services paid under a prospective 
        payment system described in paragraph (2), in the case of a 
        hospital with an application that has been approved by the 
        Medicare Geographic Classification Review Board under section 
        1886(d)(10)(C) of such Act (42 U.S.C. 1395ww(d)(10)(C)) to 
        change the hospital's geographic classification for a fiscal 
        year for purposes of the factor used to adjust the prospective 
        payment rate for area differences in hospital wage levels that 
        applies to such hospital under section 1886(d)(3)(E) of such 
        Act, the Secretary shall substitute such change in the 
        hospital's geographic adjustment that would otherwise be 
        applied to an entity or department of the hospital that is 
        provider based to account for variations in costs which are 
        attributable to wages and wage-related costs for items and 
        services paid under the prospective payment systems described 
        in paragraph (2).
          (2) Prospective payment systems covered.--For -purposes of 
        this section, items and services furnished under the following 
        prospective payment systems are covered:
                  (A) SNF prospective payment system.--The prospective 
                payment system for covered skilled nursing facility 
                services under section 1888(e) of the Social Security 
                Act (42 U.S.C. 1395yy(e)).
                  (B) Home health services prospective payment 
                system.--The prospective payment system for home health 
                services under section 1895(b) of such Act (42 U.S.C. 
                1395fff(b)).
                  (C) Inpatient rehabilitation hospital services.--The 
                prospective payment system for inpatient rehabilitation 
                services under section 1888(j) of such Act (42 U.S.C. 
                1395ww(j)).
                  (D) Inpatient long-term care hospital services.--The 
                prospective payment system for inpatient hospital 
                services of long-term care hospitals under section 123 
                of the BBRA.
                  (E) Inpatient psychiatric hospital services.--The 
                prospective payment system for inpatient hospital 
                services of psychiatric hospitals and units under 
                section 124 of the BBRA.
  (b) Effective Date.--Subsection (a) applies to fiscal years beginning 
with fiscal year 2002.

SEC. 304. RECLASSIFICATION OF A METROPOLITAN STATISTICAL AREA FOR 
                    PURPOSES OF REIMBURSEMENT UNDER THE MEDICARE 
                    PROGRAM.

  Notwithstanding any other provision of law, effective for discharges 
occurring and services furnished during fiscal year 2001 and subsequent 
fiscal years, for purposes of making payments under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.) to hospitals in the 
Mansfield, Ohio Metropolitan Statistical Area, such Metropolitan 
Statistical Area is deemed to be located in the Cleveland-Loraine-
Elyria, Ohio Metropolitan Statistical Area. The reclassification made 
under the previous sentence shall be treated as a decision of the 
Medicare Geographic Classification Review Board under section 
1886(d)(10) of such Act (42 U.S.C. 1395ww(d)(10)).

SEC. 305. MAKING THE MEDICARE DEPENDENT, SMALL RURAL HOSPITAL PROGRAM 
                    PERMANENT.

  (a) Payment Methodology.--Section 1886(d)(5)(G) Act (42 U.S.C. 
1395ww(d)(5)(G)) is amended--
          (1) in clause (i), by striking ``and before October 1, 
        2006,''; and
          (2) in clause (ii)(II), by striking ``and before October 1, 
        2006,''.
  (b) Conforming Amendments.--
          (1) Target amount.--Section 1886(b)(3)(D) (42U.S.C. 
        1395ww(b)(3)(D)) is amended--
                  (A) in the matter preceding clause (i), by striking 
                ``and before October 1, 2006,''; and
                  (B) in clause (iv), by striking ``through fiscal year 
                2005,'' and inserting ``or any subsequent fiscal 
                year,''.
          (2) Permitting hospitals to decline reclassification.--
        Section 13501(e)(2) of the Omnibus Budget Reconciliation Act of 
        1993 (42 U.S.C. 1395ww note) is amended by striking ``or fiscal 
        year 2000 through fiscal year 2005'' and inserting ``fiscal 
        year 2000, or any subsequent fiscal year''.

SEC. 306. OPTION TO BASE ELIGIBILITY ON DISCHARGES DURING ANY OF THE 3 
                    MOST RECENT AUDITED COST REPORTING PERIODS.

  (a) Option To Base Eligibility on Discharges During Any of the 3 Most 
Recent Audited Cost Reporting Periods.--Section 1886(d)(5)(G)(iv)(IV) 
(42 U.S.C. 1395ww(d)(5)(G)(iv)(IV)) is amended by inserting ``, or any 
of the 3 most recent audited cost reporting periods,'' after ``1987''.
  (b) Effective Date.--The amendments made by this section shall apply 
with respect to cost reporting periods beginning on or after the date 
of enactment of this Act.

SEC. 307. IDENTIFICATION AND REDUCTION OF MEDICAL ERRORS BY PEER REVIEW 
                    ORGANIZATIONS.

  (a) In General.--Section 1154(a) (42 U.S.C. 1320c-3(a)) is amended by 
inserting after paragraph (11) the following new paragraph:
          ``(12) The organization shall assist providers, 
        practitioners, and Medicare+Choice organizations in identifying 
        and developing strategies to reduce the incidence of actual and 
        potential medical errors and problems related to patient safety 
        affecting individuals entitled to benefits under title XVIII. 
        For the purposes of this part and title XVIII, the functions 
        described in this paragraph shall be treated as a review 
        function.''.
  (b) Effective Date.--The amendments made by this section take effect 
on January 1, 2001.

SEC. 308. GAO REPORT ON IMPACT OF THE EMERGENCY MEDICAL TREATMENT AND 
                    ACTIVE LABOR ACT (EMTALA) ON HOSPITAL EMERGENCY 
                    DEPARTMENTS.

  (a) Congressional Findings.--The Congress makes the following 
findings:
          (1) The Emergency Medical Treatment and Active Labor Act 
        (EMTALA) requires that hospitals and the emergency physicians 
        as well as doctors on call at hospital emergency departments 
        screen and stabilize patients who go to emergency departments 
        for treatment.
          (2) Physicians who refuse to treat emergency department 
        patients or fail to respond to hospital emergency department 
        requests when on call face significant fines and are exposed to 
        liability under EMTALA.
          (3) The Balanced Budget Act of 1997 made many changes in 
        hospital and physician reimbursement that appear to have had 
        unintended consequences that have hampered the ability of 
        hospitals, emergency physicians, and physicians covering 
        emergency department call to comply with the requirements of 
        EMTALA.
          (4) Estimates indicate that EMTALA costs emergency department 
        physicians $426,000,000 per year and leads to at least 
        $10,000,000,000 more in uncompensated inpatient services.
          (5) Emergency departments, emergency physicians, and 
        physicians covering emergency department call have become the 
        de facto providers of indigent health care in America.
          (6) 27 percent of the over 4,300,000 people living in Arizona 
        are uninsured.
          (7) Many physicians covering emergency department call in 
        Phoenix, Arizona, are resigning from the medical staff at 
        hospitals due to burdensome on-call requirements and 
        uncompensated care.
          (8) Significant concern exists as to whether downtown Phoenix 
        hospitals can keep their emergency departments open.
          (9) The cumulative effect of potential hospital closings and 
        staff resignations threatens the quality of health care in 
        Phoenix, Arizona.
  (b) Report.--The Comptroller General of the United States shall 
submit a report to the Subcommittee on Health and Environment of the 
Committee on Commerce of the House of Representatives by May 1, 2001, 
on the effect of the Emergency Medical Treatment and Active Labor Act 
on hospitals, emergency physicians, and physicians covering emergency 
department call throughout the United States, focusing on those in 
Arizona (including Phoenix) and California (including Los Angeles).
  (c) Report Requirements.--The report should evaluate--
          (1) the extent to which hospitals, emergency physicians, and 
        physicians covering emergency department call provide 
        uncompensated services in relation to the requirements of 
        EMTALA;
          (2) the extent to which the regulatory requirements and 
        enforcement of EMTALA have expanded beyond the legislation's 
        original intent;
          (3) estimates for the total dollar amount of EMTALA-related 
        care uncompensated costs to emergency physicians, physicians 
        covering emergency department call, hospital emergency 
        departments;
          (4) the extent to which different portions of the United 
        States may be experiencing different levels of uncompensated 
        EMTALA-related care;
          (5) the extent to which EMTALA would be classified as an 
        unfunded mandate if it were enacted today;
          (6) the extent to which States have programs to provide 
        financial support for such uncompensated care;
          (7) possible sources of funds, including medicare hospital 
        bad debt accounts, that are available to hospitals to assist 
        with the cost of such uncompensated care; and
          (8) the financial strain that illegal immigration 
        populations, the uninsured, and the underinsured place on 
        hospital emergency departments, emergency physicians, and 
        physicians covering emergency department call.
  (d) Definition.--In this section, the terms ``Emergency Medical 
Treatment and Active Labor Act'' and ``EMTALA'' mean section 1867 of 
the Social Security Act (42 U.S.C. 1395dd).

    TITLE IV--MEDICARE+CHOICE PROGRAM STABILIZATION AND IMPROVEMENTS

                      Subtitle A--Payment Reforms

SEC. 401. INCREASING MINIMUM PAYMENT AMOUNT.

  Section 1853(c)(1)(B)(ii) (42 U.S.C. 1395w-23(c)(1)(B)(ii)) is 
amended--
          (1) by striking ``(ii) For a succeeding year'' and inserting 
        ``(ii)(I) Subject to subclause (II), for a succeeding year''; 
        and
          (2) by adding at the end the following new subclause:
                          ``(II) For 2001 for any area in a 
                        Metropolitan Statistical Area with a population 
                        of more than 250,000, $525 (and for any other 
                        area, $475).''.

SEC. 402. 3 PERCENT MINIMUM PERCENTAGE UPDATE FOR 2001.

  Section 1853(c)(1)(C)(ii) (42 U.S.C. 1395w-23(c)(1)(C)(ii)) is 
amended by inserting ``(or 103 percent in the case of 2001)'' after 
``102 percent''.

SEC. 403. 10-YEAR PHASE IN OF RISK ADJUSTMENT BASED ON DATA FROM ALL 
                    SETTINGS.

  Section 1853(a)(3)(C)(ii) (42 U.S.C. 1395w-23(c)(1)(C)(ii)) is 
amended--
          (1) by striking ``and'' at the end of subclause (I);
          (2) by striking the period at the end of subclause (II) and 
        inserting a semicolon; and
          (3) by adding after and below subclause (II) the following:
                        ``and, beginning in 2004, insofar as such risk 
                        adjustment is based on data from substantially 
                        all settings, the methodology shall be phased 
                        in equal increments over a 10-year period, 
                        beginning with 2004 or (if later) the first 
                        year in which such data are used.''.

SEC. 404. TRANSITION TO REVISED MEDICARE+CHOICE PAYMENT RATES.

  (a) Announcement of Revised Medicare+Choice Payment Rates.--Within 2 
weeks after the date of the enactment of this Act, the Secretary of 
Health and Human Services shall determine, and shall announce (in a 
manner intended to provide notice to interested parties) 
Medicare+Choice capitation rates under section 1853 of the Social 
Security Act (42 U.S.C. 1395w-23) for 2001, revised in accordance with 
the provisions of this Act.
  (b) Reentry into Program Permitted for Medicare+Choice Programs in 
2000.--A Medicare+Choice organization that provided notice to the 
Secretary of Health and Human Services as of July 3, 2000, that it was 
terminating its contract under part C of title XVIII of the Social 
Security Act or was reducing the service area of a Medicare+Choice plan 
offered under such part shall be permitted to continue participation 
under such part, or to maintain the service area of such plan, for 2001 
if it provides the Secretary with the information described in section 
1854(a)(1) of the Social Security Act (42 U.S.C. 1395w-24(a)(1)) within 
four weeks after the date of the enactment of this Act.
  (c) Revised Submission of Proposed Premiums and Related 
Information.--If--
          (1) a Medicare+Choice organization provided notice to the 
        Secretary of Health and Human Services as of July 3, 2000, that 
        it was renewing its contract under part C of title XVIII of the 
        Social Security Act for all or part of the service area or 
        areas served under its current contract, and
          (2) any part of the service area or areas addressed in such 
        notice includes a county for which the Medicare+Choice 
        capitation rate under section 1853(c) of such Act (42 U.S.C. 
        1395w-23(c)) for 2001, as determined under subsection (a), is 
        higher than the rate previously determined for such year,
such organization shall revise its submission of the information 
described in section 1854(a)(1) of the Social Security Act (42 U.S.C. 
1395w-24(a)(1)), and shall submit such revised information to the 
Secretary, within four weeks after the date of the enactment of this 
Act.

                   Subtitle B--Administrative Reforms

SEC. 411. EFFECTIVENESS OF ELECTIONS AND CHANGES OF ELECTIONS.

  (a) In General.--Section 1851(f)(2) (42 U.S.C. 1395w-21(f)(2)) is 
amended by striking ``made,'' and all that follows and inserting 
``made.''.
  (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to years beginning on or after on January 1, 2001.

SEC. 412. MEDICARE+CHOICE PROGRAM COMPATIBILITY WITH EMPLOYER OR UNION 
                    GROUP HEALTH PLANS.

  (a) In General.--Section 1857 (42 U.S.C. 1395w-27) is amended by 
adding at the end the following new subsection:
  ``(i) M+C Program Compatibility With Employer or Union Group Health 
Plans.--To facilitate the offering of Medicare+Choice plans under 
contracts between Medicare+Choice organizations and employers, labor 
organizations, or the trustees of a fund established by 1 or more 
employers or labor organizations (or combination thereof) to furnish 
benefits to the entity's employees, former employees (or combination 
thereof) or members or former members (or combination thereof) of the 
labor organizations, the Secretary may waive or modify requirements 
that hinder the design of, the offering of, or the enrollment in such 
Medicare+Choice plans.''.
  (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to years beginning with 2001.

SEC. 413. UNIFORM PREMIUM AND BENEFITS.

  (a) In General.--Subsections (c) and (f)(1)(D) of section 1854 (42 
U.S.C. 1395w-24) are each amended by inserting before the period at the 
end the following: ``, except across counties as approved by the 
Secretary''.
  (b) Effective Date.--The amendments made by subsection (a) apply with 
respect to years beginning on or after January 1, 2001.

                           TITLE V--MEDICAID

SEC. 501. DSH PAYMENTS.

  (a) Continuation of Medicaid DSH Allotments at Fiscal Year 2000 
Levels for Fiscal Year 2001.--Section 1923(f) (42 U.S.C. 1396r-4(f)), 
as amended by section 601 of the Medicare, Medicaid, and SCHIP Balanced 
Budget Refinement Act of 1999 (as enacted into law by section 
1000(a)(6) of Public Law 106-113), is amended--
          (1) in paragraph (2)--
                  (A) by striking ``2002'' in the heading and inserting 
                ``2000'';
                  (B) in the matter preceding the table, by striking 
                ``2002'' and inserting ``2000''; and
                  (C) in the table in such paragraph, by striking the 
                columns labeled ``FY 01'' and ``FY 02'' relating to 
                fiscal years 2001 and 2002; and
          (2) in paragraph (3)--
                  (A) by striking ``2003'' in the heading and inserting 
                ``2001''; and
                  (B) by striking ``2003'' and inserting ``2001''.
  (b) Special Rule for Medicaid DSH Allotment for Extremely Low DSH 
States.--Section 1923(f)(3) (42 U.S.C. 1396r-4(f)(3)) is amended--
          (1) in subparagraph (A), by striking ``subparagraph (B)'' and 
        inserting ``subparagraphs (B) and (C)''; and
          (2) by adding at the end the following new subparagraph:
                  ``(C) Special rule for extremely low dsh states.--In 
                the case of a State in which the total expenditures 
                under the State plan (including Federal and State 
                shares) for disproportionate share hospital adjustments 
                under this section for fiscal year 1999, as reported to 
                the Administrator of the Health Care Financing 
                Administration as of August 31, 2000, is greater than 0 
                but less than 1 percent of the State's total amount of 
                expenditures under the State plan for medical 
                assistance during the fiscal year, the DSH allotment 
                for fiscal year 2001 shall be increased to 1 percent of 
                the State's total amount of expenditures under such 
                plan for such assistance during such fiscal year. In 
                subsequent fiscal years, such increased allotment is 
                subject to an increase for inflation as provided in 
                subparagraph (A).''.
  (c) District of Columbia.--Effective beginning with fiscal year 2001, 
the item in the table in section 1923(f) (42 U.S.C. 1396r-4(f)) 
relating to District of Columbia for FY 2000, is amended by striking 
``32'' and inserting ``49''.
  (d) Contingent Allotment for Tennessee.--Section 1923(f) (42 U.S.C. 
1396r-4(f)) is amended--
          (1) in paragraph (3)(A), by striking ``or this paragraph'' 
        and inserting ``, this paragraph, or paragraph (4)''; and
          (2) by adding at the end the following new paragraph:
          ``(4) Contingent allotment adjustment for tennessee.--If the 
        State-wide waiver approved under section 1115 for the State of 
        Tennessee with respect to requirements under this title as in 
        effect on the date of the enactment of this subsection is 
        revoked or terminated, the DSH allotment for Tennessee for 
        fiscal year 2001 is deemed to be equal to $286,442,437.''.
  (e) Assuring Identification of Medicaid Managed Care Patients.--
          (1) In general.--Section 1932 (42 U.S.C. 1396u-2) is amended 
        by adding at the end the following:
  ``(g) Identification of Patients for Purposes of Making DSH 
Payments.--Each contract with a managed care entity under section 
1903(m) or under section 1905(t)(3) shall require the entity either--
          ``(1) to report to the State information necessary to 
        determine the hospital services provided under the contract 
        (and the identity of hospitals providing such services) for 
        purposes of applying sections 1886(d)(5)(F) and 1923; or
          ``(2) to include a sponsorship code in the identification 
        card issued to individuals covered under this title in order 
        that a hospital may identify a patient as being entitled to 
        benefits under this title.''.
          (2) Clarification of counting managed care medicaid 
        patients.--Section 1923 (42 U.S.C. 1396r-4) is amended--
                  (A) in subsection (a)(2)(D), by inserting after ``the 
                proportion of low-income and medicaid patients'' the 
                following: ``(including such patients who receive 
                benefits through a managed care entity)'';
                  (B) in subsection (b)(2), by inserting after ``a 
                State plan approved under this title in a period'' the 
                following: ``(regardless of whether they receive 
                benefits on a fee-for-service basis or through a 
                managed care entity)''; and
                  (C) in subsection (b)(3)(A)(i), by inserting after 
                ``under a State plan under this title'' the following: 
                ``(regardless of whether the services were furnished on 
                a fee-for-service basis or through a managed care 
                entity)''.
          (2) Effective date.--The amendments made by paragraph (1) 
        apply to payments made for periods on or after January 1, 2001.

SEC. 502. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH 
                    CENTERS AND RURAL HEALTH CLINICS.

  (a) In General.--Section 1902(a) (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) provide 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 (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 2001 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. 
        The payment rate under this subsection shall not vary based 
        upon the site services are provided in the case of the same 
        center or clinic entity.
          ``(2) Fiscal year 2001.--Subject to paragraph (4), for 
        services furnished during fiscal year 2001, 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 average of the costs of the center or clinic of 
        furnishing such services during fiscal years 1999 and 2000 
        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 or decrease in the 
        scope of such services furnished by the center or clinic during 
        fiscal year 2001.
          ``(3) Fiscal year 2002 and succeeding fiscal years.--Subject 
        to paragraph (4), for services furnished during fiscal year 
        2002 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 or 
                decrease 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 2000, 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 based on the rates established under this 
        subsection for the fiscal year for other such centers or 
        clinics located in the same or adjacent area with a similar 
        case load, service package, and case mix or, in the absence of 
        such a center or clinic, in accordance with the regulations and 
        methodology referred to in paragraph (2) or based on such other 
        tests of reasonableness as the Secretary may specify. 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) (42 U.S.C. 1396n(b)) is amended by 
        striking ``1902(a)(13)(C)'' and inserting ``1902(a)(15), 
        1902(aa),''.
  (d) GAO Study of Future Rebasing.--The Comptroller General of the 
United States shall provide for a study on the need for, and how to, 
rebase or refine costs for making payment under the medicaid program 
for services provided by Federally-qualified health centers and rural 
health clinics (as provided under the amendments made by this section). 
The Comptroller General shall provide for submittal of a report on such 
study to the Congress by not later than 4 years after the date of the 
enactment of this Act.
  (e) Effective Date.--The amendments made by this section take effect 
on October 1, 2000, and apply to services furnished on or after such 
date.

SEC. 503. OPTIONAL COVERAGE OF LEGAL IMMIGRANTS UNDER THE MEDICAID 
                    PROGRAM.

  (a) In General.--Section 1903(v) (42 U.S.C. 1396b(v)) is amended--
          (1) in paragraph (1), by striking ``paragraph (2)'' and 
        inserting ``paragraphs (2) and (4)''; and
          (2) by adding at the end the following new paragraph:
  ``(4)(A) A State may elect (in a plan amendment under this title) to 
provide medical assistance under this title, notwithstanding sections 
401(a), 402(b), 403, and 421 of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, for aliens who are lawfully 
residing in the United States (including battered aliens described in 
section 431(c) of such Act) and who are otherwise eligible for such 
assistance, within either or both of the following eligibility 
categories, but only if they have lawfully resided in the United States 
for 2 years:
          ``(i) Pregnant women.--Women during pregnancy (and during the 
        60-day period beginning on the last day of the pregnancy).
          ``(ii) Children.--Children (as defined under such plan), 
        including optional targeted low-income children described in 
        section 1905(u)(2)(B).
  ``(B) In the case of a State that has elected to provide medical 
assistance to a category of aliens under subparagraph (A), no debt 
shall accrue under an affidavit of support against any sponsor of such 
an alien who has lawfully resided in the United State for 2 years on 
the basis of provision of assistance to such category.''.
  (b) Effective Date.--The amendments made by subsection (a) take 
effect on October 1, 2000, and apply to medical assistance and child 
health assistance furnished on or after such date.

SEC. 504. ADDITIONAL ENTITIES QUALIFIED TO DETERMINE MEDICAID 
                    PRESUMPTIVE ELIGIBILITY FOR LOW-INCOME CHILDREN.

  (a) In General.--Section 1920A(b)(3)(A)(i) (42 U.S.C. 1396r-
1a(b)(3)(A)(i)) is amended--
          (1) by striking ``or (II)'' and inserting ``, (II)''; and
          (2) by inserting ``eligibility of a child for medical 
        assistance under the State plan under this title, or 
        eligibility of a child for child health assistance under the 
        program funded under title XXI, (III) is an elementary school 
        or secondary school, as such terms are defined in section 14101 
        of the Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 8801), an elementary or secondary school operated or 
        supported by the Bureau of Indian Affairs, a State or tribal 
        child support enforcement agency, a child care resource and 
        referral agency, an organization that is providing emergency 
        food and shelter under a grant under the Stewart B. McKinney 
        Homeless Assistance Act, or a State or tribal office or entity 
        involved in enrollment in the program under this title, under 
        part A of title IV, under title XXI, or that determines 
        eligibility for any assistance or benefits provided under any 
        program of public or assisted housing that receives Federal 
        funds, including the program under section 8 or any other 
        section of the United States Housing Act of 1937 (42 U.S.C. 
        1437 et seq.) or under the Native American Housing Assistance 
        and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.), or 
        (IV) any other entity the State so deems, as approved by the 
        Secretary'' before the semicolon.
  (b) Technical Amendments.--Section 1920A (42 U.S.C. 1396r-1a) is 
amended--
          (1) in subsection (b)(3)(A)(i), by striking ``42 U.S.C. 
        9821'' and inserting ``42 U.S.C. 9831'';
          (2) in subsection (b)(3)(A)(ii), by striking ``paragraph 
        (1)(A)'' and inserting ``paragraph (2)''; and
          (3) in subsection (c)(2), in the matter preceding 
        subparagraph (A), by striking ``subsection (b)(1)(A)'' and 
        inserting ``subsection (b)(2)''.
  (c) Application to Presumptive Eligibility for Pregnant Women Under 
Medicaid.--Section 1920(b) (42 U.S.C. 1396r-1(b)) is amended by adding 
at the end after and below paragraph (2) the following flush sentence:
``The term `qualified provider' includes a qualified entity as defined 
in section 1920A(b)(3).''.
  (d) Application Under Title XXI.--Section 2107(e)(1) (42 U.S.C. 
1397gg(e)(1)) is amended by adding at the end the following new 
subparagraph:
                  ``(D) Section 1920A (relating to presumptive 
                eligibility).''.

SEC. 505. IMPROVING WELFARE-TO-WORK TRANSITION.

  (a) 1 Year Extension.--Section 1925(f) (42 U.S.C. 1396r-6(f)) is 
amended by striking ``2001'' and inserting ``2002''.
  (b) Simplification Options.--
          (1) State option to waive reporting requirements.--Section 
        1925(b)(2) of such Act (42 U.S.C. 1396r-6(b)(2)) is amended by 
        adding at the end the following new subparagraph:
                  ``(C) State option to waive reporting requirements.--
                A State may elect to waive the reporting requirements 
                under subparagraph (B) and, in the case of such a 
                waiver for purposes of notices required under 
                subparagraph (A), to exclude from such notices any 
                reference to any requirement under subparagraph (B).''.
          (2) Exemption for states covering needy families up to 185 
        percent of poverty.--Section 1925 (42 U.S.C. 1396r-6) is 
        amended--
                  (A) in each of subsections (a)(1) and (b)(1), by 
                inserting ``but subject to subsection (g),'' after 
                ``Notwithstanding any other provision of this title,''; 
                and
                  (B) by adding at the end the following new 
                subsection:
  ``(g) Exemption for State Covering Needy Families Up to 185 Percent 
of Poverty.--
          ``(1) In general.--At State option, the provisions of this 
        section shall not apply to a State that uses the authority 
        under section 1931(b)(2)(C) to make medical assistance 
        available under the State plan under this title, at a minimum, 
        to all individuals described in section 1931(b)(1) in families 
        with gross incomes (determined without regard to work-related 
        child care expenses of such individuals) at or below 185 
        percent of the income official poverty line (as defined by the 
        Office of Management and Budget, and revised annually in 
        accordance with section 673(2) of the Omnibus Budget 
        Reconciliation Act of 1981) applicable to a family of the size 
        involved.
          ``(2) Application to other provisions of this title.--The 
        State plan of a State described in paragraph (1) shall be 
        deemed to meet the requirements of sections 
        1902(a)(10)(A)(i)(I) and 1902(e)(1).''.
          (3) Effective date.--The amendments made by this subsection 
        take effect on October 1, 2000.

SEC. 506. MEDICAID COUNTY-ORGANIZED HEALTH SYSTEMS.

  Section 9517(c)(3)(C) of the Comprehensive Omnibus Budget 
Reconciliation Act of 1985 is amended by striking ``10 percent'' and 
inserting ``14 percent''.

SEC. 507. MEDICAID RECOGNITION FOR SERVICES OF PHYSICIAN ASSISTANTS.

  (a) In General.--Section 1905(a) (42 U.S.C. 1396d(a)) is amended--
          (1) by redesignating paragraphs (22) through (27) as 
        paragraphs (23) through (28), and
          (2) by inserting after paragraph (21) the following new 
        paragraph:
          ``(22) services furnished by an physician assistant (as 
        defined in section 1861(aa)(5)) which the assistant is legally 
        authorized to perform under State law and with the supervision 
        of a physician;''.
  (b) Conforming Amendments.--(1) Section 1902(a)(10)(C)(iv) (42 U.S.C. 
1396a(a)(10)(C)(iv)) is amended by striking ``(24)'' and inserting 
``(25)''.
  (2) Section 1929(e)(2)(A) (42 U.S.C. 1396t(e)(2)(A)) is amended by 
striking ``1905(a)(23)'' and inserting ``1905(a)(24)''.
  (3) Section 1917(c)(1)(C)(ii) (42 U.S.C. 1396p(c)(1)(C)(ii)) is 
amended by striking ``(22), or (24)'' and inserting ``(23), or (25)''.

          TITLE VI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

SEC. 601. SPECIAL RULE FOR REDISTRIBUTION AND AVAILABILITY OF UNUSED 
                    FISCAL YEAR 1998 AND 1999 SCHIP ALLOTMENTS.

  (a) Change in Rules for Redistribution and Retention of Unused SCHIP 
Allotments for Fiscal Years 1998 and 1999.--Section 2104 (42 U.S.C. 
1397dd) is amended by adding at the end the following new subsection:
  ``(g) Rule for Redistribution and Extended Availability of Fiscal 
Years 1998 and 1999  Allotments.--
          ``(1) Amount redistributed.--
                  ``(A) In general.--In the case of a State that 
                expends all of its allotment under subsection (b) or 
                (c) for fiscal year 1998 by the end of fiscal year 
                2000, or for fiscal year 1999 by the end of fiscal year 
                2001, the Secretary shall redistribute to the State 
                under subsection (f) (from the fiscal year 1998 or 1999 
                allotments of other States, respectively, as determined 
                by the application of paragraphs (2) and (3) with 
                respect to the respective fiscal year)) the following 
                amount:
                          ``(i) State.--In the case of 1 of the 50 
                        States or the District of Columbia, with 
                        respect to--
                                  ``(I) the fiscal year 1998 allotment, 
                                the amount by which the State's 
                                expenditures under this title in fiscal 
                                years 1998, 1999, and 2000 exceed the 
                                State's allotment for fiscal year 1998 
                                under subsection (b); or
                                  ``(II) the fiscal year 1999 
                                allotment, the amount by which the 
                                State's expenditures under this title 
                                in fiscal years 1999, 2000, and 2001 
                                exceed the State's allotment for fiscal 
                                year 1999 under subsection (b).
                          ``(ii) Territory.--In the case of a 
                        commonwealth or territory described in 
                        subsection (c)(3), an amount that bears the 
                        same ratio to 1.05 percent of the total amount 
                        described in paragraph (2)(B)(i)(I) as the 
                        ratio of the commonwealth's or territory's 
                        fiscal year 1998 or 1999 allotment under 
                        subsection (c) (as the case may be) bears to 
                        the total of all such allotments for such 
                        fiscal year under such subsection.
                  ``(B) Expenditure rules.--An amount redistributed to 
                a State under this paragraph with respect to fiscal 
                year 1998 or 1999--
                          ``(i) shall not be included in the 
                        determination of the State's allotment for any 
                        fiscal year under this section;
                          ``(ii) notwithstanding subsection (e), shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2002; and
                          ``(iii) shall be counted as being expended 
                        with respect to a fiscal year allotment in 
                        accordance with applicable regulations of the 
                        Secretary.
          ``(2) Extension of availability of portion of unexpended 
        fiscal years 1998 and 1999 allotments.--
                  ``(A) In general.--Notwithstanding subsection (e):
                          ``(i) Fiscal year 1998 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        section for fiscal year 1998 that were not 
                        expended by the State by the end of fiscal year 
                        2000, the amount specified in subparagraph (B) 
                        for fiscal year 1998 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2002.
                          ``(ii) Fiscal year 1999 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        subsection for fiscal year 1999 that were not 
                        expended by the State by the end of fiscal year 
                        2001, the amount specified in subparagraph (B) 
                        for fiscal year 1999 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2002.
                  ``(B) Amount remaining available for expenditure.--
                The amount specified in this subparagraph for a State 
                for a fiscal year is equal to--
                          ``(i) the amount by which (I) the total 
                        amount available for redistribution under 
                        subsection (f) from the allotments for that 
                        fiscal year, exceeds (II) the total amounts 
                        redistributed under paragraph (1) for that 
                        fiscal year; multiplied by
                          ``(ii) the ratio of the amount of such 
                        State's unexpended allotment for that fiscal 
                        year to the total amount described in clause 
                        (i)(I) for that fiscal year.
                  ``(C) Use of up to 10 percent of retained 1998 
                allotments for outreach activities.--Notwithstanding 
                section 2105(c)(2)(A), with respect to any State 
                described in subparagraph (A)(i), the State may use up 
                to 10 percent of the amount specified in subparagraph 
                (B) for fiscal year 1998 for expenditures for outreach 
                activities approved by the Secretary.
          ``(3) Determination of amounts.--For purposes of calculating 
        the amounts described in paragraphs (1) and (2) relating to the 
        allotment for fiscal year 1998 or fiscal year 1999, the 
        Secretary shall use the amounts reported by the States not 
        later than November 30, 2000, or November 30, 2001, 
        respectively, on HCFA Form 64 or HCFA Form 21, as approved by 
        the Secretary.''.
  (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 4901 of BBA (111 
Stat. 552).

