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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5001 Introduced in House (IH)]

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.

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

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

    (a) Short Title.--This Act may be cited as the ``Fair Care for 
Seniors and Children 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) Table of Contents.--The table of contents of 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.
                       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.

                       TITLE I--MEDICARE PROGRAM

                  Subtitle A--Medicare+Choice Program

SEC. 101. 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. 102. INCREASE IN NATIONAL PER CAPITA MEDICARE+CHOICE GROWTH 
              PERCENTAGE IN 2001 AND 2002.

    Section 1853(c)(6)(B) (42 U.S.C. 1395w-23(c)(6)(B)) is amended--
            (1) in clause (iv), by striking ``for 2001, 0.5 percentage 
        points'' and inserting ``for 2001, 0 percentage points''; and
            (2) in clause (v), by striking ``for 2002, 0.3 percentage 
        points'' and inserting ``for 2002, 0 percentage points''.

SEC. 103. PERMANENTLY REMOVING APPLICATION OF BUDGET NEUTRALITY 
              BEGINNING IN 2002.

    Section 1853(c) (42 U.S.C. 1395w-23(c)) is amended--
            (1) in paragraph (1)(A), in the matter following clause 
        (ii), by inserting ``(for years before 2001)'' after 
        ``multiplied''; and
            (2) in paragraph (5), by inserting ``(before 2001)'' after 
        ``for each year''.

SEC. 104. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND IN 2001.

    Section 1853(c)(2) (42 U.S.C. 1395w-23(c)(2)) is amended--
            (1) by adding ``and'' at the end of subparagraph (C);
            (2) by striking subparagraphs (D) and (E);
            (3) by redesignating subparagraph (F) and subparagraph (D); 
        and
            (4) in subparagraph (D), as so redesignated, by striking 
        ``2002'' and inserting ``2000''.

SEC. 105. INCREASED UPDATE FOR PAYMENT AREAS WITH ONLY ONE OR NO 
              MEDICARE+CHOICE CONTRACTS.

    (a) In General.--Section 1853(c)(1)(C)(ii) (42 U.S.C. 1395w-
23(c)(1)(C)(ii)) is amended--
            (1) by striking ``(ii) For a subsequent year'' and 
        inserting ``(ii)(I) Subject to subclause (II), for a subsequent 
        year''; and
            (2) by adding at the end the following new subclause:
                            ``(II) During 2001, 2002, 2003, 2004, and 
                        2005, in the case of a Medicare+Choice payment 
                        area in which there is no more than one 
                        contract entered into under this part as of 
                        July 1 before the beginning of the year, 102.5 
                        percent of the annual Medicare+Choice 
                        capitation rate under this paragraph for the 
                        area for the previous year.''.
    (b) Construction.--The amendments made by subsection (a) do not 
affect the payment of a first-time bonus under section 1853(i) of the 
Social Security Act (42 U.S.C. 1395w-23(i)).

SEC. 106. PERMITTING HIGHER NEGOTIATED RATES IN CERTAIN MEDICARE+CHOICE 
              PAYMENT AREAS BELOW NATIONAL AVERAGE.

