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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5612 Introduced in House (IH)]

106th CONGRESS
  2d Session
                                H. R. 5612

   To amend titles XVIII, XIX, and XXI of the Social Security Act to 
   provide benefits improvements and beneficiary protections in the 
  Medicare and Medicaid Programs and the State child health insurance 
program (SCHIP), as revised by the Balanced Budget Act of 1997 and the 
 Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, 
                        and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            November 1, 2000

  Mr. Rangel (for himself, Mr. Dingell, Mr. Spratt, Mr. Stenholm, Mr. 
    Brown of Ohio, Mr. Berry, Mr. Allen, Mr. Andrews, Mr. Baca, Ms. 
Baldwin, Mr. Boucher, Mr. Cardin, Mr. Costello, Mr. Coyne, Mr. DeFazio, 
    Mr. Dixon, Ms. Eshoo, Mr. Green of Texas, Mr. Hall of Ohio, Mr. 
Hilliard, Mr. Jackson of Illinois, Mr. Kleczka, Mr. Levin, Mrs. Lowey, 
  Mr. Matsui, Mr. McGovern, Mr. McNulty, Ms. Millender-McDonald, Mr. 
    Oberstar, Mr. Rahall, Mr. Sawyer, Mr. Skelton, and Mr. Stupak) 
 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 titles XVIII, XIX, and XXI of the Social Security Act to 
   provide benefits improvements and beneficiary protections in the 
  Medicare and Medicaid Programs and the State child health insurance 
program (SCHIP), as revised by the Balanced Budget Act of 1997 and the 
 Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, 
                        and for other purposes.

    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; REFERENCES 
              TO OTHER ACTS; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare, 
Medicaid, and SCHIP Benefits Improvement and Beneficiary 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; 111 Stat. 
        251).
            (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 
        (Appendix F, 113 Stat. 1501A-321), as enacted into law by 
        section 1000(a)(6) of Public Law 106-113.
    (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--MEDICARE BENEFICIARY IMPROVEMENTS

                Subtitle A--Improved Preventive Benefits

Sec. 101. Coverage of biennial screening pap smear and pelvic exams.
Sec. 102. Coverage of screening for glaucoma.
Sec. 103. Coverage of screening colonoscopy for average risk 
                            individuals.
Sec. 104. Modernization of screening mammography benefit.
Sec. 105. Coverage of medical nutrition therapy services for 
                            beneficiaries with diabetes or a renal 
                            disease.
Sec. 106. Extension of part A coverage for workers with disabilities.
               Subtitle B--Other Beneficiary Improvements

Sec. 111. Acceleration of reduction of beneficiary copayment for 
                            hospital outpatient department services.
Sec. 112. Preservation of coverage of drugs and biologicals under part 
                            B of the medicare program.
Sec. 113. Elimination of time limitation on medicare benefits for 
                            immunosuppressive drugs.
Sec. 114. Imposition of billing limits on drugs.
Sec. 115. Improving availability of QMB/SLMB application forms.
Sec. 116. Waiver of 24-month waiting period for medicare coverage of 
                            individuals disabled with amyotrophic 
                            lateral sclerosis (ALS).
             Subtitle C--Demonstration Projects and Studies

Sec. 121. Demonstration project for disease management for severely 
                            chronically ill medicare beneficiaries.
Sec. 122. Cancer prevention and treatment demonstration for ethnic and 
                            racial minorities.
Sec. 123. Study on medicare coverage of routine thyroid screening.
Sec. 124. MedPAC study on consumer coalitions.
Sec. 125. Study on limitation on State payment for medicare cost-
                            sharing affecting access to services for 
                            qualified medicare beneficiaries.
Sec. 126. Studies on preventive interventions in primary care for older 
                            Americans.
Sec. 127. MedPAC study and report on medicare coverage of cardiac and 
                            pulmonary rehabilitation therapy services.
                TITLE II--RURAL HEALTH CARE IMPROVEMENTS

            Subtitle A--Critical Access Hospital Provisions

Sec. 201. Clarification of no beneficiary cost-sharing for clinical 
                            diagnostic laboratory tests furnished by 
                            critical access hospitals.
Sec. 202. Assistance with fee schedule payment for professional 
                            services under all-inclusive rate.
Sec. 203. Exemption of critical access hospital swing beds from SNF 
                            PPS.
Sec. 204. Payment in critical access hospitals for emergency room on-
                            call physicians.
Sec. 205. Treatment of ambulance services furnished by certain critical 
                            access hospitals.
Sec. 206. GAO study on certain eligibility requirements for critical 
                            access hospitals.
              Subtitle B--Other Rural Hospitals Provisions

Sec. 211. Equitable treatment for rural disproportionate share 
                            hospitals.
Sec. 212. Option to base eligibility for medicare dependent, small 
                            rural hospital program on discharges during 
                            2 of the 3 most recently audited cost 
                            reporting periods.
Sec. 213. Extension of option to use rebased target amounts to all sole 
                            community hospitals.
Sec. 214. MedPAC analysis of impact of volume on per unit cost of rural 
                            hospitals with psychiatric units.
                   Subtitle C--Other Rural Provisions

Sec. 221. Assistance for providers of ambulance services in rural 
                            areas.
Sec. 222. Payment for certain physician assistant services.
Sec. 223. Revision of medicare reimbursement for telehealth services.
Sec. 224. Expanding access to rural health clinics.
Sec. 225. MedPAC study on low-volume, isolated rural health care 
                            providers.
                TITLE III--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

Sec. 301. Eliminating reduction in PPS hospital payment update.
Sec. 302. Additional modification in transition for indirect medical 
                            education (IME) percentage adjustment.
Sec. 303. Decrease in reductions for disproportionate share hospital 
                            (DSH) payments.
Sec. 304. Wage index improvements.
Sec. 305. Payment for inpatient services of rehabilitation hospitals.
Sec. 306. Payment for inpatient services of psychiatric hospitals.
Sec. 307. Payment for inpatient services of long-term care hospitals.
Sec. 308. Increase in base payment to Puerto Rico acute care hospitals.
 Subtitle B--Adjustments to PPS Payments for Skilled Nursing Facilities

Sec. 311. Elimination of reduction in skilled nursing facility (SNF) 
                            market basket update in 2001.
Sec. 312. Increase in nursing component of PPS Federal rate.
Sec. 313. Application of SNF consolidated billing requirement limited 
                            to part A covered stays.
Sec. 314. Adjustment of rehabilitation RUGs to correct anomaly in 
                            payment rates.
Sec. 315. Establishment of process for geographic reclassification.
                        Subtitle C--Hospice Care

Sec. 321. Full market basket increase for 2001 and 2002.
Sec. 322. Clarification of physician certification.
Sec. 323. MedPAC report on access to, and use of, hospice benefit.
                      Subtitle D--Other Provisions

Sec. 331. Relief from medicare part A late enrollment penalty for group 
                            buy-in for State and local retirees.
Sec. 332. Hospital geographic reclassification for labor costs for 
                            other PPS systems.
Sec. 333. Nurse staffing and quality improvement; grants to States.
                TITLE IV--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

Sec. 401. Revision of hospital outpatient PPS payment update.
Sec. 402. Clarifying process and standards for determining eligibility 
                            of devices for pass-through payments under 
                            hospital outpatient PPS.
Sec. 403. Application of OPD PPS transitional corridor payments to 
                            certain hospitals that did not submit a 
                            1996 cost report.
Sec. 404. Application of rules for determining provider-based status 
                            for certain entities.
Sec. 405. Treatment of children's hospitals under prospective payment 
                            system.
Sec. 406. Inclusion of temperature monitored cryoablation in 
                            transitional pass-through for certain 
                            medical devices, drugs, and biologicals 
                            under OPD PPS.
Sec. 407. Contrast enhanced diagnostic procedures under hospital 
                            prospective payment system.
        Subtitle B--Provisions Relating to Physicians' Services

Sec. 411. GAO studies relating to physicians' services.
Sec. 412. Physician group practice demonstration.
Sec. 413. Study on enrollment procedures for groups that retain 
                            independent contractor physicians.
                       Subtitle C--Other Services

Sec. 421. 1-year extension of moratorium on therapy caps; report on 
                            standards for supervision of physical 
                            therapy assistants.
Sec. 422. Update in renal dialysis composite rate.
Sec. 423. Payment for ambulance services.
Sec. 424. Ambulatory surgical centers.
Sec. 425. Full update for durable medical equipment.
Sec. 426. Full update for orthotics and prosthetics.
Sec. 427. Establishment of special payment provisions and requirements 
                            for prosthetics and certain custom 
                            fabricated orthotic items.
Sec. 428. Replacement of prosthetic devices and parts.
Sec. 429. Revised part B payment for drugs and biologicals and related 
                            services.
Sec. 430. Qualifications for community mental health centers.
Sec. 431. Modification of medicare billing requirements for certain 
                            Indian providers.
Sec. 432. GAO study on coverage of surgical first assisting services of 
                            certified registered nurse first 
                            assistants.
Sec. 433. MedPAC study and report on medicare reimbursement for 
                            services provided by certain providers.
Sec. 434. MedPAC study and report on medicare coverage of services 
                            provided by certain nonphysician providers.
Sec. 435. GAO study and report on the costs of emergency and medical 
                            transportation services.
Sec. 436. GAO studies and reports on medicare payments.
Sec. 437. MedPAC study on access to outpatient pain management 
                            services.
             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 501. 2-year additional delay in application of 15 percent 
                            reduction on payment limits for home health 
                            services.
Sec. 502. Restoration of full home health market basket update for home 
                            health services for fiscal year 2001.
Sec. 503. Temporary two-month extension of periodic interim payments.
Sec. 504. Use of telehealth in delivery of home health services.
Sec. 505. Study on costs to home health agencies of purchasing 
                            nonroutine medical supplies.
Sec. 506. Treatment of branch offices; GAO study on supervision of home 
                            health care provided in isolated rural 
                            areas.
Sec. 507. Clarification of the homebound definition under the medicare 
                            home health benefit.
Sec. 508. Temporary increase for home health services furnished in a 
                            rural area.
             Subtitle B--Direct Graduate Medical Education

Sec. 511. Increase in floor for direct graduate medical education 
                            payments.
Sec. 512. Change in distribution formula for Medicare+Choice-related 
                            nursing and allied health education costs.
      Subtitle C--Changes in Medicare Coverage and Appeals Process

Sec. 521. Revisions to medicare appeals process.
Sec. 522. Revisions to medicare coverage process.
            Subtitle D--Improving Access to New Technologies

Sec. 531. Reimbursement improvements for new clinical laboratory tests 
                            and durable medical equipment.
Sec. 532. Retention of HCPCS level III codes.
Sec. 533. Recognition of new medical technologies under inpatient 
                            hospital PPS.
                      Subtitle E--Other Provisions

Sec. 541. Increase in reimbursement for bad debt.
Sec. 542. Treatment of certain physician pathology services under 
                            medicare.
Sec. 543. Extension of advisory opinion authority.
Sec. 544. Change in annual MedPAC reporting.
Sec. 545. Development of patient assessment instruments.
Sec. 546. GAO report on impact of the Emergency Medical Treatment and 
                            Active Labor Act (EMTALA) on hospital 
                            emergency departments.
Sec. 547. Application of Bloodborne Pathogen standard to certain 
                            hospitals.
 TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

              Subtitle A--Medicare+Choice Payment Reforms

Sec. 601. Increased payment for accountable Medicare+Choice plans.
Sec. 602. 10-year phase-in of risk adjustment.
Sec. 603. Transition to revised Medicare+Choice payment rates.
Sec. 604. Revision of payment rates for ESRD patients enrolled in 
                            Medicare+Choice plans.
Sec. 605. Permitting premium reductions as additional benefits under 
                            Medicare+Choice plans.
Sec. 606. Full implementation of risk adjustment for congestive heart 
                            failure enrollees for 2001.
Sec. 607. Expansion of application of Medicare+Choice new entry bonus.
Sec. 608. Report on inclusion of certain costs of the Department of 
                            Veterans Affairs and military facility 
                            services in calculating Medicare+Choice 
                            payment rates.
               Subtitle B--Other Medicare+Choice Reforms

Sec. 611. Payment of additional amounts for new benefits covered during 
                            a contract term.
Sec. 612. Restriction on implementation of significant new regulatory 
                            requirements mid-year.
Sec. 613. Timely approval of marketing material that follows model 
                            marketing language.
Sec. 614. Avoiding duplicative regulation.
Sec. 615. Election of uniform local coverage policy for Medicare+Choice 
                            plan covering multiple localities.
Sec. 616. Eliminating health disparities in Medicare+Choice program.
Sec. 617. Medicare+Choice program compatibility with employer or union 
                            group health plans.
Sec. 618. Special medigap enrollment antidiscrimination provision for 
                            certain beneficiaries.
Sec. 619. Restoring effective date of elections and changes of 
                            elections of Medicare+Choice plans.
Sec. 620. Permitting ESRD beneficiaries to enroll in another 
                            Medicare+Choice plan if the plan in which 
                            they are enrolled is terminated.
Sec. 621. Providing choice for skilled nursing facility services under 
                            the Medicare+Choice program.
Sec. 622. Providing for accountability of Medicare+Choice plans.
Sec. 623. Civil monetary penalties for contract default by a 
                            Medicare+Choice organization.
                 Subtitle C--Other Managed Care Reforms

Sec. 631. 1-year extension of social health maintenance organization 
                            (SHMO) demonstration project.
Sec. 632. Revised terms and conditions for extension of medicare 
                            community nursing organization (CNO) 
                            demonstration project.
Sec. 633. Extension of medicare municipal health services demonstration 
                            projects.
Sec. 634. Service area expansion for medicare cost contracts during 
                            transition period.
                          TITLE VII--MEDICAID

Sec. 701. DSH payments.
Sec. 702. New prospective payment system for Federally-qualified health 
                            centers and rural health clinics.
Sec. 703. Streamlined approval of continued State-wide section 1115 
                            medicaid waivers.
Sec. 704. Medicaid county-organized health systems.
Sec. 705. Deadline for issuance of final regulation relating to 
                            medicaid upper payment limits.
Sec. 706. Alaska FMAP.
Sec. 707. Optional coverage of legal immigrants under the medicaid 
                            program.
Sec. 708. Additional entities qualified to determine medicaid 
                            presumptive eligibility for low-income 
                            children.
Sec. 709. Improving welfare-to-work transition.
Sec. 710. Medicaid recognition for services of physician assistants.
Sec. 711. Medicaid family opportunity provisions related to disabled 
                            children.
         TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

Sec. 801. Special rule for redistribution and availability of unused 
                            fiscal year 1998 and 1999 SCHIP allotments.
Sec. 802. Authority to pay medicaid expansion SCHIP costs from title 
                            XXI appropriation.
Sec. 803. Optional coverage of certain legal immigrants under SCHIP.
                       TITLE IX--OTHER PROVISIONS

                        Subtitle A--PACE Program

Sec. 901. Extension of transition for current waivers.
Sec. 902. Continuing of certain operating arrangements permitted.
Sec. 903. Flexibility in exercising waiver authority.
   Subtitle B--Outreach to Eligible Low-Income Medicare Beneficiaries

Sec. 911. Outreach on availability of medicare cost-sharing assistance 
                            to eligible low-income medicare 
                            beneficiaries.
           Subtitle C--Maternal and Child Health Block Grant

Sec. 921. Increase in authorization of appropriations for the maternal 
                            and child health services block grant.
                          Subtitle D--Diabetes

Sec. 931. Increase in appropriations for special diabetes programs for 
                            type I diabetes and Indians.
Sec. 932. Appropriations for Ricky Ray Hemophilia Relief Fund.

               TITLE I--MEDICARE BENEFICIARY IMPROVEMENTS

                Subtitle A--Improved Preventive Benefits

SEC. 101. COVERAGE OF BIENNIAL SCREENING PAP SMEAR AND PELVIC EXAMS.

    (a) In General.--
            (1) Biennial screening pap smear.--Section 1861(nn)(1) (42 
        U.S.C. 1395x(nn)(1)) is amended by striking ``3 years'' and 
        inserting ``2 years''.
            (2) Biennial screening pelvic exam.--Section 1861(nn)(2) 
        (42 U.S.C. 1395x(nn)(2)) is amended by striking ``3 years'' and 
        inserting ``2 years''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
items and services furnished on or after July 1, 2001.

SEC. 102. COVERAGE OF SCREENING FOR GLAUCOMA.

    (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is 
amended--
            (1) by striking ``and'' at the end of subparagraph (S);
            (2) by inserting ``and'' at the end of subparagraph (T); 
        and
            (3) by adding at the end the following:
            ``(U) screening for glaucoma (as defined in subsection 
        (uu)) for individuals determined to be at high risk for 
        glaucoma, individuals with a family history of glaucoma and 
        individuals with diabetes;''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is amended 
by adding at the end the following new subsection:

                        ``Screening for Glaucoma

    ``(uu) The term `screening for glaucoma' means a dilated eye 
examination with an intraocular pressure measurement, and a direct 
ophthalmoscopy or a slit-lamp biomicroscopic examination for the early 
detection of glaucoma which is furnished by or under the direct 
supervision of an optometrist or ophthalmologist who is legally 
authorized to furnish such services under State law (or the State 
regulatory mechanism provided by State law) of the State in which the 
services are furnished, as would otherwise be covered if furnished by a 
physician or as an incident to a physician's professional service, if 
the individual involved has not had such an examination in the 
preceding year.''.
    (c) Conforming Amendment.--Section 1862(a)(1)(F) (42 U.S.C. 
1395y(a)(1)(F)) is amended--
            (1) by striking ``and,''; and
            (2) by adding at the end the following: ``and, in the case 
        of screening for glaucoma, which is performed more frequently 
        than is provided under section 1861(uu),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2002.

SEC. 103. COVERAGE OF SCREENING COLONOSCOPY FOR AVERAGE RISK 
              INDIVIDUALS.

    (a) In General.--Section 1861(pp) (42 U.S.C. 1395x(pp)) is 
amended--
            (1) in paragraph (1)(C), by striking ``In the case of an 
        individual at high risk for colorectal cancer, screening 
        colonoscopy'' and inserting ``Screening colonoscopy''; and
            (2) in paragraph (2), by striking ``In paragraph (1)(C), 
        an'' and inserting ``An''.
    (b) Frequency Limits for Screening Colonoscopy.--Section 1834(d) 
(42 U.S.C. 1395m(d)) is amended--
            (1) in paragraph (2)(E)(ii), by inserting before the period 
        at the end the following: ``or, in the case of an individual 
        who is not at high risk for colorectal cancer, if the procedure 
        is performed within the 119 months after a previous screening 
        colonoscopy'';
            (2) in paragraph (3)--
                    (A) in the heading by striking ``for individuals at 
                high risk for colorectal cancer'';
                    (B) in subparagraph (A), by striking ``for 
                individuals at high risk for colorectal cancer (as 
                defined in section 1861(pp)(2))'';
                    (C) in subparagraph (E), by inserting before the 
                period at the end the following: ``or for other 
                individuals if the procedure is performed within the 
                119 months after a previous screening colonoscopy or 
                within 47 months after a previous screening flexible 
                sigmoidoscopy''.
    (c) Effective Date.--The amendments made by this section apply to 
colorectal cancer screening services provided on or after July 1, 2001.

SEC. 104. MODERNIZATION OF SCREENING MAMMOGRAPHY BENEFIT.

    (a) Inclusion in Physician Fee Schedule.--Section 1848(j)(3) (42 
U.S.C. 1395w-4(j)(3)) is amended by inserting ``(13),'' after ``(4),''.
    (b) Conforming Amendment.--Section 1834(c) (42 U.S.C. 1395m(c)) is 
amended to read as follows:
    ``(c) Payment and Standards for Screening Mammography.--
            ``(1) In general.--With respect to expenses incurred for 
        screening mammography (as defined in section 1861(jj)), payment 
        may be made only--
                    ``(A) for screening mammography conducted 
                consistent with the frequency permitted under paragraph 
                (2); and
                    ``(B) if the screening mammography is conducted by 
                a facility that has a certificate (or provisional 
                certificate) issued under section 354 of the Public 
                Health Service Act.
            ``(2) Frequency covered.--
                    ``(A) In general.--Subject to revision by the 
                Secretary under subparagraph (B)--
                            ``(i) no payment may be made under this 
                        part for screening mammography performed on a 
                        woman under 35 years of age;
                            ``(ii) payment may be made under this part 
                        for only one screening mammography performed on 
                        a woman over 34 years of age, but under 40 
                        years of age; and
                            ``(iii) in the case of a woman over 39 
                        years of age, payment may not be made under 
                        this part for screening mammography performed 
                        within 11 months following the month in which a 
                        previous screening mammography was performed.
                    ``(B) Revision of frequency.--
                            ``(i) Review.--The Secretary, in 
                        consultation with the Director of the National 
                        Cancer Institute, shall review periodically the 
                        appropriate frequency for performing screening 
                        mammography, based on age and such other 
                        factors as the Secretary believes to be 
                        pertinent.
                            ``(ii) Revision of frequency.--The 
                        Secretary, taking into consideration the review 
                        made under clause (i), may revise from time to 
                        time the frequency with which screening 
                        mammography may be paid for under this 
                        subsection.''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
apply with respect to screening mammographies furnished on or after 
January 1, 2002.
    (d) Payment for New Technologies.--
            (1) Tests furnished in 2001.--
                    (A) Screening.--For a screening mammography (as 
                defined in section 1861(jj) of the Social Security Act 
                (42 U.S.C. 1395(jj))) furnished during the period 
                beginning on April 1, 2001, and ending on December 31, 
                2001, that uses a new technology, payment for such 
                screening mammography shall be made as follows:
                            (i) In the case of a technology which 
                        directly takes a digital image (without 
                        involving film) and subsequently analyzes such 
                        resulting image with software to identify 
                        possible problem areas, in an amount equal to 
                        150 percent of the amount of payment under 
                        section 1848 of such Act (42 U.S.C. 1395w-4) 
                        for a bilateral diagnostic mammography (under 
                        HCPCS code 76091) for such year.
                            (ii) In the case of a technology which 
                        allows conversion of a standard film mammogram 
                        into a digital image and subsequently analyzes 
                        such resulting image with software to identify 
                        possible problem areas, in an amount equal to 
                        the limit that would otherwise be applied under 
                        section 1834(c)(3) of such Act (42 U.S.C. 
                        1395m(c)(3)) for 2001, increased by $15.
                    (B) Bilateral diagnostic mammography.--For a 
                bilateral diagnostic mammography (under HCPCS code 
                76091) furnished during the period beginning on April 
                1, 2001, and ending on December 31, 2001, that uses a 
                new technology described in subparagraph (A)(i), 
                payment for such mammography shall be the amount of 
                payment provided for under such subparagraph.
        The Secretary of Health and Human Services may implement the 
        provisions of this paragraph by program memorandum or 
        otherwise.
            (2) Consideration of new hcpcs code for new technologies 
        after 2001.--The Secretary shall determine, for such screening 
        mammographies performed after 2001, whether the assignment of a 
        new HCPCS code is appropriate for screening mammography that 
        uses a new technology. If the Secretary determines that a new 
        code is appropriate for such screening mammography, the 
        Secretary shall provide for such new code for such tests 
        furnished after 2001.
            (3) New technology described.--For purposes of this 
        subsection, a new technology with respect to a screening 
        mammography is an advance in technology with respect to the 
        test or equipment that results in the following:
                    (A) A significant increase or decrease in the 
                resources used in the test or in the manufacture of the 
                equipment.
                    (B) A significant improvement in the performance of 
                the test or equipment.
                    (C) A significant advance in medical technology 
                that is expected to significantly improve the treatment 
                of medicare beneficiaries.
            (4) HCPCS code defined.--The term ``HCPCS code'' means an 
        alphanumeric code under the Health Care Financing 
        Administration Common Procedure Coding System (HCPCS).

SEC. 105. COVERAGE OF MEDICAL NUTRITION THERAPY SERVICES FOR 
              BENEFICIARIES WITH DIABETES OR A RENAL DISEASE.

    (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as 
amended by section 102(a), is amended--
            (1) in subparagraph (T), by striking ``and'' at the end;
            (2) in subparagraph (U), by inserting ``and'' at the end; 
        and
            (3) by adding at the end the following new subparagraph:
            ``(V) medical nutrition therapy services (as defined in 
        subsection (vv)(1)) in the case of a beneficiary with diabetes 
        or a renal disease who--
                    ``(i) has not received diabetes outpatient self-
                management training services within a time period 
                determined by the Secretary; and
                    ``(ii) meets such other criteria determined by the 
                Secretary after consideration of protocols established 
                by dietitian or nutrition professional 
                organizations;''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x), as amended 
by section 102(b), is amended by adding at the end the following:

``Medical Nutrition Therapy Services; Registered Dietitian or Nutrition 
                              Professional

    ``(vv)(1) 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 subsection 
(r)(1)).
    ``(2) Subject to paragraph (3), the term `registered dietitian or 
nutrition professional' means an individual who--
            ``(A) 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;
            ``(B) has completed at least 900 hours of supervised 
        dietetics practice under the supervision of a registered 
        dietitian or nutrition professional; and
            ``(C)(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 that does 
        not provide for such licensure or certification, meets such 
        other criteria as the Secretary establishes.
    ``(3) Subparagraphs (A) and (B) of paragraph (2) shall not apply in 
the case of an individual who, as of the date of the enactment of this 
subsection, is licensed or certified as a dietitian or nutrition 
professional by the State in which medical nutrition therapy services 
are performed.''.
    (c) Payment.--Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is 
amended--
            (1) by striking ``and'' before ``(S)''; and
            (2) by inserting before the semicolon at the end the 
        following: ``, and (T) with respect to medical nutrition 
        therapy services (as defined in section 1861(vv)), the amount 
        paid shall be 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) for the same 
        services if furnished by a physician''.
    (d) Application of Limits on Billing.--Section 1842(b)(18)(C) (42 
U.S.C. 1395u(b)(18)(C)) is amended by adding at the end the following 
new clause:
            ``(vi) A registered dietitian or nutrition professional.''.
    (e) Effective Date.--The amendments made by this section apply to 
services furnished on or after January 1, 2002.
    (f) Study.--Not later than July 1, 2003, the Secretary of Health 
and Human Services shall submit to Congress a report that contains 
recommendations with respect to the expansion to other medicare 
beneficiary populations of the medical nutrition therapy services 
benefit (furnished under the amendments made by this section).

SEC. 106. EXTENSION OF PART A COVERAGE FOR WORKERS WITH DISABILITIES.

    (a) Continuation of Coverage.--
            (1) In general.--Section 226 (42 U.S.C. 426) is amended--
                    (A) in the third sentence of subsection (b), by 
                inserting ``, except as provided in subsection (j)'' 
                after ``but not in excess of 24 such months''; and
                    (B) by adding at the end the following:
    ``(j) The 24-month limitation on deemed entitlement under the third 
sentence of subsection (b) shall not apply--
            ``(1) for months occurring during the 10-year period 
        beginning with the first month that begins after the date of 
        enactment of this subsection; and
            ``(2) for subsequent months, in the case of an individual 
        who was entitled to benefits under subsection (b) as of the 
        last month of such 10-year period and would continue (but for 
        such 24-month limitation) to be so entitled.''.
            (2) Conforming amendment.--Section 1818A(a)(2)(C) (42 
        U.S.C. 1395i-2a(a)(2)(C)) is amended--
                    (A) by striking ``solely''; and
                    (B) by inserting ``or the expiration of the last 
                month of the 10-year period described in section 
                226(j)'' before the semicolon.
    (b) GAO Report.--Not later than 8 years after the date of the 
enactment of this section, the Comptroller General of the United States 
shall submit a report to the Congress that--
            (1) examines the effectiveness and cost of subsection (j) 
        of section 226 (42 U.S.C. 426); and
            (2) recommends whether such subsection (j) should continue 
        to be applied beyond the 10-year period described in the 
        subsection.
    (c) Effective Date.--The amendments made by subsection (a) apply to 
months beginning with the first month that begins after the date of 
enactment of this section.
    (d) Treatment of Certain Individuals.--An individual enrolled under 
section 1818A (42 U.S.C. 1395i2a) shall be treated with respect to 
premium payment obligations under such section as though the individual 
had continued to be entitled to benefits under section 226(b) for--
            (1) months described in section 226(j)(1) (42 U.S.C. 
        426(j)(1)) (as added by subsection (a)); and
            (2) subsequent months, in the case of an individual who was 
        so enrolled as of the last month described in section 226(j)(2) 
        (42 U.S.C. 426(j)(2)) (as so added).
    (e) Repeal of Partial Extension Provision and Study Requirement.--
Section 202 of Public Law 106-170 is repealed.

               Subtitle B--Other Beneficiary Improvements

SEC. 111. ACCELERATION OF REDUCTION OF BENEFICIARY COPAYMENT FOR 
              HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

    (a) Reducing the Upper Limit on Beneficiary Copayment.--
            (1) In general.--Section 1833(t)(8)(C) (42 U.S.C. 
        1395l(t)(8)(C)) is amended to read as follows:
                    ``(C) Limitation on copayment amount.--
                            ``(i) To inpatient hospital deductible 
                        amount.--In no case shall the copayment amount 
                        for a procedure performed in a year exceed the 
                        amount of the inpatient hospital deductible 
                        established under section 1813(b) for that 
                        year.
                            ``(ii) To specified percentage.--The 
                        Secretary shall reduce the national unadjusted 
                        copayment amount for a covered OPD service (or 
                        group of such services) furnished in a year in 
                        a manner so that the effective copayment rate 
                        (determined on a national unadjusted basis) for 
                        that service in the year does not exceed the 
                        following percentage:
                                    ``(I) For procedures performed in 
                                2001, 60 percent.
                                    ``(II) For procedures performed in 
                                2002 or 2003, 55 percent.
                                    ``(III) For procedures performed in 
                                2004, 50 percent.
                                    ``(IV) For procedures performed in 
                                2005, 45 percent.
                                    ``(V) For procedures performed in 
                                2006 and thereafter, 40 percent.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies with respect to services furnished on or after January 
        1, 2001.
    (b) Construction Regarding Limiting Increases in Cost-Sharing.--
Nothing in this Act or the Social Security Act shall be construed as 
preventing a hospital from waiving the amount of any coinsurance for 
outpatient hospital services under the medicare program under title 
XVIII of the Social Security Act that may have been increased as a 
result of the implementation of the prospective payment system under 
section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)).
    (c) GAO Study of Reduction in Medigap Premium Levels Resulting From 
Reductions in Coinsurance.--The Comptroller General of the United 
States shall work, in concert with the National Association of 
Insurance Commissioners, to evaluate the extent to which the premium 
levels for medicare supplemental policies reflect the reductions in 
coinsurance resulting from the amendment made by subsection (a). Not 
later than April 1, 2004, the Comptroller General shall submit to 
Congress a report on such evaluation and the extent to which the 
reductions in beneficiary coinsurance effected by such amendment have 
resulted in actual savings to medicare beneficiaries.

SEC. 112. 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 the date of the 
enactment of this Act.

SEC. 113. 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) Conforming Amendments.--
            (1) Extended coverage.--Section 1832 (42 U.S.C. 1395k) is 
        amended--
                    (A) by striking subsection (b); and
                    (B) by redesignating subsection (c) as subsection 
                (b).
            (2) Pass-through; report.--Section 227 of BBRA is amended 
        by striking subsection (d).
    (c) 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. 114. IMPOSITION OF BILLING LIMITS ON DRUGS.

    (a) In General.--Section 1842(o) (42 U.S.C. 1395u(o)) is amended by 
adding at the end the following new paragraph:
    ``(3)(A) Payment for a charge for any drug or biological for which 
payment may be made under this part may be made under this part only on 
an assignment-related basis.
    ``(B) The provisions of subsection (b)(18)(B) shall apply to 
charges for such drugs or biologicals in the same manner as they apply 
to services furnished by a practitioner described in subsection 
(b)(18)(C).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to items furnished on or after January 1, 2001.

SEC. 115. 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. 116. 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.

             Subtitle C--Demonstration Projects and Studies

SEC. 121. DEMONSTRATION PROJECT FOR DISEASE MANAGEMENT FOR SEVERELY 
              CHRONICALLY ILL MEDICARE BENEFICIARIES.

    (a) In General.--The Secretary of Health and Human Services shall 
conduct a demonstration project under this section (in this section 
referred to as the ``project'') to demonstrate the impact on costs and 
health outcomes of applying disease management to medicare 
beneficiaries with diagnosed, advanced-stage congestive heart failure, 
diabetes, or coronary heart disease. In no case may the number of 
participants in the project exceed 30,000 at any time.
    (b) Voluntary Participation.--
            (1) Eligibility.--Medicare beneficiaries are eligible to 
        participate in the project only if--
                    (A) they meet specific medical criteria 
                demonstrating the appropriate diagnosis and the 
                advanced nature of their disease;
                    (B) their physicians approve of participation in 
                the project; and
                    (C) they are not enrolled in a Medicare+Choice 
                plan.
            (2) Benefits.--A beneficiary who is enrolled in the project 
        shall be eligible--
                    (A) for disease management services related to 
                their chronic health condition; and
                    (B) for payment for all costs for prescription 
                drugs without regard to whether or not they relate to 
                the chronic health condition, except that the project 
                may provide for modest cost-sharing with respect to 
                prescription drug coverage.
    (c) Contracts With Disease Management Organizations.--
            (1) In general.--The Secretary of Health and Human Services 
        shall carry out the project through contracts with up to three 
        disease management organizations. The Secretary shall not enter 
        into such a contract with an organization unless the 
        organization demonstrates that it can produce improved health 
        outcomes and reduce aggregate medicare expenditures consistent 
        with paragraph (2).
            (2) Contract provisions.--Under such contracts--
                    (A) such an organization shall be required to 
                provide for prescription drug coverage described in 
                subsection (b)(2)(B);
                    (B) such an organization shall be paid a fee 
                negotiated and established by the Secretary in a manner 
                so that (taking into account savings in expenditures 
                under parts A and B of the medicare program under title 
                XVIII of the Social Security Act) there will be a net 
                reduction in expenditures under the medicare program as 
                a result of the project; and
                    (C) such an organization shall guarantee, through 
                an appropriate arrangement with a reinsurance company 
                or otherwise, the net reduction in expenditures 
                described in subparagraph (B).
            (3) Payments.--Payments to such organizations shall be made 
        in appropriate proportion from the Trust Funds established 
        under title XVIII of the Social Security Act.
    (d) Application of Medigap Protections to Demonstration Project 
Enrollees.--(1) Subject to paragraph (2), the provisions of section 
1882(s)(3) (other than clauses (i) through (iv) of subparagraph (B)) 
and 1882(s)(4) of the Social Security Act shall apply to enrollment 
(and termination of enrollment) in the demonstration project under this 
section, in the same manner as they apply to enrollment (and 
termination of enrollment) with a Medicare+Choice organization in a 
Medicare+Choice plan.
    (2) In applying paragraph (1)--
            (A) any reference in clause (v) or (vi) of section 
        1882(s)(3)(B) of such Act to 12 months is deemed a reference to 
        the period of the demonstration project; and
            (B) the notification required under section 1882(s)(3)(D) 
        of such Act shall be provided in a manner specified by the 
        Secretary of Health and Human Services.
    (e) Duration.--The project shall last for not longer than 3 years.
    (f) Waiver.--The Secretary of Health and Human Services shall waive 
such provisions of title XVIII of the Social Security Act as may be 
necessary to provide for payment for services under the project in 
accordance with subsection (c)(3).
    (g) Report.--The Secretary of Health and Human Services shall 
submit to Congress an interim report on the project not later than 2 
years after the date it is first implemented and a final report on the 
project not later than 6 months after the date of its completion. Such 
reports shall include information on the impact of the project on costs 
and health outcomes and recommendations on the cost-effectiveness of 
extending or expanding the project.

SEC. 122. CANCER PREVENTION AND TREATMENT DEMONSTRATION FOR ETHNIC AND 
              RACIAL MINORITIES.

