I

106TH CONGRESS

2D SESSION H. R. 5001

To amend title XVIII of the Social Security Act to provide for equitable

payments to providers of services under the Medicare Program, and

to amend title XIX of such Act to provide for coverage of additional

children under the Medicaid Program.

IN THE HOUSE OF REPRESENTATIVES

JULY 27, 2000

Mrs. WILSON (for herself, Mr. LUTHER, Mr. RYAN of Wisconsin, Ms. HOOLEY

of Oregon, Mr. SABO, and Mr. MINGE) introduced the following bill;

which was referred to the Committee on Commerce, and in addition to

the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To amend title XVIII of the Social Security Act to provide

for equitable payments to providers of services under

the Medicare Program, and to amend title XIX of such

Act to provide for coverage of additional children under

the Medicaid Program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU2 RITY ACT; TABLE OF CONTENTS.

3 (a) SHORT TITLE.—This Act may be cited as the

4 ‘‘Fair Care for Seniors and Children Act of 2000’’.

5 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex6 cept as otherwise specifically provided, whenever in this

7 Act an amendment is expressed in terms of an amendment

8 to or repeal of a section or other provision, the reference

9 shall be considered to be made to that section or other

10 provision of the Social Security Act.

11 (c) TABLE OF CONTENTS.—The table of contents of

12 this Act is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of contents.

TITLE I—MEDICARE PROGRAM

Subtitle A—Medicare+Choice Program

Sec. 101. Increasing minimum payment amount.

Sec. 102. Increase in national per capita Medicare+Choice growth percentage

in 2001 and 2002.

Sec. 103. Permanently removing application of budget neutrality beginning in

2001.

Sec. 104. Allowing movement to 50:50 percent blend in 2001.

Sec. 105. Increased update for payment areas with only one or no

Medicare+Choice contracts.

Sec. 106. Permitting higher negotiated rates in certain Medicare+Choice payment areas below national average.

Sec. 107. Reasonable cost reimbursement for payment areas with no more than

one medicare+choice contract.

Sec. 108. 10-Year phase in of risk adjustment based on data from all settings.

Sec. 109. Delay from July to November 2000 in deadline for offering and withdrawing Medicare+Choice plans for 2001.

Subtitle B—Inpatient Hospital Services

Sec. 111. Elimination of authority to estimate costs incurred by a hospital for

wages.

Subtitle C—Home Health Services

Sec. 121. Elimination of 15 percent reduction in payment rates under the medicare prospective payment system for home health services.
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TITLE II—MEDICAID PROGRAM

Subtitle A—Expansion of Coverage of Children under the Medicaid Program

Sec. 201. Use of State Children’s Health Insurance Program funds for enhanced matching rate for coverage of additional children under

the medicaid program.

Sec. 202. Expansion of presumptive eligibility option for children under the

medicaid program.

Sec. 203. Increased SCHIP flexibility for states with high medicaid child income levels when SCHIP initiated.

Subtitle B—Prospective Payment System for Federally-qualified Health

Centers and Rural Health Clinics

Sec. 211. Establishment of prospective payment system for federally-qualified

health centers and rural health clinics.

1 TITLE I—MEDICARE PROGRAM

2 Subtitle A—Medicare+Choice

3 Program

4 SEC. 101. INCREASING MINIMUM PAYMENT AMOUNT.

5 Section 1853(c)(1)(B)(ii) (42 U.S.C. 1395w–

6 23(c)(1)(B)(ii)) is amended—

7 (1) by striking ‘‘(ii) For a succeeding year’’ and

8 inserting ‘‘(ii)(I) Subject to subclause (II), for a suc9 ceeding year’’; and

10 (2) by adding at the end the following new sub11 clause:

12 ‘‘(II) For 2001 for any area in a Met13 ropolitan Statistical Area with a population

14 of more than 250,000, $525 (and for any

15 other area, $475).’’.
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1 SEC. 102. INCREASE IN NATIONAL PER CAPITA

2 MEDICARE+CHOICE GROWTH PERCENTAGE

3 IN 2001 AND 2002.

4 Section 1853(c)(6)(B) (42 U.S.C. 1395w–

5 23(c)(6)(B)) is amended—

6 (1) in clause (iv), by striking ‘‘for 2001, 0.5

7 percentage points’’ and inserting ‘‘for 2001, 0 per8 centage points’’; and

9 (2) in clause (v), by striking ‘‘for 2002, 0.3 per10 centage points’’ and inserting ‘‘for 2002, 0 percent11 age points’’.