SEC. 602. OPTIONAL COVERAGE OF CERTAIN LEGAL IMMIGRANTS UNDER SCHIP.

  (a) In General.--Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)), as 
amended by section 504, is amended by adding at the end the following 
new subparagraph:
                  ``(E) Section 1903(v)(4) (relating to optional 
                coverage of categories of lawfully residing alien 
                children), but only if the State has elected to apply 
                such section to the category of children under title 
                XIX.''.
  (b) Effective Date.--The amendment made by this section takes effect 
on October 1, 2000, and applies to medical assistance and child health 
assistance furnished on or after such date.

        TITLE VII--EXTENSION OF SPECIAL DIABETES GRANT PROGRAMS

SEC. 701. EXTENSION OF JUVENILE AND INDIAN DIABETES GRANT PROGRAMS.

  (a) Juvenile Diabetes Research Program.--Section 330B of the Public 
Health Service Act (42 U.S.C. 254c-2) is amended by adding at the end 
the following new subsection:
  ``(c) Extension of Funding.--There are hereby appropriated, from any 
amounts in the Treasury not otherwise appropriated, for each of fiscal 
years 2003 through 2007, $50,000,000 for grants under this section, to 
remain available until expended. Nothing in this subsection shall be 
construed as providing for such amounts to be derived or deducted from 
appropriations made under section 2104(a) of the Social Security 
Act.''.
  (b) Indian Diabetes Grant Program.----Section 330C of the Public 
Health Service Act (42 U.S.C. 254c-3) is amended by adding at the end 
the following new subsection:
  ``(d) Extension of Funding.--There are hereby appropriated, from any 
amounts in the Treasury not otherwise appropriated, for each of fiscal 
years 2003 through 2007, $50,000,000 for grants under this section, to 
remain available until expended. Nothing in this subsection shall be 
construed as providing for such amounts to be derived or deducted from 
appropriations made under section 2104(a) of the Social Security 
Act.''.
  (c) Extension of Reports on Grant Programs.--Section 4923(b) of BBA 
is amended--
          (1) in paragraph (1), by striking ``an interim report'' and 
        inserting ``interim reports'';
          (2) in paragraph (1), by striking ``, 2000'' and inserting 
        ``in each of 2000, 2002, and 2004''; and
          (3) in paragraph (2), by striking ``2002'' and inserting 
        ``2007''.

                          Purpose and Summary

    The purpose of this legislation is to improve and protect 
patient access to Federal health care programs. The savings 
achieved through changes to the Medicare and Medicaid programs 
enacted as part of the Balanced Budget Act of 1997 were 
integral to balancing the budget. Since passage of that 
legislation, the Congressional Budget Office has estimated that 
the savings from the Medicare and Medicaid programs has 
exceeded the original targets, and there is concern that 
beneficiaries in these programs may experience difficulty in 
accessing health services. This legislation seeks to address 
many of these access concerns.
    H. R. 5291 increases payments to providers under the 
Medicare and Medicaid programs, improves the quality of 
benefits for beneficiaries, and adjusts the allocation formula 
under the State Children Health Insurance Program (SCHIP).

                  Background and Need for Legislation

    In the Balanced Budget Act of 1997 (BBA '97), the Committee 
made difficult decisions in how best to address the concern of 
the Nation that the Medicare program was facing financial ruin, 
and changes needed to be made. Moving to a prospective payment 
system for hospital outpatient department services, skilled 
nursing facility services and home health services were just 
some of the changes the Congressional Budget Office (CBO) 
projected would reduce Federal spending by $103 billion over 5 
years, and create new efficiencies within the Medicare program.
    CBO continues to revise their estimates of spending in the 
Medicare program. Every revision they have released since 
passage of BBA '97 shows that spending is less than originally 
anticipated. In addition, spending in fiscal year 1999 was 
actually less than it was in fiscal year 1998.
    BBA '97 also made changes to reduce Federal spending in 
Medicaid. Last November, Congress responded to the low spending 
in Medicare and Medicaid by refining the BBA '97 and restoring 
nearly $16 billion over 5 years to the Medicare, Medicaid, and 
SCHIP programs.
    There are concerns that those changes were not enough. 
Given the record surpluses realized in recent years, and based 
on testimony provided to the Committee on this issue, this 
legislation responds to those concerns.

                                Hearings

    The Subcommittee on Health and Environment held a hearing 
on July 19, 2000 entitled ``BBA '97: A Look at the Current 
Impact on Patients and Providers,'' which laid the foundation 
for the development of H.R. 5291, the Beneficiary Improvement 
and Protection Act of 2000. The Subcommittee received testimony 
from: Dr. Gail Wilensky of the Medicare Payment Advisory 
Commission (MedPAC) and Dr. Bill Scanlon of the General 
Accounting Office on work they have done analyzing the impact 
BBA '97 has had on Medicare, Medicaid and the State Children's 
Health Insurance Program (SCHIP).
    The Subcommittee also received testimony from patient and 
provider groups who discussed the impact the changes have had 
on their ability to receive or deliver quality health care. 
Witnesses consisted of Dr. Rowen K. Zetterman, American College 
of Gastroenterology; Ms. Marilyn Tavenner, HCA-The HealthCare 
Company; Mr. Max Richtman, The National Committee to Preserve 
Social Security and Medicare; Ms. Karen Coughlin, Physicians 
Health Services, Inc.; Ms. Mary Lou Connolly, UCSD HomeCare; 
Mr. Daniel R. Hawkins, Jr., National Association of Community 
Health Centers, Inc.; and Ms. Juliet Hancock, The National 
Association for the Support of Long Term Care.

                        Committee Consideration

    On September 26, 2000 Full Committee met in open markup 
session and ordered H.R. 5291 reported to the House, as 
amended, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 5291 reported. A motion by Mr. Bliley to order H.R. 5291 
reported to the House, with an amendment, was agreed to by a 
voice vote.
    The following amendment was agreed to by a voice vote--

          An amendment in the nature of a substitute by Mr. 
        Bilirakis, No. 1, improving beneficiary access to 
        Federal health care benefits through changes to the 
        Medicare, Medicaid and SCHIP programs.

    The following amendments were withdrawn--

          An amendment to the amendment in the nature of a 
        substitute by Mrs. Wilson, No. 1a, giving States 
        greater flexibility to use SCHIP funds to cover 
        children currently not eligible and allowing States to 
        expand some services.
          An amendment to the amendment in the nature of a 
        substitute by Mr. Barton, No. 1b, requiring community 
        mental health centers to meet State licensing and 
        certification requirements as well as ensuring that 
        such facilities provide certain core services.
          An amendment to the amendment in the nature of a 
        substitute by Mr. Strickland, No. 1c, allowing the 
        clinical training portion of clinical psychology 
        graduate medical education programs to be reimbursed 
        under Medicare.
          An amendment to the amendment in the nature of a 
        substitute by Mr. Engel, No. 1d, prohibiting HCFA from 
        issuing any new regulations that would modify the upper 
        limits test applied to Medicaid spending for plans 
        approved before October 2, 2000.
          An amendment to the amendment in the nature of a 
        substitute, by Mrs. Wilson, No. 1e, making improvements 
        to the Medicare+Choice program.
          An amendment to the amendment in the nature of a 
        substitute, by Mr. Greenwood, No. 1f, placing a 
        moratorium on any proposed or final regulation relating 
        to the Medicare upper payment limit test applied to 
        State Medicaid spending for any approved State plan in 
        place as of the date of enactment and requiring the 
        Secretary of Health and Human Services to work with 
        States to develop methods to ensure that Federal 
        Medicaid funds are spent on Medicaid eligible services 
        for Medicaid eligible beneficiaries.
          An amendment to the amendment in the nature of a 
        substitute, by Mr. Rush, No. 1g, setting the formula 
        for the Medicaid upper payment limits for each class of 
        facility in a State.
          An amendment to the amendment in the nature of a 
        substitute, by Mr. Stearns, No. 1h, making various 
        changes to how the Health Care Financing Administration 
        audits physician payments and other issues affecting 
        physicians.
          An amendment to the amendment in the nature of a 
        substitute, by Mr. Deutsch, No. 1i, providing for a 
        Medicare+Choice demonstration project to allow 
        Medicare+Choice plans to purchase home care services 
        from a caregiver through a home health referral agency.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

           Committee on Government Reform Oversight Findings

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
5291, the Beneficiary Improvement and Protection Act of 2000, 
would result in new or increased budget authority, entitlement 
authority, or tax expenditures or revenues consistent with the 
estimate submitted by the Congressional Budget Office.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 2, 2000.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: At your request, the Congressional 
Budget Office has prepared the attached table showing our 
preliminary estimate of the changes in direct spending that 
would result from enacting H.R. 5291, the Beneficiary Health 
Improvement Act, as ordered reported by the House Committee on 
Commerce on September 27, 2000. This estimate is based on draft 
legislative language and modifications discussed with staff.
    CBO estimates that enacting the bill would increase direct 
spending by $1.7 billion in 2001, $18 billion over the 2001-
2005 period, and $55 billion over the 2001-2010 period. Because 
the bill would affect direct spending, pay-as-you-go procedures 
would apply.
    I hope this information is helpful to you. The CBO staff 
contact is Tom Bradley.
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Attachment.

     CBO ESTIMATE OF DIRECT SPENDING IN H.R. 5291, THE BENEFICIARY HEALTH IMPROVEMENT ACT, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON COMMERCE ON
                             SEPTEMBER 27, 2000 (BASED ON DRAFT LEGISLATIVE LANGUAGE AND MODIFICATIONS DISCUSSED WITH STAFF)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Outlays by fiscal year in billions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                                2001     2002     2003     2004     2005     2006     2007     2008     2009     2010   2001-05  2001-10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title I: Beneficiary Improvements...........      0.3      0.4      0.5      0.7      0.9      1.2      1.3      1.5      1.7      2.0      2.8     10.4
Title II: Other Medicare Part B Provisions..      0.2      0.5      0.4      0.4      0.6      0.7      0.8      1.0      1.2      1.3      2.1      7.1
Title III: Medicare Part A and B Provisions.      0.1      0.7      0.3      0.1      0.2      0.2      0.2      0.3      0.3      0.3      1.3      2.6
Title IV: Medicare+Choice Program                 0.8      1.0      1.2      1.5      1.8      1.5      2.2      2.5      2.8      3.2      6.2     18.4
 Stabilization and Improvements.............
Interaction: effect of fee-for-service              0      0.3      0.3      0.3      0.5      0.6      0.8      1.0      1.2      1.5      1.4      6.5
 provisions on Medicare+Choice payments.....
                                             -----------------------------------------------------------------------------------------------------------
      Subtotal, Gross Medicare Spending.....      1.3      2.9      2.7      3.1      3.9      4.1      5.3      6.2      7.2      8.4     13.9     45.1
Part B Premiums.............................    -0.2.     -0.4     -0.3     -0.4     -0.5     -0.5     -0.7     -0.8     -0.9     -1.1     -1.7     -5.8
                                             -----------------------------------------------------------------------------------------------------------
      Subtotal, Net Medicare Spending.......      1.2      2.5      2.3      2.7      3.4      3.6      4.6      5.4      6.3      7.3     12.1     39.3
Title V: Medicaid...........................      0.5      1.3      1.3      1.2      1.3      1.5      1.5      1.6      1.8      1.8      5.7     13.9
Interaction: effect of Medicare provisions      (\1\)    (\1\)    (\1\)    (\1\)      0.1      0.2      0.2      0.2      0.2      0.3    (\1\)      1.2
 on federal Medicaid spending...............
                                             -----------------------------------------------------------------------------------------------------------
      Subtotal, federal Medicaid............      0.5      1.2      1.2      1.3      1.4      1.6      1.8      1.9      2.0      2.1      5.7     15.1
Title VI: State Children's Health Insurance     (\1\)    (\1\)    (\1\)    (\1\)    (\1\)      0.1    (\1\)      0.1      0.1    (\1\)      0.2      0.3
 Program....................................
Title VII: Extension of Special Diabetes            0        0    (\1\)      0.1      0.1      0.1      0.1      0.1    (\1\)    (\1\)      0.2      0.5
 Grant Programs.............................
                                             -----------------------------------------------------------------------------------------------------------
      Total, Changes in Direct Spending.....      1.7      3.8      3.6      4.0      5.0      5.2      6.5      7.4      8.4      9.4     18.2    55.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Costs or savings less than $50 million.

                       Federal Mandates Statement

    The estimate of Federal mandates prepared by the Director 
of the Congressional Budget Office pursuant to section 423 of 
the Unfunded Mandates Reform Act was not timely submitted to 
the Committee. The Committee will forward such estimate to the 
House when it is submitted to the Committee.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

                   TITLE I--BENEFICIARY IMPROVEMENTS

Section 101. Improving availability of QMB/SLMB application forms

    Under current law, State Medicaid programs are required to 
pay Medicare premiums and cost-sharing charges for Qualified 
Medicare Beneficiaries (QMBs). These are persons whose incomes 
are below 100% of the poverty line and whose resources are 
below $4,000 for an individual and $6,000 for a couple. State 
Medicaid programs are also required to pay Part B premiums for 
Specified Low-Income Medicare Beneficiaries (SLMBs). These are 
persons otherwise meeting the QMB criteria except that their 
income is above the QMB level. The SLMB level is 120% of 
poverty. Currently, Medicare beneficiaries must apply for QMB/
SLMB benefits at their local welfare/Medicaid office.
    This section requires the Secretary of HHS to consult with 
States and beneficiary groups within nine months of enactment 
to develop a simplified application form for use in applying 
for assistance under the QMB/SLMB programs. The form would be 
easily readable and uniform nationally. Beginning one year 
after enactment, the Secretary would make the application forms 
available to the Social Security Administrator for distribution 
through local Social Security offices as well as to other new 
and existing sites as the Secretary determined appropriate. 
Forms would be available to individuals upon request. 
Individuals would be permitted to apply for assistance through 
QMB/SLMB programs using this simplified application form and 
would not be required to apply in person for such assistance.
    Beginning on January 1, 2004, individuals could go to local 
Social Security Offices to receive information about the QMB/
SLMB programs. These offices would notify persons who present 
themselves of the availability of QMB/SLMB application forms, 
make forms available on request, assist individuals in filling 
out forms, and upon request, submit them to the appropriate 
State agency for processing.
    The provision providing for the availability of 
applications in Social Security offices would be effective 
January 1, 2004. The provision requiring the streamlined 
application form and process would take effect 1 year after the 
date of enactment, regardless of whether regulations had been 
issued. The Secretary would be required to develop the 
application form not later than 9 months after enactment.

Section 102. Study on limitation on State payment for Medicare cost-
        sharing affecting access to services for qualified Medicare 
        beneficiaries

    Under current law, State Medicaid programs are required to 
pay Medicare premiums and cost-sharing charges for QMBs. 
Medicaid's payment rates are frequently below those applicable 
under Medicare. In the 1997 BBA, Congress specified that a 
State Medicaid program would not be required to pay any cost-
sharing amounts for QMBs to the extent such payment would 
result in a total payment for the service in excess of the 
Medicaid level.
    The provision requires the Secretary of HHS to conduct a 
study to determine whether access to certain services 
(including mental health services) has been affected by the 
payment limitation. The Secretary is required to submit a 
report on the study to Congress within one year of enactment. 
The report must include any recommendations for change in 
payment limits to assure appropriate access to services.
    This section is effective upon enactment.

Section 103. Election of periodic colonoscopy

    BBA '97 authorized coverage of, and established frequency 
limits for, colorectal cancer screening tests. A covered test 
is any of the following procedures furnished for the purpose of 
early detection of colorectal cancer: (1) screening fecal-
occult blood test (for persons over 50, no more than annually); 
(2) screening flexible sigmoidoscopy (for persons over 50, no 
more than one every 4 years); (3) screening colonoscopy for 
high-risk individuals (limited to one every 2 years); and (4) 
other procedures as the Secretary finds appropriate for the 
purpose of early detection of colorectal cancer. The Secretary 
was required to publish, within 90 days of enactment, a 
determination on the coverage of screening barium enema. Under 
the regulation, barium enemas, as an alternative to either a 
screening flexible sigmoidoscopy or a screening colonoscopy, 
are covered in accordance with the same screening parameters 
established for those tests.
    The provision permits an individual who is not at high risk 
to elect to receive a screening colonoscopy instead of a 
screening sigmoidoscopy. Payments could not be made for such 
procedures if performed within 10 years of a previous screening 
colonoscopy or within 4 years of a screening flexible 
sigmoidoscopy. This change comports with the new American 
Cancer Society guidelines which now include this option for 
average risk individuals. Further, the New England Journal of 
Medicine recently reported that flexible sigmoidoscopies are 
likely to miss diseased growths as much as one-third of the 
time, so allowing beneficiaries the option of the more thorough 
colonoscopy provides a more effective benefit.
    This section is effective January 1, 2001.

Section 104. Waiver of 24-month waiting period for Medicare coverage of 
        individuals disabled with amyotrophic lateral sclerosis (ALS)

    Currently, Medicare covers, after a 24-month waiting 
period, people under age 65 who are either receiving monthly 
Social Security benefits on the basis of disability or 
receiving payments as disabled Railroad Retirement System 
annuitants. Coverage begins with the 25th month of entitlement 
for disability cash benefits.
    The provision waives the 24-month waiting period for an 
individual medically determined to have amyotrophic lateral 
sclerosis (ALS). ALS often progresses at a rate that would make 
Medicare coverage ineffective for this population if 
individuals were forced to wait 24 months. This provision would 
ensure individuals with ALS would be able to access medical 
treatment through Medicare immediately.
    The waiver of the waiting period applies to benefits for 
months beginning after the date of enactment.

Section 105. Elimination of time limitation on Medicare benefits for 
        immunosuppresive drugs

    Under current law, Medicare will pay for drugs used in 
immunosuppressive therapy during the first 36 months following 
a Medicare-covered organ transplant. The Balanced Budget 
Refinement Act of 1999 (BBRA '99) provided for a temporary 
extension of the current 36-month limit on immunosuppressive 
drugs for Medicare beneficiaries otherwise exhausting their 
coverage in 2000-2004. In each calendar year, there is to be an 
extension specified by the Secretary (as the number of months 
or partial months), applicable to persons who exhaust their 
benefits in that calendar year. The increase for persons 
exhausting their benefits in 2000 is 8 months. The minimum 
increase for persons exhausting their benefits in 2001 is 8 
months. Total expenditures over the 5-year period are limited 
to $150 million. The Secretary, in making the specification of 
the number of additional months for 2002-2004 is required to 
make the computation so that expenditures do not exceed this 
limit.
    The provision eliminates the time limitation on coverage of 
immunosuppressive drugs for Medicare beneficiaries and allows 
for all Medicare beneficiaries to receive coverage for drugs to 
prevent rejection of the donor organ following a Medicare-
covered organ transplant.
    This provision applies to drugs furnished on or after 
enactment.

Section 106. Preservation of coverage of drugs and biologicals under 
        Part B of the Medicare program

    Medicare law defines covered ``medical and other health 
services'' for purposes of coverage under Medicare Part B. 
Included in the definition are ``services and supplies 
(including drugs and biologicals which cannot, as determined in 
accordance with regulations, be self- administered) furnished 
as incident to a physician's professional service * * *.'' The 
Medicare Carrier's Manual states that whether a drug or 
biological is of a type which cannot be self-administered is 
based on the usual method of administration of the form of that 
drug or biological as furnished by the physician.
    Individual Medicare carriers apply different policies when 
considering whether a drug or biological can or can not be 
self- administered. Some carriers base the determination on the 
typical means of administration while others assess the 
individual patient's ability to administer the drug. On August 
13, 1997, the Health Care Financing Administration (HCFA) 
issued a memorandum to Medicare carriers which was intended to 
clarify program policy. The memorandum stated that the 
inability to self-administer was to be based on the typical 
means of administration of the drug, not on the individual 
patient's ability to administer the drug.
    As a result of this memorandum, certain patients, for 
example patients with multiple sclerosis, no longer had 
Medicare coverage for certain drugs. However, implementation of 
this policy directive was halted for FY2000 by a provision in 
the Consolidated Appropriations Act (P.L. 106-113). The 
provision prohibits the use of any funds to carry out the 
August 13, 1997 transmittal or to promulgate any regulation or 
other transmittal or policy directive that has the effect of 
imposing (or clarifying the imposition of) a restriction on the 
coverage of injectable drugs beyond those applied on the day 
before issuance of the transmittal. HCFA issued a Program 
Memorandum in April 2000 which suspended application of the 
August 13, 1997 memorandum. It noted that each carrier or 
intermediary must establish its own policies individually and 
can not establish model policies as a group.
    This section clarifies that carriers are to reimburse for 
self- injectable drugs according to pre-August 1997 policy. 
This section replaces the current phrase in section 1861(s)(2) 
relating to certain drugs and biologicals administered incident 
to a physician's professional service. The new language 
requires coverage of ``drugs and biologicals which are not 
usually self-administered by the patient.'' The Committee 
intends that in determining whether a drug or biological is 
usually self-administered by the patient, HCFA should only 
consider whether a majority of Medicare patients with the 
disease or condition actually administer the drug to 
themselves. In carrying out this intent, HCFA should assume, as 
it did for many years, that Medicare patients do not usually 
self-administer injections or infusions to themselves, while 
oral medications usually are self-administered. HCFA should 
also continue to take into account the circumstances under 
which the drug or biological is being administered and continue 
to cover products that are administered in emergencies, for 
example, during which self-administered is not the usual method 
of administration.
    The Committee anticipates that HCFA will instruct its 
contractors not to rely on this section to exclude a drug or 
biological without making an explicit finding supported by 
evidence that it is usually administered to themselves by a 
majority of Medicare patients who use it for the condition to 
which the exclusion relates.
    This section applies to drugs and biologicals administered 
on or after October 1, 2000.

Section 107. Demonstration of Medicare coverage of medical nutrition 
        therapy

    BBA `97 required the Secretary of HHS to request that the 
National Academy of Sciences analyze the expansion or 
modification of preventive and other benefits provided to 
Medicare beneficiaries. The Secretary was required to submit a 
report to Congress on specific findings related to several 
benefit categories. One category included in the required study 
was ``nutrition therapy services, including parenteral and 
enteral nutrition and including the provision of such services 
by a registered dietitian.'' The Academy's Committee on 
Nutrition Services for Medicare Beneficiaries, Food and 
Nutrition Board, transmitted a report on nutrition therapy 
early this year.
    The report contained several key recommendations. The 
Committee recommended that nutrition therapy, upon referral 
from a physician, should be a reimbursable Medicare benefit. It 
noted that current evidence suggests that nutrition therapy is 
effective as part of a comprehensive approach to the management 
and treatment of many conditions affecting the Medicare 
population including dyslipidemia, hypertension, heart failure, 
diabetes, and kidney failure. The Committee also noted that the 
registered dietician is currently the single identifiable group 
of health care professionals with standardized education, 
clinical training, continuing education, and national 
credentialing requirements necessary to be directly reimbursed 
as a provider of nutrition therapy.
    The provision establishes a demonstration program for 
Medicare coverage of medical nutrition therapy services for 
beneficiaries in the five States with the highest proportion of 
population who are 65 years of age or older.
    Under the demonstration program, medical nutrition therapy 
services are defined as nutritional diagnostic, therapy and 
counseling services for the purpose of disease management which 
are furnished by a registered dietician or nutrition 
professional, pursuant to a referral by a physician. The term 
registered dietician or nutrition professional means an 
individual who (1) has completed a baccalaureate or higher 
degree with completion of academic requirements of a program in 
nutrition or dietetics; (2) has completed at least 900 hours of 
supervised dietetics practice under the supervision of a 
registered dietitian or nutrition professional; and, (3) is 
either licensed or certified as a dietician or nutrition 
professional by the State in which the services are performed, 
or, in a State which does not provide for such licensure or 
certification, meets criteria established by the Secretary. 
Persons licensed or certified as dieticians or nutrition 
specialists on the date of enactment would not be required to 
meet the training requirements under 1 and 2.
    Under the demonstration, the provision specifies that the 
amount paid for medical nutrition therapy services would equal 
80% of the lesser of the actual charge for the service or 85% 
of the amount that would be paid under the physician fee 
schedule if such services were provided by a physician. 
Assignment would be required for all claims. The Secretary is 
required to submit to Congress interim reports on the 
demonstration project and a final report within six months of 
the conclusion of the project.
    This section applies to services furnished on or after 
January 1, 2002.

               TITLE II--OTHER MEDICARE PART B PROVISIONS

                    Subtitle A--Access to Technology

Section 201. Annual reports on national coverage determinations

    The Medicare statute specifies the broad service categories 
paid for under the program; these include inpatient and 
outpatient hospital services, physicians services, and other 
types of medical care. In general, the law does not specify the 
types of medical treatments, procedures, or technologies 
covered. However, the law does specifically exclude coverage 
for any items or services which ``are not reasonable and 
necessary for the diagnosis or treatment of illness or injury 
or to improve the functioning of a malformed body member.'' 
HCFA has generally interpreted the statute to preclude payment 
for services that have not been proven safe and effective by 
acceptable clinical evidence or that have not been generally 
accepted in the medical community. Experimental items are 
generally excluded.
    Coverage decisions are made at both the national level by 
the Health Care Financing Administration and at the local level 
by Medicare intermediaries and carriers. Currently the majority 
of determinations are made at the local level. HCFA is 
currently in the process of revising the process for making 
national coverage determinations.
    The provision requires the Secretary of HHS to annually 
submit to the Congress a report about national coverage 
decisions. The report sets forth a detailed compilation of the 
actual time periods that were necessary to complete and fully 
implement any national coverage determinations that were made 
the previous fiscal year for items, services, or medical 
devices not previously covered under Medicare. The report is to 
include (for each such item, device, or service) a statement of 
the time taken by the Secretary to make the necessary coverage, 
coding, and payment determinations, including the time taken to 
complete each significant step in the process of making such 
determinations. The report will be due by December 1 of each 
year (beginning in 2001). The report would be published on the 
Medicare Internet site.
    This section is made effective upon enactment.

Section 202. National limitation amount equal to 100 percent of 
        national median for new clinical laboratory test technologies; 
        fee schedule for new clinical laboratory tests

    Medicare currently pays for clinical laboratory services on 
the basis of areawide fee schedules. The law sets a cap on the 
payment amount for a test. BBA '97 froze the fee schedule for 
the 1998-2002 period. It also lowered the cap from 76% of the 
median to 74% of the median of all fee schedules for the test.
    Under this section, the national limitation amount is set 
at 100% of the median in the case of a test, performed after 
January 1, 2001, that the Secretary determined was a new test 
for which no limitation amount had been previously established.
    The Secretary also is required to establish a national 
uniform fee schedule amount for new tests which are unique and 
unable to be crosswalked with existing tests. By December 1 of 
each year (beginning in 2001), the Secretary is to publish in 
the Federal Register an interim fee schedule amount for each 
new test which would apply for the following year. The interim 
fee schedule amount for each test is subject to a 60 day 
comment period. The Secretary would review the comments and 
make appropriate adjustments. By December 1 of each year 
(beginning in 2002), the Secretary must publish in the Federal 
Register a fee schedule amount for each such new test for which 
an interim amount was established; the amount applies for the 
following year.
    This section is effective upon enactment.

Section 203. Clarifying process and standards for determining 
        eligibility of devices for pass-through payments under hospital 
        outpatient PPS

    BBRA '99 provided that, for 2 to 3 years after the 
introduction of a new device, the Secretary of HHS is required 
to provide additional payments for costs of certain ``current 
innovative'' devices, drugs, and biologicals, and certain 
``new'' high cost devices, drugs, and biologicals used in 
hospital outpatient department care. These payments are 
referred to as ``pass-through payments'' because they would 
pass through the hospital outpatient PPS and be paid over and 
above PPS payments. ``Current'' is defined as something for 
which Medicare is paying under outpatient services on the first 
day of the PPS; ``new'' is defined as something for which 
Medicare was not paying on an outpatient basis on December 31, 
1996.
    A pass-through for the cost of current innovative products 
apply to (1) orphan drugs; (2) certain cancer therapy drugs, 
biologicals, and brachytherapy; and (3) radiopharmaceutical 
drugs and biological products.
    A pass-through of costs for ``new'' medical devices, drugs, 
and biologicals is required if the costs of those items is 
``not insignificant'' in relation to the fee schedule amount 
payable for the service.
    Pass-through payments are currently made on the basis of a 
product's brand-name.
    This provision requires the Secretary, through public 
rulemaking procedures, to establish criteria for defining 
special payment categories under the hospital outpatient PPS 
for new and certain current medical devices and to establish 
new categories for such medical devices. These payments are 
designated as ``category-based pass-through payments'' as 
opposed to the current system based on brand. In general, the 
payment period begins when the first such payment is made for a 
device after implementation of category-based pass-through 
payments.
    This section is effective upon enactment.

Section 204. Access to new technologies applied to screening 
        mammography to enhance breast cancer detection

    Medicare currently limits payment for screening mammography 
to $67.81 irrespective of what type of technology is used.
    This provision allows the Secretary to increase the 
Medicare payment limit for screening mammographies by $15, if 
the Secretary determines a new technology that enhances the 
detection of breast cancer is being used.