    (a) Demonstration.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        conduct demonstration projects (in this section referred to as 
        ``demonstration projects'') for the purpose of developing 
        models and evaluating methods that--
                    (A) improve the quality of items and services 
                provided to target individuals in order to facilitate 
                reduced disparities in early detection and treatment of 
                cancer;
                    (B) improve clinical outcomes, satisfaction, 
                quality of life, and appropriate use of medicare-
                covered services and referral patterns among those 
                target individuals with cancer;
                    (C) eliminate disparities in the rate of preventive 
                cancer screening measures, such as pap smears and 
                prostate cancer screenings, among target individuals; 
                and
                    (D) promote collaboration with community-based 
                organizations to ensure cultural competency of health 
                care professionals and linguistic access for persons 
                with limited English proficiency.
            (2) Target individual defined.--In this section, the term 
        ``target individual'' means an individual of a racial and 
        ethnic minority group, as defined by section 1707 of the Public 
        Health Service Act, who is entitled to benefits under part A, 
        and enrolled under part B, of title XVIII of the Social 
        Security Act.
    (b) Program Design.--
            (1) Initial design.--Not later than 1 year after the date 
        of the enactment of this Act, the Secretary shall evaluate best 
        practices in the private sector, community programs, and 
        academic research of methods that reduce disparities among 
        individuals of racial and ethnic minority groups in the 
        prevention and treatment of cancer and shall design the 
        demonstration projects based on such evaluation.
            (2) Number and project areas.--Not later than 2 years after 
        the date of the enactment of this Act, the Secretary shall 
        implement at least 9 demonstration projects, including the 
        following:
                    (A) 2 projects for each of the 4 major racial and 
                ethnic minority groups (American Indians, including 
                Alaska Natives, Eskimos, and Aleuts); Asian Americans 
                and Pacific Islanders; Blacks; and Hispanics. The 2 
                projects must target different ethnic subpopulations.
                    (B) 1 project within the Pacific Islands.
                    (C) At least 1 project each in a rural area and 
                inner-city area.
            (3) Expansion of projects; implementation of demonstration 
        project results.--If the initial report under subsection (c) 
        contains an evaluation that demonstration projects--
                    (A) reduce expenditures under the medicare program 
                under title XVIII of the Social Security Act; or
                    (B) do not increase expenditures under the medicare 
                program and reduce racial and ethnic health disparities 
                in the quality of health care services provided to 
                target individuals and increase satisfaction of 
                beneficiaries and health care providers;
        the Secretary shall continue the existing demonstration 
        projects and may expand the number of demonstration projects.
    (c) Report to Congress.--
            (1) In general.--Not later than 2 years after the date the 
        Secretary implements the initial demonstration projects, and 
        biannually thereafter, the Secretary shall submit to Congress a 
        report regarding the demonstration projects.
            (2) Contents of report.--Each report under paragraph (1) 
        shall include the following:
                    (A) A description of the demonstration projects.
                    (B) An evaluation of--
                            (i) the cost-effectiveness of the 
                        demonstration projects;
                            (ii) the quality of the health care 
                        services provided to target individuals under 
                        the demonstration projects; and
                            (iii) beneficiary and health care provider 
                        satisfaction under the demonstration projects.
                    (C) Any other information regarding the 
                demonstration projects that the Secretary determines to 
                be appropriate.
    (d) Waiver Authority.--The Secretary shall waive compliance with 
the requirements of title XVIII of the Social Security Act to such 
extent and for such period as the Secretary determines is necessary to 
conduct demonstration projects.
    (e) Funding.--
            (1) Demonstration projects.--
                    (A) State projects.--Except as provided in 
                subparagraph (B), the Secretary shall provide for the 
                transfer from the Federal Hospital Insurance Trust Fund 
                and the Federal Supplementary Insurance Trust Fund 
                under title XVIII of the Social Security Act, in such 
                proportions as the Secretary determines to be 
                appropriate, of such funds as are necessary for the 
                costs of carrying out the demonstration projects.
                    (B) Territory projects.--In the case of a 
                demonstration project described in subsection 
                (b)(2)(B), amounts shall be available only as provided 
                in any Federal law making appropriations for the 
                territories.
            (2) Limitation.--In conducting demonstration projects, the 
        Secretary shall ensure that the aggregate payments made by the 
        Secretary do not exceed the sum of the amount which the 
        Secretary would have paid under the program for the prevention 
        and treatment of cancer if the demonstration projects were not 
        implemented, plus $25,000,000.

SEC. 123. STUDY ON MEDICARE COVERAGE OF ROUTINE THYROID SCREENING.

    (a) Study.--The Secretary of Health and Human Services shall 
request the National Academy of Sciences, and as appropriate in 
conjunction with the United States Preventive Services Task Force, to 
conduct a study on the addition of coverage of routine thyroid 
screening using a thyroid stimulating hormone test as a preventive 
benefit provided to medicare beneficiaries under title XVIII of the 
Social Security Act for some or all medicare beneficiaries. In 
conducting the study, the Academy shall consider the short-term and 
long-term benefits, and costs to the medicare program, of such 
addition.
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Secretary of Health and Human Services shall submit a 
report on the findings of the study conducted under subsection (a) 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.

SEC. 124. MEDPAC STUDY ON CONSUMER COALITIONS.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study that examines the use of consumer coalitions in the marketing 
of Medicare+Choice plans under the medicare program under title XVIII 
of the Social Security Act. The study shall examine--
            (1) the potential for increased efficiency in the medicare 
        program through greater beneficiary knowledge of their health 
        care options, decreased marketing costs of Medicare+Choice 
        organizations, and creation of a group market;
            (2) the implications of Medicare+Choice plans and medicare 
        supplemental policies (under section 1882 of the Social 
        Security Act (42 U.S.C. 1395ss)) offering medicare 
        beneficiaries in the same geographic location different 
        benefits and premiums based on their affiliation with a 
        consumer coalition;
            (3) how coalitions should be governed, how they should be 
        accountable to the Secretary of Health and Human Services, and 
        how potential conflicts of interest in the activities of 
        consumer coalitions should be avoided; and
            (4) how such coalitions should be funded.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Commission shall submit to Congress a report on the 
study conducted under subsection (a). The report shall include a 
recommendation on whether and how a demonstration project might be 
conducted for the operation of consumer coalitions under the medicare 
program.
    (c) Consumer Coalition Defined.--For purposes of this section, the 
term ``consumer coalition'' means a nonprofit, community-based group of 
organizations that--
            (1) provides information to medicare beneficiaries about 
        their health care options under the medicare program; and
            (2) negotiates benefits and premiums for medicare 
        beneficiaries who are members or otherwise affiliated with the 
        group of organizations with Medicare+Choice organizations 
        offering Medicare+Choice plans, issuers of medicare 
        supplemental policies, issuers of long-term care coverage, and 
        pharmacy benefit managers.

SEC. 125. 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. 126. STUDIES ON PREVENTIVE INTERVENTIONS IN PRIMARY CARE FOR OLDER 
              AMERICANS.

    (a) Studies.--The Secretary of Health and Human Services, acting 
through the United States Preventive Services Task Force, shall conduct 
a series of studies designed to identify preventive interventions that 
can be delivered in the primary care setting and that are most valuable 
to older Americans.
    (b) Mission Statement.--The mission statement of the United States 
Preventive Services Task Force is amended to include the evaluation of 
services that are of particular relevance to older Americans.
    (c) Report.--Not later than 1 year after the date of the enactment 
of this Act, and annually thereafter, the Secretary of Health and Human 
Services shall submit to Congress a report on the conclusions of the 
studies conducted under subsection (a), together with recommendations 
for such legislation and administrative actions as the Secretary 
considers appropriate.

SEC. 127. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF CARDIAC AND 
              PULMONARY REHABILITATION THERAPY SERVICES.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        shall conduct a study on coverage of cardiac and pulmonary 
        rehabilitation therapy services under the medicare program 
        under title XVIII of the Social Security Act.
            (2) Focus.--In conducting the study under paragraph (1), 
        the Commission shall focus on the appropriate--
                    (A) qualifying diagnoses required for coverage of 
                cardiac and pulmonary rehabilitation therapy services;
                    (B) level of physician direct involvement and 
                supervision in furnishing such services; and
                    (C) level of reimbursement for such services.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Commission shall submit to Congress a report 
on the study conducted under subsection (a) together with such 
recommendations for legislation and administrative action as the 
Commission determines appropriate.

                TITLE II--RURAL HEALTH CARE IMPROVEMENTS

            Subtitle A--Critical Access Hospital Provisions

SEC. 201. CLARIFICATION OF NO BENEFICIARY COST-SHARING FOR CLINICAL 
              DIAGNOSTIC LABORATORY TESTS FURNISHED BY CRITICAL ACCESS 
              HOSPITALS.

    (a) Payment Clarification.--Section 1834(g) (42 U.S.C. 1395m(g)) is 
amended by adding at the end the following new paragraph:
            ``(4) No beneficiary cost-sharing for clinical diagnostic 
        laboratory services.--No coinsurance, deductible, copayment, or 
        other cost-sharing otherwise applicable under this part shall 
        apply with respect to clinical diagnostic laboratory services 
        furnished as an outpatient critical access hospital service. 
        Nothing in this title shall be construed as providing for 
        payment for clinical diagnostic laboratory services furnished 
        as part of outpatient critical access hospital services, other 
        than on the basis described in this subsection.''.
    (b) Technical and Conforming Amendments.--
            (1) Paragraphs (1)(D)(i) and (2)(D)(i) of section 1833(a) 
        (42 U.S.C. 1395l(a)) are each amended by striking ``or which 
        are furnished on an outpatient basis by a critical access 
        hospital''.
            (2) Section 403(d)(2) of BBRA (113 Stat. 1501A-371) is 
        amended by striking ``The amendment made by subsection (a) 
        shall apply'' and inserting ``Paragraphs (1) through (3) of 
        section 1834(g) of the Social Security Act (as amended by 
        paragraph (1)) apply''.
    (c) Effective Dates.--The amendment made--
            (1) by subsection (a) applies to services furnished on or 
        after the date of the enactment of BBRA;
            (2) by subsection (b)(1) applies as if included in the 
        enactment of section 403(e)(1) of BBRA (113 Stat. 1501A-371); 
        and
            (3) by subsection (b)(2) applies as if included in the 
        enactment of section 403(d)(2) of BBRA (113 Stat. 1501A-371).

SEC. 202. ASSISTANCE WITH FEE SCHEDULE PAYMENT FOR PROFESSIONAL 
              SERVICES UNDER ALL-INCLUSIVE RATE.

    (a) In General.--Section 1834(g)(2)(B) (42 U.S.C. 1395m(g)(2)(B)) 
is amended by inserting ``115 percent of'' before ``such amounts''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to items and services furnished on or after April 1, 2001.

SEC. 203. EXEMPTION OF CRITICAL ACCESS HOSPITAL SWING BEDS FROM SNF 
              PPS.

    (a) In General.--Section 1888(e)(7) (42 U.S.C. 1395yy(e)(7)) is 
amended--
            (1) in the heading, by striking ``Transition for'' and 
        inserting ``Treatment of'';
            (2) in subparagraph (A), by striking ``In general.--The'' 
        and inserting ``Transition.--Subject to subparagraph (C), 
        the'';
            (3) in subparagraph (A), by inserting ``(other than 
        critical access hospitals)'' after ``facilities described in 
        subparagraph (B)'';
            (4) in subparagraph (B), by striking ``, for which 
        payment'' and all that follows before the period; and
            (5) by adding at the end the following new subparagraph:
                    ``(C) Exemption from pps of swing-bed services 
                furnished in critical access hospitals.--The 
                prospective payment system established under this 
                subsection shall not apply to services furnished by a 
                critical access hospital pursuant to an agreement under 
                section 1883.''.
    (b) Payment on a Reasonable Cost Basis for Swing Bed Services 
Furnished by Critical Access Hospitals.--Section 1883(a) (42 U.S.C. 
1395tt(a)) is amended--
            (1) in paragraph (2)(A), by inserting ``(other than a 
        critical access hospital)'' after ``any hospital''; and
            (2) by adding at the end the following new paragraph:
    ``(3) Notwithstanding any other provision of this title, a critical 
access hospital shall be paid for covered skilled nursing facility 
services furnished under an agreement entered into under this section 
on the basis of the reasonable costs of such services (as determined 
under section 1861(v)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to cost reporting periods beginning on or after the date of the 
enactment of this Act.

SEC. 204. PAYMENT IN CRITICAL ACCESS HOSPITALS FOR EMERGENCY ROOM ON-
              CALL PHYSICIANS.

    (a) In General.--Section 1834(g) (42 U.S.C. 1395m(g)), as amended 
by section 201(a), is further amended by adding at the end the 
following new paragraph:
            ``(5) Coverage of costs for emergency room on-call 
        physicians.--In determining the reasonable costs of outpatient 
        critical access hospital services under paragraphs (1) and 
        (2)(A), the Secretary shall recognize as allowable costs, 
        amounts (as defined by the Secretary) for reasonable 
        compensation and related costs for emergency room physicians 
        who are on-call (as defined by the Secretary) but who are not 
        present on the premises of the critical access hospital 
        involved, and are not otherwise furnishing physicians' services 
        and are not on-call at any other provider or facility.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to cost reporting periods beginning on or after October 1, 2001.

SEC. 205. TREATMENT OF AMBULANCE SERVICES FURNISHED BY CERTAIN CRITICAL 
              ACCESS HOSPITALS.

    (a) In General.--Section 1834(l) (42 U.S.C. 1395m(l)) is amended by 
adding at the end the following new paragraph:
            ``(8) Services furnished by critical access hospitals.--
        Notwithstanding any other provision of this subsection, the 
        Secretary shall pay the reasonable costs incurred in furnishing 
        ambulance services if such services are furnished--
                    ``(A) by a critical access hospital (as defined in 
                section 1861(mm)(1)), or
                    ``(B) by an entity that is owned and operated by a 
                critical access hospital,
        but only if the critical access hospital or entity is the only 
        provider or supplier of ambulance services that is located 
        within a 35-mile drive of such critical access hospital.''.
    (b) Conforming Amendment.--Section 1833(a)(1)(R) (42 U.S.C. 
1395l(a)(1)(R)) is amended--
            (1) by striking ``ambulance service,'' and inserting 
        ``ambulance services, (i)''; and
            (2) by inserting before the comma at the end the following: 
        ``and (ii) with respect to ambulance services described in 
        section 1834(l)(8), the amounts paid shall be the amounts 
        determined under section 1834(g) for outpatient critical access 
        hospital services''.
    (c) Effective Date.--The amendments made by this section apply to 
services furnished on or after the date of the enactment of this Act.

SEC. 206. GAO STUDY ON CERTAIN ELIGIBILITY REQUIREMENTS FOR CRITICAL 
              ACCESS HOSPITALS.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the eligibility requirements for critical access 
hospitals under section 1820(c) of the Social Security Act (42 U.S.C. 
1395i-4(c)) with respect to limitations on average length of stay and 
number of beds in such a hospital, including an analysis of--
            (1) the feasibility of having a distinct part unit as part 
        of a critical access hospital for purposes of the medicare 
        program under title XVIII of such Act, and
            (2) the effect of seasonal variations in patient admissions 
        on critical access hospital eligibility requirements with 
        respect to limitations on average annual length of stay and 
        number of beds.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General shall submit to Congress a report 
on the study conducted under subsection (a) together with 
recommendations regarding--
            (1) whether distinct part units should be permitted as part 
        of a critical access hospital under the medicare program;
            (2) if so permitted, the payment methodologies that should 
        apply with respect to services provided by such units;
            (3) whether, and to what extent, such units should be 
        included in or excluded from the bed limits applicable to 
        critical access hospitals under the medicare program; and
            (4) any adjustments to such eligibility requirements to 
        account for seasonal variations in patient admissions.

              Subtitle B--Other Rural Hospitals Provisions

SEC. 211. EQUITABLE TREATMENT FOR RURAL DISPROPORTIONATE SHARE 
              HOSPITALS.

    (a) Application of Uniform Threshold.--Section 1886(d)(5)(F)(v) (42 
U.S.C. 1395ww(d)(5)(F)(v)) is amended--
            (1) in subclause (II), by inserting ``(or 15 percent, for 
        discharges occurring on or after April 1, 2001)'' after ``30 
        percent'';
            (2) in subclause (III), by inserting ``(or 15 percent, for 
        discharges occurring on or after April 1, 2001)'' after ``40 
        percent''; and
            (3) in subclause (IV), by inserting ``(or 15 percent, for 
        discharges occurring on or after April 1, 2001)'' after ``45 
        percent''.
    (b) Adjustment of Payment Formulas.--
            (1) Sole community hospitals.--Section 1886(d)(5)(F) (42 
        U.S.C. 1395ww(d)(5)(F)) is amended--
                    (A) in clause (iv)(VI), by inserting after ``10 
                percent'' the following: ``or, for discharges occurring 
                on or after April 1, 2001, is equal to the percent 
                determined in accordance with clause (x)''; and
                    (B) by adding at the end the following new clause:
                            ``(x) For purposes of clause (iv)(VI) 
                        (relating to sole community hospitals), in the 
                        case of a hospital for a cost reporting period 
                        with a disproportionate patient percentage (as 
                        defined in clause (vi)) that--
                                    ``(I) is less than 19.3, the 
                                disproportionate share adjustment 
                                percentage is determined in accordance 
                                with the following formula: (P-15)(.65) 
                                + 2.5;
                                    ``(II) is equal to or exceeds 19.3, 
                                but is less than 30.0, such adjustment 
                                percentage is equal to 5.25 percent; or
                                    ``(III) is equal to or exceeds 30, 
                                such adjustment percentage is equal to 
                                10 percent, where P is the hospital's 
                                disproportionate patient percentage (as 
                                defined in clause (vi)).''.
            (2) Rural referral centers.--Such section is further 
        amended--
                    (A) in clause (iv)(V) (relating to rural referral 
                centers), by inserting after ``clause (viii)'' the 
                following: ``or, for discharges occurring on or after 
                April 1, 2001, is equal to the percent determined in 
                accordance with clause (xi)''; and
                    (B) by adding at the end the following new clause:
                            ``(xi) For purposes of clause (iv)(V), in 
                        the case of a hospital for a cost reporting 
                        period with a disproportionate patient 
                        percentage (as defined in clause (vi)) that--
                                    ``(I) is less than 19.3, the 
                                disproportionate share adjustment 
                                percentage is determined in accordance 
                                with the following formula: (P-15)(.65) 
                                + 2.5;
                                    ``(II) is equal to or exceeds 19.3, 
                                but is less than 30.0, such adjustment 
                                percentage is equal to 5.25 percent; or
                                    ``(III) is equal to or exceeds 30, 
                                such adjustment percentage is 
                                determined in accordance with the 
                                following formula: (P-30)(.6) + 5.25, 
                                where P is the hospital's 
                                disproportionate patient percentage (as 
                                defined in clause (vi)).''.
            (3) Small rural hospitals generally.--Such section is 
        further amended--
                    (A) in clause (iv)(III), by inserting after ``4 
                percent'' the following: ``or, for discharges occurring 
                on or after April 1, 2001, is equal to the percent 
                determined in accordance with clause (xii)''; and
                    (B) by adding at the end the following new clause:
                            ``(xii) For purposes of clause (iv)(III) 
                        (relating to small rural hospitals generally), 
                        in the case of a hospital for a cost reporting 
                        period with a disproportionate patient 
                        percentage (as defined in clause (vi)) that--
                                    ``(I) is less than 19.3, the 
                                disproportionate share adjustment 
                                percentage is determined in accordance 
                                with the following formula: (P-15)(.65) 
                                + 2.5;
                                    ``(II) is equal to or exceeds 19.3, 
                                such adjustment percentage is equal to 
                                5.25 percent, where P is the hospital's 
                                disproportionate patient percentage (as 
                                defined in clause (vi)).''.
            (4) Hospitals that are both sole community hospitals and 
        rural referral centers.--Such section is further amended, in 
        clause (iv)(IV), by inserting after ``clause (viii)'' the 
        following: ``or, for discharges occurring on or after April 1, 
        2001, the greater of the percentages determined under clause 
        (x) or (xi)''.
            (5) Urban hospitals with less than 100 beds.--Such section 
        is further amended--
                    (A) in clause (iv)(II), by inserting after ``5 
                percent'' the following: ``or, for discharges occurring 
                on or after April 1, 2001, is equal to the percent 
                determined in accordance with clause (xiii); and
                    (B) by adding at the end the following new clause:
                            ``(xiii) For purposes of clause (iv)(II) 
                        (relating to urban hospitals with less than 100 
                        beds), in the case of a hospital for a cost 
                        reporting period with a disproportionate 
                        patient percentage (as defined in clause (vi)) 
                        that--
                                    ``(I) is less than 19.3, the 
                                disproportionate share adjustment 
                                percentage is determined in accordance 
                                with the following formula: (P-15)(.65) 
                                + 2.5;
                                    ``(II) is equal to or exceeds 19.3, 
                                such adjustment percentage is equal to 
                                5.25 percent; where P is the hospital's 
                                disproportionate patient percentage (as 
                                defined in clause (vi)).''.

SEC. 212. OPTION TO BASE ELIGIBILITY FOR MEDICARE DEPENDENT, SMALL 
              RURAL HOSPITAL PROGRAM ON DISCHARGES DURING 2 OF THE 3 
              MOST RECENTLY AUDITED COST REPORTING PERIODS.

    (a) In General.--Section 1886(d)(5)(G)(iv)(IV) (42 U.S.C. 
1395ww(d)(5)(G)(iv)(IV)) is amended by inserting ``, or 2 of the 3 most 
recently audited cost reporting periods for which the Secretary has a 
settled cost report,'' after ``1987''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to cost reporting periods beginning on or after April 1, 
2001.

SEC. 213. EXTENSION OF OPTION TO USE REBASED TARGET AMOUNTS TO ALL SOLE 
              COMMUNITY HOSPITALS.

    (a) In General.--Section 1886(b)(3)(I)(i) (42 U.S.C. 
1395ww(b)(3)(I)(i)) is amended--
            (1) in the matter preceding subclause (I), by striking 
        ``that for its cost reporting period beginning during 1999'' 
        and all that follows through ``for such target amount'' and 
        inserting ``there shall be substituted for the amount otherwise 
        determined under subsection (d)(5)(D)(i), if such substitution 
        results in a greater amount of payment under this section for 
        the hospital'';
            (2) in subclause (I), by striking ``target amount otherwise 
        applicable'' and all that follows through ``target amount')'' 
        and inserting ``the amount otherwise applicable to the hospital 
        under subsection (d)(5)(D)(i) (referred to in this clause as 
        the `subsection (d)(5)(D)(i) amount')''; and
            (3) in each of subclauses (II) and (III), by striking 
        ``subparagraph (C) target amount'' and inserting ``subsection 
        (d)(5)(D)(i) amount''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 405 of BBRA (113 
Stat. 1501A-372).

SEC. 214. MEDPAC ANALYSIS OF IMPACT OF VOLUME ON PER UNIT COST OF RURAL 
              HOSPITALS WITH PSYCHIATRIC UNITS.

    The Medicare Payment Advisory Commission, in its study conducted 
pursuant to subsection (a) of section 411 of BBRA (113 Stat. 1501A-
377), shall include--
            (1) in such study an analysis of the impact of volume on 
        the per unit cost of rural hospitals with psychiatric units; 
        and
            (2) in its report under subsection (b) of such section a 
        recommendation on whether special treatment for such hospitals 
        may be warranted.

                   Subtitle C--Other Rural Provisions

SEC. 221. ASSISTANCE FOR PROVIDERS OF AMBULANCE SERVICES IN RURAL 
              AREAS.

    (a) Transitional Assistance in Certain Mileage Rates.--Section 
1834(l) (42 U.S.C. 1395m(l)) is amended by adding at the end the 
following new paragraph:
            ``(8) Transitional assistance for rural providers.--In the 
        case of ground ambulance services furnished on or after the 
        date on which the Secretary implements the fee schedule under 
        this subsection and before January 1, 2004, for which the 
        transportation originates in a rural area (as defined in 
        section 1886(d)(2)(D)) or in a rural census tract of a 
        metropolitan statistical area (as determined under the most 
        recent modification of the Goldsmith Modification, originally 
        published in the Federal Register on February 27, 1992 (57 Fed. 
        Reg. 6725)), the fee schedule established under this subsection 
        shall provide that, with respect to the payment rate for 
        mileage for a trip above 17 miles, and up to 50 miles, the rate 
        otherwise established shall be increased by not less than \1/2\ 
        of the additional payment per mile established for the first 17 
        miles of such a trip originating in a rural area.''.
    (b) GAO Studies on the Costs of Ambulance Services Furnished in 
Rural Areas.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on each of the matters described in 
        paragraph (2).
            (2) Matters described.--The matters referred to in 
        paragraph (1) are the following:
                    (A) The cost of efficiently providing ambulance 
                services for trips originating in rural areas, with 
                special emphasis on collection of cost data from rural 
                providers.
                    (B) The means by which rural areas with low 
                population densities can be identified for the purpose 
                of designating areas in which the cost of providing 
                ambulance services would be expected to be higher than 
                similar services provided in more heavily populated 
                areas because of low usage. Such study shall also 
                include an analysis of the additional costs of 
                providing ambulance services in areas designated under 
                the previous sentence.
            (3) Report.--Not later than June 30, 2002, the Comptroller 
        General shall submit to Congress a report on the results of the 
        studies conducted under paragraph (1) and shall include 
        recommendations on steps that should be taken to assure access 
        to ambulance services in rural areas.
    (c) Adjustment in Rural Rates.--In providing for adjustments under 
subparagraph (D) of section 1834(l)(2) of the Social Security Act (42 
U.S.C. 1395m(l)(2)) for years beginning with 2004, the Secretary of 
Health and Human Services shall take into consideration the 
recommendations contained in the report under subsection (b)(2) and 
shall adjust the fee schedule payment rates under such section for 
ambulance services provided in low density rural areas based on the 
increased cost (if any) of providing such services in such areas.
    (d) Effective Date.--The amendment made by subsection (a) applies 
to services furnished on or after the date the Secretary implements the 
fee schedule under section 1834(l) of the Social Security Act (42 
U.S.C. 1395m(l)). In applying such amendment to services furnished on 
or after such date and before January 1, 2002, the amount of the rate 
increase provided under such amendment shall be equal to $1.25 per 
mile.

SEC. 222. PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT SERVICES.

    (a) Payment for Certain Physician Assistant Services.--Section 
1842(b)(6)(C) (42 U.S.C. 1395u(b)(6)(C)) is amended--
            (1) by striking ``for such services provided before January 
        1, 2003,''; and
            (2) by striking the semicolon at the end and inserting a 
        comma.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act.

SEC. 223. REVISION OF MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.

    (a) Time Limit for BBA Provision.--Section 4206(a) of BBA (42 
U.S.C. 1395l note) is amended by striking ``Not later than January 1, 
1999'' and inserting ``For services furnished on and after January 1, 
1999, and before July 1, 2001''.
    (b) Expansion of Medicare Payment for Telehealth Services.--Section 
1834 (42 U.S.C. 1395m) is amended by adding at the end the following 
new subsection:
    ``(m) Payment for Telehealth Services.--
            ``(1) In general.--The Secretary shall pay for telehealth 
        services that are furnished via a telecommunications system by 
        a physician (as defined in section 1861(r)) or a practitioner 
        (described in section 1842(b)(18)(C)) to an eligible telehealth 
        individual enrolled under this part notwithstanding that the 
        individual physician or practitioner providing the telehealth 
        service is not at the same location as the beneficiary. For 
        purposes of the preceding sentence, in the case of any Federal 
        telemedicine demonstration program conducted 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.
            ``(2) Payment amount.--
                    ``(A) Distant site.--The Secretary shall pay to a 
                physician or practitioner located at a distant site 
                that furnishes a telehealth service to an eligible 
                telehealth individual an amount equal to the amount 
                that such physician or practitioner would have been 
                paid under this title had such service been furnished 
                without the use of a telecommunications system.
                    ``(B) Facility fee for originating site.--With 
                respect to a telehealth service, subject to section 
                1833(a)(1)(U), there shall be paid to the originating 
                site a facility fee equal to--
                            ``(i) for the period beginning on July 1, 
                        2001, and ending on December 31, 2001, and for 
                        2002, $20; and
                            ``(ii) for a subsequent year, the facility 
                        fee specified in clause (i) or this clause for 
                        the preceding year increased by the percentage 
                        increase in the MEI (as defined in section 
                        1842(i)(3)) for such subsequent year.
                    ``(C) Telepresenter not required.--Nothing in this 
                subsection shall be construed as requiring an eligible 
                telehealth individual 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).
            ``(3) Limitation on beneficiary charges.--
                    ``(A) Physician and practitioner.--The provisions 
                of section 1848(g) and subparagraphs (A) and (B) of 
                section 1842(b)(18) shall apply to a physician or 
                practitioner receiving payment under this subsection in 
                the same manner as they apply to physicians or 
                practitioners under such sections.
                    ``(B) Originating site.--The provisions of section 
                1842(b)(18) shall apply to originating sites receiving 
                a facility fee in the same manner as they apply to 
                practitioners under such section.
            ``(4) Definitions.--For purposes of this subsection:
                    ``(A) 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.
                    ``(B) Eligible telehealth individual.--The term 
                `eligible telehealth individual' means an individual 
                enrolled under this part who receives a telehealth 
                service furnished at an originating site.
                    ``(C) Originating site.--
                            ``(i) In general.--The term `originating 
                        site' means only those sites described in 
                        clause (ii) at which the eligible telehealth 
                        individual is located at the time the service 
                        is furnished via a telecommunications system 
                        and only if such site is located--
                                    ``(I) in an area that is designated 
                                as a rural health professional shortage 
                                area under section 332(a)(1)(A) of the 
                                Public Health Service Act (42 U.S.C. 
                                254e(a)(1)(A));
                                    ``(II) in a county that is not 
                                included in a Metropolitan Statistical 
                                Area; or
                                    ``(III) from an entity that 
                                participates in a Federal telemedicine 
                                demonstration project that has been 
                                approved by (or receives funding from) 
                                the Secretary of Health and Human 
                                Services as of December 31, 2000.
                            ``(ii) Sites described.--The sites referred 
                        to in clause (i) are the following sites:
                                    ``(I) The office of a physician or 
                                practitioner.
                                    ``(II) A critical access hospital 
                                (as defined in section 1861(mm)(1)).
                                    ``(III) A rural health clinic (as 
                                defined in section 1861(aa)(s)).
                                    ``(IV) A Federally qualified health 
                                center (as defined in section 
                                1861(aa)(4)).
                                    ``(V) A hospital (as defined in 
                                section 1861(e)).
                            ``(D) Physician.--The term `physician' has 
                        the meaning given that term in section 1861(r).
                            ``(E) Practitioner.--The term 
                        `practitioner' has the meaning given that term 
                        in section 1842(b)(18)(C).
                    ``(F) Telehealth service.--
                            ``(i) In general.--The term `telehealth 
                        service' means professional consultations, 
                        office visits, and office psychiatry services 
                        (identified as of July 1, 2000, by HCPCS codes 
                        99241-99275, 99201-99215, 90804-90809, and 
                        90862 (and as subsequently modified by the 
                        Secretary)), and any additional service 
                        specified by the Secretary.
                            ``(ii) Yearly update.--The Secretary shall 
                        establish a process that provides, on an annual 
                        basis, for the addition or deletion of services 
                        (and HCPCS codes), as appropriate, to those 
                        specified in clause (i) for authorized payment 
                        under paragraph (1).''.
    (c) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C. 1395l(1)), 
as amended by section 105(c), is further amended--
            (1) by striking ``and (T)'' and inserting ``(T)''; and
            (2) by inserting before the semicolon at the end the 
        following: ``, and (U) with respect to facility fees described 
        in section 1834(m)(2)(B), the amounts paid shall be 80 percent 
        of the lesser of the actual charge or the amounts specified in 
        such section''.
    (d) Study and Report on Additional Coverage.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study to identify--
                    (A) settings and sites for the provision of 
                telehealth services that are in addition to those 
                permitted under section 1834(m) of the Social Security 
                Act, as added by subsection (b);
                    (B) practitioners that may be reimbursed under such 
                section for furnishing telehealth services that are in 
                addition to the practitioners that may be reimbursed 
                for such services under such section; and
                    (C) geographic areas in which telehealth services 
                may be reimbursed that are in addition to the 
                geographic areas where such services may be reimbursed 
                under such section.
            (2) Report.--Not later than 2 years after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the study conducted under paragraph (1) together with 
        such recommendations for legislation that the Secretary 
        determines are appropriate.
    (e) Effective Date.--The amendments made by subsections (b) and (c) 
shall be effective for services furnished on or after July 1, 2001.

SEC. 224. EXPANDING ACCESS TO RURAL HEALTH CLINICS.

    (a) In General.--The matter in section 1833(f) (42 U.S.C. 1395l(f)) 
preceding paragraph (1) is amended by striking ``rural hospitals'' and 
inserting ``hospitals''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished on or after July 1, 2001.

SEC. 225. MEDPAC STUDY ON LOW-VOLUME, ISOLATED RURAL HEALTH CARE 
              PROVIDERS.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study on the effect of low patient and procedure volume on the 
financial status of low-volume, isolated rural health care providers 
participating in the medicare program under title XVIII of the Social 
Security Act.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Commission shall submit to Congress a report 
on the study conducted under subsection (a) indicating--
            (1) whether low-volume, isolated rural health care 
        providers are having, or may have, significantly decreased 
        medicare margins or other financial difficulties resulting from 
        any of the payment methodologies described in subsection (c);
            (2) whether the status as a low-volume, isolated rural 
        health care provider should be designated under the medicare 
        program and any criteria that should be used to qualify for 
        such a status; and
            (3) any changes in the payment methodologies described in 
        subsection (c) that are necessary to provide appropriate 
        reimbursement under the medicare program to low-volume, 
        isolated rural health care providers (as designated pursuant to 
        paragraph (2)).
    (c) Payment Methodologies Described.--The payment methodologies 
described in this subsection are the following:
            (1) The prospective payment system for hospital outpatient 
        department services under section 1833(t) of the Social 
        Security Act (42 U.S.C. 1395l(t)).
            (2) The fee schedule for ambulance services under section 
        1834(l) of such Act (42 U.S.C. 1395m(l)).
            (3) The prospective payment system for inpatient hospital 
        services under section 1886 of such Act (42 U.S.C. 1395ww).
            (4) The prospective payment system for routine service 
        costs of skilled nursing facilities under section 1888(e) of 
        such Act (42 U.S.C. 1395yy(e)).
            (5) The prospective payment system for home health services 
        under section 1895 of such Act (42 U.S.C. 1395fff).

                TITLE III--PROVISIONS RELATING TO PART A

                Subtitle A--Inpatient Hospital Services

SEC. 301. ELIMINATING REDUCTION IN PPS HOSPITAL PAYMENT UPDATE.

    (a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
1395ww(b)(3)(B)(i)) is amended--
            (1) in subclause (XVI), by striking ``minus 1.1 percentage 
        points for hospitals (other than sole community hospitals) in 
        all areas, and the market basket percentage increase for sole 
        community hospitals,'' and inserting ``for hospitals in all 
        areas,'';
            (2) in subclause (XVII)--
                    (A) by striking ``minus 1.1 percentage points''; 
                and
                    (B) by striking ``and'' at the end;
            (3) by redesignating subclause (XVIII) as subclause (XIX);
            (4) in subclause (XIX), as so redesignated, by striking 
        ``fiscal year 2003'' and inserting ``fiscal year 2004''; and
            (5) by inserting after subclause (XVII) the following new 
        subclause:
            ``(XVIII) for fiscal year 2003, the market basket 
        percentage increase minus 0.5 percentage points for hospitals 
        in all areas, and''.
    (b) Special Rule for Payment for Fiscal Year 2001.--Notwithstanding 
the amendment made by subsection (a), for purposes of making payments 
for fiscal year 2001 for inpatient hospital services furnished by 
subsection (d) hospitals (as defined in section 1886(d)(1)(B) of the 
Social Security Act (42 U.S.C. 1395ww(d)(1)(B)), the ``applicable 
percentage increase'' referred to in section 1886(b)(3)(B)(i) of such 
Act (42 U.S.C. 1395ww(b)(3)(B)(i))--
            (1) for discharges occurring on or after October 1, 2000, 
        and before April 1, 2001, shall be determined in accordance 
        with subclause (XVI) of such section as in effect on the day 
        before the date of the enactment of this Act; and
            (2) for discharges occurring on or after April 1, 2001, and 
        before October 1, 2001, shall be equal to--
                    (A) the market basket percentage increase plus 1.1 
                percentage points for hospitals (other than sole 
                community hospitals) in all areas; and
                    (B) the market basket percentage increase for sole 
                community hospitals.
    (c) Consideration of Price of Blood and Blood Products in Market 
Basket Index.--The Secretary of Health and Human Services shall, when 
next (after the date of the enactment of this Act) rebasing and 
revising the hospital market basket index (as defined in section 
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)(iii))), consider the prices of blood and blood products 
purchased by hospitals and determine whether those prices are 
adequately reflected in such index.
    (d) MedPAC Study and Report Regarding Certain Hospital Costs.--
            (1) Study.--The Medicare Payment Advisory Commission shall 
        conduct a study on--
                    (A) any increased costs incurred by subsection (d) 
                hospitals (as defined in paragraph (1)(B) of section 
                1886(d) of the Social Security Act (42 U.S.C. 
                1395ww(d))) in providing inpatient hospital services to 
                medicare beneficiaries under title XVIII of such Act 
                during the period beginning on October 1, 1983, and 
                ending on September 30, 1999, that were attributable 
                to--
                            (i) complying with new blood safety measure 
                        requirements; and
                            (ii) providing such services using new 
                        technologies;
                    (B) the extent to which the prospective payment 
                system for such services under such section provides 
                adequate and timely recognition of such increased 
                costs;
                    (C) the prospects for (and to the extent 
                practicable, the magnitude of) cost increases that 
                hospitals will incur in providing such services that 
                are attributable to complying with new blood safety 
                measure requirements and providing such services using 
                new technologies during the 10 years after the date of 
                the enactment of this Act; and
                    (D) the feasibility and advisability of 
                establishing mechanisms under such payment system to 
                provide for more timely and accurate recognition of 
                such cost increases in the future.
            (2) Consultation.--In conducting the study under this 
        subsection, the Commission shall consult with representatives 
        of the blood community, including--
                    (A) hospitals;
                    (B) organizations involved in the collection, 
                processing, and delivery of blood; and
                    (C) organizations involved in the development of 
                new blood safety technologies.
            (3) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Commission shall submit to Congress 
        a report on the study conducted under paragraph (1) together 
        with such recommendations for legislation and administrative 
        action as the Commission determines appropriate.
    (e) Adjustment for Inpatient Case Mix Changes.--
            (1) In general.--Section 1886(d)(3)(A) (42 U.S.C. 
        1395ww(d)(3)(A)) is amended by adding at the end the following 
        new clause:
            ``(vi) Insofar as the Secretary determines that the 
        adjustments under paragraph (4)(C)(i) for a previous fiscal 
        year (or estimates that such adjustments for a future fiscal 
        year) did (or are likely to) result in a change in aggregate 
        payments under this subsection during the fiscal year that are 
        a result of changes in the coding or classification of 
        discharges that do not reflect real changes in case mix, the 
        Secretary may adjust the average standardized amounts computed 
        under this paragraph for subsequent fiscal years so as to 
        eliminate the effect of such coding or classification 
        changes.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to discharges occurring on or after October 1, 2001.

