I

106TH CONGRESS

2D SESSION H. R. 5543

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

OCTOBER 25, 2000

Mr. THOMAS (for himself, Mr. BLILEY, and Mr. BILIRAKIS) 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.

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

3 TABLE OF CONTENTS.

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

5 ‘‘Medicare, Medicaid, and SCHIP Benefits Improvement

6 and Protection Act of 2000’’.

7 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex8 cept as otherwise specifically provided, whenever in this

9 Act an amendment is expressed in terms of an amendment

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

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

12 provision of the Social Security Act.

13 (c) REFERENCES TO OTHER ACTS.—In this Act:

14 (1) BALANCED BUDGET ACT OF 1997.—The

15 term ‘‘BBA’’ means the Balanced Budget Act of

16 1997 (Public Law 105–33; 111 Stat. 251).

17 (2) MEDICARE, MEDICAID, AND SCHIP BAL18 ANCED BUDGET REFINEMENT ACT OF 1999.—The

19 term ‘‘BBRA’’ means the Medicare, Medicaid, and

20 SCHIP Balanced Budget Refinement Act of 1999

21 (Appendix F, 113 Stat. 1501A–321), as enacted into

22 law by section 1000(a)(6) of Public Law 106–113.

23 (d) TABLE OF CONTENTS.—The table of contents of

24 this Act is as follows:

Sec. 1. Short title; amendments to Social Security Act; references to other Acts;

table of contents.
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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.

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 prescription drugs.

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. Institute of Medicine study on waiver of 24-month waiting period for

medicare disability eligibility for amyotrophic lateral sclerosis

(ALS) and other devastating diseases.

Sec. 127. Studies on preventive interventions in primary care for older Americans.

Sec. 128. 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.
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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. Revision of acute care hospital payment update for 2001.

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.

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.

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 buyin for State and local retirees.

Sec. 332. Posting of information on nursing facility staffing.

TITLE IV—PROVISIONS RELATING TO PART B

Subtitle A—Hospital Outpatient Services

Sec. 401. Revision of hospital outpatient PPS payment update.
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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 passthrough for certain medical devices, drugs, and biologicals

under OPD PPS.

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. Contrast enhanced diagnostic procedures under hospital prospective

payment system.

Sec. 431. Qualifications for community mental health centers.

Sec. 432. Modification of medicare billing requirements for certain Indian providers.

Sec. 433. GAO study on coverage of surgical first assisting services of certified

registered nurse first assistants.

Sec. 434. MedPAC study and report on medicare reimbursement for services

provided by certain providers.

Sec. 435. MedPAC study and report on medicare coverage of services provided

by certain nonphysician providers.

Sec. 436. GAO study and report on the costs of emergency and medical transportation services.

Sec. 437. GAO studies and reports on medicare payments.

Sec. 438. 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. 1-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.
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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.

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.

TITLE VI—PROVISIONS RELATING TO PART C

(MEDICARE+CHOICE PROGRAM) AND OTHER MEDICARE MANAGED CARE PROVISIONS

Subtitle A—Medicare+Choice Payment Reforms

Sec. 601. Increase in minimum payment amount.

Sec. 602. Increase in minimum percentage increase.

Sec. 603. 10-year phase-in of risk adjustment.

Sec. 604. Transition to revised Medicare+Choice payment rates.

Sec. 605. Revision of payment rates for ESRD patients enrolled in

Medicare+Choice plans.

Sec. 606. Permitting premium reductions as additional benefits under

Medicare+Choice plans.

Sec. 607. Full implementation of risk adjustment for congestive heart failure

enrollees for 2001.

Sec. 608. Expansion of application of Medicare+Choice new entry bonus.

Sec. 609. Report on inclusion of certain costs of the Department of Veterans

Affairs and military facility services in calculating

Medicare+Choice payment rates.
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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.

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.

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.

TITLE IX—OTHER PROVISIONS

Subtitle A—PACE Program
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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.

1 TITLE I—MEDICARE

2 BENEFICIARY IMPROVEMENTS

3 Subtitle A—Improved Preventive

4 Benefits

5 SEC. 101. COVERAGE OF BIENNIAL SCREENING PAP SMEAR

6 AND PELVIC EXAMS.

7 (a) IN GENERAL.—

8 (1) BIENNIAL SCREENING PAP SMEAR.—Section

9 1861(nn)(1) (42 U.S.C. 1395x(nn)(1)) is amended

10 by striking ‘‘3 years’’ and inserting ‘‘2 years’’.

11 (2) BIENNIAL SCREENING PELVIC EXAM.—Sec12 tion 1861(nn)(2) (42 U.S.C. 1395x(nn)(2)) is

13 amended by striking ‘‘3 years’’ and inserting ‘‘2

14 years’’.

15 (b) EFFECTIVE DATE.—The amendments made by

16 subsection (a) apply to items and services furnished on

17 or after July 1, 2001.
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1 SEC. 102. COVERAGE OF SCREENING FOR GLAUCOMA.

2 (a) COVERAGE.—Section 1861(s)(2) (42 U.S.C.

3 1395x(s)(2)) is amended—

4 (1) by striking ‘‘and’’ at the end of subpara5 graph (S);

6 (2) by inserting ‘‘and’’ at the end of subpara7 graph (T); and

8 (3) by adding at the end the following:

9 ‘‘(U) screening for glaucoma (as defined in sub10 section (uu)) for individuals determined to be at

11 high risk for glaucoma, individuals with a family his12 tory of glaucoma and individuals with diabetes;’’.

13 (b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.

14 1395x) is amended by adding at the end the following new

15 subsection:

16 ‘‘Screening for Glaucoma

17 ‘‘(uu) The term ‘screening for glaucoma’ means a di18 lated eye examination with an intraocular pressure meas19 urement, and a direct ophthalmoscopy or a slit-lamp bio20 microscopic examination for the early detection of glau21 coma which is furnished by or under the direct supervision

22 of an optometrist or ophthalmologist who is legally author23 ized to furnish such services under State law (or the State

24 regulatory mechanism provided by State law) of the State

25 in which the services are furnished, as would otherwise

26 be covered if furnished by a physician or as an incident
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1 to a physician’s professional service, if the individual in2 volved has not had such an examination in the preceding

3 year.’’.

4 (c) CONFORMING AMENDMENT.—Section

5 1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is amended—

6 (1) by striking ‘‘and,’’; and

7 (2) by adding at the end the following: ‘‘and, in

8 the case of screening for glaucoma, which is per9 formed more frequently than is provided under sec10 tion 1861(uu),’’.

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

12 this section shall apply to services furnished on or after

13 January 1, 2002.

14 SEC. 103. COVERAGE OF SCREENING COLONOSCOPY FOR

15 AVERAGE RISK INDIVIDUALS.

16 (a) IN GENERAL.—Section 1861(pp) (42 U.S.C.

17 1395x(pp)) is amended—

18 (1) in paragraph (1)(C), by striking ‘‘In the

19 case of an individual at high risk for colorectal can20 cer, screening colonoscopy’’ and inserting ‘‘Screening

21 colonoscopy’’; and

22 (2) in paragraph (2), by striking ‘‘In paragraph

23 (1)(C), an’’ and inserting ‘‘An’’.
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1 (b) FREQUENCY LIMITS FOR SCREENING

2 COLONOSCOPY.—Section 1834(d) (42 U.S.C. 1395m(d))

3 is amended—

4 (1) in paragraph (2)(E)(ii), by inserting before

5 the period at the end the following: ‘‘or, in the case

6 of an individual who is not at high risk for colorectal

7 cancer, if the procedure is performed within the 119

8 months after a previous screening colonoscopy’’;

9 (2) in paragraph (3)—

10 (A) in the heading by striking ‘‘FOR INDI11 VIDUALS AT HIGH RISK FOR COLORECTAL CAN12 CER’’;

13 (B) in subparagraph (A), by striking ‘‘for

14 individuals at high risk for colorectal cancer (as

15 defined in section 1861(pp)(2))’’;

16 (C) in subparagraph (E), by inserting be17 fore the period at the end the following: ‘‘or for

18 other individuals if the procedure is performed

19 within the 119 months after a previous screen20 ing colonoscopy or within 47 months after a

21 previous screening flexible sigmoidoscopy’’.

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

23 this section apply to colorectal cancer screening services

24 provided on or after July 1, 2001.
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1 SEC. 104. MODERNIZATION OF SCREENING MAMMOGRAPHY

2 BENEFIT.

3 (a) INCLUSION IN PHYSICIAN FEE SCHEDULE.—Sec4 tion 1848(j)(3) (42 U.S.C. 1395w–4(j)(3)) is amended by

5 inserting ‘‘(13),’’ after ‘‘(4),’’.

6 (b) CONFORMING AMENDMENT.—Section 1834(c)

7 (42 U.S.C. 1395m(c)) is amended to read as follows:

8 ‘‘(c) PAYMENT AND STANDARDS FOR SCREENING

9 MAMMOGRAPHY.—

10 ‘‘(1) IN GENERAL.—With respect to expenses

11 incurred for screening mammography (as defined in

12 section 1861(jj)), payment may be made only—

13 ‘‘(A) for screening mammography con14 ducted consistent with the frequency permitted

15 under paragraph (2); and

16 ‘‘(B) if the screening mammography is

17 conducted by a facility that has a certificate (or

18 provisional certificate) issued under section 354

19 of the Public Health Service Act.

20 ‘‘(2) FREQUENCY COVERED.—

21 ‘‘(A) IN GENERAL.—Subject to revision by

22 the Secretary under subparagraph (B)—

23 ‘‘(i) no payment may be made under

24 this part for screening mammography per25 formed on a woman under 35 years of age;
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1 ‘‘(ii) payment may be made under this

2 part for only one screening mammography

3 performed on a woman over 34 years of

4 age, but under 40 years of age; and

5 ‘‘(iii) in the case of a woman over 39

6 years of age, payment may not be made

7 under this part for screening mammog8 raphy performed within 11 months fol9 lowing the month in which a previous

10 screening mammography was performed.

11 ‘‘(B) REVISION OF FREQUENCY.—

12 ‘‘(i) REVIEW.—The Secretary, in con13 sultation with the Director of the National

14 Cancer Institute, shall review periodically

15 the appropriate frequency for performing

16 screening mammography, based on age

17 and such other factors as the Secretary be18 lieves to be pertinent.

19 ‘‘(ii) REVISION OF FREQUENCY.—The

20 Secretary, taking into consideration the re21 view made under clause (i), may revise

22 from time to time the frequency with

23 which screening mammography may be

24 paid for under this subsection.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 subsections (a) and (b) apply with respect to screening

3 mammographies furnished on or after January 1, 2002.

4 (d) PAYMENT FOR NEW TECHNOLOGIES.—

5 (1) TESTS FURNISHED IN 2001.—

6 (A) SCREENING.—For a screening mam7 mography (as defined in section 1861(jj) of the

8 Social Security Act (42 U.S.C. 1395(jj))) fur9 nished during the period beginning on April 1,

10 2001, and ending on December 31, 2001, that

11 uses a new technology, payment for such

12 screening mammography shall be made as fol13 lows:

14 (i) In the case of a technology which

15 directly takes a digital image (without in16 volving film) and subsequently analyzes

17 such resulting image with software to iden18 tify possible problem areas, in an amount

19 equal to 150 percent of the amount of pay20 ment under section 1848 of such Act (42

21 U.S.C. 1395w–4) for a bilateral diagnostic

22 mammography (under HCPCS code

23 76091) for such year.

24 (ii) In the case of a technology which

25 allows conversion of a standard film mam-
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1 mogram into a digital image and subse2 quently analyzes such resulting image with

3 software to identify possible problem areas,

4 in an amount equal to the limit that would

5 otherwise be applied under section

6 1834(c)(3) of such Act (42 U.S.C.

7 1395m(c)(3)) for 2001, increased by $15.

8 (B) BILATERAL DIAGNOSTIC MAMMOG9 RAPHY.—For a bilateral diagnostic mammog10 raphy (under HCPCS code 76091) furnished

11 during the period beginning on April 1, 2001,

12 and ending on December 31, 2001, that uses a

13 new technology described in subparagraph

14 (A)(i), payment for such mammography shall

15 be the amount of payment provided for under

16 such subparagraph.

17 The Secretary of Health and Human Services may

18 implement the provisions of this paragraph by pro19 gram memorandum or otherwise.

20 (2) CONSIDERATION OF NEW HCPCS CODE FOR

21 NEW TECHNOLOGIES AFTER 2001.—The Secretary

22 shall determine, for such screening mammographies

23 performed after 2001, whether the assignment of a

24 new HCPCS code is appropriate for screening mam25 mography that uses a new technology. If the Sec-
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1 retary determines that a new code is appropriate for

2 such screening mammography, the Secretary shall

3 provide for such new code for such tests furnished

4 after 2001.

5 (3) NEW TECHNOLOGY DESCRIBED.—For pur6 poses of this subsection, a new technology with re7 spect to a screening mammography is an advance in

8 technology with respect to the test or equipment

9 that results in the following:

10 (A) A significant increase or decrease in

11 the resources used in the test or in the manu12 facture of the equipment.

13 (B) A significant improvement in the per14 formance of the test or equipment.

15 (C) A significant advance in medical tech16 nology that is expected to significantly improve

17 the treatment of medicare beneficiaries.

18 (4) HCPCS CODE DEFINED.—The term

19 ‘‘HCPCS code’’ means an alphanumeric code under

20 the Health Care Financing Administration Common

21 Procedure Coding System (HCPCS).
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1 SEC. 105. COVERAGE OF MEDICAL NUTRITION THERAPY

2 SERVICES FOR BENEFICIARIES WITH DIABE3 TES OR A RENAL DISEASE.

4 (a) COVERAGE.—Section 1861(s)(2) (42 U.S.C.

5 1395x(s)(2)), as amended by section 102(a), is amended—

6 (1) in subparagraph (T), by striking ‘‘and’’ at

7 the end;

8 (2) in subparagraph (U), by inserting ‘‘and’’ at

9 the end; and

10 (3) by adding at the end the following new sub11 paragraph:

12 ‘‘(V) medical nutrition therapy services (as de13 fined in subsection (vv)(1)) in the case of a bene14 ficiary with diabetes or a renal disease who—

15 ‘‘(i) has not received diabetes outpatient

16 self-management training services within a time

17 period determined by the Secretary; and

18 ‘‘(ii) meets such other criteria determined

19 by the Secretary after consideration of protocols

20 established by dietitian or nutrition professional

21 organizations;’’.

22 (b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.

23 1395x), as amended by section 102(b), is amended by add24 ing at the end the following:
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1 ‘‘Medical Nutrition Therapy Services; Registered

2 Dietitian or Nutrition Professional

3 ‘‘(vv)(1) The term ‘medical nutrition therapy serv4 ices’ means nutritional diagnostic, therapy, and counseling

5 services for the purpose of disease management which are

6 furnished by a registered dietitian or nutrition profes7 sional (as defined in paragraph (2)) pursuant to a referral

8 by a physician (as defined in subsection (r)(1)).

9 ‘‘(2) Subject to paragraph (3), the term ‘registered

10 dietitian or nutrition professional’ means an individual

11 who—

12 ‘‘(A) holds a baccalaureate or higher degree

13 granted by a regionally accredited college or univer14 sity in the United States (or an equivalent foreign

15 degree) with completion of the academic require16 ments of a program in nutrition or dietetics, as ac17 credited by an appropriate national accreditation or18 ganization recognized by the Secretary for this pur19 pose;

20 ‘‘(B) has completed at least 900 hours of super21 vised dietetics practice under the supervision of a

22 registered dietitian or nutrition professional; and

23 ‘‘(C)(i) is licensed or certified as a dietitian or

24 nutrition professional by the State in which the serv25 ices are performed; or
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1 ‘‘(ii) in the case of an individual in a State that

2 does not provide for such licensure or certification,

3 meets such other criteria as the Secretary estab4 lishes.

5 ‘‘(3) Subparagraphs (A) and (B) of paragraph (2)

6 shall not apply in the case of an individual who, as of the

7 date of the enactment of this subsection, is licensed or cer8 tified as a dietitian or nutrition professional by the State

9 in which medical nutrition therapy services are per10 formed.’’.

11 (c) PAYMENT.—Section 1833(a)(1) (42 U.S.C.

12 1395l(a)(1)) is amended—

13 (1) by striking ‘‘and’’ before ‘‘(S)’’; and

14 (2) by inserting before the semicolon at the end

15 the following: ‘‘, and (T) with respect to medical nu16 trition therapy services (as defined in section

17 1861(vv)), the amount paid shall be 80 percent of

18 the lesser of the actual charge for the services or 85

19 percent of the amount determined under the fee

20 schedule established under section 1848(b) for the

21 same services if furnished by a physician’’.

22 (d) APPLICATION OF LIMITS ON BILLING.—Section

23 1842(b)(18)(C) (42 U.S.C. 1395u(b)(18)(C)) is amended

24 by adding at the end the following new clause:
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1 ‘‘(vi) A registered dietitian or nutrition profes2 sional.’’.

3 (e) EFFECTIVE DATE.—The amendments made by

4 this section apply to services furnished on or after Janu5 ary 1, 2002.

6 (f) STUDY.—Not later than July 1, 2003, the Sec7 retary of Health and Human Services shall submit to Con8 gress a report that contains recommendations with respect

9 to the expansion to other medicare beneficiary populations

10 of the medical nutrition therapy services benefit (furnished

11 under the amendments made by this section).

12 Subtitle B—Other Beneficiary

13 Improvements

14 SEC. 111. ACCELERATION OF REDUCTION OF BENEFICIARY

15 COPAYMENT FOR HOSPITAL OUTPATIENT DE16 PARTMENT SERVICES.

17 (a) REDUCING THE UPPER LIMIT ON BENEFICIARY

18 COPAYMENT.—

19 (1) IN GENERAL.—Section 1833(t)(8)(C) (42

20 U.S.C. 1395l(t)(8)(C)) is amended to read as fol21 lows:

22 ‘‘(C) LIMITATION ON COPAYMENT

23 AMOUNT.—

24 ‘‘(i) TO INPATIENT HOSPITAL DE25 DUCTIBLE AMOUNT.—In no case shall the
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1 copayment amount for a procedure per2 formed in a year exceed the amount of the

3 inpatient hospital deductible established

4 under section 1813(b) for that year.

5 ‘‘(ii) TO SPECIFIED PERCENTAGE.—

6 The Secretary shall reduce the national

7 unadjusted copayment amount for a cov8 ered OPD service (or group of such serv9 ices) furnished in a year in a manner so

10 that the effective copayment rate (deter11 mined on a national unadjusted basis) for

12 that service in the year does not exceed the

13 following percentage:

14 ‘‘(I) For procedures performed in

15 2001, 60 percent.

16 ‘‘(II) For procedures performed

17 in 2002 or 2003, 55 percent.

18 ‘‘(III) For procedures performed

19 in 2004, 50 percent.

20 ‘‘(IV) For procedures performed

21 in 2005, 45 percent.

22 ‘‘(V) For procedures performed

23 in 2006 and thereafter, 40 percent.’’.
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1 (2) EFFECTIVE DATE.—The amendment made

2 by paragraph (1) applies with respect to services

3 furnished on or after January 1, 2001.