         Subtitle B--Provisions Relating to Physicians Services

Section 211. GAO study of gastrointestinal endoscopic services 
        furnished in physicians' offices and hospital outpatient 
        department services

    Payments for physicians services are made on the basis of a 
fee schedule which is intended to relate payments for a given 
service to actual resources used. The fee schedule assigns 
relative values to services; these values are the sum of three 
components--a physician work component, a practice expense 
component, and a malpractice expense component. Each component 
is adjusted for geographic variations in costs. The adjusted 
relative values are then converted into a dollar payment amount 
by a conversion factor.
    BBA `97 established a process for the development of new 
relative values for practice expenses. The new resource-based 
system is being phased-in over 4 years beginning in 1999. For 
many services, there is a differential between the value 
assigned to practice expenses for a service provided in a 
physicians office and that assigned when the service is 
provided in an institutional setting.
    The provision requires the GAO to conduct a study on the 
appropriateness of furnishing gastrointestinal endoscopic 
services in physicians offices. The GAO is also required to 
review available scientific and clinical evidence about the 
safety of performing procedures in physicians offices and 
hospital outpatient departments. The GAO is also required to 
assess whether the assigned practice expense relative value 
units assigned for these services create an incentive to 
furnish services in doctors offices, rather than in hospital 
outpatient departments. The GAO is further required to report 
on the implications for beneficiary access if Medicare did not 
cover such services in physicians offices.
    The GAO is required to submit the report to Congress, 
together with any recommendations, by July 1, 2002.
    This section is effective upon enactment.

Section 212. Treatment of certain physician pathology services

    The final rule for the Medicare physician fee schedule 
issued November 2, 1999 required hospitals to bill for the 
technical component of pathology services furnished to its 
inpatients. Based on comments received, HCFA decided to delay 
implementation of this rebundling requirement until January 1, 
2001, to allow hospitals and independent laboratories 
sufficient time to negotiate arrangements.
    Regulations implementing the hospital outpatient 
prospective payment system require hospitals to provide 
directly or under arrangements all services furnished to 
hospital outpatients. If a specimen (e.g., tissue, blood, 
urine) is taken from a hospital outpatient, the facility or 
technical component of the diagnostic test must be billed by 
the hospital. Thus, independent laboratories cannot bill for 
the technical component of pathology services furnished to 
outpatients. On August 11, 2000, HCFA issued a program 
memorandum (Transmittal No. AB-00-73) which delayed 
implementation of the rebundling requirement until January 1, 
2001.
    The provision grandfathers hospitals that have an 
arrangement with an independent lab in effect as of July 22, 
1999 under which the lab was furnishing and directly billing 
the carrier (not the hospital) for a 2 year period. Labs 
working with these hospitals could continue direct billing for 
the technical component of pathology services provided to 
hospital inpatients and hospital outpatients. The provision 
does not apply to services furnished to Medicare+Choice 
enrollees.
    The GAO will be required to analyze the types of hospitals 
that are grandfathered under the provision and study the 
effects of the direct billing provision on hospitals, 
laboratories, and Medicare beneficiaries access to physician 
pathology services. The report is due to Congress by July 1, 
2002. It would include recommendations on whether the 
grandfather provision should continue after the 2-year period 
for either (or both) inpatient and outpatient hospital services 
and whether the provision should be extended to other hospitals 
with similar characteristics.
    The direct billing provision would apply to services 
furnished during the 2-year period beginning January 1, 2001. 
The report requirement is effective on enactment.

Section 213. Physician group practice demonstration

    The provision requires the Secretary to conduct 
demonstration projects to test, and if proven effective, expand 
the use of incentives to health care groups participating under 
Medicare. These incentives include encouraging coordination of 
care furnished under Medicare Parts A and B by institutional 
and other providers and practitioners; encouraging investment 
in administrative structures and processes encouraging 
efficient service delivery; and rewarding physicians for 
improving health outcomes. For purposes of the demonstration, a 
health care group is a group of physicians organized, at least 
in part, for the purpose of providing physicians services under 
Medicare. As the Secretary finds appropriate, the group could 
include a hospital or other entity that was affiliated with the 
group and which would share in any bonus earned under the 
demonstration.
    Groups participating in the demonstration agree to be paid 
on a fee-for-service basis. They also agree that payment for 
all services furnished to beneficiaries would be made to a 
single agency.
    The Secretary specifies those patients to be considered 
within the scope of the demonstration. The Secretary ensures 
that each beneficiary in a demonstration program would be 
notified of the incentives and of any waivers of coverage or 
payment rules under the demonstration program.
    The Secretary establishes for each group participating in a 
demonstration, a base expenditure amount and an expenditure 
target (reflecting base expenditures adjusted for risk and 
expected growth rates). The Secretary pays each group a bonus 
for each year equal to a portion of the savings for the year 
relative to the target. In addition, at such time as the 
Secretary had developed appropriate criteria, the Secretary 
pays an additional bonus related to process and outcome 
improvements. Total payments under demonstrations could not 
exceed what the Secretary estimates would be paid in the 
absence of the demonstration program.
    The provision also specifies requirements for 
administration of the demonstration program. These include: 
limiting beneficiary eligibility to fee-for-service enrollees; 
permitting the Secretary to limit the scope of the program 
including limitation to a geographic area (or areas) or to 
subgroup (or subgroups) of beneficiaries or entities; voluntary 
receipt of services by beneficiaries; permitting the Secretary 
to enter into agreements with individuals and entities; 
establishment of performance standards by the Secretary; 
administrative review of decisions affecting individuals and 
entities furnishing services; and, Secretarial review of 
marketing material. Individuals or entities receiving payment 
under the program would agree to accept such payment as payment 
in full, except for any deductible and coinsurance amount.
    The Secretary is permitted to administer the demonstration 
program through a contract with a program administrator which 
could be a Medicare intermediary or carrier or other entity 
with substantial experience in managing this type of program. 
Contracts are for an initial term of 3 years and could be 
awarded noncompetitively. The Secretary could make bonus 
payments to program administrators; the Secretary could also 
condition such payments on the achievement of standards related 
to efficiency, improvement in processes or outcomes of care, or 
other factors.
    Entities with agreements to provide health services under 
the demonstration and entities with program administration 
contracts would be required to maintain adequate records and 
furnish such reports as the Secretary may require. The 
provision places certain limitations on judicial and 
administrative review of certain actions and determinations 
relating to the demonstration. The provision further requires 
periodic reports to Congress on the use of authorities under 
the demonstration program.
    This section is effective upon enactment.

Section 214. Designation of separate category for interventional pain 
        management services

    Payments for physicians services are made on the basis of a 
fee schedule which is intended to relate payments for a given 
service to actual resources used. The fee schedule assigns 
relative values to services; these values are the sum of three 
components--a physician work component, a practice expense 
component, and a malpractice expense component. In making these 
calculations, the Secretary is required to determine, for each 
physicians service or class of services, the percentage that is 
performed nationwide by physician in different specialties.
    The provision specifies that for services provided on or 
after January 1, 2002, the Secretary will specify 
interventional pain management physicians as a separate 
category of physician specialists.
    This section is effective upon enactment.

Section 215. Evaluation of enrollment procedures for medical groups 
        that retain independent contractor physicians

    Medicare generally prohibits payments for services to be 
made to anyone other than the person providing a service. One 
exception is if the physician or other practitioner, as a 
condition of his or her employment, is required to turn over 
the fee to his or her employer.
    This section directs the Secretary of Health and Human 
Services to evaluate the current Medicare enrollment process 
for medical groups that retain independent contractor 
physicians with particular emphasis on hospital-based 
physicians, such as emergency department staffing groups. The 
Secretary must review the increase of individual Medicare 
provider numbers issued and the possible Medicare program 
integrity vulnerabilities of the current process; assess how 
program integrity could be enhanced by the enrollment of groups 
that retain independent contractor hospital-based physicians; 
and develop suggested procedures for the enrollment of these 
groups.
    The Secretary will submit the report to Congress one year 
after the date of enactment.
    This section is effective upon enactment.

                       Subtitle C--Other Services

Section 221. 3-year moratorium on SNF Part B consolidated billing 
        requirements

    Under the consolidated billing requirement of BBA '97, 
skilled nursing facilities (SNFs) and all nursing homes that 
include a Medicare-certified SNF component must submit to 
Medicare all claims for all the services provided to their 
residents who are enrolled in traditional fee-for-service 
Medicare. Thus, the requirement applies to claims on behalf of 
beneficiaries who are long-term care residents of a nursing 
home that has a SNF component as well as those who are 
residents in the SNF. This requirement is referred to as 
``consolidated billing.'' (The law includes a list of services 
that are excluded from the consolidated billing requirement; 
excluded providers may bill Medicare directly.) The 
consolidated billing requirement also pertains to Medicare 
covered services regardless of whether the resident does or 
does not qualify for SNF care under Medicare Part A. The 
requirement means that non-excluded service or care providers 
who furnish covered services to SNF residents may not bill 
Medicare directly, but must submit their claim to the SNF for 
payment. If the item or service is covered by Medicare but is 
not included in the SNF PPS, Medicare makes the payment to the 
SNF, and the SNF is responsible for paying the provider.
    The consolidated billing requirement went into effect in 
July 1998 (implementation of the SNF PPS) for some, but not 
all, SNF patients. Consolidated billing has been implemented 
only for services to those SNF residents who are in a Medicare 
Part A covered stay, and has not been implemented for Medicare 
Part B covered services for beneficiaries who are SNF residents 
whose stay is not covered under Medicare (which includes those 
who are long-term care residents of the non-SNF component of 
the facility). When HCFA is ready to expand implementation of 
consolidated billing it will publish a notice in the Federal 
Register 90 days prior to implementation.
    Under this provision, implementation of consolidated 
billing is delayed until October 1, 2003, for Part B-covered 
services to SNF residents who are not in a SNF stay that is 
covered by Medicare Part A. The Comptroller General is required 
to submit a report to Congress by October 1, 2002, regarding 
alternatives, if any, to consolidated billing for Part B items 
and services to ensure accountability by SNFs and accuracy in 
claims submitted for all services and items provided to SNF 
residents under Part B.
    Delay of consolidated billing is effective as if included 
with enactment of BBA '97.

Section 222. Ambulatory Surgical Centers (ASCs)

    Delay in Implementation of Prospective Payment System. From 
the start of Medicare coverage of ASC services in 1982, 
Medicare based payments to ASCs on a fee schedule. Starting 
January 1, 1995, the Secretary of HHS has been required to 
update ASC rates every 5 years based on a survey of the actual 
audited costs incurred by a representative sample of ASCs for a 
representative sample of procedures, and to increase annual 
payments in the intervening years by the CPI-U. (BBA '97 
modified the annual update amounts.)
    On June 12, 1998, HCFA issued proposed rules which would 
make major changes in Medicare payments to ASCs. The major 
changes include replacing eight payment groupings with an 
ambulatory payment classification (APC) system comprised of 105 
payment groups; updating underlying cost data using 1994 survey 
data updated to the present; and making additions to and 
deletions from the list of Medicare covered ASC procedures. 
Payments would range from $53 to $2,107 and would be updated by 
the CPI-U annually on a calendar year basis. Final rules are 
scheduled for publication in November 2000 for implementation 
in April 2001. BBRA '99 delayed the implementation by requiring 
a 3 year phase-in.
    The Secretary would be prohibited from implementing the 
changes to the APC system published on June 12, 1998 before 
January 1, 2002.
    This section is effective upon enactment.
    Extending Phase-In to 4 Years. BBRA `99 requires that, if 
the Secretary implements new ASC rates based on the 1994 data 
(or any rates based on pre-1999 Medicare cost survey data), 
those new rates must be phased-in by basing payments one-third 
on the new rates in the first year, two-thirds in the second 
year, and fully in the third year.
    This provision extends the phase-in of new ASC payment 
rates based on pre-1999 survey data is extended to occur over 4 
years (one- fourth per year).
    This section is effective upon enactment.
    Deadline for Use of 1999 or Later Cost Surveys. This 
provision requires the Secretary by January 1, 2003, to 
incorporate data from a 1999 Medicare cost survey or a 
subsequent cost survey for purposes of revising the ASC payment 
system.
    This section is effective upon enactment.

Section 223. One-year extension of moratorium on therapy caps

    BBA `97 established annual payment limits for all 
outpatient therapy services provided by non-hospital providers. 
The limits applied to services provided by independent 
therapists as well as to those provided by comprehensive 
outpatient rehabilitation facilities (CORFs) and other 
rehabilitation agencies. The limits did not apply to outpatient 
services provided by hospitals.
    There were two per beneficiary limits. The first was a 
$1,500 per beneficiary annual cap for all outpatient physical 
therapy services and speech language pathology services. The 
second was a $1,500 per beneficiary annual cap for all 
outpatient occupational therapy services. Beginning in 2002, 
the amount would increase by the Medicare Economic Index (MEI).
    BBRA '99 suspended application of the therapy limits in 
2000 and 2001. (In the absence of additional legislation, the 
caps would be imposed again beginning in 2002.) During this 
time, the Secretary is required to conduct focused medical 
reviews of therapy claims with emphasis on claims for services 
provided to residents of SNFs. The Secretary is also required 
to study utilization patterns in 2000 compared to those in 1998 
and 1999. The study (which must be based on a statistically 
significant number of claims) will look at nationwide patterns 
as well as patterns by region, types of setting, and diagnosis 
or condition. The Secretary is required to report the results 
of this study to Congress by June 30, 2001, together with any 
legislative recommendations deemed appropriate.
    The provision extends the moratorium on implementation of 
the therapy cap, and the focused reviews, for 1 year.
    This section is effective upon enactment.

Section 224. Revision of Medicare reimbursement for telehealth services

    BBA '97 provided for reimbursement from Medicare Part B for 
professional consultation via telecommunications systems with 
physicians and practitioners for beneficiaries residing in 
rural areas.
    The provision requires payments to be made no later than 
April 1, 2001, in accordance with revised payment procedures, 
for services that are provided on a telecommunications system 
by a practitioner or provider to an eligible beneficiary. 
Services covered under the provision will include payments for 
professional consultations, office visits, office psychiatry 
visits, including any service identified, as of July 1, 2000, 
by the following HCPCS codes: 99241-99275, 99201-99215, 90804-
90809, and 90862. The Secretary must develop a process to 
determine what other services would be appropriate to be 
provided under telehealth and shall annually update covered 
services through this process.
    An eligible beneficiary would be a person residing in a 
designated health professional shortage area, a county that is 
not in a metropolitan statistical area (MSA), an inner city 
area that is medically underserved (effective January 1, 2002), 
or an area in which there is a Federal telemedicine 
demonstration program. In the case of any Federal telemedicine 
demonstration program in Alaska or Hawaii, the term 
telecommunications system would include store-and-forward 
technologies that provide for asynchronous transmission of 
health care information in single or multi-media formats.
    The provision requires the Secretary to make payments for 
telemedicine services in an amount equal to the amount that 
would have been paid to the physician or practitioner if the 
service had been furnished to the beneficiary without the use 
of a telecommunications system. It also eliminates the 75/25 
percent fee splitting requirement.
    A facility fee would be paid to the originating site. This 
fee would equal $20 in 2001 and 2002, increased by the 
percentage increase in the Medicare Economic Index (MEI) in 
future years. Payments would be subject to beneficiary cost-
sharing, however balance billing protections apply. Beginning 
April 1, 2001, an originating site would be defined as: the 
physician's or practitioner's office, a critical access 
hospital, rural health clinic, or Federally qualified health 
center. Beginning in January 1, 2002, the definition would be 
expanded to include a hospital, skilled nursing facility, 
comprehensive outpatient rehabilitation facility, renal 
dialysis facility, ambulatory surgical center, hospital or 
skilled nursing facility of the Indian Health Service, or a 
community mental health center.
    The provision specifies that nothing would be construed as 
requiring an eligible telehealth beneficiary to be presented by 
the physician or practitioner at the originating site for the 
furnishing of a service, unless it was determined medically 
necessary by the physician or practitioner at the distant site.
    The provision requires the Secretary to conduct a study to 
identify additional services that are appropriate for 
reimbursement. The report, together with recommendations, would 
be transmitted to Congress within 2 years of enactment.
    The provision clarifies that the telecommunications 
provisions should not be construed as preventing a home health 
agency from providing a service, for which payment is made 
under the prospective payment system, via a telecommunications 
system.
    This section is effective upon enactment.

Section 225. Payment for ambulance services

    Payment for ambulance services provided by freestanding 
suppliers is currently based on reasonable charge screens. 
Hospital or other provider-based ambulance services are paid on 
a reasonable cost basis. Payment cannot exceed what would be 
paid to a freestanding supplier. The reasonable costs or 
charges cannot exceed costs or charges recognized in a prior 
year, increased by the CPI-U minus one percentage point.
    BBA '97 provided for the implementation of a fee schedule, 
effective January 1, 2000. The aggregate amount of payments in 
2000 could not exceed what would otherwise be paid under the 
prior system. Increases in subsequent years are to equal the 
CPI increase, except that there is a one percentage point 
reduction in 2001 and 2002.
    Implementation of the fee schedule has been delayed until 
at least January 1, 2001.
    The provision eliminates the 1.0 percentage point reduction 
for 2001 and 2002 so that ambulance services will receive a 
full update for CPI. The provision also specifies that any 
phase-in of the ambulance fee schedule shall provide, in any 
State in which suppliers had not been paid a separate amount 
for all mileage, for full payment of the national mileage rate 
beginning with the effective date of the fee schedule.
    The provision requires the GAO to conduct a study of the 
costs of providing ambulance services across the range of 
service levels. Within 18 months of enactment, GAO is required 
to report to Congress on the study. The report includes any 
recommendations for changes in methodology or payment levels 
necessary to fairly compensate suppliers and to ensure access 
for Medicare beneficiaries.
    This section is effective upon enactment.

Section 226. Contrast enhanced diagnostic procedures under hospital 
        prospective payment system

    Currently, Medicare covers diagnostic scanning procedures 
used in hospital outpatient departments, including procedures 
that require injection of agents that enhance the visibility of 
organs showing greater contrast among organs and organ parts. 
Under the outpatient PPS, coverage of certain agents used for 
contrasting is generally included in the PPS amount for the 
procedure for which contrast agents are used.
    The Secretary is required to create under the hospital 
outpatient department PPS additional groups of covered services 
that classify separately those procedures that utilize contrast 
media from those that do not. The provision is retroactive to 
the implementation of the hospital outpatient department PPS 
(August 1, 2000). The provision also amends the definition of a 
drug to include contrast agents.
    This section is effective as if enacted as part of BBA '97.

Section. 227. Increase from 55 percent to 80 percent the proportion of 
        hospital bad debt recognized

    Currently, hospitals receive compensation from Medicare for 
certain portions of amounts they are unable to collect from 
beneficiaries for deductibles and coinsurance (applicable to 
both inpatient and outpatient department care). BBA '97 
established a schedule under which the amount of a hospital's 
bad debt Medicare would recognize as an allowable cost would 
decline from 75% for cost reporting periods beginning in FY1998 
to 55% for cost reporting periods beginning in FY2000 and 
thereafter. Prior to BBA '97, hospitals received compensation 
for 100% of bad debt incurred.
    This provision would reinstate the ability of hospitals to 
receive compensation for bad debt. The provision would phase-in 
Medicare payment for up to 80% of a hospital's allowable costs 
in equal increments beginning in FY 2000 over 10 years.

Section 228. State accreditation of diabetes outpatient self-management 
        training programs

    BBA '97 authorized coverage, effective July 1, 1998, for 
diabetes outpatient self-management training services. These 
services are defined as including educational and training 
services furnished to an individual with diabetes by a 
certified provider in an outpatient setting. Certified 
providers for these purposes are defined as physicians or other 
individuals or entities that, in addition to providing diabetes 
self-management training services, provide other items or 
services reimbursed by Medicare. Providers must meet quality 
standards established by the Secretary. They are deemed to meet 
the Secretary's standards if they meet standards originally 
established by the National Diabetes Advisory Board and 
subsequently revised by organizations who participated in the 
establishment of standards of the Board, or if they are 
recognized by an organization representing persons with 
diabetes, as meeting standards for furnishing such services.
    The provision authorizes State accreditation of diabetes 
self- management training programs, provided that the Secretary 
determined that the State program had established quality 
standards that meet or exceed the national standards or the 
standards originally established by the National Diabetes 
Advisory Board, and subsequently revised.
    This section is effective upon enactment.

              TITLE III--MEDICARE PART A AND B PROVISIONS

Section 301. Home health services

    One-Year Delay in 15 Percent Reduction in Payment Rates 
under the Medicare Prospective Payment System for Home Health 
Services. BBA '97 required implementation of a home health care 
prospective payment system and specified that the prospective 
payment system (PPS) be designed so that in the first 12 months 
of operation the aggregate amount of Medicare PPS payments 
would equal the total payments that would have been paid under 
the interim payment system had it remained in effect that year 
but with a 15% across-the-board reduction in Medicare payments 
to home health agencies. The home health PPS was originally 
scheduled for implementation in FY 1999 but was delayed until 
October 1, 2000 (FY 2001). BBRA '99 delayed the 15% reduction 
until 12 months after October 1, 2000 (thus the reduction would 
go into effect on October 1, 2001), but it required the 
Secretary to report on the need for a 15% or other reduction 6 
months after implementation of the PPS. (This report would be 
due by March 1, 2001.)
    The provision requires that the aggregate amount of 
Medicare payments to home health agencies in the second year of 
the PPS (FY2002) must equal the aggregate payments in the first 
year of the PPS, updated by the Market Basket Increase minus 
1.1 percentage points. The 15% reduction to aggregate PPS 
amounts would be delayed until October 1, 2002.
    This section is effective upon enactment.
    Treatment of Branch Offices of Home Health Agencies. Prior 
to BBA '97, home health agency (HHA) payments were based on the 
HHA's billing location. Thus, an agency headquartered in an 
urban area would be paid according to rates for urban areas, 
even though that agency had provided some of its billable 
visits through branch offices serving rural communities. BBA 
'97 required HHAs to submit payment claims on the basis of the 
location in which the service was provided. The home health PPS 
payments are based on the location in which the care is 
furnished.
    A home health agency may have both branch offices and 
subunits. Subunits must meet the same conditions of 
participation as the parent home health agency. These 
conditions of participation include staffing and supervision 
standards. Branch offices do not have to meet the conditions of 
participation independently of the home health agency, and thus 
are not subject to the same staffing and supervision 
requirements. For this reason, in order to ensure that branch 
offices of HHAs are adequately supervised, HCFA regional 
offices have established ``time and distance'' restrictions on 
how far a branch office may be from an agency's main office. 
Typically, these restrictions specify that a branch office may 
be no farther than 60 miles or 60 minutes from the main office 
for that HHA, although they vary in different areas. The branch 
office must be easily accessible from the parent office in case 
of an emergency as the branch office does not have the same 
skilled staff on site.
    Under this provision, use of time and distance as the sole 
determinant of a home health agency's branch office status is 
prohibited.
    This section is effective upon enactment.
    Consideration of Forms of Technology in Definition of 
Supervision. One component of the definition of a home health 
agency is that it has policies governing the services it 
furnishes and provides for supervision of such services by a 
physician or registered professional nurse.
    This section requires the Secretary to include various 
forms of technology in determining what constitutes 
``supervision'' for purposes of an agency's meeting the 
definition of a home health agency.
    This section is effective upon enactment.
    Clarification of the Definition of Homebound. To qualify 
for home health care under Medicare an individual must be 
homebound or ``confined to home.'' A homebound individual is 
defined as one who cannot leave home without a considerable and 
taxing effort and only with the aid of devices such as a 
wheelchair, a walker, or through use of special transportation. 
Absences from home may occur infrequently for short periods of 
time for such purposes as to receive medical treatment. 
Medicare law requires that a physician certify that an 
individual's medical condition confines him or her to home. 
Currently, some regional home health intermediaries exclude 
individuals with Alzheimer's from home care if they leave the 
home for medical or therapeutic treatment at an adult day care 
center.
    This provision clarifies that approved absences from home 
include participation in an adult day care program licensed or 
certified by a State to furnish such services for therapeutic 
treatment for Alzheimer's disease or a related dementia. This 
would not change the requirement the home health services must 
be provided by a Medicare home health agency.
    This provision is effective October 1, 2001.
    One-Year Delay in Report. BBRA '99 required the Secretary 
to submit, within 6 months of implementation of the home health 
PPS, a report to Congress on the need for a 15% or other 
reduction in Medicare payments to home health agencies.
    This section requires the Secretary to submit a report to 
Congress on the need for the 15% or other reduction no later 
than 18 months after implementation of the home health PPS.
    This section is effective upon enactment.

Section 302. Advisory opinions

    The Health Insurance Portability and Accountability Act of 
1996 (HIPAA, P.L. 104-91) required the Department of Health and 
Human Services, through the Office of the Inspector General 
(OIG) in consultation with the Department of Justice, to issue 
advisory opinions to outside parties who request guidance on 
the applicability of the anti-kickback statute, safe harbor 
provisions and other OIG health care fraud and abuse sanctions. 
The authority to issue this guidance expired on August 21, 
2000. The OIG protects submissions of proprietary information 
to the extent possible under the Freedom of Information Act 
(FOIA; 5 U.S.C Sec. 552).
    This section makes permanent the OIG's authority to issue 
guidance. Any supporting documentation submitted as part of a 
request for an advisory opinion will not be subject to FOIA.

Section 303. Hospital geographic reclassification for labor costs for 
        other PPS systems opinions

    As part of Medicare's prospective payment system for acute 
hospitals, a hospital may apply to the Medicare Geographic 
Classification Review Board (MGCRB) to be reclassified to a 
different area for the purposes of using its wage index, its 
standardized amount, or both. Although some of Medicare's 
payment systems for other provider types use the hospital wage 
index, reclassification decisions made by the MGCRB only apply 
to inpatient and outpatient hospital PPS payments.
    Under this section, MGCRB reclassification decisions to 
adjust the hospital's wage index in a fiscal year will apply to 
provider-based entities or distinct part units of that 
particular hospital paid under the following payment systems: 
home health PPS, skilled nursing facility PPS, inpatient 
rehabilitation hospital PPS, inpatient long term care hospital 
PPS, inpatient psychiatric hospital PPS.

Section 304. Reclassification of a metropolitan statistical area for 
        the purposes of reimbursement under the Medicare program

    As part of Medicare's prospective payment system for acute 
hospitals, hospitals may apply to the Medicare Geographic 
Classification Review Board to be reclassified to a different 
area for the purposes of using its wage index, its standardized 
amount, or both. Hospitals that are in or that are reclassified 
to metropolitan areas (MSAs) with population of one million or 
more are considered to be in large urban areas and receive 
payment based on a higher standardized amount. The labor-
related amount of the standardized amount is adjusted by the 
wage index value of the area the hospital is in or the area to 
which the hospital has been reclassified. With respect to MGCRB 
wage index reclassifications, if the wage data for the 
redesignated hospitals reduces the wage index value of the area 
to which the hospitals are redesignated by 1 percentage point 
or less, the original wage index value for the area (exclusive 
of the wage data for the redesignated hospitals) applies to the 
redesignated hospitals. However, if the wage data for the 
redesignated hospitals reduced the wage index value of the area 
to which the hospitals are redesignated by more than 1 
percentage point, the redesignated hospitals are subject to 
that combined wage index value.
    This provision establishes, for FY2001 and subsequently, 
hospitals in the Mansfield Ohio MSA are deemed to be located in 
the Cleveland-Loraine-Elyria Ohio MSA, a large urban area. The 
reclassification made under the previous sentence is to be 
treated as a MGCRB decision.
    This section is effective beginning in fiscal year 2001.

Section 305. Making the Medicare dependent, small rural hospital 
        program permanent

    Medicare dependent hospitals (MDHs) are small rural 
hospitals that treat a relatively high proportion of Medicare 
patients. MDH's special payment status was phased out as of 
September 30, 1994 and then reinstated, on a modified basis by 
BBA '97, starting on October 1, 1997 through October 1, 2001. 
MDH classification was extended to October 1, 2006 by BBRA '99.
    This provision makes the MDH program permanent. Conforming 
amendments would permit hospitals to decline reclassification 
by the Medicare Geographic Classification Review Board from a 
rural to an urban area in order to maintain its MDH status.
    This section is effective upon enactment.

Section 306. Option to base eligibility on discharges during any of the 
        3 most recent audited cost reporting periods

    Medicare dependent hospitals are small rural hospitals that 
treat a relatively high proportion of Medicare patients. 
Generally, a MDH is located in a rural area, has 100 beds or 
less, is not classified as a sole community hospital, and had a 
least 60% of its days or discharges during FY 1987 attributable 
to Medicare Part A beneficiaries.
    This provision updates the MDH criteria to permit an 
otherwise qualifying small rural hospital to be classified as 
an MDH if at least 60% of its days or discharges were 
attributable to Medicare Part A beneficiaries in any of the 3 
most recently audited cost reporting periods.
    This section is effective upon enactment.

Section 307. Identification and reduction of medical errors by peer 
        review organizations

    Peer review organizations (PROs) now have certain statutory 
responsibilities to work with hospitals and other providers to 
improve clinical outcomes through data collection and analysis. 
PROs also address certain beneficiary complaints and work to 
prevent Medicare payment errors.
    This provision gives PROs the authority to work with 
providers, practitioner, and Medicare+Choice organizations to 
identify and reduce the incidence of medical errors and 
problems affecting patient safety.
    This section is effective January 1, 2001.

Section 308. GAO Report on Impact of the Emergency Medical Treatment 
        and Active Labor Act (EMTALA) on hospital emergency departments

    The Emergency Medical Treatment and Active Labor Act 
(EMTALA) requires that doctors on call at hospital emergency 
departments screen and stabilize patients who go to emergency 
departments for treatment. Physicians who refuse to treat 
emergency department patients or fail to respond to hospital 
emergency department requests when on call face significant 
fines and are exposed to liability under EMTALA. There are 
concerns that the impact of EMTALA, as well as provisions in 
the Balanced Budget Act of 1997, has led to many physicians 
covering emergency department calls in Phoenix, Arizona to 
resign from various hospitals' medical staffs, thus raising 
concerns as to whether downtown Phoenix hospitals can keep 
their emergency departments open.
    This provision would require the General Accounting Office 
to report to the Subcommittee on Health and Environment of the 
Committee on Commerce of the House of Representatives by May 1, 
2001, on the effect of EMTALA on hospitals, emergency 
physicians, and physicians covering emergency department calls, 
focusing on those in Arizona and California.

    TITLE IV--MEDICARE+CHOICE PROGRAM STABILIZATION AND IMPROVEMENTS

                      Subtitle A--Payment Reforms

Section 401. Increasing minimum payment amount

    Under current law, each county is subject to a floor 
amount, designed to raise payments in certain counties more 
quickly than would otherwise occur. The minimum payment amount 
for aged Medicare+Choice (M+C) enrollees is $401.61 for 2000 
and will be $415.01 for 2001. As required by law, each year 
this payment amount is increased by a measure of the national 
growth percentage. In 2001, payments for M+C organizations will 
be set at the floor amount in about one-third of all counties.
    This section sets the minimum payment amount or floor 
payment for aged enrollees in a Metropolitan Statistical Area 
with a population of more than 250,000 at $525 in 2001. For all 
other areas, the minimum would be $475. This provision would 
not apply to M+C private fee-for service plans.