SEC. 302. ADDITIONAL MODIFICATION IN TRANSITION FOR INDIRECT MEDICAL 
              EDUCATION (IME) PERCENTAGE ADJUSTMENT.

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended--
            (1) in subclause (V) by striking ``and'' at the end;
            (2) by redesignating subclause (VI) as subclause (VII);
            (3) in subclause (VII) as so redesignated, by striking 
        ``2001'' and inserting ``2002''; and
            (4) by inserting after subclause (V) the following new 
        subclause:
                    ``(VI) during fiscal year 2002, `c' is equal to 
                1.6; and''.
    (b) Special Rule for Payment for Fiscal Year 2001.--Notwithstanding 
paragraph (5)(B)(ii)(V) of section 1886(d) of the Social Security Act 
(42 U.S.C. 1395ww(d)(5)(B)(ii)(V)), for purposes of making payments for 
subsection (d) hospitals (as defined in paragraph (1)(B) of such 
section) with indirect costs of medical education, the indirect 
teaching adjustment factor referred to in paragraph (5)(B)(ii) of such 
section shall be determined, for discharges occurring on or after April 
1, 2001, and before October 1, 2001, as if ``c'' in paragraph 
(5)(B)(ii)(V) of such section equalled 1.66 rather than 1.54.
    (c) Conforming Amendment Relating to Determination of Standardized 
Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is 
amended by inserting ``or of section 302 of the Medicare, Medicaid, and 
SCHIP Benefits Improvement and Beneficiary Protection Act of 2000'' 
after ``Balanced Budget Refinement Act of 1999''.
    (d) Clerical Amendments.--Section 1886(d)(5)(B) (42 U.S.C. 
1395ww(d)(5)(B)), as amended by subsection (a), is further amended by 
moving the indentation of each of the following 2 ems to the left:
            (1) Clauses (ii), (v), and (vi).
            (2) Subclauses (I) (II), (III), (IV), (V), and (VII) of 
        clause (ii).
            (3) Subclauses (I) and (II) of clause (vi) and the flush 
        sentence at the end of such clause.

SEC. 303. DECREASE IN REDUCTIONS FOR DISPROPORTIONATE SHARE HOSPITAL 
              (DSH) PAYMENTS.

    (a) In General.--Section 1886(d)(5)(F)(ix) (42 U.S.C. 
1395ww(d)(5)(F)(ix)) is amended--
            (1) in subclause (III), by striking ``each of'' and by 
        inserting ``and 2 percent, respectively'' after ``3 percent''; 
        and
            (2) in subclause (IV), by striking ``4 percent'' and 
        inserting ``3 percent''.
    (b) Special Rule for Payment for Fiscal Year 2001.--Notwithstanding 
the amendment made by subsection (a)(1), for purposes of making 
disproportionate share payments for subsection (d) hospitals (as 
defined in section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
1395ww(d)(1)(B)) for fiscal year 2001, the additional payment amount 
otherwise determined under clause (ii) of section 1886(d)(5)(F) of the 
Social Security Act (42 U.S.C. 1395ww(d)(5)(F))--
            (1) for discharges occurring on or after October 1, 2000, 
        and before April 1, 2001, shall be adjusted as provided by 
        clause (ix)(III) of such section as in effect on the day before 
        the date of the enactment of this Act; and
            (2) for discharges occurring on or after April 1, 2001, and 
        before October 1, 2001, shall, instead of being reduced by 3 
        percent as provided by clause (ix)(III) of such section as in 
        effect after the date of the enactment of this Act, be reduced 
        by 1 percent.
    (c) Conforming Amendments Relating to Determination of Standardized 
Amount.--Section 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)), is 
amended--
            (1) by striking ``1989 or'' and inserting ``1989,''; and
            (2) by inserting ``, or the enactment of section 303 of the 
        Medicare, Medicaid, and SCHIP Benefits Improvement and 
        Beneficiary Protection Act of 2000'' after ``Omnibus Budget 
        Reconciliation Act of 1990''.
    (d) Technical Amendment.--
            (1) In general.--Section 1886(d)(5)(F)(i) (42 U.S.C. 
        1395ww(d)(5)(F)(i)) is amended by striking ``and before October 
        1, 1997,''.
            (2) Effective date.--The amendment made by paragraph (1) is 
        effective as if included in the enactment of BBA.
    (e) Reference to Changes in DSH for Rural Hospitals.--For 
additional changes in the DSH program for rural hospitals, see section 
211.

SEC. 304. WAGE INDEX IMPROVEMENTS.

    (a) Duration of Wage Index Reclassification; Use of 3-Year Wage 
Data.--Section 1886(d)(10)(D) (42 U.S.C. 1395ww(d)(10)(D)) is amended 
by adding at the end the following new clauses:
    ``(v) Any decision of the Board to reclassify a subsection (d) 
hospital for purposes of the adjustment factor described in 
subparagraph (C)(i)(II) for fiscal year 2001 or any fiscal year 
thereafter shall be effective for a period of 3 fiscal years, except 
that the Secretary shall establish procedures under which a subsection 
(d) hospital may elect to terminate such reclassification before the 
end of such period.
    ``(vi) Such guidelines shall provide that, in making decisions on 
applications for reclassification for the purposes described in clause 
(v) for fiscal year 2003 and any succeeding fiscal year, the Board 
shall base any comparison of the average hourly wage for the hospital 
with the average hourly wage for hospitals in an area on--
            ``(I) an average of the average hourly wage amount for the 
        hospital from the most recently published hospital wage survey 
        data of the Secretary (as of the date on which the hospital 
        applies for reclassification) and such amount from each of the 
        two immediately preceding surveys; and
            ``(II) an average of the average hourly wage amount for 
        hospitals in such area from the most recently published 
        hospital wage survey data of the Secretary (as of the date on 
        which the hospital applies for reclassification) and such 
        amount from each of the two immediately preceding surveys.''.
    (b) Process To Permit Statewide Wage Index Calculation and 
Application.--
            (1) In general.--The Secretary of Health and Human Services 
        shall establish a process (based on the voluntary process 
        utilized by the Secretary of Health and Human Services under 
        section 1848 of the Social Security Act (42 U.S.C. 1395w-4) for 
        purposes of computing and applying a statewide geographic wage 
        index) under which an appropriate statewide entity may apply to 
        have all the geographic areas in a State treated as a single 
        geographic area for purposes of computing and applying the area 
        wage index under section 1886(d)(3)(E) of such Act (42 U.S.C. 
        1395ww(d)(3)(E)). Such process shall be established by October 
        1, 2001, for reclassifications beginning in fiscal year 2003.
            (2) Prohibition on individual hospital reclassification.--
        Notwithstanding any other provision of law, if the Secretary 
        applies a statewide geographic wage index under paragraph (1) 
        with respect to a State, any application submitted by a 
        hospital in that State under section 1886(d)(10) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(10)) for geographic 
        reclassification shall not be considered.
    (c) Collection of Information on Occupational Mix.--
            (1) In general.--The Secretary of Health and Human Services 
        shall provide for the collection of data every 3 years on 
        occupational mix for employees of each subsection (d) hospital 
        (as defined in section 1886(d)(1)(D) of the Social Security Act 
        (42 U.S.C. 1395ww(d)(1)(D))) in the provision of inpatient 
        hospital services, in order to construct an occupational mix 
        adjustment in the hospital area wage index applied under 
        section 1886(d)(3)(E) of such Act (42 U.S.C. 1395ww(d)(3)(E)).
            (2) Application.--The third sentence of section 
        1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is amended by 
        striking ``To the extent determined feasible by the Secretary, 
        such survey shall measure'' and inserting ``Not less often than 
        once every 3 years the Secretary (through such survey or 
        otherwise) shall measure''.
            (3) Effective date.--By not later than September 30, 2003, 
        for application beginning October 1, 2004, the Secretary shall 
        first complete--
                    (A) the collection of data under paragraph (1); and
                    (B) the measurement under the third sentence of 
                section 1886(d)(3)(E), as amended by paragraph (2).

SEC. 305. PAYMENT FOR INPATIENT SERVICES OF REHABILITATION HOSPITALS.

    (a) Assistance With Administrative Costs Associated With Completion 
of Patient Assessment.--Section 1886(j)(3)(B) (42 U.S.C. 
1395ww(j)(3)(B)) is amended by striking ``98 percent'' and inserting 
``98 percent for fiscal year 2001 and 100 percent for fiscal year 
2002''.
    (b) Election To Apply Full Prospective Payment Rate Without Phase-
In.--
            (1) In general.--Paragraph (1) of section 1886(j) (42 
        U.S.C. 1395ww(j)) is amended--
                    (A) in subparagraph (A), by inserting ``other than 
                a facility making an election under subparagraph (F)'' 
                before ``in a cost reporting period'';
                    (B) in subparagraph (B), by inserting ``or, in the 
                case of a facility making an election under 
                subparagraph (F), for any cost reporting period 
                described in such subparagraph,'' after ``2002,''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F) Election to apply full prospective payment 
                system.--A rehabilitation facility may elect, not later 
                than 30 days before its first cost reporting period for 
                which the payment methodology under this subsection 
                applies to the facility, to have payment made to the 
                facility under this subsection under the provisions of 
                subparagraph (B) (rather than subparagraph (A)) for 
                each cost reporting period to which such payment 
                methodology applies.''.
            (2) Clarification.--Paragraph (3)(B) of such section is 
        amended by inserting ``but not taking into account any payment 
        adjustment resulting from an election permitted under paragraph 
        (1)(F)'' after ``paragraphs (4) and (6)''.
    (c) Effective Date.--The amendments made by this section take 
effect as if included in the enactment of BBA.

SEC. 306. PAYMENT FOR INPATIENT SERVICES OF PSYCHIATRIC HOSPITALS.

    With respect to hospitals described in clause (i) of section 
1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) 
and psychiatric units described in the matter following clause (v) of 
such section, in making incentive payments to such hospitals under 
section 1886(b)(1)(A) of such Act (42 U.S.C. 1395ww(b)(1)(A)) for cost 
reporting periods beginning on or after October 1, 2000, and before 
October 1, 2001, the Secretary of Health and Human Services, in clause 
(ii) of such section, shall substitute ``3 percent'' for ``2 percent''.

SEC. 307. PAYMENT FOR INPATIENT SERVICES OF LONG-TERM CARE HOSPITALS.

    (a) Increased Target Amounts and Caps for Long-Term Care Hospitals 
Before Implementation of the Prospective Payment System.--
            (1) In general.--Section 1886(b)(3) (42 U.S.C. 
        1395ww(b)(3)) is amended--
                    (A) in subparagraph (H)(ii)(III), by inserting 
                ``subject to subparagraph (J),'' after ``2002,''; and
                    (B) by adding at the end the following new 
                subparagraph:
    ``(J) For cost reporting periods beginning during fiscal year 2001, 
for a hospital described in subsection (d)(1)(B)(iv)--
            ``(i) the limiting or cap amount otherwise determined under 
        subparagraph (H) shall be increased by 2 percent; and
            ``(ii) the target amount otherwise determined under 
        subparagraph (A) shall be increased by 25 percent (subject to 
        the limiting or cap amount determined under subparagraph (H), 
        as increased by clause (i)).''.
            (2) Application.--The amendments made by subsection (a) and 
        by section 122 of BBRA (113 Stat. 1501A-331) shall not be taken 
        into account in the development and implementation of the 
        prospective payment system under section 123 of BBRA (113 Stat. 
        1501A-331).
    (b) Implementation of Prospective Payment System for Long-Term Care 
Hospitals.--
            (1) Modification of requirement.--In developing the 
        prospective payment system for payment for inpatient hospital 
        services provided in long-term care hospitals described in 
        section 1886(d)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
        1395ww(d)(1)(B)(iv)) under the medicare program under title 
        XVIII of such Act required under section 123 of BBRA, the 
        Secretary of Health and Human Services shall examine the 
        feasibility and the impact of basing payment under such a 
        system on the use of existing (or refined) hospital diagnosis-
        related groups (DRGs) that have been modified to account for 
        different resource use of long-term care hospital patients as 
        well as the use of the most recently available hospital 
        discharge data. The Secretary shall examine and may provide for 
        appropriate adjustments to the long-term hospital payment 
        system, including adjustments to DRG weights, area wage 
        adjustments, geographic reclassification, outliers, updates, 
        and a disproportionate share adjustment consistent with section 
        1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
        1395ww(d)(5)(F)).
            (2) Default implementation of system based on existing drg 
        methodology.--If the Secretary is unable to implement the 
        prospective payment system under section 123 of the BBRA by 
        October 1, 2002, the Secretary shall implement a prospective 
        payment system for such hospitals that bases payment under such 
        a system using existing hospital diagnosis-related groups 
        (DRGs), modified where feasible to account for resource use of 
        long-term care hospital patients using the most recently 
        available hospital discharge data for such services furnished 
        on or after that date.

SEC. 308. INCREASE IN BASE PAYMENT TO PUERTO RICO ACUTE CARE HOSPITALS.

    (a) In General.--Section 1886(d)(9)(A) (42 U.S.C. 1395ww(d)(9)(A)) 
is amended--
            (1) in clause (i), by striking ``on or after October 1, 
        1997, 50 percent ('' and inserting ``on or after October 1, 
        2000, 25 percent (and for discharges between October 1, 1997, 
        and September 30, 2000, 50 percent''; and
            (2) in clause (ii), in the matter preceding subclause (I), 
        by striking ``on or after October 1, 1997, 50 percent ('' and 
        inserting ``on or after October 1, 2000, 75 percent (and for 
        discharges between October 1, 1997, and September 30, 2000, 50 
        percent''.
    (b) Special Rule for Payment for Fiscal Year 2001.--
            (1) In general.--Notwithstanding the amendment made by 
        subsection (a), for purposes of making payments for the 
        operating costs of inpatient hospital services of a Puerto Rico 
        hospital for fiscal year 2001, the amount referred to in the 
        matter preceding clause (i) of section 1886(d)(9)(A) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(9)(A))--
                    (A) for discharges occurring on or after October 1, 
                2000, and before April 1, 2001, shall be determined in 
                accordance with such section as in effect on the day 
                before the date of enactment of this Act; and
                    (B) for discharges occurring on or after April 1, 
                2001, and before October 1, 2001, shall be determined--
                            (i) using 0 percent of the Puerto Rico 
                        adjusted DRG prospective payment rate referred 
                        to in clause (i) of such section; and
                            (ii) using 100 percent of the discharge-
                        weighted average referred to in clause (ii) of 
                        such section.
            (2) Puerto rico hospital.--For purposes of this subsection, 
        the term ``Puerto Rico hospital'' means a subsection (d) Puerto 
        Rico hospital as defined in the last sentence of section 
        1886(d)(9)(A) of the Social Security Act (42 U.S.C. 
        1395ww(d)(9)(A)).

 Subtitle B--Adjustments to PPS Payments for Skilled Nursing Facilities

SEC. 311. ELIMINATION OF REDUCTION IN SKILLED NURSING FACILITY (SNF) 
              MARKET BASKET UPDATE IN 2001.

    (a) In General.--Section 1888(e)(4)(E)(ii) (42 U.S.C. 
1395yy(e)(4)(E)(ii)) is amended--
            (1) by redesignating subclauses (II) and (III) as 
        subclauses (III) and (IV), respectively;
            (2) in subclause (III), as so redesignated--
                    (A) by striking ``each of fiscal years 2001 and 
                2002'' and inserting ``each of fiscal years 2002 and 
                2003''; and
                    (B) by striking ``minus 1 percentage point'' and 
                inserting ``minus 0.5 percentage points''; and
            (3) by inserting after subclause (I) the following new 
        subclause:
                                    ``(II) for fiscal year 2001, the 
                                rate computed for the previous fiscal 
                                year increased by the skilled nursing 
                                facility market basket percentage 
                                change for the fiscal year;''.
    (b) Special Rule for Payment for Fiscal Year 2001.--Notwithstanding 
the amendments made by subsection (a), for purposes of making payments 
for covered skilled nursing facility services under section 1888(e) of 
the Social Security Act (42 U.S.C. 1395yy(e)) for fiscal year 2001, the 
Federal per diem rate referred to in paragraph (4)(E)(ii) of such 
section--
            (1) for the period beginning on October 1, 2000, and ending 
        on March 31, 2001, shall be the rate determined in accordance 
        with the law as in effect on the day before the date of the 
        enactment of this Act; and
            (2) for the period beginning on April 1, 2001, and ending 
        on September 30, 2001, shall be the rate that would have been 
        determined under such section if ``plus 1 percentage point'' 
        had been substituted for ``minus 1 percentage point'' under 
        subclause (II) of such paragraph (as in effect on the day 
        before the date of the enactment of this Act).
    (c) Relation to Temporary Increase in BBRA.--The increases provided 
under section 101 of BBRA (113 Stat. 1501A-325) shall be in addition to 
any increase resulting from the amendments made by subsection (a).
    (d) GAO Report on Adequacy of SNF Payment Rates.--Not later than 
July 1, 2002, the Comptroller General of the United States shall submit 
to Congress a report on the adequacy of medicare payment rates to 
skilled nursing facilities and the extent to which medicare contributes 
to the financial viability of such facilities. Such report shall take 
into account the role of private payors, medicaid, and case mix on the 
financial performance of these facilities, and shall include an 
analysis (by specific RUG classification) of the number and 
characteristics of such facilities.
    (e) HCFA Study of Classification Systems for SNF Residents.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study of the different systems for categorizing 
        patients in medicare skilled nursing facilities in a manner 
        that accounts for the relative resource utilization of 
        different patient types.
            (2) Report.--Not later than January 1, 2005, the Secretary 
        shall submit to Congress a report on the study conducted under 
        subsection (a). Such report shall include such recommendations 
        regarding changes in law as may be appropriate.

SEC. 312. INCREASE IN NURSING COMPONENT OF PPS FEDERAL RATE.

    (a) In General.--The Secretary of Health and Human Services shall 
increase by 16.66 percent the nursing component of the case-mix 
adjusted Federal prospective payment rate specified in Tables 3 and 4 
of the final rule published in the Federal Register by the Health Care 
Financing Administration on July 31, 2000 (65 Fed. Reg. 46770), 
effective for services furnished on or after April 1, 2001, and before 
October 1, 2002.
    (b) GAO Audit of Nursing Staff Ratios.--
            (1) Audit.--The Comptroller General of the United States 
        shall conduct an audit of nursing staffing ratios in a 
        representative sample of medicare skilled nursing facilities. 
        Such sample shall cover selected States and shall include broad 
        representation with respect to size, ownership, location, and 
        medicare volume. Such audit shall include an examination of 
        payroll records and medicaid cost reports of individual 
        facilities.
            (2) Report.--Not later than August 1, 2002, the Comptroller 
        General shall submit to Congress a report on the audits 
        conducted under paragraph (1). Such report shall include an 
        assessment of the impact of the increased payments under this 
        subtitle on increased nursing staff ratios and shall make 
        recommendations as to whether increased payments under 
        subsection (a) should be continued.

SEC. 313. APPLICATION OF SNF CONSOLIDATED BILLING REQUIREMENT LIMITED 
              TO PART A COVERED STAYS.

    (a) In General.--Section 1862(a)(18) (42 U.S.C. 1395y(a)(18)) is 
amended by striking ``or of a part of a facility that includes a 
skilled nursing facility (as determined under regulations),'' and 
inserting ``during a period in which the resident is provided covered 
post-hospital extended care services (or, for services described in 
section 1861(s)(2)(D), which are furnished to such an individual 
without regard to such period),''.
    (b) Conforming Amendments.--(1) Section 1842(b)(6)(E) (42 U.S.C. 
1395u(b)(6)(E)) is amended--
            (A) by inserting ``by, or under arrangements made by, a 
        skilled nursing facility'' after ``furnished'';
            (B) by striking ``or of a part of a facility that includes 
        a skilled nursing facility (as determined under regulations)''; 
        and
            (C) by striking ``(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)''.
    (2) Section 1842(t) (42 U.S.C. 1395u(t)) is amended by striking 
``by a physician'' and ``or of a part of a facility that includes a 
skilled nursing facility (as determined under regulations),''.
    (3) Section 1866(a)(1)(H)(ii)(I) (42 U.S.C. 1395cc(a)(1)(H)(ii)(I)) 
is amended by inserting after ``who is a resident of the skilled 
nursing facility'' the following: ``during a period in which the 
resident is provided covered post-hospital extended care services (or, 
for services described in section 1861(s)(2)(D), that are furnished to 
such an individual without regard to such period)''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
apply to services furnished on or after January 1, 2001.
    (d) Oversight.--The Secretary of Health and Human Services, through 
the Office of the Inspector General in the Department of Health and 
Human Services or otherwise, shall monitor payments made under part B 
of the title XVIII of the Social Security Act for items and services 
furnished to residents of skilled nursing facilities during a time in 
which the residents are not being provided medicare covered post-
hospital extended care services to ensure that there is not duplicate 
billing for services or excessive services provided.

SEC. 314. ADJUSTMENT OF REHABILITATION RUGS TO CORRECT ANOMALY IN 
              PAYMENT RATES.

    (a) Adjustment for Rehabilitation RUGs.--
            (1) In general.--For purposes of computing payments for 
        covered skilled nursing facility services under paragraph (1) 
        of section 1888(e) of the Social Security Act (42 U.S.C. 
        1395yy(e)) for such services furnished on or after April 1, 
        2001, and before the date described in section 101(c)(2) of 
        BBRA (113 Stat. 1501A-324), the Secretary of Health and Human 
        Services shall increase by 6.7 percent the adjusted Federal per 
        diem rate otherwise determined under paragraph (4) of such 
        section (but for this section) for covered skilled nursing 
        facility services for RUG-III rehabilitation groups described 
        in paragraph (2) furnished to an individual during the period 
        in which such individual is classified in such a RUG-III 
        category.
            (2) Rehabilitation groups described.--The RUG-III 
        rehabilitation groups for which the adjustment described in 
        paragraph (1) applies are RUC, RUB, RUA, RVC, RVB, RVA, RHC, 
        RHB, RHA, RMC, RMB, RMA, RLB, and RLA, as specified in Tables 3 
        and 4 of the final rule published in the Federal Register by 
        the Health Care Financing Administration on July 31, 2000 (65 
        Fed. Reg. 46770).
    (b) Correction With Respect to Rehabilitation RUGs.--
            (1) In general.--Section 101(b) of BBRA (113 Stat. 1501A-
        324) is amended by striking ``CA1, RHC, RMC, and RMB'' and 
        inserting ``and CA1''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to services furnished on or after April 1, 2001.
    (c) Review by Office of Inspector General.--The Inspector General 
of the Department of Health and Human Services shall review the 
medicare payment structure for services classified within 
rehabilitation resource utilization groups (RUGs) (as in effect after 
the date of the enactment of the BBRA) to assess whether payment 
incentives exist for the delivery of inadequate care. Not later than 
October 1, 2001, the Inspector General shall submit to Congress a 
report on such review.

SEC. 315. ESTABLISHMENT OF PROCESS FOR GEOGRAPHIC RECLASSIFICATION.

    (a) In General.--The Secretary of Health and Human Services may 
establish a procedure for the geographic reclassification of a skilled 
nursing facility for purposes of payment for covered skilled nursing 
facility services under the prospective payment system established 
under section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)). 
Such procedure may be based upon the method for geographic 
reclassifications for inpatient hospitals established under section 
1886(d)(10) of the Social Security Act (42 U.S.C. 1395ww(d)(10)).
    (b) Requirement for Skilled Nursing Facility Wage Data.--In no case 
may the Secretary implement the procedure under subsection (a) before 
such time as the Secretary has collected data necessary to establish an 
area wage index for skilled nursing facilities based on wage data from 
such facilities.

                        Subtitle C--Hospice Care

SEC. 321. FULL MARKET BASKET INCREASE FOR 2001 AND 2002.

    (a) In General.--Section 1814(i)(1)(C)(ii) (42 U.S.C. 
1395f(i)(1)(C)(ii)) is amended--
            (1) by redesignating subclause (VII) as subclause (VIII);
            (2) in subclause (VI)--
                    (A) by striking ``through 2002'' and inserting 
                ``through 2000''; and
                    (B) by striking ``and'' at the end; and
            (3) by inserting after subclause (VI) the following new 
        subclause:
            ``(VII) for each of fiscal years 2001 and 2002, the market 
        basket percentage increase for the fiscal year; and''.
    (b) Transition During Fiscal Year 2001.--Notwithstanding the 
amendments made by subsection (a), for purposes of making payments for 
hospice care under section 1814(i) of the Social Security Act (42 
U.S.C. 1395f(i)) for fiscal year 2001, the payment rates referred to in 
paragraph (1)(C) of such section--
            (1) for the period beginning on October 1, 2000, and ending 
        on March 31, 2001, shall be the rate determined in accordance 
        with the law as in effect on the day before the date of the 
        enactment of this Act; and
            (2) for the period beginning on April 1, 2001, and ending 
        on September 30, 2001, shall be the rate that would have been 
        determined under paragraph (1) if ``plus 1.0 percentage 
        points'' were substituted for ``minus 1.0 percentage points'' 
        under paragraph (1)(C)(ii)(VI) of such section for fiscal year 
        2001.
    (c) Conforming Amendments to BBRA.--
            (1) In general.--Section 131 of BBRA (113 Stat. 1501A-333) 
        is repealed.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the enactment of BBRA.
    (d) Technical Amendment.--Section 1814(a)(7)(A)(ii) (42 U.S.C. 
1395f(a)(7)(A)(ii)) is amended by striking the period at the end and 
inserting a semicolon.

SEC. 322. CLARIFICATION OF PHYSICIAN CERTIFICATION.

    (a) Certification Based on Normal Course of Illness.--
            (1) In general.--Section 1814(a) (42 U.S.C. 1395f(a)) is 
        amended by adding at the end the following new sentence: ``The 
        certification regarding terminal illness of an individual under 
        paragraph (7) shall be based on the physician's or medical 
        director's clinical judgment regarding the normal course of the 
        individual's illness.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to certifications made on or after the date of the 
        enactment of this Act.
    (b) Study and Report on Physician Certification Requirement for 
Hospice Benefits.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study to examine the appropriateness of the 
        certification regarding terminal illness of an individual under 
        section 1814(a)(7) of the Social Security Act (42 U.S.C. 
        1395f(a)(7)) that is required in order for such individual to 
        receive hospice benefits under the medicare program under title 
        XVIII of such Act. In conducting such study, the Secretary 
        shall take into account the effect of the amendment made by 
        subsection (a).
            (2) Report.--Not later than 2 years after the date of the 
        enactment of this Act, the Secretary of Health and Human 
        Services shall submit to Congress a report on the study 
        conducted under paragraph (1), together with any 
        recommendations for legislation that the Secretary deems 
        appropriate.

SEC. 323. MEDPAC REPORT ON ACCESS TO, AND USE OF, HOSPICE BENEFIT.

    (a) In General.--The Medicare Payment Advisory Commission shall 
conduct a study to examine the factors affecting the use of hospice 
benefits under the medicare program under title XVIII of the Social 
Security Act, including a delay in the time (relative to death) of 
entry into a hospice program, and differences in such use between urban 
and rural hospice programs and based upon the presenting condition of 
the patient.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Commission shall submit to Congress a report 
on the study conducted under subsection (a), together with any 
recommendations for legislation that the Commission deems appropriate.

                      Subtitle D--Other Provisions

SEC. 331. RELIEF FROM MEDICARE PART A LATE ENROLLMENT PENALTY FOR GROUP 
              BUY-IN FOR STATE AND LOCAL RETIREES.

    (a) In General.--Section 1818 (42 U.S.C. 1395i-2) is amended--
            (1) in subsection (c)(6), by inserting before the semicolon 
        at the end the following: ``and shall be subject to reduction 
        in accordance with subsection (d)(6)''; and
            (2) by adding at the end of subsection (d) the following 
        new paragraph:
    ``(6)(A) In the case where a State, a political subdivision of a 
State, or an agency or instrumentality of a State or political 
subdivision thereof determines to pay, for the life of each individual, 
the monthly premiums due under paragraph (1) on behalf of each of the 
individuals in a qualified State or local government retiree group who 
meets the conditions of subsection (a), the amount of any increase 
otherwise applicable under section 1839(b) (as applied and modified by 
subsection (c)(6) of this section) with respect to the monthly premium 
for benefits under this part for an individual who is a member of such 
group shall be reduced by the total amount of taxes paid under section 
3101(b) of the Internal Revenue Code of 1986 by such individual and 
under section 3111(b) by the employers of such individual on behalf of 
such individual with respect to employment (as defined in section 
3121(b) of such Code).
    ``(B) For purposes of this paragraph, the term `qualified State or 
local government retiree group' means all of the individuals who retire 
prior to a specified date that is before January 1, 2002, from 
employment in 1 or more occupations or other broad classes of employees 
of--
            ``(i) the State;
            ``(ii) a political subdivision of the State; or
            ``(iii) an agency or instrumentality of the State or 
        political subdivision of the State.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
premiums for months beginning with July 1, 2001.

SEC. 332. 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 of Health and Human Services 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.
            (3) Reclassification of freestanding skilled nursing 
        facilities and home health agencies.--The Secretary shall 
        establish a process by which a skilled nursing facility or home 
        health agency that is not a unit of, or owned or operated by, a 
hospital may apply to change the facility's or agency's geographic 
classification for a fiscal year for purposes of the factor used to 
adjust the prospective payment rate for area differences in wage levels 
of the skilled nursing facility or home health agency, as the case may 
be, 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 subparagraphs (A) and (B) of 
paragraph (2).
    (b) Effective Date.--Subsection (a) applies to fiscal years 
beginning with fiscal year 2002.

SEC. 333. NURSE STAFFING AND QUALITY IMPROVEMENT; GRANTS TO STATES.