12 SEC. 103. PERMANENTLY REMOVING APPLICATION OF

13 BUDGET NEUTRALITY BEGINNING IN 2002.

14 Section 1853(c) (42 U.S.C. 1395w–23(c)) is

15 amended—

16 (1) in paragraph (1)(A), in the matter following

17 clause (ii), by inserting ‘‘(for years before 2001)’’

18 after ‘‘multiplied’’; and

19 (2) in paragraph (5), by inserting ‘‘(before

20 2001)’’ after ‘‘for each year’’.

21 SEC. 104. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND

22 IN 2001.

23 Section 1853(c)(2) (42 U.S.C. 1395w–23(c)(2)) is

24 amended—

25 (1) by adding ‘‘and’’ at the end of subpara26 graph (C);
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1 (2) by striking subparagraphs (D) and (E);

2 (3) by redesignating subparagraph (F) and sub3 paragraph (D); and

4 (4) in subparagraph (D), as so redesignated, by

5 striking ‘‘2002’’ and inserting ‘‘2000’’.

6 SEC. 105. INCREASED UPDATE FOR PAYMENT AREAS WITH

7 ONLY ONE OR NO MEDICARE+CHOICE CON8 TRACTS.

9 (a) IN GENERAL.—Section 1853(c)(1)(C)(ii) (42

10 U.S.C. 1395w–23(c)(1)(C)(ii)) is amended—

11 (1) by striking ‘‘(ii) For a subsequent year’’

12 and inserting ‘‘(ii)(I) Subject to subclause (II), for

13 a subsequent year’’; and

14 (2) by adding at the end the following new sub15 clause:

16 ‘‘(II) During 2001, 2002, 2003, 2004,

17 and 2005, in the case of a

18 Medicare+Choice payment area in which

19 there is no more than one contract entered

20 into under this part as of July 1 before the

21 beginning of the year, 102.5 percent of the

22 annual Medicare+Choice capitation rate

23 under this paragraph for the area for the

24 previous year.’’.
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1 (b) CONSTRUCTION.—The amendments made by sub2 section (a) do not affect the payment of a first-time bonus

3 under section 1853(i) of the Social Security Act (42

4 U.S.C. 1395w–23(i)).

5 SEC. 106. PERMITTING HIGHER NEGOTIATED RATES IN

6 CERTAIN MEDICARE+CHOICE PAYMENT

7 AREAS BELOW NATIONAL AVERAGE.

8 Section 1853(c)(1) (42 U.S.C. 1395w–23(c)(1)) is

9 amended—

10 (1) in the matter before subparagraph (A), by

11 striking ‘‘or (C)’’ and inserting ‘‘(C), or (D)’’; and

12 (2) by adding at the end the following new sub13 paragraph:

14 ‘‘(D) PERMITTING HIGHER RATES

15 THROUGH NEGOTIATION.—

16 ‘‘(i) IN GENERAL.—For each year be17 ginning with 2001, in the case of a

18 Medicare+Choice payment area for which

19 the Medicare+Choice capitation rate under

20 this paragraph would otherwise be less

21 than the United States per capita cost

22 (USPCC), as calculated by the Secretary,

23 a Medicare+Choice organization may ne24 gotiate with the Secretary an annual per

25 capita rate that—
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1 ‘‘(I) reflects an annual rate of in2 crease up to the rate of increase speci3 fied in clause (ii);

4 ‘‘(II) takes into account audited

5 current data supplied by the organiza6 tion on its adjusted community rate

7 (as defined in section 1854(f)(3)); and

8 ‘‘(III) does not exceed the United

9 States per capita cost, as projected by

10 the Secretary for the year involved.