Section 402. 3 Percent minimum percentage update in 2001

    The minimum increase rule under current law protects 
counties that would otherwise receive only a small (if any) 
increase. In 1998, the minimum rate for any payment area was 
102% of its 1997 AAPCC. For each subsequent year, it will be 
102% of its annual M+C per capita rate for the previous year. 
All plans are subject to the same minimum increase.
    This section allows plans to receive a 3.0% minimum update, 
rather than the 2% minimum update for 2001.

Section 403. 10-year phase in of risk adjustment based on data from all 
        settings

    M+C payments are risk adjusted to reflect variations in the 
cost of providing health care among Medicare beneficiaries. For 
example, if sicker and older patients all sign up for one M+C 
plan, risk adjustment is designed to compensate the plan for 
their above average health expenses.
    BBA '97 required the Secretary of HHS to develop a risk 
adjustment mechanism that uses variations in health status as 
well as demographic factors to account for variations in costs. 
Beginning in January 2000, the Health Care Financing 
Administration implemented a new risk adjustment mechanism 
built on 15 principal inpatient diagnostic cost groups (PIP-
DCGs). Payments are adjusted based on inpatient data using the 
PIP-DCG adjuster and demographic factors, so that this system 
accounts for both demographic and health-status variations. 
Under this mechanism, the per capita payment made to a plan for 
an enrollee is adjusted if that enrollee had an inpatient stay 
during the previous year. Separate demographically-based 
payments are used for enrollees without a prior 
hospitalization, newly eligible aged persons, newly eligible 
disabled Medicare enrollees, and others without a medical 
history.
    BBRA '99 slowed down the implementation of the Secretary's 
proposed phase-in schedule of this system, through 2002. In 
2000 and 2001, 10% of payments will include risk adjustment 
using the PIP-DCG method and 90% will be based solely on the 
older demographic method. In 2002, up to 20% of the payments 
will be adjusted under the new system, with the remainder of 
the payment based on adjustments under the old method. After 
2002, the splits are not set in law, although the Secretary 
originally planned to: (1) base 80% of payments on the PIP-DCG 
system in 2003; and (2) develop a new risk adjustment system 
for 2004 and beyond that would incorporate both inpatient and 
outpatient diagnoses.
    This provision phases in a new risk adjustment method based 
on data from substantially all settings gradually over 10 
years, in one-tenth increments, starting in 2004, or, if later, 
the first year in which such data are used.

Section 404. Transition to revised Medicare+Choice payment rates

    Under current law, M+C organizations which choose not to 
renew their contract with HCFA or to reduce their service area 
must notify HCFA in writing by July 1 of the year in which the 
contract would end. (For example notification was due by July 
3, 2000 (because July 1 fell on a Saturday) for contracts 
ending December 31, 2000.)
    Under this section, within 2 weeks after the date of 
enactment of the bill, the Secretary of Health and Human 
Services must announce revised M+C capitation rates for 2001, 
due to changes from this legislation. Plans that previously 
provided notice of their intention to terminate contracts or 
reduce their service area for 2001 would have 4 weeks after 
enactment of this Act to rescind their notice and submit an 
ACR. Further, any M+C organization that would receive higher 
capitation payments as a result of this bill must submit 
revised ACR information within four weeks after the date of 
enactment.

                   Subtitle B--Administrative Reforms

Section 411. Effectiveness of elections and changes of elections

    The Balanced Budget Refinement Act changed BBA '97 to 
specify that any request to enroll in or disenroll from a M+C 
plan made after the 10th of the month will not be effective 
until the first day of the second calendar month thereafter.
    This provision reverses that policy and returns to the 
policy in effect with the BBA '97, allowing individuals who 
enroll in an M+C plan after the 10th day of the month to 
receive coverage beginning on the first day of the next 
calendar month, effective January 1, 2001.

Section 412. Medicare+Choice Program compatibility with employer or 
        union group health plans

    This section grants the Secretary authority to waive 
certain rules that hinder the design of or offering of 
Medicare+Choice plans to employers and labor organizations, 
thereby enabling employers and their retirees to take advantage 
of the Medicare+Choice program.
    Over the past few years, employers have increasingly relied 
on health plans that participate in Medicare to meet their 
retirees' health care needs. The growing participation in 
Medicare health plans among employers and retirees reflects the 
attractiveness over the fee-for-service Medicare program and 
traditional indemnity retiree health benefits.
    Many employers have turned to Medicare+Choice as a way to 
continue offering coverage to their retirees. Certain BBA rules 
related to enrollment effective dates and beneficiary 
information (e.g., all beneficiaries receive the same 
information), among others, have made it more difficult for 
employers to offer Medicare+Choice plans to their retirees.

Section 413. Uniform premium and benefit

    This section allows the Secretary to waive the BBA '97 rule 
that Medicare+Choice organizations offer uniform benefits and 
premiums across a service area without regard to different 
payment levels in the service area. BBA '97 limited plans' 
ability to continue or begin serving lower-payment counties, 
just the opposite of the BBA '97 goal of expanded choice.
    The Balanced Budget Act of 1997 required Medicare+Choice 
plans to have a uniform benefit package and premium across a 
service area. The Balanced Budget Act of 1999 modified this 
requirement and allowed plans to break their ACR into service 
areas which could be as small as a county. Under current law, 
there is no requirement that you provide the same premium and 
benefit level in two different counties in your service area. 
However, plans must submit a separate ACR for each segment. 
This provision would allow plans to vary benefits across 
counties without submitting a separate ACR for each county. We 
note, however, that the Health Care Financing Administration 
still has the the ability to audit and monitor these situations 
to ensure that plans continue to be accountable to the Medicare 
program and its beneficiaries.
    This provision is effective upon enactment.

                           TITLE V--MEDICAID

                     Subtitle A--General Provisions

Section 501. DSH allotments

    Continuation of Medicaid DSH Allotments at Fiscal Year 2000 
Levels. Medicaid requires States to make disproportionate share 
(DSH) payments to certain hospitals treating large numbers of 
low-income and Medicaid patients. Within broad Federal 
guidelines, States determine the formulas used to make payments 
to individual hospitals and to designate which hospitals 
qualify for payments. Those payments are matched by the Federal 
government at the Federal medical assistance percentage (FMAP), 
the same percentage that applies to most other Medicaid 
payments for benefits.
    Provisions were included in the Balanced Budget Act of 1997 
that made graduated reductions in DSH spending over time. The 
formula-based DSH allotments were replaced with specific DSH 
allotments for each State for FY1998 through 2002, with some 
high DSH States (above 12%) taking reductions. After 2002, each 
State's allotment will be equal to its allotment for the 
previous year increased by the percentage change in the 
consumer price index for the previous year. Each State's DSH 
payments for FY2003 and beyond are limited to no more than 12% 
of spending for medical assistance for that year.
    The Committee's provision stops the reduction in allotments 
to the high DSH States by freezing State-specific DSH 
allotments for FY2001 at the FY2000 levels, and allow these 
allotments to grow for inflation. For FY2001 and beyond, each 
State's DSH allotment would be equal to its allotment for the 
previous year increased by the percentage change in the 
consumer price index for the previous year, subject to a 
ceiling equal to 12% of that State's total medical assistance 
payments in that year.
    Special Rule For Medicaid DSH Allotment for Extremely Low 
DSH States. The Committee's provision rebases Medicaid DSH 
allotments for extremely low DSH States.
    In the case of a State where the total FY1999 Federal and 
State DSH expenditures (as reported to HCFA on August 31, 2000) 
is less than one percent of the State's total medical 
assistance expenditures during that fiscal year, the DSH 
allotment for FY2001 must be increased to 1 percent of the 
State's total amount of expenditures under their plan for such 
assistance during that fiscal year. This new allotment becomes 
the State's base allotment for the purposes of applying section 
501(a) in future years, and these States would be allowed to 
grow at CPI-U with the rest of the States. This provision does 
not apply to Hawaii and Tennessee, which do not have DSH 
programs.
    District of Columbia. The DSH allotment for the District of 
Colombia is set at $32 million for FY2000.
    For the purpose of calculating the FY2001 allotment, the 
Committee's provision would increase the FY2000 DSH allotment 
for the District of Columbia to $49 million. This change is 
intended to compensate for a technical error in calculating the 
District's 1995 DSH allotment.
    Contingent Allotment for Tennessee. Some States in the past 
obtained waivers of certain Medicaid provisions for a number of 
purposes including requiring Medicaid beneficiaries to enroll 
in managed care organizations (MCOs), or limiting MCO services 
to a specific population or geographic area or to expand the 
program to individuals who would not otherwise be eligible for 
Medicaid. These renewable waivers are authorized under sections 
1915(b), 1915(c), or 1115 of the Medicaid law. These waivers 
are required to be budget neutral so oftentimes, the States 
discontinued their regular DSH programs and used Federal share 
DSH allotments to help offset the costs of the program 
expansions.
    If Tennessee's State-wide section 1115 Medicaid waiver 
program is revoked or terminated, the Committee's provision 
sets Tennessee's FY2001 DSH allotment equal to $286,442,437 so 
that it could re-institute a regular DSH program and resume DSH 
payments to hospitals.
    Assuring Identification of Medicaid Managed Care Patients. 
Medicaid requires States to make disproportionate share (DSH) 
payments to certain hospitals treating large numbers of low-
income and Medicaid patients. Within broad Federal guidelines, 
States determine the formulas used to make payments to 
individual hospitals and to designate which hospitals qualify 
for payments. Those payments are matched by the Federal 
government at the Federal medical assistance percentage (FMAP), 
the same percentage that applies to most other Medicaid 
payments for benefits.
    States may provide disproportionate share payments to those 
hospitals whose Medicaid inpatient utilization rate is at least 
one standard deviation above the mean Medicaid inpatient 
utilization rate for all hospitals receiving Medicaid payments 
in the State, and must provide payments to those with a low-
income utilization rate above 25 percent. The Medicaid 
inpatient utilization rate is in part based on the number of 
inpatient days attributable to Medicaid beneficiaries. The low-
income utilization rate includes the total revenues paid on 
behalf of Medicaid beneficiaries.
    The Committee's provision clarifies that Medicaid enrollees 
of managed care organizations and primary care case management 
organizations are to be included for the purposes of 
calculating the Medicaid inpatient utilization rate and the 
low-income utilization rate. With the move to managed care, the 
fee-for-service number by itself is no longer an accurate 
representation of Medicaid utilization. The State must include 
in their MCO contracts information that allows the State to 
determine which hospital services are provided to Medicaid 
beneficiaries through managed care. The Committee's provision 
would also requires States to include a sponsorship code for 
the managed care entity on the Medicaid beneficiary's 
identification card.
    This section is effective January 1, 2001.

Section 502. New prospective payment system for federally-qualified 
        health centers and rural health clinics

    Under the Balanced Budget Act of 1997, Congress repealed 
the requirement that States pay Federally Qualified Health 
Centers (FQHCs) based on costs incurred in providing care 
(cost-based reimbursement). States now pay Federally Qualified 
Health Centers and Rural Health Clinics (RHCs) a percentage of 
the facilities' reasonable costs for providing services. This 
percentage decreases for specified fiscal years--100% of costs 
for services furnished during FY1998 and FY1999; 95% for FY2001 
and FY2002; 90% for FY2003; 85% for FY2004; and cost-based 
reimbursement will expire in 2005. Two special payment rules 
are applicable during FY1998-FY2002. In the case of a contract 
between an FQHC or RHC and a managed care organization (MCO), 
the MCO must pay the FQHC or RHC at least as much as it would 
pay any other provider for similar services. States are 
required to make supplemental payments to the FQHCs and RHCs, 
equal to the difference between the contracted amounts and the 
cost-based amounts.
    The Committee's provision creates a new Medicaid 
prospective payment system for FQHCs and RHCs beginning in 
FY2001. An average of the reasonable costs incurred in FY 1999 
and 2000 will form the base for prospective payments beginning 
in FY 2001 to FQHCs and RHCs. This amount will take into 
account any increase or decrease in the scope of services 
furnished. For entities first qualifying as FQHCs or RHCs after 
2000, the per visit payments will begin in the first year that 
the center or clinic attains such qualification and are to be 
based on 100% of the costs incurred during that year based on 
the rates established for similar centers or clinics with 
similar caseloads in the same adjacent geographic area. In the 
absence of such similar centers or clinics, the methodology 
would be based on that used for developing rates for 
established FQHCs or RHCs or a methodology established by the 
Secretary.
    For subsequent fiscal years, per visit payments for all 
FQHCs and RHCs are equal to amounts for the preceding fiscal 
year increased by the percentage increase or decrease in the 
Medicare Economic Index applicable to primary care services for 
that fiscal year, and adjusted for any increase in the scope of 
services furnished during that fiscal year. In managed care 
contracts, States must make supplemental payments to the center 
or clinic equal to the difference between contracted amounts 
and the prospective payment system amounts. Those payments are 
to be paid on a schedule mutually agreed to by the State and 
the FQHC or RHC. Alternative payment methods are permitted only 
when payments are at least equal to amounts otherwise provided.
    The Committee's provision also directs the Comptroller 
General to provide for a study on how to rebase or refine cost 
payment methods for the services of FQHCs and RHCs. The report 
is due to Congress no later than 4 years after the date of 
enactment.
    This section is effective October 1, 2000.

Section 503. Optional coverage of legal immigrants under the Medicaid 
        program

    For the purposes of determining alien eligibility for 
Federal benefits, the law recognizes two general categories of 
aliens: qualified and non-qualified aliens. Qualified aliens 
include legal permanent residents, refugees, aliens paroled 
into the United States for at least 1 year, aliens granted 
asylum or related relief, certain abused spouses and children 
and Cuban-Haitian entrants. Non-qualified aliens are other non-
citizens, including illegal aliens, aliens admitted for a 
temporary purpose, such as tourists and foreign students, 
short-term parolees, asylum applicants, and various classes or 
aliens granted temporary permission to remain.
    In general, non-qualified aliens are not eligible for 
Federal medical assistance under title XIX except in the case 
of medical emergency.
    In addition, States are required to cover certain 
categories of aliens provided they meet the State's financial 
and other eligibility criteria. These groups include: (1) 
veterans or persons on active military duty; (2) refugees, 
asylees, and Cuban and Haitian entrants for seven years after 
entry, and Amerasians for five years after entry; (3) lawful 
permanent residents who can be credited with 40 quarters of 
Social Security coverage; and (4) Canadian- and Mexican-born 
immigrants of at least 50% North American Native heritage. 
Legal immigrants who were receiving SSI (and related Medicaid) 
as of August 22, 1996 continue to be eligible. In addition, 
those who were here by August 22, 1996, and subsequently became 
disabled are also eligible for SSI and related Medicaid.
    Other lawfully residing aliens may become eligible for 
Medicaid at State option subject to their State's financial and 
other criteria, for example, aliens residing in the United 
States before August 22, 1996. Those entering the United States 
after August 22, 1996 are barred for 5 years from all but 
emergency medical assistance. After 5 years, they may become 
eligible for full Medicaid at State option.
    Aliens entering with sponsors after December 19, 1997 are 
subject to the ``deeming rule,'' under which the sponsors' 
income and resources are deemed to be available to the 
immigrant in determining the immigrant's financial eligibility 
for benefits until the immigrant becomes a citizen or meets the 
10-year work requirement or is credited with 40 quarters of 
work by SSA.
    The Committee's provision amends title XIX to allow States 
the option of extending Medicaid coverage to pregnant women 
(during pregnancy and for 60 days following birth) or children 
who would not otherwise qualify under the 1996 welfare reform 
law provisions pertaining to eligibility for lawfully residing 
illegal immigrants. To qualify, the pregnant woman or children 
must meet all other Medicaid eligibility requirements and must 
have been lawfully residing in the United States for at least 2 
years. States could elect to apply the new option to immigrant 
pregnant women, immigrant children, or both.
    In a State that elects to provide Medical assistance to 
pregnant women and children under this provision, action may 
not be brought under an affidavit of support against the 
sponsor of such an alien on the basis of the medical care 
received. In a State that elects this option, the provisions of 
the law that might restrict participation in Medicaid of 
immigrants who have lawfully resided in the country for at 
least two years would cease to apply. Additionally, if a State 
chooses to cover these immigrants, sponsors would not incur a 
debt for the cost of Medicaid benefits provided to immigrants 
under the election and sponsors would not be asked to repay the 
value of the medical care received after the two year period 
had been met. Under section 602, States electing to apply the 
new option to immigrant children in Medicaid would also be 
permitted to extend coverage to them in SCHIP under the same 
terms.
    This section is effective October 1, 2000.

Section 504. Additional entities qualified to determine Medicaid 
        presumptive eligibility for low-income children

    Qualified Entities to Determine Presumptive Eligibility for 
Low- Income Children. Currently, States have the option of 
extending what is known as ``presumptive eligibility'' to two 
categories of Medicaid beneficiaries--pregnant women and 
children under 19 years of age. Presumptive eligibility allows 
such individuals whose family income appears to be below the 
State's Medicaid income standards to enroll temporarily in 
Medicaid, until a final formal determination of eligibility is 
made. The primary purpose of this option is to make needed 
services immediately available to these specified groups. 
Presumptive eligibility has been permitted for pregnant women 
since 1986, and for children under 19 since 1997.
    The law defines the entities permitted to make presumptive 
eligibility determinations. For children, qualified entities 
include Medicaid providers, or agencies authorized to determine 
eligibility for Head Start programs, subsidized child care 
(under the Child Care and Development Block Grant), or the 
Special Supplemental Food Program for Women, Infants and 
Children (WIC).
    For pregnant women, a qualified entity is a provider that: 
(1) is eligible to receive payments under Medicaid, and 
provides services of the types delivered by outpatient 
hospitals, Rural Health Clinics, Federally Qualified Health 
Centers, or other clinics, and has been designated by the State 
as being capable of making presumptive eligibility 
determinations, and receives funds under the Consolidated 
Health Centers program or the Rural Health Outreach, Network 
Development and Telemedicine Grant, or the Maternal and Child 
Health Services Block Grant Program, or the Health Services for 
Urban Indians program; (2) participates in a program 
established under the Special Supplemental Food Program for 
Women, Infants and Children (WIC) or the Commodity Supplemental 
Food Program; (3) participates in a State perinatal program; or 
(4) is the Indian Health Service or a health program or 
facility operated by the tribe or tribal organization under the 
Indian Self Determination Act.
    The Committee's provision adds several new entities to the 
list of those qualified to make Medicaid presumptive 
eligibility determinations for low-income children and pregnant 
women, including (1) those authorized to determine eligibility 
for children under Medicaid (title XIX) or the State Children's 
Health Insurance Program (title XXI); (2) elementary or 
secondary schools as defined in the Elementary and Secondary 
Education Act of 1965; (3) elementary or secondary schools 
operated or supported by the Bureau of Indian Affairs; (4) 
State or tribal child support enforcement agencies; (5) child 
care resource and referral agencies; (6) organizations 
providing emergency food and shelter under a grant through the 
Stewart B. McKinney Homeless Assistance Act; (7) State or 
tribal offices or entities involved in enrollment under 
Medicaid, the Temporary Assistance for Needy Families program 
(part A of title IV), the State Children Health Insurance 
Program, or that determines eligibility for assistance or 
benefits provided under any program of public or assisted 
housing that receives Federal funds, including the program 
under Section 8 or any other section of the United States 
Housing Act of 1937 or under the Native American Housing 
Assistance and Self-Determination Act of 1996; or (8) any other 
entity deemed by a State, as approved by the Secretary of 
Health and Human Services (HHS).
    The entities included in this provision are all locations 
that interact with individuals who may be potentially eligible 
for health insurance through Medicaid or SCHIP. These entities 
may have access to the family's income information and could 
cross reference State Medicaid and SCHIP income eligibility 
guidelines to determine whether or not the children or pregnant 
women would qualify for health insurance based on income. This 
provision does not change current law that requires the State 
to make the ultimate eligibility determination.
    This section is effective October 1, 2000.
    Application of Presumptive Eligibility Provisions to the 
State Children's Health Insurance Program. States' allotments 
under the State Children's Health Insurance Program (SCHIP; 
title XXI of the Social Security Act) are made available to pay 
only the Federal share of costs associated with separate (non-
Medicaid) SCHIP programs. The Federal share of costs associated 
with Medicaid expansions under SCHIP are paid for under 
Medicaid. State SCHIP allotments are reduced by the amounts 
paid under Medicaid for SCHIP Medicaid expansion costs.
    Medicaid's presumptive eligibility option allows States to 
enroll temporarily children whose family income appears to be 
below the State's applicable income standards, until a final 
formal determination of eligibility is made. Benefits provided 
during periods of presumptive eligibility to Medicaid children, 
both those presumed to be eligible under regular Medicaid and 
those presumed to be eligible under SCHIP Medicaid expansions, 
are paid out of title XIX and are counted against a State's 
SCHIP allotment.
    There is no express provision for the treatment of 
presumptive eligibility under separate (non-Medicaid) SCHIP 
programs. However, the Secretary of Health and Human Services 
permits States to develop an equivalent procedure for separate 
(non-Medicaid) SCHIP programs. Expenditures associated with 
presumptive eligibility for children who are eventually 
determined to be ineligible for Medicaid (under title XIX or 
under a Medicaid expansion under SCHIP) or for a separate (non-
Medicaid) SCHIP program are counted against title XXI 
allotments under the health service initiatives option. Health 
service initiatives, direct purchase of services to provide 
child health assistance, outreach activities and other 
reasonable costs to administer the program are treated as 
administrative expenses. All administrative expenses are 
subject to an overall limit of 10% of total program spending 
per fiscal year.
    The Committee's provision would clarify States' authority 
to conduct presumptive eligibility, as defined in title XIX and 
amended by the previous provision, under separate (non-
Medicaid) SCHIP programs.
    This section is effective October 1, 2000.

Section 505. Improving welfare-to-work transition under the Medicaid 
        program

    Eligibility for Temporary Assistance for Needy Families 
(TANF) does not confer automatic Medicaid eligibility. 
Nonetheless, current law preserves Medicaid entitlement for 
individuals who meet the requirements for the former Aid to 
Families with Dependent Children (AFDC) programs that were in 
effect in States on July 16, 1996, even if they do not qualify 
for assistance under TANF. This group was created to ensure 
that certain low-income families do not lose their Medicaid 
eligibility as a result of welfare reform. States are required 
to use the eligibility determination processes that were 
already in place for AFDC and Medicaid, including the same 
income and resource standards and other rules formerly used to 
determine if a family's income and composition made it eligible 
for AFDC and Medicaid. States may modify their ``pre-reform'' 
AFDC income and resource standards as follows: (1) States may 
lower their income eligibility standards, but not below those 
used on May 1, 1988, (2) States may increase their income and 
resource standards up to the percentage increase in the 
Consumer Price Index (CPI), and (3) States may use less 
restrictive income and resource methodologies than those in 
effect on July 16, 1996.
    Transitional medical assistance (TMA) under Medicaid was 
created to address the concern that the loss of Medicaid for 
individuals who successfully obtain employment would be a 
disincentive to seeking and keeping jobs. States are required 
to continue Medicaid for 6 months for families included in the 
group (described above) who received Medicaid in at least 3 of 
the last 6 months preceding the month in which the family lost 
Medicaid coverage due to increased hours of employment, 
increased earnings of the caretaker relative, or the family 
member's loss of one of the time limited earned income 
disregards. States must extend Medicaid coverage for an 
additional 6 months for families that were covered during the 
entire first 6-month period, and are earning below 185% of the 
Federal poverty line. The TMA provision will sunset at the end 
of fiscal year 2001.
    States must adhere to certain notification requirements for 
TMA. During the initial 6-month extension period, at specified 
intervals, States must notify qualifying families about: (1) 
their option for an additional 6 months of Medicaid coverage, 
(2) the reporting requirements applicable to the initial 
extension period and the additional extension period, (3) 
whether premiums are required for extended assistance, 
including premiums required in the first 3 months of the 
additional 6-month extension, and (4) other out-of-pocket 
expenses, benefits, reporting and payment procedures and any 
pre- existing condition limitations, waiting periods, or other 
coverage limitations imposed under any alternative coverage 
options offered. During the additional 6-month extension 
period, States must notify qualifying families about the 
reporting requirements applicable to this period of extension 
and the amount of any premium required for such extended 
assistance for the final 3 months of coverage.
    To qualify for TMA, families must meet certain reporting 
requirements. Families receiving the initial 6 months of TMA 
must report gross monthly earnings and the monthly costs of 
employment-related child care for months 1 through 3 of this 
period. Such reporting is a condition for eligibility for the 
additional 6 months of TMA. During the second 6 months of TMA, 
families must report the same financial information for months 
4 through 9. Thus, families who qualify for the full 12 months 
of TMA must report gross earnings and employment-related child 
care costs for each of months 1 through 9.
    The Committee's provision extends the sunset on the TMA 
provision by one year to fiscal year 2002. It also gives States 
the option to waive reporting requirements for families 
qualifying for up to 12 months of TMA (and the corresponding 
obligation of States to notify families of these reporting 
requirements).
    Individuals who are eligible for TMA are automatically 
eligible for the first six months. The only requirement that 
beneficiaries must meet during this period is to have a 
dependent child living in the home. This provision would allow 
States the option to eliminate this reporting requirement 
during the first six months.
    The provision gives States the option to eliminate the 
reporting requirements laid out in the statute for the second 
six months as well. The provision does not in any way alter the 
requirement that families' incomes do not exceed 185% of 
poverty. States must continue to ensure that families meet the 
income requirements to continue to be eligible. The provision 
in the Committee's bill would allow States the flexibility to 
look to the regular eligibility redetermination rules and 
procedures (rather than mandate that they follow the statutory 
requirements) to ensure that families continue to meet the 
requirements for eligibility. For example, the Health Care 
Financing Administration recently notified States of States' 
ability to do ex parte determinations using existing current 
information that beneficiaries have filed for other programs to 
determine and redetermine eligibility, rather than requiring 
individuals to present in the State office at each interval. 
This provision will give States more flexibility in managing 
their programs and alleviate burden on beneficiaries as well.
    Finally, the Committee's provision makes TMA an option, 
rather than a requirement, for the subset of States that 
already cover individuals in this group at or above 185% of 
poverty. States that are already covering these individuals in 
their Medicaid program and are meeting Medicaid eligibility 
requirements will be deemed to have met the TMA requirements. 
The Committee believes this option is in keeping with its 
desire to reduce burdensome or overly prescriptive requirements 
on States and beneficiaries without decreasing accountability 
or access.
    This section is effective October 1, 2000.

Section 506. Medicaid county-organized health systems

    Health insuring organizations (HIOs) are county-sponsored 
health maintenance organizations which are currently providing 
care to a limited number of beneficiaries in the California 
Medicaid program. Currently, five HIOs operate in seven 
California counties. These entities are exempt from certain 
Federal statutory requirements for Medicaid HMO contracts if 
the HIOs enroll no more than 10 percent of all Medicaid 
beneficiaries in these California counties (not counting 
qualified Medicare beneficiaries.)
    The committee's provision allows the current exemption from 
Medicaid HMO contracting requirements to continue to apply as 
long as no more than 14% of all Medicaid beneficiaries in these 
California counties are enrolled in those HIOs.
    This provision is effective upon enactment of this 
legislation.

Section 507. Medicaid recognition for services of physician assistants

    The Federal Medicaid statute lists services that qualify as 
Medicaid benefits. Federal matching payments are available 
toward the cost of items on the list, if covered by State 
Medicaid programs. States are required to cover certain of 
those listed items and may choose to cover other items on the 
list. Congress recognized the services of physician assistants 
for Medicare in the Balanced Budget Act of 1997. However, a 
parallel change was not made in Medicaid. Currently, all but 
three States cover the services of physician assistants under 
Medicaid.
    The Committee's provision includes services provided by 
physician assistants as Medicaid recognized benefits as long as 
the services are provided under the supervision of a physician 
and are authorized under State law. The services of physician 
assistants would be an optional Medicaid benefit.
    This section is effective upon enactment.

          TITLE VI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Section 601. Special rule for availability and redistribution of unused 
        fiscal year 1998 and 1999 SCHIP allotments

    Title XXI of the Social Security Act, the State Children's 
Health Insurance Program, authorizes and appropriates funds for 
SCHIP for FY1998 through FY2007. To receive Federal funds, 
States must submit a plan describing their program to the 
Health Care Financing Administration for approval. In order to 
access FY1998 allotments, States must have had such approval 
prior to October 1, 1999. Allotment of funds among the States 
is determined by a formula set in law. This formula is based on 
a combination of the number of low-income children and low-
income uninsured children in the State, and includes a cost 
factor that represents the average wages in the State compared 
to the national average.
    SCHIP funds not drawn down from a State's Federal allotment 
by the end of each fiscal year continue to be available for 2 
additional fiscal years, giving each State a total of 3 years 
to draw down its allotment of Federal matching funds from a 
given year.
    FY1998 allotments not spent by the end of FY2000 (as of 
September 30, 2000) and FY1999 funds not spent by the end of 
FY2001 (as of September 30, 2001) will be redistributed by a 
method to be determined by the Secretary of Health and Human 
Services (HHS) to States that have fully expended their 
existing FY1998 or FY1999 allotments respectively and are able 
to provide required matching funds. Redistributed funds not 
spent by the end of the fiscal year in which they are 
reallocated will officially expire and return to the Federal 
Treasury.
    Health service initiatives, direct purchase of services to 
provide child health assistance, outreach activities and other 
reasonable costs to administer the program are treated as 
administrative expenses. All administrative expenses are 
subject to an overall limit of 10% of total program spending 
per fiscal year.
    The Committee's provision establishes a new method for 
distributing unspent FY1998 and FY1999 allotments to States and 
territories.
    For FY1998, each State (and the District of Columbia) that 
uses all its SCHIP allotment would receive from the pool of 
unspent 1998 funds, the amount of its expenditures in excess of 
its original exhausted allotment. For FY1998, each territory 
(and commonwealth) that expends all its 1998 SCHIP allotment 
would receive an amount that bears the same ratio to 1.05 
percent of the total amount available for redistribution 
(across all States and territories) as the ratio of its 
original allotment to the total FY1998 allotment for all 
territories. For such States and territories, the same 
redistribution methods apply with respect to FY1999 funds. The 
States which have exhausted their 1998 and/or 1999 allotments 
would have two years to expend the funds which they receive 
through this process.
    For FY1998, each State that did not use all its SCHIP 
allotment would receive an amount equal to the total amount of 
unspent 1998 funds, less the amounts distributed to States that 
fully exhausted their original allotments (described in the 
paragraph above), multiplied by the ratio of its unspent 
original 1998 allotment to the total amount of unspent 1998 
funds. For such States, the same redistribution methods apply 
with respect to FY1999 funds. The amount of unspent FY1998 and 
FY1999 funds provided to these States that had not fully spent 
their allotments for these years would remain available to them 
through the end of FY2002. These States may use up to 10% of 
the retained FY1998 funds for outreach activities, in addition 
to amounts spent under the 10% administration cap under current 
law. However, the States which have already exhausted their 
1998 and/or 1999 allotments will not be able use 10% of this 
additional allotment for outreach.
    To calculate the amounts available for redistribution in 
each formula described above, the Secretary will use amounts 
reported by States not later than November 30 of the relevant 
fiscal year on HCFA Form 64 or HCFA Form 21, as approved by the 
Secretary.
    This section is effective upon enactment.