4 (b) CONSTRUCTION REGARDING LIMITING IN5 CREASES IN COST-SHARING.—Nothing in this Act or the

6 Social Security Act shall be construed as preventing a hos7 pital from waiving the amount of any coinsurance for out8 patient hospital services under the medicare program

9 under title XVIII of the Social Security Act that may have

10 been increased as a result of the implementation of the

11 prospective payment system under section 1833(t) of the

12 Social Security Act (42 U.S.C. 1395l(t)).

13 (c) GAO STUDY OF REDUCTION IN MEDIGAP PRE14 MIUM LEVELS RESULTING FROM REDUCTIONS IN COIN15 SURANCE.—The Comptroller General of the United States

16 shall work, in concert with the National Association of In17 surance Commissioners, to evaluate the extent to which

18 the premium levels for medicare supplemental policies re19 flect the reductions in coinsurance resulting from the

20 amendment made by subsection (a). Not later than April

21 1, 2004, the Comptroller General shall submit to Congress

22 a report on such evaluation and the extent to which the

23 reductions in beneficiary coinsurance effected by such

24 amendment have resulted in actual savings to medicare

25 beneficiaries.
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1 SEC. 112. PRESERVATION OF COVERAGE OF DRUGS AND

2 BIOLOGICALS UNDER PART B OF THE MEDI3 CARE PROGRAM.

4 (a) IN GENERAL.—Section 1861(s)(2) (42 U.S.C.

5 1395x(s)(2)) is amended, in each of subparagraphs (A)

6 and (B), by striking ‘‘(including drugs and biologicals

7 which cannot, as determined in accordance with regula8 tions, be self-administered)’’ and inserting ‘‘(including

9 drugs and biologicals which are not usually self-adminis10 tered by the patient)’’.

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

12 subsection (a) applies to drugs and biologicals adminis13 tered on or after the date of the enactment of this Act.

14 SEC. 113. ELIMINATION OF TIME LIMITATION ON MEDI15 CARE BENEFITS FOR IMMUNOSUPPRESSIVE

16 DRUGS.

17 (a) IN GENERAL.—Section 1861(s)(2)(J) (42 U.S.C.

18 1395x(s)(2)(J)) is amended by striking ‘‘, but only’’ and

19 all that follows up to the semicolon at the end.

20 (b) CONFORMING AMENDMENTS.—

21 (1) EXTENDED COVERAGE.—Section 1832 (42

22 U.S.C. 1395k) is amended—

23 (A) by striking subsection (b); and

24 (B) by redesignating subsection (c) as sub25 section (b).
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1 (2) PASS-THROUGH; REPORT.—Section 227 of

2 BBRA is amended by striking subsection (d).

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

4 subsection (a) shall apply to drugs furnished on or after

5 the date of the enactment of this Act.

6 SEC. 114. IMPOSITION OF BILLING LIMITS ON PRESCRIP7 TION DRUGS.

8 (a) IN GENERAL.—Section 1842(o) (42 U.S.C.

9 1395u(o)) is amended by adding at the end the following

10 new paragraph:

11 ‘‘(3)(A) Payment for a charge for any drug or biologi12 cal for which payment may be made under this part may

13 be made under this part only on an assignment-related

14 basis.

15 ‘‘(B) The provisions of subsection (b)(18)(B) shall

16 apply to charges for such drugs or biologicals in the same

17 manner as they apply to services furnished by a practi18 tioner described in subsection (b)(18)(C).’’.

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

20 subsection (a) shall apply to items furnished on or after

21 January 1, 2001.
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1 Subtitle C—Demonstration

2 Projects and Studies

3 SEC. 121. DEMONSTRATION PROJECT FOR DISEASE MAN4 AGEMENT FOR SEVERELY CHRONICALLY ILL

5 MEDICARE BENEFICIARIES.

6 (a) IN GENERAL.—The Secretary of Health and

7 Human Services shall conduct a demonstration project

8 under this section (in this section referred to as the

9 ‘‘project’’) to demonstrate the impact on costs and health

10 outcomes of applying disease management to medicare

11 beneficiaries with diagnosed, advanced-stage congestive

12 heart failure, diabetes, or coronary heart disease. In no

13 case may the number of participants in the project exceed

14 30,000 at any time.

15 (b) VOLUNTARY PARTICIPATION.—

16 (1) ELIGIBILITY.—Medicare beneficiaries are

17 eligible to participate in the project only if—

18 (A) they meet specific medical criteria

19 demonstrating the appropriate diagnosis and

20 the advanced nature of their disease;

21 (B) their physicians approve of participa22 tion in the project; and

23 (C) they are not enrolled in a

24 Medicare+Choice plan.
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1 (2) BENEFITS.—A beneficiary who is enrolled

2 in the project shall be eligible—

3 (A) for disease management services re4 lated to their chronic health condition; and

5 (B) for payment for all costs for prescrip6 tion drugs without regard to whether or not

7 they relate to the chronic health condition, ex8 cept that the project may provide for modest

9 cost-sharing with respect to prescription drug

10 coverage.

11 (c) CONTRACTS WITH DISEASE MANAGEMENT ORGA12 NIZATIONS.—

13 (1) IN GENERAL.—The Secretary of Health and

14 Human Services shall carry out the project through

15 contracts with up to three disease management orga16 nizations. The Secretary shall not enter into such a

17 contract with an organization unless the organiza18 tion demonstrates that it can produce improved

19 health outcomes and reduce aggregate medicare ex20 penditures consistent with paragraph (2).

21 (2) CONTRACT PROVISIONS.—Under such

22 contracts—

23 (A) such an organization shall be required

24 to provide for prescription drug coverage de25 scribed in subsection (b)(2)(B);
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1 (B) such an organization shall be paid a

2 fee negotiated and established by the Secretary

3 in a manner so that (taking into account sav4 ings in expenditures under parts A and B of

5 the medicare program under title XVIII of the

6 Social Security Act) there will be a net reduc7 tion in expenditures under the medicare pro8 gram as a result of the project; and

9 (C) such an organization shall guarantee,

10 through an appropriate arrangement with a re11 insurance company or otherwise, the net reduc12 tion in expenditures described in subparagraph

13 (B).

14 (3) PAYMENTS.—Payments to such organiza15 tions shall be made in appropriate proportion from

16 the Trust Funds established under title XVIII of the

17 Social Security Act.

18 (d) APPLICATION OF MEDIGAP PROTECTIONS TO

19 DEMONSTRATION PROJECT ENROLLEES.—(1) Subject to

20 paragraph (2), the provisions of section 1882(s)(3) (other

21 than clauses (i) through (iv) of subparagraph (B)) and

22 1882(s)(4) of the Social Security Act shall apply to enroll23 ment (and termination of enrollment) in the demonstra24 tion project under this section, in the same manner as they

25 apply to enrollment (and termination of enrollment) with
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1 a Medicare+Choice organization in a Medicare+Choice

2 plan.

3 (2) In applying paragraph (1)—

4 (A) any reference in clause (v) or (vi) of section

5 1882(s)(3)(B) of such Act to 12 months is deemed

6 a reference to the period of the demonstration

7 project; and

8 (B) the notification required under section

9 1882(s)(3)(D) of such Act shall be provided in a

10 manner specified by the Secretary of Health and

11 Human Services.

12 (e) DURATION.—The project shall last for not longer

13 than 3 years.

14 (f) WAIVER.—The Secretary of Health and Human

15 Services shall waive such provisions of title XVIII of the

16 Social Security Act as may be necessary to provide for

17 payment for services under the project in accordance with

18 subsection (c)(3).

19 (g) REPORT.—The Secretary of Health and Human

20 Services shall submit to Congress an interim report on the

21 project not later than 2 years after the date it is first im22 plemented and a final report on the project not later than

23 6 months after the date of its completion. Such reports

24 shall include information on the impact of the project on
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1 costs and health outcomes and recommendations on the

2 cost-effectiveness of extending or expanding the project.

3 SEC. 122. CANCER PREVENTION AND TREATMENT DEM4 ONSTRATION FOR ETHNIC AND RACIAL MI5 NORITIES.

6 (a) DEMONSTRATION.—

7 (1) IN GENERAL.—The Secretary of Health and

8 Human Services (in this section referred to as the

9 ‘‘Secretary’’) shall conduct demonstration projects

10 (in this section referred to as ‘‘demonstration

11 projects’’) for the purpose of developing models and

12 evaluating methods that—

13 (A) improve the quality of items and serv14 ices provided to target individuals in order to

15 facilitate reduced disparities in early detection

16 and treatment of cancer;

17 (B) improve clinical outcomes, satisfaction,

18 quality of life, and appropriate use of medicare19 covered services and referral patterns among

20 those target individuals with cancer;

21 (C) eliminate disparities in the rate of pre22 ventive cancer screening measures, such as pap

23 smears and prostate cancer screenings, among

24 target individuals; and
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1 (D) promote collaboration with community2 based organizations to ensure cultural com3 petency of health care professionals and lin4 guistic access for persons with limited English

5 proficiency.

6 (2) TARGET INDIVIDUAL DEFINED.—In this

7 section, the term ‘‘target individual’’ means an indi8 vidual of a racial and ethnic minority group, as de9 fined by section 1707 of the Public Health Service

10 Act, who is entitled to benefits under part A, and

11 enrolled under part B, of title XVIII of the Social

12 Security Act.

13 (b) PROGRAM DESIGN.—

14 (1) INITIAL DESIGN.—Not later than 1 year

15 after the date of the enactment of this Act, the Sec16 retary shall evaluate best practices in the private

17 sector, community programs, and academic research

18 of methods that reduce disparities among individuals

19 of racial and ethnic minority groups in the preven20 tion and treatment of cancer and shall design the

21 demonstration projects based on such evaluation.

22 (2) NUMBER AND PROJECT AREAS.—Not later

23 than 2 years after the date of the enactment of this

24 Act, the Secretary shall implement at least 9 dem25 onstration projects, including the following:
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1 (A) 2 projects for each of the 4 major ra2 cial and ethnic minority groups (American Indi3 ans (including Alaska Natives, Eskimos, and

4 Aleuts); Asian Americans and Pacific Islanders;

5 Blacks; and Hispanics. The 2 projects must

6 target different ethnic subpopulations.

7 (B) 1 project within the Pacific Islands.

8 (C) At least 1 project each in a rural area

9 and inner-city area.

10 (3) EXPANSION OF PROJECTS; IMPLEMENTA11 TION OF DEMONSTRATION PROJECT RESULTS.—If

12 the initial report under subsection (c) contains an

13 evaluation that demonstration projects—

14 (A) reduce expenditures under the medi15 care program under title XVIII of the Social

16 Security Act; or

17 (B) do not increase expenditures under the

18 medicare program and reduce racial and ethnic

19 health disparities in the quality of health care

20 services provided to target individuals and in21 crease satisfaction of beneficiaries and health

22 care providers;

23 the Secretary shall continue the existing demonstra24 tion projects and may expand the number of dem25 onstration projects.
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1 (c) REPORT TO CONGRESS.—

2 (1) IN GENERAL.—Not later than 2 years after

3 the date the Secretary implements the initial dem4 onstration projects, and biannually thereafter, the

5 Secretary shall submit to Congress a report regard6 ing the demonstration projects.

7 (2) CONTENTS OF REPORT.—Each report under

8 paragraph (1) shall include the following:

9 (A) A description of the demonstration

10 projects.

11 (B) An evaluation of—

12 (i) the cost-effectiveness of the dem13 onstration projects;

14 (ii) the quality of the health care serv15 ices provided to target individuals under

16 the demonstration projects; and

17 (iii) beneficiary and health care pro18 vider satisfaction under the demonstration

19 projects.

20 (C) Any other information regarding the

21 demonstration projects that the Secretary de22 termines to be appropriate.

23 (d) WAIVER AUTHORITY.—The Secretary shall waive

24 compliance with the requirements of title XVIII of the So25 cial Security Act to such extent and for such period as
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1 the Secretary determines is necessary to conduct dem2 onstration projects.

3 (e) FUNDING.—

4 (1) DEMONSTRATION PROJECTS.—

5 (A) STATE PROJECTS.—Except as provided

6 in subparagraph (B), the Secretary shall pro7 vide for the transfer from the Federal Hospital

8 Insurance Trust Fund and the Federal Supple9 mentary Insurance Trust Fund under title

10 XVIII of the Social Security Act, in such pro11 portions as the Secretary determines to be ap12 propriate, of such funds as are necessary for

13 the costs of carrying out the demonstration

14 projects.

15 (B) TERRITORY PROJECTS.—In the case of

16 a demonstration project described in subsection

17 (b)(2)(B), amounts shall be available only as

18 provided in any Federal law making appropria19 tions for the territories.

20 (2) LIMITATION.—In conducting demonstration

21 projects, the Secretary shall ensure that the aggre22 gate payments made by the Secretary do not exceed

23 the sum of the amount which the Secretary would

24 have paid under the program for the prevention and
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1 treatment of cancer if the demonstration projects

2 were not implemented, plus $25,000,000.

3 SEC. 123. STUDY ON MEDICARE COVERAGE OF ROUTINE

4 THYROID SCREENING.

5 (a) STUDY.—The Secretary of Health and Human

6 Services shall request the National Academy of Sciences,

7 and as appropriate in conjunction with the United States

8 Preventive Services Task Force, to conduct a study on the

9 addition of coverage of routine thyroid screening using a

10 thyroid stimulating hormone test as a preventive benefit

11 provided to medicare beneficiaries under title XVIII of the

12 Social Security Act for some or all medicare beneficiaries.

13 In conducting the study, the Academy shall consider the

14 short-term and long-term benefits, and costs to the medi15 care program, of such addition.

16 (b) REPORT.—Not later than 2 years after the date

17 of the enactment of this Act, the Secretary of Health and

18 Human Services shall submit a report on the findings of

19 the study conducted under subsection (a) to the Com20 mittee on Ways and Means and the Committee on Com21 merce of the House of Representatives and the Committee

22 on Finance of the Senate.

23 SEC. 124. MEDPAC STUDY ON CONSUMER COALITIONS.

24 (a) STUDY.—The Medicare Payment Advisory Com25 mission shall conduct a study that examines the use of
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1 consumer coalitions in the marketing of Medicare+Choice

2 plans under the medicare program under title XVIII of

3 the Social Security Act. The study shall examine—

4 (1) the potential for increased efficiency in the

5 medicare program through greater beneficiary

6 knowledge of their health care options, decreased

7 marketing costs of Medicare+Choice organizations,

8 and creation of a group market;

9 (2) the implications of Medicare+Choice plans

10 and medicare supplemental policies (under section

11 1882 of the Social Security Act (42 U.S.C. 1395ss))

12 offering medicare beneficiaries in the same geo13 graphic location different benefits and premiums

14 based on their affiliation with a consumer coalition;

15 (3) how coalitions should be governed, how they

16 should be accountable to the Secretary of Health

17 and Human Services, and how potential conflicts of

18 interest in the activities of consumer coalitions

19 should be avoided; and

20 (4) how such coalitions should be funded.

21 (b) REPORT.—Not later than 1 year after the date

22 of the enactment of this Act, the Commission shall submit

23 to Congress a report on the study conducted under sub24 section (a). The report shall include a recommendation on

25 whether and how a demonstration project might be con-
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1 ducted for the operation of consumer coalitions under the

2 medicare program.

3 (c) CONSUMER COALITION DEFINED.—For purposes

4 of this section, the term ‘‘consumer coalition’’ means a

5 nonprofit, community-based group of organizations that—

6 (1) provides information to medicare bene7 ficiaries about their health care options under the

8 medicare program; and

9 (2) negotiates benefits and premiums for medi10 care beneficiaries who are members or otherwise af11 filiated with the group of organizations with

12 Medicare+Choice organizations offering

13 Medicare+Choice plans, issuers of medicare supple14 mental policies, issuers of long-term care coverage,

15 and pharmacy benefit managers.

16 SEC. 125. STUDY ON LIMITATION ON STATE PAYMENT FOR

17 MEDICARE COST-SHARING AFFECTING AC18 CESS TO SERVICES FOR QUALIFIED MEDI19 CARE BENEFICIARIES.

20 (a) IN GENERAL.—The Secretary of Health and

21 Human Services shall conduct a study to determine if ac22 cess to certain services (including mental health services)

23 for qualified medicare beneficiaries has been affected by

24 limitations on a State’s payment for medicare cost-sharing

25 for such beneficiaries under section 1902(n) of the Social
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1 Security Act (42 U.S.C. 1396a(n)). As part of such study,

2 the Secretary shall analyze the effect of such payment lim3 itation on providers who serve a disproportionate share of

4 such beneficiaries.

5 (b) REPORT.—Not later than 1 year after the date

6 of the enactment of this Act, the Secretary shall submit

7 to Congress a report on the study under subsection (a).

8 The report shall include recommendations regarding any

9 changes that should be made to the State payment limits

10 under section 1902(n) for qualified medicare beneficiaries

11 to ensure appropriate access to services.

12 SEC. 126. INSTITUTE OF MEDICINE STUDY ON WAIVER OF

13 24-MONTH WAITING PERIOD FOR MEDICARE

14 DISABILITY ELIGIBILITY FOR AMYOTROPHIC

15 LATERAL SCLEROSIS (ALS) AND OTHER DEV16 ASTATING DISEASES.

17 (a) STUDY.—The Secretary of Health and Human

18 Services shall enter into a contract with the Institute of

19 Medicine to conduct a study that examines the appro20 priateness of waiving the 24-month waiting period for eli21 gibility for benefits under the medicare program under

22 title XVIII of the Social Security Act applicable under sec23 tion 226(b) of such Act (42 U.S.C. 426(b)) for individuals

24 with a devastating disease. For purposes of this section,

25 the term ‘‘devastating disease’’ means amyotrophic lateral
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1 sclerosis (ALS) and includes any other disease that is as

2 rapidly debilitating as ALS.

3 (b) REPORT.—The contract shall provide for the sub4 mission to Congress and the Secretary of a report on the

5 study conducted under subsection (a) by not later than

6 18 months after the date of the enactment of this Act.

7 SEC. 127. STUDIES ON PREVENTIVE INTERVENTIONS IN

8 PRIMARY CARE FOR OLDER AMERICANS.

9 (a) STUDIES.—The Secretary of Health and Human

10 Services, acting through the United States Preventive

11 Services Task Force, shall conduct a series of studies de12 signed to identify preventive interventions that can be de13 livered in the primary care setting and that are most valu14 able to older Americans.

15 (b) MISSION STATEMENT.—The mission statement of

16 the United States Preventive Services Task Force is

17 amended to include the evaluation of services that are of

18 particular relevance to older Americans.

19 (c) REPORT.—Not later than 1 year after the date

20 of the enactment of this Act, and annually thereafter, the

21 Secretary of Health and Human Services shall submit to

22 Congress a report on the conclusions of the studies con23 ducted under subsection (a), together with recommenda24 tions for such legislation and administrative actions as the

25 Secretary considers appropriate.
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1 SEC. 128. MEDPAC STUDY AND REPORT ON MEDICARE COV2 ERAGE OF CARDIAC AND PULMONARY REHA3 BILITATION THERAPY SERVICES.