11 ‘‘(ii) MAXIMUM RATE DESCRIBED.—

12 The rate of increase specified in this clause

13 for a year is the rate of inflation in private

14 health insurance for the year involved, as

15 projected by the Secretary, and includes

16 such adjustments as may be necessary to

17 reflect the demographic characteristics in

18 the population under this title.

19 ‘‘(iii) ADJUSTMENTS FOR OVER OR

20 UNDER PROJECTIONS.—If this subpara21 graph is applied to an organization and

22 payment area for a year, in applying this

23 subparagraph for a subsequent year the

24 provisions of paragraph (6)(C) shall apply
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1 in the same manner as such provisions

2 apply under this paragraph.’’.

3 SEC. 107. REASONABLE COST REIMBURSEMENT FOR PAY4 MENT AREAS WITH NO MORE THAN ONE

5 MEDICARE+CHOICE CONTRACT.

6 (a) IN GENERAL.—Section 1853 (42 U.S.C. 1395w–

7 23) is amended—

8 (1) in subsection (a)(1)(A) by striking ‘‘(g), and

9 (i)’’ and inserting ‘‘(g), (i), and (j)’’; and

10 (2) by adding at the end the following new sub11 section:

12 ‘‘(j) REASONABLE COST REIMBURSEMENT FOR PAY13 MENT AREAS WITH NO MORE THAN ONE

14 MEDICARE+CHOICE CONTRACT.—

15 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

16 in the case of a Medicare+Choice payment area in

17 which there is no more than 1 contract entered into

18 under this part as of July 1 before the beginning of

19 the following year, at the election of a

20 Medicare+Choice organization the amount of pay21 ment under this section for such following year for

22 enrollment under a Medicare+Choice plan offered by

23 the organization in that area shall be the amount of

24 payment otherwise applicable to an eligible organiza25 tion that has entered into a reasonable cost reim-
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1 bursement contract with the Secretary under section

2 1876(h).

3 ‘‘(2) LIMITATION.—A Medicare+Choice organi4 zation that has negotiated a higher an annual per

5 capita rate under subsection (c)(1)(D) for a year

6 may not elect reimbursement under paragraph (1)

7 for that year.’’.

8 SEC. 108. 10-YEAR PHASE IN OF RISK ADJUSTMENT BASED

9 ON DATA FROM ALL SETTINGS.

10 Section 1853(a)(3)(C)(ii) (42 U.S.C. 1395w–

11 23(c)(1)(C)(ii)) is amended—

12 (1) by striking the period at the end of sub13 clause (II) and inserting a semicolon; and

14 (2) by adding after and below subclause (II) the

15 following:

16 ‘‘and, beginning in 2004, insofar as such

17 risk adjustment is based on data from all

18 settings, the methodology shall be phased

19 in in equal increments over a 10-year pe20 riod, beginning with 2004 or (if later) the

21 first year in which such data are used.’’.
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1 SEC. 109. DELAY FROM JULY TO NOVEMBER 2000 IN DEAD2 LINE FOR OFFERING AND WITHDRAWING

3 MEDICARE+CHOICE PLANS FOR 2001.

4 Notwithstanding any other provision of law, the dead5 line for a Medicare+Choice organization to withdraw the

6 offering of a Medicare+Choice plan under part C of title

7 XVIII of the Social Security Act (or otherwise to submit

8 information required for the offering of such a plan) for

9 2001 is delayed from July 1, 2000, to October 1, 2000,

10 and any such organization that provided notice of with11 drawal of such a plan during 2000 before the date of the

12 enactment of this Act may rescind such withdrawal at any

13 time before November 1, 2000.

