I

106TH CONGRESS

2D SESSION H. R. 4937

To amend title XVIII of the Social Security Act to provide relief to providers

of services under the Medicare Program by correcting reductions in

payment rates instituted under the Balanced Budget Act of 1997.

IN THE HOUSE OF REPRESENTATIVES

JULY 24, 2000

Mr. SMITH of Washington introduced the following bill; which was referred to

the Committee on Ways and Means, and in addition to the Committee

on Commerce, 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

relief to providers of services under the Medicare Program by correcting reductions in payment rates instituted under the Balanced Budget Act of 1997.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Medicare Protection and Fairness Act of 2000’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:
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Sec. 1. Short title; table of contents.

TITLE I—INCREASE IN PAYMENTS FOR INPATIENT HOSPITAL

SERVICES

Sec. 101. Elimination of reduction to market basket percentage increase in fiscal years 2001 and 2002.

Sec. 102. Increase in payments for disproportionate share hospitals (DSH) in

fiscal years 2001 and 2002.

Sec. 103. Elimination of reduction in payments for indirect costs of graduate

medical education (IME).

TITLE II—INCREASE IN PAYMENTS FOR HOME HEALTH

SERVICES

Sec. 201. Elimination of 15 percent reduction under the prospective payment

system.

TITLE III—INCREASE IN PAYMENTS TO MEDICARE+CHOICE

ORGANIZATIONS

Subtitle A—Modifications to Risk Adjustment Methodology

Sec. 301. Application of budget neutrality principle to the new

Medicare+Choice risk adjustment methodology.

Sec. 302. 10-year phase in for risk adjustment.

Subtitle B—Modifications to the Blended Capitation Rate

Sec. 311. Election of application in 2001 and 2002 of 50:50 area-specific and

national percentages.

Sec. 312. Increase in national per capita Medicare+Choice growth percentage

in 2001 and 2002.

Subtitle C—Reporting Requirements for Medicare Health Care Services

Furnished in Military Treatment Facilities

Sec. 321. Reporting costs incurred under Medicare Subvention Demonstration

Project for military retirees.

1 TITLE I—INCREASE IN PAY2 MENTS FOR INPATIENT HOS3 PITAL SERVICES

4 SEC. 101. ELIMINATION OF REDUCTION TO MARKET BAS5 KET PERCENTAGE INCREASE IN FISCAL

6 YEARS 2001 AND 2002.

7 Section 1886(b)(3)(B)(i) of the Social Security Act

8 (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended—
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1 (1) by striking subclauses (XVI) and (XVII);

2 (2) by inserting ‘‘and’’ at the end of subclause

3 (XV);

4 (3) by redesignating subclause (XVIII) as sub5 clause (XVI); and

6 (4) in subclause (XVI), as so redesignated, by

7 striking ‘‘2003’’ and inserting ‘‘2001’’.

8 SEC. 102. INCREASE IN PAYMENTS FOR DISPROPOR9 TIONATE SHARE HOSPITALS (DSH) IN FISCAL

10 YEARS 2001 AND 2002.

11 Section 1886(d)(5)(F)(ix) of the Social Security Act

12 (42 U.S.C. 1395ww(d)(5)(F)(ix)) is amended—

13 (1) in subclause (III), by striking ‘‘each of fis14 cal years 2000 and 2001,’’ and inserting ‘‘fiscal year

15 2000,’’; and

16 (2) in subclause (IV)—

17 (A) by striking ‘‘fiscal year 2002,’’ and in18 serting ‘‘each of fiscal years 2001 and 2002,’’;

19 and

20 (B) by striking ‘‘reduced by 4 percent’’

21 and inserting ‘‘reduced by 2 percent’’.
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1 SEC. 103. ELIMINATION OF REDUCTION IN PAYMENTS FOR

2 INDIRECT COSTS OF GRADUATE MEDICAL

3 EDUCATION (IME).

4 Section 1886(d)(5)(B) of the Social Security Act (42

5 U.S.C. 1395ww(d)(5)(B)) is amended—

6 (1) by striking subclauses (V), and (VI);

7 (2) by adding ‘‘and’’ at the end of subclause

8 (III); and

9 (3) in subclause (IV)—

10 (A) by striking ‘‘during fiscal year 2000,’’

11 and inserting ‘‘on or after October 1, 1999,’’;

12 and

13 (B) by striking the semicolon at the end

14 and inserting a period.

15 TITLE II—INCREASE IN PAY16 MENTS FOR HOME HEALTH

17 SERVICES

18 SEC. 201. ELIMINATION OF 15 PERCENT REDUCTION

19 UNDER THE PROSPECTIVE PAYMENT SYS20 TEM.

21 (a) IN GENERAL.—Section 1895(b)(3)(A) of the So22 cial Security Act (42 U.S.C. 1395fff(b)(3)(A)), as amend23 ed by sections 302(b) and 303(f) of the Medicare, Med24 icaid, and SCHIP Balanced Budget Refinement Act of

25 1999 (113 Stat. 1501A–359, 361), as enacted into law
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1 by section 1000(a)(6) of Public Law 106–113, is amended

2 to read as follows:

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

4 the Secretary shall provide for computation of

5 a standard prospective payment amount (or

6 amounts). Such amount (or amounts) shall ini7 tially be based on the most current audited cost

8 report data available to the Secretary and shall

9 be computed in a manner so that the total

10 amounts payable under the system for the 12-

11 month period beginning on the date the Sec12 retary implements the system shall be equal to