4 (a) STUDY.—

5 (1) IN GENERAL.—The Medicare Payment Ad6 visory Commission shall conduct a study on coverage

7 of cardiac and pulmonary rehabilitation therapy

8 services under the medicare program under title

9 XVIII of the Social Security Act.

10 (2) FOCUS.—In conducting the study under

11 paragraph (1), the Commission shall focus on the

12 appropriate—

13 (A) qualifying diagnoses required for cov14 erage of cardiac and pulmonary rehabilitation

15 therapy services;

16 (B) level of physician direct involvement

17 and supervision in furnishing such services; and

18 (C) level of reimbursement for such serv19 ices.

20 (b) REPORT.—Not later than 18 months after the

21 date of the enactment of this Act, the Commission shall

22 submit to Congress a report on the study conducted under

23 subsection (a) together with such recommendations for

24 legislation and administrative action as the Commission

25 determines appropriate.
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1 TITLE II—RURAL HEALTH CARE

2 IMPROVEMENTS

3 Subtitle A—Critical Access

4 Hospital Provisions

5 SEC. 201. CLARIFICATION OF NO BENEFICIARY COST-SHAR6 ING FOR CLINICAL DIAGNOSTIC LABORA7 TORY TESTS FURNISHED BY CRITICAL AC8 CESS HOSPITALS.

9 (a) PAYMENT CLARIFICATION.—Section 1834(g) (42

10 U.S.C. 1395m(g)) is amended by adding at the end the

11 following new paragraph:

12 ‘‘(4) NO BENEFICIARY COST-SHARING FOR

13 CLINICAL DIAGNOSTIC LABORATORY SERVICES.—No

14 coinsurance, deductible, copayment, or other cost15 sharing otherwise applicable under this part shall

16 apply with respect to clinical diagnostic laboratory

17 services furnished as an outpatient critical access

18 hospital service. Nothing in this title shall be con19 strued as providing for payment for clinical diag20 nostic laboratory services furnished as part of out21 patient critical access hospital services, other than

22 on the basis described in this subsection.’’.

23 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

24 (1) Paragraphs (1)(D)(i) and (2)(D)(i) of sec25 tion 1833(a) (42 U.S.C. 1395l(a)) are each amended
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1 by striking ‘‘or which are furnished on an outpatient

2 basis by a critical access hospital’’.

3 (2) Section 403(d)(2) of BBRA (113 Stat.

4 1501A–371) is amended by striking ‘‘The amend5 ment made by subsection (a) shall apply’’ and in6 serting ‘‘Paragraphs (1) through (3) of section

7 1834(g) of the Social Security Act (as amended by

8 paragraph (1)) apply’’.

9 (c) EFFECTIVE DATES.—The amendment made—

10 (1) by subsection (a) applies to services fur11 nished on or after the date of the enactment of

12 BBRA;

13 (2) by subsection (b)(1) applies as if included

14 in the enactment of section 403(e)(1) of BBRA (113

15 Stat. 1501A–371); and

16 (3) by subsection (b)(2) applies as if included

17 in the enactment of section 403(d)(2) of BBRA

18 (113 Stat. 1501A–371).

19 SEC. 202. ASSISTANCE WITH FEE SCHEDULE PAYMENT FOR

20 PROFESSIONAL SERVICES UNDER ALL-INCLU21 SIVE RATE.

22 (a) IN GENERAL.—Section 1834(g)(2)(B) (42 U.S.C.

23 1395m(g)(2)(B)) is amended by inserting ‘‘115 percent

24 of’’ before ‘‘such amounts’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) applies with respect to items and services

3 furnished on or after April 1, 2001.

4 SEC. 203. EXEMPTION OF CRITICAL ACCESS HOSPITAL

5 SWING BEDS FROM SNF PPS.

6 (a) IN GENERAL.—Section 1888(e)(7) (42 U.S.C.

7 1395yy(e)(7)) is amended—

8 (1) in the heading, by striking ‘‘TRANSITION

9 FOR’’ and inserting ‘‘TREATMENT OF’’;

10 (2) in subparagraph (A), by striking ‘‘IN GEN11 ERAL.—The’’ and inserting ‘‘TRANSITION.—Subject

12 to subparagraph (C), the’’;

13 (3) in subparagraph (A), by inserting ‘‘(other

14 than critical access hospitals)’’ after ‘‘facilities de15 scribed in subparagraph (B)’’;

16 (4) in subparagraph (B), by striking ‘‘, for

17 which payment’’ and all that follows before the pe18 riod; and

19 (5) by adding at the end the following new sub20 paragraph:

21 ‘‘(C) EXEMPTION FROM PPS OF SWING22 BED SERVICES FURNISHED IN CRITICAL ACCESS

23 HOSPITALS.—The prospective payment system

24 established under this subsection shall not

25 apply to services furnished by a critical access
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1 hospital pursuant to an agreement under sec2 tion 1883.’’.

3 (b) PAYMENT ON A REASONABLE COST BASIS FOR

4 SWING BED SERVICES FURNISHED BY CRITICAL ACCESS

5 HOSPITALS.—Section 1883(a) (42 U.S.C. 1395tt(a)) is

6 amended—

7 (1) in paragraph (2)(A), by inserting ‘‘(other

8 than a critical access hospital)’’ after ‘‘any hospital’’;

9 and

10 (2) by adding at the end the following new

11 paragraph:

12 ‘‘(3) Notwithstanding any other provision of this title,

13 a critical access hospital shall be paid for covered skilled

14 nursing facility services furnished under an agreement en15 tered into under this section on the basis of the reasonable

16 costs of such services (as determined under section

17 1861(v)).’’.

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

19 this section shall apply to cost reporting periods beginning

20 on or after the date of the enactment of this Act.

21 SEC. 204. PAYMENT IN CRITICAL ACCESS HOSPITALS FOR

22 EMERGENCY ROOM ON-CALL PHYSICIANS.

23 (a) IN GENERAL.—Section 1834(g) (42 U.S.C.

24 1395m(g)), as amended by section 201(a), is further
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1 amended by adding at the end the following new para2 graph:

3 ‘‘(5) COVERAGE OF COSTS FOR EMERGENCY

4 ROOM ON-CALL PHYSICIANS.—In determining the

5 reasonable costs of outpatient critical access hospital

6 services under paragraphs (1) and (2)(A), the Sec7 retary shall recognize as allowable costs, amounts

8 (as defined by the Secretary) for reasonable com9 pensation and related costs for emergency room phy10 sicians who are on-call (as defined by the Secretary)

11 but who are not present on the premises of the crit12 ical access hospital involved, and are not otherwise

13 furnishing physicians’ services and are not on-call at

14 any other provider or facility.’’.

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

16 subsection (a) applies to cost reporting periods beginning

17 on or after October 1, 2001.

18 SEC. 205. TREATMENT OF AMBULANCE SERVICES FUR19 NISHED BY CERTAIN CRITICAL ACCESS HOS20 PITALS.

21 (a) IN GENERAL.—Section 1834(l) (42 U.S.C.

22 1395m(l)) is amended by adding at the end the following

23 new paragraph:

24 ‘‘(8) SERVICES FURNISHED BY CRITICAL AC25 CESS HOSPITALS.—Notwithstanding any other provi-
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1 sion of this subsection, the Secretary shall pay the

2 reasonable costs incurred in furnishing ambulance

3 services if such services are furnished—

4 ‘‘(A) by a critical access hospital (as de5 fined in ––section 1861(mm)(1)), or

6 ‘‘(B) by an entity that is owned and oper7 ated by a ––critical access hospital,

8 but only if the critical access hospital or entity is the

9 –only provider or supplier of ambulance services that

10 is located within a 35-mile drive of such critical ac11 cess hospital.’’.

12 (b) CONFORMING AMENDMENT.—Section

13 1833(a)(1)(R) (42 U.S.C. 1395l(a)(1)(R)) is amended—

14 (1) by striking ‘‘ambulance service,’’ and insert15 ing ‘‘ambulance services, (i)’’; and

16 (2) by inserting before the comma at the end

17 the –following: ‘‘and (ii) with respect to ambulance

18 services described in section 1834(l)(8), the amounts

19 paid shall be the amounts determined under section

20 1834(g) for outpatient critical access hospital serv21 ices’’.

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

23 this section apply to services furnished on or after the date

24 of the enactment of this Act.
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1 SEC. 206. GAO STUDY ON CERTAIN ELIGIBILITY REQUIRE2 MENTS FOR CRITICAL ACCESS HOSPITALS.

3 (a) STUDY.—The Comptroller General of the United

4 States shall conduct a study on the eligibility requirements

5 for critical access hospitals under section 1820(c) of the

6 Social Security Act (42 U.S.C. 1395i–4(c)) with respect

7 to limitations on average length of stay and number of

8 beds in such a hospital, including an analysis of—

9 (1) the feasibility of having a distinct part unit

10 as part of a critical access hospital for purposes of

11 the medicare program under title XVIII of such Act,

12 and

13 (2) the effect of seasonal variations in patient

14 admissions on critical access hospital eligibility re15 quirements with respect to limitations on average

16 annual length of stay and number of beds.

17 (b) REPORT.—Not later than 1 year after the date

18 of the enactment of this Act, the Comptroller General shall

19 submit to Congress a report on the study conducted under

20 subsection (a) together with recommendations

21 regarding—

22 (1) whether distinct part units should be per23 mitted as part of a critical access hospital under the

24 medicare program;
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1 (2) if so permitted, the payment methodologies

2 that should apply with respect to services provided

3 by such units;

4 (3) whether, and to what extent, such units

5 should be included in or excluded from the bed limits

6 applicable to critical access hospitals under the

7 medicare program; and

8 (4) any adjustments to such eligibility require9 ments to account for seasonal variations in patient

10 admissions.

11 Subtitle B—Other Rural Hospitals

12 Provisions

13 SEC. 211. EQUITABLE TREATMENT FOR RURAL DISPROPOR14 TIONATE SHARE HOSPITALS.

15 (a) APPLICATION OF UNIFORM THRESHOLD.—Sec16 tion 1886(d)(5)(F)(v) (42 U.S.C. 1395ww(d)(5)(F)(v)) is

17 amended—

18 (1) in subclause (II), by inserting ‘‘(or 15 per19 cent, for discharges occurring on or after April 1,

20 2001)’’ after ‘‘30 percent’’;

21 (2) in subclause (III), by inserting ‘‘(or 15 per22 cent, for discharges occurring on or after April 1,

23 2001)’’ after ‘‘40 percent’’; and
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1 (3) in subclause (IV), by inserting ‘‘(or 15 per2 cent, for discharges occurring on or after April 1,

3 2001)’’ after ‘‘45 percent’’.

4 (b) ADJUSTMENT OF PAYMENT FORMULAS.—

5 (1) SOLE COMMUNITY HOSPITALS.—Section

6 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is

7 amended—

8 (A) in clause (iv)(VI), by inserting after

9 ‘‘10 percent’’ the following: ‘‘or, for discharges

10 occurring on or after April 1, 2001, is equal to

11 the percent determined in accordance with

12 clause (x)’’; and

13 (B) by adding at the end the following new

14 clause:

15 ‘‘(x) For purposes of clause (iv)(VI) (relating to sole

16 community hospitals), in the case of a hospital for a cost

17 reporting period with a disproportionate patient percent18 age (as defined in clause (vi)) that—

19 ‘‘(I) is less than 17.3, the disproportionate

20 share adjustment percentage is determined in ac21 cordance with the following formula: (P–15)(.65) +

22 2.5;

23 ‘‘(II) is equal to or exceeds 17.3, but is less

24 than 30.0, such adjustment percentage is equal to 4

25 percent; or
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1 ‘‘(III) is equal to or exceeds 30, such adjust2 ment percentage is equal to 10 percent,

3 where ‘P’ is the hospital’s disproportionate patient per4 centage (as defined in clause (vi)).’’.

5 (2) RURAL REFERRAL CENTERS.—Such section

6 is further amended—

7 (A) in clause (iv)(V), by inserting after

8 ‘‘clause (viii)’’ the following: ‘‘or, for discharges

9 occurring on or after April 1, 2001, is equal to

10 the percent determined in accordance with

11 clause (xi)’’; and

12 (B) by adding at the end the following new

13 clause:

14 ‘‘(xi) For purposes of clause (iv)(V) (relating to rural

15 referral centers), in the case of a hospital for a cost report16 ing period with a disproportionate patient percentage (as

17 defined in clause (vi)) that—

18 ‘‘(I) is less than 17.3, the disproportionate

19 share adjustment percentage is determined in ac20 cordance with the following formula: (P–15)(.65) +

21 2.5;

22 ‘‘(II) is equal to or exceeds 17.3, but is less

23 than 30.0, such adjustment percentage is equal to 4

24 percent; or
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1 ‘‘(III) is equal to or exceeds 30, such adjust2 ment percentage is determined in accordance with

3 the following formula: (P–30)(.6) + 4,

4 where ‘P’ is the hospital’s disproportionate patient per5 centage (as defined in clause (vi)).’’.

6 (3) SMALL RURAL HOSPITALS GENERALLY.—

7 Such section is further amended—

8 (A) in clause (iv)(III), by inserting after

9 ‘‘4 percent’’ the following: ‘‘or, for discharges

10 occurring on or after April 1, 2001, is equal to

11 the percent determined in accordance with

12 clause (xii)’’; and

13 (B) by adding at the end the following new

14 clause:

15 ‘‘(xii) For purposes of clause (iv)(III) (relating to

16 small rural hospitals generally), in the case of a hospital

17 for a cost reporting period with a disproportionate patient

18 percentage (as defined in clause (vi)) that—

19 ‘‘(I) is less than 17.3, the disproportionate

20 share adjustment percentage is determined in ac21 cordance with the following formula: (P–15)(.65) +

22 2.5;

23 ‘‘(II) is equal to or exceeds 17.3, such adjust24 ment percentage is equal to 4 percent,
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1 where ‘P’ is the hospital’s disproportionate patient per2 centage (as defined in clause (vi)).’’.

3 (4) HOSPITALS THAT ARE BOTH SOLE COMMU4 NITY HOSPITALS AND RURAL REFERRAL CENTERS.—

5 Such section is further amended, in clause (iv)(IV),

6 by inserting after ‘‘clause (viii)’’ the following: ‘‘or,

7 for discharges occurring on or after April 1, 2001,

8 the greater of the percentages determined under

9 clause (x) or (xi)’’.

10 (5) URBAN HOSPITALS WITH LESS THAN 100

11 BEDS.—Such section is further amended—

12 (A) in clause (iv)(II), by inserting after ‘‘5

13 percent’’ the following: ‘‘or, for discharges oc14 curring on or after April 1, 2001, is equal to

15 the percent determined in accordance with

16 clause (xiii)’’; and

17 (B) by adding at the end the following new

18 clause:

19 ‘‘(xiii) For purposes of clause (iv)(II) (relating to

20 urban hospitals with less than 100 beds), in the case of

21 a hospital for a cost reporting period with a dispropor22 tionate patient percentage (as defined in clause (vi))

23 that—

24 ‘‘(I) is less than 17.3, the disproportionate

25 share adjustment percentage is determined in ac-
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1 cordance with the following formula: (P–15)(.65) +

2 2.5;

3 ‘‘(II) is equal to or exceeds 17.3, but is less

4 than 40.0, such adjustment percentage is equal to 4

5 percent; or

6 ‘‘(III) is equal to or exceeds 40, such adjust7 ment percentage is equal to 5 percent,

8 where ‘P’ is the hospital’s disproportionate patient per9 centage (as defined in clause (vi)).’’.

10 SEC. 212. OPTION TO BASE ELIGIBILITY FOR MEDICARE DE11 PENDENT, SMALL RURAL HOSPITAL PRO12 GRAM ON DISCHARGES DURING 2 OF THE 3

13 MOST RECENTLY AUDITED COST REPORTING

14 PERIODS.

15 (a) IN GENERAL.—Section 1886(d)(5)(G)(iv)(IV)

16 (42 U.S.C. 1395ww(d)(5)(G)(iv)(IV)) is amended by in17 serting ‘‘, or 2 of the 3 most recently audited cost report18 ing periods for which the Secretary has a settled cost re19 port,’’ after ‘‘1987’’.

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

21 this section shall apply with respect to cost reporting peri22 ods beginning on or after April 1, 2001.
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1 SEC. 213. EXTENSION OF OPTION TO USE REBASED TARGET

2 AMOUNTS TO ALL SOLE COMMUNITY HOS3 PITALS.

4 (a) IN GENERAL.—Section 1886(b)(3)(I)(i) (42

5 U.S.C. 1395ww(b)(3)(I)(i)) is amended—

6 (1) in the matter preceding subclause (I), by

7 striking ‘‘that for its cost reporting period beginning

8 during 1999’’ and all that follows through ‘‘for such

9 target amount’’ and inserting ‘‘there shall be sub10 stituted for the amount otherwise determined under

11 subsection (d)(5)(D)(i), if such substitution results

12 in a greater amount of payment under this section

13 for the hospital’’;

14 (2) in subclause (I), by striking ‘‘target amount

15 otherwise applicable’’ and all that follows through

16 ‘‘target amount’)’’ and inserting ‘‘the amount other17 wise applicable to the hospital under subsection

18 (d)(5)(D)(i) (referred to in this clause as the ‘sub19 section (d)(5)(D)(i) amount’)’’; and

20 (3) in each of subclauses (II) and (III), by

21 striking ‘‘subparagraph (C) target amount’’ and in22 serting ‘‘subsection (d)(5)(D)(i) amount’’.

23 (b) EFFECTIVE DATE.—The amendments made by

24 this section shall take effect as if included in the enact25 ment of section 405 of BBRA (113 Stat. 1501A–372).
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1 SEC. 214. MEDPAC ANALYSIS OF IMPACT OF VOLUME ON

2 PER UNIT COST OF RURAL HOSPITALS WITH

3 PSYCHIATRIC UNITS.

4 The Medicare Payment Advisory Commission, in its

5 study conducted pursuant to subsection (a) of section 411

6 of BBRA (113 Stat. 1501A–377), shall include—

7 (1) in such study an analysis of the impact of

8 volume on the per unit cost of rural hospitals with

9 psychiatric units; and

10 (2) in its report under subsection (b) of such

11 section a recommendation on whether special treat12 ment for such hospitals may be warranted.

13 Subtitle C—Other Rural Provisions

14 SEC. 221. ASSISTANCE FOR PROVIDERS OF AMBULANCE

15 SERVICES IN RURAL AREAS.

16 (a) TRANSITIONAL ASSISTANCE IN CERTAIN MILE17 AGE RATES.—Section 1834(l) (42 U.S.C. 1395m(l)) is

18 amended by adding at the end the following new para19 graph:

20 ‘‘(8) TRANSITIONAL ASSISTANCE FOR RURAL

21 PROVIDERS.—In the case of ground ambulance serv22 ices furnished on or after the date on which the Sec23 retary implements the fee schedule under this sub24 section and before January 1, 2004, for which the

25 transportation originates in a rural area (as defined

26 in section 1886(d)(2)(D)) or in a rural census tract
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1 of a metropolitan statistical area (as determined

2 under the most recent modification of the Goldsmith

3 Modification, originally published in the Federal

4 Register on February 27, 1992 (57 Fed. Reg.

5 6725)), the fee schedule established under this sub6 section shall provide that, with respect to the pay7 ment rate for mileage for a trip above 17 miles, and

8 up to 50 miles, the rate otherwise established shall

be increased by not less than 1 9 ⁄2 of the additional

10 payment per mile established for the first 17 miles

11 of such a trip originating in a rural area.’’.