    Section 1853(c)(1) (42 U.S.C. 1395w-23(c)(1)) is amended--
            (1) in the matter before subparagraph (A), by striking ``or 
        (C)'' and inserting ``(C), or (D)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Permitting higher rates through 
                negotiation.--
                            ``(i) In general.--For each year beginning 
                        with 2001, in the case of a Medicare+Choice 
                        payment area for which the Medicare+Choice 
                        capitation rate under this paragraph would 
                        otherwise be less than the United States per 
                        capita cost (USPCC), as calculated by the 
                        Secretary, a Medicare+Choice organization may 
                        negotiate with the Secretary an annual per 
                        capita rate that--
                                    ``(I) reflects an annual rate of 
                                increase up to the rate of increase 
                                specified in clause (ii);
                                    ``(II) takes into account audited 
                                current data supplied by the 
                                organization on its adjusted community 
                                rate (as defined in section 
                                1854(f)(3)); and
                                    ``(III) does not exceed the United 
                                States per capita cost, as projected by 
                                the Secretary for the year involved.
                            ``(ii) Maximum rate described.--The rate of 
                        increase specified in this clause for a year is 
                        the rate of inflation in private health 
                        insurance for the year involved, as projected 
                        by the Secretary, and includes such adjustments 
                        as may be necessary to reflect the demographic 
                        characteristics in the population under this 
                        title.
                            ``(iii) Adjustments for over or under 
                        projections.--If this subparagraph is applied 
                        to an organization and payment area for a year, 
                        in applying this subparagraph for a subsequent 
                        year the provisions of paragraph (6)(C) shall 
                        apply in the same manner as such provisions 
                        apply under this paragraph.''.

SEC. 107. REASONABLE COST REIMBURSEMENT FOR PAYMENT AREAS WITH NO MORE 
              THAN ONE MEDICARE+CHOICE CONTRACT.

    (a) In General.--Section 1853 (42 U.S.C. 1395w-23) is amended--
            (1) in subsection (a)(1)(A) by striking ``(g), and (i)'' 
        and inserting ``(g), (i), and (j)''; and
            (2) by adding at the end the following new subsection:
    ``(j) Reasonable Cost Reimbursement for Payment Areas With No More 
Than One Medicare+Choice Contract.--
            ``(1) In general.--Subject to paragraph (2), in the case of 
        a Medicare+Choice payment area in which there is no more than 1 
        contract entered into under this part as of July 1 before the 
        beginning of the following year, at the election of a 
        Medicare+Choice organization the amount of payment under this 
        section for such following year for enrollment under a 
        Medicare+Choice plan offered by the organization in that area 
        shall be the amount of payment otherwise applicable to an 
        eligible organization that has entered into a reasonable cost 
        reimbursement contract with the Secretary under section 
        1876(h).
            ``(2) Limitation.--A Medicare+Choice organization that has 
        negotiated a higher an annual per capita rate under subsection 
        (c)(1)(D) for a year may not elect reimbursement under 
        paragraph (1) for that year.''.

SEC. 108. 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 the period at the end of subclause (II) and 
        inserting a semicolon; and
            (2) by adding after and below subclause (II) the following:
                        ``and, beginning in 2004, insofar as such risk 
                        adjustment is based on data from all settings, 
                        the methodology shall be phased in in equal 
                        increments over a 10-year period, beginning 
                        with 2004 or (if later) the first year in which 
                        such data are used.''.

SEC. 109. DELAY FROM JULY TO NOVEMBER 2000 IN DEADLINE FOR OFFERING AND 
              WITHDRAWING MEDICARE+CHOICE PLANS FOR 2001.

    Notwithstanding any other provision of law, the deadline for a 
Medicare+Choice organization to withdraw the offering of a 
Medicare+Choice plan under part C of title XVIII of the Social Security 
Act (or otherwise to submit information required for the offering of 
such a plan) for 2001 is delayed from July 1, 2000, to October 1, 2000, 
and any such organization that provided notice of withdrawal of such a 
plan during 2000 before the date of the enactment of this Act may 
rescind such withdrawal at any time before November 1, 2000.

                Subtitle B--Inpatient Hospital Services

SEC. 111. ELIMINATION OF AUTHORITY TO ESTIMATE COSTS INCURRED BY A 
              HOSPITAL FOR WAGES.