Section 602. Optional coverage of legal immigrants under SCHIP

    For States choosing to provide health insurance coverage 
through a Medicaid expansion under SCHIP, legal immigrant 
children are subject to the same Medicaid restrictions as other 
legal immigrants. States that operate a separate State (non-
Medicaid) SCHIP program must cover those legal immigrant 
children who meet the Federal definition of qualified alien and 
who are otherwise eligible. These include: (1) all qualified 
alien children who were in the United States before August 22, 
1996; (2) refugees, asylees, and certain Cuban, Haitian and 
Amerasian immigrants; (3) unmarried, dependent children of 
veterans and active duty service members of the Armed Forces; 
and (4) qualified alien children who enter the United States on 
or after August 22, 1996 as lawful permanent residents and who 
are in continuous residence for 5 years--before 5 years of 
continuous residence, qualified alien children are barred from 
participation in SCHIP. States that operate separate State 
programs also may cover battered immigrants as determined by 
INS provided the qualified alien child is otherwise eligible 
for the program.
    In the case of qualified alien children entering with 
sponsors after December 19, 1997, SCHIP coverage is subject to 
the ``deeming rule,'' under which the sponsors' income and 
resources are deemed to be available to the qualified alien 
child in determining their eligibility for benefits until the 
child becomes a citizen or meets the 10-year work requirement.
    The Committee's provision adds a new State option to SCHIP 
that would allow States to expand health insurance coverage to 
lawfully residing alien children who are otherwise eligible for 
SCHIP and who have been lawfully residing in the United States 
for 2 years. In a State that elects this option, the provisions 
of the 1996 welfare reform law that might restrict the 
participation in SCHIP of immigrants who have lawfully resided 
in the country for at least two years would cease to apply. In 
addition, if a State chooses to cover these immigrants, 
sponsors would not incur a debt for the cost of SCHIP benefits 
provided to immigrants under the election and sponsors would 
not be asked to repay the value of the medical care received 
after the two year period had been met. The option to expand 
coverage to this group under SCHIP would only be available to 
States that have opted to expand coverage to this category of 
children under their Medicaid State plan.
    This section is effective October 1, 2000.

        TITLE VII--EXTENSION OF SPECIAL DIABETES GRANT PROGRAMS

Section 701. Extension of juvenile and Indian diabetes grant programs

    Juvenile Diabetes Research Program. The Balanced Budget Act 
of 1997 amended title III of the Public Health Service Act to 
create a grant program under which the Secretary could make 
grants to support prevention and treatment services of, and 
research relating to, type 1 diabetes in children. Congress 
committed $150 million, ($30 million each year over 5 years 
FY1998 through FY2002), for this program, with the funds being 
transferred from title XXI of the Social Security Act (State 
Children's Health Insurance Program) for these grants. This 
commitment was in addition to the annual appropriations for 
NIH.
    The Committee's provision extends appropriated funds from 
the Treasury to be made available for diabetes grants, bringing 
the total to $50 million each for FY2003 and FY2007. The funds 
will remain available until expended. The funds may not be 
derived or deducted from the State Children's Health Insurance 
Program.
    This section is effective upon enactment.
    Indian Diabetes Grant Program. The Balanced Budget Act of 
1997 amended title III of the Public Health Service Act to 
create a grant program under which the Secretary could make 
grants to support prevention and treatment services of diabetes 
in Indians. These grants were to purchase services provided 
through one or more of the following entities: the Indian 
Health Service, a tribal Indian health program, and an urban 
Indian health program. Congress committed $150 million, ($30 
million each year over 5 years FY1998 through FY2002), for this 
program, with the funds being transferred from Title XXI of the 
Social Security Act (State Children's Health Insurance Program) 
for these grants.
    The Committee's provision extends appropriated funds 
available from the Treasury for diabetes prevention and 
treatment programs for Indians, bringing the total to $50 
million each for FY2003 and FY2007. The funds will remain 
available until expended. The funds may not be derived or 
deducted from the State Children's Health Insurance Program.
    This section is effective upon enactment.
    Extension of Reports on Grant Programs. The Balanced Budget 
Act of 1997 required that the Secretary conduct an evaluation 
of the diabetes grant programs established under this section 
and report to the appropriate committees of Congress an interim 
report on January 1, 2000, and a final report on January 1, 
2002.
    The Committee's provision extends the interim report 
requirements to every two years, 2000, 2002, 2004, with a final 
report due on January 1, 2007.
    This section is effective upon enactment.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                         SOCIAL SECURITY ACT

           *       *       *       *       *       *       *

TITLE II--FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS

           *       *       *       *       *       *       *

               entitlement to hospital insurance benefits

  Sec. 226. (a)  * * *

           *       *       *       *       *       *       *

  (h) For purposes of applying this section in the case of an 
individual medically determined to have amyotrophic lateral 
sclerosis (ALS), the following special rules apply:
          (1) Subsection (b) shall be applied as if there were 
        no requirement for any entitlement to benefits, or 
        status, for a period longer than 1 month.
          (2) The entitlement under such subsection shall begin 
        with the first month (rather than twenty-fifth month) 
        of entitlement or status.
          (3) Subsection (f) shall not be applied.

           *       *       *       *       *       *       *

  [(h)] (j) For entitlement to hospital insurance benefits in 
the case of certain uninsured individuals, see section 103 of 
the Social Security Amendments of 1965.

           *       *       *       *       *       *       *

     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                            SIMPLIFICATION

           *       *       *       *       *       *       *

guidance regarding application of health care fraud and abuse sanctions

  Sec. 1128D. (a)  * * *

           *       *       *       *       *       *       *

  (b) Advisory Opinions.--
          (1)  * * *

           *       *       *       *       *       *       *

          (6) Application of subsection.--This subsection shall 
        apply to requests for advisory opinions made on or 
        after the date which is 6 months after the date of 
        enactment of this section [and before the date which is 
        4 years after such date of enactment].
          (7) Nondisclosure of requests and supporting 
        materials.--A request for an advisory opinion under 
        this subsection and any supporting written materials 
        submitted by the party requesting the opinion shall not 
        be subject to disclosure under section 552 of title 5, 
        United States Code.

           *       *       *       *       *       *       *

                 functions of peer review organizations

  Sec. 1154. (a) Any utilization and quality control peer 
review organization entering into a contract with the Secretary 
under this part must perform the following functions:
          (1)  * * *

           *       *       *       *       *       *       *

          (12) The organization shall assist providers, 
        practitioners, and Medicare+Choice organizations in 
        identifying and developing strategies to reduce the 
        incidence of actual and potential medical errors and 
        problems related to patient safety affecting 
        individuals entitled to benefits under title XVIII. For 
        the purposes of this part and title XVIII, the 
        functions described in this paragraph shall be treated 
        as a review function.

           *       *       *       *       *       *       *

        TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *

     notice of medicare benefits; medicare and medigap information

  Sec. 1804. (a)  * * *

           *       *       *       *       *       *       *

  (d) Availability of Application Forms for Medical Assistance 
for Medicare Cost-Sharing.--The Secretary shall make available 
to the Commissioner of Social Security appropriate forms for 
applying for medical assistance for medicare cost-sharing under 
a State plan under title XIX. Such Commissioner, through local 
offices of the Social Security Administration shall--
          (1) notify applicants and beneficiaries who present 
        at a local office orally of the availability of such 
        forms and make such forms available to such individuals 
        upon request; and
          (2) provide assistance to such individuals in 
        completing such forms and, upon request, in submitting 
        such forms to the appropriate State agency.

           *       *       *       *       *       *       *

     Part A--Hospital Insurance Benefits for the Aged and Disabled

           *       *       *       *       *       *       *

         CONDITIONS OF AND LIMITATIONS ON PAYMENT FOR SERVICES

               Requirement of Requests and Certifications

  Sec. 1814. (a) Except as provided in subsections (d) and (g) 
and in section 1876, payment for services furnished an 
individual may be made only to providers of services which are 
eligible therefor under section 1866 and only if--
          (1)  * * *

           *       *       *       *       *       *       *

To the extent provided by regulations, the certification and 
recertification requirements of paragraph (2) shall be deemed 
satisfied where, at a later date, a physician, nurse 
practitioner, or clinical nurse specialist (as the case may be) 
makes certification of the kind provided in subparagraph (A), 
(B), (C), or (D) of paragraph (2) (whichever would have 
applied), but only where such certification is accompanied by 
such medical and other evidence as may be required by such 
regulations. With respect to the physician certification 
required by paragraph (2) for home health services furnished to 
any individual by a home health agency (other than an agency 
which is a governmental entity) and with respect to the 
establishment and review of a plan for such services, the 
Secretary shall prescribe regulations which shall become 
effective no later than July 1, 1981, and which prohibit a 
physician who has a significant ownership interest in, or a 
significant financial or contractual relationship with, such 
home health agency from performing such certification and from 
establishing or reviewing such plan, except that such 
prohibition shall not apply with respect to a home health 
agency which is a sole community home health agency (as 
determined by the Secretary). For purposes of the preceding 
sentence, service by a physician as an uncompensated officer or 
director of a home health agency shall not constitute having a 
significant ownership interest in, or a significant financial 
or contractual relationship with, such agency. For purposes of 
paragraph (2)(C), an individual shall be considered to be 
``confined to his home'' if the individual has a condition, due 
to an illness or injury, that restricts the ability of the 
individual to leave his or her home except with the assistance 
of another individual or the aid of a supportive device (such 
as crutches, a cane, a wheelchair, or a walker), or if the 
individual has a condition such that leaving his or her home is 
medically contraindicated. While an individual does not have to 
be bedridden to be considered ``confined to his home'', the 
condition of the individual should be such that there exists a 
normal inability to leave home, that leaving home requires a 
considerable and taxing effort by the individual, and that 
absences of the individual from home are infrequent or of 
relatively short duration, or are attributable to the need to 
receive medical treatment[.], including participating in an 
adult day care program licensed or certified by a State, or 
accredited, to furnish adult day care services in the State for 
the purposes of therapeutic treatment for Alzheimer's disease 
or a related dementia.

           *       *       *       *       *       *       *

   Part B--Supplementary Medical Insurance Benefits for the Aged and 
                               Disabled

           *       *       *       *       *       *       *

                          PAYMENT OF BENEFITS

  Sec. 1833. (a)  * * *

           *       *       *       *       *       *       *

  (g)(1)  * * *

           *       *       *       *       *       *       *

  (4) This subsection shall not apply to expenses incurred with 
respect to services furnished during 2000 [and 2001], 2001, and 
2002.
  (h)(1)(A)  * * *
  (B) [In] Except for tests described in subparagraph (E), in 
the case of clinical diagnostic laboratory tests performed by a 
physician or by a laboratory (other than tests performed by a 
qualified hospital laboratory (as defined in subparagraph (D)) 
for outpatients of such hospital), the fee schedules 
established under subparagraph (A) shall be established on a 
regional, statewide, or carrier service area basis (as the 
Secretary may determine to be appropriate) for tests furnished 
on or after July 1, 1984.

           *       *       *       *       *       *       *

  (E) In the case of a clinical diagnostic laboratory test 
which is described by a new code in the Health Care Financing 
Administration Common Procedure Coding System (commonly 
referred to as ``HCPCS''), for which the Secretary is not able 
to crosswalk with a similar test with an established schedule 
amount, the Secretary shall establish for purposes of 
subparagraph (A) a single fee schedule amount for all areas in 
the following manner:
          (i) By not later than December 1 of each year, 
        beginning with 2001, the Secretary shall cause to have 
        published in the Federal Register (which may include 
        publication on an interim final rule basis with a 
        comment period) an interim fee schedule amount for each 
        such new test which shall apply for such new tests 
        furnished during the following year.
          (ii) The interim fee schedule amount for each such 
        new test shall be subject to a comment period of 60 
        days. The Secretary shall review comments and data 
        received and make appropriate adjustments to the fee 
        schedule for each test applicable beginning with the 
        following calendar year.
          (iii) For years beginning with 2002, the Secretary 
        shall also cause to have published in the Federal 
        Register by not later than December 1 of the year prior 
        to its application, the adjustments to the interim fee 
        schedule amount described in clause (ii) for each such 
        new test for which an interim fee schedule amount was 
        established for a year, including adjustments to such 
        fee schedule amounts in response to comments.
  (2)(A)(i) Except as provided in paragraph (4), the Secretary 
shall set the fee schedules at 60 percent (or, in the case of a 
test performed by a qualified hospital laboratory (as defined 
in paragraph (1)(D)) for outpatients of such hospital, 62 
percent) of the prevailing charge level determined pursuant to 
the third and fourth sentences of section 1842(b)(3) for 
similar clinical diagnostic laboratory tests for the applicable 
region, State, or area for the 12-month period beginning [July 
1, 1984,] July 1, 1984. The fee schedules established under the 
previous sentence and paragraph (1)(E)(3) shall be adjusted 
annually (to become effective on January 1 of each year) by a 
percentage increase or decrease equal to the percentage 
increase or decrease in the Consumer Price Index for All Urban 
Consumers (United States city average), and subject to such 
other adjustments as the Secretary determines are justified by 
technological changes.

           *       *       *       *       *       *       *

  (4)(A)  * * *
  (B) For purposes of subsections (a)(1)(D)(i) and 
(a)(2)(D)(i), the limitation amount for a clinical diagnostic 
laboratory test performed--
          (i)  * * *

           *       *       *       *       *       *       *

          (viii) after December 31, 1997, is equal to 74 
        percent of such median (or 100 percent of such median 
        in the case of a clinical diagnostic laboratory test 
        performed on or after January 1, 2001, that the 
        Secretary determines is a new test for which no 
        limitation amount has previously been established under 
        this subparagraph).

           *       *       *       *       *       *       *

  (t) Prospective Payment System for Hospital Outpatient 
Department Services.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) System requirements.--Under the payment system--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) the Secretary shall establish, in a 
                budget neutral manner, outlier adjustments 
                under paragraph (5) and transitional pass-
                through payments under paragraph (6) and other 
                adjustments as determined to be necessary to 
                ensure equitable payments, such as adjustments 
                for certain classes of hospitals; [and]
                  (F) the Secretary shall develop a method for 
                controlling unnecessary increases in the volume 
                of covered OPD services[.]; and
                  (G) the Secretary shall create additional 
                groups of covered OPD services that classify 
                separately those procedures that utilize 
                contrast media from those that do not.

           *       *       *       *       *       *       *

          (6) Transitional pass-through for additional costs of 
        innovative medical devices, drugs, and biologicals.--
                  (A) In general.--The Secretary shall provide 
                for an additional payment under this paragraph 
                for any of the following that are provided as 
                part of a covered OPD service (or group of 
                services):
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iv) New medical devices, drugs, and 
                        biologicals.--A medical device, drug, 
                        or biological not described in clause 
                        (i), (ii), or (iii) if--
                                  (I)  * * *
                                  (II) [the cost of the device, 
                                drug, or biological] the cost 
                                of the drug or biological or 
                                the average cost of the 
                                category of devices is not 
                                insignificant in relation to 
                                the OPD fee schedule amount (as 
                                calculated under paragraph 
                                (3)(D)) payable for the service 
                                (or group of services) 
                                involved.
                  [(B) Limited period of payment.--The payment 
                under this paragraph with respect to a medical 
                device, drug, or biological shall only apply 
                during a period of at least 2 years, but not 
                more than 3 years, that begins--
                          [(i) on the first date this 
                        subsection is implemented in the case 
                        of a drug, biological, or device 
                        described in clause (i), (ii), or (iii) 
                        of subparagraph (A) and in the case of 
                        a device, drug, or biological described 
                        in subparagraph (A)(iv) and for which 
                        payment under this part is made as an 
                        outpatient hospital service before such 
                        first date; or
                          [(ii) in the case of a device, drug, 
                        or biological described in subparagraph 
                        (A)(iv) not described in clause (i), on 
                        the first date on which payment is made 
                        under this part for the device, drug, 
                        or biological as an outpatient hospital 
                        service.]
                  (B) Use of categories in determining 
                eligibility of a device for pass-through 
                payments.--The Secretary shall determine 
                whether a medical device meets the requirements 
                of subparagraph (A)(iv) as follows:
                          (i) Establishment of categories.--The 
                        Secretary shall establish categories of 
                        medical devices based on type of 
                        medical device as follows:
                                  (I) In general.--The 
                                Secretary shall establish 
                                criteria that will be used for 
                                creation of categories through 
                                rulemaking (which may include 
                                use of an interim final rule 
                                with comment period). Such 
                                categories shall be established 
                                in a manner such that no 
                                medical device is described by 
                                more than one category. Such 
                                criteria shall include a test 
                                of whether the average cost of 
                                devices that would be included 
                                in a category, as estimated by 
                                the Secretary, is not 
                                insignificant as described in 
                                paragraph (A)(iv)(II).
                                  (II) Initial categories.--The 
                                categories to be applied as of 
                                the category-based pass-through 
                                implementation date specified 
                                pursuant to subclause (V) shall 
                                be established in a manner such 
                                that each medical device that 
                                meets the requirements of 
                                clause (ii) or (iv) of 
                                subparagraph (A) as of such 
                                date is included in a such a 
                                category. For purposes of the 
                                preceding sentence, whether a 
                                medical device meets the 
                                requirements of clause (ii) or 
                                (iv) of subparagraph (A) as of 
                                such date shall be determined 
                                without regard to clause (ii) 
                                of this subparagraph and on the 
                                basis of the program memoranda 
                                issued before such date 
                                identifying medical devices 
                                that meet such requirements.
                                  (III) Adding categories.--The 
                                Secretary shall promptly 
                                establish a new category of 
                                medical device under this 
                                clause for any medical device 
                                that meets the requirements of 
                                subparagraph (A)(iv) and for 
                                which none of the categories in 
                                effect or that were previously 
                                in effect (as described in 
                                subparagraph (C)(iii)) is 
                                appropriate. The Secretary 
                                shall only establish a new 
                                category for a medical device 
                                that is described by a category 
                                that was previously in effect 
                                if the Secretary determines, in 
                                accord with criteria 
                                established under subclause (I) 
                                of this clause, that the device 
                                represents a significant 
                                advance in medical technology 
                                that is expected to 
                                significantly improve the 
                                treatment of Medicare 
                                beneficiaries.
                                  (IV) Deleting categories.--
                                The Secretary shall delete a 
                                category at the close of the 
                                period for which the category 
                                is in effect (as described in 
                                subparagraph (C)(iii)).
                                  (V) Category-based pass-
                                through implementation date.--
                                For purposes of this 
                                subparagraph and subparagraph 
                                (C), the ``category-based pass-
                                through implementation date'' 
                                is a date specified by the 
                                Secretary as of which the 
                                categories established under 
                                this clause are first used for 
                                purposes of clause (ii)(I). 
                                Such date may not be later than 
                                July 1, 2000.
                          (ii) Requirements treated as met.--A 
                        medical device shall be treated as 
                        meeting the requirements of 
                        subparagraph (A)(iv) if--
                                  (I) the device is described 
                                by a category established under 
                                clause (i), and
                                  (II) an application under 
                                section 515 of the Federal 
                                Food, Drug, and Cosmetic Act 
                                has been approved with respect 
                                to the device, or the device 
                                has been cleared for market 
                                under section 510(k) of such 
                                Act, or the device is exempt 
                                from the requirements of 
                                section 510(k) of such Act 
                                pursuant to subsection (l) or 
                                (m) of section 510 of such Act 
                                or section 520(g) of such Act, 
                                without an additional 
                                requirement for application or 
                                prior approval.---
                  (C) Limited period of payment.--
                          (i) Drugs and biologicals.--The 
                        payment under this paragraph with 
                        respect to a drug or biological shall 
                        only apply during a period of at least 
                        2 years, but not more than 3 years, 
                        that begins--
                                  (I) on the first date this 
                                subsection is implemented in 
                                the case of a drug or 
                                biological described in clause 
                                (i), (ii), or (iii) of 
                                subparagraph (A) and in the 
                                case of a drug or biological 
                                described in subparagraph 
                                (A)(iv) and for which payment 
                                under this part is made as an 
                                outpatient hospital service 
                                before such first date; or
                                  (II) in the case of a drug or 
                                biological described in 
                                subparagraph (A)(iv) not 
                                described in subclause (I), on 
                                the first date on which payment 
                                is made under this part for the 
                                drug or biological as an 
                                outpatient hospital service.
                          (ii) Medical devices.--Except as 
                        provided in clause (iv), payment shall 
                        be made under this paragraph with 
                        respect to a medical device only if 
                        such device--
                                  (I) is described by a 
                                category of medical devices 
                                established under subparagraph 
                                (B)(i); and
                                  (II) is provided as part of a 
                                service (or group of services) 
                                paid for under this subsection 
                                and provided during the period 
                                for which such category is in 
                                effect (as described in clause 
                                (iii)).
                          (iii) Period for which category is in 
                        effect.--For purposes of this 
                        subparagraph and subparagraph (B), a 
                        category of medical devices established 
                        under subparagraph (B)(i) shall be in 
                        effect for a period of at least 2 
                        years, but not more than 3 years, that 
                        begins--
                                  (I) in the case of a category 
                                established under subparagraph 
                                (B)(i)(II), on the first date 
                                on which payment was made under 
                                this paragraph for any device 
                                described by such category 
                                (including payments made during 
                                the period before the category-
                                based pass-through 
                                implementation date); and
                                  (II) in the case of a 
                                category established under 
                                subparagraph (B)(i)(III), on 
                                the first date on which payment 
                                is made under this paragraph 
                                for any medical device that is 
                                described by such category.
                          (iv) Payments made before category-
                        based pass-through implementation 
                        date.--
                                  (I) in the case of a medical 
                                device provided as part of a 
                                service (or group of services) 
                                paid for under this subsection 
                                and provided during the period 
                                beginning on the first date on 
                                which the system under this 
                                subsection is implemented and 
                                ending on (and including) the 
                                day before the category-based 
                                pass-through implementation 
                                date specified pursuant to 
                                subparagraph (B)(i)(V), payment 
                                shall be made in accordance 
                                with the provisions of this 
                                paragraph as in effect on the 
                                day before the date of the 
                                enactment of this subparagraph; 
                                and
                                  (II) notwithstanding 
                                subclause (I), the Secretary 
                                shall make payments under this 
                                paragraph during the period 
                                beginning one month after the 
                                date of enactment of the 
                                Beneficiary Improvement and 
                                Protection Act of 2000 and 
                                ending on the same ending date 
                                in subclause (I) with respect 
                                to any medical device that is 
                                not included in a program 
                                memorandum referred to in 
                                subparagraph (B)(i)(II) but 
                                that is substantially similar 
                                (other than with respect to the 
                                restriction in subparagraph 
                                (A)(iv)(I)) to devices that are 
                                so included and that the 
                                Secretary determines is likely 
                                to be described by a initial 
                                category established under such 
                                subparagraph.
                  [(C)] (D) Amount of additional payment.--
                Subject to [subparagraph (D)(iii)] subparagraph 
                (E)(iii), the amount of the payment under this 
                paragraph with respect to a device, drug, or 
                biological provided as part of a covered OPD 
                service is--
                          (i)  * * *

           *       *       *       *       *       *       *

                  [(D)] (E) Limit on aggregate annual 
                adjustment.--
                          (i) In general.--The total of the 
                        additional payments made under this 
                        paragraph for covered OPD services 
                        furnished in a year (as estimated by 
                        the Secretary before the beginning of 
                        the year) may not exceed the applicable 
                        percentage (specified in clause (ii)) 
                        of the total program payments estimated 
                        to be made under this subsection for 
                        all covered OPD services furnished in 
                        that year. If this paragraph is first 
                        applied to less than a full year, the 
                        previous sentence shall apply only to 
                        the portion of such year.

           *       *       *       *       *       *       *

          (12) Limitation on review.--There shall be no 
        administrative or judicial review under section 1869, 
        1878, or otherwise of--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) the determination of the fixed multiple, 
                or a fixed dollar cutoff amount, the marginal 
                cost of care, or applicable percentage under 
                paragraph (5) or the determination of 
                insignificance of cost, the duration of the 
                [additional payments (consistent with paragraph 
                (6)(B))] additional payments, the determination 
                and deletion of initial and new categories 
                (consistent with subparagraphs (B) and (C) of 
                paragraph (6)), the portion of the medicare OPD 
                fee schedule amount associated with particular 
                devices, drugs, or biologicals, and the 
                application of any pro rata reduction under 
                paragraph (6).

           *       *       *       *       *       *       *

        SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES

  Sec. 1834. (a)  * * *

           *       *       *       *       *       *       *

  (c) Payments and Standards for Screening Mammography.--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) Limit.--
                  (A) $55, indexed.--Except as provided by the 
                Secretary under [subparagraph (B)] 
                subparagraphs (B) and (D), the limit 
                established under this paragraph--
                          (i)  * * *
                          (ii) for screening mammography 
                        performed in a subsequent year is the 
                        limit established under this paragraph 
                        for the preceding year (taking into 
                        account, if applicable, subparagraph 
                        (D)) increased by the percentage 
                        increase in the MEI for that subsequent 
                        year.
                  (B) [Reduction of] Revisions to limit.--The 
                Secretary shall review from time to time the 
                appropriateness of the amount of the limit 
                established under this paragraph. The Secretary 
                may, with respect to screening mammography 
                performed in a year after 1992 or new 
                technologies described in paragraph (1)(D), 
                increase or reduce the amount of such limit as 
                it applies nationally or in any area to the 
                amount that the Secretary estimates is required 
                to assure that screening mammography of an 
                appropriate quality is readily and conveniently 
                available during the year.

           *       *       *       *       *       *       *

                  (D) Increase in payment limit for new 
                technologies.--In the case of new technologies 
                applied to screening mammography performed 
                beginning in 2001 and determined by the 
                Secretary to enhance the detection of breast 
                cancer, the limit applied under this paragraph 
                for 2001 shall be increased by $15.

           *       *       *       *       *       *       *

  (d) Frequency Limits and Payment for Colorectal Cancer 
Screening Tests.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Screening flexible sigmoidoscopies.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening 
                flexible sigmoidoscopy--
                          (i) if the individual is under 50 
                        years of age; [or]
                          (ii) if the procedure is performed 
                        within the 47 months after a previous 
                        screening flexible sigmoidoscopy[.]; or
                          (iii) if the procedure is performed 
                        within 119 months after a screening 
                        colonoscopy under paragraph (4).
          (3) Screening colonoscopy for individuals at high 
        risk for colorectal cancer.--
                  (A) Fee schedule.--With respect to colorectal 
                cancer screening test consisting of a screening 
                colonoscopy for individuals at high risk for 
                colorectal cancer (as defined in section 
                1861(pp)(2)) and for individuals making the 
                election described in paragraph (4), payment 
                under section 1848 shall be consistent with 
                payment amounts under such section for similar 
                or related services.

           *       *       *       *       *       *       *

                  (E) Frequency limit.--No payment may be made 
                under this part for a colorectal cancer 
                screening test consisting of a screening 
                colonoscopy for individuals at high risk for 
                colorectal cancer if the procedure is performed 
                within the 23 months after a previous screening 
                colonoscopy. No payment may be made under this 
                part for a colorectal cancer screening test 
                consisting of a screening colonoscopy for 
                individuals making the election described in 
                paragraph (4) if the procedure is performed 
                within the 119 months after a previous 
                screening colonoscopy or within 47 months after 
                a screening flexible sigmoidoscopy.
          (4) Election of screening colonoscopy for individuals 
        not at high risk of colorectal cancer instead of 
        screening sigmoidoscopy.--An individual who is not at 
        high risk of colorectal cancer may elect to receive a 
        screening colonoscopy instead of a screening 
        sigmoidoscopy.

           *       *       *       *       *       *       *

  (l) Establishment of Fee Schedule for Ambulance Services.--
          (1)  * * *
          (2) Considerations.--In establishing such fee 
        schedule, the Secretary shall--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (E) phase in the application of the payment 
                rates under the fee schedule in an efficient 
                and fair manner, except that such phase-in 
                shall provide for full payment of any national 
                mileage rate beginning with the effective date 
                of the fee schedule for ambulance services 
                provided by suppliers in any State who were not 
                paid a separate amount for all mileage prior to 
                the implementation of the fee schedule.
          (3) Savings.--In establishing such fee schedule, the 
        Secretary shall--
                  (A) ensure that the aggregate amount of 
                payments made for ambulance services under this 
                part during 2000 does not exceed the aggregate 
                amount of payments which would have been made 
                for such services under this part during such 
                year if the amendments made by section 4531(a) 
                of the Balanced Budget Act of 1997 continued in 
                effect, except that in making such 
                determination the Secretary shall assume an 
                update in such payments for 2002 equal to 
                percentage increase in the consumer price index 
                for all urban consumers (U.S. city average) for 
                the 12-month period ending with June of the 
                previous year [reduced in the case of 2001 and 
                2002 by 1.0 percentage points]; and
                  (B) set the payment amounts provided under 
                the fee schedule for services furnished in 2001 
                and each subsequent year at amounts equal to 
                the payment amounts under the fee schedule for 
                services furnished during the previous year, 
                increased by the percentage increase in the 
                consumer price index for all urban consumers 
                (U.S. city average) for the 12-month period 
                ending with June of the previous year [reduced 
                in the case of 2001 and 2002 by 1.0 percentage 
                points].