14 Subtitle B—Inpatient Hospital

15 Services

16 SEC. 111. ELIMINATION OF AUTHORITY TO ESTIMATE

17 COSTS INCURRED BY A HOSPITAL FOR

18 WAGES.

19 (a) IN GENERAL.—The first sentence of section

20 1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is amended

21 by striking ‘‘, (as estimated by the Secretary from time

22 to time) of hospitals’ costs’’ and inserting ‘‘of each hos23 pital’s costs (based on the most recent data available to

24 the Secretary with respect to each hospital)’’.

25 (b) SPECIAL RULE FOR PUERTO RICO HOSPITALS.—

26 Section 1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is
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1 amended by adding at the end the following new sentence:

2 ‘‘In the case of a subsection (d) Puerto Rico hospital, the

3 first sentence of this subparagraph shall be applied as in

4 effect on the date that precedes the date of the enactment

5 of the Fair Care for Seniors and Children Act of 2000.’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply with respect to discharges occur8 ring on or after January 1, 2001.

9 Subtitle C—Home Health Services

10 SEC. 121. ELIMINATION OF 15 PERCENT REDUCTION IN

11 PAYMENT RATES UNDER THE MEDICARE

12 PROSPECTIVE PAYMENT SYSTEM FOR HOME

13 HEALTH SERVICES.

14 (a) IN GENERAL.—Section 1895(b)(3)(A) (42 U.S.C.

15 1395fff(b)(3)(A)), as amended by sections 302(b) and

16 303(f) of the Medicare, Medicaid, and SCHIP Balanced

17 Budget Refinement Act of 1999 (113 Stat. 1501A–359,

18 361), as enacted into law by section 1000(a)(6) of Public

19 Law 106–113, is amended to read as follows:

20 ‘‘(A) INITIAL BASIS.—Under such system

21 the Secretary shall provide for computation of

22 a standard prospective payment amount (or

23 amounts). Such amount (or amounts) shall ini24 tially be based on the most current audited cost

25 report data available to the Secretary and shall
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1 be computed in a manner so that the total

2 amounts payable under the system for the 12-

3 month period beginning on the date the Sec4 retary implements the system shall be equal to

5 the total amount that would have been made if

6 the system had not been in effect and if section

7 1861(v)(1)(L)(ix) had not been enacted. Each

8 such amount shall be standardized in a manner

9 that eliminates the effect of variations in rel10 ative case mix and area wage adjustments

11 among different home health agencies in a

12 budget neutral manner consistent with the case

13 mix and wage level adjustments provided under

14 paragraph (4)(A). Under the system, the Sec15 retary may recognize regional differences or dif16 ferences based upon whether or not the services

17 or agency are in an urbanized area.’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall take effect as if included in the enact20 ment of the Medicare, Medicaid, and SCHIP Balanced

21 Budget Refinement Act of 1999 (Public Law 106–113).
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1 TITLE II—MEDICAID PROGRAM

2 Subtitle A—Expansion of Coverage

3 of Children under the Medicaid

4 Program

5 SEC. 201. USE OF STATE CHILDREN’S HEALTH INSURANCE

6 PROGRAM FUNDS FOR ENHANCED MATCH7 ING RATE FOR COVERAGE OF ADDITIONAL

8 CHILDREN UNDER THE MEDICAID PROGRAM.

9 (a) IN GENERAL.—Section 1905 (42 U.S.C. 1396d)

10 is amended—

11 (1) in subsection (b), by striking ‘‘or subsection

12 (u)(3)’’ and inserting ‘‘, subsection (u)(3), or sub13 section (u)(4)(A)’’; and

14 (2) in subsection (u) (as added by section

15 4911(a)(2) of the Balanced Budget Act of 1997 and

16 as amended by section 162 of Public Law 105–

17 100)—

18 (A) by redesignating paragraph (4) as

19 paragraph (5); and

20 (B) by inserting after paragraph (3) the

21 following new paragraph:

22 ‘‘(4)(A) For purposes of subsection (b), the expendi23 tures described in this subparagraph are expenditures for

24 medical assistance for waivered low-income children de25 scribed in subparagraph (B) but—
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1 ‘‘(i) only in the case of children residing in a