    (a) Grants to States for Improvements in Nursing Home Staffing and 
Quality.--
            (1) Secretary's authority to award grants.--The Secretary 
        shall establish a program of competitive grants to States, in 
        accordance with the provisions of this subsection, for the 
        purpose of improving the quality of care furnished in nursing 
        homes operating in the State.
            (2) Applications and eligibility for grants.--
                    (A) Initial application.--A State seeking a grant 
                to conduct a project under this subsection shall submit 
                an application containing such information and 
                assurances as the Secretary may require, including--
                            (i) a commitment to submit annual reports 
                        describing the State's progress in increasing 
                        staffing levels and making other quality 
                        improvements in nursing homes in the State; and
                            (ii) a description of a plan for evaluation 
                        of the activities carried out under the grant, 
                        including a plan for measurement of progress 
                        toward the goals and objectives of the program, 
                        consistent with the principles of the 
                        Government Performance and Results Act.
                    (B) Consultation with public.--Before submitting an 
                application for a grant under this subsection, States 
                shall solicit and consider the views of members of the 
                public, nursing home residents or their 
                representatives, and other persons concerned with the 
                administration of nursing homes within the State with 
                respect to the design of the proposed State program.
                    (C) Eligibility.--
                            (i) Initial eligibility.--A State shall not 
                        be eligible for a grant award under this 
                        subsection unless it makes assurances 
                        satisfactory to the Secretary that the skilled 
                        nursing facilities (as defined in section 
                        1819(a)) and nursing facilities (as defined in 
                        section 1919(a)) within the State will reach or 
                        exceed the minimum staff level described in 
                        paragraph (4)(B) not later than two years after 
                        enactment of this Act and will maintain such 
                        level throughout the remainder of the grant 
                        program.
                            (ii) Continuing eligibility.--A State shall 
                        not be eligible for the continuation of grant 
                        funding under a multi-year grant under this 
                        subsection unless the State demonstrates to the 
                        Secretary's satisfaction that it continues to 
                        meet the requirement described in clause (i) 
                        and has made sufficient progress in meeting the 
                        goals described in its grant application.
            (3) Use of grant funds.--
                    (A) In general.--Subject to the succeeding 
                provisions of this paragraph, funds received by a State 
                under this subsection may be provided to entities 
                including nursing homes, labor management partnerships, 
                and educational institutions, and may be used for any 
                or all of the following purposes:
                            (i) To enable a nursing home to recruit 
                        additional nursing staff or to retain existing 
                        nursing staff (including through the use of 
                        reasonable financial incentives or reasonable 
                        benefit enhancements).
                            (ii) To increase education and training of 
                        nursing staff (including designing or 
                        implementing programs to promote the career 
                        advancement of certified nurse aides).
                            (iii) To provide bonuses to nursing homes 
                        meeting State quality standards or avoiding 
                        serious quality violations for a period of one 
                        or more years.
                            (iv) Such other nursing home staffing and 
                        quality improvement initiatives as the 
                        Secretary may approve.
                    (B) Applicability of nursing home reform 
                provisions.--Funds made available under a grant awarded 
                to a State under this subsection may only be used to 
                provide financial support or technical assistance for 
                any purpose described in subparagraph (A) to the extent 
                that the activities conducted under the project are 
                consistent with the requirements of sections 1818 and 
                1919 of the Social Security Act (42 U.S.C. 1395i-3, 
                1396r).
                    (C) Prohibition.--No funds made available under a 
                grant awarded to a State under this subsection may be 
                used to provide financial support or technical 
                assistance for any purpose described in subparagraph 
                (A) that is conducted at, or for the benefit of, a 
                nursing facility that is owned or operated by a State, 
                county, or local government.
                    (D) No supplantation of funds.--Funds made 
                available under a grant awarded to a State under this 
                subsection may only be used to supplement, not 
                supplant, other funds that the State expends to carry 
                out activities described in subparagraph (A).
            (4) Distribution of funds.--
                    (A) In general.--Subject to paragraph (2), in 
                awarding grants under this subsection, the Secretary 
                shall award no more than 25 percent of the funds to 
                States in which, as of the date of the enactment of 
                this subsection, skilled nursing facilities (as defined 
                in section 1819(a)) and nursing facilities (as defined 
                in section 1919(a)) have reached or exceeded the 
                minimum staff level specified in subparagraph (B) (as 
determined by the Secretary).
                    (B) Minimum nursing home staff level.--
                            (i) In general.--Subject to clause (ii), 
                        for purposes of paragraph (2) and subparagraph 
                        (A), the level specified in this subparagraph 
                        for a skilled nursing facility or nursing 
                        facility is a staff level sufficient to ensure 
                        that each resident receives from a certified 
                        nurse aide at least 2 hours per day of direct 
                        care (including repositioning the resident and 
                        changing wet clothes, assisting with feeding, 
                        exercise, and toileting, and working to enhance 
                        a resident's independence with respect to 
                        activities of daily living).
                            (ii) Secretary's authority to increase 
                        minimum staff level.--The Secretary may 
                        establish a minimum staff level that is higher 
                        than that specified in clause (i). Any such 
                        revised staff level shall be effective no 
                        earlier than six months after the date on which 
                        Secretary provides notice to States of the new 
                        requirement.
                    (C) Multi-year grant funds.--The Secretary shall 
                award any multi-year grant under this subsection from 
                amounts appropriated (or available pursuant to 
                paragraph (5)(B)) for the first fiscal year of the 
                grant.
            (5) Appropriations and availability of civil money penalty 
        (cmp) collections.--
                    (A) Appropriations.--There are appropriated for all 
                costs to the Secretary for carrying out the program 
                under this subsection $200,000,000 for each of fiscal 
                years 2001 through 2005, such funds to remain available 
                to the Secretary through the end of the first 
                succeeding fiscal year.
                    (B) Availability of cmp collections.--In addition 
                to the amounts appropriated pursuant to subparagraph 
                (A), there shall be available to the Secretary for such 
                costs for such fiscal years any amounts deposited in 
                the Nursing Facility Civil Money Penalties Collection 
                Account established under subsection (c).
    (b) Enhanced Nursing Facility Reporting Requirements.--
            (1) Medicare.--
                    (A) Submission of nursing staff level data to the 
                secretary.--Section 1819(b) (42 U.S.C. 1395i-3(b)) is 
                amended by adding at the end the following new 
                paragraph:
            ``(8) Data on staffing levels.--
                    ``(A) Submission to secretary.--A skilled nursing 
                facility shall submit to the Secretary, in such form 
                and manner and at such intervals as the Secretary may 
                require, data with respect to nursing staff of the 
                facility. Such data shall include the total number of 
                nursing staff hours furnished during the period 
                specified by the Secretary (including totals for each 
                shift worked during such period) by the facility to 
                residents for which payment is made under section 
                1888(e), broken down by total certified nurse aide 
                hours, total licensed practical or vocational nurse 
                hours, and total registered nurse hours, and shall also 
                include the average wage rate for each class of nursing 
                staff employed by the facility.
                    ``(B) Publication.--The Secretary shall provide for 
                the publication on the Internet site of the Department 
                of Health and Human Services known as `Nursing Home 
                Compare' the facility-specific nursing staff 
                information collected pursuant to subparagraph (A). The 
                Secretary shall update such information 
                periodically.''.
                    (B) Posting of information on nursing facility 
                staffing.--Section 1819(b) (42 U.S.C. 1395i-3(b)), as 
                amended by subparagraph (A), is further amended by 
                adding at the end the following new paragraph:
            ``(9) Information on nurse staffing.--
                    ``(A) In general.--A skilled nursing facility shall 
                post daily for each nursing unit of the facility and 
                for each shift the current number of licensed and 
                unlicensed nursing staff directly responsible for 
                resident care. The information shall be displayed in a 
                uniform manner (as specified by the Secretary) and in a 
                clearly visible place.
                    ``(B) Publication of data.--A skilled nursing 
                facility shall, upon request, make available to the 
                public the nursing staff data described in subparagraph 
                (A).''.
                    (C) Information concerning patient 
                classification.--Section 1819(b)(4)(C) (42 U.S.C. 
                1395i-3(b)(4)(C)) is amended by adding at the end the 
                following new clause:
                            ``(iii) Information concerning residents.--
                        The skilled nursing facility shall provide the 
                        Secretary, in such form and manner and at such 
                        intervals as the Secretary may require, a 
                        classification of all residents of the skilled 
                        nursing facility that accords with the patient 
                        classification system described in section 
                        1888(e)(3)(B)(ii), or such successor system as 
                        the Secretary may identify.''.
            (2) Medicaid.--
                    (A) In general.--Section 1919(b) (42 U.S.C. 1396r) 
                is amended by adding at the end the following new 
                paragraph:
            ``(8) Data on staffing levels.--
                    ``(A) Submission to secretary.--A nursing facility 
                shall submit to the Secretary, in such form and manner 
                and at such intervals as the Secretary may require, 
                data with respect to nursing staff of the facility. 
                Such data shall include the total number of nursing 
                staff hours furnished during the period specified by 
                the Secretary (including totals for each shift worked 
                during such period) by the facility to residents for 
                which payment is made under this title, broken down by 
                total certified nurse aide hours, total licensed 
                practical or vocational nurse hours, and total 
                registered nurse hours, and shall also include the 
                average wage rate for each class of nursing staff 
                employed by the facility.
                    ``(B) Publication.--The Secretary shall provide for 
                the publication on the Internet site of the Department 
                of Health and Human Services known as `Nursing Home 
                Compare' the facility-specific nursing staff 
                information collected pursuant to subparagraph (A). The 
                Secretary shall update such information 
                periodically.''.
                    (B) Posting of information on nursing facility 
                staffing.--Section 1919(b) (42 U.S.C. 1395r(b)), as 
                amended by subparagraph (A), is further amended by 
                adding at the end the following new paragraph:
            ``(9) Information on nurse staffing.--
                    ``(A) In general.--A nursing facility shall post 
                daily for each nursing unit of the facility and for 
                each shift the current number of licensed and 
                unlicensed nursing staff directly responsible for 
                resident care. The information shall be displayed in a 
                uniform manner (as specified by the Secretary) and in a 
                clearly visible place.
                    ``(B) Publication of data.--A nursing facility 
                shall, upon request, make available to the public the 
                nursing staff data described in subparagraph (A).''.
                    (C) Information concerning patient 
                classification.--Section 1919(b)(4)(C) (42 U.S.C. 
                1396r(b)(4)(C)) is amended by adding at the end the 
                following new clause:
                            ``(iv) Information concerning residents.--
                        The nursing facility shall provide the 
                        Secretary, in such form and manner and at such 
                        intervals as the Secretary may require, a 
                        classification of all residents of the nursing 
                        facility that accords with the patient 
                        classification system described in section 
                        1888(e)(3)(B)(ii), or such successor system as 
                        the Secretary may identify.''.
    (c) Nursing Facility Civil Money Penalty Collections.--
            (1) Establishment of nursing facility civil money penalty 
        collections account.--Section 1128A (42 U.S.C. 1320a-7a) is 
        amended by adding at the end the following new subsection:
    ``(o) Establishment of Nursing Facility Civil Money Penalty 
Collections Account.--There is hereby established an account to be 
known as the `Nursing Facility Civil Money Penalties Collection 
Account' (hereafter in this subsection referred to as the `Account'). 
Notwithstanding any other provision of law, there shall be deposited 
into the Account the Secretary's share of any civil monetary penalties 
collected under sections 1819 and 1919, all such amounts to be 
available without fiscal year limitation for repaying the Secretary's 
share of amounts owed to nursing facilities or skilled nursing 
facilities pursuant to the final sentence of sections 1819(h)(2)(B)(ii) 
and 1919(h)(2)(B)(ii), and for awarding grants under section 333(a) of 
the Medicare, Medicaid, and SCHIP Benefits Improvement and Beneficiary 
Protection Act of 2000.''.
            (2) Authority to collect cmp immediately.--
                    (A) Medicare.--Section 1819(h)(2)(B)(ii) (42 U.S.C. 
                1395i-3(h)(2)(B)(ii)) is amended by inserting before 
                the final period ``, except that, notwithstanding 
                section 1128A(c)(2) or any other provision of law, the 
                Secretary, upon determining that a civil money penalty 
                should be imposed against a skilled nursing facility 
                pursuant to this paragraph, shall take immediate action 
                to collect such penalty (except where the Secretary 
                finds that such action could jeopardize the health or 
                welfare of residents of the skilled nursing facility). 
                In collecting such penalty, the Secretary may deduct 
                the amount of the penalty from amounts otherwise 
                payable to the facility under this title or take such 
                other actions as the Secretary considers appropriate. 
                If the Secretary's imposition of a penalty under this 
                paragraph is set aside, in whole or in part, as a 
                result of a hearing under section 1128A(c)(2) (or an 
                appeal therefrom) or by a court of competent 
                jurisdiction, and the Secretary elects not to pursue an 
                appeal of such judgment; or has exhausted all appeals, 
                the Secretary shall repay any amount owed to the 
                skilled nursing facility with accrued interest''.
                    (B) Medicaid.--Section 1919(h)(3)(B)(ii) (42 U.S.C. 
                1396r(h)(3)(B)(ii)) is amended by inserting before the 
                final period ``, except that, notwithstanding section 
                1128A(c)(2) or any other provision of law, the 
                Secretary, upon determining that a civil money penalty 
                should be imposed against a nursing facility pursuant 
                to this paragraph, shall take immediate action to 
                collect the penalty (except where the Secretary finds 
                that such action could jeopardize the health or welfare 
                of residents of the nursing facility). In collecting 
                such penalty, the Secretary may direct the State to 
                deduct the amount of the penalty from amounts otherwise 
                payable to the nursing facility under this title or 
                take such other actions as the Secretary, in 
                consultation with the State, considers appropriate. If 
                the Secretary's imposition of a penalty under this 
                paragraph is set aside, in whole or in part, as a 
                result of a hearing under section 1128A(c)(2) (or an 
                appeal therefrom) or by a court of competent 
                jurisdiction, and the Secretary elects not to pursue an 
                appeal of such judgment, or has exhausted all appeals, 
                the Secretary shall repay, or shall direct the State to 
                repay, any amount owed to the nursing facility with 
                accrued interest''.

                TITLE IV--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

SEC. 401. REVISION OF HOSPITAL OUTPATIENT PPS PAYMENT UPDATE.

    (a) In General.--Section 1833(t)(3)(C)(iii) (42 U.S.C. 
1395l(t)(3)(C)(iii)) is amended by striking ``in each of 2000, 2001, 
and 2002'' and inserting ``in each of 2000 and 2002''.
    (b) Adjustment for Case Mix Changes.--
            (1) In general.--Section 1833(t)(3)(C) (42 U.S.C. 
        1395l(t)(3)(C)) is amended--
                    (A) by redesignating clause (iii) as clause (iv); 
                and
                    (B) by inserting after clause (ii) the following 
                new clause:
                            ``(iii) Adjustment for service mix 
                        changes.--Insofar as the Secretary determines 
                        that the adjustments for service mix under 
                        paragraph (2) for a previous year (or estimates 
                        that such adjustments for a future year) did 
                        (or are likely to) result in a change in 
                        aggregate payments under this subsection during 
                        the year that are a result of changes in the 
                        coding or classification of covered OPD 
                        services that do not reflect real changes in 
                        service mix, the Secretary may adjust the 
                        conversion factor computed under this 
                        subparagraph for subsequent years so as to 
                        eliminate the effect of such coding or 
                        classification changes.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect as if included in the enactment of BBA.

SEC. 402. 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 new subparagraphs:
                    ``(B) Use of categories in determining eligibility 
                of a device for pass-through payments.--The following 
                provisions apply for purposes of determining whether a 
                medical device qualifies for additional payments under 
                clause (ii) or (iv) of subparagraph (A):
                            ``(i) Establishment of initial 
                        categories.--The Secretary shall initially 
                        establish under this clause categories of 
                        medical devices based on type of device by 
                        April 1, 2001. Such categories 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 January 
                        1, 2001, is included in such a category and no 
                        such device is included in more than one 
                        category. For purposes of the preceding 
                        sentence, whether a medical device meets such 
                        requirements as of such date shall be 
                        determined on the basis of the program 
                        memoranda issued before such date or if the 
                        Secretary determines the medical device would 
                        have been included in the program memoranda but 
                        for the requirement of subparagraph (A)(iv)(I). 
                        The categories may be established under this 
                        clause by program memorandum or otherwise, 
                        after consultation with groups representing 
                        hospitals, manufacturers of medical devices, 
                        and other affected parties.
                            ``(ii) Establishing criteria for additional 
                        categories.--
                                    ``(I) In general.--The Secretary 
                                shall establish criteria that will be 
                                used for creation of additional 
                                categories (other than those 
                                established under clause (i)) through 
                                rulemaking (which may include use of an 
                                interim final rule with comment 
                                period).
                                    ``(II) Standard.--Such categories 
                                shall be established under this clause 
                                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 
                                and are in use at the time the category 
                                is established is not insignificant, as 
                                described in subparagraph (A)(iv)(II).
                                    ``(III) Deadline.--Criteria shall 
                                first be established under this clause 
                                by July 1, 2001. The Secretary may 
                                establish in compelling circumstances 
                                categories under this clause before the 
                                date such criteria are established.
                                    ``(IV) Adding categories.--The 
                                Secretary shall promptly establish a 
                                new category of medical devices 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) is appropriate.
                            ``(iii) Period for which category is in 
                        effect.--A category of medical devices 
                        established under clause (i) or clause (ii) 
                        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 clause (i), 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 
                                April 1, 2001); and
                                    ``(II) in the case of any other 
                                category, on the first date on which 
                                payment is made under this paragraph 
                                for any medical device that is 
                                described by such category.
                            ``(iv) 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 and in effect 
                                under clause (i); or
                                    ``(II) the device is described by a 
                                category established and in effect 
                                under clause (ii) and 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.
                        Nothing in this clause shall be construed as 
                        requiring an application or prior approval 
                        (other than that described in subclause (II)) 
                        in order for a covered device to qualify for 
                        payment under this paragraph.
                    ``(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.--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 and in 
                                effect under subparagraph (B); 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 under such 
                                subparagraph.''.
    (b) Conforming Amendments.--Section 1833(t) (42 U.S.C. 1395l(t)) is 
further amended--
            (1) in paragraph (6)(A)(iv)(II), 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'';
            (2) 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)''; 
        and
            (3) 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))''.
    (c) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act.
    (d) Transition.--
            (1) In general.--In the case of a medical device provided 
        as part of a service (or group of services) furnished during 
        the period before initial categories are implemented under 
        subparagraph (B)(i) of section 1833(t)(6) of the Social 
        Security Act (as amended by subsection (a)), payment shall be 
        made for such device under such section in accordance with the 
        provisions in effect before the date of the enactment of this 
        Act, except that, beginning on the date that is 30 days after 
        the date of the enactment of this Act, payment shall also be 
        made for such a device that is not included in a program 
        memorandum described in such subparagraph if the Secretary of 
        Health and Human Services determines that the device is likely 
        to be described by such an initial category or would have been 
        included in such program memoranda but for the requirement of 
        subparagraph (A)(iv)(I) of that section.
            (2) Application of current process.--Notwithstanding any 
        other provision of law, the Secretary shall continue to accept 
        applications with respect to medical devices under the process 
        established pursuant to paragraph (6) of section 1833(t) of the 
        Social Security Act (as in effect on the day before the date of 
        the enactment of this Act) through December 1, 2000, and any 
        device--
                    (A) with respect to which an application was 
                submitted (pursuant to such process) on or before such 
                date; and
                    (B) that meets the requirements of clause (ii) or 
                (iv) of subparagraph (A) of such paragraph (as 
                determined pursuant to such process),
        shall be treated as a device with respect to which an initial 
        category is required to be established under subparagraph 
        (B)(i) of such paragraph (as amended by subsection (a)(2)).

SEC. 403. APPLICATION OF OPD PPS TRANSITIONAL CORRIDOR PAYMENTS TO 
              CERTAIN HOSPITALS THAT DID NOT SUBMIT A 1996 COST REPORT.

    (a) In General.--Section 1833(t)(7)(F)(ii)(I) (42 U.S.C. 
1395l(t)(7)(F)(ii)(I)) is amended by inserting ``(or in the case of a 
hospital that did not submit a cost report for such period, during the 
first subsequent cost reporting period ending before 2001 for which the 
hospital submitted a cost report)'' after ``1996''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of BBRA.

SEC. 404. APPLICATION OF RULES FOR DETERMINING PROVIDER-BASED STATUS 
              FOR CERTAIN ENTITIES.

    (a) Grandfather.--Notwithstanding any other provision of law, for 
purposes of making determinations of provider-based status under title 
XVIII of the Social Security Act on or after October 1, 2000, any 
facility or organization that is treated as provider-based in relation 
to a hospital or critical access hospital under such title as of 
October 1, 2000--
            (1) shall continue to be treated as provider-based in 
        relation to such hospital or critical access hospital under 
        such title during the 2-year period beginning on October 1, 
        2000; and
            (2) the requirements, limitations, and exclusions specified 
        in paragraphs (d), (e), (f), and (h) of section 413.65 of title 
        42, Code of Federal Regulations shall not apply to such 
        facility or organization in relation to such hospital or 
        critical access hospital until after the end of such 2-year 
        period.
    (b) Temporary Criteria.--For purposes of title XVIII of the Social 
Security Act--
            (1) a facility or organization for which a determination of 
        provider-based status in relation to a hospital or critical 
        access hospital is requested on or after October 1, 2000, and 
        before October 1, 2002, may not be treated as not having 
        provider-based status in relation to such a hospital for any 
        period before a determination is made with respect to such 
        status pursuant to such request; and
            (2) in making a determination with respect to such status 
        for any facility or organization in relationship to such a 
        hospital on or after October 1, 2000, the following rules 
        apply:
                    (A) The facility or organization shall be treated 
                as satisfying any requirements and standards for 
                geographic location in relation to such a hospital if 
                the facility or organization--
                            (i) satisfies the requirements of section 
                        413.65(d)(7) of title 42, Code of Federal 
                        Regulations; or
                            (ii) is located not more than 35 miles from 
                        the main campus of the hospital or critical 
                        access hospital.
                    (B) The facility or organization shall be treated 
                as satisfying any of the requirements and standards for 
                geographic location in relation to such a hospital if 
                the facility or organization is owned and operated by a 
                hospital or critical access hospital that--
                            (i) is owned or operated by a unit of State 
                        or local government, is a public or private 
                        nonprofit corporation that is formally granted 
                        governmental powers by a unit of State or local 
                        government, or is a private hospital that has a 
                        contract with a State or local government that 
                        includes the operation of clinics located off 
                        the main campus of the hospital to assure 
                        access in a well-defined service area to health 
                        care services for low-income individuals who 
                        are not entitled to benefits under title XVIII 
                        (or medical assistance under a State plan under 
                        title XIX) of such Act; and
                            (ii) has a disproportionate share 
                        adjustment percentage (as determined under 
                        section 1886(d)(5)(F) of such Act (42 U.S.C. 
                        1395ww(d)(5)(F))) greater than 11.75 percent or 
                        is described in clause (i)(II) of such section.
    (c) Definitions.--For purposes of this section, the terms 
``hospital'' and ``critical access hospital'' have the meanings given 
such terms in subsections (e) and (mm)(1), respectively, of section 
1861 of the Social Security Act (42 U.S.C. 1395x).

SEC. 405. TREATMENT OF CHILDREN'S HOSPITALS UNDER PROSPECTIVE PAYMENT 
              SYSTEM.

    (a) In General.--Section 1833(t) (42 U.S.C. 1395l(t)) is amended--
            (1) in the heading of paragraph (7)(D)(ii), by inserting 
        ``and children's hospitals'' after ``cancer hospitals''; and
            (2) in paragraphs (7)(D)(ii) and (11), by striking 
        ``section 1886(d)(1)(B)(v)'' and inserting ``clause (iii) or 
        (v) of section 1886(d)(1)(B)''.
    (b) Effective Date.--The amendments made by subsection (a) apply as 
if included in the enactment of section 202 of BBRA (113 Stat. 1501A-
342).

SEC. 406. INCLUSION OF TEMPERATURE MONITORED CRYOABLATION IN 
              TRANSITIONAL PASS-THROUGH FOR CERTAIN MEDICAL DEVICES, 
              DRUGS, AND BIOLOGICALS UNDER OPD PPS.

    (a) In General.--Section 1833(t)(6)(A)(ii) (42 U.S.C. 
1395l(t)(6)(A)(ii)) is amended by inserting ``or temperature monitored 
cryoablation'' after ``device of brachytherapy''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to devices furnished on or after April 1, 2001.

SEC. 407. 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 apply to 
items and services furnished on or after January 1, 2001.

        Subtitle B--Provisions Relating to Physicians' Services

SEC. 411. GAO STUDIES RELATING TO PHYSICIANS' SERVICES.

    (a) Study of Specialist Physicians' Services Furnished in 
Physicians' Offices and Hospital Outpatient Department Services.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study to examine the appropriateness of 
        furnishing in physicians' offices specialist physicians' 
        services (such as gastrointestinal endoscopic physicians' 
        services) which are ordinarily furnished in hospital outpatient 
        departments. In conducting this study, the Comptroller General 
        shall--
                    (A) review available scientific and clinical 
                evidence about the safety of performing procedures in 
                physicians' offices and hospital outpatient 
                departments;
                    (B) 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 such specialist physicians' 
                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
                    (C) assess the implications for access to care for 
                medicare beneficiaries if the medicare program were not 
                to cover such services in physicians' offices.
            (2) Report.--Not later than July 1, 2001, the Comptroller 
        General shall submit to Congress a report on such study and 
        include such recommendations as the Comptroller General 
        determines to be appropriate.
    (b) Study of the Resource-Based Practice Expense System.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the refinements to the practice 
        expense relative value units during the transition to a 
        resource-based practice expense system for physician payments 
        under the medicare program under title XVIII of the Social 
        Security Act. Such study shall examine how the Secretary of 
        Health and Human Services has accepted and used the practice 
        expense data submitted under section 212 of BBRA (113 Stat. 
        1501A-350).
            (2) Report.--Not later than July 1, 2001, the Comptroller 
        General shall submit to Congress a report on the study 
        conducted under paragraph (1) together with recommendations 
        regarding--
                    (A) improvements in the process for acceptance and 
                use of practice expense data under section 212 of BBRA;
                    (B) any change or adjustment that is appropriate to 
                ensure full access to a spectrum of care for 
                beneficiaries under the medicare program; and
                    (C) the appropriateness of payments to physicians.

SEC. 412. PHYSICIAN GROUP PRACTICE DEMONSTRATION.

    (a) In General.--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.
        Such projects shall focus on the efficiencies of furnishing 
        health care in a group-practice setting as compared to the 
        efficiencies of furnishing health care in other health care 
        delivery systems.
            ``(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 requires, 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 that 
        market 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 demonstration 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 demonstration 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 demonstration 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 demonstration 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 the enactment of this section, and biennially thereafter for six 
years, the Secretary shall report to 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.''.
    (b) GAO Report.--Not later than 2 years after the date on which the 
demonstration project under section 1866A of the Social Security Act, 
as added by subsection (a), is implemented, the Comptroller General of 
the United States shall submit to Congress a report on such 
demonstration project. The report shall include such recommendations 
with respect to changes to the demonstration project that the 
Comptroller General determines appropriate.

SEC. 413. STUDY ON ENROLLMENT PROCEDURES FOR GROUPS THAT RETAIN 
              INDEPENDENT CONTRACTOR PHYSICIANS.

    (a) In General.--The Comptroller General of the United States shall 
conduct a study of the current medicare enrollment process for groups 
that retain independent contractor physicians with particular emphasis 
on hospital-based physicians, such as emergency department staffing 
groups. In conducting the evaluation, the Comptroller General shall 
consult with groups that retain independent contractor physicians and 
shall--
            (1) review the issuance of individual medicare provider 
        numbers and the possible medicare program integrity 
        vulnerabilities of the current process;
            (2) review direct and indirect costs associated with the 
        current process incurred by the medicare program and groups 
        that retain independent contractor physicians;
            (3) assess the effect on program integrity by the 
        enrollment of groups that retain independent contractor 
        hospital-based physicians; and
            (4) 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 Comptroller General shall submit to Congress a report 
on the study conducted under subsection (a).

                       Subtitle C--Other Services

SEC. 421. 1-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS; REPORT ON 
              STANDARDS FOR SUPERVISION OF PHYSICAL THERAPY ASSISTANTS.

    (a) In General.--Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) is 
amended by striking ``2000 and 2001.'' and inserting ``2000, 2001, and 
2002.''.
    (b) Conforming Amendment To Continue Focused Medical Reviews of 
Claims During Moratorium Period.--Section 221(a)(2) of BBRA (113 Stat. 
1501A-351) is amended by striking ``(under the amendment made by 
paragraph (1)(B))''.
    (c) Study on Standards for Supervision of Physical Therapist 
Assistants.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study of the implications--
                    (A) of eliminating the ``in the room'' supervision 
                requirement for medicare payment for services of 
                physical therapy assistants who are supervised by 
                physical therapists; and
                    (B) of such requirement on the cap imposed under 
                section 1833(g) of the Social Security Act (42 U.S.C. 
                1395l(g)) on physical therapy services.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the study conducted under paragraph (1).

SEC. 422. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

    (a) Update.--
            (1) In general.--The last sentence of section 1881(b)(7) 
        (42 U.S.C. 1395rr(b)(7)) is amended by striking ``for such 
        services furnished on or after January 1, 2001, by 1.2 
        percent'' and inserting ``for such services furnished on or 
        after January 1, 2001, by 2.4 percent''.
            (2) Prohibition on Exemptions.--
                    (A) In general.--Subject to subparagraph (B), the 
                Secretary of Health and Human Services may not provide 
                for an exception under section 1881(b)(7) of the Social 
                Security Act (42 U.S.C. 1395rr(b)(7)) on or after 
                December 31, 2000.
                    (B) Special rules for 2000.--
                            (i) In general.--Any exemption rate under 
                        such section 1881(b)(7) in effect on December 
                        31, 2000, shall continue in effect so long as 
                        such rate is greater than the composite rate as 
                        updated by the amendment made by paragraph (1).
                            (ii) Resubmission of certain 
                        applications.--In the case of an application 
                        for an exemption rate under such section that 
                        was filed by a facility during 2000 that was 
                        not approved by the Secretary of Health and 
                        Human Services, the facility may submit an 
                        application for an exemption rate for that year 
                        by not later than July 1, 2001.
    (b) Development of ESRD Market Basket.--
            (1) Development.--The Secretary of Health and Human 
        Services shall collect data and develop an ESRD market basket 
        whereby the Secretary can estimate, before the beginning of a 
        year, the percentage by which the costs for the year of the mix 
        of labor and nonlabor goods and services included in the ESRD 
        composite rate under section 1881(b)(7) of the Social Security 
        Act (42 U.S.C. 1395rr(b)(7)) will exceed the costs of such mix 
        of goods and services for the preceding year. In developing 
        such index, the Secretary may take into account measures of 
        changes in--
                    (A) technology used in furnishing dialysis 
                services;
                    (B) the manner or method of furnishing dialysis 
                services; and
                    (C) the amounts by which the payments under such 
                section for all services billed by a facility for a 
                year exceed the aggregate allowable audited costs of 
                such services for such facility for such year.
            (2) Report.--The Secretary of Health and Human Services 
        shall submit to Congress a report on the index developed under 
        paragraph (1) no later than July 1, 2002, and shall include in 
        the report recommendations on the appropriateness of an annual 
        or periodic update mechanism for renal dialysis services under 
        the medicare program under title XVIII of the Social Security 
        Act based on such index.
    (c) Inclusion of Additional Services in Composite Rate.--
            (1) Development.--The Secretary of Health and Human 
        Services shall develop a system which includes, to the maximum 
        extent feasible, in the composite rate used for payment under 
        section 1881(b)(7) of the Social Security Act (42 U.S.C. 
        1395rr(b)(7)), payment for clinical diagnostic laboratory tests 
        and drugs (including drugs paid under section 1881(b)(11)(B) of 
        such Act (42 U.S.C. 1395rr(b)(11)(B)) that are routinely used 
        in furnishing dialysis services to medicare beneficiaries but 
        which are currently separately billable by renal dialysis 
        facilities.
            (2) Report.--The Secretary shall include, as part of the 
        report submitted under subsection (b)(2), a report on the 
        system developed under paragraph (1) and recommendations on the 
        appropriateness of incorporating the system into medicare 
        payment for renal dialysis services.
    (d) GAO Study on Access to Services.--
            (1) Study.--The Comptroller General of the United States 
        shall study access of medicare beneficiaries to renal dialysis 
        services. Such study shall include whether there is a 
        sufficient supply of facilities to furnish needed renal 
        dialysis services, whether medicare payment levels are 
        appropriate, taking into account audited costs of facilities 
        for all services furnished, to ensure continued access to such 
        services, and improvements in access (and quality of care) that 
        may result in the increased use of long nightly and short daily 
        hemodialysis modalities.
            (2) Report.--Not later than January 1, 2003, the 
        Comptroller General shall submit to Congress a report on the 
        study conducted under paragraph (1).

SEC. 423. PAYMENT FOR AMBULANCE SERVICES.

    (a) Restoration of Full CPI Increase for 2001.--Section 1834(l)(3) 
(42 U.S.C. 1395m(l)(3)) is amended by striking ``reduced in the case of 
2001 and 2002'' each place it appears and inserting ``reduced in the 
case of 2002''.
    (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, beginning on the date on which the 
Secretary implements such fee schedule, such phase-in shall provide for 
full payment of any national mileage rate for ambulance services 
provided by suppliers that are paid by carriers in any of the 50 States 
where payment by a carrier for such services for all such suppliers in 
such State did not, prior to the implementation of the fee schedule, 
include a separate amount for all mileage within the county from which 
the beneficiary is transported''.
    (c) Effective Date.--The amendment made by subsection (a) applies 
to services furnished on or after the date on which the Secretary of 
Health and Human Services implements the fee schedule under section 
1834(l) of the Social Security Act (42 U.S.C. 1395m(l)).

SEC. 424. 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 (113 
Stat. 1501A-354) 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 (113 Stat. 1501A-354) 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. 425. FULL UPDATE FOR DURABLE MEDICAL EQUIPMENT.

    (a) In General.--Section 1834(a)(14) (42 U.S.C. 1395m(a)(14)) is 
amended--
            (1) by redesignating subparagraph (D) as subparagraph (F);
            (2) in subparagraph (C)--
                    (A) by striking ``through 2002'' and inserting 
                ``through 2000''; and
                    (B) by striking ``and'' at the end; and
            (3) by inserting after subparagraph (C) the following new 
        subparagraphs:
                    ``(D) for 2001, the percentage increase in the 
                Consumer Price Index for all urban consumers (U.S. city 
                average) for the 12-month period ending with June 2000;
                    ``(E) for 2002, 0 percentage points; and''.
    (b) Conforming Amendments to BBRA.--Subsection (a) of section 228 
of BBRA (113 Stat. 1501A-356) is amended--
            (1) in the matter preceding paragraph (1), by striking 
        ``for such items'';
            (2) in paragraph (1), by inserting ``oxygen and oxygen 
        equipment for'' after ``(1)''; and
            (3) in paragraph (2), by inserting ``all such covered items 
        for'' after ``(2)''.
    (c) Effective Date.--The amendments made by subsection (b) shall 
take effect as if included in the enactment of BBRA.

SEC. 426. FULL UPDATE FOR ORTHOTICS AND PROSTHETICS.

    Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
            (1) by redesignating clause (vi) as clause (viii);
            (2) in clause (v)--
                    (A) by striking ``through 2002'' and inserting 
                ``through 2000''; and
                    (B) by striking ``and'' at the end; and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) for 2001, the percentage increase in 
                        the consumer price index for all urban 
                        consumers (U.S. city average) for the 12-month 
                        period ending with June 2000;
                            ``(vii) for 2002, 1 percent; and''.

SEC. 427. ESTABLISHMENT OF SPECIAL PAYMENT PROVISIONS AND REQUIREMENTS 
              FOR PROSTHETICS AND CERTAIN CUSTOM FABRICATED ORTHOTIC 
              ITEMS.

    (a) In General.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)) is 
amended by adding at the end the following:
                    ``(F) Special payment rules for certain prosthetics 
                and custom fabricated orthotics.--
                            ``(i) In general.--No payment shall be made 
                        under this subsection for an item of custom 
                        fabricated orthotics described in clause (ii) 
                        or for an item of prosthetics unless such item 
                        is--
                                    ``(I) furnished by a qualified 
                                practitioner; and
                                    ``(II) fabricated by a qualified 
                                practitioner or a qualified supplier at 
                                a facility that meets such criteria as 
                                the Secretary determines appropriate.
                            ``(ii) Description of custom fabricated 
                        item.--
                                    ``(I) In general.--An item 
                                described in this clause is an item of 
                                custom fabricated orthotics that 
                                requires education, training, and 
                                experience to custom fabricate and that 
                                is included in a list established by 
                                the Secretary in subclause (II). Such 
                                an item does not include shoes and shoe 
                                inserts.
                                    ``(II) List of items.--The 
                                Secretary, in consultation with 
                                appropriate experts in orthotics 
                                (including national organizations 
                                representing manufacturers of 
                                orthotics), shall establish and update 
                                as appropriate a list of items to which 
                                this subparagraph applies. No item may 
                                be included in such list unless the 
                                item is individually fabricated for the 
                                patient over a positive model of the 
                                patient.
                            ``(iii) Qualified practitioner defined.--In 
                        this subparagraph, the term `qualified 
                        practitioner' means a physician or other 
                        individual who--
                                    ``(I) is a qualified physical 
                                therapist or a qualified occupational 
                                therapist;
                                    ``(II) in the case of a State that 
                                provides for the licensing of orthotics 
                                and prosthetics, is licensed in 
                                orthotics or prosthetics by the State 
                                in which the item is supplied; or
                                    ``(III) in the case of a State that 
                                does not provide for the licensing of 
                                orthotics and prosthetics, is 
                                specifically trained and educated to 
                                provide or manage the provision of 
                                prosthetics and custom-designed or 
                                fabricated orthotics, and is certified 
                                by the American Board for Certification 
                                in Orthotics and Prosthetics, Inc. or 
                                by the Board for Orthotist/Prosthetist 
                                Certification, or is credentialed and 
                                approved by a program that the 
                                Secretary determines, in consultation 
                                with appropriate experts in orthotics 
                                and prosthetics, has training and 
                                education standards that are necessary 
                                to provide such prosthetics and 
                                orthotics.
                            ``(iv) Qualified supplier defined.--In this 
                        subparagraph, the term `qualified supplier' 
                        means any entity that is accredited by the 
                        American Board for Certification in Orthotics 
                        and Prosthetics, Inc. or by the Board for 
                        Orthotist/Prosthetist Certification, or 
                        accredited and approved by a program that the 
                        Secretary determines has accreditation and 
                        approval standards that are essentially 
                        equivalent to those of such Board.''.
    (b) Effective Date.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Health and Human Services shall 
promulgate revised regulations to carry out the amendment made by 
subsection (a) using a negotiated rulemaking process under subchapter 
III of chapter 5 of title 5, United States Code.
    (c) GAO Study and Report.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on HCFA Ruling 96-1, issued on September 
        1, 1996, with respect to distinguishing orthotics from durable 
        medical equipment under the medicare program under title XVIII 
        of the Social Security Act. The study shall assess the 
        following matters:
                    (A) The compliance of the Secretary of Health and 
                Human Services with the Administrative Procedures Act 
                (under chapter 5 of title 5, United States Code) in 
                making such ruling.
                    (B) The potential impact of such ruling on the 
                health care furnished to medicare beneficiaries under 
                the medicare program, especially those beneficiaries 
                with degenerative musculoskeletal conditions.
                    (C) The potential for fraud and abuse under the 
                medicare program if payment were provided for orthotics 
                used as a component of durable medical equipment only 
                when made under the special payment provision for 
                certain prosthetics and custom fabricated orthotics 
                under section 1834(h)(1)(F) of the Social Security Act, 
                as added by subsection (a) and furnished by qualified 
                practitioners under that section.
                    (D) The impact on payments under titles XVIII and 
                XIX of the Social Security Act if such ruling were 
                overturned.
            (2) Report.--Not later than 6 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1).

SEC. 428. REPLACEMENT OF PROSTHETIC DEVICES AND PARTS.

    (a) In General.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)), as 
amended by section 427(a), is further amended by adding at the end the 
following new subparagraph:
                    ``(G) Replacement of prosthetic devices and 
                parts.--
                            ``(i) In general.--Payment shall be made 
                        for the replacement of prosthetic devices which 
                        are artificial limbs, or for the replacement of 
                        any part of such devices, without regard to 
                        continuous use or useful lifetime restrictions 
                        if an ordering physician determines that the 
                        provision of a replacement device, or a 
                        replacement part of such a device, is necessary 
                        because of any of the following:
                                    ``(I) A change in the physiological 
                                condition of the patient.
                                    ``(II) An irreparable change in the 
                                condition of the device, or in a part 
                                of the device.
                                    ``(III) The condition of the 
                                device, or the part of the device, 
                                requires repairs and the cost of such 
                                repairs would be more than 60 percent 
                                of the cost of a replacement device, 
                                or, as the case may be, of the part 
                                being replaced.
                            ``(ii) Confirmation may be required if 
                        replacement device or part is less than 3 years 
                        old.--If a physician determines that a 
                        replacement device, or a replacement part, is 
                        necessary pursuant to clause (i)--
                                    ``(I) such determination shall be 
                                controlling; and
                                    ``(II) such replacement device or 
                                part shall be deemed to be reasonable 
                                and necessary for purposes of section 
                                1862(a)(1)(A);
                        except that if the device, or part, being 
                        replaced is less than 3 years old (calculated 
                        from the date on which the beneficiary began to 
                        use the device or part), the Secretary may also 
                        require confirmation of necessity of the 
                        replacement device, or, as the case may be, the 
                        replacement part.''.
    (b) Preemption of Rule.--The provisions of section 1834(h)(1)(G) as 
added by subsection (a) shall supersede any rule that as of the date of 
the enactment of this Act may have applied a 5-year replacement rule 
with regard to prosthetic devices.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to items replaced on or after April 1, 2001.

SEC. 429. REVISED PART B PAYMENT FOR DRUGS AND BIOLOGICALS AND RELATED 
              SERVICES.