           *       *       *       *       *       *       *

        PROCEDURE FOR PAYMENT OF CLAIMS OF PROVIDERS OF SERVICES

  Sec. 1835. (a) Except as provided in subsections (b), (c), 
and (e), payment for services described in section 1832(a)(2) 
furnished an individual may be made only to providers of 
services which are eligible therefor under section 1866(a), and 
only if--
          (1)  * * *

           *       *       *       *       *       *       *

To the extent provided by regulations, the certification and 
recertification requirements of paragraph (2) shall be deemed 
satisfied where, at a later date, a physician makes a 
certification of the kind provided in subparagraph (A) or (B) 
of paragraph (2) (whichever would have applied), but only where 
such certification is accompanied by such medical and other 
evidence as may be required by such regulations. With respect 
to the physician certification required by paragraph (2) for 
home health services furnished to any individual by a home 
health agency (other than an agency which is a governmental 
entity) and with respect to the establishment and review of a 
plan for such services, the Secretary shall prescribe 
regulations which shall become effective no later than July 1, 
1981, and which prohibit a physician who has a significant 
ownership interest in, or a significant financial or 
contractual relationship with, such home health agency from 
performing such certification and from establishing or 
reviewing such plan, except that such prohibition shall not 
apply with respect to a home health agency which is a sole 
community home health agency (as determined by the Secretary). 
For purposes of the preceding sentence, service by a physician 
as an uncompensated officer or director of a home health agency 
shall not constitute having a significant ownership interest 
in, or a significant financial or contractual relationship 
with, such agency. For purposes of paragraph (2)(A), an 
individual shall be considered to be ``confined to his home'' 
if the individual has a condition, due to an illness or injury, 
that restricts the ability of the individual to leave his or 
her home except with the assistance of another individual or 
the aid of a supportive device (such as crutches, a cane, a 
wheelchair, or a walker), or if the individual has a condition 
such that leaving his or her home is medically contraindicated. 
While an individual does not have to be bedridden to be 
considered ``confined to his home'', the condition of the 
individual should be such that there exists a normal inability 
to leave home, that leaving home requires a considerable and 
taxing effort by the individual, and that absences of the 
individual from home are infrequent or of relatively short 
duration, or are attributable to the need to receive medical 
treatment[.], including participating in an adult day care 
program licensed or certified by a State, or accredited to 
furnish adult day care services in the State, to furnish adult 
day care services in the State for the purposes of therapeutic 
treatment for Alzheimer's disease or a related dementia.

           *       *       *       *       *       *       *

                           ENROLLMENT PERIODS

  Sec. 1837. (a)  * * *

           *       *       *       *       *       *       *

  (j) In applying this section in the case of an individual who 
is entitled to benefits under part A pursuant to the operation 
of section 226(h), the following special rules apply:
          (1) The initial enrollment period under subsection 
        (d) shall begin on the first day of the first month in 
        which the individual satisfies the requirement of 
        section 1836(1).
          (2) In applying subsection (g)(1), the initial 
        enrollment period shall begin on the first day of the 
        first month of entitlement to disability insurance 
        benefits referred to in such subsection.

           *       *       *       *       *       *       *

             USE OF CARRIERS FOR ADMINISTRATION OF BENEFITS

  Sec. 1842. (a)  * * *

           *       *       *       *       *       *       *

  (b)(1)  * * *

           *       *       *       *       *       *       *

  (6) No payment under this part for a service provided to any 
individual shall (except as provided in section 1870) be made 
to anyone other than such individual or (pursuant to an 
assignment described in subparagraph (B)(ii) of paragraph (3)) 
the physician or other person who provided the service, except 
that (A) payment may be made (i) to the employer of such 
physician or other person if such physician or other person is 
required as a condition of his employment to turn over his fee 
for such service to his employer, or (ii) (where the service 
was provided in a hospital, critical access hospital, clinic, 
or other facility) to the facility in which the service was 
provided if there is a contractual arrangement between such 
physician or other person and such facility under which such 
facility submits the bill for such service, (B) payment may be 
made to an entity (i) which provides coverage of the services 
under a health benefits plan, but only to the extent that 
payment is not made under this part, (ii) which has paid the 
person who provided the service an amount (including the amount 
payable under this part) which that person has accepted as 
payment in full for the service, and (iii) to which the 
individual has agreed in writing that payment may be made under 
this part, (C) in the case of services described in clause (i) 
of section 1861(s)(2)(K), payment shall be made to either (i) 
the employer of the physician assistant involved, or (ii) with 
respect to a physician assistant who was the owner of a rural 
health clinic (as described in section 1861(aa)(2)) for a 
continuous period beginning prior to the date of the enactment 
of the Balanced Budget Act of 1997 and ending on the date that 
the Secretary determines such rural health clinic no longer 
meets the requirements of section 1861(aa)(2), for such 
services provided before January 1, 2003, payment may be made 
directly to the physician assistant; (D) payment may be made to 
a physician for physicians' services (and services furnished 
incident to such services) furnished by a second physician to 
patients of the first physician if (i) the first physician is 
unavailable to provide the services; (ii) the services are 
furnished pursuant to an arrangement between the two physicians 
that (I) is informal and reciprocal, or (II) involves per diem 
or other fee-for-time compensation for such services; (iii) the 
services are not provided by the second physician over a 
continuous period of more than 60 days; and (iv) the claim form 
submitted to the carrier for such services includes the second 
physician's unique identifier (provided under the system 
established under subsection (r)) and indicates that the claim 
meets the requirements of this subparagraph for payment to the 
first physician, (E) in the case of an item or service (other 
than services described in section 1888(e)(2)(A)(ii)) furnished 
to an individual (on or after October 1, 2003) who (at the time 
the item or service is furnished) is a resident of a skilled 
nursing facility or of a part of a facility that includes a 
skilled nursing facility (as determined under regulations), 
payment shall be made to the facility (without regard to 
whether or not the item or service was furnished by the 
facility, by others under arrangement with them made by the 
facility, under any other contracting or consulting 
arrangement, or otherwise), and (F) in the case of home health 
services (including medical supplies described in section 
1861(m)(5), but excluding durable medical equipment to the 
extent provided for in such section) furnished to an individual 
who (at the time the item or service is furnished) is under a 
plan of care of a home health agency, payment shall be made to 
the agency (without regard to whether or not the item or 
service was furnished by the agency, by others under 
arrangement with them made by the agency, or when any other 
contracting or consulting arrangement, or otherwise). No 
payment which under the preceding sentence may be made directly 
to the physician or other person providing the service involved 
(pursuant to an assignment described in subparagraph (B)(ii) of 
paragraph (3)) shall be made to anyone else under a 
reassignment or power of attorney (except to an employer or 
facility as described in clause (A) of such sentence); but 
nothing in this subsection shall be construed (i) to prevent 
the making of such a payment in accordance with an assignment 
from the individual to whom the service was provided or a 
reassignment from the physician or other person providing such 
service if such assignment or reassignment is made to a 
governmental agency or entity or is established by or pursuant 
to the order of a court of competent jurisdiction, or (ii) to 
preclude an agent of the physician or other person providing 
the service from receiving any such payment if (but only if) 
such agent does so pursuant to an agency agreement under which 
the compensation to be paid to the agent for his services for 
or in connection with the billing or collection of payments due 
such physician or other person under this title is unrelated 
(directly or indirectly) to the amount of such payments or the 
billings therefor, and is not dependent upon the actual 
collection of any such payment. For purposes of subparagraph 
(C) of the first sentence of this paragraph, an employment 
relationship may include any independent contractor 
arrangement, and employer status shall be determined in 
accordance with the law of the State in which the services 
described in such clause are performed.

           *       *       *       *       *       *       *

                    Part C--Medicare+Choice Program

                 eligibility, election, and enrollment

  Sec. 1851. (a)  * * *

           *       *       *       *       *       *       *

  (f) Effectiveness of Elections and Changes of Elections.--
          (1)  * * *
          (2) During continuous open enrollment periods.--An 
        election or change of coverage made under subsection 
        (e)(2) shall take effect with the first day of the 
        first calendar month following the date on which the 
        election or change is [made, except that if such 
        election or change is made after the 10th day of any 
        calendar month, then the election or change shall not 
        take effect until the first day of the second calendar 
        month following the date on which the election or 
        change is made.] made.

           *       *       *       *       *       *       *

               payments to medicare+choice organizations

  Sec. 1853. (a) Payments to Organizations.--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) Establishment of risk adjustment factors.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) Initial implementation.--
                          (i)  * * *
                          (ii) Phase-in.--Such risk adjustment 
                        methodology shall be implemented in a 
                        phased-in manner so that the 
                        methodology insofar as it makes 
                        adjustments to capitation rates for 
                        health status applies to--
                                  (I) 10 percent of \1/12\ of 
                                the annual Medicare+Choice 
                                capitation rate in 2000 and 
                                2001; [and]
                                  (II) not more than 20 percent 
                                of such capitation rate in 
                                2002[.];
                        and, beginning in 2004, insofar as such 
                        risk adjustment is based on data from 
                        substantially all settings, the 
                        methodology shall be phased in equal 
                        increments over a 10-year period, 
                        beginning with 2004 or (if later) the 
                        first year in which such data are used.

           *       *       *       *       *       *       *

  (c) Calculation of Annual Medicare+Choice Capitation Rates.--
          (1) In general.--For purposes of this part, subject 
        to paragraphs (6)(C) and (7), each annual 
        Medicare+Choice capitation rate, for a Medicare+Choice 
        payment area for a contract year consisting of a 
        calendar year, is equal to the largest of the amounts 
        specified in the following subparagraph (A), (B), or 
        (C):
                  (A)  * * *

           *       *       *       *       *       *       *

                  (B) Minimum amount.--12 multiplied by the 
                following amount:
                          (i) For 1998, $367 (but not to 
                        exceed, in the case of an area outside 
                        the 50 States and the District of 
                        Columbia, 150 percent of the annual per 
                        capita rate of payment for 1997 
                        determined under section 1876(a)(1)(C) 
                        for the area).
                          [(ii) For a succeeding year] (ii)(I) 
                        Subject to subclause (II), for a 
                        succeeding year, the minimum amount 
                        specified in this clause (or clause 
                        (i)) for the preceding year increased 
                        by the national per capita 
                        Medicare+Choice growth percentage, 
                        described in paragraph (6)(A) for that 
                        succeeding year.
                          (II) For 2001 for any area in a 
                        Metropolitan Statistical Area with a 
                        population of more than 250,000, $525 
                        (and for any other area, $475).
                  (C) Minimum percentage increase.--
                          (i)  * * *
                          (ii) For a subsequent year, 102 
                        percent (or 103 percent in the case of 
                        2001) of the annual Medicare+Choice 
                        capitation rate under this paragraph 
                        for the area for the previous year.

           *       *       *       *       *       *       *

                                premiums

  Sec. 1854. (a)  * * *

           *       *       *       *       *       *       *

  (c) Uniform Premium.--The Medicare+Choice monthly basic and 
supplemental beneficiary premium, the Medicare+Choice monthly 
MSA premium charged under subsection (b) of a Medicare+Choice 
organization under this part may not vary among individuals 
enrolled in the plan, except across counties as approved by the 
Secretary.

           *       *       *       *       *       *       *

  (f) Requirement for Additional Benefits.--
          (1) Requirement.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (D) Uniform application.--This paragraph 
                shall be applied uniformly for all enrollees 
                for a plan, except across counties as approved 
                by the Secretary.

           *       *       *       *       *       *       *

              contracts with medicare+choice organizations

  Sec. 1857. (a)  * * *

           *       *       *       *       *       *       *

  (i) M+C Program Compatibility With Employer or Union Group 
Health Plans.--To facilitate the offering of Medicare+Choice 
plans under contracts between Medicare+Choice organizations and 
employers, labor organizations, or the trustees of a fund 
established by 1 or more employers or labor organizations (or 
combination thereof) to furnish benefits to the entity's 
employees, former employees (or combination thereof) or members 
or former members (or combination thereof) of the labor 
organizations, the Secretary may waive or modify requirements 
that hinder the design of, the offering of, or the enrollment 
in such Medicare+Choice plans.

           *       *       *       *       *       *       *

                    Part D--Miscellaneous Provisions

              definitions of services, institutions, etc.

  Sec. 1861. For purposes of this title--

                            Spell of Illness

  (a)  * * *

           *       *       *       *       *       *       *

                   Medical and Other Health Services

  (s) The term ``medical and other health services'' means any 
of the following items or services:
          (1) physicians' services;
          (2)(A) services and supplies [(including drugs and 
        biologicals which cannot, as determined in accordance 
        with regulations, be self-administered)] (including 
        drugs and biologicals which are not usually self-
        administered by the patient) furnished as an incident 
        to a physician's professional service, of kinds which 
        are commonly furnished in physicians' offices and are 
        commonly either rendered without charge or included in 
        the physicians' bills;
          (B) hospital services [(including drugs and 
        biologicals which cannot, as determined in accordance 
        with regulations, be self-administered)] (including 
        drugs and biologicals which are not usually self-
        administered by the patient) incident to physicians' 
        services rendered to outpatients and partial 
        hospitalization services incident to such services;

           *       *       *       *       *       *       *

          (J) prescription drugs used in immunosuppressive 
        therapy furnished, to an individual who receives an 
        organ transplant for which payment is made under this 
        title[, but only in the case of drugs furnished--
                  [(i) before 1995, within 12 months after the 
                date of the transplant procedure,
                  [(ii) during 1995, within 18 months after the 
                date of the transplant procedure,
                  [(iii) during 1996, within 24 months after 
                the date of the transplant procedure,
                  [(iv) during 1997, within 30 months after the 
                date of the transplant procedure, and
                  [(v) during any year after 1997, within 36 
                months after the date of the transplant 
                procedureplus such additional number of months 
                (if any) provided under section 1832(b)];

           *       *       *       *       *       *       *

                         Drugs and Biologicals

  (t)(1) The term ``drugs'' and the term ``biologicals'', 
except for purposes of subsection (m)(5) and paragraph (2), 
include only such drugs (including contrast agents) and 
biologicals, respectively, as are included (or approved for 
inclusion) in the United States Pharmacopoeia, the National 
Formulary, or the United States Homeopathic Pharmacopoeia, or 
in New Drugs or Accepted Dental Remedies (except for any drugs 
and biologicals unfavorably evaluated therein), or as are 
approved by the pharmacy and drug therapeutics committee (or 
equivalent committee) of the medical staff of the hospital 
furnishing such drugs and biologicals for use in such hospital.

           *       *       *       *       *       *       *

                            Reasonable Cost

  (v)(1)(A)  * * *

           *       *       *       *       *       *       *

  (T) In determining such reasonable costs for hospitals, no 
reduction in copayments under section 1833(t)(5)(B) shall be 
treated as a bad debt and the amount of bad debts otherwise 
treated as allowable costs which are attributable to the 
deductibles and coinsurance amounts under this title shall be 
reduced--
          (i)  * * *
          (ii) for cost reporting periods beginning during 
        fiscal year 1999, by 40 percent of such amount 
        otherwise allowable, [and]
          (iii) for cost reporting periods beginning during [a 
        subsequent fiscal year] fiscal year 2000, by 45 percent 
        of such amount otherwise allowable[.];
          (iv) for cost reporting periods beginning during 
        fiscal year 2001 and each subsequent fiscal year 
        (before fiscal year 2011), by the percent specified in 
        clause (iii) or this clause for the preceding fiscal 
        year reduced by 2.5 percentage points, of such amount 
        otherwise allowable; and
          (v) for cost reporting periods beginning during 
        fiscal year 2011 or a subsequent fiscal year, by 20 
        percent of such amount otherwise allowable.

           *       *       *       *       *       *       *

                         Screening Mammography

  (jj) The term ``screening mammography'' means a radiologic 
procedure provided to a woman for the purpose of early 
detection of breast cancer and includes a physician's 
interpretation of the results of the procedure, as well as new 
technology applied to such a procedure that the Secretary 
determines enhances the detection of breast cancer.

           *       *       *       *       *       *       *

                   Colorectal Cancer Screening Tests

  (pp)(1) The term ``colorectal cancer screening test'' means 
any of the following procedures furnished to an individual for 
the purpose of early detection of colorectal cancer:
          (A)  * * *

           *       *       *       *       *       *       *

          (C) In the case of an individual at high risk for 
        colorectal cancer and in the case of an individual 
        making the election described in section 1834(d)(4), 
        screening colonoscopy.

           *       *       *       *       *       *       *

         Diabetes Outpatient Self-Management Training Services

  (qq)(1)  * * *
  (2) In [paragraph (1)--] paragraph (1):
          (A) [a ``certified provider''] A ``certified 
        provider'' is a physician, or other individual or 
        entity designated by the Secretary, that, in addition 
        to providing diabetes outpatient self-management 
        training services, provides other items or services for 
        which payment may be made under this title[; and].
          (B) [a physician, or such other individual] (i) A 
        physician, or such other individual or entity, meets 
        the quality standards described in this paragraph if 
        the physician, or individual or entity, meets quality 
        standards established by the Secretary, except that the 
        physician or other individual or entity shall be deemed 
        to have met such standards if the physician or other 
        individual or entity (I) meets applicable standards 
        originally established by the National Diabetes 
        Advisory Board and subsequently revised by 
        organizations who participated in the establishment of 
        standards by such Board, or (II) is recognized by an 
        organization that represents individuals (including 
        individuals under this title) with diabetes, or by a 
        program described in clause (ii), as meeting standards 
        for furnishing the services.
          (ii) Notwithstanding any reference to ``a national 
        accreditation body'' in section 1865(b), for purposes 
        of clause (i), a program described in this clause is a 
        program operated by a State for the purposes of 
        accrediting diabetes self-management training programs, 
        if the Secretary determines that such State program has 
        established quality standards that meet or exceed the 
        standards established by the Secretary under clause (i) 
        or the standards originally established by the National 
        Diabetes Advisory Board and subsequently revised as 
        described in clause (i).

           *       *       *       *       *       *       *

        exclusions from coverage and medicare as secondary payer

  Sec. 1862. (a) Notwithstanding any other provision of this 
title, no payment may be made under part A or part B for any 
expenses incurred for items or services--
          (1)  * * *

           *       *       *       *       *       *       *

          [(18) which are covered skilled nursing facility 
        services described in section 1888(e)(2)(A)(i) and 
        which are furnished to an individual who is a resident 
        of a skilled nursing facility or of a part of a 
        facility that includes a skilled nursing facility (as 
        determined under regulations), by an entity other than 
        the skilled nursing facility, unless the services are 
        furnished under arrangements (as defined in section 
        1861(w)(1)) with the entity made by the skilled nursing 
        facility;]
          (18) which are covered skilled nursing facility 
        services described in section 1888(e)(2)(A)(i) and 
        which are furnished to an individual who is a 
        resident--
                  (A) of a skilled nursing facility in the case 
                of a resident who is in a stay covered under 
                part A; or
                  (B) of a skilled nursing facility or of a 
                part of a facility that includes a skilled 
                nursing facility (as determined under 
                regulations) for services furnished on or after 
                October 1, 2003, in the case of a resident who 
                is not in a stay covered under such part,
        by an entity other than the skilled nursing facility, 
        unless the services are furnished under arrangements 
        (as defined in section 1861(w)(1)) with the entity made 
        by the skilled nursing facility;

           *       *       *       *       *       *       *

                 agreements with providers of services

  Sec. 1866. (a)(1) Any provider of services (except a fund 
designated for purposes of section 1814(g) and section 1835(e)) 
shall be qualified to participate under this title and shall be 
eligible for payments under this title if it files with the 
Secretary an agreement--
          (A)  * * *

           *       *       *       *       *       *       *

          (H)(i)  * * *
          (ii) in the case of skilled nursing facilities which 
        provide covered skilled nursing facility services--
                  (I) that are furnished to an individual who 
                is a resident of the skilled nursing facility 
                in the case of a resident who is in a stay 
                covered under part A, and for services 
                furnished on or after October 1, 2003, in the 
                case of a resident who is not in a stay covered 
                under such part, and

           *       *       *       *       *       *       *

  demonstration of application of physician volume increases to group 
                               practices

  Sec. 1866A. (a) Demonstration Program Authorized.--
          (1) In general.--The Secretary shall conduct 
        demonstration projects to test and, if proven 
        effective, expand the use of incentives to health care 
        groups participating in the program under this title 
        that--
                  (A) encourage coordination of the care 
                furnished to individuals under the programs 
                under parts A and B by institutional and other 
                providers, practitioners, and suppliers of 
                health care items and services;
                  (B) encourage investment in administrative 
                structures and processes to ensure efficient 
                service delivery; and
                  (C) reward physicians for improving health 
                outcomes.
          (2) Administration by contract.--Except as otherwise 
        specifically provided, the Secretary may administer the 
        program under this section in accordance with section 
        1866B.
          (3) Definitions.--For purposes of this section, terms 
        have the following meanings:
                  (A) Physician.--Except as the Secretary may 
                otherwise provide, the term ``physician'' means 
                any individual who furnishes services which may 
                be paid for as physicians' services under this 
                title .
                  (B) Health care group.--The term ``health 
                care group'' means a group of physicians (as 
                defined in subparagraph (A)) organized at least 
                in part for the purpose of providing 
                physicians' services under this title. As the 
                Secretary finds appropriate, a health care 
                group may include a hospital and any other 
                individual or entity furnishing items or 
                services for which payment may be made under 
                this title that is affiliated with the health 
                care group under an arrangement structured so 
                that such individual or entity participates in 
                a demonstration under this section and will 
                share in any bonus earned under subsection (d).
  (b) Eligibility Criteria.--
          (1) In general.--The Secretary is authorized to 
        establish criteria for health care groups eligible to 
        participate in a demonstration under this section, 
        including criteria relating to numbers of health care 
        professionals in, and of patients served by, the group, 
        scope of services provided, and quality of care.
          (2) Payment method.--A health care group 
        participating in the demonstration under this section 
        shall agree with respect to services furnished to 
        beneficiaries within the scope of the demonstration (as 
        determined under subsection (c))--
                  (A) to be paid on a fee-for-service basis; 
                and
                  (B) that payment with respect to all such 
                services furnished by members of the health 
                care group to such beneficiaries shall (where 
                determined appropriate by the Secretary) be 
                made to a single entity.
          (3) Data reporting.--A health care group 
        participating in a demonstration under this section 
        shall report to the Secretary such data, at such times 
        and in such format as the Secretary require, for 
        purposes of monitoring and evaluation of the 
        demonstration under this section.
  (c) Patients Within Scope of Demonstration.--
          (1) In general.--The Secretary shall specify, in 
        accordance with this subsection, the criteria for 
        identifying those patients of a health care group who 
        shall be considered within the scope of the 
        demonstration under this section for purposes of 
        application of subsection (d) and for assessment of the 
        effectiveness of the group in achieving the objectives 
        of this section.
          (2) Other criteria.--The Secretary may establish 
        additional criteria for inclusion of beneficiaries 
        within a demonstration under this section, which may 
        include frequency of contact with physicians in the 
        group or other factors or criteria that the Secretary 
        finds to be appropriate.
          (3) Notice requirements.--In the case of each 
        beneficiary determined to be within the scope of a 
        demonstration under this section with respect to a 
        specific health care group, the Secretary shall ensure 
        that such beneficiary is notified of the incentives, 
        and of any waivers of coverage or payment rules, 
        applicable to such group under such demonstration.
  (d) Incentives.--
          (1) Performance target.--The Secretary shall 
        establish for each health care group participating in a 
        demonstration under this section--
                  (A) a base expenditure amount, equal to the 
                average total payments under parts A and B for 
                patients served by the health care group on a 
                fee-for-service basis in a base period 
                determined by the Secretary; and
                  (B) an annual per capita expenditure target 
                for patients determined to be within the scope 
                of the demonstration, reflecting the base 
                expenditure amount adjusted for risk and 
                expected growth rates.
          (2) Incentive bonus.--The Secretary shall pay to each 
        participating health care group (subject to paragraph 
        (4)) a bonus for each year under the demonstration 
        equal to a portion of the Medicare savings realized for 
        such year relative to the performance target.
          (3) Additional bonus for process and outcome 
        improvements.--At such time as the Secretary has 
        established appropriate criteria based on evidence the 
        Secretary determines to be sufficient, the Secretary 
        shall also pay to a participating health care group 
        (subject to paragraph (4)) an additional bonus for a 
        year, equal to such portion as the Secretary may 
        designate of the saving to the program under this title 
        resulting from process improvements made by and patient 
        outcome improvements attributable to activities of the 
        group.
          (4) Limitation.--The Secretary shall limit bonus 
        payments under this section as necessary to ensure that 
        the aggregate expenditures under this title (inclusive 
        of bonus payments) with respect to patients within the 
        scope of the demonstration do not exceed the amount 
        which the Secretary estimates would be expended if the 
        demonstration projects under this section were not 
        implemented.

         provisions for administration of demonstration program

  Sec. 1866B. (a) General Administrative Authority.--
          (1) Beneficiary eligibility.--Except as otherwise 
        provided by the Secretary, an individual shall only be 
        eligible to receive benefits under the program under 
        section 1866A (in this section referred to as the 
        ``demonstration program'') if such individual--
                  (A) is enrolled in under the program under 
                part B and entitled to benefits under part A; 
                and
                  (B) is not enrolled in a Medicare+Choice plan 
                under part C, an eligible organization under a 
                contract under section 1876 (or a similar 
                organization operating under a demonstration 
                project authority), an organization with an 
                agreement under section 1833(a)(1)(A), or a 
                PACE program under section 1894.
          (2) Secretary's discretion as to scope of program.--
        The Secretary may limit the implementation of the 
        demonstration program to--
                  (A) a geographic area (or areas) that the 
                Secretary designates for purposes of the 
                program, based upon such criteria as the 
                Secretary finds appropriate;
                  (B) a subgroup (or subgroups) of 
                beneficiaries or individuals and entities 
                furnishing items or services (otherwise 
                eligible to participate in the program), 
                selected on the basis of the number of such 
                participants that the Secretary finds 
                consistent with the effective and efficient 
                implementation of the program;
                  (C) an element (or elements) of the program 
                that the Secretary determines to be suitable 
                for implementation; or
                  (D) any combination of any of the limits 
                described in subparagraphs (A) through (C).
          (3) Voluntary receipt of items and services.--Items 
        and services shall be furnished to an individual under 
        the demonstration program only at the individual's 
        election.
          (4) Agreements.--The Secretary is authorized to enter 
        into agreements with individuals and entities to 
        furnish health care items and services to beneficiaries 
        under the demonstration program.
          (5) Program standards and criteria.--The Secretary 
        shall establish performance standards for the 
        demonstration program including, as applicable, 
        standards for quality of health care items and 
        services, cost-effectiveness, beneficiary satisfaction, 
        and such other factors as the Secretary finds 
        appropriate. The eligibility of individuals or entities 
        for the initial award, continuation, and renewal of 
        agreements to provide health care items and services 
        under the program shall be conditioned, at a minimum, 
        on performance that meets or exceeds such standards.
          (6) Administrative review of decisions affecting 
        individuals and entities furnishing services.--An 
        individual or entity furnishing services under the 
        demonstration program shall be entitled to a review by 
        the program administrator (or, if the Secretary has not 
        contracted with a program administrator, by the 
        Secretary) of a decision not to enter into, or to 
        terminate, or not to renew, an agreement with the 
        entity to provide health care items or services under 
        the program.
          (7) Secretary's review of marketing materials.--An 
        agreement with an individual or entity furnishing 
        services under the demonstration program shall require 
        the individual or entity to guarantee that it will not 
        distribute materials marketing items or services under 
        the program without the Secretary's prior review and 
        approval;
          (8) Payment in full.--
                  (A) In general.--Except as provided in 
                subparagraph (B), an individual or entity 
                receiving payment from the Secretary under a 
                contract or agreement under the demonstration 
                program shall agree to accept such payment as 
                payment in full, and such payment shall be in 
                lieu of any payments to which the individual or 
                entity would otherwise be entitled under this 
                title.
                  (B) Collection of deductibles and 
                coinsurance.--Such individual or entity may 
                collect any applicable deductible or 
                coinsurance amount from a beneficiary.
  (b) Contracts for Program Administration.--
          (1) In general.--The Secretary may administer the 
        demonstration program through a contract with a program 
        administrator in accordance with the provisions of this 
        subsection.
          (2) Scope of program administrator contracts.--The 
        Secretary may enter into such contracts for a limited 
        geographic area, or on a regional or national basis.
          (3) Eligible contractors.--The Secretary may contract 
        for the administration of the program with--
                  (A) an entity that, under a contract under 
                section 1816 or 1842, determines the amount of 
                and makes payments for health care items and 
                services furnished under this title; or
                  (B) any other entity with substantial 
                experience in managing the type of program 
                concerned.
          (4) Contract award, duration, and renewal.--
                  (A)  In general.--A contract under this 
                subsection shall be for an initial term of up 
                to three years, renewable for additional terms 
                of up to three years.
                  (B) Noncompetitive award and renewal for 
                entities administering part a or part b 
                payments.--The Secretary may enter or renew a 
                contract under this subsection with an entity 
                described in paragraph (3)(A) without regard to 
                the requirements of section 5 of title 41, 
                United States Code.
          (5) Applicability of federal acquisition 
        regulation.--The Federal Acquisition Regulation shall 
        apply to program administration contracts under this 
        subsection.
          (6) Performance standards.--The Secretary shall 
        establish performance standards for the program 
        administrator including, as applicable, standards for 
        the quality and cost-effectiveness of the program 
        administered, and such other factors as the Secretary 
        finds appropriate. The eligibility of entities for the 
        initial award, continuation, and renewal of program 
        administration contracts shall be conditioned, at a 
        minimum, on performance that meets or exceeds such 
        standards.
          (7) Functions of program administrator.--A program 
        administrator shall perform any or all of the following 
        functions, as specified by the Secretary:
                  (A) Agreements with entities furnishing 
                health care items and services.--Determine the 
                qualifications of entities seeking to enter or 
                renew agreements to provide services under the 
                program, and as appropriate enter or renew (or 
                refuse to enter or renew) such agreements on 
                behalf of the Secretary.
                  (B) Establishment of payment rates.--
                Negotiate or otherwise establish, subject to 
                the Secretary's approval, payment rates for 
                covered health care items and services.
                  (C) Payment of claims or fees.--Administer 
                payments for health care items or services 
                furnished under the program.
                  (D) Payment of bonuses.--Using such 
                guidelines as the Secretary shall establish, 
                and subject to the approval of the Secretary, 
                make bonus payments as described in subsection 
                (c)(2)(A)(ii) to entities furnishing items or 
                services for which payment may be made under 
                the program.
                  (E) Oversight.--Monitor the compliance of 
                individuals and entities with agreements under 
                the program with the conditions of 
                participation.
                  (F) Administrative review.--Conduct reviews 
                of adverse determinations specified in 
                subsection (a)(6).
                  (G) Review of marketing materials.--Conduct a 
                review of marketing materials proposed by an 
                entity furnishing services under the program.
                  (H) Additional functions.--Perform such other 
                functions as the Secretary may specify.
          (8) Limitation of liability.--The provisions of 
        section 1157(b) shall apply with respect to activities 
        of contractors and their officers, employees, and 
        agents under a contract under this subsection.
          (9) Information sharing.--Notwithstanding section 
        1106 and section 552a of title 5, United States Code, 
        the Secretary is authorized to disclose to an entity 
        with a program administration contract under this 
        subsection such information (including medical 
        information) on individuals receiving health care items 
        and services under the program as the entity may 
        require to carry out its responsibilities under the 
        contract.
  (c) Rules Applicable to Both Program Agreements and Program 
Administration Contracts.--
          (1) Records, reports, and audits.--The Secretary is 
        authorized to require entities with agreements to 
        provide health care items or services under the 
        demonstration program, and entities with program 
        administration contracts under subsection (b), to 
        maintain adequate records, to afford the Secretary 
        access to such records (including for audit purposes), 
        and to furnish such reports and other materials 
        (including audited financial statements and performance 
        data) as the Secretary may require for purposes of 
        implementation, oversight, and evaluation of the 
        program and of individuals' and entities' effectiveness 
        in performance of such agreements or contracts.
          (2) Bonuses.--Notwithstanding any other provision of 
        law, but subject to subparagraph (B)(ii), the Secretary 
        may make bonus payments under the program from the 
        Federal Health Insurance Trust Fund and the Federal 
        Supplementary Medical Insurance Trust Fund in amounts 
        that do not exceed the amounts authorized under the 
        program in accordance with the following:
                  (A) Payments to program administrators.--The 
                Secretary may make bonus payments under the 
                program to program administrators.
                  (B) Payments to entities furnishing 
                services.--
                          (i) In general.--Subject to clause 
                        (ii), the Secretary may make bonus 
                        payments to individuals or entities 
                        furnishing items or services for which 
                        payment may be made under the program, 
                        or may authorize the program 
                        administrator to make such bonus 
                        payments in accordance with such 
                        guidelines as the Secretary shall 
                        establish and subject to the 
                        Secretary's approval.
                          (ii) Limitations.--The Secretary may 
                        condition such payments on the 
                        achievement of such standards related 
                        to efficiency, improvement in processes 
                        or outcomes of care, or such other 
                        factors as the Secretary determines to 
                        be appropriate.
          (3) Antidiscrimination limitation.--The Secretary 
        shall not enter into an agreement with an entity to 
        provide health care items or services under the 
        program, or with an entity to administer the program, 
        unless such entity guarantees that it will not deny, 
        limit, or condition the coverage or provision of 
        benefits under the program, for individuals eligible to 
        be enrolled under such program, based on any health 
        status-related factor described in section 2702(a)(1) 
        of the Public Health Service Act.
  (d) Limitations on Judicial Review.--The following actions 
and determinations with respect to the demonstration program 
shall not be subject to review by a judicial or administrative 
tribunal:
          (1) Limiting the implementation of the program under 
        subsection (a)(2).
          (2) Establishment of program participation standards 
        under subsection (a)(5) or the denial or termination 
        of, or refusal to renew, an agreement with an entity to 
        provide health care items and services under the 
        program.
          (3) Establishment of program administration contract 
        performance standards under subsection (b)(6), the 
        refusal to renew a program administration contract, or 
        the noncompetitive award or renewal of a program 
        administration contract under subsection (b)(4)(B).
          (5) Establishment of payment rates, through 
        negotiation or otherwise, under a program agreement or 
        a program administration contract.
          (6) A determination with respect to the program 
        (where specifically authorized by the program authority 
        or by subsection (c)(2))--
                  (A) as to whether cost savings have been 
                achieved, and the amount of savings; or
                  (B) as to whether, to whom, and in what 
                amounts bonuses will be paid.
  (e) Application Limited to Parts A and B.--None of the 
provisions of this section or of the demonstration program 
shall apply to the programs under part C.
  (f) Reports to Congress.--Not later than two years after the 
date of enactment of this section, and biennially thereafter 
for six years, the Secretary shall report to the Congress on 
the use of authorities under the demonstration program. Each 
report shall address the impact of the use of those authorities 
on expenditures, access, and quality under the programs under 
this title.