2 State described in subparagraph (C); and

3 ‘‘(ii) only to the extent the number of full-year

4 equivalent waivered low-income children enrolled

5 under the State plan under this title for the fiscal

6 year exceeds the number of waivered low-income

7 children described in subparagraph (D)(i) for the

8 State for the fiscal year.

9 ‘‘(B) For purposes of this paragraph, the term

10 ‘waivered low-income child’ means a child whose family in11 come exceeds the minimum income level required to be es12 tablished for the age of such child under section

13 1902(l)(2) in order for the child to be eligible for medical

14 assistance under this title, but does not exceed the med15 icaid applicable income level (as defined in section

16 2110(b)(4) but determined as if ‘June 1, 1997’ were sub17 stituted for ‘March 31, 1997’) for that child.

18 ‘‘(C) A State described in this subparagraph is a

19 State that—

20 ‘‘(i) has under a waiver authorized by the Sec21 retary or under section 1902(r)(2) established a

22 medicaid applicable income level (as defined in sec23 tion 2110(b)(4) but determined as if ‘June 1, 1997’

24 were substituted for ‘March 31, 1997’) for children
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1 under 19 years of age residing in the State that is

2 at or above 185 percent of the poverty line; and

3 ‘‘(ii) demonstrates to the satisfaction of the

4 Secretary a commitment to reach and enroll children

5 who are eligible for, but not enrolled under, the

6 State plan through means, such as the following:

7 ‘‘(I) Eliminating the assets test for eligi8 bility of waivered low-income children.

9 ‘‘(II) Using shortened and simplified appli10 cations for such children.

11 ‘‘(III) Allowing applications for such chil12 dren to be submitted by mail or through tele13 phone.

14 ‘‘(IV) Outstationing State eligibility work15 ers at sites that are frequented by families with

16 children, including schools, child care centers,

17 churches, centers providing Head Start services,

18 local offices of the special supplemental food

19 program for women, infants and young children

20 (WIC) established under section 17 of the Child

21 Nutrition Act of 1966, community centers, Job

22 Corps centers established under part B of title

23 IV of the Job Training Partnership Act or sub24 title C of title I of the Workforce Investment

25 Act of 1998, sites offering the recognized equiv-
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1 alent of a secondary school degree, offices of

2 tribal organizations (as defined in section 4(l)

3 of the Indian Self-Determination and Education

4 Assistance Act), and Social Security Adminis5 tration field offices.

6 ‘‘(V) Using presumptive eligibility for

7 waivered low-income children.

8 ‘‘(VI) Collaborating with public and private

9 entities to conduct outreach campaigns to enroll

10 such children.

11 ‘‘(D)(i) For purposes of subparagraph (A)(ii), the

12 number of waivered low-income children for a State de13 scribed in this clause for—

14 ‘‘(I) fiscal year 1998, is equal to the number of

15 full-year equivalent waivered low-income children en16 rolled under the State plan under this title for fiscal

17 year 1997; and

18 ‘‘(II) fiscal year 1999 or a succeeding fiscal

19 year, is equal to the number of waivered low-income

20 children determined under this clause for the pre21 ceding fiscal year increased by the number of per22 centage points determined under clause (ii) for the

23 State for the fiscal year involved.
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1 ‘‘(ii) The number of percentage points determined

2 under this clause for a State for a fiscal year is equal to

3 the number of percentage points by which—

4 ‘‘(I) the arithmetic average of the total number

5 of children in the State set forth in the 3 most re6 cent March supplements to the Current Population

7 Survey of the Bureau of the Census before the be8 ginning of the fiscal year; exceeds

9 ‘‘(II) the arithmetic average of such total num10 ber set forth in the second, third, and fourth most

11 recent March supplements to such Survey before the

12 beginning of the fiscal year.