    (a) In General.--The first sentence of section 1886(d)(3)(E) (42 
U.S.C. 1395ww(d)(3)(E)) is amended by striking ``, (as estimated by the 
Secretary from time to time) of hospitals' costs'' and inserting ``of 
each hospital's costs (based on the most recent data available to the 
Secretary with respect to each hospital)''.
    (b) Special Rule for Puerto Rico Hospitals.--Section 1886(d)(3)(E) 
(42 U.S.C. 1395ww(d)(3)(E)) is amended by adding at the end the 
following new sentence: ``In the case of a subsection (d) Puerto Rico 
hospital, the first sentence of this subparagraph shall be applied as 
in effect on the date that precedes the date of the enactment of the 
Fair Care for Seniors and Children Act of 2000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to discharges occurring on or after January 1, 2001.

                    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.

    (a) In General.--Section 1895(b)(3)(A) (42 U.S.C. 
1395fff(b)(3)(A)), as amended by sections 302(b) and 303(f) of the 
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 
(113 Stat. 1501A-359, 361), as enacted into law by section 1000(a)(6) 
of Public Law 106-113, is amended to read as follows:
                    ``(A) Initial basis.--Under such system the 
                Secretary shall provide for computation of a standard 
                prospective payment amount (or amounts). 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 and if section 1861(v)(1)(L)(ix) had not been 
                enacted. Each such amount shall be standardized in a 
                manner that eliminates the effect of variations in 
                relative case mix and area wage adjustments among 
                different home health agencies in a budget neutral 
                manner consistent with the case mix and wage level 
                adjustments provided under paragraph (4)(A). Under the 
                system, the Secretary may recognize regional 
                differences or differences based upon whether or not 
                the services or agency are in an urbanized area.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of the Medicare, Medicaid, 
and SCHIP Balanced Budget Refinement Act of 1999 (Public Law 106-113).

                       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.