12 (b) GAO STUDIES ON THE COSTS OF AMBULANCE

13 SERVICES FURNISHED IN RURAL AREAS.—

14 (1) STUDY.—The Comptroller General of the

15 United States shall conduct a study on each of the

16 matters described in paragraph (2).

17 (2) MATTERS DESCRIBED.—The matters re18 ferred to in paragraph (1) are the following:

19 (A) The cost of efficiently providing ambu20 lance services for trips originating in rural

21 areas, with special emphasis on collection of

22 cost data from rural providers.

23 (B) The means by which rural areas with

24 low population densities can be identified for

25 the purpose of designating areas in which the
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1 cost of providing ambulance services would be

2 expected to be higher than similar services pro3 vided in more heavily populated areas because

4 of low usage. Such study shall also include an

5 analysis of the additional costs of providing am6 bulance services in areas designated under the

7 previous sentence.

8 (3) REPORT.—Not later than June 30, 2002,

9 the Comptroller General shall submit to Congress a

10 report on the results of the studies conducted under

11 paragraph (1) and shall include recommendations on

12 steps that should be taken to assure access to ambu13 lance services in rural areas.

14 (c) ADJUSTMENT IN RURAL RATES.—In providing

15 for adjustments under subparagraph (D) of section

16 1834(l)(2) of the Social Security Act (42 U.S.C.

17 1395m(l)(2)) for years beginning with 2004, the Secretary

18 of Health and Human Services shall take into consider19 ation the recommendations contained in the report under

20 subsection (b)(2) and shall adjust the fee schedule pay21 ment rates under such section for ambulance services pro22 vided in low density rural areas based on the increased

23 cost (if any) of providing such services in such areas.

24 (d) EFFECTIVE DATE.—The amendment made by

25 subsection (a) applies to services furnished on or after the
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1 date the Secretary implements the fee schedule under sec2 tion 1834(l) of the Social Security Act (42 U.S.C.

3 1395m(l)). In applying such amendment to services fur4 nished on or after such date and before January 1, 2002,

5 the amount of the rate increase provided under such

6 amendment shall be equal to $1.25 per mile.

7 SEC. 222. PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT

8 SERVICES.

9 (a) PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT

10 SERVICES.—Section 1842(b)(6)(C) (42 U.S.C.

11 1395u(b)(6)(C)) is amended—

12 (1) by striking ‘‘for such services provided be13 fore January 1, 2003,’’; and

14 (2) by striking the semicolon at the end and in15 serting a comma.

16 (b) EFFECTIVE DATE.—The amendments made by

17 subsection (a) shall take effect on the date of the enact18 ment of this Act.

19 SEC. 223. REVISION OF MEDICARE REIMBURSEMENT FOR

20 TELEHEALTH SERVICES.

21 (a) TIME LIMIT FOR BBA PROVISION.—Section

22 4206(a) of BBA (42 U.S.C. 1395l note) is amended by

23 striking ‘‘Not later than January 1, 1999’’ and inserting

24 ‘‘For services furnished on and after January 1, 1999, and

25 before July 1, 2001’’.
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1 (b) EXPANSION OF MEDICARE PAYMENT FOR TELE2 HEALTH SERVICES.—Section 1834 (42 U.S.C. 1395m) is

3 amended by adding at the end the following new sub4 section:

5 ‘‘(m) PAYMENT FOR TELEHEALTH SERVICES.—

6 ‘‘(1) IN GENERAL.—The Secretary shall pay for

7 telehealth services that are furnished via a tele8 communications system by a physician (as defined in

9 section 1861(r)) or a practitioner (described in sec10 tion 1842(b)(18)(C)) to an eligible telehealth indi11 vidual enrolled under this part notwithstanding that

12 the individual physician or practitioner providing the

13 telehealth service is not at the same location as the

14 beneficiary. For purposes of the preceding sentence,

15 in the case of any Federal telemedicine demonstra16 tion program conducted in Alaska or Hawaii, the

17 term ‘telecommunications system’ includes store18 and-forward technologies that provide for the asyn19 chronous transmission of health care information in

20 single or multimedia formats.

21 ‘‘(2) PAYMENT AMOUNT.—

22 ‘‘(A) DISTANT SITE.—The Secretary shall

23 pay to a physician or practitioner located at a

24 distant site that furnishes a telehealth service

25 to an eligible telehealth individual an amount
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1 equal to the amount that such physician or

2 practitioner would have been paid under this

3 title had such service been furnished without

4 the use of a telecommunications system.

5 ‘‘(B) FACILITY FEE FOR ORIGINATING

6 SITE.—With respect to a telehealth service, sub7 ject to section 1833(a)(1)(U), there shall be

8 paid to the originating site a facility fee equal

9 to—

10 ‘‘(i) for the period beginning on July

11 1, 2001, and ending on December 31,

12 2001, and for 2002, $20; and

13 ‘‘(ii) for a subsequent year, the facil14 ity fee specified in clause (i) or this clause

15 for the preceding year increased by the

16 percentage increase in the MEI (as defined

17 in section 1842(i)(3)) for such subsequent

18 year.

19 ‘‘(C) TELEPRESENTER NOT REQUIRED.—

20 Nothing in this subsection shall be construed as

21 requiring an eligible telehealth individual to be

22 presented by a physician or practitioner at the

23 originating site for the furnishing of a service

24 via a telecommunications system, unless it is
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1 medically necessary (as determined by the phy2 sician or practitioner at the distant site).

3 ‘‘(3) LIMITATION ON BENEFICIARY CHARGES.—

4 ‘‘(A) PHYSICIAN AND PRACTITIONER.—

5 The provisions of section 1848(g) and subpara6 graphs (A) and (B) of section 1842(b)(18) shall

7 apply to a physician or practitioner receiving

8 payment under this subsection in the same

9 manner as they apply to physicians or practi10 tioners under such sections.

11 ‘‘(B) ORIGINATING SITE.—The provisions

12 of section 1842(b)(18) shall apply to originating

13 sites receiving a facility fee in the same manner

14 as they apply to practitioners under such sec15 tion.

16 ‘‘(4) DEFINITIONS.—For purposes of this sub17 section:

18 ‘‘(A) DISTANT SITE.—The term ‘distant

19 site’ means the site at which the physician or

20 practitioner is located at the time the service is

21 provided via a telecommunications system.

22 ‘‘(B) ELIGIBLE TELEHEALTH INDI23 VIDUAL.—The term ‘eligible telehealth indi24 vidual’ means an individual enrolled under this
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1 part who receives a telehealth service furnished

2 at an originating site.

3 ‘‘(C) ORIGINATING SITE.—

4 ‘‘(i) IN GENERAL.—The term ‘origi5 nating site’ means only those sites de6 scribed in clause (ii) at which the eligible

7 telehealth individual is located at the time

8 the service is furnished via a telecommuni9 cations system and only if such site is

10 located—

11 ‘‘(I) in an area that is designated

12 as a rural health professional shortage

13 area under section 332(a)(1)(A) of

14 the Public Health Service Act (42

15 U.S.C. 254e(a)(1)(A));

16 ‘‘(II) in a county that is not in17 cluded in a Metropolitan Statistical

18 Area; or

19 ‘‘(III) from an entity that partici20 pates in a Federal telemedicine dem21 onstration project that has been ap22 proved by (or receives funding from)

23 the Secretary of Health and Human

24 Services as of December 31, 2000.
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1 ‘‘(ii) SITES DESCRIBED.—The sites

2 referred to in clause (i) are the following

3 sites:

4 ‘‘(I) The office of a physician or

5 practitioner.

6 ‘‘(II) A critical access hospital

7 (as defined in section 1861(mm)(1)).

8 ‘‘(III) A rural health clinic (as

9 defined in section 1861(aa)(s)).

10 ‘‘(IV) A Federally qualified

11 health center (as defined in section

12 1861(aa)(4)).

13 ‘‘(V) A hospital (as defined in

14 section 1861(e)).

15 ‘‘(D) PHYSICIAN.—The term ‘‘physi16 cian’’ has the meaning given that term in

17 section 1861(r).

18 ‘‘(E) PRACTITIONER.—The term

19 ‘practitioner’ has the meaning given that

20 term in section 1842(b)(18)(C).

21 ‘‘(F) TELEHEALTH SERVICE.—

22 ‘‘(i) IN GENERAL.—The term ‘tele23 health service’ means professional con24 sultations, office visits, and office psychi25 atry services (identified as of July 1, 2000,
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1 by HCPCS codes 99241–99275, 99201–

2 99215, 90804–90809, and 90862 (and as

3 subsequently modified by the Secretary)),

4 and any additional service specified by the

5 Secretary.

6 ‘‘(ii) YEARLY UPDATE.—The Sec7 retary shall establish a process that pro8 vides, on an annual basis, for the addition

9 or deletion of services (and HCPCS codes),

10 as appropriate, to those specified in clause

11 (i) for authorized payment under para12 graph (1).’’.

13 (c) CONFORMING AMENDMENT.—Section 1833(a)(1)

14 (42 U.S.C. 1395l(1)), as amended by section 105(c), is

15 further amended—

16 (1) by striking ‘‘and (T)’’ and inserting ‘‘(T)’’;

17 and

18 (2) by inserting before the semicolon at the end

19 the following: ‘‘, and (U) with respect to facility fees

20 described in section 1834(m)(2)(B), the amounts

21 paid shall be 80 percent of the lesser of the actual

22 charge or the amounts specified in such section’’.

23 (d) STUDY AND REPORT ON ADDITIONAL COV24 ERAGE.—
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1 (1) STUDY.—The Secretary of Health and

2 Human Services shall conduct a study to identify—

3 (A) settings and sites for the provision of

4 telehealth services that are in addition to those

5 permitted under section 1834(m) of the Social

6 Security Act, as added by subsection (b);

7 (B) practitioners that may be reimbursed

8 under such section for furnishing telehealth

9 services that are in addition to the practitioners

10 that may be reimbursed for such services under

11 such section; and

12 (C) geographic areas in which telehealth

13 services may be reimbursed that are in addition

14 to the geographic areas where such services

15 may be reimbursed under such section.

16 (2) REPORT.—Not later than 2 years after the

17 date of the enactment of this Act, the Secretary

18 shall submit to Congress a report on the study con19 ducted under paragraph (1) together with such rec20 ommendations for legislation that the Secretary de21 termines are appropriate.

22 (e) EFFECTIVE DATE.—The amendments made by

23 subsections (b) and (c) shall be effective for services fur24 nished on or after July 1, 2001.
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1 SEC. 224. EXPANDING ACCESS TO RURAL HEALTH CLINICS.

2 (a) IN GENERAL.—The matter in section 1833(f) (42

3 U.S.C. 1395l(f)) preceding paragraph (1) is amended by

4 striking ‘‘rural hospitals’’ and inserting ‘‘hospitals’’.

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

6 subsection (a) shall apply to services furnished on or after

7 July 1, 2001.

8 SEC. 225. MEDPAC STUDY ON LOW-VOLUME, ISOLATED

9 RURAL HEALTH CARE PROVIDERS.

10 (a) STUDY.—The Medicare Payment Advisory Com11 mission shall conduct a study on the effect of low patient

12 and procedure volume on the financial status of low-vol13 ume, isolated rural health care providers participating in

14 the medicare program under title XVIII of the Social Se15 curity Act.

16 (b) REPORT.—Not later than 18 months after the

17 date of the enactment of this Act, the Commission shall

18 submit to Congress a report on the study conducted under

19 subsection (a) indicating—

20 (1) whether low-volume, isolated rural health

21 care providers are having, or may have, significantly

22 decreased medicare margins or other financial dif23 ficulties resulting from any of the payment meth24 odologies described in subsection (c);

25 (2) whether the status as a low-volume, isolated

26 rural health care provider should be designated
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1 under the medicare program and any criteria that

2 should be used to qualify for such a status; and

3 (3) any changes in the payment methodologies

4 described in subsection (c) that are necessary to pro5 vide appropriate reimbursement under the medicare

6 program to low-volume, isolated rural health care

7 providers (as designated pursuant to paragraph (2)).

8 (c) PAYMENT METHODOLOGIES DESCRIBED.—The

9 payment methodologies described in this subsection are

10 the following:

11 (1) The prospective payment system for hos12 pital outpatient department services under section

13 1833(t) of the Social Security Act (42 U.S.C.

14 1395l(t)).

15 (2) The fee schedule for ambulance services

16 under section 1834(l) of such Act (42 U.S.C.

17 1395m(l)).

18 (3) The prospective payment system for inpa19 tient hospital services under section 1886 of such

20 Act (42 U.S.C. 1395ww).

21 (4) The prospective payment system for routine

22 service costs of skilled nursing facilities under sec23 tion 1888(e) of such Act (42 U.S.C. 1395yy(e)).
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1 (5) The prospective payment system for home

2 health services under section 1895 of such Act (42

3 U.S.C. 1395fff).

4 TITLE III—PROVISIONS

5 RELATING TO PART A

6 Subtitle A—Inpatient Hospital

7 Services

8 SEC. 301. REVISION OF ACUTE CARE HOSPITAL PAYMENT

9 UPDATE FOR 2001.

10 (a) IN GENERAL.—Section 1886(b)(3)(B)(i) (42

11 U.S.C. 1395ww(b)(3)(B)(i)) is amended—

12 (1) in subclause (XVI), by striking ‘‘minus 1.1

13 percentage points for hospitals (other than sole com14 munity hospitals) in all areas, and the market bas15 ket percentage increase for sole community hos16 pitals,’’ and inserting ‘‘for hospitals in all areas,’’;

17 (2) in subclause (XVII)—

18 (A) by striking ‘‘minus 1.1 percentage

19 points’’ and inserting ‘‘minus 0.55 percentage

20 points; and

21 (B) by striking ‘‘and’’ at the end;

22 (3) by redesignating subclause (XVIII) as sub23 clause (XIX);
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1 (4) in subclause (XIX), as so redesignated, by

2 striking ‘‘fiscal year 2003’’ and inserting ‘‘fiscal year

3 2004’’; and

4 (5) by inserting after subclause (XVII) the fol5 lowing new subclause:

6 ‘‘(XVIII) for fiscal year 2003, the market bas7 ket percentage increase minus 0.55 percentage

8 points for hospitals in all areas, and’’.

9 (b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR

10 2001.—Notwithstanding the amendment made by sub11 section (a), for purposes of making payments for fiscal

12 year 2001 for inpatient hospital services furnished by sub13 section (d) hospitals (as defined in section 1886(d)(1)(B)

14 of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)),

15 the ‘‘applicable percentage increase’’ referred to in section

16 1886(b)(3)(B)(i) of such Act (42 U.S.C.

17 1395ww(b)(3)(B)(i))—

18 (1) for discharges occurring on or after October

19 1, 2000, and before April 1, 2001, shall be deter20 mined in accordance with subclause (XVI) of such

21 section as in effect on the day before the date of the

22 enactment of this Act; and

23 (2) for discharges occurring on or after April 1,

24 2001, and before October 1, 2001, shall be equal

25 to—
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1 (A) the market basket percentage increase

2 plus 1.1 percentage points for hospitals (other

3 than sole community hospitals) in all areas; and

4 (B) the market basket percentage increase

5 for sole community hospitals.

6 (c) CONSIDERATION OF PRICE OF BLOOD AND

7 BLOOD PRODUCTS IN MARKET BASKET INDEX.—The

8 Secretary of Health and Human Services shall, when next

9 (after the date of the enactment of this Act) rebasing and

10 revising the hospital market basket index (as defined in

11 section 1886(b)(3)(B)(iii) of the Social Security Act (42

12 U.S.C. 1395ww(b)(3)(B)(iii))), consider the prices of

13 blood and blood products purchased by hospitals and de14 termine whether those prices are adequately reflected in

15 such index.

16 (d) MEDPAC STUDY AND REPORT REGARDING CER17 TAIN HOSPITAL COSTS.—

18 (1) STUDY.—The Medicare Payment Advisory

19 Commission shall conduct a study on—

20 (A) any increased costs incurred by sub21 section (d) hospitals (as defined in paragraph

22 (1)(B) of section 1886(d) of the Social Security

23 Act (42 U.S.C. 1395ww(d))) in providing inpa24 tient hospital services to medicare beneficiaries

25 under title XVIII of such Act during the period
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1 beginning on October 1, 1983, and ending on

2 September 30, 1999, that were attributable

3 to—

4 (i) complying with new blood safety

5 measure requirements; and

6 (ii) providing such services using new

7 technologies;

8 (B) the extent to which the prospective

9 payment system for such services under such

10 section provides adequate and timely recogni11 tion of such increased costs;

12 (C) the prospects for (and to the extent

13 practicable, the magnitude of) cost increases

14 that hospitals will incur in providing such serv15 ices that are attributable to complying with new

16 blood safety measure requirements and pro17 viding such services using new technologies dur18 ing the 10 years after the date of the enact19 ment of this Act; and

20 (D) the feasibility and advisability of es21 tablishing mechanisms under such payment sys22 tem to provide for more timely and accurate

23 recognition of such cost increases in the future.

24 (2) CONSULTATION.—In conducting the study

25 under this subsection, the Commission shall consult
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1 with representatives of the blood community,

2 including—

3 (A) hospitals;

4 (B) organizations involved in the collection,

5 processing, and delivery of blood; and

6 (C) organizations involved in the develop7 ment of new blood safety technologies.

8 (3) REPORT.—Not later than 1 year after the

9 date of the enactment of this Act, the Commission

10 shall submit to Congress a report on the study con11 ducted under paragraph (1) together with such rec12 ommendations for legislation and administrative ac13 tion as the Commission determines appropriate.

14 (e) ADJUSTMENT FOR INPATIENT CASE MIX

15 CHANGES.—

16 (1) IN GENERAL.—Section 1886(d)(3)(A) (42

17 U.S.C. 1395ww(d)(3)(A)) is amended by adding at

18 the end the following new clause:

19 ‘‘(vi) Insofar as the Secretary determines that

20 the adjustments under paragraph (4)(C)(i) for a

21 previous fiscal year (or estimates that such adjust22 ments for a future fiscal year) did (or are likely to)

23 result in a change in aggregate payments under this

24 subsection during the fiscal year that are a result of

25 changes in the coding or classification of discharges
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1 that do not reflect real changes in case mix, the Sec2 retary may adjust the average standardized amounts

3 computed under this paragraph for subsequent fiscal

4 years so as to eliminate the effect of such coding or

5 classification changes.’’.

6 (2) EFFECTIVE DATE.—The amendment made

7 by paragraph (1) applies to discharges occurring on

8 or after October 1, 2001.