    (a) Recommendations for Revised Payment Methodology for Drugs and 
Biologicals.--
            (1) Study.--
                    (A) In general.--The Comptroller General of the 
                United States shall conduct a study on the 
                reimbursement for drugs and biologicals under the 
                current medicare payment methodology (provided under 
                section 1842(o) of the Social Security Act (42 U.S.C. 
                1395u(o)) and for related services under part B of 
                title XVIII of such Act. In the study, the Comptroller 
                General shall--
                            (i) identify the average prices at which 
                        such drugs and biologicals are acquired by 
                        physicians and other suppliers;
                            (ii) quantify the difference between such 
                        average prices and the reimbursement amount 
                        under such section; and
                            (iii) determine the extent to which (if 
                        any) payment under such part is adequate to 
                        compensate physicians, providers of services, 
                        or other suppliers of such drugs and 
                        biologicals for costs incurred in the 
                        administration, handling, or storage of such 
                        drugs or biologicals.
                    (B) Consultation.--In conducting the study under 
                subparagraph (A), the Comptroller General shall consult 
                with physicians, providers of services, and suppliers 
                of drugs and biologicals under the medicare program 
                under title XVIII of such Act, as well as other 
                organizations involved in the distribution of such 
                drugs and biologicals to such physicians, providers of 
                services, and suppliers.
            (2) Report.--Not later than 9 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress and to the Secretary of Health and Human Services a 
        report on the study conducted under this subsection, and shall 
        include in such report recommendations for revised payment 
        methodologies described in paragraph (3).
            (3) Recommendations for revised payment methodologies.--
                    (A) In general.--The Comptroller General shall 
                provide specific recommendations for revised payment 
                methodologies for reimbursement for drugs and 
                biologicals and for related services under the medicare 
                program. The Comptroller General may include in the 
                recommendations--
                            (i) proposals to make adjustments under 
                        subsection (c) of section 1848 of the Social 
                        Security Act (42 U.S.C. 1395w-4) for the 
                        practice expense component of the physician fee 
                        schedule under such section for the costs 
                        incurred in the administration, handling, or 
                        storage of certain categories of such drugs and 
                        biologicals, if appropriate; and
                            (ii) proposals for new payments to 
                        providers of services or suppliers for such 
                        costs, if appropriate.
                    (B) Ensuring patient access to care.--In making 
                recommendations under this paragraph, the Comptroller 
                General shall ensure that any proposed revised payment 
                methodology is designed to ensure that medicare 
                beneficiaries continue to have appropriate access to 
                health care services under the medicare program.
                    (C) Matters considered.--In making recommendations 
                under this paragraph, the Comptroller General shall 
                consider--
                            (i) the method and amount of reimbursement 
                        for similar drugs and biologicals made by large 
                        group health plans;
                            (ii) as a result of any revised payment 
                        methodology, the potential for patients to 
                        receive inpatient or outpatient hospital 
                        services in lieu of services in a physician's 
                        office; and
                            (iii) the effect of any revised payment 
                        methodology on the delivery of drug therapies 
                        by hospital outpatient departments.
                    (D) Coordination with bbra study.--In making 
                recommendations under this paragraph, the Comptroller 
                General shall conclude and take into account the 
                results of the study provided for under section 213(a) 
                of BBRA (113 Stat. 1501A-350).
    (b) Implementation of New Payment Methodology.--
            (1) In general.--Notwithstanding any other provision of 
        law, based on the recommendations contained in the report under 
        subsection (a), the Secretary of Health and Human Services, 
        subject to paragraph (2), shall revise the payment methodology 
        under section 1842(o) of the Social Security Act (42 U.S.C. 
        1395u(o)) for drugs and biologicals furnished under part B of 
        the medicare program. To the extent the Secretary determines 
        appropriate, the Secretary may provide for the adjustments to 
        payments amounts referred to in subsection (a)(3)(A)(i) or 
        additional payments referred to in subsection (a)(2)(A)(ii).
            (2) Limitation.--In revising the payment methodology under 
        paragraph (1), in no case may the estimated aggregate payments 
        for drugs and biologicals under the revised system (including 
        additional payments referred to in subsection (a)(3)(A)(ii)) 
        exceed the aggregate amount of payment for such drugs and 
        biologicals, as projected by the Secretary, that would have 
        been made under the payment methodology in effect under such 
        section 1842(o).
    (c) Temporary Injunction Against Reductions in Payment Rates.--
Notwithstanding any other provision of law, the Administrator of the 
Health Care Financing Administration may not directly or indirectly 
increase or decrease the rates of reimbursement (in effect on October 
1, 2000) for drugs and biologicals under the current medicare payment 
methodology (provided under section 1842(o) of such Act (42 U.S.C. 
1395u(o)) until such time as the Secretary has reviewed the report 
submitted under subsection (a)(2).

SEC. 430. QUALIFICATIONS FOR COMMUNITY MENTAL HEALTH CENTERS.

    (a) Medicare Program.--Section 1861(ff)(3)(B) (42 U.S.C. 
1395x(ff)(3)(B)) is amended by striking ``entity'' and all that follows 
and inserting the following: ``entity that--
            ``(i)(I) provides the mental health services described in 
        section 1913(c)(1) of the Public Health Service Act; or
            ``(II) in the case of an entity operating in a State that 
        by law precludes the entity from providing itself the service 
        described in subparagraph (E) of such section, provides for 
        such service by contract with an approved organization or 
        entity (as determined by the Secretary);
            ``(ii) meets applicable licensing or certification 
        requirements for community mental health centers in the State 
        in which it is located; and
            ``(iii) meets such additional conditions as the Secretary 
        shall specify to ensure (I) the health and safety of 
        individuals being furnished such services, (II) the effective 
        and efficient furnishing of such services, and (III) the 
        compliance of such entity with the criteria described in 
        section 1931(c)(1) of the Public Health Service Act.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to community mental health centers with respect to 
services furnished on or after the first day of the third month 
beginning after the date of the enactment of this Act.

SEC. 431. MODIFICATION OF MEDICARE BILLING REQUIREMENTS FOR CERTAIN 
              INDIAN PROVIDERS.

    (a) In General.--Section 1880(a) (42 U.S.C. 1395qq(a)) is amended 
by adding at the end the following new sentence: ``A hospital or a 
free-standing ambulatory care clinic (as defined by the Secretary), 
whether operated by the Indian Health Service or by an Indian tribe or 
tribal organization (as those terms are defined in section 4 of the 
Indian Health Care Improvement Act), shall be eligible for payments for 
services for which payment is made pursuant to section 1848, 
notwithstanding sections 1814(c) and 1835(d), if and for so long as it 
meets all of the requirements which are applicable generally to such 
payments, services, hospitals, and clinics.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to services furnished on or after January 1, 2001.

SEC. 432. GAO STUDY ON COVERAGE OF SURGICAL FIRST ASSISTING SERVICES OF 
              CERTIFIED REGISTERED NURSE FIRST ASSISTANTS.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the effect on the medicare program under title XVIII 
of the Social Security Act and on medicare beneficiaries of coverage 
under the program of surgical first assisting services of certified 
registered nurse first assistants. The Comptroller General shall 
consider the following when conducting the study:
            (1) Any impact on the quality of care furnished to medicare 
        beneficiaries by reason of such coverage.
            (2) Appropriate education and training requirements for 
        certified registered nurse first assistants who furnish such 
        first assisting services.
            (3) Appropriate rates of payment under the program to such 
        certified registered nurse first assistants for furnishing such 
        services, taking into account the costs of compensation, 
        overhead, and supervision attributable to certified registered 
        nurse first assistants.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General shall submit to Congress a report 
on the study conducted under subsection (a).

SEC. 433. MEDPAC STUDY AND REPORT ON MEDICARE REIMBURSEMENT FOR 
              SERVICES PROVIDED BY CERTAIN PROVIDERS.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study on the appropriateness of the current payment rates under the 
medicare program under title XVIII of the Social Security Act for 
services provided by a--
            (1) certified nurse-midwife (as defined in subsection 
        (gg)(2) of section 1861 of such Act (42 U.S.C. 1395x);
            (2) physician assistant (as defined in subsection 
        (aa)(5)(A) of such section);
            (3) nurse practitioner (as defined in such subsection); and
            (4) clinical nurse specialist (as defined in subsection 
        (aa)(5)(B) of such section).
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Commission shall submit to Congress a report 
on the study conducted under subsection (a), together with any 
recommendations for legislation that the Commission determines to be 
appropriate as a result of such study.

SEC. 434. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF SERVICES 
              PROVIDED BY CERTAIN NONPHYSICIAN PROVIDERS.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        shall conduct a study to determine the appropriateness of 
        providing coverage under the medicare program under title XVIII 
        of the Social Security Act for services provided by a--
                    (A) surgical technologist;
                    (B) marriage counselor;
                    (C) marriage and family therapist;
                    (D) pastoral care counselor; and
                    (E) licensed professional counselor of mental 
                health.
            (2) Costs to program.--The study shall consider the short-
        term and long-term benefits, and costs to the medicare program, 
        of providing the coverage described in paragraph (1).
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Commission shall submit to Congress a report 
on the study conducted under subsection (a), together with any 
recommendations for legislation that the Commission determines to be 
appropriate as a result of such study.

SEC. 435. GAO STUDY AND REPORT ON THE COSTS OF EMERGENCY AND MEDICAL 
              TRANSPORTATION SERVICES.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the costs of providing emergency and medical 
transportation services across the range of acuity levels of conditions 
for which such transportation services are provided.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Comptroller General shall submit to Congress 
a report on the study conducted under subsection (a), together with 
recommendations for any changes in methodology or payment level 
necessary to fairly compensate suppliers of emergency and medical 
transportation services and to ensure the access of beneficiaries under 
the medicare program under title XVIII of the Social Security Act.

SEC. 436. GAO STUDIES AND REPORTS ON MEDICARE PAYMENTS.

    (a) GAO Study on HCFA Post-Payment Audit Process.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the post-payment audit process under 
        the medicare program under title XVIII of the Social Security 
        Act as such process applies to physicians, including the proper 
        level of resources that the Health Care Financing 
        Administration should devote to educating physicians 
        regarding--
                    (A) coding and billing;
                    (B) documentation requirements; and
                    (C) the calculation of overpayments.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1) 
        together with specific recommendations for changes or 
        improvements in the post-payment audit process described in 
        such paragraph.
    (b) GAO Study on Administration and Oversight.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the aggregate effects of regulatory, 
        audit, oversight, and paperwork burdens on physicians and other 
        health care providers participating in the medicare program 
        under title XVIII of the Social Security Act.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1) 
        together with recommendations regarding any area in which--
                    (A) a reduction in paperwork, an ease of 
                administration, or an appropriate change in oversight 
                and review may be accomplished; or
                    (B) additional payments or education are needed to 
                assist physicians and other health care providers in 
                understanding and complying with any legal or 
                regulatory requirements.

SEC. 437. MEDPAC STUDY ON ACCESS TO OUTPATIENT PAIN MANAGEMENT 
              SERVICES.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study on the barriers to coverage and payment for outpatient 
interventional pain medicine procedures under the medicare program 
under title XVIII of the Social Security Act. Such study shall 
examine--
            (1) the specific barriers imposed under the medicare 
        program on the provision of pain management procedures in 
        hospital outpatient departments, ambulatory surgery centers, 
        and physicians' offices; and
            (2) the consistency of medicare payment policies for pain 
        management procedures in those different settings.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Commission shall submit to Congress a report on the 
study.

             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

SEC. 501. 2-YEAR ADDITIONAL DELAY IN APPLICATION OF 15 PERCENT 
              REDUCTION ON PAYMENT LIMITS FOR HOME HEALTH SERVICES.

    (a) In General.--Section 1895(b)(3)(A)(i) (42 U.S.C. 
1395fff(b)(3)(A)(i)) is amended--
            (1) by redesignating subclause (II) as subclause (III);
            (2) in subclause (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 each of the two 12-month 
                                periods 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) Change in Report.--Section 302(c) of BBRA (113 Stat. 1501A-360) 
is amended--
            (1) by striking ``Not later than'' and all that follows 
        through ``(42 U.S.C. 1395fff)'' and inserting ``Not later than 
        April 1, 2003''; and
            (2) by striking ``Secretary'' and inserting ``Comptroller 
        General of the United States''.
    (c) Case Mix Adjustment Corrections.--
            (1) In general.--Section 1895(b)(3)(B) (42 U.S.C. 
        1395fff(b)(3)(B)) is amended by adding at the end the following 
        new clause:
                            ``(iv) Adjustment for case mix changes.--
                        Insofar as the Secretary determines that the 
                        adjustments under paragraph (4)(A)(i) for a 
                        previous fiscal year (or estimates that such 
                        adjustments for a future fiscal year) did (or 
                        are likely to) result in a change in aggregate 
                        payments under this subsection during the 
                        fiscal year that are a result of changes in the 
                        coding or classification of different units of 
                        services that do not reflect real changes in 
                        case mix, the Secretary may adjust the standard 
                        prospective payment amount (or amounts) under 
                        paragraph (3) for subsequent fiscal years so as 
                        to eliminate the effect of such coding or 
                        classification changes.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to episodes concluding on or after October 1, 2001.

SEC. 502. RESTORATION OF FULL HOME HEALTH MARKET BASKET UPDATE FOR HOME 
              HEALTH SERVICES FOR FISCAL YEAR 2001.

    (a) In General.--Section 1861(v)(1)(L)(x) (42 U.S.C. 
1395x(v)(1)(L)(x)) is amended--
            (1) by striking ``2001,''; and
            (2) by adding at the end the following: ``With respect to 
        cost reporting periods beginning during fiscal year 2001, the 
        update to any limit under this subparagraph shall be the home 
        health market basket index.''.
    (b) Special Rule for Payment for Fiscal Year 2001 Based on Adjusted 
Prospective Payment Amounts.--
            (1) In general.--Notwithstanding the amendments made by 
        subsection (a), for purposes of making payments under section 
        1895(b) of the Social Security Act (42 U.S.C. 1395fff(b)) for 
        home health services for fiscal year 2001, the Secretary of 
        Health and Human Services shall--
                    (A) with respect to episodes and visits ending on 
                or after October 1, 2000, and before April 1, 2001, use 
                the final standardized and budget neutral prospective 
                payment amounts for 60 day episodes and standardized 
                average per visit amounts for fiscal year 2001 as 
                published by the Secretary in the Federal Register of 
                July 3, 2000 (65 Federal Register 41128-41214); and
                    (B) with respect to episodes and visits ending on 
                or after April 1, 2001, and before October 1, 2001, use 
                such amounts increased by 2.2 percent.
            (2) No effect on other payments or determinations.--The 
        Secretary shall not take the provisions of paragraph (1) into 
        account for purposes of payments, determinations, or budget 
        neutrality adjustments under section 1895 of the Social 
        Security Act.

SEC. 503. TEMPORARY TWO-MONTH EXTENSION OF PERIODIC INTERIM PAYMENTS.

    (a) Temporary Extension.--Notwithstanding subsection (d) of section 
4603 of BBA (42 U.S.C. 1395fff note), as amended by section 5101(c)(2) 
of the Tax and Trade Relief Extension Act of 1998 (contained in 
division J of Public Law 105-277), the amendments made by subsection 
(b) of such section 4603 shall not take effect until December 1, 2000, 
in the case of a home health agency that was receiving periodic interim 
payments under section 1815(e)(2) as of September 30, 2000.
    (b) Payment Rule.--The amount of such periodic interim payment made 
to a home health agency by reason of subsection (a) during each of 
November and December, 2000, shall be equal to the amount of such 
payment made to the agency in their last full monthly periodic interim 
payment. Such amount of payment shall be included in the tentative 
settlement of the last cost report for the home health agency under the 
payment system in effect prior to the implementation of the prospective 
payment system under section 1895(b) of the Social Security Act (42 
U.S.C. 1395fff(b)).

SEC. 504. USE OF TELEHEALTH IN DELIVERY OF HOME HEALTH SERVICES.

    Section 1895 (42 U.S.C. 1395fff) is amended by adding at the end 
the following new subsection:
    ``(e) Construction Related to Home Health Services.--
            ``(1) Telecommunications.--Nothing in this section 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 by this section for such 
        units of service from furnishing services via a 
        telecommunication system if such services--
                    ``(A) do not substitute for in-person home health 
                services ordered as part of a plan of care certified by 
                a physician pursuant to section 1814(a)(2)(C) or 
                section 1835(a)(2)(A); and
                    ``(B) are not considered a home health visit for 
                purposes of eligibility or payment under this title.
            ``(2) Physician certification.--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.''.

SEC. 505. STUDY ON COSTS TO HOME HEALTH AGENCIES OF PURCHASING 
              NONROUTINE MEDICAL SUPPLIES.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on variations in prices paid by home health agencies 
furnishing home health services under the medicare program under title 
XVIII of the Social Security Act in purchasing nonroutine medical 
supplies, including ostomy supplies, and volumes if such supplies used, 
shall determine the effect (if any) of variations on prices and volumes 
in the provision of such services.
    (b) Report.--Not later than October 1, 2001, the Comptroller 
General shall submit to Congress a report on the study conducted under 
subsection (a), and shall include in the report recommendations 
respecting whether payment for nonroutine medical supplies furnished in 
connection with home health services should be made separately from the 
prospective payment system for such services.

SEC. 506. TREATMENT OF BRANCH OFFICES; GAO STUDY ON SUPERVISION OF HOME 
              HEALTH CARE PROVIDED IN ISOLATED RURAL AREAS.

    (a) 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 may 
        include forms of technology in determining what constitutes 
        ``supervision'' for purposes of determining a home health 
        agency's branch office status under paragraph (1).
    (b) GAO Study.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study of the provision of adequate supervision 
        to maintain quality of home health services delivered under the 
        medicare program under title XVIII of the Social Security Act 
        in isolated rural areas. The study shall evaluate the methods 
        that home health agency branches and subunits use to maintain 
        adequate supervision in the delivery of services to clients 
        residing in those areas, how these methods of supervision 
        compare to requirements that subunits independently meet 
        medicare conditions of participation, and the resources 
        utilized by subunits to meet such conditions.
            (2) Report.--Not later than January 1, 2002, the 
        Comptroller General shall submit to Congress a report on the 
        study conducted under paragraph (1). The report shall include 
        recommendations on whether exceptions are needed for subunits 
        and branches of home health agencies under the medicare program 
        to maintain access to the home health benefit or whether 
        alternative policies should be developed to assure adequate 
        supervision and access and recommendations on whether a 
        national standard for supervision is appropriate.

SEC. 507. CLARIFICATION OF THE HOMEBOUND DEFINITION UNDER THE MEDICARE 
              HOME HEALTH BENEFIT.

    (a) Clarification.--
            (1) In general.--Sections 1814(a) and 1835(a) (42 U.S.C. 
        1395f(a) and 1395n(a)) are each amended--
                    (A) in the last sentence, by striking ``, 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''; and
                    (B) by adding at the end the following new 
                sentences: ``Any absence of an individual from the home 
                attributable to the need to receive health care 
                treatment, including regular absences for the purpose 
                of participating in therapeutic, psychosocial, or 
                medical treatment in an adult day-care program that is 
                licensed or certified by a State, or accredited, to 
                furnish adult day-care services in the State shall not 
                disqualify an individual from being considered to be 
                `confined to his home'. Any other absence of an 
                individual from the home shall not so disqualify an 
                individual if the absence is of infrequent or of 
                relatively short duration. For purposes of the 
                preceding sentence, any absence for the purpose of 
                attending a religious service shall be deemed to be an 
                absence of infrequent or short duration.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to items and services provided on or after the date 
        of enactment of this Act.
    (b) Study.--
            (1) In general.--The Comptroller General of the United 
        States shall conduct an evaluation of the effect of the 
        amendment on the cost of and access to home health services 
        under the medicare program under title XVIII of the Social 
        Security Act.
            (2) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Comptroller General shall submit to 
        Congress a report on the study conducted under paragraph (1).

SEC. 508. TEMPORARY INCREASE FOR HOME HEALTH SERVICES FURNISHED IN A 
              RURAL AREA.

    (a) Increase for 2001 and 2002.--In the case of a unit of home 
health service furnished in a rural area (as defined in section 
1886(d)(2)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(2)(D))) 
during 2001 or 2002, the Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall increase the 
payment amount otherwise made under section 1895 of such Act (42 U.S.C. 
1395fff) for such unit of service by 10 percent.
    (b) Additional Payment Not Built Into the Base.--The Secretary 
shall not include any additional payment made under subsection (a) in 
updating the standard prospective payment amount (or amounts) 
applicable to units of home health services furnished during a period, 
as increased by the home health applicable increase percentage for the 
fiscal year involved under section 1895(b)(3)(B) of the Social Security 
Act (42 U.S.C. 1395fff(b)(3)(B)).
    (c) Waiving Budget Neutrality.--The Secretary shall not reduce the 
standard prospective payment amount (or amounts) under section 1895 of 
the Social Security Act (42 U.S.C. 1395fff) applicable to units of home 
health services furnished during a period to offset the increase in 
payments resulting from the application of subsection (a).

             Subtitle B--Direct Graduate Medical Education

SEC. 511. INCREASE IN FLOOR FOR DIRECT GRADUATE MEDICAL EDUCATION 
              PAYMENTS.

    Section 1886(h)(2)(D)(iii) (42 U.S.C. 1395ww(h)(2)(D)(iii)) is 
amended--
            (1) in the heading, by striking ``in fiscal year 2001 at 70 
        percent of'' and inserting ``for''; and
            (2) by inserting after ``70 percent'' the following: ``, 
        and for the cost reporting period beginning during fiscal year 
        2002 shall not be less than 85 percent,''.

SEC. 512. CHANGE IN DISTRIBUTION FORMULA FOR MEDICARE+CHOICE-RELATED 
              NURSING AND ALLIED HEALTH EDUCATION COSTS.

    (a) In General.--Section 1886(l)(2)(C) (42 U.S.C. 1395ww(l)(2)(C)) 
is amended by striking all that follows ``multiplied by'' and inserting 
the following: ``the ratio of--
                            ``(i) the product of (I) the Secretary's 
                        estimate of the ratio of the amount of payments 
                        made under section 1861(v) to the hospital for 
                        nursing and allied health education activities 
                        for the hospital's cost reporting period ending 
                        in the second preceding fiscal year, to the 
                        hospital's total inpatient days for such 
                        period, and (II) the total number of inpatient 
                        days (as established by the Secretary) for such 
                        period which are attributable to services 
                        furnished to individuals who are enrolled under 
                        a risk sharing contract with an eligible 
                        organization under section 1876 and who are 
                        entitled to benefits under part A or who are 
                        enrolled with a Medicare+Choice organization 
                        under part C; to
                            ``(ii) the sum of the products determined 
                        under clause (i) for such cost reporting 
                        periods.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to portions of cost reporting periods occurring on or after January 1, 
2001.

      Subtitle C--Changes in Medicare Coverage and Appeals Process

SEC. 521. REVISIONS TO MEDICARE APPEALS PROCESS.

    (a) Conduct of Reconsiderations of Determinations by Independent 
Contractors.--Section 1869 (42 U.S.C. 1395ff) is amended to read as 
follows:

                       ``determinations; appeals

    ``Sec. 1869. (a) Initial Determinations.--
            ``(1) Promulgations of regulations.--The Secretary shall 
        promulgate regulations and make initial determinations with 
        respect to benefits under part A or part B in accordance with 
        those regulations for the following:
                    ``(A) The initial determination of whether an 
                individual is entitled to benefits under such parts.
                    ``(B) The initial determination of the amount of 
                benefits available to the individual under such parts.
                    ``(C) Any other initial determination with respect 
                to a claim for benefits under such parts, including an 
                initial determination by the Secretary that payment may 
                not be made, or may no longer be made, for an item or 
                service under such parts, an initial determination made 
                by a utilization and quality control peer review 
                organization under section 1154(a)(2), and an initial 
                determination made by an entity pursuant to a contract 
                (other than a contract under section 1852) with the 
                Secretary to administer provisions of this title or 
                title XI.
            ``(2) Deadlines for making initial determinations.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                promulgating regulations under paragraph (1), initial 
                determinations shall be concluded by not later than the 
                45-day period beginning on the date the fiscal 
                intermediary or the carrier, as the case may be, 
                receives a claim for benefits from an individual as 
                described in paragraph (1). Notice of such 
                determination shall be mailed to the individual filing 
                the claim before the conclusion of such 45-day period.
                    ``(B) Clean claims.--Subparagraph (A) shall not 
                apply with respect to any claim that does not meet the 
                requirements of section 1816(c)(2) or section 
                1842(c)(2).
            ``(3) Internal redeterminations.--
                    ``(A) In general.--In promulgating regulations 
                under paragraph (1) with respect to initial 
                determinations, such regulations shall provide for a 
                fiscal intermediary or a carrier to make a 
                redetermination with respect to a claim for benefits 
                that is denied in whole or in part.
                    ``(B) Limitations.--
                            ``(i) Appeals rights.--No initial 
                        determination may be reconsidered or appealed 
                        under subsection (b) unless the fiscal 
                        intermediary or carrier has made a 
                        redetermination of that initial determination 
                        under this paragraph.
                            ``(ii) Decision maker.--No redetermination 
                        may be made by any individual involved in the 
                        initial determination.
                    ``(C) Deadlines.--
                            ``(i) Filing for redetermination.--A 
                        redetermination under subparagraph (A) shall be 
                        available only if notice is filed with the 
                        Secretary to request the redetermination by not 
                        later than the end of the 180-day period 
                        beginning on the date the individual receives 
                        notice of the initial determination under 
                        paragraph (2).
                            ``(ii) Concluding redeterminations.--Except 
                        as provided in subsection (d), redeterminations 
                        shall be made and notice of the redetermination 
                        shall be provided in accordance with the 
                        medical needs of the individual, but no later 
                        than 30 days after the fiscal intermediary or 
                        the carrier, as the case may be, receives a 
                        request for a redetermination.
                    ``(D) Construction.--For purposes of the succeeding 
                provisions of this section a redetermination under this 
                paragraph shall be considered to be part of the initial 
                determination.
    ``(b) Appeal Rights.--
            ``(1) In general.--
                    ``(A) Reconsideration of initial determination.--
                (i) Subject to subparagraph (D), any individual 
                dissatisfied with any initial determination under 
                subsection (a)(1) shall be entitled to reconsideration 
                of the determination, and, subject to subparagraphs (D) 
                and (E), a hearing thereon by the Secretary to the same 
                extent as is provided in section 205(b) and to judicial 
                review of the Secretary's final decision after such 
                hearing as is provided in section 205(g). For purposes 
                of the preceding sentence, any reference to the 
                Commissioner of Social Security or the Social Security 
                Administration in subsection (g) or (l) of section 205 
                shall be considered a reference to the Secretary or the 
                Department of Health and Human Services, respectively.
                    ``(ii) In making determinations under this 
                subsection, local and national coverage determinations 
                that involve the consideration of medical facts of 
                application of medical judgment shall not be binding on 
                qualified independent contractors, administrative law 
                judges or the Departmental Appeals Board when 
                determining whether a particular item or service is 
                covered with respect to an individual making a claim 
                for benefit or the amount, duration or scope of an item 
                or service to which an individual making a claim for 
                benefits is eligible.
                    ``(B) Representation by provider or supplier.--
                            ``(i) In general.--Sections 206(a), 1102, 
                        and 1871 shall not be construed as authorizing 
                        the Secretary to prohibit an individual from 
                        being represented under this section by a 
                        person that furnishes or supplies the 
                        individual, directly or indirectly, with 
                        services or items, solely on the basis that the 
                        person furnishes or supplies the individual 
                        with such a service or item.
                            ``(ii) Mandatory waiver of right to payment 
                        from beneficiary.--Any person that furnishes 
                        services or items to an individual may not 
                        represent an individual under this section with 
                        respect to the issue described in section 
                        1879(a)(2) unless the person has waived any 
                        rights for payment from the beneficiary with 
                        respect to the services or items involved in 
                        the appeal.
                            ``(iii) Prohibition on payment for 
                        representation.--If a person furnishes services 
                        or items to an individual and represents the 
                        individual under this section, the person may 
                        not impose any financial liability on such 
                        individual in connection with such 
                        representation.
                            ``(iv) Requirements for representatives of 
                        a beneficiary.--The provisions of section 
                        205(j) and section 206 (other than subsection 
                        (a)(4) of such section) regarding 
                        representation of claimants shall apply to 
                        representation of an individual with respect to 
                        appeals under this section in the same manner 
                        as they apply to representation of an 
                        individual under those sections.
                    ``(C) Succession of rights in cases of 
                assignment.--The right of an individual to an appeal 
                under this section with respect to an item or service 
                may be assigned to the provider of services or supplier 
                of the item or service upon the written consent of such 
                individual using a standard form established by the 
                Secretary for such an assignment.
                    ``(D) Time limits for filing appeals.--
                            ``(i) Reconsiderations.--Reconsideration 
                        under subparagraph (A) shall be available only 
                        if the individual described in subparagraph (A) 
                        files notice with the Secretary to request 
                        reconsideration by not later than the end of 
                        the 180-day period beginning on the date the 
                        individual receives notice of the 
                        redetermination under subsection (a)(3), or 
                        within such additional time as the Secretary 
                        may allow.
                            ``(ii) Hearings conducted by the 
                        secretary.--The Secretary shall establish in 
                        regulations time limits for the filing of a 
                        request for a hearing by the Secretary in 
                        accordance with provisions in sections 205 and 
                        206.
                    ``(E) Amounts in controversy.--
                            ``(i) In general.--A hearing (by the 
                        Secretary) shall not be available to an 
                        individual under this section if the amount in 
                        controversy is less than $100, and judicial 
                        review shall not be available to the individual 
                        if the amount in controversy is less than 
                        $1,000.
                            ``(ii) Aggregation of claims.--In 
                        determining the amount in controversy, the 
                        Secretary, under regulations, shall allow two 
                        or more appeals to be aggregated if the appeals 
                        involve--
                                    ``(I) the delivery of similar or 
                                related services to the same individual 
                                by one or more providers of services or 
                                suppliers, or
                                    ``(II) common issues of law and 
                                fact arising from services furnished to 
                                two or more individuals by one or more 
                                providers of services or suppliers.
                    ``(F) Expedited proceedings.--
                            ``(i) Expedited determination.--In the case 
                        of an individual who has received notice by a 
                        provider of services that the provider of 
                        services plans--
                                    ``(I) to terminate services 
                                provided to an individual and a 
                                physician certifies that failure to 
                                continue the provision of such services 
                                is likely to place the individual's 
                                health at significant risk, or
                                    ``(II) to discharge the individual 
                                from the provider of services, the 
                                individual may request, in writing or 
                                orally, an expedited determination or 
                                an expedited reconsideration of an 
                                initial determination made under 
                                subsection (a)(1), as the case may be, 
                                and the Secretary shall provide such 
                                expedited determination or expedited 
                                reconsideration.
                        A reconsideration of a discharge from a 
                        hospital shall be conducted under this clause 
                        in accordance with the provisions of paragraphs 
                        (2), (3), and (4) of section 1154(e) as in 
                        effect on the date that precedes the date of 
                        the enactment of this subparagraph.
                            ``(ii) Expedited hearing.--In a hearing by 
                        the Secretary under this section, in which the 
                        moving party alleges that no material issues of 
                        fact are in dispute, the Secretary shall make 
                        an expedited determination as to whether any 
                        such facts are in dispute and, if not, shall 
                        render a decision expeditiously.
                    ``(G) Reopening and revision of determinations.--
                The Secretary may reopen or revise any initial 
                determination or reconsidered determination described 
                in this subsection under guidelines established by the 
                Secretary in regulations.
    ``(c) Conduct of Reconsiderations by Independent Contractors.--
            ``(1) In general.--The Secretary shall enter into contracts 
        with qualified independent contractors to conduct 
        reconsiderations of initial determinations made under 
        subparagraphs (B) and (C) of subsection (a)(1), if such 
        determinations involve either whether a particular item or 
        service is covered with respect to an individual making a claim 
        for benefits or the amount, duration, or scope of an item or 
        service to which an individual making a claim for benefits is 
        eligible. Contracts shall be for an initial term of three years 
        and shall be renewable on a triennial basis thereafter. This 
        subsection shall not apply to claims for persons described in 
        subparagraphs (B) and (C) of subsection (b)(1) that involve 
        only the amount of payment or the type of payment available 
        with respect to an item or service.
            ``(2) Qualified independent contractor defined.--For 
        purposes of this subsection, the term `qualified independent 
        contractor' means an entity or organization that is independent 
        of any organization under contract with the Secretary that 
        makes initial determinations under subsection (a)(1), and that 
        meets the requirements established by the Secretary consistent 
        with paragraph (3).
            ``(3) Requirements.--Any qualified independent contractor 
        entering into a contract with the Secretary under this 
        subsection shall meet all of the following requirements:
                    ``(A) In general.--The qualified independent 
                contractor shall perform such duties and functions and 
                assume such responsibilities as may be required by the 
                Secretary to carry out the provisions of this 
                subsection, and shall have sufficient training and 
                expertise in medical science and legal matters to make 
                reconsiderations under this subsection.
                    ``(B) Reconsiderations.--Subject to subsection 
                (b)(1)(A)(ii), the qualified independent contractor 
                shall review initial determinations. In the case of an 
                initial determination made with respect to whether an 
                item or service is reasonable and necessary for the 
                diagnosis or treatment of illness or injury (under 
                section 1862(a)(1)(A)), such review shall include 
                consideration of the facts and circumstances of the 
                initial determination by a physician or other 
                appropriate health care professional based on the 
                medical condition of the individual (including the 
                medical records of the individual) and any decisions 
                with respect to the reconsideration shall be based on 
                applicable information, including clinical experience 
                and valid, relevant medical, technical, and scientific 
                evidence.
                    ``(C) Deadlines for decisions.--
                            ``(i) Reconsiderations.--Except as provided 
                        in clauses (iii) and (iv), and in accordance 
                        with subsection (e), the qualified independent 
                        contractor shall conduct and conclude a 
                        reconsideration under subparagraph (B), and 
                        mail the notice of the decision with respect to 
                        the reconsideration in accordance with the 
                        medical needs of the individual but not later 
                        than the end of the 30-day period beginning on 
                        the date a request for reconsideration has been 
                        timely filed.
                            ``(ii) Consequences of failure to meet 
                        deadline.--In the case of a failure by the 
                        qualified independent contractor to mail the 
                        notice of the decision by the end of the period 
                        described in clause (i), or by the end of the 
                        applicable period described in subsection (e), 
                        or to provide notice by the end of the period 
                        described in clause (iii), as the case may be, 
                        the party requesting the reconsideration or 
                        appeal may request a hearing before the 
                        Secretary, notwithstanding any requirements for 
                        a reconsidered determination for purposes of 
                        the party's right to such hearing.
                            ``(iii) Expedited reconsiderations.--The 
                        qualified independent contractor shall perform 
                        an expedited reconsideration under subsection 
                        (b)(1)(F) as follows:
                                    ``(I) Deadline for decision.--
                                Notwithstanding section 216(j) and 
                                subject to clause (iv), in accordance 
                                with the medical needs of the 
                                individual and not later than the end 
                                of the 72-hour period beginning on the 
                                date the qualified independent 
                                contractor has received a request for 
                                such reconsideration and has received 
                                such medical or other records needed 
                                for such reconsideration, the qualified 
                                independent contractor shall provide 
                                notice (by telephone and in writing) to 
                                the individual and the provider of 
                                services and attending physician of the 
                                individual of the results of the 
                                reconsideration. Such reconsideration 
                                shall be conducted regardless of 
                                whether the provider of services or 
                                supplier will charge the individual for 
                                continued services or whether the 
                                individual will be liable for payment 
                                for such continued services.
                                    ``(II) Consultation with 
                                beneficiary.--In such reconsideration, 
                                the qualified independent contractor 
                                may solicit the views of the individual 
                                involved.
                                    ``(III) Special rule for hospital 
                                discharges.--A reconsideration of a 
                                discharge from a hospital shall be 
                                conducted under this clause in 
                                accordance with the provisions of 
                                paragraphs (2), (3), and (4) of section 
                                1154(e) as in effect on the date that 
                                precedes the date of the enactment of 
                                this subparagraph.
                            ``(iv) Extension.--In any case in which an 
                        individual requests an extension, or the 
                        qualified independent contractor determines 
that an extension is in the best interests of the individual, an 
extension of not greater than 14 days may be granted.
                    ``(D) Limitation on individual reviewing 
                determinations.--
                            ``(i) Physicians and health care 
                        professional.--No physician or health care 
                        professional under the employ of a qualified 
                        independent contractor may review--
                                    ``(I) determinations regarding 
                                health care services furnished to a 
                                patient if the physician or health care 
                                professional was directly responsible 
                                for furnishing such services; or
                                    ``(II) determinations regarding 
                                health care services provided in or by 
                                an institution, organization, or 
                                agency, if the physician or any member 
                                of the family of the physician or 
                                health care professional has, directly 
                                or indirectly, a significant financial 
                                interest in such institution, 
                                organization, or agency.
                            ``(ii) Family described.--For purposes of 
                        this paragraph, the family of a physician or 
                        health care professional includes the spouse 
                        (other than a spouse who is legally separated 
                        from the physician or health care professional 
                        under a decree of divorce or separate 
                        maintenance), children including stepchildren 
                        and legally adopted children), grandchildren, 
                        parents, and grandparents of the physician or 
                        health care professional.
                    ``(E) Explanation of decision.--Any decision with 
                respect to a reconsideration of a qualified independent 
                contractor shall be in writing, and shall include a 
                detailed explanation of the decision as well as a 
                discussion of the pertinent facts and applicable 
                regulations applied in making such decision, and in the 
                case of a determination of whether an item or service 
                is reasonable and necessary for the diagnosis or 
                treatment of illness or injury (under section 
                1862(a)(1)(A)) an explanation of the medical and 
                scientific rationale for the decision.
                    ``(F) Notice requirements.--Whenever a qualified 
                independent contractor makes a decision with respect to 
                a reconsideration under this subsection, the qualified 
                independent contractor shall promptly notify the entity 
                responsible for the payment of claims under part A or 
                part B of such decision.
                    ``(G) Dissemination of decisions on 
                reconsiderations.--Each qualified independent 
                contractor shall make available all decisions with 
                respect to reconsiderations of such qualified 
                independent contractors to fiscal intermediaries (under 
                section 1816), carriers (under section 1842), peer 
                review organizations (under part B of title XI), 
                Medicare+Choice organizations offering Medicare+Choice 
                plans under part C, other entities under contract with 
                the Secretary to make initial determinations under part 
                A or part B or title XI, and to the public. The 
                Secretary shall establish a methodology under which 
                qualified independent contractors shall carry out this 
                subparagraph.
                    ``(H) Ensuring consistency in decisions.--Each 
                qualified independent contractor shall monitor its 
                decisions with respect to reconsiderations to ensure 
                the consistency of such decisions with respect to 
                requests for reconsideration of similar or related 
                matters.
                    ``(I) Data collection.--
                            ``(i) In general.--Consistent with the 
                        requirements of clause (ii), a qualified 
                        independent contractor shall collect such 
                        information relevant to its functions, and keep 
                        and maintain such records in such form and 
                        manner as the Secretary may require to carry 
                        out the purposes of this section and shall 
                        permit access to and use of any such 
                        information and records as the Secretary may 
                        require for such purposes.
                            ``(ii) Type of data collected.--Each 
                        qualified independent contractor shall keep 
                        accurate records of each decision made, 
                        consistent with standards established by the 
                        Secretary for such purpose. Such records shall 
                        be maintained in an electronic database in a 
                        manner that provides for identification of the 
                        following:
                                    ``(I) Specific claims that give 
                                rise to appeals.
                                    ``(II) Situations suggesting the 
                                need for increased education for 
                                providers of services, physicians, or 
                                suppliers.
                                    ``(III) Situations suggesting the 
                                need for changes in national or local 
                                coverage policy.
                                    ``(IV) Situations suggesting the 
                                need for changes in local medical 
                                review policies.
                            ``(iii) Annual reporting.--Each qualified 
                        independent contractor shall submit annually to 
                        the Secretary (or otherwise as the Secretary 
                        may request) records maintained under this 
                        paragraph for the previous year.
                    ``(J) Hearings by the secretary.--The qualified 
                independent contractor shall--
                            ``(i) prepare such information as is 
                        required for an appeal of a decision of the 
                        contractor with respect to a reconsideration to 
                        the Secretary for a hearing, including as 
                        necessary, explanations of issues involved in 
                        the decision and relevant policies, and
                            ``(ii) participate in such hearings as 
                        required by the Secretary.
            ``(4) Number of qualified independent contractors.--The 
        Secretary shall enter into contracts with such number of 
        qualified independent contractors under this subsection as the 
        Secretary determines appropriate to carry out the provisions of 
        this subsection.
            ``(5) Limitation on qualified independent contractor 
        liability.--No qualified independent contractor having a 
        contract with the Secretary under this subsection and no person 
        who is employed by, or who has a fiduciary relationship with, 
        any such qualified independent contractor or who furnishes 
        professional services to such qualified independent contractor, 
        shall be held by reason of the performance of any duty, 
        function, or activity required or authorized pursuant to this 
        subsection or to a valid contract entered into under this 
        subsection, to have violated any criminal law, or to be civilly 
        liable under any law of the United States or of any State (or 
        political subdivision thereof) provided due care was exercised 
        in the performance of such duty, function, or activity.
    ``(d) Medical Exigent Process for Contractors.--
            ``(1) In general.--An individual may request, either orally 
        or in writing, a medical exigent review under subsection (b). 
        Such request shall be made to the contractor who made the 
        initial determination.
            ``(2) Conditions for granting a medical exigent review.--A 
        medical exigent review shall be granted where--
                    ``(A) the contractor determines that the 
                application of the standard time frame for conducting a 
                redetermination under subsection (a)(3) could seriously 
                jeopardize the life or health of the individual or such 
                individual's ability to attain, maintain, or regain 
                maximum function, or
                    ``(B) the individual submits a certification from a 
                physician that the jeopardy could occur.
            ``(3) Deadline for medical exigent reviews.--If an 
        individual is granted a medical exigent review under this 
        subsection, the review shall be conducted and notice of the 
        review shall be made, in accordance with the 
individual's medical needs, but no later than 72 hours after the 
request was made.
            ``(4) Failure to meet time frames.--In the event the 
        contractor who made the initial determination to meet the time 
        frame in paragraph (3), the individual may proceed to the next 
        level of review.
    ``(e) Medical Exigent Process for Qualified Independent 
Contractors.--
            ``(1) In general.--An individual may request, either orally 
        or in writing, a medical exigent reconsideration of an initial 
        determination under subsection (a) or a determination made 
        under subsection (d). Such request shall be made to the 
        qualified independent contractor.
            ``(2) Conditions for granting a medical exigent review.--A 
        medical exigent review shall be granted where--
                    ``(A) the qualified independent contractor 
                determines that the application of the standard time 
                frame for conducting a review could seriously 
                jeopardize the life or health of the individual or such 
                individual's ability to attain, maintain, or regain 
                maximum function,
                    ``(B) the individual submits a certification from a 
                physician that the jeopardy could occur, or
                    ``(C) was expedited at the previous contractor 
                level.
            ``(3) Deadline for medical exigent reviews.--If an 
        individual is granted a medical exigent reconsideration under 
        this paragraph, the review shall be conducted and notice of the 
        review shall be made, in accordance with the individual's 
        medical needs, but no later than 72 hours after the request was 
        made.
            ``(4) Failure to meet time frames.--In the event the 
        qualified independent contractor or the Secretary fails to meet 
        the time frame in paragraph (3), the individual may proceed to 
        the next level of review.
    ``(f) Time Frame for Review by Secretary.--The Secretary shall 
conduct all reviews in a time frame that is in accordance with the 
medical exigencies of the case.
    ``(g) Administrative Provisions.--
            ``(1) Limitation on review of certain regulations.--A 
        regulation or instruction that relates to a method for 
        determining the amount of payment under part B and that was 
        initially issued before January 1, 1981, shall not be subject 
        to judicial review.
            ``(2) Outreach.--The Secretary shall perform such outreach 
        activities as are necessary to inform individuals entitled to 
        benefits under this title and providers of services and 
        suppliers with respect to their rights of, and the process for, 
        appeals made under this section. The Secretary shall use the 
        toll-free telephone number maintained by the Secretary under 
        section 1804(b) to provide information regarding appeal rights 
        and respond to inquiries regarding the status of appeals.
            ``(3) Continuing education requirement for qualified 
        independent contractors and administrative law judges.--The 
        Secretary shall provide to each qualified independent 
        contractor, and, in consultation with the Commissioner of 
        Social Security, to administrative law judges that decide 
        appeals of reconsiderations of initial determinations or other 
        decisions or determinations under this section, such continuing 
        education with respect to coverage of items and services under 
        this title or policies of the Secretary with respect to part B 
        of title XI as is necessary for such qualified independent 
        contractors and administrative law judges to make informed 
        decisions with respect to appeals.
            ``(4) Reports.--
                    ``(A) Annual report to congress.--The Secretary 
                shall submit to Congress an annual report describing 
                the number of appeals for the previous year, 
                identifying issues that require administrative or 
                legislative actions, and including any recommendations 
                of the Secretary with respect to such actions. The 
                Secretary shall include in such report an analysis of 
                determinations by qualified independent contractors 
                with respect to inconsistent decisions and an analysis 
                of the causes of any such inconsistencies.
                    ``(B) Survey.--Not less frequently than every 5 
                years, the Secretary shall conduct a survey of a valid 
                sample of individuals entitled to benefits under this 
                title who have filed appeals of determinations under 
                this section, providers of services, and suppliers to 
                determine the satisfaction of such individuals or 
                entities with the process for appeals of determinations 
                provided for under this section and education and 
                training provided by the Secretary with respect to that 
                process. The Secretary shall submit to Congress a 
                report describing the results of the survey, and shall 
                include any recommendations for administrative or 
                legislative actions that the Secretary determines 
                appropriate.''.
    (b) Applicability of Requirements and Limitations on Liability of 
Qualified Independent Contractors to Medicare+Choice Independent 
Appeals Contractors.--Section 1852(g)(4) (42 U.S.C. 1395w22(g)(4)) is 
amended by adding at the end the following: ``The provisions of section 
1869(c)(5) shall apply to independent outside entities under contract 
with the Secretary under this paragraph.''.
    (c) Effective Date.--The amendments made by this section apply with 
respect to initial determinations made on or after October 1, 2002.