13 ‘‘(E) For purposes of section 2104(d) (regarding the

14 reduction of an allotment under title XXI) the amount de15 termined under paragraph (2) of that section shall, with

16 respect to expenditures described in subparagraph (A),

17 only take into account the amount by which—

18 ‘‘(i) the payments made to a State for such ex19 penditures for a fiscal year on the basis of an en20 hanced FMAP under the fourth sentence of sub21 section (b); exceed

22 ‘‘(ii) the amount of payments that would have

23 been made for the expenditures if the enhanced

24 FMAP did not apply.
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1 ‘‘(F) Each State shall submit to the Secretary such

2 information, at such time and in such manner, as the Sec3 retary determines is necessary to ensure that the require4 ments of this paragraph are satisfied. The Secretary shall

5 ensure that information is provided under this subsection

6 in a manner that is consistent with other reporting re7 quirements for information required to be submitted by

8 a State under this title and title XXI, and avoids duplica9 tion of reporting requirements.

10 ‘‘(G) The Secretary shall regularly examine the pay11 ments made to a State for the expenditures described in

12 subparagraph (A) to confirm that the payments are attrib13 utable to expenditures described in such subparagraph.’’.

14 (b) CONFORMING AMENDMENT.—Section 2104(d)(2)

15 (42 U.S.C. 1397dd(d)(2)) is amended by inserting ‘‘sub16 ject to section 1905(u)(4)(E),’’ after ‘‘(2)’’.

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall be effective as if included in the enact19 ment of section 4911 of the Balanced Budget Act of 1997.

20 SEC. 202. EXPANSION OF PRESUMPTIVE ELIGIBILITY OP21 TION FOR CHILDREN UNDER THE MEDICAID

22 PROGRAM.

23 (a) IN GENERAL.—Section 1920A(b)(3)(A)(i) (42

24 U.S.C. 1396r–1a(b)(3)(A)(i)) is amended—
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1 (1) by striking ‘‘or (II)’’ and inserting ‘‘, (II)’’;

2 and

3 (2) by inserting before the semicolon ‘‘, eligi4 bility for assistance under the State plan under part

5 A of title IV, eligibility of a child to receive medical

6 assistance under the State plan under this title or

7 title XXI, (III) is a staff member of an elementary

8 school or secondary school, as such terms are de9 fined in section 14101 of the Elementary and Sec10 ondary Education Act of 1965 (20 U.S.C. 8801), a

11 child care resource and referral center, or an agency

12 administering a State plan under part D of title IV,

13 or (IV) is so designated by the State’’.

14 (b) CONFORMING AMENDMENTS.—Section 1920A

15 (42 U.S.C. 1396r–1a) is amended—

16 (1) in subsection (b)(3)(A)(ii), by striking

17 ‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph

18 (2)(A)’’; and

19 (2) in subsection (c)(2), in the matter preceding

20 subparagraph (A), by striking ‘‘subsection

21 (b)(1)(A)’’ and inserting ‘‘subsection (b)(2)(A)’’.
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1 SEC. 203. INCREASED SCHIP FLEXIBILITY FOR STATES

2 WITH HIGH MEDICAID CHILD INCOME LEV3 ELS WHEN SCHIP INITIATED.

4 (a) USE OF ENHANCED MATCH FOR EXPANDED

5 MEDICAID CHILD COVERAGE.—Section 1905 (42 U.S.C.

6 1396d), as amended by section 201, is further amended—

7 (1) in subsection (b), by striking ‘‘or subsection

8 (u)(4)(A)’’ and inserting ‘‘, subsection (u)(4)(A), or

9 subsection (u)(5)(A)’’; and

10 (2) in subsection (u)—

11 (A) by redesignating paragraph (5) as

12 paragraph (6); and

13 (B) by inserting after paragraph (4) the

14 following new paragraph:

15 ‘‘(5)(A) For purposes of subsection (b), the expendi16 tures described in this subparagraph are expenditures for

17 medical assistance for expansion children (as defined in

18 subparagraph (B)) but—

19 ‘‘(i) only in the case of expansion children resid20 ing in a State that has, under a waiver authorized

21 by the Secretary under section 1115 or under sec22 tion 1902(r)(2), established a medicaid applicable in23 come level (as defined in section 2110(b)(4)) for

24 children under 19 years of age residing in the State

25 that is at or above 185 percent of the poverty line;

26 and
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1 ‘‘(ii) only for a fiscal year to the extent the full2 year equivalent number of expansion children en3 rolled under the State plan under this title for the

4 fiscal year exceeds the number of such children en5 rolled under the plan for the State during the first

6 month in which the State’s child health plan under

7 title XXI was effective.