9 SEC. 302. ADDITIONAL MODIFICATION IN TRANSITION FOR

10 INDIRECT MEDICAL EDUCATION (IME) PER11 CENTAGE ADJUSTMENT.

12 (a) IN GENERAL.—Section 1886(d)(5)(B)(ii) (42

13 U.S.C. 1395ww(d)(5)(B)(ii)) is amended—

14 (1) in subclause (V) by striking ‘‘and’’ at the

15 end;

16 (2) by redesignating subclause (VI) as sub17 clause (VII);

18 (3) in subclause (VII) as so redesignated, by

19 striking ‘‘2001’’ and inserting ‘‘2002’’; and

20 (4) by inserting after subclause (V) the fol21 lowing new subclause:

22 ‘‘(VI) during fiscal year 2002, ‘c’ is equal

23 to 1.57; and’’.

24 (b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR

25 2001.—Notwithstanding paragraph (5)(B)(ii)(V) of sec-
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1 tion 1886(d) of the Social Security Act (42 U.S.C.

2 1395ww(d)(5)(B)(ii)(V)), for purposes of making pay3 ments for subsection (d) hospitals (as defined in para4 graph (1)(B) of such section) with indirect costs of med5 ical education, the indirect teaching adjustment factor re6 ferred to in paragraph (5)(B)(ii) of such section shall be

7 determined, for discharges occurring on or after April 1,

8 2001, and before October 1, 2001, as if ‘‘c’’ in paragraph

9 (5)(B)(ii)(V) of such section equalled 1.66 rather than

10 1.54.

11 (c) CONFORMING AMENDMENT RELATING TO DE12 TERMINATION OF STANDARDIZED AMOUNT.—Section

13 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is

14 amended by inserting ‘‘or of section 302 of the Medicare,

15 Medicaid, and SCHIP Benefits Improvement and Protec16 tion Act of 2000’’ after ‘‘Balanced Budget Refinement Act

17 of 1999’’.

18 (d) CLERICAL AMENDMENTS.—Section

19 1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B)), as amended

20 by subsection (a), is further amended by moving the in21 dentation of each of the following 2 ems to the left:

22 (1) Clauses (ii), (v), and (vi).

23 (2) Subclauses (I) (II), (III), (IV), (V), and

24 (VII) of clause (ii).
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1 (3) Subclauses (I) and (II) of clause (vi) and

2 the flush sentence at the end of such clause.

3 SEC. 303. DECREASE IN REDUCTIONS FOR DISPROPOR4 TIONATE SHARE HOSPITAL (DSH) PAYMENTS.

5 (a) IN GENERAL.—Section 1886(d)(5)(F)(ix) (42

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

7 (1) in subclause (III), by striking ‘‘each of’’ and

8 by inserting ‘‘and 2 percent, respectively’’ after ‘‘3

9 percent’’; and

10 (2) in subclause (IV), by striking ‘‘4 percent’’

11 and inserting ‘‘3 percent’’.

12 (b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR

13 2001.—Notwithstanding the amendment made by sub14 section (a)(1), for purposes of making disproportionate

15 share payments for subsection (d) hospitals (as defined

16 in section 1886(d)(1)(B) of the Social Security Act (42

17 U.S.C. 1395ww(d)(1)(B)) for fiscal year 2001, the addi18 tional payment amount otherwise determined under clause

19 (ii) of section 1886(d)(5)(F) of the Social Security Act

20 (42 U.S.C. 1395ww(d)(5)(F))—

21 (1) for discharges occurring on or after October

22 1, 2000, and before April 1, 2001, shall be adjusted

23 as provided by clause (ix)(III) of such section as in

24 effect on the day before the date of the enactment

25 of this Act; and
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1 (2) for discharges occurring on or after April 1,

2 2001, and before October 1, 2001, shall, instead of

3 being reduced by 3 percent as provided by clause

4 (ix)(III) of such section as in effect after the date

5 of the enactment of this Act, be reduced by 1 per6 cent.

7 (c) CONFORMING AMENDMENTS RELATING TO DE8 TERMINATION OF STANDARDIZED AMOUNT.—Section

9 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)), is

10 amended—

11 (1) by striking ‘‘1989 or’’ and inserting

12 ‘‘1989,’’; and

13 (2) by inserting ‘‘, or the enactment of section

14 303 of the Medicare, Medicaid, and SCHIP Benefits

15 Improvement and Protection Act of 2000’’ after

16 ‘‘Omnibus Budget Reconciliation Act of 1990’’.

17 (d) TECHNICAL AMENDMENT.—

18 (1) IN GENERAL.—Section 1886(d)(5)(F)(i) (42

19 U.S.C. 1395ww(d)(5)(F)(i)) is amended by striking

20 ‘‘and before October 1, 1997,’’.

21 (2) EFFECTIVE DATE.—The amendment made

22 by paragraph (1) is effective as if included in the en23 actment of BBA.
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1 (e) REFERENCE TO CHANGES IN DSH FOR RURAL

2 HOSPITALS.—For additional changes in the DSH pro3 gram for rural hospitals, see section 211.

4 SEC. 304. WAGE INDEX IMPROVEMENTS.

5 (a) DURATION OF WAGE INDEX RECLASSIFICATION;

6 USE OF 3-YEAR WAGE DATA.—Section 1886(d)(10)(D)

7 (42 U.S.C. 1395ww(d)(10)(D)) is amended by adding at

8 the end the following new clauses:

9 ‘‘(v) Any decision of the Board to reclassify a sub10 section (d) hospital for purposes of the adjustment factor

11 described in subparagraph (C)(i)(II) for fiscal year 2001

12 or any fiscal year thereafter shall be effective for a period

13 of 3 fiscal years, except that the Secretary shall establish

14 procedures under which a subsection (d) hospital may

15 elect to terminate such reclassification before the end of

16 such period.

17 ‘‘(vi) Such guidelines shall provide that, in making

18 decisions on applications for reclassification for the pur19 poses described in clause (v) for fiscal year 2003 and any

20 succeeding fiscal year, the Board shall base any compari21 son of the average hourly wage for the hospital with the

22 average hourly wage for hospitals in an area on—

23 ‘‘(I) an average of the average hourly wage

24 amount for the hospital from the most recently pub25 lished hospital wage survey data of the Secretary (as
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1 of the date on which the hospital applies for reclassi2 fication) and such amount from each of the two im3 mediately preceding surveys; and

4 ‘‘(II) an average of the average hourly wage

5 amount for hospitals in such area from the most re6 cently published hospital wage survey data of the

7 Secretary (as of the date on which the hospital ap8 plies for reclassification) and such amount from each

9 of the two immediately preceding surveys.’’.

10 (b) PROCESS TO PERMIT STATEWIDE WAGE INDEX

11 CALCULATION AND APPLICATION.—

12 (1) IN GENERAL.—The Secretary of Health and

13 Human Services shall establish a process (based on

14 the voluntary process utilized by the Secretary of

15 Health and Human Services under section 1848 of

16 the Social Security Act (42 U.S.C. 1395w–4) for

17 purposes of computing and applying a statewide geo18 graphic wage index) under which an appropriate

19 statewide entity may apply to have all the geo20 graphic areas in a State treated as a single geo21 graphic area for purposes of computing and applying

22 the area wage index under section 1886(d)(3)(E) of

23 such Act (42 U.S.C. 1395ww(d)(3)(E)). Such proc24 ess shall be established by October 1, 2001, for re25 classifications beginning in fiscal year 2003.
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1 (2) PROHIBITION ON INDIVIDUAL HOSPITAL RE2 CLASSIFICATION.—Notwithstanding any other provi3 sion of law, if the Secretary applies a statewide geo4 graphic wage index under paragraph (1) with re5 spect to a State, any application submitted by a hos6 pital in that State under section 1886(d)(10) of the

7 Social Security Act (42 U.S.C. 1395ww(d)(10)) for

8 geographic reclassification shall not be considered.

9 (c) COLLECTION OF INFORMATION ON OCCUPA10 TIONAL MIX.—

11 (1) IN GENERAL.—The Secretary of Health and

12 Human Services shall provide for the collection of

13 data every 3 years on occupational mix for employ14 ees of each subsection (d) hospital (as defined in

15 section 1886(d)(1)(D) of the Social Security Act (42

16 U.S.C. 1395ww(d)(1)(D))) in the provision of inpa17 tient hospital services, in order to construct an occu18 pational mix adjustment in the hospital area wage

19 index applied under section 1886(d)(3)(E) of such

20 Act (42 U.S.C. 1395ww(d)(3)(E)).

21 (2) APPLICATION.—The third sentence of sec22 tion 1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is

23 amended by striking ‘‘To the extent determined fea24 sible by the Secretary, such survey shall measure’’

25 and inserting ‘‘Not less often than once every 3
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1 years the Secretary (through such survey or other2 wise) shall measure’’.

3 (3) EFFECTIVE DATE.—By not later than Sep4 tember 30, 2003, for application beginning October

5 1, 2004, the Secretary shall first complete—

6 (A) the collection of data under paragraph

7 (1); and

8 (B) the measurement under the third sen9 tence of section 1886(d)(3)(E), as amended by

10 paragraph (2).

11 SEC. 305. PAYMENT FOR INPATIENT SERVICES OF REHA12 BILITATION HOSPITALS.

13 (a) ASSISTANCE WITH ADMINISTRATIVE COSTS AS14 SOCIATED WITH COMPLETION OF PATIENT ASSESS15 MENT.—Section 1886(j)(3)(B) (42 U.S.C.

16 1395ww(j)(3)(B)) is amended by striking ‘‘98 percent’’

17 and inserting ‘‘98 percent for fiscal year 2001 and 100

18 percent for fiscal year 2002’’.

19 (b) ELECTION TO APPLY FULL PROSPECTIVE PAY20 MENT RATE WITHOUT PHASE-IN.—

21 (1) IN GENERAL.—Paragraph (1) of section

22 1886(j) (42 U.S.C. 1395ww(j)) is amended—

23 (A) in subparagraph (A), by inserting

24 ‘‘other than a facility making an election under
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1 subparagraph (F)’’ before ‘‘in a cost reporting

2 period’’;

3 (B) in subparagraph (B), by inserting ‘‘or,

4 in the case of a facility making an election

5 under subparagraph (F), for any cost reporting

6 period described in such subparagraph,’’ after

7 ‘‘2002,’’; and

8 (C) by adding at the end the following new

9 subparagraph:

10 ‘‘(F) ELECTION TO APPLY FULL PROSPEC11 TIVE PAYMENT SYSTEM.—A rehabilitation facil12 ity may elect, not later than 30 days before its

13 first cost reporting period for which the pay14 ment methodology under this subsection applies

15 to the facility, to have payment made to the fa16 cility under this subsection under the provisions

17 of subparagraph (B) (rather than subparagraph

18 (A)) for each cost reporting period to which

19 such payment methodology applies.’’.

20 (2) CLARIFICATION.—Paragraph (3)(B) of such

21 section is amended by inserting ‘‘but not taking into

22 account any payment adjustment resulting from an

23 election permitted under paragraph (1)(F)’’ after

24 ‘‘paragraphs (4) and (6)’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section take effect as if included in the enactment of

3 BBA.

4 SEC. 306. PAYMENT FOR INPATIENT SERVICES OF PSY5 CHIATRIC HOSPITALS.

6 With respect to hospitals described in clause (i) of

7 section 1886(d)(1)(B) of the Social Security Act (42

8 U.S.C. 1395ww(d)(1)(B)) and psychiatric units described

9 in the matter following clause (v) of such section, in mak10 ing incentive payments to such hospitals under section

11 1886(b)(1)(A) of such Act (42 U.S.C. 1395ww(b)(1)(A))

12 for cost reporting periods beginning on or after October

13 1, 2000, and before October 1, 2001, the Secretary of

14 Health and Human Services, in clause (ii) of such section,

15 shall substitute ‘‘3 percent’’ for ‘‘2 percent’’.

16 SEC. 307. PAYMENT FOR INPATIENT SERVICES OF LONG17 TERM CARE HOSPITALS.

18 (a) INCREASED TARGET AMOUNTS AND CAPS FOR

19 LONG-TERM CARE HOSPITALS BEFORE IMPLEMENTA20 TION OF THE PROSPECTIVE PAYMENT SYSTEM.—

21 (1) IN GENERAL.—Section 1886(b)(3) (42

22 U.S.C. 1395ww(b)(3)) is amended—

23 (A) in subparagraph (H)(ii)(III), by insert24 ing ‘‘subject to subparagraph (J),’’ after

25 ‘‘2002,’’; and
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1 (B) by adding at the end the following new

2 subparagraph:

3 ‘‘(J) For cost reporting periods beginning during fis4 cal year 2001, for a hospital described in subsection

5 (d)(1)(B)(iv)—

6 ‘‘(i) the limiting or cap amount otherwise deter7 mined under subparagraph (H) shall be increased by

8 2 percent; and

9 ‘‘(ii) the target amount otherwise determined

10 under subparagraph (A) shall be increased by 25

11 percent (subject to the limiting or cap amount deter12 mined under subparagraph (H), as increased by

13 clause (i)).’’.

14 (2) APPLICATION.—The amendments made by

15 subsection (a) and by section 122 of BBRA (113

16 Stat. 1501A–331) shall not be taken into account in

17 the development and implementation of the prospec18 tive payment system under section 123 of BBRA

19 (113 Stat. 1501A–331).

20 (b) IMPLEMENTATION OF PROSPECTIVE PAYMENT

21 SYSTEM FOR LONG-TERM CARE HOSPITALS.—

22 (1) MODIFICATION OF REQUIREMENT.—In de23 veloping the prospective payment system for pay24 ment for inpatient hospital services provided in long25 term care hospitals described in section
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1 1886(d)(1)(B)(iv) of the Social Security Act (42

2 U.S.C. 1395ww(d)(1)(B)(iv)) under the medicare

3 program under title XVIII of such Act required

4 under section 123 of BBRA, the Secretary of Health

5 and Human Services shall examine the feasibility

6 and the impact of basing payment under such a sys7 tem on the use of existing (or refined) hospital diag8 nosis-related groups (DRGs) that have been modi9 fied to account for different resource use of long10 term care hospital patients as well as the use of the

11 most recently available hospital discharge data. The

12 Secretary shall examine and may provide for appro13 priate adjustments to the long-term hospital pay14 ment system, including adjustments to DRG

15 weights, area wage adjustments, geographic reclassi16 fication, outliers, updates, and a disproportionate

17 share adjustment consistent with section

18 1886(d)(5)(F) of the Social Security Act (42 U.S.C.

19 1395ww(d)(5)(F)).

20 (2) DEFAULT IMPLEMENTATION OF SYSTEM

21 BASED ON EXISTING DRG METHODOLOGY.—If the

22 Secretary is unable to implement the prospective

23 payment system under section 123 of the BBRA by

24 October 1, 2002, the Secretary shall implement a

25 prospective payment system for such hospitals that
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1 bases payment under such a system using existing

2 hospital diagnosis-related groups (DRGs), modified

3 where feasible to account for resource use of long4 term care hospital patients using the most recently

5 available hospital discharge data for such services

6 furnished on or after that date.

7 Subtitle B—Adjustments to PPS

8 Payments for Skilled Nursing

9 Facilities

10 SEC. 311. ELIMINATION OF REDUCTION IN SKILLED NURS11 ING FACILITY (SNF) MARKET BASKET UP12 DATE IN 2001.

13 (a) IN GENERAL.—Section 1888(e)(4)(E)(ii) (42

14 U.S.C. 1395yy(e)(4)(E)(ii)) is amended—

15 (1) by redesignating subclauses (II) and (III)

16 as subclauses (III) and (IV), respectively;

17 (2) in subclause (III), as so redesignated—

18 (A) by striking ‘‘each of fiscal years 2001

19 and 2002’’ and inserting ‘‘each of fiscal years

20 2002 and 2003’’; and

21 (B) by striking ‘‘minus 1 percentage

22 point’’ and inserting ‘‘minus 0.5 percentage

23 points’’; and

24 (3) by inserting after subclause (I) the fol25 lowing new subclause:
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1 ‘‘(II) for fiscal year 2001, the

2 rate computed for the previous fiscal

3 year increased by the skilled nursing

4 facility market basket percentage

5 change for the fiscal year;’’.

6 (b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR

7 2001.—Notwithstanding the amendments made by sub8 section (a), for purposes of making payments for covered

9 skilled nursing facility services under section 1888(e) of

10 the Social Security Act (42 U.S.C. 1395yy(e)) for fiscal

11 year 2001, the Federal per diem rate referred to in para12 graph (4)(E)(ii) of such section—

13 (1) for the period beginning on October 1,

14 2000, and ending on March 31, 2001, shall be the

15 rate determined in accordance with the law as in ef16 fect on the day before the date of the enactment of

17 this Act; and

18 (2) for the period beginning on April 1, 2001,

19 and ending on September 30, 2001, shall be the rate

20 that would have been determined under such section

21 if ‘‘plus 1 percentage point’’ had been substituted

22 for ‘‘minus 1 percentage point’’ under subclause (II)

23 of such paragraph (as in effect on the day before the

24 date of the enactment of this Act).
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1 (c) RELATION TO TEMPORARY INCREASE IN

2 BBRA.—The increases provided under section 101 of

3 BBRA (113 Stat. 1501A–325) shall be in addition to any

4 increase resulting from the amendments made by sub5 section (a).

6 (d) GAO REPORT ON ADEQUACY OF SNF PAYMENT

7 RATES.—Not later than July 1, 2002, the Comptroller

8 General of the United States shall submit to Congress a

9 report on the adequacy of medicare payment rates to

10 skilled nursing facilities and the extent to which medicare

11 contributes to the financial viability of such facilities. Such

12 report shall take into account the role of private payors,

13 medicaid, and case mix on the financial performance of

14 these facilities, and shall include an analysis (by specific

15 RUG classification) of the number and characteristics of

16 such facilities.

17 (e) HCFA STUDY OF CLASSIFICATION SYSTEMS FOR

18 SNF RESIDENTS.—

19 (1) STUDY.—The Secretary of Health and

20 Human Services shall conduct a study of the dif21 ferent systems for categorizing patients in medicare

22 skilled nursing facilities in a manner that accounts

23 for the relative resource utilization of different pa24 tient types.
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1 (2) REPORT.—Not later than January 1, 2005,

2 the Secretary shall submit to Congress a report on

3 the study conducted under subsection (a). Such re4 port shall include such recommendations regarding

5 changes in law as may be appropriate.

6 SEC. 312. INCREASE IN NURSING COMPONENT OF PPS FED7 ERAL RATE.

8 (a) IN GENERAL.—The Secretary of Health and

9 Human Services shall increase by 16.66 percent the nurs10 ing component of the case-mix adjusted Federal prospec11 tive payment rate specified in Tables 3 and 4 of the final

12 rule published in the Federal Register by the Health Care

13 Financing Administration on July 31, 2000 (65 Fed. Reg.

14 46770), effective for services furnished on or after April

15 1, 2001, and before October 1, 2002.

16 (b) GAO AUDIT OF NURSING STAFF RATIOS.—

17 (1) AUDIT.—The Comptroller General of the

18 United States shall conduct an audit of nursing

19 staffing ratios in a representative sample of medi20 care skilled nursing facilities. Such sample shall

21 cover selected States and shall include broad rep22 resentation with respect to size, ownership, location,

23 and medicare volume. Such audit shall include an

24 examination of payroll records and medicaid cost re25 ports of individual facilities.
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1 (2) REPORT.—Not later than August 1, 2002,

2 the Comptroller General shall submit to Congress a

3 report on the audits conducted under paragraph (1).