SEC. 522. REVISIONS TO MEDICARE COVERAGE PROCESS.

    (a) Review of Determinations.--Section 1869 (42 U.S.C. 1395ff), as 
amended by section 521, is further amended by adding at the end the 
following new subsection:
    ``(h) Review of Coverage Determinations.--
            ``(1) National coverage determinations.--
                    ``(A) In general.--Review of any national coverage 
                determination shall be subject to the following 
                limitations:
                            ``(i) Such a determination shall not be 
                        reviewed by any administrative law judge.
                            ``(ii) Such a determination shall not be 
                        held unlawful or set aside on the ground that a 
                        requirement of section 553 of title 5, United 
                        States Code, or section 1871(b) of this title, 
                        relating to publication in the Federal Register 
                        or opportunity for public comment, was not 
                        satisfied.
                            ``(iii) Upon the filing of a complaint by 
                        an aggrieved party, the Secretary shall provide 
                        for the review of a national coverage 
                        determination by the advisory panel established 
                        pursuant to paragraph (3) (hereinafter referred 
                        to as the `Panel'). In conducting such a 
                        review, the Panel shall review the record to 
                        evaluate whether the determination is in accord 
                        with sound medical practice, taking into 
                        account medical, technological, or clinical 
                        advancements, and any other medical, 
                        scientific, or other relevant information that 
                        the Panel deems reliable and may consider 
                        information that was not available or was not 
                        considered at the time of the determination. 
                        The Panel shall make a recommendation to the 
                        Secretary as to whether the determination 
                        should be upheld, modified, or set aside, and 
                        the Secretary shall have 30 days from the 
                        receipt of such recommendation to issue a 
                        decision.
                            ``(iv) A decision of the Secretary under 
                        clause (iii) constitutes a final agency action 
                        and is subject to judicial review.
                    ``(B) Definition of national coverage 
                determination.--For purposes of this section, the term 
                `national coverage determination' means a determination 
                by the Secretary with respect to whether or not a 
                particular item or service is covered nationally under 
                this title, but does not include a determination of 
                what code, if any, is assigned to a particular item or 
                service covered under this title or a determination 
                with respect to the amount of payment made for a 
                particular item or service so covered.
            ``(2) Local coverage determination.--
                    ``(A) In general.--Upon the filing of a complaint 
                by an aggrieved party (except in the cases of issues 
                regarding the coding or supporting documentation), the 
                Secretary shall provide for the review of a local 
                coverage determination by the Panel as provided in 
                paragraph (3) except that for purposes of a review 
                under this subsection, the Panel shall also consider 
                any special circumstances that may be relevant to the 
                practice of medicine in the locality. The Panel shall 
                make a recommendation to the Secretary as to whether 
                the determination should be upheld, modified, or set 
                aside, and the Secretary shall have 30 days from the 
                receipt of such recommendation to issue a decision to 
                uphold the determination or to remand it to the fiscal 
                intermediary or carrier for revision. A fiscal 
                intermediary or carrier shall have 30 days from the 
                receipt of any remand instructions from the Secretary 
                in which to complete such revision. The decision of the 
                Secretary shall have effect only with respect to the 
                local coverage determination. Such a decision 
                constitutes a final agency action and is subject to 
                judicial review.
                    ``(B) Definition of local coverage determination.--
                For purposes of this section, the term `local coverage 
                determination' means a determination by a fiscal 
                intermediary or a carrier under part A or part B, as 
                applicable, respecting whether or not a particular item 
                or service is covered on an intermediary- or carrier-
                wide basis under such parts, in accordance with section 
                1862(a)(1)(A).
            ``(3) Establishment of medical advisory panel.--For the 
        purposes of providing expert clinical and scientific advice and 
        recommendations to the Secretary regarding reconsiderations of 
        national or local coverage determinations under paragraphs (1) 
        and (2), the Secretary shall establish panels of experts or use 
        panels of experts (or members of such panels) established 
        before the date of enactment of this subsection or both. The 
        Secretary shall appoint as members of any such panel persons 
        the Secretary determines to have an appropriate level of 
        expertise in the subject matter, but shall not appoint any 
        individual who is in the regular full-time employ of the Health 
        Care Financing Administration or any individual who 
        participated in the initial coverage determination that is the 
        subject of a reconsideration request.
            ``(4) Pending national coverage determinations.--
                    ``(A) In general.--In the event the Secretary has 
                not issued a national coverage or noncoverage 
                determination with respect to a particular type or 
                class of items or services, an aggrieved person (as 
                described in paragraph (5)) may submit to the Secretary 
                a request to make such a determination with respect to 
                such items or services. By not later than the end of 
                the 90-day period beginning on the date the Secretary 
                receives such a request (notwithstanding the receipt by 
                the Secretary of new evidence, if any, during such 90-
                day period), the Secretary shall take one of the 
                following actions:
                            ``(i) Issue a national coverage 
                        determination, with or without limitations.
                            ``(ii) Issue a national noncoverage 
                        determination.
                            ``(iii) Issue a determination that no 
                        national coverage or noncoverage determination 
                        is appropriate as of the end of such 90-day 
                        period with respect to national coverage of 
                        such items or services.
                            ``(iv) Issue a notice that states that the 
                        Secretary has not completed a review of the 
                        request for a national coverage determination 
                        and that includes an identification of the 
                        remaining steps in the Secretary's review 
                        process and a deadline by which the Secretary 
                        will complete the review and take an action 
                        described in clause (i), (ii), or (iii).
                    ``(B) Deemed action by the secretary.--In the case 
                of an action described in subparagraph (A)(iv), if the 
                Secretary fails to take an action referred to in such 
                subparagraph by the deadline specified by the Secretary 
                under such subparagraph, then the Secretary is deemed 
                to have taken an action described in subparagraph 
                (A)(iii) as of the deadline.
                    ``(C) Explanation of determination.--When issuing a 
                determination under subparagraph (A), the Secretary 
                shall include an explanation of the basis for the 
                determination. An action taken under subparagraph (A) 
                (other than clause (iv)) is deemed to be a national 
                coverage determination for purposes of review under 
                paragraph (1).
            ``(5) Standing.--An action under this subsection seeking 
        review of a national coverage determination or local coverage 
        determination may be initiated only by individuals entitled to 
        benefits under part A, or enrolled under part B, or both, who 
        are in need of the items or services that are the subject of 
        the coverage determination.
            ``(6) Publication on the internet of decisions of hearings 
        of the secretary.--Each decision of a hearing by the Secretary 
        with respect to a national coverage determination shall be made 
        public, and the Secretary shall publish each decision on the 
        medicare Internet site of the Department of Health and Human 
        Services. The Secretary shall remove from such decision any 
        information that would identify any individual, provider of 
        services, or supplier.
            ``(7) Annual report on national coverage determinations.--
                    ``(A) In general.--Not later than December 1 of 
                each year, beginning in 2001, the Secretary 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 national 
                coverage determinations that were made in the previous 
                fiscal year for items, services, or medical devices not 
                previously covered as a benefit under this title, 
                including, with respect to each new item, service, or 
                medical device, a statement of the time taken by the 
                Secretary to make and implement the necessary coverage, 
                coding, and payment determinations, and including the 
                time taken to complete each significant step in the 
                process of making and implementing such determinations.
                    ``(B) Publication of reports on the internet.--The 
                Secretary shall publish each report submitted under 
                subparagraph (A) on the medicare Internet site of the 
                Department of Health and Human Services.
            ``(8) Construction.--Nothing in this subsection shall be 
        construed as permitting administrative or judicial review 
        pursuant to this section insofar as such review is explicitly 
        prohibited or restricted under another provision of law.''.
    (b) Establishment of a Process for Coverage Determinations.--
Section 1862(a) (42 U.S.C. 1395y(a)) is amended by adding at the end 
the following new sentence: ``In making a national coverage 
determination (as defined in paragraph (1)(B) of section 1869(h)) the 
Secretary shall ensure that the public is afforded notice and 
opportunity to comment prior to implementation by the Secretary of the 
determination; meetings of advisory committees established under 
section 1114(f) with respect to the determination are made on the 
record; in making the determination, the Secretary has considered 
applicable information (including clinical experience and valid, 
relevant medical, technical, and scientific evidence) with respect to 
the subject matter of the determination; and in the determination, 
provide a clear statement of the basis for the determination (including 
responses to comments received from the public), the assumptions 
underlying that basis, and make available to the public the data (other 
than proprietary data) considered in making the determination.''.
    (c) Improvements to the Medicare Advisory Committee Process.--
Section 1114 (42 U.S.C. 1314) is amended by adding at the end the 
following new subsection:
    ``(i)(1) Any advisory committee appointed under subsection (f) to 
advise the Secretary on matters relating to the interpretation, 
application, or implementation of section 1862(a)(1) shall assure the 
full participation of a nonvoting member in the deliberations of the 
advisory committee, and shall provide such nonvoting member access to 
all information and data made available to voting members of the 
advisory committee, other than information that--
            ``(A) is exempt from disclosure pursuant to subsection (a) 
        of section 552 of title 5, United States Code, by reason of 
        subsection (b)(4) of such section (relating to trade secrets); 
        or
            ``(B) the Secretary determines would present a conflict of 
        interest relating to such nonvoting member.
    ``(2) If an advisory committee described in paragraph (1) organizes 
into panels of experts according to types of items or services 
considered by the advisory committee, any such panel of experts may 
report any recommendation with respect to such items or services 
directly to the Secretary without the prior approval of the advisory 
committee or an executive committee thereof.''.
    (d) Effective Date.--The amendments made by this section apply with 
respect to--
            (1) a review of any national or local coverage 
        determination filed,
            (2) a request to make such a determination made, and
            (3) a national coverage determination made, on or after 
        October 1, 2001.

            Subtitle D--Improving Access to New Technologies

SEC. 531. REIMBURSEMENT IMPROVEMENTS FOR NEW CLINICAL LABORATORY TESTS 
              AND DURABLE MEDICAL EQUIPMENT.

    (a) Payment Rule for New Laboratory Tests.--Section 
1833(h)(4)(B)(viii) (42 U.S.C. 1395l(h)(4)(B)(viii)) is amended by 
inserting before the period at the end 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) Establishment of Coding and Payment Procedures for New Clinical 
Diagnostic Laboratory Tests and Other Items on a Fee Schedule.--Not 
later than 1 year after the date of the enactment of this Act, the 
Secretary of Health and Human Services shall establish procedures for 
coding and payment determinations for the categories of new clinical 
diagnostic laboratory tests and new durable medical equipment under 
part B of the title XVIII of the Social Security Act that permit public 
consultation in a manner consistent with the procedures established for 
implementing coding modifications for ICD-9-CM.
    (c) Report on Procedures Used for Advanced, Improved 
Technologies.--Not later than 1 year after the date of the enactment of 
this Act, the Secretary of Health and Human Services shall submit to 
Congress a report that identifies the specific procedures used by the 
Secretary under part B of title XVIII of the Social Security Act to 
adjust payments for clinical diagnostic laboratory tests and durable 
medical equipment which are classified to existing codes where, because 
of an advance in technology with respect to the test or equipment, 
there has been a significant increase or decrease in the resources used 
in the test or in the manufacture of the equipment, and there has been 
a significant improvement in the performance of the test or equipment. 
The report shall include such recommendations for changes in law as may 
be necessary to assure fair and appropriate payment levels under such 
part for such improved tests and equipment as reflects increased costs 
necessary to produce improved results.

SEC. 532. RETENTION OF HCPCS LEVEL III CODES.

    (a) In General.--The Secretary of Health and Human Services shall 
maintain and continue the use of level III codes of the HCPCS coding 
system (as such system was in effect on August 16, 2000) through 
December 31, 2003, and shall make such codes available to the public.
    (b) Definition.--For purposes of this section, the term ``HCPCS 
Level III codes'' means the alphanumeric codes for local use under the 
Health Care Financing Administration Common Procedure Coding System 
(HCPCS).

SEC. 533. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER INPATIENT 
              HOSPITAL PPS.

    (a) Expediting Recognition of New Technologies Into Inpatient PPS 
Coding System.--
            (1) Report.--Not later than April 1, 2001, the Secretary of 
        Health and Human Services shall submit to Congress a report on 
        methods of expeditiously incorporating new medical services and 
        technologies into the clinical coding system used with respect 
        to payment for inpatient hospital services furnished under the 
        medicare program under title XVIII of the Social Security Act, 
        together with a detailed description of the Secretary's 
        preferred methods to achieve this purpose.
            (2) Implementation.--Not later than October 1, 2001, the 
        Secretary shall implement the preferred methods described in 
        the report transmitted pursuant to paragraph (1).
    (b) Ensuring Appropriate Payments for Hospitals Incorporating New 
Medical Services and Technologies.--
            (1) Establishment of mechanism.--Section 1886(d)(5) (42 
        U.S.C. 1395ww(d)(5)) is amended by adding at the end the 
        following new subparagraphs:
    ``(K)(i) Effective for discharges beginning on or after October 1, 
2001, the Secretary shall establish a mechanism to recognize the costs 
of new medical services and technologies under the payment system 
established under this subsection. Such mechanism shall be established 
after notice and opportunity for public comment (in the publications 
required by subsection (e)(5) for a fiscal year or otherwise).
    ``(ii) The mechanism established pursuant to clause (i) shall--
            ``(I) apply to a new medical service or technology if, 
        based on the estimated costs incurred with respect to 
        discharges involving such service or technology, the DRG 
        prospective payment rate otherwise applicable to such 
        discharges under this subsection is inadequate;
            ``(II) provide for the collection of data with respect to 
        the costs of a new medical service or technology described in 
        subclause (I) for a period of not less than two years and not 
        more than three years beginning on the date on which an 
        inpatient hospital code is issued with respect to the service 
        or technology;
            ``(III) subject to paragraph (4)(C)(iii), provide for 
        additional payment to be made under this subsection with 
        respect to discharges involving a new medical service or 
        technology described in subclause (I) that occur during the 
        period described in subclause (II) in an amount that adequately 
        reflects the estimated average cost of such service or 
        technology; and
            ``(IV) provide that discharges involving such a service or 
        technology that occur after the close of the period described 
        in subclause (II) will be classified within a new or existing 
        diagnosis-related group with a weighting factor under paragraph 
        (4)(B) that is derived from cost data collected with respect to 
        discharges occurring during such period.
    ``(iii) For purposes of clause (ii)(II), the term `inpatient 
hospital code' means any code that is used with respect to inpatient 
hospital services for which payment may be made under this subsection 
and includes an alphanumeric code issued under the International 
Classification of Diseases, 9th Revision, Clinical Modification (`ICD-
9-CM') and its subsequent revisions.
    ``(iv) For purposes of clause (ii)(III), the term `additional 
payment' means, with respect to a discharge for a new medical service 
or technology described in clause (ii)(I), an amount that exceeds the 
prospective payment rate otherwise applicable under this subsection to 
discharges involving such service or technology that would be made but 
for this subparagraph.
    ``(v) The requirement under clause (ii)(III) for an additional 
payment may be satisfied by means of a new-technology group (described 
in subparagraph (L)), an add-on payment, a payment adjustment, or any 
other similar mechanism for increasing the amount otherwise payable 
with respect to a discharge under this subsection. The Secretary may 
not establish a separate fee schedule for such additional payment for 
such services and technologies, by utilizing a methodology established 
under subsection (a) or (h) of section 1834 to determine the amount of 
such additional payment, or by other similar mechanisms or 
methodologies.
    ``(vi) For purposes of this subparagraph and subparagraph (L), a 
medical service or technology will be considered a `new medical service 
or technology' if the service or technology meets criteria established 
by the Secretary after notice and an opportunity for public comment.
    ``(L)(i) In establishing the mechanism under subparagraph (K), the 
Secretary may establish new-technology groups into which a new medical 
service or technology will be classified if, based on the estimated 
average costs incurred with respect to discharges involving such 
service or technology, the DRG prospective payment rate otherwise 
applicable to such discharges under this subsection is inadequate.
    ``(ii) Such groups--
            ``(I) shall not be based on the costs associated with a 
        specific new medical service or technology; but
            ``(II) shall, in combination with the applicable 
        standardized amounts and the weighting factors assigned to such 
        groups under paragraph (4)(B), reflect such cost cohorts as the 
        Secretary determines are appropriate for all new medical 
        services and technologies that are likely to be provided as 
        inpatient hospital services in a fiscal year.
    ``(iii) The methodology for classifying specific hospital 
discharges within a diagnosis-related group under paragraph (4)(A) or a 
new-technology group shall provide that a specific hospital discharge 
may not be classified within both a diagnosis-related group and a new-
technology group.''.
            (2) Prior consultation.--The Secretary of Health and Human 
        Services shall consult with groups representing hospitals, 
        physicians, and manufacturers of new medical technologies 
        before publishing the notice of proposed rulemaking required by 
        section 1886(d)(5)(K)(i) of the Social Security Act (as added 
        by paragraph (1)).
            (3) Conforming amendment.--Section 1886(d)(4)(C)(i) (42 
        U.S.C. 1395ww(d)(4)(C)(i)) is amended by striking 
        ``technology,'' and inserting ``technology (including a new 
        medical service or technology under paragraph (5)(K)),''.

                      Subtitle E--Other Provisions

SEC. 541. INCREASE IN REIMBURSEMENT FOR BAD DEBT.

    Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is amended--
            (1) in clause (ii), by striking ``and'' at the end;
            (2) in clause (iii)--
                    (A) by striking ``during a subsequent fiscal year'' 
                and inserting ``during fiscal year 2000''; and
                    (B) by striking the period at the end and inserting 
                ``, and''; and
            (3) by adding at the end the following new clause:
            ``(iv) for cost reporting periods beginning during a 
        subsequent fiscal year, by 30 percent of such amount otherwise 
        allowable.''.

SEC. 542. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES UNDER 
              MEDICARE.

    (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 an inpatient or outpatient of a 
covered 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 1833(t) of such Act (42 U.S.C. 
1395l(t)).
    (b) Definitions.--For purposes of this section:
            (1) Covered hospital.--The term ``covered hospital'' means, 
        with respect to an inpatient or an outpatient, 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 inpatients 
        or outpatients, respectively, and submitted claims for payment 
        for such component to a medicare carrier (that has a contract 
        with the Secretary under section 1842 of the Social Security 
        Act, 42 U.S.C. 1395u) and not to such 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, or both, of such title; and
                    (B) is not enrolled in any of the following:
                            (i) A Medicare+Choice plan under part C of 
                        such title.
                            (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 1894 of such 
                        Act (42 U.S.C. 1395eee).
                            (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).
    (c) Effective Date.--This section 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 conduct a study of the effects of the previous provisions 
        of this section on hospitals and laboratories and access of 
        fee-for-service medicare beneficiaries to the technical 
        component of physician pathology services.
            (2) Report.--Not later than April 1, 2002, the Comptroller 
        General shall submit to Congress a report on such study. The 
        report shall include recommendations about whether such 
        provisions should be extended after the end of the period 
        specified in subsection (c) for either or both inpatient and 
        outpatient hospital services, and whether the provisions should 
        be extended to other hospitals.

SEC. 543. EXTENSION OF 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''.

SEC. 544. CHANGE IN ANNUAL MEDPAC REPORTING.

    (a) Revision of Deadlines for Submission of Reports.--
            (1) In general.--Section 1805(b)(1)(D) (42 U.S.C. 1395b-
        6(b)(1)(D)) is amended by striking ``June 1 of each year 
        (beginning with 1998),'' and inserting ``June 15 of each 
        year,''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies beginning with 2001.
    (b) Requirement for on the Record Votes on Recommendations.--
Section 1805(b) (42 U.S.C. 1395b-6(b)) is amended by adding at the end 
the following new paragraph:
            ``(7) Voting and reporting requirements.--With respect to 
        each recommendation contained in a report submitted under 
        paragraph (1), each member of the Commission shall vote on the 
        recommendation, and the Commission shall include, by member, 
        the results of that vote in the report containing the 
        recommendation.''.

SEC. 545. DEVELOPMENT OF PATIENT ASSESSMENT INSTRUMENTS.

    (a) Development.--
            (1) In general.--Not later than January 1, 2005, the 
        Secretary of Health and Human Services 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 a report on the development of standard instruments 
        for the assessment of the health and functional status of 
        patients, for whom items and services described in subsection 
        (b) are furnished, and include in the report a recommendation 
        on the use of such standard instruments for payment purposes.
            (2) Design for comparison of common elements.--The 
        Secretary shall design such standard instruments in a manner 
        such that--
                    (A) elements that are common to the items and 
                services described in subsection (b) may be readily 
                comparable and are statistically compatible;
                    (B) only elements necessary to meet program 
                objectives are collected; and
                    (C) the standard instruments supersede any other 
                assessment instrument used before that date.
            (3) Consultation.--In developing an assessment instrument 
        under paragraph (1), the Secretary shall consult with the 
        Medicare Payment Advisory Commission, the Agency for Healthcare 
        Research and Quality, and qualified organizations representing 
        providers of services and suppliers under title XVIII.
    (b) Description of Services.--For purposes of subsection (a), items 
and services described in this subsection are those items and services 
furnished to individuals entitled to benefits under part A, or enrolled 
under part B, or both of title XVIII of the Social Security Act for 
which payment is made under such title, and include the following:
            (1) Inpatient and outpatient hospital services.
            (2) Inpatient and outpatient rehabilitation services.
            (3) Covered skilled nursing facility services.
            (4) Home health services.
            (5) Physical or occupational therapy or speech-language 
        pathology services.
            (6) Items and services furnished to such individuals 
        determined to have end stage renal disease.
            (7) Partial hospitalization services and other mental 
        health services.
            (8) Any other service for which payment is made under such 
        title as the Secretary determines to be appropriate.

SEC. 546. GAO REPORT ON IMPACT OF THE EMERGENCY MEDICAL TREATMENT AND 
              ACTIVE LABOR ACT (EMTALA) ON HOSPITAL EMERGENCY 
              DEPARTMENTS.

    (a) Report.--The Comptroller General of the United States shall 
submit a report to the Committee on Commerce and the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate 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.
    (b) 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, and other hospital services;
            (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, other hospital services, 
        emergency physicians, and physicians covering emergency 
        department call.
    (c) 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).

SEC. 547. APPLICATION OF BLOODBORNE PATHOGEN STANDARD TO CERTAIN 
              HOSPITALS.

    (a) In General.--Section 1866 (42 U.S.C. 1395cc) is amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (R), by striking ``and'' at the 
                end;
                    (B) in subparagraph (S), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by inserting after subparagraph (S) the 
                following new subparagraph:
            ``(T) in the case of hospitals that are not otherwise 
        subject to regulation by the Occupational Safety and Health 
        Administration, to comply with the Bloodborne Pathogens 
        standard under section 1910.1030 of title 29 of the Code of 
        Federal Regulations (or as subsequently redesignated).''; and
            (2) by adding at the end of subsection (b) the following 
        new paragraph:
    ``(4) With respect to a failure to comply with the requirement of 
subsection (a)(1)(T), the Secretary shall not terminate an agreement 
under this section but shall impose a monetary fine in an amount 
similar to the amount of civil penalties that may be imposed under 
section 17 of the Occupational Safety and Health Act of 1970 for a 
violation of the standard referred to in such subsection by a hospital 
subject to regulation by the Occupational Safety and Health 
Administration. Such penalty shall be imposed and collected in the same 
manner as civil money penalties under subsection (a) of section 1128A 
are imposed and collected under that section.''.
    (b) Effective Date.--The amendments made by this section apply to 
hospitals as of January 1, 2002.

 TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

              Subtitle A--Medicare+Choice Payment Reforms

SEC. 601. INCREASED PAYMENT FOR ACCOUNTABLE MEDICARE+CHOICE PLANS.

    Section 1853 (42 U.S.C. 1395w-23) is amended--
            (1) in subsection (a)(1)(A), by striking ``and (i)'' and 
        inserting ``(i), and (j)''; and
            (2) by adding at the end the following new subsection:
    ``(j) Increased Payment for Accountable Medicare+Choice Coordinated 
Care Plans.--
            ``(1) In general.--In the case of a Medicare+Choice 
        coordinated care plan that enters into a 3-year contract for 
        the period of 2001 through 2003, the amount of the monthly 
        payment otherwise made under this section (taking into account, 
        if applicable, subsection (i)), shall be increased for each 
        year of the contract period by the amount necessary to ensure 
        that the total monthly payment is equal to the greater of the 
        adjusted minimum amount specified in paragraph (2) or an amount 
        equal to the otherwise applicable rate increased by \1/3\ of 1 
        percent.
            ``(2) Adjusted minimum amount.--For purposes of this 
        subsection, the adjusted minimum amount shall equal--
                    ``(A) in 2001--
                            ``(i) for any payment area in a 
                        Metropolitan Statistical Area or a Primary 
                        Metropolitan Statistical Area, $525 per month; 
                        and
                            ``(ii) for any other payment area, $475;
                however, in the case of a payment area outside the 50 
                States and the District of Columbia, such amount shall 
                not exceed 110 percent of the minimum amount for such 
                area for 2000.
                    ``(B) in 2002 and 2003, the adjusted minimum amount 
                for months during the previous year increased by the 
                national per capita Medicare+Choice growth percentage, 
                described in subsection (c)(6)(A) for that succeeding 
                year.
            ``(3) Penalty for contract termination.--In the case of a 
        Medicare+Choice coordinated care plan described in paragraph 
        (1) whose contract is terminated prior to the end of the 3-year 
        contract period, the Medicare+Choice organizations that offered 
        such plan shall return to the Secretary an amount equal to 
        twice the total of the increased payments provided under this 
        section. Such moneys shall be deposited in the Federal Hospital 
        Insurance Trust Funds and the Federal Supplementary Medical 
        Insurance Trust Funds in such proportion as the Secretary deems 
        to be fair and equitable.''.

SEC. 602. 10-YEAR PHASE-IN OF RISK ADJUSTMENT.

    Section 1853(a)(3)(C)(ii) (42 U.S.C. 1395w-23(a)(3)(C)(ii)) is 
amended--
            (1) in subclause (I), by striking ``and 2001'' and 
        inserting ``and each succeeding year through the first year in 
        which risk adjustment is based on data from inpatient hospital 
        and ambulatory settings''; and
            (2) by amending subclause (II) to read as follows:
                                    ``(II) beginning after such first 
                                year, insofar as such risk adjustment 
                                is based on data from inpatient 
                                hospital and ambulatory settings, the 
                                methodology shall be phased in equal 
                                increments over a 10-year period that 
                                begins with such first year.''.

SEC. 603. 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 before the date of the enactment 
of this Act 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 2 weeks after the date revised rates 
are announced by the Secretary under subsection (a).
    (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 payment area 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 2 weeks after the date revised rates are announced by 
the Secretary under subsection (a).
    (d) Disregard of New Rate Announcement in Applying Pass-Through for 
New National Coverage Determinations.--For purposes of applying section 
1852(a)(5) of the Social Security Act (42 U.S.C. 1395w-22(a)(5)), the 
announcement of revised rates under subsection (a) shall not be treated 
as an announcement under section 1853(b) of such Act (42 U.S.C. 1395w-
23(b)).

SEC. 604. REVISION OF PAYMENT RATES FOR ESRD PATIENTS ENROLLED IN 
              MEDICARE+CHOICE PLANS.

    (a) In General.--Section 1853(a)(1)(B) (42 U.S.C. 1395w-
23(a)(1)(B)) is amended by adding at the end the following: ``In 
establishing such rates, the Secretary shall provide for appropriate 
adjustments to increase each rate to reflect the demonstration rate 
(including the risk adjustment methodology associated with such rate) 
of the social health maintenance organization end-stage renal disease 
capitation demonstrations (established by section 2355 of the Deficit 
Reduction Act of 1984, as amended by section 13567(b) of the Omnibus 
Budget Reconciliation Act of 1993), and shall compute such rates by 
taking into account such factors as renal treatment modality, age, and 
the underlying cause of the end-stage renal disease.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to payments for months beginning with January 2002.
    (c) Publication.--Not later than 6 months after the date of the 
enactment of this Act, the Secretary of Health and Human Services shall 
publish for public comment a description of the appropriate adjustments 
described in the last sentence of section 1853(a)(1)(B) of the Social 
Security Act (42 U.S.C. 1395w-23(a)(1)(B)), as added by subsection (a). 
The Secretary shall publish such adjustments in final form by not later 
than July 1, 2001, so that the amendment made by subsection (a) is 
implemented on a timely basis consistent with subsection (b).