           *       *       *       *       *       *       *

         medicare coverage for end stage renal disease patients

  Sec. 1881. (a)  * * *

           *       *       *       *       *       *       *

  (b)(1)  * * *

           *       *       *       *       *       *       *

  (7) The Secretary shall provide by regulation for a method 
(or methods) for determining prospectively the amounts of 
payments to be made for dialysis services furnished by 
providers of services and renal dialysis facilities to 
individuals in a facility and to such individuals at home. Such 
method (or methods) shall provide for the prospective 
determination of a rate (or rates) for each mode of care based 
on a single composite weighted formula (which takes into 
account the mix of patients who receive dialysis services at a 
facility or at home and the relative costs of providing such 
services in such settings) for hospital-based facilities and 
such a single composite weighted formula for other renal 
dialysis facilities, or based on such other method or 
combination of methods which differentiate between hospital-
based facilities and other renal dialysis facilities and which 
the Secretary determines, after detailed analysis, will more 
effectively encourage the more efficient delivery of dialysis 
services and will provide greater incentives for increased use 
of home dialysis than through the single composite weighted 
formulas. The amount of a payment made under any method other 
than a method based on a single composite weighted formula may 
not exceed the amount (or, in the case of continuous cycling 
peritoneal dialysis, 130 percent of the amount) of the median 
payment that would have been made under the formula for 
hospital-based facilities. The Secretary shall provide for such 
exceptions to such methods as may be warranted by unusual 
circumstances (including the special circumstances of sole 
facilities located in isolated, rural areas and of pediatric 
facilities). Each application for such an exception shall be 
deemed to be approved unless the Secretary disapproves it by 
not later than 60 working days after the date the application 
is filed. The Secretary may provide that such method will serve 
in lieu of any target reimbursement rate that would otherwise 
be established under paragraph (6). The Secretary shall reduce 
the amount of each composite rate payment under this paragraph 
for each treatment by 50 cents (subject to such adjustments as 
may be required to reflect modes of dialysis other than 
hemodialysis) and provide for payment of such amount to the 
organizations (designated under subsection (c)(1)(A)) for such 
organizations' necessary and proper administrative costs 
incurred in carrying out the responsibilities described in 
subsection (c)(2). The Secretary shall provide that amounts 
paid under the previous sentence shall be distributed to the 
organizations described in subsection (c)(1)(A) to ensure 
equitable treatment of all such network organizations. The 
Secretary in distributing any such payments to network 
organizations shall take into account--
          (A)  * * *

           *       *       *       *       *       *       *

The Secretary shall increase the amount of each composite rate 
payment for dialysis services furnished during 2000 by 1.2 
percent above such composite rate payment amounts for such 
services furnished on December 31, 1999, and for such services 
furnished on or after January 1, [2001, by 1.2 percent] 2000, 
by 2.4 percent above such composite rate payment amounts for 
such services furnished on December 31, 2000.

           *       *       *       *       *       *       *

          payment to hospitals for inpatient hospital services

  Sec. 1886. (a)  * * *

           *       *       *       *       *       *       *

  (b)(1)  * * *

           *       *       *       *       *       *       *

  (3)(A)  * * *

           *       *       *       *       *       *       *

  (D) For cost reporting periods ending on or before September 
30, 1994, and for cost reporting periods beginning on or after 
October 1, 1997, [and before October 1, 2006,] in the case of a 
hospital that is a medicare-dependent, small rural hospital (as 
defined in subsection (d)(5)(G)), the term ``target amount'' 
means--
          (i)  * * *

           *       *       *       *       *       *       *

          (iv) with respect to discharges occurring during 
        fiscal year 1998 [through fiscal year 2005,] or any 
        subsequent fiscal year, the target amount for the 
        preceding year increased by the applicable percentage 
        increase under subparagraph (B)(iv).

           *       *       *       *       *       *       *

  (d)(1)  * * *

           *       *       *       *       *       *       *

  (5)(A)  * * *

           *       *       *       *       *       *       *

  (G)(i) For any cost reporting period beginning on or after 
April 1, 1990, and before October 1, 1994, or discharges 
occurring on or after October 1, 1997, [and before October 1, 
2006,] in the case of a subsection (d) hospital which is a 
medicare-dependent, small rural hospital, payment under 
paragraph (1)(A) shall be equal to the sum of the amount 
determined under clause (ii) and the amount determined under 
paragraph (1)(A)(iii).
  (ii) The amount determined under this clause is--
          (I)  * * *
          (II) for discharges occurring during any subsequent 
        cost reporting period (or portion thereof) and before 
        October 1, 1994, or discharges occurring on or after 
        October 1, 1997, [and before October 1, 2006,] 50 
        percent of the amount by which the hospital's target 
        amount for the cost reporting period (as defined in 
        subsection (b)(3)(D)) exceeds the amount determined 
        under paragraph (1)(A)(iii).

           *       *       *       *       *       *       *

  (iv) The term ``medicare-dependent, small rural hospital'' 
means, with respect to any cost reporting period to which 
clause (i) applies, any hospital--
          (I)  * * *

           *       *       *       *       *       *       *

          (IV) for which not less than 60 percent of its 
        inpatient days or discharges during the cost reporting 
        period beginning in fiscal year 1987, or any of the 3 
        most recent audited cost reporting periods, were 
        attributable to inpatients entitled to benefits under 
        part A.

           *       *       *       *       *       *       *

              prospective payment for home health services

  Sec. 1895. (a)  * * *
  (b) System of Prospective Payment for Home Health Services.--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) Payment basis.--
                  (A) Initial basis.--
                          (i) In general.--Under such system 
                        the Secretary shall provide for 
                        computation of a standard prospective 
                        payment amount (or amounts) as follows:
                                  (I) Such amount (or amounts) 
                                shall initially be based on the 
                                most current audited cost 
                                report data available to the 
                                Secretary and shall be computed 
                                in a manner so that the total 
                                amounts payable under the 
                                system for the 12-month period 
                                beginning on the date the 
                                Secretary implements the system 
                                shall be equal to the total 
                                amount that would have been 
                                made if the system had not been 
                                in effect.
                                  (II) For the 12-month period 
                                beginning after the period 
                                described in subclause (I), 
                                such amount (or amounts) shall 
                                be equal to the amount (or 
                                amounts) determined under 
                                subclause (I), updated under 
                                subparagraph (B).
                                  [(II)] (III) For periods 
                                beginning after the period 
                                described in subclause [(I)] 
                                (II), such amount (or amounts) 
                                shall be equal to the amount 
                                (or amounts) that would have 
                                been determined under subclause 
                                (I) that would have been made 
                                for fiscal year 2001 if the 
                                system had not been in effect 
                                and if section 
                                1861(v)(1)(L)(ix) had not been 
                                enacted but if the reduction in 
                                limits described in clause (ii) 
                                had been in effect, updated 
                                under subparagraph (B).

           *       *       *       *       *       *       *

      TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

           *       *       *       *       *       *       *

                   STATE PLANS FOR MEDICAL ASSISTANCE

  Sec. 1902. (a) A State plan for medical assistance must--
          (1)  * * *

           *       *       *       *       *       *       *

          (8) provide that all individuals wishing to make 
        application for medical assistance under the plan shall 
        have opportunity to do so[, and that] permit 
        individuals to apply for and obtain medical assistance 
        for medicare cost-sharing using the simplified uniform 
        application form developed under section 1905(p)(5), 
        make available such forms to such individuals, permit 
        such individuals to apply for such assistance by mail 
        (and, at the State option, by telephone or other 
        electronic means) and not require them to apply in 
        person, and provide that such assistance shall be 
        furnished with reasonable promptness to all eligible 
        individuals and provide application forms for medical 
        assistance for medicare cost-sharing under the plan to 
        the Secretary in order to make them available through 
        Federal offices under section 1804(d) within the State;

           *       *       *       *       *       *       *

          (10) provide--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) that if medical assistance is included 
                for any group of individuals described in 
                section 1905(a) who are not described in 
                subparagraph (A) or (E), then--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iv) if such medical assistance 
                        includes services in institutions for 
                        mental diseases or in an intermediate 
                        care facility for the mentally retarded 
                        (or both) for any such group, it also 
                        must include for all groups covered at 
                        least the care and services listed in 
                        paragraphs (1) through (5) and (17) of 
                        section 1905(a) or the care and 
                        services listed in any 7 of the 
                        paragraphs numbered (1) through [(24)] 
                        (25) of such section;

           *       *       *       *       *       *       *

          (13) provide--
                  (A) for a public process for determination of 
                rates of payment under the plan for hospital 
                services, nursing facility services, and 
                services of intermediate care facilities for 
                the mentally retarded under which--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (iv) in the case of hospitals, such 
                        rates take into account (in a manner 
                        consistent with section 1923) the 
                        situation of hospitals which serve a 
                        disproportionate number of low-income 
                        patients with special needs; and
                  (B) for payment for hospice care in amounts 
                no lower than the amounts, using the same 
                methodology, used under part A of title XVIII 
                and for payment of amounts under section 
                1905(o)(3); except that in the case of hospice 
                care which is furnished to an individual who is 
                a resident of a nursing facility or 
                intermediate care facility for the mentally 
                retarded, and who would be eligible under the 
                plan for nursing facility services or services 
                in an intermediate care facility for the 
                mentally retarded if he had not elected to 
                receive hospice care, there shall be paid an 
                additional amount, to take into account the 
                room and board furnished by the facility, equal 
                to at least 95 percent of the rate that would 
                have been paid by the State under the plan for 
                facility services in that facility for that 
                individual; [and]
                  [(C)(i) for payment for services described in 
                clause (B) or (C) of section 1905(a)(2) under 
                the plan, of 100 percent (or 95 percent for 
                services furnished during fiscal year 2000, 
                fiscal year 2001, or fiscal year 2002, 90 
                percent for services furnished during fiscal 
                year 2003, or 85 percent for services furnished 
                during fiscal year 2004) of costs 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 those regulations do not apply, on the 
                same methodology used under section 1833(a)(3) 
                and (ii) in carrying out clause (i) in the case 
                of services furnished by a Federally-qualified 
                health center or a rural health clinic pursuant 
                to a contract between the center and an 
                organization under section 1903(m), 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 clause (i) exceeds the amount 
                of the payments provided under such contract;]

           *       *       *       *       *       *       *

          (15) provide for payment for services described in 
        clause (B) or (C) of section 1905(a)(2) under the plan 
        in accordance with subsection (aa);

           *       *       *       *       *       *       *

  (aa) Payment for Services Provided by Federally-Qualified 
Health Centers and Rural Health Clinics.--
          (1) In general.--Beginning with fiscal year 2001 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. The payment rate 
        under this subsection shall not vary based upon the 
        site services are provided in the case of the same 
        center or clinic entity.
          (2) Fiscal year 2001.--Subject to paragraph (4), for 
        services furnished during fiscal year 2001, 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 average of the costs of the 
        center or clinic of furnishing such services during 
        fiscal years 1999 and 2000 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 or decrease in the scope of such services 
        furnished by the center or clinic during fiscal year 
        2001.
          (3) Fiscal year 2002 and succeeding fiscal years.--
        Subject to paragraph (4), for services furnished during 
        fiscal year 2002 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 or decrease 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 2000, 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 based on the rates established under 
        this subsection for the fiscal year for other such 
        centers or clinics located in the same or adjacent area 
        with a similar case load, service package, and case mix 
        or, in the absence of such a center or clinic, in 
        accordance with the regulations and methodology 
        referred to in paragraph (2) or based on such other 
        tests of reasonableness as the Secretary may specify. 
        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.

           *       *       *       *       *       *       *

                           PAYMENT TO STATES

  Sec. 1903. (a)  * * *

           *       *       *       *       *       *       *

  (v)(1) Notwithstanding the preceding provisions of this 
section, except as provided in [paragraph (2)] paragraphs (2) 
and (4), no payment may be made to a State under this section 
for medical assistance furnished to an alien who is not 
lawfully admitted for permanent residence or otherwise 
permanently residing in the United States under color of law.

           *       *       *       *       *       *       *

  (4)(A) A State may elect (in a plan amendment under this 
title) to provide medical assistance under this title, 
notwithstanding sections 401(a), 402(b), 403, and 421 of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996, for aliens who are lawfully residing in the United 
States (including battered aliens described in section 431(c) 
of such Act) and who are otherwise eligible for such 
assistance, within either or both of the following eligibility 
categories, but only if they have lawfully resided in the 
United States for 2 years:
          (i) Pregnant women.--Women during pregnancy (and 
        during the 60-day period beginning on the last day of 
        the pregnancy).
          (ii) Children.--Children (as defined under such 
        plan), including optional targeted low-income children 
        described in section 1905(u)(2)(B).
  (B) In the case of a State that has elected to provide 
medical assistance to a category of aliens under subparagraph 
(A), no debt shall accrue under an affidavit of support against 
any sponsor of such an alien who has lawfully resided in the 
United States for 2 years on the basis of provision of 
assistance to such category.

           *       *       *       *       *       *       *

                              DEFINITIONS

  Sec. 1905. For purposes of this title--
  (a) The term ``medical assistance'' means payment of part or 
all of the cost of the following care and services (if provided 
in or after the third month before the month in which the 
recipient makes application for assistance or, in the case of 
medicare cost-sharing with respect to a qualified medicare 
beneficiary described in subsection (p)(1), if provided after 
the month in which the individual becomes such a beneficiary) 
for individuals, and, with respect to physicians' or dentists' 
services, at the option of the State, to individuals (other 
than individuals with respect to whom there is being paid, or 
who are eligible, or would be eligible if they were not in a 
medical institution, to have paid with respect to them a State 
supplementary payment and are eligible for medical assistance 
equal in amount, duration, and scope to the medical assistance 
made available to individuals described in section 
1902(a)(10)(A)) not receiving aid or assistance under any plan 
of the State approved under title I, X, XIV, or XVI, or part A 
of title IV, and with respect to whom supplemental security 
income benefits are not being paid under title XVI, who are--
          (i)  * * *

           *       *       *       *       *       *       *

but whose income and resources are insufficient to meet all of 
such cost--
          (1) inpatient hospital services (other than services 
        in an institution for mental diseases);

           *       *       *       *       *       *       *

          (22) services furnished by a physician assistant (as 
        defined in section 1861(aa)(5)) which the assistant is 
        legally authorized to perform under State law and with 
        the supervision of a physician;
          [(22)] (23) home and community care (to the extent 
        allowed and as defined in section 1929) for 
        functionally disabled elderly individuals;
          [(23)] (24) community supported living arrangements 
        services (to the extent allowed and as defined in 
        section 1930);
          [(24)] (25) personal care services furnished to an 
        individual who is not an inpatient or resident of a 
        hospital, nursing facility, intermediate care facility 
        for the mentally retarded, or institution for mental 
        disease that are (A) authorized for the individual by a 
        physician in accordance with a plan of treatment or (at 
        the option of the State) otherwise authorized for the 
        individual in accordance with a service plan approved 
        by the State, (B) provided by an individual who is 
        qualified to provide such services and who is not a 
        member of the individual's family, and (C) furnished in 
        a home or other location;
          [(25)] (26) primary care case management services (as 
        defined in subsection (t));
          [(26)] (27) services furnished under a PACE program 
        under section 1934 to PACE program eligible individuals 
        enrolled under the program under such section; and
          [(27)] (28) any other medical care, and any other 
        type of remedial care recognized under State law, 
        specified by the Secretary,

           *       *       *       *       *       *       *

  (p)(1)  * * *

           *       *       *       *       *       *       *

  (5)(A) The Secretary shall develop a simplified application 
form for use by individuals (including both qualified medicare 
beneficiaries and specified low-income medicare beneficiaries) 
in applying for medical assistance for medicare cost-sharing 
under this title. Such form shall be easily readable by 
applicants and uniform nationally.
  (B) In developing such form, the Secretary shall consult with 
beneficiary groups and the States.
  (C) The Secretary shall make such application forms 
available--
          (i) to the Commissioner of Social Security for 
        distribution through local social security offices;
          (ii) at such other sites at the Secretary determines 
        appropriate; and
          (iii) to persons upon request.

           *       *       *       *       *       *       *

      PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN 
                       REQUIREMENTS OF THIS TITLE

  Sec. 1915. (a)  * * *

           *       *       *       *       *       *       *

  (b) The Secretary, to the extent he finds it to be cost-
effective and efficient and not inconsistent with the purposes 
of this title, may waive such requirements of section 1902 
(other than subsection (s)) (other than sections 
[1902(a)(13)(C)] 1902(a)(15), 1902(aa), and 1902(a)(10)(A) 
insofar as it requires provision of the care and services 
described in section 1905(a)(2)(C)) as may be necessary for a 
State--
          (1)  * * *

           *       *       *       *       *       *       *

       liens, adjustments and recoveries, and transfers of assets

  Sec. 1917. (a)  * * *

           *       *       *       *       *       *       *

  (c)(1)(A)  * * *

           *       *       *       *       *       *       *

  (C)(i)  * * *

           *       *       *       *       *       *       *

  (ii) The services described in this subparagraph with respect 
to a noninstitutionalized individual are services (not 
including any services described in clause (i)) that are 
described in paragraph (7), [(22), or (24)] (23), or (25) of 
section 1905(a), and, at the option of a State, other long-term 
care services for which medical assistance is otherwise 
available under the State plan to individuals requiring long-
term care.

           *       *       *       *       *       *       *

               PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN

  Sec. 1920. (a)  * * *
  (b) For purposes of this section--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) the term ``qualified provider'' means any 
        provider that--
                  (A)  * * *

           *       *       *       *       *       *       *

The term ``qualified provider'' includes a qualified entity as 
defined in section 1920A(b)(3).

           *       *       *       *       *       *       *

                  presumptive eligibility for children

  Sec. 1920A. (a)  * * *
  (b) For purposes of this section:
          (1)  * * *

           *       *       *       *       *       *       *

          (3)(A) Subject to subparagraph (B), the term 
        ``qualified entity'' means any entity that--
                  (i)(I) is eligible for payments under a State 
                plan approved under this title and provides 
                items and services described in subsection (a) 
                [or (II)], (II) is authorized to determine 
                eligibility of a child to participate in a Head 
                Start program under the Head Start Act ([42 
                U.S.C. 9821] 42 U.S.C. 9831 et seq.), 
                eligibility of a child to receive child care 
                services for which financial assistance is 
                provided under the Child Care and Development 
                Block Grant Act of 1990 (42 U.S.C. 9858 et 
                seq.), eligibility of an infant or child to 
                receive assistance under the special 
                supplemental nutrition program for women, 
                infants, and children (WIC) under section 17 of 
                the Child Nutrition Act of 1966 (42 U.S.C. 
                1786) eligibility of a child for medical 
                assistance under the State plan under this 
                title, or eligibility of a child for child 
                health assistance under the program funded 
                under title XXI, (III) is an elementary school 
                or secondary school, as such terms are defined 
                in section 14101 of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 
                8801), an elementary or secondary school 
                operated or supported by the Bureau of Indian 
                Affairs, a State or tribal child support 
                enforcement agency, a child care resource and 
                referral agency, an organization that is 
                providing emergency food and shelter under a 
                grant under the Stewart B. McKinney Homeless 
                Assistance Act, or a State or tribal office or 
                entity involved in enrollment in the program 
                under this title, under part A of title IV, 
                under title XXI, or that determines eligibility 
                for any assistance or benefits provided under 
                any program of public or assisted housing that 
                receives Federal funds, including the program 
                under section 8 or any other section of the 
                United States Housing Act of 1937 (42 U.S.C. 
                1437 et seq.) or under the Native American 
                Housing Assistance and Self-Determination Act 
                of 1996 (25 U.S.C. 4101 et seq.), or (IV) any 
                other entity the State so deems, as approved by 
                the Secretary; and
                  (ii) is determined by the State agency to be 
                capable of making determinations of the type 
                described in [paragraph (1)(A)] paragraph (2).

           *       *       *       *       *       *       *

  ADJUSTMENT IN PAYMENT FOR INPATIENT HOSPITAL SERVICES FURNISHED BY 
                    DISPROPORTIONATE SHARE HOSPITALS

  Sec. 1923. (a) Implementation of Requirement.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2)(A)  * * *

           *       *       *       *       *       *       *

          (D) A State plan under this title shall not be 
        considered to meet the requirements of section 
        1902(a)(13)(A)(iv) (insofar as it requires payments to 
        hospitals to take into account the situation of 
        hospitals that serve a disproportionate number of low-
        income patients with special needs), as of October 1, 
        1998, unless the State has submitted to the Secretary 
        by such date a description of the methodology used by 
        the State to identify and to make payments to 
        disproportionate share hospitals, including children's 
        hospitals, on the basis of the proportion of low-income 
        and medicaid patients (including such patients who 
        receive benefits through a managed care entity) served 
        by such hospitals. The State shall provide an annual 
        report to the Secretary describing the disproportionate 
        share payments to each such disproportionate share 
        hospital.

           *       *       *       *       *       *       *

  (b) Hospitals Deemed Disproportionate Share.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) For purposes of paragraph (1)(A), the term 
        ``medicaid inpatient utilization rate'' means, for a 
        hospital, a fraction (expressed as a percentage), the 
        numerator of which is the hospital's number of 
        inpatient days attributable to patients who (for such 
        days) were eligible for medical assistance under a 
        State plan approved under this title in a period 
        (regardless of whether they receive benefits on a fee-
        for-service basis or through a managed care entity), 
        and the denominator of which is the total number of the 
        hospital's inpatient days in that period. In this 
        paragraph, the term ``inpatient day'' includes each day 
        in which an individual (including a newborn) is an 
        inpatient in the hospital, whether or not the 
        individual is in a specialized ward and whether or not 
        the individual remains in the hospital for lack of 
        suitable placement elsewhere.
          (3) For purposes of paragraph (1)(B), the term ``low-
        income utilization rate'' means, for a hospital, the 
        sum of--
                  (A) the fraction (expressed as a 
                percentage)--
                          (i) the numerator of which is the sum 
                        (for a period) of (I) the total 
                        revenues paid the hospital for patient 
                        services under a State plan under this 
                        title (regardless of whether the 
                        services were furnished on a fee-for-
                        service basis or through a managed care 
                        entity) and (II) the amount of the cash 
                        subsidies for patient services received 
                        directly from State and local 
                        governments, and

           *       *       *       *       *       *       *

  (f) Limitation on Federal Financial Participation.--
          (1)  * * *
          (2) State dsh allotments for fiscal years 1998 
        through [2002] 2000.--The DSH allotment for a State for 
        each fiscal year during the period beginning with 
        fiscal year 1998 and ending with fiscal year [2002] 
        2000 is determined in accordance with the following 
        table:

----------------------------------------------------------------------------------------------------------------
                                                                     DSH Allotment (in millions of dollars)
                       State or District                       -------------------------------------------------
                                                                  FY 98     FY 99     FY 00    [FY 01]   [FY 02]
----------------------------------------------------------------------------------------------------------------
 Alabama                                                             293       269       248     [246]     [246]

 Alaska                                                               10        10        10       [9]       [9]

 Arizona                                                              81        81        81      [81]      [81]

 Arkansas                                                              2         2         2       [2]       [2]

 California                                                        1,085     1,068       986     [931]     [877]

 Colorado                                                             93        85        79      [74]      [74]

 Connecticut                                                         200       194       164     [160]     [160]

 Delaware                                                              4         4         4       [4]       [4]

 District of Columbia                                                 23        23   [32] 49      [32]      [32]

 Florida                                                             207       203       197     [188]     [160]

 Georgia                                                             253       248       241     [228]     [215]

 Hawaii                                                                0         0         0       [0]       [0]

 Idaho                                                                 1         1         1       [1]       [1]

 Illinois                                                            203       199       193     [182]     [172]

 Indiana                                                             201       197       191     [181]     [171]

 Iowa                                                                  8         8         8       [8]       [8]

 Kansas                                                               51        49        42      [36]      [33]

 Kentucky                                                            137       134       130     [123]     [116]

 Louisiana                                                           880       795       713     [658]     [631]

 Maine                                                               103        99        84      [84]      [84]

 Maryland                                                             72        70        68      [64]      [61]

 Massachusetts                                                       288       282       273     [259]     [244]

 Michigan                                                            249       244       237     [224]     [212]

 Minnesota                                                            16                  33      [33]      [33]

 Mississippi                                                         143       141       136     [129]     [122]

 Missouri                                                            436       423       379     [379]     [379]

 Montana                                                             0.2       0.2       0.2     [0.2]     [0.2]

 Nebraska                                                              5         5         5       [5]       [5]

 Nevada                                                               37        37        37      [37]      [37]

 New Hampshire                                                       140       136       130     [130]     [130]

 New Jersey                                                          600       582       515     [515]     [515]

 New Mexico                                                            5                   9       [9]       [9]

 New York                                                          1,512     1,482     1,436   [1,361]   [1,285]

 North Carolina                                                      278       272       264     [250]     [236]

 North Dakota                                                          1         1         1       [1]       [1]

 Ohio                                                                382       374       363     [344]     [325]

 Oklahoma                                                             16        16        16      [16]      [16]

 Oregon                                                               20        20        20      [20]      [20]

 Pennsylvania                                                        529       518       502     [476]     [449]

 Rhode Island                                                         62        60        58      [55]      [52]

 South Carolina                                                      313       303       262     [262]     [262]

 South Dakota                                                          1         1         1       [1]       [1]

 Tennessee                                                             0         0         0       [0]       [0]

 Texas                                                               979       950       806     [765]     [765]

 Utah                                                                  3         3         3       [3]       [3]

 Vermont                                                              18        18        18      [18]      [18]

 Virginia                                                             70        68        66      [63]      [59]

 Washington                                                          174       171       166     [157]     [148]

 West Virginia                                                        64        63        61      [58]      [54]

 Wisconsin                                                             7         7         7       [7]       [7]

 Wyoming                                                               0      \3\0       0.1     [0.1]     [0.1]

----------------------------------------------------------------------------------------------------------------

          (3) State dsh allotments for fiscal year [2003] 2001  
        and thereafter.--
                  (A) In general.--The DSH allotment for any 
                State for fiscal year [2003] 2001 and each 
                succeeding fiscal year is equal to the DSH 
                allotment for the State for the preceding 
                fiscal year under paragraph (2) [or this 
                paragraph], this paragraph, or paragraph (4), 
                increased, subject to [subparagraph (B)] 
                subparagraphs (B) and (C), by the percentage 
                change in the consumer price index for all 
                urban consumers (all items; U.S. city average), 
                for the previous fiscal year.

           *       *       *       *       *       *       *

                  (C) Special rule for extremely low dsh 
                states.--In the case of a State in which the 
                total expenditures under the State plan 
                (including Federal and State shares) for 
                disproportionate share hospital adjustments 
                under this section for fiscal year 1999, as 
                reported to the Administrator of the Health 
                Care Financing Administration as of August 31, 
                2000, is greater than 0 but less than 1 percent 
                of the State's total amount of expenditures 
                under the State plan for medical assistance 
                during the fiscal year, the DSH allotment for 
                fiscal year 2001 shall be increased to 1 
                percent of the State's total amount of 
                expenditures under such plan for such 
                assistance during such fiscal year. In 
                subsequent fiscal years, such increased 
                allotment is subject to an increase for 
                inflation as provided in subparagraph (A).