4 Such report shall include an assessment of the im5 pact of the increased payments under this subtitle

6 on increased nursing staff ratios and shall make rec7 ommendations as to whether increased payments

8 under subsection (a) should be continued.

9 SEC. 313. APPLICATION OF SNF CONSOLIDATED BILLING

10 REQUIREMENT LIMITED TO PART A COV11 ERED STAYS.

12 (a) IN GENERAL.—Section 1862(a)(18) (42 U.S.C.

13 1395y(a)(18)) is amended by striking ‘‘or of a part of a

14 facility that includes a skilled nursing facility (as deter15 mined under regulations),’’ and inserting ‘‘during a period

16 in which the resident is provided covered post-hospital ex17 tended care services (or, for services described in section

18 1861(s)(2)(D), which are furnished to such an individual

19 without regard to such period),’’.

20 (b) CONFORMING AMENDMENTS.—(1) Section

21 1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) is amended—

22 (A) by inserting ‘‘by, or under arrangements

23 made by, a skilled nursing facility’’ after ‘‘fur24 nished’’;
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1 (B) by striking ‘‘or of a part of a facility that

2 includes a skilled nursing facility (as determined

3 under regulations)’’; and

4 (C) by striking ‘‘(without regard to whether or

5 not the item or service was furnished by the facility,

6 by others under arrangement with them made by the

7 facility, under any other contracting or consulting

8 arrangement, or otherwise)’’.

9 (2) Section 1842(t) (42 U.S.C. 1395u(t)) is amended

10 by striking ‘‘by a physician’’ and ‘‘or of a part of a facility

11 that includes a skilled nursing facility (as determined

12 under regulations),’’.

13 (3) Section 1866(a)(1)(H)(ii)(I) (42 U.S.C.

14 1395cc(a)(1)(H)(ii)(I)) is amended by inserting after

15 ‘‘who is a resident of the skilled nursing facility’’ the fol16 lowing: ‘‘during a period in which the resident is provided

17 covered post-hospital extended care services (or, for serv18 ices described in section 1861(s)(2)(D), that are furnished

19 to such an individual without regard to such period)’’.

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

21 subsections (a) and (b) apply to services furnished on or

22 after January 1, 2001.

23 (d) OVERSIGHT.—The Secretary of Health and

24 Human Services, through the Office of the Inspector Gen25 eral in the Department of Health and Human Services
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1 or otherwise, shall monitor payments made under part B

2 of the title XVIII of the Social Security Act for items and

3 services furnished to residents of skilled nursing facilities

4 during a time in which the residents are not being pro5 vided medicare covered post-hospital extended care serv6 ices to ensure that there is not duplicate billing for serv7 ices or excessive services provided.

8 SEC. 314. ADJUSTMENT OF REHABILITATION RUGS TO COR9 RECT ANOMALY IN PAYMENT RATES.

10 (a) ADJUSTMENT FOR REHABILITATION RUGS.—

11 (1) IN GENERAL.—For purposes of computing

12 payments for covered skilled nursing facility services

13 under paragraph (1) of section 1888(e) of the Social

14 Security Act (42 U.S.C. 1395yy(e)) for such services

15 furnished on or after April 1, 2001, and before the

16 date described in section 101(c)(2) of BBRA (113

17 Stat. 1501A–324), the Secretary of Health and

18 Human Services shall increase by 6.7 percent the

19 adjusted Federal per diem rate otherwise determined

20 under paragraph (4) of such section (but for this

21 section) for covered skilled nursing facility services

22 for RUG–III rehabilitation groups described in para23 graph (2) furnished to an individual during the pe24 riod in which such individual is classified in such a

25 RUG–III category.
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1 (2) REHABILITATION GROUPS DESCRIBED.—

2 The RUG–III rehabilitation groups for which the

3 adjustment described in paragraph (1) applies are

4 RUC, RUB, RUA, RVC, RVB, RVA, RHC, RHB,

5 RHA, RMC, RMB, RMA, RLB, and RLA, as speci6 fied in Tables 3 and 4 of the final rule published in

7 the Federal Register by the Health Care Financing

8 Administration on July 31, 2000 (65 Fed. Reg.

9 46770).

10 (b) CORRECTION WITH RESPECT TO REHABILITA11 TION RUGS.—

12 (1) IN GENERAL.—Section 101(b) of BBRA

13 (113 Stat. 1501A–324) is amended by striking

14 ‘‘CA1, RHC, RMC, and RMB’’ and inserting ‘‘and

15 CA1’’.

16 (2) EFFECTIVE DATE.—The amendment made

17 by paragraph (1) applies to services furnished on or

18 after April 1, 2001.

19 (c) REVIEW BY OFFICE OF INSPECTOR GENERAL.—

20 The Inspector General of the Department of Health and

21 Human Services shall review the medicare payment struc22 ture for services classified within rehabilitation resource

23 utilization groups (RUGs) (as in effect after the date of

24 the enactment of the BBRA) to assess whether payment

25 incentives exist for the delivery of inadequate care. Not
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1 later than October 1, 2001, the Inspector General shall

2 submit to Congress a report on such review.

3 SEC. 315. ESTABLISHMENT OF PROCESS FOR GEOGRAPHIC

4 RECLASSIFICATION.

5 (a) IN GENERAL.—The Secretary of Health and

6 Human Services may establish a procedure for the geo7 graphic reclassification of a skilled nursing facility for pur8 poses of payment for covered skilled nursing facility serv9 ices under the prospective payment system established

10 under section 1888(e) of the Social Security Act (42

11 U.S.C. 1395yy(e)). Such procedure may be based upon the

12 method for geographic reclassifications for inpatient hos13 pitals established under section 1886(d)(10) of the Social

14 Security Act (42 U.S.C. 1395ww(d)(10)).

15 (b) REQUIREMENT FOR SKILLED NURSING FACILITY

16 WAGE DATA.—In no case may the Secretary implement

17 the procedure under subsection (a) before such time as

18 the Secretary has collected data necessary to establish an

19 area wage index for skilled nursing facilities based on

20 wage data from such facilities.

21 Subtitle C—Hospice Care

22 SEC. 321. FULL MARKET BASKET INCREASE FOR 2001.

23 (a) IN GENERAL.—Section 1814(i)(1)(C)(ii) (42

24 U.S.C. 1395f(i)(1)(C)(ii)) is amended—
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1 (1) by redesignating subclause (VII) as sub2 clause (IX);

3 (2) in subclause (VI)—

4 (A) by striking ‘‘through 2002’’ and insert5 ing ‘‘through 2000’’; and

6 (B) by striking ‘‘and’’ at the end; and

7 (3) by inserting after subclause (VI) the fol8 lowing new subclauses:

9 ‘‘(VII) for fiscal year 2001, the market basket

10 percentage increase for the fiscal year;

11 ‘‘(VIII) for fiscal year 2002, the market basket

12 percentage increase for the fiscal year minus 0.25

13 percentage points; and’’.

14 (b) TRANSITION DURING FISCAL YEAR 2001.—Not15 withstanding the amendments made by subsection (a), for

16 purposes of making payments for hospice care under sec17 tion 1814(i) of the Social Security Act (42 U.S.C.

18 1395f(i)) for fiscal year 2001, the payment rates referred

19 to in paragraph (1)(C) of such section—

20 (1) for the period beginning on October 1,

21 2000, and ending on March 31, 2001, shall be the

22 rate determined in accordance with the law as in ef23 fect on the day before the date of the enactment of

24 this Act; and
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1 (2) for the period beginning on April 1, 2001,

2 and ending on September 30, 2001, shall be the rate

3 that would have been determined under paragraph

4 (1) if ‘‘plus 1.0 percentage points’’ were substituted

5 for ‘‘minus 1.0 percentage points’’ under paragraph

6 (1)(C)(ii)(VI) of such section for fiscal year 2001.

7 (c) CONFORMING AMENDMENTS TO BBRA.—

8 (1) IN GENERAL.—Section 131 of BBRA (113

9 Stat. 1501A–333) is repealed.

10 (2) EFFECTIVE DATE.—The amendment made

11 by paragraph (1) shall take effect as if included in

12 the enactment of BBRA.

13 (d) TECHNICAL AMENDMENT.—Section

14 1814(a)(7)(A)(ii) (42 U.S.C. 1395f(a)(7)(A)(ii)) is

15 amended by striking the period at the end and inserting

16 a semicolon.

17 SEC. 322. CLARIFICATION OF PHYSICIAN CERTIFICATION.

18 (a) CERTIFICATION BASED ON NORMAL COURSE OF

19 ILLNESS.—

20 (1) IN GENERAL.—Section 1814(a) (42 U.S.C.

21 1395f(a)) is amended by adding at the end the fol22 lowing new sentence: ‘‘The certification regarding

23 terminal illness of an individual under paragraph (7)

24 shall be based on the physician’s or medical direc-
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1 tor’s clinical judgment regarding the normal course

2 of the individual’s illness.’’.

3 (2) EFFECTIVE DATE.—The amendment made

4 by paragraph (1) applies to certifications made on or

5 after the date of the enactment of this Act.

6 (b) STUDY AND REPORT ON PHYSICIAN CERTIFI7 CATION REQUIREMENT FOR HOSPICE BENEFITS.—

8 (1) STUDY.—The Secretary of Health and

9 Human Services shall conduct a study to examine

10 the appropriateness of the certification regarding

11 terminal illness of an individual under section

12 1814(a)(7) of the Social Security Act (42 U.S.C.

13 1395f(a)(7)) that is required in order for such indi14 vidual to receive hospice benefits under the medicare

15 program under title XVIII of such Act. In con16 ducting such study, the Secretary shall take into ac17 count the effect of the amendment made by sub18 section (a).

19 (2) REPORT.—Not later than 2 years after the

20 date of the enactment of this Act, the Secretary of

21 Health and Human Services shall submit to Con22 gress a report on the study conducted under para23 graph (1), together with any recommendations for

24 legislation that the Secretary deems appropriate.
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1 SEC. 323. MEDPAC REPORT ON ACCESS TO, AND USE OF,

2 HOSPICE BENEFIT.

3 (a) IN GENERAL.—The Medicare Payment Advisory

4 Commission shall conduct a study to examine the factors

5 affecting the use of hospice benefits under the medicare

6 program under title XVIII of the Social Security Act, in7 cluding a delay in the time (relative to death) of entry

8 into a hospice program, and differences in such use be9 tween urban and rural hospice programs and based upon

10 the presenting condition of the patient.

11 (b) REPORT.—Not later than 18 months after the

12 date of the enactment of this Act, the Commission shall

13 submit to Congress a report on the study conducted under

14 subsection (a), together with any recommendations for leg15 islation that the Commission deems appropriate.

16 Subtitle D—Other Provisions

17 SEC. 331. RELIEF FROM MEDICARE PART A LATE ENROLL18 MENT PENALTY FOR GROUP BUY-IN FOR

19 STATE AND LOCAL RETIREES.

20 (a) IN GENERAL.—Section 1818 (42 U.S.C. 1395i–

21 2) is amended—

22 (1) in subsection (c)(6), by inserting before the

23 semicolon at the end the following: ‘‘and shall be

24 subject to reduction in accordance with subsection

25 (d)(6)’’; and
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1 (2) by adding at the end of subsection (d) the

2 following new paragraph:

3 ‘‘(6)(A) In the case where a State, a political subdivi4 sion of a State, or an agency or instrumentality of a State

5 or political subdivision thereof determines to pay, for the

6 life of each individual, the monthly premiums due under

7 paragraph (1) on behalf of each of the individuals in a

8 qualified State or local government retiree group who

9 meets the conditions of subsection (a), the amount of any

10 increase otherwise applicable under section 1839(b) (as

11 applied and modified by subsection (c)(6) of this section)

12 with respect to the monthly premium for benefits under

13 this part for an individual who is a member of such group

14 shall be reduced by the total amount of taxes paid under

15 section 3101(b) of the Internal Revenue Code of 1986 by

16 such individual and under section 3111(b) by the employ17 ers of such individual on behalf of such individual with

18 respect to employment (as defined in section 3121(b) of

19 such Code).

20 ‘‘(B) For purposes of this paragraph, the term ‘quali21 fied State or local government retiree group’ means all of

22 the individuals who retire prior to a specified date that

23 is before January 1, 2002, from employment in 1 or more

24 occupations or other broad classes of employees of—

25 ‘‘(i) the State;
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1 ‘‘(ii) a political subdivision of the State; or

2 ‘‘(iii) an agency or instrumentality of the State

3 or political subdivision of the State.’’.

4 (b) EFFECTIVE DATE.—The amendments made by

5 subsection (a) apply to premiums for months beginning

6 with July 1, 2001.

7 SEC. 332. POSTING OF INFORMATION ON NURSING FACIL8 ITY STAFFING.

9 (a) MEDICARE.—Section 1819(b) (42 U.S.C. 1395i–

10 3(b)) is amended by adding at the end the following new

11 paragraph:

12 ‘‘(8) INFORMATION ON NURSE STAFFING.—

13 ‘‘(A) IN GENERAL.—A skilled nursing fa14 cility shall post daily for each shift the current

15 number of licensed and unlicensed nursing staff

16 directly responsible for resident care in the fa17 cility. The information shall be displayed in a

18 uniform manner (as specified by the Secretary)

19 and in a clearly visible place.

20 ‘‘(B) PUBLICATION OF DATA.—A skilled

21 nursing facility shall, upon request, make avail22 able to the public the nursing staff data de23 scribed in subparagraph (A).’’.
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1 (b) MEDICAID.—Section 1919(b) (42 U.S.C.

2 1395r(b)) is amended by adding at the end the following

3 new paragraph:

4 ‘‘(8) INFORMATION ON NURSE STAFFING.—

5 ‘‘(A) IN GENERAL.—A nursing facility

6 shall post daily for each shift the current num7 ber of licensed and unlicensed nursing staff di8 rectly responsible for resident care in the facil9 ity. The information shall be displayed in a uni10 form manner (as specified by the Secretary)

11 and in a clearly visible place.

12 ‘‘(B) PUBLICATION OF DATA.—A nursing

13 facility shall, upon request, make available to

14 the public the nursing staff data described in

15 subparagraph (A).’’.

16 TITLE IV—PROVISIONS

17 RELATING TO PART B

18 Subtitle A—Hospital Outpatient

19 Services

20 SEC. 401. REVISION OF HOSPITAL OUTPATIENT PPS PAY21 MENT UPDATE.

22 (a) IN GENERAL.—Section 1833(t)(3)(C)(iii) (42

23 U.S.C. 1395l(t)(3)(C)(iii)) is amended by striking ‘‘in

24 each of 2000, 2001, and 2002’’ and inserting ‘‘in each

25 of 2000 and 2002’’.
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1 (b) ADJUSTMENT FOR CASE MIX CHANGES.—

2 (1) IN GENERAL.—Section 1833(t)(3)(C) (42

3 U.S.C. 1395l(t)(3)(C)) is amended—

4 (A) by redesignating clause (iii) as clause

5 (iv); and

6 (B) by inserting after clause (ii) the fol7 lowing new clause:

8 ‘‘(iii) ADJUSTMENT FOR SERVICE MIX

9 CHANGES.—Insofar as the Secretary deter10 mines that the adjustments for service mix

11 under paragraph (2) for a previous year

12 (or estimates that such adjustments for a

13 future year) did (or are likely to) result in

14 a change in aggregate payments under this

15 subsection during the year that are a re16 sult of changes in the coding or classifica17 tion of covered OPD services that do not

18 reflect real changes in service mix, the Sec19 retary may adjust the conversion factor

20 computed under this subparagraph for

21 subsequent years so as to eliminate the ef22 fect of such coding or classification

23 changes.’’.
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1 (2) EFFECTIVE DATE.—The amendments made

2 by paragraph (1) shall take effect as if included in

3 the enactment of BBA.

4 SEC. 402. CLARIFYING PROCESS AND STANDARDS FOR DE5 TERMINING ELIGIBILITY OF DEVICES FOR

6 PASS-THROUGH PAYMENTS UNDER HOSPITAL

7 OUTPATIENT PPS.

8 (a) IN GENERAL.—Section 1833(t)(6) (42 U.S.C.

9 1395l(t)(6)) is amended—

10 (1) by redesignating subparagraphs (C) and

11 (D) as subparagraphs (D) and (E), respectively; and

12 (2) by striking subparagraph (B) and inserting

13 the following new subparagraphs:

14 ‘‘(B) USE OF CATEGORIES IN DETER15 MINING ELIGIBILITY OF A DEVICE FOR PASS16 THROUGH PAYMENTS.—The following provi17 sions apply for purposes of determining whether

18 a medical device qualifies for additional pay19 ments under clause (ii) or (iv) of subparagraph

20 (A):

21 ‘‘(i) ESTABLISHMENT OF INITIAL CAT22 EGORIES.—The Secretary shall initially es23 tablish under this clause categories of med24 ical devices based on type of device by

25 April 1, 2001. Such categories shall be es-
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1 tablished in a manner such that each med2 ical device that meets the requirements of

3 clause (ii) or (iv) of subparagraph (A) as

4 of as of January 1, 2001, is included in

5 such a category and no such device is in6 cluded in more than one category. For pur7 poses of the preceding sentence, whether a

8 medical device meets such requirements as

9 of such date shall be determined on the

10 basis of the program memoranda issued

11 before such date or if the Secretary deter12 mines the medical device would have been

13 included in the program memoranda but

14 for the requirement of subparagraph

15 (A)(iv)(I). The categories may be estab16 lished under this clause by program memo17 randum or otherwise, after consultation

18 with groups representing hospitals, manu19 facturers of medical devices, and other af20 fected parties.

21 ‘‘(ii) ESTABLISHING CRITERIA FOR

22 ADDITIONAL CATEGORIES.—

23 ‘‘(I) IN GENERAL.—The Sec24 retary shall establish criteria that will

25 be used for creation of additional cat-
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1 egories (other than those established

2 under clause (i)) through rulemaking

3 (which may include use of an interim

4 final rule with comment period).

5 ‘‘(II) STANDARD.—Such cat6 egories shall be established under this

7 clause in a manner such that no med8 ical device is described by more than

9 one category. Such criteria shall in10 clude a test of whether the average

11 cost of devices that would be included

12 in a category and are in use at the

13 time the category is established is not

14 insignificant, as described in subpara15 graph (A)(iv)(II).

16 ‘‘(III) DEADLINE.—Criteria shall

17 first be established under this clause

18 by July 1, 2001. The Secretary may

19 establish in compelling circumstances

20 categories under this clause before the

21 date such criteria are established.

22 ‘‘(IV) ADDING CATEGORIES.—

23 The Secretary shall promptly establish

24 a new category of medical devices

25 under this clause for any medical de-
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1 vice that meets the requirements of

2 subparagraph (A)(iv) and for which

3 none of the categories in effect (or

4 that were previously in effect) is ap5 propriate.

6 ‘‘(iii) PERIOD FOR WHICH CATEGORY

7 IS IN EFFECT.—A category of medical de8 vices established under clause (i) or clause

9 (ii) shall be in effect for a period of at

10 least 2 years, but not more than 3 years,

11 that begins—

12 ‘‘(I) in the case of a category es13 tablished under clause (i), on the first

14 date on which payment was made

15 under this paragraph for any device

16 described by such category (including

17 payments made during the period be18 fore April 1, 2001); and

19 ‘‘(II) in the case of any other

20 category, on the first date on which

21 payment is made under this para22 graph for any medical device that is

23 described by such category.