SEC. 605. PERMITTING PREMIUM REDUCTIONS AS ADDITIONAL BENEFITS UNDER 
              MEDICARE+CHOICE PLANS.

    (a) In General.--
            (1) Authorization of part b premium reductions.--Section 
        1854(f)(1) (42 U.S.C. 1395w-24(f)(1)) is amended--
                    (A) by redesignating subparagraph (E) as 
                subparagraph (F); and
                    (B) by inserting after subparagraph (D) the 
                following new subparagraph:
                    ``(E) Premium reductions.--
                            ``(i) In general.--Subject to clause (ii), 
                        as part of providing any additional benefits 
                        required under subparagraph (A), a 
                        Medicare+Choice organization may elect a 
                        reduction in its payments under section 
                        1853(a)(1)(A) with respect to a Medicare+Choice 
                        plan and the Secretary shall apply such 
                        reduction to reduce the premium under section 
                        1839 of each enrollee in such plan as provided 
                        in section 1840(i).
                            ``(ii) Amount of reduction.--The amount of 
                        the reduction under clause (i) with respect to 
                        any enrollee in a Medicare+Choice plan--
                                    ``(I) may not exceed 125 percent of 
                                the premium described under section 
                                1839(a)(3); and
                                    ``(II) shall apply uniformly to 
                                each enrollee of the Medicare+Choice 
                                plan to which such reduction 
                                applies.''.
            (2) Conforming amendments.--
                    (A) Adjustment of payments to medicare+choice 
                organizations.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-
                23(a)(1)(A)) is amended by inserting ``reduced by the 
                amount of any reduction elected under section 
                1854(f)(1)(E) and'' after ``for that area,''.
                    (B) Adjustment and payment of part b premiums.--
                            (i) Adjustment of premiums.--Section 
                        1839(a)(2) (42 U.S.C. 1395r(a)(2)) is amended 
                        by striking ``shall'' and all that follows and 
                        inserting the following: ``shall be the amount 
                        determined under paragraph (3), adjusted as 
                        required in accordance with subsections (b), 
                        (c), and (f), and to reflect 80 percent of any 
                        reduction elected under section 
                        1854(f)(1)(E).''.
                            (ii) Payment of premiums.--Section 1840 (42 
                        U.S.C. 1395s) is amended by adding at the end 
                        the following new subsection:
    ``(i) In the case of an individual enrolled in a Medicare+Choice 
plan, the Secretary shall provide for necessary adjustments of the 
monthly beneficiary premium to reflect 80 percent of any reduction 
elected under section 1854(f)(1)(E). This premium adjustment may be 
provided directly or as an adjustment to any social security, railroad 
retirement, and civil service retirement benefits, to the extent which 
the Secretary determines that such an adjustment is appropriate with 
the concurrence of the agencies responsible for the administration of 
such benefits.''.
                    (C) Information comparing plan premiums under part 
                c.--Section 1851(d)(4)(B) (42 U.S.C. 1395w-21(d)(4)(B)) 
                is amended--
                            (i) by striking ``Premiums.--The'' and 
                        inserting ``Premiums.--
                            ``(i) In general.--The''; and
                            (ii) by adding at the end the following new 
                        clause:
                            ``(ii) Reductions.--The reduction in part B 
                        premiums, if any.''.
                    (D) Treatment of reduction for purposes of 
                determining government contribution under part b.--
                Section 1844 (42 U.S.C. 1395w) is amended by adding at 
                the end the following new subsection:
    ``(c) The Secretary shall determine the Government contribution 
under subparagraphs (A) and (B) of subsection (a)(1) without regard to 
any premium reduction resulting from an election under section 
1854(f)(1)(E).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to years beginning with 2002.

SEC. 606. FULL IMPLEMENTATION OF RISK ADJUSTMENT FOR CONGESTIVE HEART 
              FAILURE ENROLLEES FOR 2001.

    (a) In General.--Section 1853(a)(3)(C) (42 U.S.C. 1395w-
23(a)(3)(C)) is amended--
            (1) in clause (ii), by striking ``Such risk adjustment'' 
        and inserting ``Except as provided in clause (iii), such risk 
        adjustment''; and
            (2) by adding at the end the following new clause:
                            ``(iii) Full implementation of risk 
                        adjustment for congestive heart failure 
                        enrollees for 2001.--
                                    ``(I) Exemption from phase-in.--
                                Subject to subclause (II), the 
                                Secretary shall fully implement the 
                                risk adjustment methodology described 
                                in clause (i) with respect to each 
                                individual who has had a qualifying 
                                congestive heart failure inpatient 
                                diagnosis (as determined by the 
                                Secretary under such risk adjustment 
                                methodology) during the period 
                                beginning on July 1, 1999, and ending 
                                on June 30, 2000, and who is enrolled 
                                in a coordinated care plan that is the 
                                only coordinated care plan offered on 
                                January 1, 2001, in the service area of 
                                the individual.
                                    ``(II) Period of application.--
                                Subclause (I) shall only apply during 
                                the 1-year period beginning on January 
                                1, 2001.''.
    (b) Exclusion From Determination of the Budget Neutrality Factor.--
Section 1853(c)(5) (42 U.S.C. 1395w-23(c)(5)) is amended by striking 
``subsection (i)'' and inserting ``subsections (a)(3)(C)(iii) and 
(i)''.

SEC. 607. EXPANSION OF APPLICATION OF MEDICARE+CHOICE NEW ENTRY BONUS.

    (a) In General.--Section 1853(i)(1) (42 U.S.C. 1395w-23(i)(1)) is 
amended in the matter preceding subparagraph (A) by inserting ``, or 
filed notice with the Secretary as of October 3, 2000, that they will 
not be offering such a plan as of January 1, 2001'' after ``January 1, 
2000''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply as if included in the enactment of BBRA.

SEC. 608. REPORT ON INCLUSION OF CERTAIN COSTS OF THE DEPARTMENT OF 
              VETERANS AFFAIRS AND MILITARY FACILITY SERVICES IN 
              CALCULATING MEDICARE+CHOICE PAYMENT RATES.

    The Secretary of Health and Human Services shall report to Congress 
by not later than January 1, 2003, on a method to phase-in the costs of 
military facility services furnished by the Department of Veterans 
Affairs, and the costs of military facility services furnished by the 
Department of Defense, to medicare-eligible beneficiaries in the 
calculation of an area's Medicare+Choice capitation payment. Such 
report shall include on a county-by-county basis--
            (1) the actual or estimated cost of such services to 
        medicare-eligible beneficiaries;
            (2) the change in Medicare+Choice capitation payment rates 
        if such costs are included in the calculation of payment rates;
            (3) one or more proposals for the implementation of payment 
        adjustments to Medicare+Choice plans in counties where the 
        payment rate has been affected due to the failure to calculate 
        the cost of such services to medicare-eligible beneficiaries; 
        and
            (4) a system to ensure that when a Medicare+Choice enrollee 
        receives covered services through a facility of the Department 
        of Veterans Affairs or the Department of Defense there is an 
        appropriate payment recovery to the medicare program under 
        title XVIII of the Social Security Act.

               Subtitle B--Other Medicare+Choice Reforms

SEC. 611. PAYMENT OF ADDITIONAL AMOUNTS FOR NEW BENEFITS COVERED DURING 
              A CONTRACT TERM.

    (a) In General.--Section 1853(c)(7) (42 U.S.C. 1395w-23(c)(7)) is 
amended to read as follows:
            ``(7) Adjustment for national coverage determinations and 
        legislative changes in benefits.--If the Secretary makes a 
        determination with respect to coverage under this title or 
        there is a change in benefits required to be provided under 
        this part that the Secretary projects will result in a 
        significant increase in the costs to Medicare+Choice of 
        providing benefits under contracts under this part (for periods 
        after any period described in section 1852(a)(5)), the 
        Secretary shall adjust appropriately the payments to such 
        organizations under this part. Such projection and adjustment 
        shall be based on an analysis by the Chief Actuary of the 
        Health Care Financing Administration of the actuarial costs 
        associated with the new benefits.''.
    (b) Conforming Amendment.--Section 1852(a)(5) (42 U.S.C. 1395w-
22(a)(5)) is amended--
            (1) in the heading, by inserting ``and legislative changes 
        in benefits'' after ``National coverage determinations'';
            (2) by inserting ``or legislative change in benefits 
        required to be provided under this part'' after ``national 
        coverage determination'';
            (3) in subparagraph (A), by inserting ``or legislative 
        change in benefits'' after ``such determination'';
            (4) in subparagraph (B), by inserting ``or legislative 
        change'' after ``if such coverage determination''; and
            (5) by adding at the end the following:
        ``The projection under the previous sentence shall be based on 
        an analysis by the Chief Actuary of the Health Care Financing 
        Administration of the actuarial costs associated with the 
        coverage determination or legislative change in benefits.''.
    (c) Effective Date.--The amendments made by this section are 
effective on the date of the enactment of this Act and apply to 
national coverage determinations and legislative changes in benefits 
occurring on or after such date.

SEC. 612. RESTRICTION ON IMPLEMENTATION OF SIGNIFICANT NEW REGULATORY 
              REQUIREMENTS MIDYEAR.

    (a) In General.--Section 1856(b) (42 U.S.C. 1395w-26(b)) is amended 
by adding at the end the following new paragraph:
            ``(4) Prohibition of midyear implementation of significant 
        new regulatory requirements.--The Secretary may not implement, 
        other than at the beginning of a calendar year, regulations 
        under this section that impose new, significant regulatory 
        requirements on a Medicare+Choice organization or plan.''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on the date of the enactment of this Act.

SEC. 613. TIMELY APPROVAL OF MARKETING MATERIAL THAT FOLLOWS MODEL 
              MARKETING LANGUAGE.

    (a) In General.--Section 1851(h) (42 U.S.C. 1395w-21(h)) is 
amended--
            (1) in paragraph (1)(A), by inserting ``(or 10 days in the 
        case described in paragraph (5))'' after ``45 days''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Special treatment of marketing material following 
        model marketing language.--In the case of marketing material of 
        an organization that uses, without modification, proposed model 
        language specified by the Secretary, the period specified in 
        paragraph (1)(A) shall be reduced from 45 days to 10 days.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
marketing material submitted on or after January 1, 2001.

SEC. 614. AVOIDING DUPLICATIVE REGULATION.

    (a) In General.--Section 1856(b)(3)(B) (42 U.S.C. 1395w-
26(b)(3)(B)) is amended--
            (1) in clause (i), by inserting ``(including cost-sharing 
        requirements)'' after ``Benefit requirements''; and
            (2) by adding at the end the following new clause:
                            ``(iv) Requirements relating to marketing 
                        materials and summaries and schedules of 
                        benefits regarding a Medicare+Choice plan.''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on the date of the enactment of this Act.

SEC. 615. ELECTION OF UNIFORM LOCAL COVERAGE POLICY FOR MEDICARE+CHOICE 
              PLAN COVERING MULTIPLE LOCALITIES.

    Section 1852(a)(2) (42 U.S.C. 1395w-22(a)(2)) is amended by adding 
at the end the following new subparagraph:
                    ``(C) Election of uniform coverage policy.--In the 
                case of a Medicare+Choice organization that offers a 
                Medicare+Choice plan in an area in which more than one 
                local coverage policy is applied with respect to 
                different parts of the area, the organization may elect 
                to have the local coverage policy for the part of the 
                area that is most beneficial to Medicare+Choice 
                enrollees (as identified by the Secretary) apply with 
                respect to all Medicare+Choice enrollees enrolled in 
                the plan.''.

SEC. 616. ELIMINATING HEALTH DISPARITIES IN MEDICARE+CHOICE PROGRAM.

    (a) Quality Assurance Program Focus on Racial and Ethnic 
Minorities.--Subparagraphs (A) and (B) of section 1852(e)(2) (42 U.S.C. 
1395w-22(e)(2)) are each amended by adding at the end the following:
                ``Such program shall include a separate focus (with 
                respect to all the elements described in this 
                subparagraph) on racial and ethnic minorities.''.
    (b) Report.--Section 1852(e) (42 U.S.C. 1395w-22(e)) is amended by 
adding at the end the following new paragraph:
            ``(5) Report to congress.--
                    ``(A) In general.--Not later than 2 years after the 
                date of the enactment of this paragraph, and biennially 
                thereafter, the Secretary shall submit to Congress a 
                report regarding how quality assurance programs 
                conducted under this subsection focus on racial and 
                ethnic minorities.
                    ``(B) Contents of report.--Each such report shall 
                include the following:
                            ``(i) A description of the means by which 
                        such programs focus on such racial and ethnic 
                        minorities.
                            ``(ii) An evaluation of the impact of such 
                        programs on eliminating health disparities and 
                        on improving health outcomes, continuity and 
                        coordination of care, management of chronic 
                        conditions, and consumer satisfaction.
                            ``(iii) Recommendations on ways to reduce 
                        clinical outcome disparities among racial and 
                        ethnic minorities.''.

SEC. 617. 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) Medicare+Choice 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. 618. SPECIAL MEDIGAP ENROLLMENT ANTIDISCRIMINATION PROVISION FOR 
              CERTAIN BENEFICIARIES.

    (a) Disenrollment Window in Accordance With Beneficiary's 
Circumstance.--Section 1882(s)(3) (42 U.S.C. 1395ss(s)(3)) is amended--
            (1) in subparagraph (A), in the matter following clause 
        (iii), by striking ``, subject to subparagraph (E), seeks to 
        enroll under the policy not later than 63 days after the date 
        of the termination of enrollment described in such 
        subparagraph'' and inserting ``seeks to enroll under the policy 
        during the period specified in subparagraph (E)''; and
            (2) by striking subparagraph (E) and inserting the 
        following new subparagraph:
    ``(E) For purposes of subparagraph (A), the time period specified 
in this subparagraph is--
            ``(i) in the case of an individual described in 
        subparagraph (B)(i), the period beginning on the date the 
        individual receives a notice of termination or cessation of all 
        supplemental health benefits (or, if no such notice is 
        received, notice that a claim has been denied because of such a 
        termination or cessation) and ending on the date that is 63 
        days after the applicable notice;
            ``(ii) in the case of an individual described in clause 
        (ii), (iii), (v), or (vi) of subparagraph (B) whose enrollment 
        is terminated involuntarily, the period beginning on the date 
        that the individual receives a notice of termination and ending 
        on the date that is 63 days after the date the applicable 
        coverage is terminated;
            ``(iii) in the case of an individual described in 
        subparagraph (B)(iv)(I), the period beginning on the earlier of 
        (I) the date that the individual receives a notice of 
        termination, a notice of the issuer's bankruptcy or insolvency, 
        or other such similar notice, if any, and (II) the date that 
        the applicable coverage is terminated, and ending on the date 
that is 63 days after the date the coverage is terminated;
            ``(iv) in the case of an individual described in clause 
        (ii), (iii), (iv)(II), (iv)(III), (v), or (vi) of subparagraph 
        (B) who disenrolls voluntarily, the period beginning on the 
        date that is 60 days before the effective date of the 
        disenrollment and ending on the date that is 63 days after such 
        effective date; and
            ``(v) in the case of an individual described in 
        subparagraph (B) but not described in the preceding provisions 
        of this subparagraph, the period beginning on the effective 
        date of the disenrollment and ending on the date that is 63 
        days after such effective date.''.
    (b) Extended Medigap Access for Interrupted Trial Periods.--Section 
1882(s)(3) (42 U.S.C. 1395ss(s)(3)), as amended by subsection (a), is 
further amended by adding at the end the following new subparagraph:
    ``(F)(i) Subject to clause (ii), for purposes of this paragraph--
            ``(I) in the case of an individual described in 
        subparagraph (B)(v) (or deemed to be so described, pursuant to 
        this subparagraph) whose enrollment with an organization or 
        provider described in subclause (II) of such subparagraph is 
        involuntarily terminated within the first 12 months of such 
        enrollment, and who, without an intervening enrollment, enrolls 
        with another such organization or provider, such subsequent 
        enrollment shall be deemed to be an initial enrollment 
        described in such subparagraph; and
            ``(II) in the case of an individual described in clause 
        (vi) of subparagraph (B) (or deemed to be so described, 
        pursuant to this subparagraph) whose enrollment with a plan or 
        in a program described in such clause is involuntarily 
        terminated within the first 12 months of such enrollment, and 
        who, without an intervening enrollment, enrolls in another such 
        plan or program, such subsequent enrollment shall be deemed to 
        be an initial enrollment described in such clause.
    ``(ii) For purposes of clauses (v) and (vi) of subparagraph (B), no 
enrollment of an individual with an organization or provider described 
in clause (v)(II), or with a plan or in a program described in clause 
(vi), may be deemed to be an initial enrollment under this clause after 
the 2-year period beginning on the date on which the individual first 
enrolled with such an organization, provider, plan, or program.''.

SEC. 619. RESTORING EFFECTIVE DATE OF ELECTIONS AND CHANGES OF 
              ELECTIONS OF MEDICARE+CHOICE PLANS.

    (a) Open Enrollment.--Section 1851(f)(2) (42 U.S.C. 1395w-21(f)(2)) 
is amended by striking ``, 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''.
    (b) Effective Date.--The amendment made by this section shall apply 
to elections and changes of coverage made on or after January 1, 2001.

SEC. 620. PERMITTING ESRD BENEFICIARIES TO ENROLL IN ANOTHER 
              MEDICARE+CHOICE PLAN IF THE PLAN IN WHICH THEY ARE 
              ENROLLED IS TERMINATED.

    (a) In General.--Section 1851(a)(3)(B) (42 U.S.C. 1395w-
21(a)(3)(B)) is amended by striking ``except that'' and all that 
follows and inserting the following: ``except that--
                            ``(i) an individual who develops end-stage 
                        renal disease while enrolled in a 
                        Medicare+Choice plan may continue to be 
                        enrolled in that plan; and
                            ``(ii) in the case of such an individual 
                        who is enrolled in a Medicare+Choice plan under 
                        clause (i) (or subsequently under this clause), 
                        if the enrollment is discontinued under 
                        circumstances described in section 
                        1851(e)(4)(A), then the individual will be 
                        treated as a `Medicare+Choice eligible 
                        individual' for purposes of electing to 
                        continue enrollment in another Medicare+Choice 
                        plan.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to terminations and discontinuations occurring on or 
        after the date of the enactment of this Act.
            (2) Application to prior plan terminations.--Clause (ii) of 
        section 1851(a)(3)(B) of the Social Security Act (as inserted 
        by subsection (a)) also shall apply to individuals whose 
        enrollment in a Medicare+Choice plan was terminated or 
        discontinued after December 31, 1998, and before the date of 
        the enactment of this Act. In applying this paragraph, such an 
        individual shall be treated, for purposes of part C of title 
        XVIII of the Social Security Act, as having discontinued 
        enrollment in such a plan as of the date of the enactment of 
        this Act.

SEC. 621. PROVIDING CHOICE FOR SKILLED NURSING FACILITY SERVICES UNDER 
              THE MEDICARE+CHOICE PROGRAM.

    (a) In General.--Section 1852 (42 U.S.C. 1395w-22) is amended by 
adding at the end the following new subsection:
    ``(l) Return to Home Skilled Nursing Facilities for Covered Post-
Hospital Extended Care Services.--
            ``(1) Ensuring return to home snf.--
                    ``(A) In general.--In providing coverage of post-
                hospital extended care services, a Medicare+Choice plan 
                shall provide for such coverage through a home skilled 
                nursing facility if the following conditions are met:
                            ``(i) Enrollee election.--The enrollee 
                        elects to receive such coverage through such 
                        facility.
                            ``(ii) SNF agreement.--The facility has a 
                        contract with the Medicare+Choice organization 
                        for the provision of such services, or the 
                        facility agrees to accept substantially similar 
                        payment under the same terms and conditions 
                        that apply to similarly situated skilled 
nursing facilities that are under contract with the Medicare+Choice 
organization for the provision of such services and through which the 
enrollee would otherwise receive such services.
                    ``(B) Manner of payment to home snf.--The 
                organization shall provide payment to the home skilled 
                nursing facility consistent with the contract or the 
                agreement described in subparagraph (A)(ii), as the 
                case may be.
            ``(2) No less favorable coverage.--The coverage provided 
        under paragraph (1) (including scope of services, cost-sharing, 
        and other criteria of coverage) shall be no less favorable to 
        the enrollee than the coverage that would be provided to the 
        enrollee with respect to a skilled nursing facility the post-
        hospital extended care services of which are otherwise covered 
        under the Medicare+Choice plan.
            ``(3) Rule of construction.--Nothing in this subsection 
        shall be construed to do the following:
                    ``(A) To require coverage through a skilled nursing 
                facility that is not otherwise qualified to provide 
                benefits under part A for medicare beneficiaries not 
                enrolled in a Medicare+Choice plan.
                    ``(B) To prevent a skilled nursing facility from 
                refusing to accept, or imposing conditions upon the 
                acceptance of, an enrollee for the receipt of post-
                hospital extended care services.
            ``(4) Definitions.--In this subsection:
                    ``(A) Home skilled nursing facility.--The term 
                `home skilled nursing facility' means, with respect to 
                an enrollee who is entitled to receive post-hospital 
                extended care services under a Medicare+Choice plan, 
                any of the following skilled nursing facilities:
                            ``(i) SNF residence at time of admission.--
                        The skilled nursing facility in which the 
                        enrollee resided at the time of admission to 
                        the hospital preceding the receipt of such 
                        post-hospital extended care services.
                            ``(ii) SNF in continuing care retirement 
                        community.--A skilled nursing facility that is 
                        providing such services through a continuing 
                        care retirement community (as defined in 
                        subparagraph (B)) which provided residence to 
                        the enrollee at the time of such admission.
                            ``(iii) SNF residence of spouse at time of 
                        discharge.--The skilled nursing facility in 
                        which the spouse of the enrollee is residing at 
                        the time of discharge from such hospital.
                    ``(B) Continuing care retirement community.--The 
                term `continuing care retirement community' means, with 
                respect to an enrollee in a Medicare+Choice plan, an 
                arrangement under which housing and health-related 
                services are provided (or arranged) through an 
                organization for the enrollee under an agreement that 
                is effective for the life of the enrollee or for a 
                specified period.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to contracts entered into or renewed on or after the date 
of the enactment of this Act.
    (c) MedPAC Study.--
            (1) Study.--The Medicare Payment Advisory Commission shall 
        conduct a study analyzing the effects of the amendment made by 
        subsection (a) on Medicare+Choice organizations. In conducting 
        such study, the Commission shall examine the effects (if any) 
        such amendment has had on--
                    (A) the scope of additional benefits provided under 
                the Medicare+Choice program;
                    (B) the administrative and other costs incurred by 
                Medicare+Choice organizations;
                    (C) the contractual relationships between such 
                organizations and skilled nursing facilities.
            (2) Report.--Not later than 2 years after the date of the 
        enactment of this Act, the Commission shall submit to Congress 
        a report on the study conducted under paragraph (1).

SEC. 622. PROVIDING FOR ACCOUNTABILITY OF MEDICARE+CHOICE PLANS.

    (a) Mandatory Review of ACR Submissions by the Chief Actuary of the 
Health Care Financing Administration.--Section 1854(a)(5)(A) (42 U.S.C. 
1395w-24(a)(5)(A)) is amended--
            (1) by striking ``value'' and inserting ``values''; and
            (2) by adding at the end the following: ``The Chief Actuary 
        of the Health Care Financing Administration shall review the 
        actuarial assumptions and data used by the Medicare+Choice 
        organization with respect to such rates, amounts, and values so 
        submitted to determine the appropriateness of such assumptions 
        and data.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to submissions made on or after January 1, 2001.

SEC. 623. CIVIL MONETARY PENALTIES FOR CONTRACT DEFAULT BY A 
              MEDICARE+CHOICE ORGANIZATION.

    (a) In General.--Section 1857(g)(3) is amended by adding at the end 
the following new subparagraph:
                    ``(D) Civil monetary penalties of up to $25,000 per 
                enrollee or $100,000 per organization, whichever is 
                greater, where the finding under subsection (c)(2)(A) 
                is based on the organization's defaulting on its 
                contract.''.

                 Subtitle C--Other Managed Care Reforms

SEC. 631. 1-YEAR EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION 
              (SHMO) DEMONSTRATION PROJECT.

    Section 4018(b)(1) of the Omnibus Budget Reconciliation Act of 
1987, as amended by section 531(a)(1) of BBRA (113 Stat. 1501A-388), is 
amended by striking ``18 months'' and inserting ``30 months''.

SEC. 632. REVISED TERMS AND CONDITIONS FOR EXTENSION OF MEDICARE 
              COMMUNITY NURSING ORGANIZATION (CNO) DEMONSTRATION 
              PROJECT.

    (a) In General.--Section 532 of BBRA (113 Stat. 1501A-388) is 
amended--
            (1) in subsection (a), by striking the second sentence; and
            (2) by striking subsection (b) and inserting the following 
        new subsection:
    ``(b) Terms and Conditions.--
            ``(1) January through september 2000.--For the 9-month 
        period beginning with January 2000, any such demonstration 
        project shall be conducted under the same terms and conditions 
        as applied to such demonstration during 1999.
            ``(2) October 2000 through december 2001.--For the 15-month 
        period beginning with October 2000, any such demonstration 
        project shall be conducted under the same terms and conditions 
        as applied to such demonstration during 1999, except that the 
        following modifications shall apply:
                    ``(A) Basic capitation rate.--The basic capitation 
                rate paid for services covered under the project (other 
                than case management services) per enrollee per month 
                and furnished during--
                            ``(i) the period beginning with October 1, 
                        2000, and ending with December 31, 2000, shall 
                        be determined by actuarially adjusting the 
                        actual capitation rate paid for such services 
                        in 1999 for inflation, utilization, and other 
                        changes to the CNO service package, and by 
                        reducing such adjusted capitation rate by 10 
                        percent in the case of the demonstration sites 
                        located in Arizona, Minnesota, and Illinois, 
and 15 percent for the demonstration site located in New York; and
                            ``(ii) 2001 shall be determined by 
                        actuarially adjusting the capitation rate 
                        determined under clause (i) for inflation, 
                        utilization, and other changes to the CNO 
                        service package.
                    ``(B) Targeted case management fee.--Effective 
                October 1, 2000--
                            ``(i) the case management fee per enrollee 
                        per month for--
                                    ``(I) the period described in 
                                subparagraph (A)(i) shall be determined 
                                by actuarially adjusting the case 
                                management fee for 1999 for inflation; 
                                and
                                    ``(II) 2001 shall be determined by 
                                actuarially adjusting the amount 
                                determined under subclause (I) for 
                                inflation; and
                            ``(ii) such case management fee shall be 
                        paid only for enrollees who are classified as 
                        moderately frail or frail pursuant to criteria 
                        established by the Secretary.
                    ``(C) Greater uniformity in clinical features among 
                sites.--Each project shall implement for each site--
                            ``(i) protocols for periodic telephonic 
                        contact with enrollees based on--
                                    ``(I) the results of such 
                                standardized written health assessment; 
                                and
                                    ``(II) the application of 
                                appropriate care planning approaches;
                            ``(ii) disease management programs for 
                        targeted diseases (such as congestive heart 
                        failure, arthritis, diabetes, and hypertension) 
                        that are highly prevalent in the enrolled 
                        populations;
                            ``(iii) systems and protocols to track 
                        enrollees through hospitalizations, including 
                        pre-admission planning, concurrent management 
                        during inpatient hospital stays, and post-
                        discharge assessment, planning, and follow-up; 
                        and
                            ``(iv) standardized patient educational 
                        materials for specified diseases and health 
                        conditions.
                    ``(D) Quality improvement.--Each project shall 
                implement at each site once during the 15-month 
                period--
                            ``(i) enrollee satisfaction surveys; and
                            ``(ii) reporting on specified quality 
                        indicators for the enrolled population.
    ``(c) Evaluation.--
            ``(1) Preliminary report.--Not later than July 1, 2001, the 
        Secretary of Health and Human Services shall submit to the 
        Committees on Ways and Means and Commerce of the House of 
        Representatives and the Committee on Finance of the Senate a 
        preliminary report that--
                    ``(A) evaluates such demonstration projects for the 
                period beginning July 1, 1997, and ending December 31, 
                1999, on a site-specific basis with respect to the 
                impact on per beneficiary spending, specific health 
                utilization measures, and enrollee satisfaction; and
                    ``(B) includes a similar evaluation of such 
                projects for the portion of the extension period that 
                occurs after September 30, 2000.
            ``(2) Final report.--The Secretary shall submit a final 
        report to such Committees on such demonstration projects not 
        later than July 1, 2002. Such report shall include the same 
        elements as the preliminary report required by paragraph (1), 
        but for the period after December 31, 1999.
            ``(3) Methodology for spending comparisons.--Any evaluation 
        of the impact of the demonstration projects on per beneficiary 
        spending included in such reports shall include a comparison 
        of--
                    ``(A) data for all individuals who--
                            ``(i) were enrolled in such demonstration 
                        projects as of the first day of the period 
                        under evaluation; and
                            ``(ii) were enrolled for a minimum of 6 
                        months thereafter; with
                    ``(B) data for a matched sample of individuals who 
                are enrolled under part B of title XVIII of the Social 
                Security Act and are not enrolled in such a project, or 
                in a Medicare+Choice plan under part C of such title, a 
                plan offered by an eligible organization under section 
                1876 of such Act, or a health care prepayment plan 
                under section 1833(a)(1)(A) of such Act.''.
    (b) Effective Date.--The amendments made by subsection (a) shall be 
effective as if included in the enactment of section 532 of BBRA (113 
Stat. 1501A-388).

SEC. 633. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES DEMONSTRATION 
              PROJECTS.

    Section 9215(a) of the Consolidated Omnibus Budget Reconciliation 
Act of 1985 (42 U.S.C. 1395b-1 note), as amended by section 6135 of the 
Omnibus Budget Reconciliation Act of 1989, section 13557 of the Omnibus 
Budget Reconciliation Act of 1993, section 4017 of BBA, and section 534 
of BBRA (113 Stat. 1501A-390), is amended by striking ``December 31, 
2002'' and inserting ``December 31, 2004''.

SEC. 634. SERVICE AREA EXPANSION FOR MEDICARE COST CONTRACTS DURING 
              TRANSITION PERIOD.

    Section 1876(h)(5) (42 U.S.C. 1395mm(h)(5)) is amended--
            (1) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (2) by inserting after subparagraph (A), the following new 
        subparagraph:
    ``(B) Subject to subparagraph (C), the Secretary shall approve an 
application for a modification to a reasonable cost contract under this 
section in order to expand the service area of such contract if--
            ``(i) such application is submitted to the Secretary on or 
        before September 1, 2003; and
            ``(ii) the Secretary determines that the organization with 
        the contract continues to meet the requirements applicable to 
        such organizations and contracts under this section.''.

                          TITLE VII--MEDICAID

SEC. 701. DSH PAYMENTS.

    (a) Continuation of Medicaid DSH Allotments at Fiscal Year 2000 
Levels for Fiscal Years 2001 and 2002.--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) 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 new subsection:
    ``(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 such patients 
                receive medical assistance 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)''.
            (3) Effective dates.--
                    (A) The amendment made by paragraph (1) applies to 
                contracts as of January 1, 2001.
                    (B) The amendments made by paragraph (2) apply to 
                payments made on or after January 1, 2001.
    (e) Application of Medicaid DSH Transition Rule to Public Hospitals 
in All States.--
            (1) In general.--During the period described in paragraph 
        (3), with respect to a State, section 4721(e) of the Balanced 
        Budget Act of 1997 (Public Law 105-33; 111 Stat. 514), as 
        amended by section 607 of BBRA (113 Stat. 1501A-321) shall be 
        applied as though--
                    (A) ``September 30, 2002'' were substituted for 
                ``July 1, 1997'' each place it appears;
                    (B) ``hospitals owned or operated by an 
                instrumentality or a unit of government within a State 
                (as defined for purposes of title XIX)'' were 
                substituted for ``the State of California'';
                    (C) paragraph (3) were redesignated as paragraph 
                (4);
                    (D) ``and'' were omitted from the end of paragraph 
                (2); and
                    (E) the following new paragraph were inserted after 
                paragraph (2):
            ``(3) `(as defined in subparagraph (B) but without regard 
        to clause (ii) of that subparagraph and subject to subsection 
        (d))' were substituted for `(as defined in subparagraph (B))' 
        in subparagraph (A) of such section; and''.
            (2) Special rule.--With respect to California, section 
        4721(e) of the Balanced Budget Act of 1997 (Public Law 105-33; 
        111 Stat. 514), as amended by section 607 of BBRA (113 Stat. 
        1501A-321), shall be applied without regard to paragraph (1).
            (3) Period described.--The period described in this 
        paragraph is the period that begins, with respect to a State, 
        on the first day of the first State fiscal year that begins 
        after September 30, 2002, and ends on the last day of the 
        succeeding State fiscal year.
            (4) Application to waivers.--With respect to a State 
        operating under a waiver of the requirements of title XIX of 
        the Social Security Act (42 U.S.C. 1396 et seq.) under section 
        1115 of such Act (42 U.S.C. 1315), the amount by which any 
        payment adjustment made by the State under title XIX of such 
        Act (42 U.S.C. 1396 et seq.), after the application of section 
        4721(e) of the Balanced Budget Act of 1997 under paragraph (1) 
        to such State, exceeds the costs of furnishing hospital 
        services provided by hospitals described in such section shall 
        be fully reflected as an increase in the baseline expenditure 
        limit for such waiver, but subject to the DSH allotment for the 
        State under section 1923(f) of such title (42 U.S.C. 1396r-
        4(f)).
    (f) Assistance for Certain Public Hospitals.--
            (1) In general.--Subject to subsection (h), beginning with 
        fiscal year 2002, notwithstanding section 1923(f) of the Social 
        Security Act (42 U.S.C. 1396r-4(f)) and subject to paragraph 
        (3), with respect to a State, payment adjustments made under 
        title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) 
        to a hospital described in paragraph (2) shall be made without 
        regard to the DSH allotment limitation for the State determined 
        under section 1923(f) of that Act (42 U.S.C. 1396r-4(f)).
            (2) Hospital described.--A hospital is described in this 
        paragraph if the hospital--
                    (A) is owned or operated by a State (as defined for 
                purposes of title XIX of the Social Security Act), or 
                by an instrumentality or a unit of government within a 
                State (as so defined);
                    (B) as of October 1, 2000--
                            (i) is in existence and operating as a 
                        hospital described in subparagraph (A); and
                            (ii) is not receiving disproportionate 
                        share hospital payments from the State in which 
                        it is located under title XIX of such Act; and
                    (C) has a low-income utilization rate (as defined 
                in section 1923(b)(3) of the Social Security Act (42 
                U.S.C. 1396r-4(b)(3))) in excess of 65 percent.
            (3) Limitation on expenditures.--
                    (A) In general.--With respect to any fiscal year, 
                the aggregate amount of Federal financial participation 
                that may be provided for payment adjustments described 
                in paragraph (1) for that fiscal year for all States 
                may not exceed the amount described in subparagraph (B) 
                for the fiscal year.
                    (B) Amount described.--The amount described in this 
                subparagraph for a fiscal year is as follows:
                            (i) For fiscal year 2002, $15,000,000.
                            (ii) For fiscal year 2003, $176,000,000.
                            (iii) For fiscal year 2004, $269,000,000.
                            (iv) For fiscal year 2005, $330,000,000.
                            (v) For fiscal year 2006 and each fiscal 
                        year thereafter, $375,000,000.
    (g) DSH Payment Accountability Standards.--Subject to subsection 
(h), not later than September 30, 2002, the Secretary of Health and 
Human Services shall implement accountability standards to ensure that 
Federal funds provided with respect to disproportionate share hospital 
adjustments made under section 1923 of the Social Security Act (42 
U.S.C. 1396r-4) are used to reimburse States and hospitals eligible for 
such payment adjustments for providing uncompensated health care to 
low-income patients and are otherwise made in accordance with the 
requirements of section 1923 of that Act.
    (h) Effective Date.--The amendments made by subsection (f) and (g) 
take effect on the date the final regulation required under section 
705(a) (relating to the application of an aggregate upper payment limit 
test for State medicaid spending for inpatient hospital services, 
outpatient hospital services, nursing facility services, intermediate 
care facility services for the mentally retarded, and clinic services 
provided by government facilities that are not State-owned or operated 
facilities) is published in the Federal Register.