           *       *       *       *       *       *       *

            EXTENSION OF ELIGIBILITY FOR MEDICAL ASSISTANCE

  Sec. 1925. (a) Initial 6-Month Extension.--
          (1) Requirement.--Notwithstanding any other provision 
        of this title, but subject to subsection (g), each 
        State plan approved under this title must provide that 
        each family which was receiving aid pursuant to a plan 
        of the State approved under part A of title IV in at 
        least 3 of the 6 months immediately preceding the month 
        in which such family becomes ineligible for such aid, 
        because of hours of, or income from, employment of the 
        caretaker relative (as defined in subsection (e)) or 
        because of section 402(a)(8)(B)(ii)(II) (providing for 
        a time-limited earned income disregard), shall, subject 
        to paragraph (3) and without any reapplication for 
        benefits under the plan, remain eligible for assistance 
        under the plan approved under this title during the 
        immediately succeeding 6-month period in accordance 
        with this subsection.

           *       *       *       *       *       *       *

  (b) Additional 6-Month Extension.--
          (1) Requirement.--Notwithstanding any other provision 
        of this title, but subject to subsection (g), each 
        State plan approved under this title shall provide that 
        the State shall offer to each family, which has 
        received assistance during the entire 6-month period 
        under subsection (a) and which meets the requirement of 
        paragraph (2)(B)(i), in the last month of the period 
        the option of extending coverage under this subsection 
        for the succeeding 6-month period, subject to paragraph 
        (3).
          (2) Notice and reporting requirements.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) State option to waive reporting 
                requirements.--A State may elect to waive the 
                reporting requirements under subparagraph (B) 
                and, in the case of such a waiver for purposes 
                of notices required under subparagraph (A), to 
                exclude from such notices any reference to any 
                requirement under subparagraph (B).

           *       *       *       *       *       *       *

  (f) Sunset.--This section shall not apply with respect to 
families that cease to be eligible for aid under part A of 
title IV after September 30, [2001] 2002.
  (g) Exemption for State Covering Needy Families Up to 185 
Percent of Poverty.--
          (1) In general.--At State option, the provisions of 
        this section shall not apply to a State that uses the 
        authority under section 1931(b)(2)(C) to make medical 
        assistance available under the State plan under this 
        title, at a minimum, to all individuals described in 
        section 1931(b)(1) in families with gross incomes 
        (determined without regard to work-related child care 
        expenses of such individuals) at or below 185 percent 
        of the income official poverty line (as defined by the 
        Office of Management and Budget, and revised annually 
        in accordance with section 673(2) of the Omnibus Budget 
        Reconciliation Act of 1981) applicable to a family of 
        the size involved.
          (2) Application to other provisions of this title.--
        The State plan of a State described in paragraph (1) 
        shall be deemed to meet the requirements of sections 
        1902(a)(10)(A)(i)(I) and 1902(e)(1).

           *       *       *       *       *       *       *

 Home and Community Care for Functionally Disabled Elderly Individuals

  Sec. 1929. (a)  * * *

           *       *       *       *       *       *       *

  (e) Ceiling on Payment Amounts and Maintenance of Effort.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Maintenance of effort.--
                  (A) Annual reports.--As a condition for the 
                receipt of payment under section 1903(a) with 
                respect to medical assistance provided by a 
                State for home and community care (other than a 
                waiver under section 1915(c) and other than 
                home health care services described in section 
                1905(a)(7) and personal care services specified 
                under regulations under section [1905(a)(23)] 
                1905(a)(24)), the State shall report to the 
                Secretary, with respect to each Federal fiscal 
                year (beginning with fiscal year 1990) and in a 
                format developed or approved by the Secretary, 
                the amount of funds obligated by the State with 
                respect to the provision of home and community 
                care to the functionally disabled elderly in 
                that fiscal year.

           *       *       *       *       *       *       *

                  provisions relating to managed care

  Sec. 1932. (a)  * * *

           *       *       *       *       *       *       *

  (g) Identification of Patients for Purposes of Making DSH 
Payments.--Each contract with a managed care entity under 
section 1903(m) or under section 1905(t)(3) shall require the 
entity either--
          (1) to report to the State information necessary to 
        determine the hospital services provided under the 
        contract (and the identity of hospitals providing such 
        services) for purposes of applying sections 
        1886(d)(5)(F) and 1923; or
          (2) to include a sponsorship code in the 
        identification card issued to individuals covered under 
        this title in order that a hospital may identify a 
        patient as being entitled to benefits under this title.

           *       *       *       *       *       *       *

         TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

           *       *       *       *       *       *       *

SEC. 2104. ALLOTMENTS.

  (a)  * * *

           *       *       *       *       *       *       *

  (g) Rule for Redistribution and Extended Availability of 
Fiscal Years 1998 and 1999  Allotments.--
          (1) Amount redistributed.--
                  (A) In general.--In the case of a State that 
                expends all of its allotment under subsection 
                (b) or (c) for fiscal year 1998 by the end of 
                fiscal year 2000, or for fiscal year 1999 by 
                the end of fiscal year 2001, the Secretary 
                shall redistribute to the State under 
                subsection (f) (from the fiscal year 1998 or 
                1999 allotments of other States, respectively, 
                as determined by the application of paragraphs 
                (2) and (3) with respect to the respective 
                fiscal year)) the following amount:
                          (i) State.--In the case of 1 of the 
                        50 States or the District of Columbia, 
                        with respect to--
                                  (I) the fiscal year 1998 
                                allotment, the amount by which 
                                the State's expenditures under 
                                this title in fiscal years 
                                1998, 1999, and 2000 exceed the 
                                State's allotment for fiscal 
                                year 1998 under subsection (b); 
                                or
                                  (II) the fiscal year 1999 
                                allotment, the amount by which 
                                the State's expenditures under 
                                this title in fiscal years 
                                1999, 2000, and 2001 exceed the 
                                State's allotment for fiscal 
                                year 1999 under subsection (b).
                          (ii) Territory.--In the case of a 
                        commonwealth or territory described in 
                        subsection (c)(3), an amount that bears 
                        the same ratio to 1.05 percent of the 
                        total amount described in paragraph 
                        (2)(B)(i)(I) as the ratio of the 
                        commonwealth's or territory's fiscal 
                        year 1998 or 1999 allotment under 
                        subsection (c) (as the case may be) 
                        bears to the total of all such 
                        allotments for such fiscal year under 
                        such subsection.
                  (B) Expenditure rules.--An amount 
                redistributed to a State under this paragraph 
                with respect to fiscal year 1998 or 1999--
                          (i) shall not be included in the 
                        determination of the State's allotment 
                        for any fiscal year under this section;
                          (ii) notwithstanding subsection (e), 
                        shall remain available for expenditure 
                        by the State through the end of fiscal 
                        year 2002; and
                          (iii) shall be counted as being 
                        expended with respect to a fiscal year 
                        allotment in accordance with applicable 
                        regulations of the Secretary.
          (2) Extension of availability of portion of 
        unexpended fiscal years 1998 and 1999 allotments.--
                  (A) In general.--Notwithstanding subsection 
                (e):
                          (i) Fiscal year 1998 allotment.--Of 
                        the amounts allotted to a State 
                        pursuant to this section for fiscal 
                        year 1998 that were not expended by the 
                        State by the end of fiscal year 2000, 
                        the amount specified in subparagraph 
                        (B) for fiscal year 1998 for such State 
                        shall remain available for expenditure 
                        by the State through the end of fiscal 
                        year 2002.
                          (ii) Fiscal year 1999 allotment.--Of 
                        the amounts allotted to a State 
                        pursuant to this subsection for fiscal 
                        year 1999 that were not expended by the 
                        State by the end of fiscal year 2001, 
                        the amount specified in subparagraph 
                        (B) for fiscal year 1999 for such State 
                        shall remain available for expenditure 
                        by the State through the end of fiscal 
                        year 2002.
                  (B) Amount remaining available for 
                expenditure.--The amount specified in this 
                subparagraph for a State for a fiscal year is 
                equal to--
                          (i) the amount by which (I) the total 
                        amount available for redistribution 
                        under subsection (f) from the 
                        allotments for that fiscal year, 
                        exceeds (II) the total amounts 
                        redistributed under paragraph (1) for 
                        that fiscal year; multiplied by
                          (ii) the ratio of the amount of such 
                        State's unexpended allotment for that 
                        fiscal year to the total amount 
                        described in clause (i)(I) for that 
                        fiscal year.
                  (C) Use of up to 10 percent of retained 1998 
                allotments for outreach activities.--
                Notwithstanding section 2105(c)(2)(A), with 
                respect to any State described in subparagraph 
                (A)(i), the State may use up to 10 percent of 
                the amount specified in subparagraph (B) for 
                fiscal year 1998 for expenditures for outreach 
                activities approved by the Secretary.
          (3) Determination of amounts.--For purposes of 
        calculating the amounts described in paragraphs (1) and 
        (2) relating to the allotment for fiscal year 1998 or 
        fiscal year 1999, the Secretary shall use the amounts 
        reported by the States not later than November 30, 
        2000, or November 30, 2001, respectively, on HCFA Form 
        64 or HCFA Form 21, as approved by the Secretary.

           *       *       *       *       *       *       *

SEC. 2107. STRATEGIC OBJECTIVES AND PERFORMANCE GOALS; PLAN 
                    ADMINISTRATION.

  (a)  * * *

           *       *       *       *       *       *       *

  (e) Application of Certain General Provisions.--The following 
sections of this Act shall apply to States under this title in 
the same manner as they apply to a State under title XIX:
          (1) Title xix provisions.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (D) Section 1920A (relating to presumptive 
                eligibility).''.
                  (E) Section 1903(v)(4) (relating to optional 
                coverage of categories of lawfully residing 
                alien children), but only if the State has 
                elected to apply such section to the category 
                of children under title XIX.
                              ----------                              

 MEDICARE, MEDICAID, AND SCHIP BALANCED BUDGET REFINEMENT ACT OF 1999

           *       *       *       *       *       *       *

                TITLE II--PROVISIONS RELATING TO PART B

           *       *       *       *       *       *       *

                       Subtitle C--Other Services

SEC. 221. REVISION OF PROVISIONS RELATING TO THERAPY SERVICES.

  (a) 2-Year Moratorium on Caps.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Focused medical reviews of claims during 
        moratorium period.--During years in which paragraph (4) 
        of section 1833(g) of the Social Security Act (42 
        U.S.C. 1395l(g)) applies [(under the amendment made by 
        paragraph (1)(B))], the Secretary of Health and Human 
        Services shall conduct focused medical reviews of 
        claims for reimbursement for services described in 
        paragraph (1) or (3) of such section, with an emphasis 
        on such claims for services that are provided to 
        residents of skilled nursing facilities.

           *       *       *       *       *       *       *

SEC. 226. PHASE-IN OF PPS FOR AMBULATORY SURGICAL CENTERS.

  If the Secretary of Health and Human Services implements a 
revised prospective payment system for services of ambulatory 
surgical facilities under section 1833(i) of the Social 
Security Act (42 U.S.C. 1395l(i)), prior to incorporating data 
from the 1999 Medicare cost survey or a subsequent cost survey, 
such system shall be implemented in a manner so that--
          [(1) in the first year of its implementation, only a 
        proportion (specified by the Secretary and not to 
        exceed \1/3\) of the payment for such services shall be 
        made in accordance with such system and the remainder 
        shall be made in accordance with current regulations; 
        and
          [(2) in the following year a proportion (specified by 
        the Secretary and not to exceed \2/3\) of the payment 
        for such services shall be made under such system and 
        the remainder shall be made in accordance with current 
        regulations.]
          (1) in the first year of its implementation, only a 
        proportion (specified by the Secretary and not to 
        exceed \1/4\) of the payment for such services shall be 
        made in accordance with such system and the remainder 
        shall be made in accordance with current regulations; 
        and
          (2) in each of the following 2 years a proportion 
        (specified by the Secretary and not to exceed \1/2\, 
        and \3/4\, respectively) of the payment for such 
        services shall be made under such system and the 
        remainder shall be made in accordance with current 
        regulations.
By not later than January 1, 2003, the Secretary shall 
incorporate data from a 1999 Medicare cost survey or a 
subsequent cost survey for purposes of implementing or revising 
such system.

           *       *       *       *       *       *       *

            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                   Subtitle A--Home Health Services

           *       *       *       *       *       *       *

SEC. 302. DELAY IN APPLICATION OF 15 PERCENT REDUCTION IN PAYMENT RATES 
                    FOR HOME HEALTH SERVICES UNTIL ONE YEAR AFTER 
                    IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Report.--Not later than the date that is [six] 18 months 
after the date the Secretary of Health and Human Services 
implements the prospective payment system for home health 
services under section 1895 of the Social Security Act (42 
U.S.C. 1395fff), the Secretary shall submit to Congress a 
report analyzing the need for the 15 percent reduction under 
subsection (b)(3)(A)(ii) of such section, or for any reduction, 
in the computation of the base payment amounts under the 
prospective payment system for home health services established 
under such section.

           *       *       *       *       *       *       *

                              ----------                              

                      BALANCED BUDGET ACT OF 1997

           *       *       *       *       *       *       *

    TITLE IV--MEDICARE, MEDICAID, AND CHILDREN'S HEALTH PROVISIONS

           *       *       *       *       *       *       *

                     Subtitle C--Rural Initiatives

           *       *       *       *       *       *       *

SEC. 4206. MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.

  [(a) In General.--Not later than January 1, 1999, the 
Secretary of Health and Human Services shall make payments from 
the Federal Supplementary Medical Insurance Trust Fund under 
part B of title XVIII of the Social Security Act (42 U.S.C. 
1395j et seq.) in accordance with the methodology described in 
subsection (b) for professional consultation via 
telecommunications systems with a physician (as defined in 
section 1861(r) of such Act (42 U.S.C. 1395x(r)) or a 
practitioner (described in section 1842(b)(18)(C) of such Act 
(42 U.S.C. 1395u(b)(18)(C)) furnishing a service for which 
payment may be made under such part to a beneficiary under the 
medicare program residing in a county in a rural area (as 
defined in section 1886(d)(2)(D) of such Act (42 U.S.C. 
1395ww(d)(2)(D))) that is designated as a health professional 
shortage area under section 332(a)(1)(A) of the Public Health 
Service Act (42 U.S.C. 254e(a)(1)(A)), notwithstanding that the 
individual physician or practitioner providing the professional 
consultation is not at the same location as the physician or 
practitioner furnishing the service to that beneficiary.
  [(b) Methodology for Determining Amount of Payments.--Taking 
into account the findings of the report required under section 
192 of the Health Insurance Portability and Accountability Act 
of 1996 (Public Law 104-191; 110 Stat. 1988), the findings of 
the report required under paragraph (c), and any other findings 
related to the clinical efficacy and cost-effectiveness of 
telehealth applications, the Secretary shall establish a 
methodology for determining the amount of payments made under 
subsection (a) within the following parameters:
          [(1) The payment shall shared between the referring 
        physician or practitioner and the consulting physician 
        or practitioner. The amount of such payment shall not 
        be greater than the current fee schedule of the 
        consulting physician or practitioner for the health 
        care services provided.
          [(2) The payment shall not include any reimbursement 
        for any telephone line charges or any facility fees, 
        and a beneficiary may not be billed for any such 
        charges or fees.
          [(3) The payment shall be made subject to the 
        coinsurance and deductible requirements under 
        subsections (a)(1) and (b) of section 1833 of the 
        Social Security Act (42 U.S.C. 1395l).
          [(4) The payment differential of section 1848(a)(3) 
        of such Act (42 U.S.C. 1395w-4(a)(3)) shall apply to 
        services furnished by non-participating physicians. The 
        provisions of section 1848(g) of such Act (42 U.S.C. 
        1395w-4(g)) and section 1842(b)(18) of such Act (42 
        U.S.C. 1395u(b)(18)) shall apply. Payment for such 
        service shall be increased annually by the update 
        factor for physicians' services determined under 
        section 1848(d) of such Act (42 U.S.C. 1395w-4(d)).
  [(c) Supplemental Report.--Not later than January 1, 1999, 
the Secretary shall submit a report to Congress which shall 
contain a detailed analysis of--
          [(1) how telemedicine and telehealth systems are 
        expanding access to health care services;
          [(2) the clinical efficacy and cost-effectiveness of 
        telemedicine and telehealth applications;
          [(3) the quality of telemedicine and telehealth 
        services delivered; and
          [(4) the reasonable cost of telecommunications 
        charges incurred in practicing telemedicine and 
        telehealth in rural, frontier, and underserved areas.
  [(d) Expansion of Telehealth Services for Certain Medicare 
Beneficiaries.--
          [(1) In general.--Not later than January 1, 1999, the 
        Secretary shall submit a report to Congress that 
        examines the possibility of making payments from the 
        Federal Supplementary Medical Insurance Trust Fund 
        under part B of title XVIII of the Social Security Act 
        (42 U.S.C. 1395j et seq.) for professional consultation 
        via telecommunications systems with such a physician or 
        practitioner furnishing a service for which payment may 
        be made under such part to a beneficiary described in 
        paragraph (2), notwithstanding that the individual 
        physician or practitioner providing the professional 
        consultation is not at the same location as the 
        physician or practitioner furnishing the service to 
        that beneficiary.
          [(2) Beneficiary described.--A beneficiary described 
        in this paragraph is a beneficiary under the medicare 
        program under title XVIII of the Social Security Act 
        (42 U.S.C. 1395 et seq.) who does not reside in a rural 
        area (as so defined) that is designated as a health 
        professional shortage area under section 332(a)(1)(A) 
        of the Public Health Service Act (42 U.S.C. 
        254e(a)(1)(A)), who is homebound or nursing homebound, 
        and for whom being transferred for health care services 
        imposes a serious hardship.
          [(3) Report.--The report described in paragraph (1) 
        shall contain a detailed statement of the potential 
        costs and savings to the medicare program of making the 
        payments described in that paragraph using various 
        reimbursement schemes.]
  (a) Telehealth Services Reimbursed.--
          (1) In general.--Not later than April 1, 2001, the 
        Secretary of Health and Human Services shall make 
        payments from the Federal Supplementary Medical 
        Insurance Trust Fund in accordance with the methodology 
        described in subsection (b) for services for which 
        payment may be made under part B of title XVIII of the 
        Social Security Act (42 U.S.C. 1395j et seq.) that are 
        furnished via a telecommunications system by a 
        physician or practitioner to an eligible telehealth 
        beneficiary.
          (2) Use of store-and-forward technologies.--For 
        purposes of paragraph (1), in the case of any Federal 
        telemedicine demonstration program in Alaska or Hawaii, 
        the term ``telecommunications system'' includes store-
        and-forward technologies that provide for the 
        asynchronous transmission of health care information in 
        single or multimedia formats.
  (b) Methodology for Determining Amount of Payments.--
          (1) In general.--The Secretary shall make payment 
        under this section as follows:
                  (A) Subject to subparagraph (B), with respect 
                to a physician or practitioner located at a 
                distant site that furnishes a service to an 
                eligible medicare beneficiary under subsection 
                (a), an amount equal to the amount that such 
                physician or practitioner would have been paid 
                had the service been furnished without the use 
                of a telecommunications system.
                  (B) With respect to an originating site, a 
                facility fee equal to--
                          (i) for 2001 (beginning with April 1, 
                        2001) and 2002, $20; and
                          (ii) for a subsequent year, the 
                        facility fee under this subsection for 
                        the previous year increased by the 
                        percentage increase in the MEI (as 
                        defined in section 1842(i)(3)) for such 
                        subsequent year.
          (2) Application of part b coinsurance and 
        deductible.--Any payment made under this section shall 
        be subject to the coinsurance and deductible 
        requirements under subsections (a)(1) and (b) of 
        section 1833 of the Social Security Act (42 U.S.C. 
        1395l).
          (3) Application of nonparticipating physician payment 
        differential and balance billing limits.--The payment 
        differential of section 1848(a)(3) of such Act (42 
        U.S.C. 1395w-4(a)(3)) shall apply to services furnished 
        by non-participating physicians. The provisions of 
        section 1848(g) of such Act (42 U.S.C. 1395w-4(g)) and 
        section 1842(b)(18) of such Act (42 U.S.C. 
        1395u(b)(18)) shall apply. Payment for such service 
        shall be increased annually by the update factor for 
        physicians' services determined under section 1848(d) 
        of such Act (42 U.S.C. 1395w-4(d)).
  (c) Telepresenter Not Required.--Nothing in this section 
shall be construed as requiring an eligible telehealth 
beneficiary to be presented by a physician or practitioner at 
the originating site for the furnishing of a service via a 
telecommunications system, unless it is medically necessary as 
determined by the physician or practitioner at the distant 
site.
  (d) Coverage of Additional Services.--
          (1) Study and report on additional services.--
                  (A) Study.--The Secretary of Health and Human 
                Services shall conduct a study to identify 
                services in addition to those described in 
                subsection (a)(1) that are appropriate for 
                payment under this section.
                  (B) Report.--Not later than 2 years after the 
                date of enactment of this Act, the Secretary 
                shall submit to Congress a report on the study 
                conducted under subparagraph (A) together with 
                such recommendations for legislation that the 
                Secretary determines are appropriate.
          (2) In general.--The Secretary shall provide for 
        payment under this section for services identified in 
        paragraph (1).
  (e) Construction Relating to Home Health Services.--
          (1) In general.--Nothing in this section or in 
        section 1895 of the Social Security Act (42 U.S.C. 
        1395fff) shall be construed as preventing a home health 
        agency furnishing a home health unit of service for 
        which payment is made under the prospective payment 
        system established in such section from furnishing the 
        service via a telecommunications system.
          (2) Limitation.--The Secretary shall not consider a 
        home health service provided in the manner described in 
        paragraph (1) to be a home health visit for purposes 
        of--
                  (A) determining the amount of payment to be 
                made under such prospective payment system; or
                  (B) any requirement relating to the 
                certification of a physician required under 
                section 1814(a)(2)(C) or section 1835(a)(2)(A) 
                of such Act (42 U.S.C. 1395f(a)(2)(C), 
                1395n(a)(2)(A)).
          (3) Construction.--Nothing in this section shall be 
        construed as waiving the requirement for a physician 
        certification under section 1814(a)(2)(C) or section 
        1835(a)(2)(A) of such Act (42 U.S.C. 1395f(a)(2)(C), 
        1395n(a)(2)(A)) for the payment for home health 
        services, whether or not furnished via a 
        telecommunications system.
  (f) Coverage of Items and Services.--
          (1) In general.--Subject to paragraph (2), payment 
        for items and services provided pursuant to subsection 
        (a) shall include payment for professional 
        consultations, office visits, office psychiatry 
        services, including any service identified as of July 
        1, 2000, by HCPCS codes 99241-99275, 99201-99215, 
        90804-90809, and 90862, and any additional item or 
        service specified by the Secretary.
          (2) Yearly update.--The Secretary shall provide a 
        process that provides, on at least an annual basis, for 
        the review and revision of services (and HCPCS codes) 
        to those specified in paragraph (1) for authorized 
        payment under subsection (a).
  (g) Definitions.--In this section:
          (1) Eligible telehealth beneficiary.--The term 
        ``eligible telehealth beneficiary'' means an individual 
        enrolled under part B of title XVIII of the Social 
        Security Act (42 U.S.C. 1395j et seq.) that receives a 
        service originating--
                  (A) in an area that is designated as a health 
                professional shortage area under section 
                332(a)(1)(A) of the Public Health Service Act 
                (42 U.S.C. 254e(a)(1)(A));
                  (B) in a county that is not included in a 
                Metropolitan Statistical Area;
                  (C) effective January 1, 2002, in an inner-
                city area that is medically underserved (as 
                defined in section 330(b)(3) of the Public 
                Health Service Act (42 U.S.C. 254b(b)(3))); or
                  (D) in a service which originated in a 
                facility which participates in a Federal 
                telemedicine demonstration project.
          (2) Physician.--The term ``physician'' has the 
        meaning given that term in section 1861(r) of the 
        Social Security Act (42 U.S.C. 1395x(r))
          (3) Practitioner.--The term ``practitioner'' means a 
        practitioner described in section 1842(b)(18)(C) of the 
        Social Security Act (42 U.S.C. 1395u(b)(18)(C)).
          (4) Distant site.--The term ``distant site'' means 
        the site at which the physician or practitioner is 
        located at the time the service is provided via a 
        telecommunications system.
          (5) Originating site.--
                  (A) In general.--The term ``originating 
                site'' means any site described in subparagraph 
                (B) at which the eligible telehealth 
                beneficiary is located at the time the service 
                is furnished via a telecommunications system.
                  (B) Sites described.--The sites described in 
                this subparagraph are as follows:
                          (i) On or after April 1, 2001--
                                  (I) the office of a physician 
                                or a practitioner,
                                  (II) a critical access 
                                hospital (as defined in section 
                                1861(mm)(1) of the Social 
                                Security Act (42 U.S.C. 
                                1395x(mm)(1))),
                                  (III) a rural health clinic 
                                (as defined in section 
                                1861(aa)(2) of such Act (42 
                                U.S.C. 1395x(aa)(2))), and
                                  (IV) a Federally qualified 
                                health center (as defined in 
                                section 1861(aa)(4) of such Act 
                                (42 U.S.C. 1395x(aa)(4))).
                          (ii) On or after January 1, 2002--
                                  (I) a hospital (as defined in 
                                section 1861(e) of such Act (42 
                                U.S.C. 1395x(e))),
                                  (II) a skilled nursing 
                                facility (as defined in section 
                                1861(j) of such Act (42 U.S.C. 
                                1395x(j))),
                                  (III) a comprehensive 
                                outpatient rehabilitation 
                                facility (as defined in section 
                                1861(cc)(2) of such Act (42 
                                U.S.C. 1395x(cc)(2))),
                                  (IV) a renal dialysis 
                                facility (described in section 
                                1881(b)(1) of such Act (42 
                                U.S.C. 1395rr(b)(1))),
                                  (V) an ambulatory surgical 
                                center (described in section 
                                1833(i)(1)(A) of such Act (42 
                                U.S.C. 1395l(i)(1)(A))),
                                  (VI) a hospital or skilled 
                                nursing facility of the Indian 
                                Health Service (under section 
                                1880 of such Act (42 U.S.C. 
                                1395qq)), and
                                  (VII) a community mental 
                                health center (as defined in 
                                section 1861(ff)(3)(B) of such 
                                Act (42 U.S.C. 
                                1395x(ff)(3)(B))).
          (6) Federal supplementary medical insurance trust 
        fund.--The term ``Federal Supplementary Medical 
        Insurance Trust Fund'' means the trust fund established 
        under section 1841 of the Social Security Act (42 
        U.S.C. 1395t).

           *       *       *       *       *       *       *
                         Subtitle H--Medicaid

           *       *       *       *       *       *       *

            CHAPTER 2--FLEXIBILITY IN PAYMENT OF PROVIDERS

           *       *       *       *       *       *       *

SEC. 4712. PAYMENT FOR CENTER AND CLINIC SERVICES.

  (a)  * * *

           *       *       *       *       *       *       *

  [(c) End of Transitional Payment Rules.--Effective for 
services furnished on or after October 1, 2003--
          [(1) subparagraph (C) of section 1902(a)(13) (42 
        U.S.C. 1396a(a)(13)), as so redesignated, is repealed, 
        and
          [(2) clause (ix) of section 1903(m)(2)(A) (42 U.S.C. 
        1396b(m)(2)(A)) is repealed.]

           *       *       *       *       *       *       *

        Subtitle J--State Children's Health Insurance Program

           *       *       *       *       *       *       *

                  CHAPTER 3--DIABETES GRANT PROGRAMS

           *       *       *       *       *       *       *

SEC. 4923. REPORT ON DIABETES GRANT PROGRAMS.

  (a)  * * *
  (b) Reports.--The Secretary shall submit to the appropriate 
committees of Congress--
          (1) [an interim report] interim reports on the 
        evaluation conducted under subsection (a) not later 
        than January 1[, 2000] in each of 2000, 2002, and 2004, 
        and
          (2) a final report on such evaluation not later than 
        January 1, [2002] 2007.

           *       *       *       *       *       *       *

                              ----------                              

     SECTION 13501 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1993

SEC. 13501. PAYMENTS FOR PPS HOSPITALS.

  (a)  * * *

           *       *       *       *       *       *       *

  (e) Extension for Medicare-Dependent, Small Rural 
Hospitals.--
          (1)  * * *

           *       *       *       *       *       *       *

           (2) Permitting hospitals to decline 
        reclassification.--If any hospital fails to qualify as 
        a medicare-dependent, small rural hospital under 
        section 1886(d)(5)(G)(i) of the Social Security Act as 
        a result of a decision by the Medicare Geographic 
        Classification Review Board under section 1886(d)(10) 
        of such Act to reclassify the hospital as being located 
        in an urban area for fiscal year 1993, fiscal year 
        1994, fiscal year 1998, fiscal year 1999, [or fiscal 
        year 2000 through fiscal year 2005] fiscal year 2000, 
        or any subsequent fiscal year, the Secretary of Health 
        and Human Services shall--
                  (A)  * * *

           *       *       *       *       *       *       *

                              ----------                              

 SECTION 9517 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985

SEC. 9517. MODIFYING APPLICATION OF MEDICAID HMO PROVISIONS FOR CERTAIN 
                    HEALTH CENTERS.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Health Insuring Organizations.--(1) * * *

           *       *       *       *       *       *       *

  (3)(A) Subject to subparagraph (C), in the case of up to 3 
health insuring organizations which are described in 
subparagraph (B), which first become operational on or after 
January 1, 1986, and which are designated by the Governor, and 
approved by the Legislature, of California, the amendments made 
by paragraph (1) shall not apply.

           *       *       *       *       *       *       *

  (C) Subparagraph (A) shall not apply with respect to any 
period for which the Secretary of Health and Human Services 
determines that the number of medicaid beneficiaries enrolled 
with health insuring organizations described in subparagraph 
(B) exceeds [10] 14 percent of the number of such beneficiaries 
in the State of California.

           *       *       *       *       *       *       *

                              ----------                              

                       PUBLIC HEALTH SERVICE ACT

           *       *       *       *       *       *       *

    TITLE III--GENERAL POWERS AND DUTIES OF PUBLIC HEALTH SERVICE

           *       *       *       *       *       *       *

                      Part D--Primary Health Care

                       Subpart I--Health Centers

           *       *       *       *       *       *       *

SEC. 330B. SPECIAL DIABETES PROGRAMS FOR TYPE I DIABETES.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Extension of Funding.--There are hereby appropriated, 
from any amounts in the Treasury not otherwise appropriated, 
for each of fiscal years 2003 through 2007, $50,000,000 for 
grants under this section, to remain available until expended. 
Nothing in this subsection shall be construed as providing for 
such amounts to be derived or deducted from appropriations made 
under section 2104(a) of the Social Security Act.

SEC. 330C. SPECIAL DIABETES PROGRAMS FOR INDIANS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Extension of Funding.--There are hereby appropriated, 
from any amounts in the Treasury not otherwise appropriated, 
for each of fiscal years 2003 through 2007, $50,000,000 for 
grants under this section, to remain available until expended. 
Nothing in this subsection shall be construed as providing for 
such amounts to be derived or deducted from appropriations made 
under section 2104(a) of the Social Security Act.

           *       *       *       *       *       *       *

                                  

```