24 ‘‘(iv) REQUIREMENTS TREATED AS

25 MET.—A medical device shall be treated as
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1 meeting the requirements of subparagraph

2 (A)(iv) if—

3 ‘‘(I) the device is described by a

4 category established and in effect

5 under clause (i); or

6 ‘‘(II) the device is described by a

7 category established and in effect

8 under clause (ii) and an application

9 under section 515 of the Federal

10 Food, Drug, and Cosmetic Act has

11 been approved with respect to the de12 vice, or the device has been cleared for

13 market under section 510(k) of such

14 Act, or the device is exempt from the

15 requirements of section 510(k) of

16 such Act pursuant to subsection (l) or

17 (m) of section 510 of such Act or sec18 tion 520(g) of such Act.

19 Nothing in this clause shall be construed

20 as requiring an application or prior ap21 proval (other than that described in sub22 clause (II)) in order for a covered device to

23 qualify for payment under this paragraph.

24 ‘‘(C) LIMITED PERIOD OF PAYMENT.—
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1 ‘‘(i) DRUGS AND BIOLOGICALS.—The

2 payment under this paragraph with respect

3 to a drug or biological shall only apply dur4 ing a period of at least 2 years, but not

5 more than 3 years, that begins—

6 ‘‘(I) on the first date this sub7 section is implemented in the case of

8 a drug or biological described in

9 clause (i), (ii), or (iii) of subparagraph

10 (A) and in the case of a drug or bio11 logical described in subparagraph

12 (A)(iv) and for which payment under

13 this part is made as an outpatient

14 hospital service before such first date;

15 or

16 ‘‘(II) in the case of a drug or bio17 logical described in subparagraph

18 (A)(iv) not described in subclause (I),

19 on the first date on which payment is

20 made under this part for the drug or

21 biological as an outpatient hospital

22 service.

23 ‘‘(ii) MEDICAL DEVICES.—Payment

24 shall be made under this paragraph with
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1 respect to a medical device only if such

2 device—

3 ‘‘(I) is described by a category of

4 medical devices established and in ef5 fect under subparagraph (B); and

6 ‘‘(II) is provided as part of a

7 service (or group of services) paid for

8 under this subsection and provided

9 during the period for which such cat10 egory is in effect under such subpara11 graph.’’.

12 (b) CONFORMING AMENDMENTS.—Section 1833(t)

13 (42 U.S.C. 1395l(t)) is further amended—

14 (1) in paragraph (6)(A)(iv)(II), by striking ‘‘the

15 cost of the device, drug, or biological’’ and inserting

16 ‘‘the cost of the drug or biological or the average

17 cost of the category of devices’’;

18 (2) in paragraph (6)(D) (as redesignated by

19 subsection (a)(1)), by striking ‘‘subparagraph

20 (D)(iii)’’ in the matter preceding clause (i) and in21 serting ‘‘subparagraph (E)(iii)’’; and

22 (3) in paragraph (12)(E), by striking ‘‘addi23 tional payments (consistent with paragraph (6)(B))’’

24 and inserting ‘‘additional payments, the determina25 tion and deletion of initial and new categories (con-
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1 sistent with subparagraphs (B) and (C) of para2 graph (6))’’.

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

4 this section take effect on the date of the enactment of

5 this Act.

6 (d) TRANSITION.—

7 (1) IN GENERAL.—In the case of a medical de8 vice provided as part of a service (or group of serv9 ices) furnished during the period before initial cat10 egories are implemented under subparagraph (B)(i)

11 of section 1833(t)(6) of the Social Security Act (as

12 amended by subsection (a)), payment shall be made

13 for such device under such section in accordance

14 with the provisions in effect before the date of the

15 enactment of this Act, except that, beginning on the

16 date that is 30 days after the date of the enactment

17 of this Act, payment shall also be made for such a

18 device that is not included in a program memo19 randum described in such subparagraph if the Sec20 retary of Health and Human Services determines

21 that the device is likely to be described by such an

22 initial category or would have been included in such

23 program memoranda but for the requirement of sub24 paragraph (A)(iv)(I) of that section.
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1 (2) APPLICATION OF CURRENT PROCESS.—Not2 withstanding any other provision of law, the Sec3 retary shall continue to accept applications with re4 spect to medical devices under the process estab5 lished pursuant to paragraph (6) of section 1833(t)

6 of the Social Security Act (as in effect on the day

7 before the date of the enactment of this Act)

8 through December 1, 2000, and any device—

9 (A) with respect to which an application

10 was submitted (pursuant to such process) on or

11 before such date; and

12 (B) that meets the requirements of clause

13 (ii) or (iv) of subparagraph (A) of such para14 graph (as determined pursuant to such proc15 ess),

16 shall be treated as a device with respect to which an

17 initial category is required to be established under

18 subparagraph (B)(i) of such paragraph (as amended

19 by subsection (a)(2)).

20 SEC. 403. APPLICATION OF OPD PPS TRANSITIONAL COR21 RIDOR PAYMENTS TO CERTAIN HOSPITALS

22 THAT DID NOT SUBMIT A 1996 COST REPORT.

23 (a) IN GENERAL.—Section 1833(t)(7)(F)(ii)(I) (42

24 U.S.C. 1395l(t)(7)(F)(ii)(I)) is amended by inserting ‘‘(or

25 in the case of a hospital that did not submit a cost report
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1 for such period, during the first subsequent cost reporting

2 period ending before 2001 for which the hospital sub3 mitted a cost report)’’ after ‘‘1996’’.

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

5 subsection (a) shall take effect as if included in the enact6 ment of BBRA.

7 SEC. 404. APPLICATION OF RULES FOR DETERMINING PRO8 VIDER-BASED STATUS FOR CERTAIN ENTI9 TIES.

10 (a) GRANDFATHER.—Notwithstanding any other pro11 vision of law, for purposes of making determinations of

12 provider-based status under title XVIII of the Social Secu13 rity Act on or after October 1, 2000, any facility or organi14 zation that is treated as provider-based in relation to a

15 hospital or critical access hospital under such title as of

16 October 1, 2000—

17 (1) shall continue to be treated as provider18 based in relation to such hospital or critical access

19 hospital under such title during the 2-year period

20 beginning on October 1, 2000; and

21 (2) the requirements, limitations, and exclu22 sions specified in paragraphs (d), (e), (f), and (h) of

23 section 413.65 of title 42, Code of Federal Regula24 tions shall not apply to such facility or organization
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1 in relation to such hospital or critical access hospital

2 until after the end of such 2-year period.

3 (b) TEMPORARY CRITERIA.—For purposes of title

4 XVIII of the Social Security Act—

5 (1) a facility or organization for which a deter6 mination of provider-based status in relation to a

7 hospital or critical access hospital is requested on or

8 after October 1, 2000, and before October 1, 2002,

9 may not be treated as not having provider-based sta10 tus in relation to such a hospital for any period be11 fore a determination is made with respect to such

12 status pursuant to such request; and

13 (2) in making a determination with respect to

14 such status for any facility or organization in rela15 tionship to such a hospital on or after October 1,

16 2000, the following rules apply:

17 (A) The facility or organization shall be

18 treated as satisfying any requirements and

19 standards for geographic location in relation to

20 such a hospital if the facility or organization—

21 (i) satisfies the requirements of sec22 tion 413.65(d)(7) of title 42, Code of Fed23 eral Regulations; or
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1 (ii) is located not more than 35 miles

2 from the main campus of the hospital or

3 critical access hospital.

4 (B) The facility or organization shall be

5 treated as satisfying any of the requirements

6 and standards for geographic location in rela7 tion to such a hospital if the facility or organi8 zation is owned and operated by a hospital or

9 critical access hospital that—

10 (i) is owned or operated by a unit of

11 State or local government, is a public or

12 private nonprofit corporation that is for13 mally granted governmental powers by a

14 unit of State or local government, or is a

15 private hospital that has a contract with a

16 State or local government that includes the

17 operation of clinics located off the main

18 campus of the hospital to assure access in

19 a well-defined service area to health care

20 services for low-income individuals who are

21 not entitled to benefits under title XVIII

22 (or medical assistance under a State plan

23 under title XIX) of such Act; and

24 (ii) has a disproportionate share ad25 justment percentage (as determined under
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1 section 1886(d)(5)(F) of such Act (42

2 U.S.C. 1395ww(d)(5)(F))) greater than

3 11.75 percent or is described in clause

4 (i)(II) of such section.

5 (c) DEFINITIONS.—For purposes of this section, the

6 terms ‘‘hospital’’ and ‘‘critical access hospital’’ have the

7 meanings given such terms in subsections (e) and

8 (mm)(1), respectively, of section 1861 of the Social Secu9 rity Act (42 U.S.C. 1395x).

10 SEC. 405. TREATMENT OF CHILDREN’S HOSPITALS UNDER

11 PROSPECTIVE PAYMENT SYSTEM.

12 (a) IN GENERAL.—Section 1833(t) (42 U.S.C.

13 1395l(t)) is amended—

14 (1) in the heading of paragraph (7)(D)(ii), by

15 inserting ‘‘AND CHILDREN’S HOSPITALS’’ after ‘‘CAN16 CER HOSPITALS’’; and

17 (2) in paragraphs (7)(D)(ii) and (11), by strik18 ing ‘‘section 1886(d)(1)(B)(v)’’ and inserting

19 ‘‘clause (iii) or (v) of section 1886(d)(1)(B)’’.

20 (b) EFFECTIVE DATE.—The amendments made by

21 subsection (a) apply as if included in the enactment of

22 section 202 of BBRA (113 Stat. 1501A–342).
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1 SEC. 406. INCLUSION OF TEMPERATURE MONITORED

2 CRYOABLATION IN TRANSITIONAL PASS3 THROUGH FOR CERTAIN MEDICAL DEVICES,

4 DRUGS, AND BIOLOGICALS UNDER OPD PPS.

5 (a) IN GENERAL.—Section 1833(t)(6)(A)(ii) (42

6 U.S.C. 1395l(t)(6)(A)(ii)) is amended by inserting ‘‘or

7 temperature monitored cryoablation’’ after ‘‘device of

8 brachytherapy’’.

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

10 subsection (a) applies to devices furnished on or after

11 April 1, 2001.

12 Subtitle B—Provisions Relating to

13 Physicians’ Services

14 SEC. 411. GAO STUDIES RELATING TO PHYSICIANS’ SERV15 ICES.

16 (a) STUDY OF SPECIALIST PHYSICIANS’ SERVICES

17 FURNISHED IN PHYSICIANS’ OFFICES AND HOSPITAL

18 OUTPATIENT DEPARTMENT SERVICES.—

19 (1) STUDY.—The Comptroller General of the

20 United States shall conduct a study to examine the

21 appropriateness of furnishing in physicians’ offices

22 specialist physicians’ services (such as gastro23 intestinal endoscopic physicians’ services) which are

24 ordinarily furnished in hospital outpatient depart25 ments. In conducting this study, the Comptroller

26 General shall—
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1 (A) review available scientific and clinical

2 evidence about the safety of performing proce3 dures in physicians’ offices and hospital out4 patient departments;

5 (B) assess whether resource-based practice

6 expense relative values established by the Sec7 retary of Health and Human Services under the

8 medicare physician fee schedule under section

9 1848 of the Social Security Act (42 U.S.C.

10 1395w–4) for such specialist physicians’ serv11 ices furnished in physicians’ offices and hospital

12 outpatient departments create an incentive to

13 furnish such services in physicians’ offices in14 stead of hospital outpatient departments; and

15 (C) assess the implications for access to

16 care for medicare beneficiaries if the medicare

17 program were not to cover such services in phy18 sicians’ offices.

19 (2) REPORT.—Not later than July 1, 2001, the

20 Comptroller General shall submit to Congress a re21 port on such study and include such recommenda22 tions as the Comptroller General determines to be

23 appropriate.

24 (b) STUDY OF THE RESOURCE-BASED PRACTICE EX25 PENSE SYSTEM.—
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1 (1) STUDY.—The Comptroller General of the

2 United States shall conduct a study on the refine3 ments to the practice expense relative value units

4 during the transition to a resource-based practice ex5 pense system for physician payments under the

6 medicare program under title XVIII of the Social

7 Security Act. Such study shall examine how the Sec8 retary of Health and Human Services has accepted

9 and used the practice expense data submitted under

10 section 212 of BBRA (113 Stat. 1501A–350).

11 (2) REPORT.—Not later than July 1, 2001, the

12 Comptroller General shall submit to Congress a re13 port on the study conducted under paragraph (1) to14 gether with recommendations regarding—

15 (A) improvements in the process for ac16 ceptance and use of practice expense data

17 under section 212 of BBRA;

18 (B) any change or adjustment that is ap19 propriate to ensure full access to a spectrum of

20 care for beneficiaries under the medicare pro21 gram; and

22 (C) the appropriateness of payments to

23 physicians.
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1 SEC. 412. PHYSICIAN GROUP PRACTICE DEMONSTRATION.

2 (a) IN GENERAL.—Title XVIII is amended by insert3 ing after section 1866 the following new sections:

4 ‘‘DEMONSTRATION OF APPLICATION OF PHYSICIAN

5 VOLUME INCREASES TO GROUP PRACTICES

6 ‘‘SEC. 1866A. (a) DEMONSTRATION PROGRAM AU7 THORIZED.—

8 ‘‘(1) IN GENERAL.—The Secretary shall con9 duct demonstration projects to test and, if proven ef10 fective, expand the use of incentives to health care

11 groups participating in the program under this title

12 that—

13 ‘‘(A) encourage coordination of the care

14 furnished to individuals under the programs

15 under parts A and B by institutional and other

16 providers, practitioners, and suppliers of health

17 care items and services;

18 ‘‘(B) encourage investment in administra19 tive structures and processes to ensure efficient

20 service delivery; and

21 ‘‘(C) reward physicians for improving

22 health outcomes.

23 Such projects shall focus on the efficiencies of fur24 nishing health care in a group-practice setting as

25 compared to the efficiencies of furnishing health care

26 in other health care delivery systems.
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1 ‘‘(2) ADMINISTRATION BY CONTRACT.—Except

2 as otherwise specifically provided, the Secretary may

3 administer the program under this section in accord4 ance with section 1866B.

5 ‘‘(3) DEFINITIONS.—For purposes of this sec6 tion, terms have the following meanings:

7 ‘‘(A) PHYSICIAN.—Except as the Secretary

8 may otherwise provide, the term ‘physician’

9 means any individual who furnishes services

10 which may be paid for as physicians’ services

11 under this title.

12 ‘‘(B) HEALTH CARE GROUP.—The term

13 ‘health care group’ means a group of physicians

14 (as defined in subparagraph (A)) organized at

15 least in part for the purpose of providing physi16 cians’ services under this title. As the Secretary

17 finds appropriate, a health care group may in18 clude a hospital and any other individual or en19 tity furnishing items or services for which pay20 ment may be made under this title that is affili21 ated with the health care group under an ar22 rangement structured so that such individual or

23 entity participates in a demonstration under

24 this section and will share in any bonus earned

25 under subsection (d).
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1 ‘‘(b) ELIGIBILITY CRITERIA.—

2 ‘‘(1) IN GENERAL.—The Secretary is authorized

3 to establish criteria for health care groups eligible to

4 participate in a demonstration under this section, in5 cluding criteria relating to numbers of health care

6 professionals in, and of patients served by, the

7 group, scope of services provided, and quality of

8 care.

9 ‘‘(2) PAYMENT METHOD.—A health care group

10 participating in the demonstration under this section

11 shall agree with respect to services furnished to

12 beneficiaries within the scope of the demonstration

13 (as determined under subsection (c))—

14 ‘‘(A) to be paid on a fee-for-service basis;

15 and

16 ‘‘(B) that payment with respect to all such

17 services furnished by members of the health

18 care group to such beneficiaries shall (where de19 termined appropriate by the Secretary) be made

20 to a single entity.

21 ‘‘(3) DATA REPORTING.—A health care group

22 participating in a demonstration under this section

23 shall report to the Secretary such data, at such

24 times and in such format as the Secretary requires,
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1 for purposes of monitoring and evaluation of the

2 demonstration under this section.

3 ‘‘(c) PATIENTS WITHIN SCOPE OF DEMONSTRA4 TION.—

5 ‘‘(1) IN GENERAL.—The Secretary shall specify,

6 in accordance with this subsection, the criteria for

7 identifying those patients of a health care group who

8 shall be considered within the scope of the dem9 onstration under this section for purposes of applica10 tion of subsection (d) and for assessment of the ef11 fectiveness of the group in achieving the objectives

12 of this section.

13 ‘‘(2) OTHER CRITERIA.—The Secretary may es14 tablish additional criteria for inclusion of bene15 ficiaries within a demonstration under this section,

16 which may include frequency of contact with physi17 cians in the group or other factors or criteria that

18 the Secretary finds to be appropriate.

19 ‘‘(3) NOTICE REQUIREMENTS.—In the case of

20 each beneficiary determined to be within the scope

21 of a demonstration under this section with respect to

22 a specific health care group, the Secretary shall en23 sure that such beneficiary is notified of the incen24 tives, and of any waivers of coverage or payment
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1 rules, applicable to such group under such dem2 onstration.

3 ‘‘(d) INCENTIVES.—

4 ‘‘(1) PERFORMANCE TARGET.—The Secretary

5 shall establish for each health care group partici6 pating in a demonstration under this section—

7 ‘‘(A) a base expenditure amount, equal to

8 the average total payments under parts A and

9 B for patients served by the health care group

10 on a fee-for-service basis in a base period deter11 mined by the Secretary; and

12 ‘‘(B) an annual per capita expenditure tar13 get for patients determined to be within the

14 scope of the demonstration, reflecting the base

15 expenditure amount adjusted for risk and ex16 pected growth rates.

17 ‘‘(2) INCENTIVE BONUS.—The Secretary shall

18 pay to each participating health care group (subject

19 to paragraph (4)) a bonus for each year under the

20 demonstration equal to a portion of the medicare

21 savings realized for such year relative to the per22 formance target.

23 ‘‘(3) ADDITIONAL BONUS FOR PROCESS AND

24 OUTCOME IMPROVEMENTS.—At such time as the

25 Secretary has established appropriate criteria based
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1 on evidence the Secretary determines to be suffi2 cient, the Secretary shall also pay to a participating

3 health care group (subject to paragraph (4)) an ad4 ditional bonus for a year, equal to such portion as

5 the Secretary may designate of the saving to the

6 program under this title resulting from process im7 provements made by and patient outcome improve8 ments attributable to activities of the group.

9 ‘‘(4) LIMITATION.—The Secretary shall limit

10 bonus payments under this section as necessary to

11 ensure that the aggregate expenditures under this

12 title (inclusive of bonus payments) with respect to

13 patients within the scope of the demonstration do

14 not exceed the amount which the Secretary esti15 mates would be expended if the demonstration

16 projects under this section were not implemented.