8 ‘‘(B) For purposes of this paragraph, the term ‘ex9 pansion child’ means a child who is eligible for medical

10 assistance under this title only due to a waiver described

11 in subparagraph (A)(i), and whose family income does not

12 exceed the medicaid applicable income level (as defined in

13 section 2110(b)(4)) for that child.’’.

14 (b) APPLICATION OF INCREASED PROPORTION OF

15 SCHIP ALLOTMENT FOR SPECIAL INITIATIVES AND SIMI16 LAR PURPOSES.—Section 2105(c)(2) of such Act (42

17 U.S.C. 1397ee(c)(2)) is amended by adding at the end the

18 following new subparagraph:

19 ‘‘(C) INCREASED FLEXIBILITY FOR CER20 TAIN STATES.—In the case of a State with a

21 medicaid applicable income level that is at or

22 above 185 percent of the poverty line—

23 ‘‘(i) the limitation under subpara24 graph (A) shall not apply to payments and
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1 expenditures described in subsection

2 (a)(2)(A) or (a)(2)(B); and

3 ‘‘(ii) in applying such limitation to ex4 penditures and costs described in sub5 section (a)(2)(C) or (a)(2)(D), any ref6 erence in subparagraph (A) to a sum is

7 deemed a reference to the amount of the

8 State’s allotment under section 2104 for

9 the fiscal year involved.’’.

10 (c) EFFECTIVE DATE.—The amendments made by

11 this section shall be effective as if included in the enact12 ment of section 4911 of the Balanced Budget Act of 1997.

13 Subtitle B—Prospective Payment

14 System for Federally-qualified

15 Health Centers and Rural

16 Health Clinics

17 SEC. 211. ESTABLISHMENT OF PROSPECTIVE PAYMENT

18 SYSTEM FOR FEDERALLY-QUALIFIED

19 HEALTH CENTERS AND RURAL HEALTH CLIN20 ICS.

21 (a) IN GENERAL.—Section 1902(a) (42 U.S.C.

22 1396a(a)) is amended—

23 (1) in paragraph (13)—

24 (A) in subparagraph (A), by adding ‘‘and’’

25 at the end;
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1 (B) in subparagraph (B), by striking

2 ‘‘and’’ at the end; and

3 (C) by striking subparagraph (C); and

4 (2) by inserting after paragraph (14) the fol5 lowing new paragraph:

6 ‘‘(15) for payment for services described in

7 clause (B) or (C) of section 1905(a)(2) under the

8 plan in accordance with subsection (aa);’’.

9 (b) NEW PROSPECTIVE PAYMENT SYSTEM.—Section

10 1902 (42 U.S.C. 1396a) is amended by adding at the end

11 the following:

12 ‘‘(aa) PAYMENT FOR SERVICES PROVIDED BY FED13 ERALLY-QUALIFIED HEALTH CENTERS AND RURAL

14 HEALTH CLINICS.—

15 ‘‘(1) IN GENERAL.—Beginning with fiscal year

16 2000 and each succeeding fiscal year, the State plan

17 shall provide for payment for services described in

18 section 1905(a)(2)(C) furnished by a Federally19 qualified health center and services described in sec20 tion 1905(a)(2)(B) furnished by a rural health clinic

21 in accordance with the provisions of this subsection.