13 the total amount that would have been made if

14 the system had not been in effect and if section

15 1861(v)(1)(L)(ix) had not been enacted. Each

16 such amount shall be standardized in a manner

17 that eliminates the effect of variations in rel18 ative case mix and area wage adjustments

19 among different home health agencies in a

20 budget neutral manner consistent with the case

21 mix and wage level adjustments provided under

22 paragraph (4)(A). Under the system, the Sec23 retary may recognize regional differences or dif24 ferences based upon whether or not the services

25 or agency are in an urbanized area.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall take effect as if included in the enact3 ment of the Medicare, Medicaid, and SCHIP Balanced

4 Budget Refinement Act of 1999 (Public Law 106–113).

5 TITLE III—INCREASE IN PAY6 MENTS TO

7 MEDICARE+CHOICE ORGANI8 ZATIONS

9 Subtitle A—Modifications to Risk

10 Adjustment Methodology

11 SEC. 301. APPLICATION OF BUDGET NEUTRALITY PRIN12 CIPLE TO THE NEW MEDICARE+CHOICE RISK

13 ADJUSTMENT METHODOLOGY.

14 (a) IN GENERAL.—Section 1853(a)(3) of the Social

15 Security Act (42 U.S.C. 1395w–23(a)(3)) is amended by

16 adding at the end the following new subparagraph:

17 ‘‘(E) IMPLEMENTATION IN A BUDGET NEU18 TRAL MANNER.—The methodology under this

19 paragraph shall be designed and implemented

20 in a manner so that it does not result in any

21 material change in the aggregate level of ex22 penditures under this title compared to the level

23 that would have occurred if such methodology

24 had not been implemented (and if the previous
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1 risk adjustment methodology used in 1998 had

2 continued to be implemented).’’.

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

4 subsection (a) takes effect on the date of the enactment

5 of this Act and applies to payments for months beginning

6 on or after January 2001.

7 SEC. 302. 10-YEAR PHASE-IN FOR RISK ADJUSTMENT.

8 Section 1853(a)(3)(C)(ii) of the Social Security Act

9 (42 U.S.C. 1395w–23(a)(3)(C)(ii)) is amended to read as

10 follows:

11 ‘‘(ii) PHASE-IN.—Such risk adjust12 ment methodology shall be implemented in

13 a phased-in manner so that the method14 ology insofar as it makes adjustments to

15 capitation rates for health status applies to

10 percent of 1 16 ⁄12 of the annual

17 Medicare+Choice capitation rate in each

18 of 2000 through 2009.

19 Subtitle B—Modifications to the

20 Blended Capitation Rate

21 SEC. 311. ELECTION OF APPLICATION IN 2001 AND 2002 OF

22 50:50 AREA-SPECIFIC AND NATIONAL PER23 CENTAGES.

24 Section 1853(c)(2) of the Social Security Act (42

25 U.S.C. 1395w–23(c)(2)) is amended—
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1 (1) by striking the period at the end of sub2 paragraph (F) and inserting a semicolon; and

3 (2) by adding after and below subparagraph

4 (F) the following: ‘‘except that for either or both

5 2001 and 2002, a Medicare+Choice organization

6 may elect to apply subparagraph (F) (rather than,

7 with respect to 2001, subparagraph (D) or, with re8 spect to 2002, subparagraph (E)).’’.

9 SEC. 312. INCREASE IN NATIONAL PER CAPITA

10 MEDICARE+CHOICE GROWTH PERCENTAGE

11 IN 2001 AND 2002.

12 Section 1853(c)(6)(B) of the Social Security Act (42

13 U.S.C. 1395w–23(c)(6)(B)) is amended—

14 (1) by adding ‘‘and’’ at the end of clause (iii);

15 (2) by striking clauses (iv) and (v); and

16 (3) in clause (vi), by redesignating such clause

17 as clause (iv) and by striking ‘‘2002’’ and inserting

18 ‘‘2000’’.
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1 Subtitle C—Reporting Require2 ments for Medicare Health Care

3 Services Furnished in Military

4 Treatment Facilities

5 SEC. 321. REPORTING COSTS INCURRED UNDER MEDICARE

6 SUBVENTION DEMONSTRATION PROJECT

7 FOR MILITARY RETIREES.

8 (a) IN GENERAL.—Section 1896 of the Social Secu9 rity Act (42 U.S.C. 1395ggg) is amended by adding at

10 the end the following new subsection:

11 ‘‘(l) REPORTING COSTS INCURRED UNDER THE

12 PROJECT FOR PURPOSES OF CALCULATING

13 MEDICARE+CHOICE PAYMENT RATES.—

14 ‘‘(1) DETERMINATION OF COSTS.—For a year

15 in which the project is carried out in a military

16 treatment facility, the facility shall determine the ag17 gregate costs that are incurred under the project

18 (and for which payment will be made from the trust

19 funds) for furnishing medicare health care services

20 to medicare-eligible military retirees or dependents

21 under the project in that year.

22 ‘‘(2) REPORT OF CALCULATED COSTS.—For

23 purposes of including the costs incurred under the

24 project (as described in paragraph (1)) in the cal25 culation the annual Medicare+Choice capitation
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1 rates in each Medicare+Choice payment area, a

2 military treatment facility shall submit to the Sec3 retary the determination made under paragraph (1)

4 by not later than March 31 of the year that follows

5 the year for which the facility has made such deter6 mination.’’.

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

8 subsection (a) shall apply with respect to years beginning

9 on or after January 1, 2000.

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