    (a) In General.--Section 1905 (42 U.S.C. 1396d) is amended--
            (1) in subsection (b), by striking ``or subsection (u)(3)'' 
        and inserting ``, subsection (u)(3), or subsection (u)(4)(A)''; 
        and
            (2) in subsection (u) (as added by section 4911(a)(2) of 
        the Balanced Budget Act of 1997 and as amended by section 162 
        of Public Law 105-100)--
                    (A) by redesignating paragraph (4) as paragraph 
                (5); and
                    (B) by inserting after paragraph (3) the following 
                new paragraph:
    ``(4)(A) For purposes of subsection (b), the expenditures described 
in this subparagraph are expenditures for medical assistance for 
waivered low-income children described in subparagraph (B) but--
            ``(i) only in the case of children residing in a State 
        described in subparagraph (C); and
            ``(ii) only to the extent the number of full-year 
        equivalent waivered low-income children enrolled under the 
        State plan under this title for the fiscal year exceeds the 
        number of waivered low-income children described in 
        subparagraph (D)(i) for the State for the fiscal year.
    ``(B) For purposes of this paragraph, the term `waivered low-income 
child' means a child whose family income exceeds the minimum income 
level required to be established for the age of such child under 
section 1902(l)(2) in order for the child to be eligible for medical 
assistance under this title, but does not exceed the medicaid 
applicable income level (as defined in section 2110(b)(4) but 
determined as if `June 1, 1997' were substituted for `March 31, 1997') 
for that child.
    ``(C) A State described in this subparagraph is a State that--
            ``(i) has under a waiver authorized by the Secretary or 
        under section 1902(r)(2) established a medicaid applicable 
        income level (as defined in section 2110(b)(4) but determined 
        as if `June 1, 1997' were substituted for `March 31, 1997') for 
        children under 19 years of age residing in the State that is at 
or above 185 percent of the poverty line; and
            ``(ii) demonstrates to the satisfaction of the Secretary a 
        commitment to reach and enroll children who are eligible for, 
        but not enrolled under, the State plan through means, such as 
        the following:
                    ``(I) Eliminating the assets test for eligibility 
                of waivered low-income children.
                    ``(II) Using shortened and simplified applications 
                for such children.
                    ``(III) Allowing applications for such children to 
                be submitted by mail or through telephone.
                    ``(IV) Outstationing State eligibility workers at 
                sites that are frequented by families with children, 
                including schools, child care centers, churches, 
                centers providing Head Start services, local offices of 
                the special supplemental food program for women, 
                infants and young children (WIC) established under 
                section 17 of the Child Nutrition Act of 1966, 
                community centers, Job Corps centers established under 
                part B of title IV of the Job Training Partnership Act 
                or subtitle C of title I of the Workforce Investment 
                Act of 1998, sites offering the recognized equivalent 
                of a secondary school degree, offices of tribal 
                organizations (as defined in section 4(l) of the Indian 
                Self-Determination and Education Assistance Act), and 
                Social Security Administration field offices.
                    ``(V) Using presumptive eligibility for waivered 
                low-income children.
                    ``(VI) Collaborating with public and private 
                entities to conduct outreach campaigns to enroll such 
                children.
    ``(D)(i) For purposes of subparagraph (A)(ii), the number of 
waivered low-income children for a State described in this clause for--
            ``(I) fiscal year 1998, is equal to the number of full-year 
        equivalent waivered low-income children enrolled under the 
        State plan under this title for fiscal year 1997; and
            ``(II) fiscal year 1999 or a succeeding fiscal year, is 
        equal to the number of waivered low-income children determined 
        under this clause for the preceding fiscal year increased by 
        the number of percentage points determined under clause (ii) 
        for the State for the fiscal year involved.
    ``(ii) The number of percentage points determined under this clause 
for a State for a fiscal year is equal to the number of percentage 
points by which--
            ``(I) the arithmetic average of the total number of 
        children in the State set forth in the 3 most recent March 
        supplements to the Current Population Survey of the Bureau of 
        the Census before the beginning of the fiscal year; exceeds
            ``(II) the arithmetic average of such total number set 
        forth in the second, third, and fourth most recent March 
        supplements to such Survey before the beginning of the fiscal 
        year.
    ``(E) For purposes of section 2104(d) (regarding the reduction of 
an allotment under title XXI) the amount determined under paragraph (2) 
of that section shall, with respect to expenditures described in 
subparagraph (A), only take into account the amount by which--
            ``(i) the payments made to a State for such expenditures 
        for a fiscal year on the basis of an enhanced FMAP under the 
        fourth sentence of subsection (b); exceed
            ``(ii) the amount of payments that would have been made for 
        the expenditures if the enhanced FMAP did not apply.
    ``(F) Each State shall submit to the Secretary such information, at 
such time and in such manner, as the Secretary determines is necessary 
to ensure that the requirements of this paragraph are satisfied. The 
Secretary shall ensure that information is provided under this 
subsection in a manner that is consistent with other reporting 
requirements for information required to be submitted by a State under 
this title and title XXI, and avoids duplication of reporting 
requirements.
    ``(G) The Secretary shall regularly examine the payments made to a 
State for the expenditures described in subparagraph (A) to confirm 
that the payments are attributable to expenditures described in such 
subparagraph.''.
    (b) Conforming Amendment.--Section 2104(d)(2) (42 U.S.C. 
1397dd(d)(2)) is amended by inserting ``subject to section 
1905(u)(4)(E),'' after ``(2)''.
    (c) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of section 4911 of the 
Balanced Budget Act of 1997.

SEC. 202. EXPANSION OF PRESUMPTIVE ELIGIBILITY OPTION FOR CHILDREN 
              UNDER THE MEDICAID PROGRAM.

    (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 before the semicolon ``, eligibility for 
        assistance under the State plan under part A of title IV, 
        eligibility of a child to receive medical assistance under the 
        State plan under this title or title XXI, (III) is a staff 
        member of 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), a child care 
        resource and referral center, or an agency administering a 
        State plan under part D of title IV, or (IV) is so designated 
        by the State''.
    (b) Conforming Amendments.--Section 1920A (42 U.S.C. 1396r-1a) is 
amended--
            (1) in subsection (b)(3)(A)(ii), by striking ``paragraph 
        (1)(A)'' and inserting ``paragraph (2)(A)''; and
            (2) in subsection (c)(2), in the matter preceding 
        subparagraph (A), by striking ``subsection (b)(1)(A)'' and 
        inserting ``subsection (b)(2)(A)''.