22 ‘‘(2) FISCAL YEAR 2000.—Subject to paragraph

23 (4), for services furnished during fiscal year 2000,

24 the State plan shall provide for payment for such

25 services in an amount (calculated on a per visit
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1 basis) that is equal to 100 percent of the costs of

2 the center or clinic of furnishing such services dur3 ing fiscal year 1999 which are reasonable and re4 lated to the cost of furnishing such services, or

5 based on such other tests of reasonableness as the

6 Secretary prescribes in regulations under section

7 1833(a)(3), or, in the case of services to which such

8 regulations do not apply, the same methodology used

9 under section 1833(a)(3), adjusted to take into ac10 count any increase in the scope of such services fur11 nished by the center or clinic during fiscal year

12 2000.

13 ‘‘(3) FISCAL YEAR 2001 AND SUCCEEDING FIS14 CAL YEARS.—Subject to paragraph (4), for services

15 furnished during fiscal year 2001 or a succeeding

16 fiscal year, the State plan shall provide for payment

17 for such services in an amount (calculated on a per

18 visit basis) that is equal to the amount calculated for

19 such services under this subsection for the preceding

20 fiscal year—

21 ‘‘(A) increased by the percentage increase

22 in the MEI (as defined in section 1842(i)(3))

23 applicable to primary care services (as defined

24 in section 1842(i)(4)) for that fiscal year; and
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1 ‘‘(B) adjusted to take into account any in2 crease in the scope of such services furnished by

3 the center or clinic during that fiscal year.

4 ‘‘(4) ESTABLISHMENT OF INITIAL YEAR PAY5 MENT AMOUNT FOR NEW CENTERS OR CLINICS.—In

6 any case in which an entity first qualifies as a Fed7 erally-qualified health center or rural health clinic

8 after fiscal year 1999, the State plan shall provide

9 for payment for services described in section

10 1905(a)(2)(C) furnished by the center or services

11 described in section 1905(a)(2)(B) furnished by the

12 clinic in the first fiscal year in which the center or

13 clinic so qualifies in an amount (calculated on a per

14 visit basis) that is equal to 100 percent of the costs

15 of furnishing such services during such fiscal year in

16 accordance with the regulations and methodology re17 ferred to in paragraph (2). For each fiscal year fol18 lowing the fiscal year in which the entity first quali19 fies as a Federally-qualified health center or rural

20 health clinic, the State plan shall provide for the

21 payment amount to be calculated in accordance with

22 paragraph (3).

23 ‘‘(5) ADMINISTRATION IN THE CASE OF MAN24 AGED CARE.—In the case of services furnished by a

25 Federally-qualified health center or rural health clin-
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1 ic pursuant to a contract between the center or clinic

2 and a managed care entity (as defined in section

3 1932(a)(1)(B)), the State plan shall provide for pay4 ment to the center or clinic (at least quarterly) by

5 the State of a supplemental payment equal to the

6 amount (if any) by which the amount determined

7 under paragraphs (2), (3), and (4) of this subsection

8 exceeds the amount of the payments provided under

9 the contract.

10 ‘‘(6) ALTERNATIVE PAYMENT METHODOLO11 GIES.—Notwithstanding any other provision of this

12 section, the State plan may provide for payment in

13 any fiscal year to a Federally-qualified health center

14 for services described in section 1905(a)(2)(C) or to

15 a rural health clinic for services described in section

16 1905(a)(2)(B) in an amount which is determined

17 under an alternative payment methodology that—

18 ‘‘(A) is agreed to by the State and the cen19 ter or clinic; and

20 ‘‘(B) results in payment to the center or

21 clinic of an amount which is at least equal to

22 the amount otherwise required to be paid to the

23 center or clinic under this section.’’.

24 (c) CONFORMING AMENDMENTS.—
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1 (1) Section 4712 of the Balanced Budget Act

2 of 1997 (Public Law 105-33; 111 Stat. 508) is

3 amended by striking subsection (c).

4 (2) Section 1915(b) (42 U.S.C. 1396n(b)) is

5 amended by striking ‘‘1902(a)(13)(E)’’ and insert6 ing ‘‘1902(a)(15), 1902(aa),’’.

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section take effect on October 1, 1999, and apply to

9 services furnished on or after such date.

Æ