SEC. 702. 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.
            ``(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.--
                    ``(A) In general.--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 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.
                    ``(B) Payment schedule.--The supplemental payment 
                required under subparagraph (A) shall be made pursuant 
                to a payment schedule agreed to by the State and the 
                Federally-qualified health center or rural health 
                clinic, but in no case less frequently than every 4 
                months.
            ``(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 BBA (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 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. 703. STREAMLINED APPROVAL OF CONTINUED STATE-WIDE SECTION 1115 
              MEDICAID WAIVERS.

    (a) In General.--Section 1115 (42 U.S.C. 1315) is amended by adding 
at the end the following new subsection:
    ``(f) An application by the chief executive officer of a State for 
an extension of a waiver project the State is operating under an 
extension under subsection (e) (in this subsection referred to as the 
`waiver project') shall be submitted and approved or disapproved in 
accordance with the following:
            ``(1) The application for an extension of the waiver 
        project shall be submitted to the Secretary at least 120 days 
        prior to the expiration of the current period of the waiver 
        project.
            ``(2) Not later than 45 days after the date such 
        application is received by the Secretary, the Secretary shall 
        notify the State if the Secretary intends to review the terms 
        and conditions of the waiver project. A failure to provide such 
        notification shall be deemed to be an approval of the 
        application.
            ``(3) Not later than 45 days after the date a notification 
        is made in accordance with paragraph (2), the Secretary shall 
        inform the State of proposed changes in the terms and 
        conditions of the waiver project. A failure to provide such 
        information shall be deemed to be an approval of the 
        application.
            ``(4) During the 30-day period that begins on the date 
        information described in paragraph (3) is provided to a State, 
        the Secretary shall negotiate revised terms and conditions of 
        the waiver project with the State.
            ``(5)(A) Not later than 120 days after the date an 
        application for an extension of the waiver project is submitted 
        to the Secretary (or such later date agreed to by the chief 
        executive officer of the State), the Secretary shall--
                    ``(i) approve the application subject to such 
                modifications in the terms and conditions--
                            ``(I) as have been agreed to by the 
                        Secretary and the State; or
                            ``(II) in the absence of such agreement, as 
                        are determined by the Secretary to be 
                        reasonable, consistent with the overall 
                        objectives of the waiver project, and not in 
                        violation of applicable law; or
                    ``(ii) disapprove the application.
            ``(B) A failure by the Secretary to approve or disapprove 
        an application submitted under this subsection in accordance 
        with the requirements of subparagraph (A) shall be deemed to be 
        an approval of the application subject to such modifications in 
        the terms and conditions as have been agreed to (if any) by the 
        Secretary and the State.
            ``(6) An approval of an application for an extension of a 
        waiver project under this subsection shall be for a period not 
        to exceed 3 years.
            ``(7) An extension of a waiver project under this 
        subsection shall be subject to the final reporting and 
        evaluation requirements of paragraphs (4) and (5) of subsection 
        (e) (taking into account the extension under this subsection 
        with respect to any timing requirements imposed under those 
        paragraphs).''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to requests for extensions of demonstration projects pending or 
submitted on or after the date of the enactment of this Act.

SEC. 704. MEDICAID COUNTY-ORGANIZED HEALTH SYSTEMS.

    (a) In General.--Section 9517(c)(3)(C) of the Comprehensive Omnibus 
Budget Reconciliation Act of 1985 is amended by striking ``10 percent'' 
and inserting ``14 percent''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on the date of the enactment of this Act.

SEC. 705. DEADLINE FOR ISSUANCE OF FINAL REGULATION RELATING TO 
              MEDICAID UPPER PAYMENT LIMITS.

    (a) In General.--Not later than December 31, 2000, the Secretary of 
Health and Human Services (in this section referred to as the 
``Secretary''), notwithstanding any requirement of the Administrative 
Procedures Act under chapter 5 of title 5, United States Code, or any 
other provision of law, shall issue under sections 447.272, 447.304, 
and 447.321 of title 42, Code of Federal Regulations (and any other 
section of part 447 of title 42, Code of Federal Regulations that the 
Secretary determines is appropriate), a final regulation based on the 
proposed rule announced on October 5, 2000, that--
            (1) modifies the upper payment limit test applied to State 
        medicaid spending for inpatient hospital services, outpatient 
        hospital services, nursing facility services, intermediate care 
        facility services for the mentally retarded, and clinic 
        services by applying an aggregate upper payment limit to 
        payments made to government facilities that are not State-owned 
        or operated facilities; and
            (2) provides for a transition period in accordance with 
        subsection (b).
    (b) Transition Period.--
            (1) In general.--The final regulation required under 
        subsection (a) shall provide that, with respect to a State 
        described in paragraph (3), the State shall be considered to be 
        in compliance with the final regulation required under 
        subsection (a) so long as, for each State fiscal year during 
        the period described in paragraph (4), the State reduces 
        payments under a State medicaid payment methodology or a State 
        plan provision described in paragraph (3), or reduces the 
        actual dollar payment levels described in paragraph (3)(B), so 
        that the amount of the payments that would otherwise have been 
        made under such provision, methodology, or payment levels by 
        the State for any State fiscal year during such period is 
        reduced by 15 percent in the first such State fiscal year, and 
        by an additional 15 percent in each of next 5 State fiscal 
        years.
            (2) Requirement.--Notwithstanding paragraph (1), the final 
        regulation required under subsection (a) shall provide that, 
        for any period (or portion of a period) that occurs on or after 
        October 1, 2008, medicaid payments made by a State described in 
        paragraph (3) shall comply with such final regulation.
            (3) State described.--A State described in this paragraph 
        is a State with a State medicaid payment methodology or State 
        plan provision which--
                    (A) was approved, deemed to have been approved, or 
                was in effect on or before October 1, 1992 (including 
                any subsequent amendments or successor provisions or 
                methodologies and whether or not a State plan amendment 
                was made to carry out such provision or methodology 
                after such date) or under which claims for Federal 
                financial participation were filed and paid on or 
                before such date; and
                    (B) provides for payments that are in excess of the 
                upper payment limit test established under the final 
                regulation required under subsection (a) (or which 
                would be noncompliant with such final regulation if the 
                actual dollar payment levels made under the payment 
                provision or methodology in the State fiscal year which 
                begins during 1999 were continued).
            (4) Period described.--The period described in this 
        paragraph is the period that begins on the first State fiscal 
        year that begins after September 30, 2002, and ends on 
        September 30, 2008.

SEC. 706. ALASKA FMAP.

    Notwithstanding the first sentence of section 1905(b) of the Social 
Security Act (42 U.S.C. 1396d(b)), only with respect to each of fiscal 
years 2001 through 2005, for purposes of titles XIX and XXI of the 
Social Security Act, the State percentage used to determine the Federal 
medical assistance percentage for Alaska shall be that percentage which 
bears the same ratio to 45 percent as the square of the adjusted per 
capita income of Alaska (determined by dividing the State's 3-year 
average per capita income by 1.05) bears to the square of the per 
capita income of the 50 States.

SEC. 707. 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:
            ``(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 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. 708. 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. 709. 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. 710. 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), respectively; and
            (2) by inserting after paragraph (21) the following new 
        paragraph:
            ``(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;''.
    (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. 1396(p)(c)(1)(C)(ii)) is 
amended by striking ``(22), or (24)'' and inserting ``(23), or (25)''.

SECTION 711. MEDICAID FAMILY OPPORTUNITY PROVISIONS RELATED TO DISABLED 
              CHILDREN.

    (a) Opportunity for Families of Disabled Children To Purchase 
Medicaid Coverage for Such Children.--
            (1) State option to allow families of disabled children to 
        purchase medicaid coverage for such children.--
                    (A) In general.--Section 1902 (42 U.S.C. 1396a), as 
                amended by the Foster Care Independence Act of 1999 
                (Public Law 106-169; 113 Stat. 1822) and the Ticket to 
                Work and Work Incentives Improvement Act of 1999 
                (Public Law 106-170; 113 Stat. 1860), is amended--
                            (i) in subsection (a)(10)(A)(ii)--
                                    (I) by striking ``or'' at the end 
                                of subclause (XVI);
                                    (II) by adding ``or'' at the end of 
                                subclause (XVII); and
                                    (III) by adding at the end the 
                                following new subclause:
                                    ``(XVIII) who are disabled children 
                                described in subsection (aa);''; and
                            (ii) by adding at the end the following new 
                        subsection:
    ``(aa) Individuals described in this subsection are individuals--
            ``(1) who have not attained 18 years of age;
            ``(2) who would be considered disabled under section 
        1614(a)(3)(C) (determined without regard to the reference to 
        age in that section) but for having earnings or deemed income 
        or resources (as determined under title XVI for children) that 
        exceed the requirements for receipt of supplemental security 
        income benefits; and
            ``(3) whose family income does not exceed such income level 
        as the State establishes and does not exceed--
                    ``(A) 300 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; or
                    ``(B) such higher percent of such poverty line as a 
                State may establish, except that no Federal financial 
                participation shall be provided under section 1903(a) 
                for any medical assistance provided to an individual 
                who would not be described in this subsection but for 
                this clause.''.
                    (B) Interaction with employer-sponsored family 
                coverage.--Section 1902(aa) (42 U.S.C. 1396a(aa)), as 
                added by subparagraph (A), is amended by adding at the 
                end the following new paragraph:
    ``(3)(A) If an employer of a parent of an individual described in 
paragraph (1) offers family coverage under a group health plan (as 
defined in section 2791(a) of the Public Health Service Act), the State 
may--
            ``(i) notwithstanding section 1906(a)(3), require such 
        parent to apply for, enroll in, and pay premiums for, such 
        coverage as a condition of such parent's child being or 
        remaining eligible for medical assistance under subsection 
        (a)(10)(A)(ii)(XVIII) if the parent is determined eligible for 
        such coverage and the employer contributes at least 50 percent 
        of the total cost of annual premiums for such coverage; and
            ``(ii) if such coverage is obtained--
                    ``(I) subject to paragraph (2) of section 1916(h), 
                reduce the premium imposed by the State under that 
                section (if any) in an amount that reasonably reflects 
                the premium contribution made by the parent for private 
                coverage on behalf of a child with a disability; and
                    ``(II) treat such coverage as a third party 
                liability under subsection (a)(25).
    ``(B) In the case of a parent to which subparagraph (A) applies--
            ``(i) if the family income of such parent does not exceed 
        300 percent of the income official poverty line (referred to in 
        paragraph (1)(C)(i)), a State may provide for payment of any 
        portion of the annual premium for such family coverage that the 
        parent is required to pay; and
            ``(ii) any payments made by the State under clause (i) 
        shall be considered, for purposes of section 1903(a), to be 
        payments for medical assistance.''.
            (2) State option to impose income-related premiums.--
        Section 1916 (42 U.S.C. 1396o), as amended by the Ticket to 
        Work and Work Incentives Improvement Act of 1999 (Public Law 
        106-170; 113 Stat. 1860), is amended--
                    (A) in subsection (a), by striking ``subsection 
                (g)'' and inserting ``subsections (g) and (h)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(h)(1) With respect to disabled children provided medical 
assistance under section 1902(a)(10)(A)(ii)(XVIII), subject to 
paragraph (2), a State may (in a uniform manner for such children) 
require the families of such children to pay monthly premiums set on a 
sliding scale based on family income.
    ``(2) A premium requirement imposed under paragraph (1) may only 
apply to the extent that--
            ``(A) the aggregate amount of such premium and any premium 
        that the parent is required to pay for family coverage under 
        section 1902(aa)(3)(A)(i) does not exceed 5 percent of the 
        family's income; and
            ``(B) the requirement is imposed consistent with section 
        1902(aa)(3)(A)(ii)(I).
    ``(3) A State shall not require prepayment of a premium imposed 
pursuant to paragraph (1) and shall not terminate eligibility of a 
child under section 1902(a)(10)(A)(ii)(XVIII) for medical assistance 
under this title on the basis of failure to pay any such premium until 
such failure continues for a period of not less than 60 days from the 
date on which the premium became past due. The State may waive payment 
of any such premium in any case where the State determines that 
requiring such payment would create an undue hardship.''.
            (3) Conforming amendment.--Section 1903(f)(4) (42 U.S.C. 
        1396b(f)(4)) is amended in the matter preceding subparagraph 
        (A) by inserting ``1902(a)(10)(A)(ii)(XIII), 
        1902(a)(10)(A)(ii)(XVIII),'' after 
        ``1902(a)(10)(A)(ii)(XVI),''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to medical assistance for items and services 
        furnished on or after January 1, 2002.
    (b) Treatment of Inpatient Psychiatric Hospital Services for 
Individuals Under Age 21 in Home or Community-Based Services Waivers.--
            (1) In general.--Section 1915(c) (42 U.S.C. 1396n(c)) is 
        amended--
                    (A) in paragraph (1)--
                            (i) in the first sentence, by inserting ``, 
                        or inpatient psychiatric hospital services for 
                        individuals under age 21,'' after 
                        ``intermediate care facility for the mentally 
                        retarded''; and
                            (ii) in the second sentence, by inserting 
                        ``, or inpatient psychiatric hospital services 
                        for individuals under age 21'' before the 
                        period;
                    (B) in paragraph (2)(B), by striking ``or services 
                in an intermediate care facility for the mentally 
                retarded'' each place it appears and inserting ``, 
                services in an intermediate care facility for the 
                mentally retarded, or inpatient psychiatric hospital 
                services for individuals under age 21'';
                    (C) by striking paragraph (2)(C) and inserting the 
                following:
            ``(C) such individuals who are determined to be likely to 
        require the level of care provided in a hospital, nursing 
        facility, or intermediate care facility for the mentally 
        retarded, or inpatient psychiatric hospital services for 
        individuals under age 21, are informed of the feasible 
        alternatives, if available under the waiver, at the choice of 
        such individuals, to the provision of inpatient hospital 
        services, nursing facility services, services in an 
        intermediate care facility for the mentally retarded, or 
        inpatient psychiatric hospital services for individuals under 
        age 21;''; and
                    (D) in paragraph (7)(A)--
                            (i) by inserting ``, or inpatient 
                        psychiatric hospital services for individuals 
                        under age 21,'' after ``intermediate care 
                        facility for the mentally retarded''; and
                            (ii) by inserting ``, or who would require 
                        inpatient psychiatric hospital services for 
                        individuals under age 21'' before the period.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply with respect to medical assistance provided on or after 
        October 1, 2000.
    (c) Demonstration of Coverage Under the Medicaid Program of 
Children With Potentially Severe Disabilities.--
            (1) State application.--A State may apply to the Secretary 
        of Health and Human Services (in this subsection referred to as 
        the ``Secretary'') for approval of a demonstration project (in 
        this subsection referred to as a ``demonstration project'') 
        under which up to a specified maximum number of children with a 
        potentially severe disability (as defined in paragraph (2)) are 
        provided medical assistance under the State medicaid plan under 
        title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).
            (2) Child with a potentially severe disability defined.--
                    (A) In general.--In this subsection, the term 
                ``child with a potentially severe disability'' means, 
                with respect to a demonstration project, an individual 
                who--
                            (i) has not attained 21 years of age;
                            (ii) has a physical or mental condition, 
                        disease, disorder (including a congenital birth 
                        defect or a metabolic condition), injury, or 
                        developmental disability that was incurred 
                        before the individual attained such age; and
                            (iii) is reasonably expected, but for the 
                        receipt of medical assistance under the State 
                        medicaid plan, to reach the level of disability 
                        defined under section 1614(a)(3) of the Social 
                        Security Act (42 U.S.C. 1382c(a)(3)), 
                        (determined without regard to the reference to 
                        age in subparagraph (C) of that section).
                    (B) Exception.--Such term does not include an 
                individual who would be considered disabled under 
                section 1614(a)(3)(C) of the Social Security Act (42 
                U.S.C. 1382c(a)(3)(C)) (determined without regard to 
                the reference to age in that section).
            (3) Approval of demonstration projects.--
                    (A) In general.--Subject to subparagraph (C), the 
                Secretary shall approve applications under paragraph 
                (1) that meet the requirements of subparagraph (B) and 
                such additional terms and conditions as the Secretary 
                may require. The Secretary may waive the requirement of 
                section 1902(a)(1) of the Social Security Act (42 
                U.S.C. 1396a(a)(1)) to allow for sub-State 
                demonstrations.
                    (B) Terms and conditions of demonstration 
                projects.--The Secretary may not approve a 
                demonstration project under this subsection unless the 
                State provides assurances satisfactory to the Secretary 
                that the following conditions are or will be met:
                            (i) Independent evaluation.--The State 
                        provides for an independent evaluation of the 
                        project to be conducted during fiscal year 
                        2005.
                            (ii) Consultation for development of 
                        criteria.--The State consults with appropriate 
                        pediatric health professionals in establishing 
                        the criteria for determining whether a child 
                        has a potentially severe disability.
                            (iii) Annual report.--The State submits an 
                        annual report to the Secretary (in a uniform 
                        form and manner established by the Secretary) 
                        on the use of funds provided under the grant 
                        that includes the following:
                                    (II) Enrollment and financial 
                                statistics on the total number of 
                                children with a potentially severe 
                                disability enrolled in the 
                                demonstration project, disaggregated by 
                                disability; the services provided by 
                                category or code and the cost of each 
                                service so categorized or coded; and 
                                the number of children enrolled in the 
                                demonstration project who also receive 
                                services through private insurance.
                                    (II) With respect to the report 
                                submitted for fiscal year 2005, the 
                                results of the independent evaluation 
                                conducted under clause (i).
                                    (III) Such additional information 
                                as the Secretary may require.
                    (C) Limitations on federal funding.--
                            (i) Appropriation.--
                                    (I) In general.--Out of any funds 
                                in the Treasury not otherwise 
                                appropriated, there is appropriated to 
                                carry out this subsection $16,667,000 
                                for each of fiscal years 2001 through 
                                2006.
                                    (II) Budget authority.--Subclause 
                                (I) constitutes budget authority in 
                                advance of appropriations Acts and 
                                represents the obligation of the 
Federal Government to provide for the payment of the amounts 
appropriated under subclause (I).
                            (ii) Limitation on payments.--In no case 
                        may--
                                    (I) the aggregate amount of 
                                payments made by the Secretary to 
                                States under this subsection exceed 
                                $100,000,000;
                                    (II) the aggregate amount of 
                                payments made by the Secretary to 
                                States for administrative expenses 
                                relating to the evaluations and annual 
                                reports required under clauses (i) and 
                                (iii) of subparagraph (B) exceed 
                                $2,000,000 of such $100,000,000; or
                                    (III) payments be provided by the 
                                Secretary for a fiscal year after 
                                fiscal year 2009.
                            (iii) Funds allocated to states.--
                                    (I) In general.--The Secretary 
                                shall allocate funds to States based on 
                                their applications and the availability 
                                of funds. In making such allocations, 
                                the Secretary shall ensure an equitable 
                                distribution of funds among States with 
                                large populations and States with small 
                                populations.
                                    (II) Availability.--Funds allocated 
                                to a State under a grant made under 
                                this subsection for a fiscal year shall 
                                remain available until expended.
                            (iv) Funds not allocated to states.--Funds 
                        not allocated to States in the fiscal year for 
                        which they are appropriated shall remain 
                        available in succeeding fiscal years for 
                        allocation by the Secretary using the 
                        allocation formula established under this 
                        subsection.
                            (v) Payments to states.--The Secretary 
                        shall pay to each State with a demonstration 
                        project approved under this subsection, from 
                        its allocation under clause (iii), an amount 
                        for each quarter equal to the Federal medical 
                        assistance percentage (as defined in section 
                        1905(b) of the Social Security Act (42 U.S.C. 
                        1395d(b))) of expenditures in the quarter for 
                        medical assistance provided to children with a 
                        potentially severe disability.
            (4) Recommendation.--Not later than October 1, 2004, the 
        Secretary shall submit a recommendation to the Committee on 
        Commerce of the House of Representatives and the Committee on 
        Finance of the Senate regarding whether the demonstration 
        project established under this subsection should be continued 
        after fiscal year 2006.
            (5) State defined.--In this subsection, the term ``State'' 
        has the meaning given such term for purposes of title XIX of 
        the Social Security Act (42 U.S.C. 1396 et seq.).
    (d) Development and Support of Family-to-Family Health Information 
Centers.--Section 501 (42 U.S.C. 701) is amended by adding at the end 
the following new subsection:
    ``(c)(1)(A) In addition to amounts appropriated under subsection 
(a) and retained under section 502(a)(1) for the purpose of carrying 
out activities described in subsection (a)(2), there is appropriated to 
the Secretary, out of any money in the Treasury not otherwise 
appropriated, for the purpose of enabling the Secretary (through 
grants, contracts, or otherwise) to provide for special projects of 
regional and national significance for the development and support of 
family-to-family health information centers described in paragraph (2), 
$10,000,000 for each of fiscal years 2001 through 2006.
    ``(B) Funds appropriated under subparagraph (A) shall remain 
available until expended.
    ``(2) The family-to-family health information centers described in 
this paragraph are centers that--
            ``(A) assist families of children with disabilities or 
        special health care needs to make informed choices about health 
        care in order to promote good treatment decisions, cost-
        effectiveness, and improved health outcomes for such children;
            ``(B) provide information regarding the health care needs 
        of, and resources available for, children with disabilities or 
        special health care needs;
            ``(C) identify successful health delivery models for such 
        children;
            ``(D) develop with representatives of health care 
        providers, managed care organizations, health care purchasers, 
        and appropriate State agencies a model for collaboration 
        between families of such children and health professionals;
            ``(E) provide training and guidance regarding caring for 
        such children;
            ``(F) conduct outreach activities to the families of such 
        children, health professionals, schools, and other appropriate 
        entities and individuals; and
            ``(G) are staffed by families of children with disabilities 
        or special health care needs who have expertise in Federal and 
        State public and private health care systems and health 
        professionals.
    ``(3) The provisions of this title that are applicable to the funds 
made available to the Secretary under section 502(a)(1) apply in the 
same manner to funds made available to the Secretary under paragraph 
(1).''.
    (e) Restoration of Medicaid Eligibility for Certain SSI 
Beneficiaries.--
            (1) In general.--Section 1902(a)(10)(A)(i)(II) (42 U.S.C. 
        1396a(a)(10)(A)(i)(II)) is amended--
                    (A) by inserting ``(aa)'' after ``(II)'';
                    (B) by striking ``or who are'' and inserting ``(bb) 
                who are''; and
                    (C) by inserting before the comma at the end the 
                following: ``, or (cc) who are under 21 years of age 
                and with respect to whom supplemental security income 
                benefits would be paid under title XVI but for section 
                1611(c)(7)''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply to medical assistance for items and services furnished on 
        or after October 1, 2000, except that a State may elect to 
        apply such amendments to items and services furnished on or 
        after any date after the date of the enactment of this section 
        and before October 1, 2000.

         TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

SEC. 801. 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. 802. AUTHORITY TO PAY MEDICAID EXPANSION SCHIP COSTS FROM TITLE 
              XXI APPROPRIATION.

    (a) Authority To Pay Medicaid Expansion SCHIP Costs From Title XXI 
Appropriation.--Section 2105(a) (42 U.S.C. 1397ee(a)) is amended--
            (1) by redesignating subparagraphs (A) through (D) of 
        paragraph (2) as clauses (i) through (iv), respectively, and 
        indenting appropriately;
            (2) by redesignating paragraph (1) as subparagraph (C), and 
        indenting appropriately;
            (3) by redesignating paragraph (2) as subparagraph (D), and 
        indenting appropriately;
            (4) by striking ``(a) In General.--'' and the remainder of 
        the text that precedes subparagraph (C), as so redesignated, 
        and inserting the following:
    ``(a) Payments.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section, the Secretary shall pay to each State with a plan 
        approved under this title, from its allotment under section 
        2104, an amount for each quarter equal to the enhanced FMAP 
        (or, in the case of expenditures described in subparagraph (B), 
        the Federal medical assistance percentage (as defined in the 
        first sentence of section 1905(b))) of expenditures in the 
        quarter--
                    ``(A) for child health assistance under the plan 
                for targeted low-income children in the form of 
                providing medical assistance for which payment is made 
                on the basis of an enhanced FMAP under the fourth 
                sentence of section 1905(b);
                    ``(B) for the provision of medical assistance on 
                behalf of a child during a presumptive eligibility 
                period under section 1920A;''; and
            (5) by adding after subparagraph (D), as so redesignated, 
        the following new paragraph:
            ``(2) Order of payments.--Payments under paragraph (1) from 
        a State's allotment shall be made in the following order:
                    ``(A) First, for expenditures for items described 
                in paragraph (1)(A).
                    ``(B) Second, for expenditures for items described 
                in paragraph (1)(B).
                    ``(C) Third, for expenditures for items described 
                in paragraph (1)(C).
                    ``(D) Fourth, for expenditures for items described 
                in paragraph (1)(D).''.
    (b) Elimination of Requirement To Reduce Title XXI Allotment by 
Medicaid Expansion SCHIP Costs.--Section 2104 (42 U.S.C. 1397dd) is 
amended by striking subsection (d).
    (c) Authority To Transfer Title XXI Appropriations to Title XIX 
Appropriation Account as Reimbursement for Medicaid Expenditures for 
Medicaid Expansion SCHIP Services.--Notwithstanding any other provision 
of law, all amounts appropriated under title XXI and allotted to a 
State pursuant to subsection (b) or (c) of section 2104 of the Social 
Security Act (42 U.S.C. 1397dd) for fiscal years 1998 through 2000 
(including any amounts that, but for this provision, would be 
considered to have expired) and not expended in providing child health 
assistance or related services for which payment may be made pursuant 
to subparagraph (C) or (D) of section 2105(a)(1) of such Act (42 U.S.C. 
1397ee(a)(1)) (as amended by subsection (a)), shall be available to 
reimburse the Grants to States for Medicaid account in an amount equal 
to the total payments made to such State under section 1903(a) of such 
Act (42 U.S.C. 1396b(a)) for expenditures in such years for medical 
assistance described in subparagraphs (A) and (B) of section 2105(a)(1) 
of such Act (42 U.S.C. 1397ee(a)(1) (as so amended).
    (d) Conforming Amendments.--
            (1) Section 1905(b) (42 U.S.C. 1396d(b)) is amended in the 
        fourth sentence by striking ``the State's allotment under 
        section 2104 (not taking into account reductions under section 
        2104(d)(2)) for the fiscal year reduced by the amount of any 
        payments made under section 2105 to the State from such 
        allotment for such fiscal year'' and inserting ``the State's 
        available allotment under section 2104''.
            (2) Section 1905(u)(1)(B) (42 U.S.C. 1396d(u)(1)(B)) is 
        amended by striking ``and section 2104(d)''.
            (3) Section 2104 (42 U.S.C. 1397dd), as amended by 
        subsection (b), is further amended--
                    (A) in subsection (b)(1), by striking ``and 
                subsection (d)''; and
                    (B) in subsection (c)(1), by striking ``subject to 
                subsection (d),''.
            (4) Section 2105(c) (42 U.S.C. 1397ee(c)) is amended--
                    (A) in paragraph (2)(A), by striking all that 
                follows ``Except as provided in this paragraph,'' and 
                inserting ``the amount of payment that may be made 
                under subsection (a) for a fiscal year for expenditures 
                for items described in paragraph (1)(D) of such 
                subsection shall not exceed 10 percent of the total 
                amount of expenditures for which payment is made under 
                subparagraphs (A), (C), and (D) of paragraph (1) of 
                such subsection.'';
                    (B) in paragraph (2)(B), by striking ``described in 
                subsection (a)(2)'' and inserting ``described in 
                subsection (a)(1)(D)''; and
                    (C) in paragraph (6)(B), by striking ``Except as 
                otherwise provided by law,'' and inserting ``Except as 
                provided in subparagraph (A) or (B) of subsection 
                (a)(1) or any other provision of law,''.
            (5) Section 2110(a) (42 U.S.C. 1397jj(a)) is amended by 
        striking ``section 2105(a)(2)(A)'' and inserting ``section 
        2105(a)(1)(D)(i)''.
    (e) Technical Amendment.--Section 2105(d)(2)(B)(ii) (42 U.S.C. 
1397ee(d)(2)(B)(ii)) is amended by striking ``enhanced FMAP under 
section 1905(u)'' and inserting ``enhanced FMAP under the fourth 
sentence of section 1905(b)''.
    (f) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of section 4901 of the BBA 
(111 Stat. 552).

SEC. 803. OPTIONAL COVERAGE OF CERTAIN LEGAL IMMIGRANTS UNDER SCHIP.

    (a) In General.--Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)) as 
amended in section 707(d), is further 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 subsection (a) takes 
effect October 1, 2000, and applies to medical assistance and child 
health assistance furnished on or after such date.

                       TITLE IX--OTHER PROVISIONS

                        Subtitle A--PACE Program

SEC. 901. EXTENSION OF TRANSITION FOR CURRENT WAIVERS.

    Section 4803(d)(2) of BBA is amended--
            (1) in subparagraph (A), by striking ``24 months'' and 
        inserting ``36 months'';
            (2) in subparagraph (A), by striking ``the initial 
        effective date of regulations described in subsection (a)'' and 
        inserting ``July 1, 2000''; and
            (3) in subparagraph (B), by striking ``3 years'' and 
        inserting ``4 years''.

SEC. 902. CONTINUING OF CERTAIN OPERATING ARRANGEMENTS PERMITTED.

    (a) In General.--Section 1894(f)(2) (42 U.S.C. 1395eee(f)(2)) is 
amended by adding at the end the following new subparagraph:
                    ``(C) Continuation of modifications or waivers of 
                operational requirements under demonstration status.--
                If a PACE program operating under demonstration 
                authority has contractual or other operating 
                arrangements which are not otherwise recognized in 
                regulation and which were in effect on July 1, 2000, 
                the Secretary (in close consultation with, and with the 
                concurrence of, the State administering agency) shall 
                permit any such program to continue such arrangements 
                so long as such arrangements are found by the Secretary 
                and the State to be reasonably consistent with the 
                objectives of the PACE program.''.
    (b) Conforming Amendment.--Section 1934(f)(2) (42 U.S.C. 1396u-
4(f)(2)) is amended by adding at the end the following new 
subparagraph:
                    ``(C) Continuation of modifications or waivers of 
                operational requirements under demonstration status.--
                If a PACE program operating under demonstration 
                authority has contractual or other operating 
                arrangements which are not otherwise recognized in 
                regulation and which were in effect on July 1 2000, the 
                Secretary (in close consultation with, and with the 
                concurrence of, the State administering agency) shall 
                permit any such program to continue such arrangements 
                so long as such arrangements are found by the Secretary 
                and the State to be reasonably consistent with the 
                objectives of the PACE program.''.
    (c) Effective Date.--The amendments made by this section shall be 
effective as included in the enactment of BBA.

SEC. 903. FLEXIBILITY IN EXERCISING WAIVER AUTHORITY.

    In applying sections 1894(f)(2)(B) and 1934(f)(2)(B) of the Social 
Security Act (42 U.S.C. 1395eee(f)(2)(B), 1396u-4(f)(2)(B)), the 
Secretary of Health and Human Services--
            (1) shall approve or deny a request for a modification or a 
        waiver of provisions of the PACE protocol not later than 90 
        days after the date the Secretary receives the request; and
            (2) may exercise authority to modify or waive such 
        provisions in a manner that responds promptly to the needs of 
        PACE programs relating to areas of employment and the use of 
        community-based primary care physicians.

   Subtitle B--Outreach to Eligible Low-Income Medicare Beneficiaries

SEC. 911. OUTREACH ON AVAILABILITY OF MEDICARE COST-SHARING ASSISTANCE 
              TO ELIGIBLE LOW-INCOME MEDICARE BENEFICIARIES.

    (a) Outreach.--
            (1) In general.--Title XI (42 U.S.C. 1301 et seq.) is 
        amended by inserting after section 1143 the following new 
        section:

    ``outreach efforts to increase awareness of the availability of 
                         medicare cost-sharing

    ``Sec. 1144. (a) Outreach.--
            ``(1) In general.--The Commissioner of Social Security (in 
        this section referred to as the `Commissioner') shall conduct 
        outreach efforts to--
                    ``(A) identify individuals entitled to benefits 
                under the medicare program under title XVIII who may be 
                eligible for medical assistance for payment of the cost 
                of medicare cost-sharing under the medicaid program 
                pursuant to sections 1902(a)(10)(E) and 1933; and
                    ``(B) notify such individuals of the availability 
                of such medical assistance under such sections.
            ``(2) Content of notice.--Any notice furnished under 
        paragraph (1) shall state that eligibility for medicare cost-
        sharing assistance under such sections is conditioned upon--
                    ``(A) the individual providing to the State 
                information about income and resources (in the case of 
                an individual residing in a State that imposes an 
                assets test for such eligibility); and
                    ``(B) meeting the applicable eligibility criteria.
    ``(b) Coordination With States.--
            ``(1) In general.--In conducting the outreach efforts under 
        this section, the Commissioner shall--
                    ``(A) furnish the agency of each State responsible 
                for the administration of the medicaid program and any 
                other appropriate State agency with information 
                consisting of the name and address of individuals 
                residing in the State that the Commissioner determines 
                may be eligible for medical assistance for payment of 
                the cost of medicare cost-sharing under the medicaid 
                program pursuant to sections 1902(a)(10)(E) and 1933; 
                and
                    ``(B) update any such information not less 
                frequently than once per year.
            ``(2) Information in periodic updates.--The periodic 
        updates described in paragraph (1)(B) shall include information 
        on individuals who are or may be eligible for the medical 
        assistance described in paragraph (1)(A) because such 
        individuals have experienced reductions in benefits under title 
        II.''.
            (2) Amendment to title xix.--Section 1905(p) (42 U.S.C. 
        1396d(p)) is amended by adding at the end the following new 
        paragraph:
    ``(5) For provisions relating to outreach efforts to increase 
awareness of the availability of medicare cost-sharing, see section 
1144.''.
    (b) GAO Report.--The Comptroller General of the United States shall 
conduct a study of the impact of section 1144 of the Social Security 
Act (as added by subsection (a)(1)) on the enrollment of individuals 
for medicare cost-sharing under the medicaid program. Not later than 18 
months after the date that the Commissioner of Social Security first 
conducts outreach under section 1144 of such Act, the Comptroller 
General shall submit to Congress a report on such study. The report 
shall include such recommendations for legislative changes as the 
Comptroller General deems appropriate.
    (c) Effective Date.--The amendments made by subsections (a) shall 
take effect one year after the date of the enactment of this Act.

           Subtitle C--Maternal and Child Health Block Grant

SEC. 921. INCREASE IN AUTHORIZATION OF APPROPRIATIONS FOR THE MATERNAL 
              AND CHILD HEALTH SERVICES BLOCK GRANT.

    (a) In General.--Section 501(a) (42 U.S.C. 701(a)) is amended in 
the matter preceding paragraph (1) by striking ``$705,000,000 for 
fiscal year 1994'' and inserting ``$850,000,000 for fiscal year 2001''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on October 1, 2000.

                          Subtitle D--Diabetes

SEC. 931. INCREASE IN APPROPRIATIONS FOR SPECIAL DIABETES PROGRAMS FOR 
              TYPE I DIABETES AND INDIANS.

    (a) Special Diabetes Programs for Type I Diabetes.--Section 330B(b) 
of the Public Health Service Act (42 U.S.C. 254c-2(b)) is amended--
            (1) by striking ``Notwithstanding'' and inserting the 
        following:
            ``(1) Transferred funds.--Notwithstanding''; and
            (2) by adding at the end the following:
            ``(2) Appropriations.--For the purpose of making grants 
        under this section, there is appropriated, out of any funds in 
        the Treasury not otherwise appropriated--
                    ``(A) $70,000,000 for each of fiscal years 2001 and 
                2002 (which shall be combined with amounts transferred 
                under paragraph (1) for each such fiscal years); and
                    ``(B) $100,000,000 for fiscal year 2003.''.
    (b) Special Diabetes Programs for Indians.--Section 330C(c) of such 
Act (42 U.S.C. 254c-3(c)) is amended--
            (1) by striking ``Notwithstanding'' and inserting the 
        following:
            ``(1) Transferred funds.--Notwithstanding''; and
            (2) by adding at the end the following:
            ``(2) Appropriations.--For the purpose of making grants 
        under this section, there is appropriated, out of any money in 
        the Treasury not otherwise appropriated--
                    ``(A) $70,000,000 for each of fiscal years 2001 and 
                2002 (which shall be combined with amounts transferred 
                under paragraph (1) for each such fiscal years); and
                    ``(B) $100,000,000 for fiscal year 2003.''.
    (c) Extension of Final Report on Grant Programs.--Section 
4923(b)(2) of BBA is amended by striking ``2002'' and inserting 
``2003''.

SEC. 932. APPROPRIATIONS FOR RICKY RAY HEMOPHILIA RELIEF FUND.

    Section 101(e) of the Ricky Ray Hemophilia Relief Fund Act of 1998 
(42 U.S.C. 300c-22 note) is amended by adding at the end the following: 
``There is appropriated to the Fund $475,000,000 for fiscal year 2001, 
to remain available until expended.''.
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