SEC. 203. INCREASED SCHIP FLEXIBILITY FOR STATES WITH HIGH MEDICAID 
              CHILD INCOME LEVELS WHEN SCHIP INITIATED.

    (a) Use of Enhanced Match for Expanded Medicaid Child Coverage.--
Section 1905 (42 U.S.C. 1396d), as amended by section 201, is further 
amended--
            (1) in subsection (b), by striking ``or subsection 
        (u)(4)(A)'' and inserting ``, subsection (u)(4)(A), or 
        subsection (u)(5)(A)''; and
            (2) in subsection (u)--
                    (A) by redesignating paragraph (5) as paragraph 
                (6); and
                    (B) by inserting after paragraph (4) the following 
                new paragraph:
    ``(5)(A) For purposes of subsection (b), the expenditures described 
in this subparagraph are expenditures for medical assistance for 
expansion children (as defined in subparagraph (B)) but--
            ``(i) only in the case of expansion children residing in a 
        State that has, under a waiver authorized by the Secretary 
        under section 1115 or under section 1902(r)(2), established a 
        medicaid applicable income level (as defined in section 
        2110(b)(4)) for children under 19 years of age residing in the 
        State that is at or above 185 percent of the poverty line; and
            ``(ii) only for a fiscal year to the extent the full-year 
        equivalent number of expansion children enrolled under the 
        State plan under this title for the fiscal year exceeds the 
        number of such children enrolled under the plan for the State 
        during the first month in which the State's child health plan 
        under title XXI was effective.
    ``(B) For purposes of this paragraph, the term `expansion child' 
means a child who is eligible for medical assistance under this title 
only due to a waiver described in subparagraph (A)(i), and whose family 
income does not exceed the medicaid applicable income level (as defined 
in section 2110(b)(4)) for that child.''.
    (b) Application of Increased Proportion of SCHIP Allotment for 
Special Initiatives and Similar Purposes.--Section 2105(c)(2) of such 
Act (42 U.S.C. 1397ee(c)(2)) is amended by adding at the end the 
following new subparagraph:
                    ``(C) Increased flexibility for certain states.--In 
                the case of a State with a medicaid applicable income 
                level that is at or above 185 percent of the poverty 
                line--
                            ``(i) the limitation under subparagraph (A) 
                        shall not apply to payments and expenditures 
                        described in subsection (a)(2)(A) or (a)(2)(B); 
                        and
                            ``(ii) in applying such limitation to 
                        expenditures and costs described in subsection 
                        (a)(2)(C) or (a)(2)(D), any reference in 
                        subparagraph (A) to a sum is deemed a reference 
                        to the amount of the State's allotment under 
                        section 2104 for the fiscal year involved.''.
    (c) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of section 4911 of the 
Balanced Budget Act of 1997.

 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.

    (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) 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 2000 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.
            ``(2) Fiscal year 2000.--Subject to paragraph (4), for 
        services furnished during fiscal year 2000, 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 costs of the center or clinic of furnishing such 
        services during fiscal year 1999 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 in the scope of such services 
        furnished by the center or clinic during fiscal year 2000.
            ``(3) Fiscal year 2001 and succeeding fiscal years.--
        Subject to paragraph (4), for services furnished during fiscal 
        year 2001 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 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 1999, 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 in accordance with the regulations and methodology 
        referred to in paragraph (2). 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)(E)'' and inserting ``1902(a)(15), 
        1902(aa),''.
    (d) Effective Date.--The amendments made by this section take 
effect on October 1, 1999, and apply to services furnished on or after 
such date.
                                 <all>
```