17 ‘‘PROVISIONS FOR ADMINISTRATION OF DEMONSTRATION

18 PROGRAM

19 ‘‘SEC. 1866B. (a) GENERAL ADMINISTRATIVE AU20 THORITY.—

21 ‘‘(1) BENEFICIARY ELIGIBILITY.—Except as

22 otherwise provided by the Secretary, an individual

23 shall only be eligible to receive benefits under the

24 program under section 1866A (in this section re25 ferred to as the ‘demonstration program’) if such

26 individual—
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1 ‘‘(A) is enrolled in under the program

2 under part B and entitled to benefits under

3 part A; and

4 ‘‘(B) is not enrolled in a Medicare+Choice

5 plan under part C, an eligible organization

6 under a contract under section 1876 (or a simi7 lar organization operating under a demonstra8 tion project authority), an organization with an

9 agreement under section 1833(a)(1)(A), or a

10 PACE program under section 1894.

11 ‘‘(2) SECRETARY’S DISCRETION AS TO SCOPE

12 OF PROGRAM.—The Secretary may limit the imple13 mentation of the demonstration program to—

14 ‘‘(A) a geographic area (or areas) that the

15 Secretary designates for purposes of the pro16 gram, based upon such criteria as the Secretary

17 finds appropriate;

18 ‘‘(B) a subgroup (or subgroups) of bene19 ficiaries or individuals and entities furnishing

20 items or services (otherwise eligible to partici21 pate in the program), selected on the basis of

22 the number of such participants that the Sec23 retary finds consistent with the effective and ef24 ficient implementation of the program;
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1 ‘‘(C) an element (or elements) of the pro2 gram that the Secretary determines to be suit3 able for implementation; or

4 ‘‘(D) any combination of any of the limits

5 described in subparagraphs (A) through (C).

6 ‘‘(3) VOLUNTARY RECEIPT OF ITEMS AND

7 SERVICES.—Items and services shall be furnished to

8 an individual under the demonstration program only

9 at the individual’s election.

10 ‘‘(4) AGREEMENTS.—The Secretary is author11 ized to enter into agreements with individuals and

12 entities to furnish health care items and services to

13 beneficiaries under the demonstration program.

14 ‘‘(5) PROGRAM STANDARDS AND CRITERIA.—

15 The Secretary shall establish performance standards

16 for the demonstration program including, as applica17 ble, standards for quality of health care items and

18 services, cost-effectiveness, beneficiary satisfaction,

19 and such other factors as the Secretary finds appro20 priate. The eligibility of individuals or entities for

21 the initial award, continuation, and renewal of

22 agreements to provide health care items and services

23 under the program shall be conditioned, at a min24 imum, on performance that meets or exceeds such

25 standards.
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1 ‘‘(6) ADMINISTRATIVE REVIEW OF DECISIONS

2 AFFECTING INDIVIDUALS AND ENTITIES FUR3 NISHING SERVICES.—An individual or entity fur4 nishing services under the demonstration program

5 shall be entitled to a review by the program adminis6 trator (or, if the Secretary has not contracted with

7 a program administrator, by the Secretary) of a de8 cision not to enter into, or to terminate, or not to

9 renew, an agreement with the entity to provide

10 health care items or services under the program.

11 ‘‘(7) SECRETARY’S REVIEW OF MARKETING MA12 TERIALS.—An agreement with an individual or enti13 ty furnishing services under the demonstration pro14 gram shall require the individual or entity to guar15 antee that it will not distribute materials that mar16 ket items or services under the program without the

17 Secretary’s prior review and approval.

18 ‘‘(8) PAYMENT IN FULL.—

19 ‘‘(A) IN GENERAL.—Except as provided in

20 subparagraph (B), an individual or entity re21 ceiving payment from the Secretary under a

22 contract or agreement under the demonstration

23 program shall agree to accept such payment as

24 payment in full, and such payment shall be in

25 lieu of any payments to which the individual or
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1 entity would otherwise be entitled under this

2 title.

3 ‘‘(B) COLLECTION OF DEDUCTIBLES AND

4 COINSURANCE.—Such individual or entity may

5 collect any applicable deductible or coinsurance

6 amount from a beneficiary.

7 ‘‘(b) CONTRACTS FOR PROGRAM ADMINISTRATION.—

8 ‘‘(1) IN GENERAL.—The Secretary may admin9 ister the demonstration program through a contract

10 with a program administrator in accordance with the

11 provisions of this subsection.

12 ‘‘(2) SCOPE OF PROGRAM ADMINISTRATOR CON13 TRACTS.—The Secretary may enter into such con14 tracts for a limited geographic area, or on a regional

15 or national basis.

16 ‘‘(3) ELIGIBLE CONTRACTORS.—The Secretary

17 may contract for the administration of the program

18 with—

19 ‘‘(A) an entity that, under a contract

20 under section 1816 or 1842, determines the

21 amount of and makes payments for health care

22 items and services furnished under this title; or

23 ‘‘(B) any other entity with substantial ex24 perience in managing the type of program con25 cerned.
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1 ‘‘(4) CONTRACT AWARD, DURATION, AND RE2 NEWAL.—

3 ‘‘(A) IN GENERAL.—A contract under this

4 subsection shall be for an initial term of up to

5 three years, renewable for additional terms of

6 up to three years.

7 ‘‘(B) NONCOMPETITIVE AWARD AND RE8 NEWAL FOR ENTITIES ADMINISTERING PART A

9 OR PART B PAYMENTS.—The Secretary may

10 enter or renew a contract under this subsection

11 with an entity described in paragraph (3)(A)

12 without regard to the requirements of section 5

13 of title 41, United States Code.

14 ‘‘(5) APPLICABILITY OF FEDERAL ACQUISITION

15 REGULATION.—The Federal Acquisition Regulation

16 shall apply to program administration contracts

17 under this subsection.

18 ‘‘(6) PERFORMANCE STANDARDS.—The Sec19 retary shall establish performance standards for the

20 program administrator including, as applicable,

21 standards for the quality and cost-effectiveness of

22 the program administered, and such other factors as

23 the Secretary finds appropriate. The eligibility of en24 tities for the initial award, continuation, and renewal

25 of program administration contracts shall be condi-
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1 tioned, at a minimum, on performance that meets or

2 exceeds such standards.

3 ‘‘(7) FUNCTIONS OF PROGRAM ADMINIS4 TRATOR.—A program administrator shall perform

5 any or all of the following functions, as specified by

6 the Secretary:

7 ‘‘(A) AGREEMENTS WITH ENTITIES FUR8 NISHING HEALTH CARE ITEMS AND SERV9 ICES.—Determine the qualifications of entities

10 seeking to enter or renew agreements to provide

11 services under the demonstration program, and

12 as appropriate enter or renew (or refuse to

13 enter or renew) such agreements on behalf of

14 the Secretary.

15 ‘‘(B) ESTABLISHMENT OF PAYMENT

16 RATES.—Negotiate or otherwise establish, sub17 ject to the Secretary’s approval, payment rates

18 for covered health care items and services.

19 ‘‘(C) PAYMENT OF CLAIMS OR FEES.—Ad20 minister payments for health care items or serv21 ices furnished under the program.

22 ‘‘(D) PAYMENT OF BONUSES.—Using such

23 guidelines as the Secretary shall establish, and

24 subject to the approval of the Secretary, make

25 bonus payments as described in subsection
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1 (c)(2)(A)(ii) to entities furnishing items or serv2 ices for which payment may be made under the

3 program.

4 ‘‘(E) OVERSIGHT.—Monitor the compli5 ance of individuals and entities with agreements

6 under the program with the conditions of par7 ticipation.

8 ‘‘(F) ADMINISTRATIVE REVIEW.—Conduct

9 reviews of adverse determinations specified in

10 subsection (a)(6).

11 ‘‘(G) REVIEW OF MARKETING MATE12 RIALS.—Conduct a review of marketing mate13 rials proposed by an entity furnishing services

14 under the program.

15 ‘‘(H) ADDITIONAL FUNCTIONS.—Perform

16 such other functions as the Secretary may

17 specify.

18 ‘‘(8) LIMITATION OF LIABILITY.—The provi19 sions of section 1157(b) shall apply with respect to

20 activities of contractors and their officers, employ21 ees, and agents under a contract under this sub22 section.

23 ‘‘(9) INFORMATION SHARING.—Notwithstanding

24 section 1106 and section 552a of title 5, United

25 States Code, the Secretary is authorized to disclose
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1 to an entity with a program administration contract

2 under this subsection such information (including

3 medical information) on individuals receiving health

4 care items and services under the program as the

5 entity may require to carry out its responsibilities

6 under the contract.

7 ‘‘(c) RULES APPLICABLE TO BOTH PROGRAM

8 AGREEMENTS AND PROGRAM ADMINISTRATION CON9 TRACTS.—

10 ‘‘(1) RECORDS, REPORTS, AND AUDITS.—The

11 Secretary is authorized to require entities with

12 agreements to provide health care items or services

13 under the demonstration program, and entities with

14 program administration contracts under subsection

15 (b), to maintain adequate records, to afford the Sec16 retary access to such records (including for audit

17 purposes), and to furnish such reports and other

18 materials (including audited financial statements

19 and performance data) as the Secretary may require

20 for purposes of implementation, oversight, and eval21 uation of the program and of individuals’ and enti22 ties’ effectiveness in performance of such agreements

23 or contracts.

24 ‘‘(2) BONUSES.—Notwithstanding any other

25 provision of law, but subject to subparagraph
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1 (B)(ii), the Secretary may make bonus payments

2 under the demonstration program from the Federal

3 Health Insurance Trust Fund and the Federal Sup4 plementary Medical Insurance Trust Fund in

5 amounts that do not exceed the amounts authorized

6 under the program in accordance with the following:

7 ‘‘(A) PAYMENTS TO PROGRAM ADMINIS8 TRATORS.—The Secretary may make bonus

9 payments under the program to program ad10 ministrators.

11 ‘‘(B) PAYMENTS TO ENTITIES FURNISHING

12 SERVICES.—

13 ‘‘(i) IN GENERAL.—Subject to clause

14 (ii), the Secretary may make bonus pay15 ments to individuals or entities furnishing

16 items or services for which payment may

17 be made under the demonstration pro18 gram, or may authorize the program ad19 ministrator to make such bonus payments

20 in accordance with such guidelines as the

21 Secretary shall establish and subject to the

22 Secretary’s approval.

23 ‘‘(ii) LIMITATIONS.—The Secretary

24 may condition such payments on the

25 achievement of such standards related to
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1 efficiency, improvement in processes or

2 outcomes of care, or such other factors as

3 the Secretary determines to be appropriate.

4 ‘‘(3) ANTIDISCRIMINATION LIMITATION.—The

5 Secretary shall not enter into an agreement with an

6 entity to provide health care items or services under

7 the demonstration program, or with an entity to ad8 minister the program, unless such entity guarantees

9 that it will not deny, limit, or condition the coverage

10 or provision of benefits under the program, for indi11 viduals eligible to be enrolled under such program,

12 based on any health status-related factor described

13 in section 2702(a)(1) of the Public Health Service

14 Act.

15 ‘‘(d) LIMITATIONS ON JUDICIAL REVIEW.—The fol16 lowing actions and determinations with respect to the

17 demonstration program shall not be subject to review by

18 a judicial or administrative tribunal:

19 ‘‘(1) Limiting the implementation of the pro20 gram under subsection (a)(2).

21 ‘‘(2) Establishment of program participation

22 standards under subsection (a)(5) or the denial or

23 termination of, or refusal to renew, an agreement

24 with an entity to provide health care items and serv25 ices under the program.
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1 ‘‘(3) Establishment of program administration

2 contract performance standards under subsection

3 (b)(6), the refusal to renew a program administra4 tion contract, or the noncompetitive award or re5 newal of a program administration contract under

6 subsection (b)(4)(B).

7 ‘‘(5) Establishment of payment rates, through

8 negotiation or otherwise, under a program agree9 ment or a program administration contract.

10 ‘‘(6) A determination with respect to the pro11 gram (where specifically authorized by the program

12 authority or by subsection (c)(2))—

13 ‘‘(A) as to whether cost savings have been

14 achieved, and the amount of savings; or

15 ‘‘(B) as to whether, to whom, and in what

16 amounts bonuses will be paid.

17 ‘‘(e) APPLICATION LIMITED TO PARTS A AND B.—

18 None of the provisions of this section or of the demonstra19 tion program shall apply to the programs under part C.

20 ‘‘(f) REPORTS TO CONGRESS.—Not later than two

21 years after the date of the enactment of this section, and

22 biennially thereafter for six years, the Secretary shall re23 port to Congress on the use of authorities under the dem24 onstration program. Each report shall address the impact
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1 of the use of those authorities on expenditures, access, and

2 quality under the programs under this title.’’.

3 (b) GAO REPORT.—Not later than 2 years after the

4 date on which the demonstration project under section

5 1866A of the Social Security Act, as added by subsection

6 (a), is implemented, the Comptroller General of the United

7 States shall submit to Congress a report on such dem8 onstration project. The report shall include such rec9 ommendations with respect to changes to the demonstra10 tion project that the Comptroller General determines ap11 propriate.

12 SEC. 413. STUDY ON ENROLLMENT PROCEDURES FOR

13 GROUPS THAT RETAIN INDEPENDENT CON14 TRACTOR PHYSICIANS.

15 (a) IN GENERAL.—The Comptroller General of the

16 United States shall conduct a study of the current medi17 care enrollment process for groups that retain independent

18 contractor physicians with particular emphasis on hos19 pital-based physicians, such as emergency department

20 staffing groups. In conducting the evaluation, the Comp21 troller General shall consult with groups that retain inde22 pendent contractor physicians and shall—

23 (1) review the issuance of individual medicare

24 provider numbers and the possible medicare program

25 integrity vulnerabilities of the current process;
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1 (2) review direct and indirect costs associated

2 with the current process incurred by the medicare

3 program and groups that retain independent con4 tractor physicians;

5 (3) assess the effect on program integrity by

6 the enrollment of groups that retain independent

7 contractor hospital-based physicians; and

8 (4) develop suggested procedures for the enroll9 ment of these groups.

10 (b) REPORT.—Not later than 1 year after the date

11 of the enactment of this Act, the Comptroller General shall

12 submit to Congress a report on the study conducted under

13 subsection (a).

14 Subtitle C—Other Services

15 SEC. 421. 1-YEAR EXTENSION OF MORATORIUM ON THER16 APY CAPS; REPORT ON STANDARDS FOR SU17 PERVISION OF PHYSICAL THERAPY ASSIST18 ANTS.

19 (a) IN GENERAL.—Section 1833(g)(4) (42 U.S.C.

20 1395l(g)(4)) is amended by striking ‘‘2000 and 2001.’’

21 and inserting ‘‘2000, 2001, and 2002.’’.

22 (b) CONFORMING AMENDMENT TO CONTINUE FO23 CUSED MEDICAL REVIEWS OF CLAIMS DURING MORATO24 RIUM PERIOD.—Section 221(a)(2) of BBRA (113 Stat.
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1 1501A–351) is amended by striking ‘‘(under the amend2 ment made by paragraph (1)(B))’’.

3 (c) STUDY ON STANDARDS FOR SUPERVISION OF

4 PHYSICAL THERAPIST ASSISTANTS.—

5 (1) STUDY.—The Secretary of Health and

6 Human Services shall conduct a study of the

7 implications—

8 (A) of eliminating the ‘‘in the room’’ su9 pervision requirement for medicare payment for

10 services of physical therapy assistants who are

11 supervised by physical therapists; and

12 (B) of such requirement on the cap im13 posed under section 1833(g) of the Social Secu14 rity Act (42 U.S.C. 1395l(g)) on physical ther15 apy services.

16 (2) REPORT.—Not later than 18 months after

17 the date of the enactment of this Act, the Secretary

18 shall submit to Congress a report on the study con19 ducted under paragraph (1).

20 SEC. 422. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

21 (a) UPDATE.—

22 (1) IN GENERAL.—The last sentence of section

23 1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by

24 striking ‘‘for such services furnished on or after

25 January 1, 2001, by 1.2 percent’’ and inserting ‘‘for
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1 such services furnished on or after January 1, 2001,

2 by 2.4 percent’’.

3 (2) PROHIBITION ON EXEMPTIONS.—

4 (A) IN GENERAL.—Subject to subpara5 graph (B), the Secretary of Health and Human

6 Services may not provide for an exception under

7 section 1881(b)(7) of the Social Security Act

8 (42 U.S.C. 1395rr(b)(7)) on or after December

9 31, 2000.

10 (B) SPECIAL RULES FOR 2000.—

11 (i) IN GENERAL.—Any exemption rate

12 under such section 1881(b)(7) in effect on

13 December 31, 2000, shall continue in ef14 fect so long as such rate is greater than

15 the composite rate as updated by the

16 amendment made by paragraph (1).

17 (ii) RESUBMISSION OF CERTAIN AP18 PLICATIONS.—In the case of an application

19 for an exemption rate under such section

20 that was filed by a facility during 2000

21 that was not approved by the Secretary of

22 Health and Human Services, the facility

23 may submit an application for an exemp24 tion rate for that year by not later than

25 July 1, 2001.
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1 (b) DEVELOPMENT OF ESRD MARKET BASKET.—

2 (1) DEVELOPMENT.—The Secretary of Health

3 and Human Services shall collect data and develop

4 an ESRD market basket whereby the Secretary can

5 estimate, before the beginning of a year, the percent6 age by which the costs for the year of the mix of

7 labor and nonlabor goods and services included in

8 the ESRD composite rate under section 1881(b)(7)

9 of the Social Security Act (42 U.S.C. 1395rr(b)(7))

10 will exceed the costs of such mix of goods and serv11 ices for the preceding year. In developing such index,

12 the Secretary may take into account measures of

13 changes in—

14 (A) technology used in furnishing dialysis

15 services;

16 (B) the manner or method of furnishing

17 dialysis services; and

18 (C) the amounts by which the payments

19 under such section for all services billed by a

20 facility for a year exceed the aggregate allow21 able audited costs of such services for such fa22 cility for such year.

23 (2) REPORT.—The Secretary of Health and

24 Human Services shall submit to Congress a report

25 on the index developed under paragraph (1) no later
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1 than July 1, 2002, and shall include in the report

2 recommendations on the appropriateness of an an3 nual or periodic update mechanism for renal dialysis

4 services under the medicare program under title

5 XVIII of the Social Security Act based on such

6 index.

7 (c) INCLUSION OF ADDITIONAL SERVICES IN COM8 POSITE RATE.—

9 (1) DEVELOPMENT.—The Secretary of Health

10 and Human Services shall develop a system which

11 includes, to the maximum extent feasible, in the

12 composite rate used for payment under section

13 1881(b)(7) of the Social Security Act (42 U.S.C.

14 1395rr(b)(7)), payment for clinical diagnostic lab15 oratory tests and drugs (including drugs paid under

16 section 1881(b)(11)(B) of such Act (42 U.S.C.

17 1395rr(b)(11)(B)) that are routinely used in fur18 nishing dialysis services to medicare beneficiaries but

19 which are currently separately billable by renal dialy20 sis facilities.

21 (2) REPORT.—The Secretary shall include, as

22 part of the report submitted under subsection (b)(2),

23 a report on the system developed under paragraph

24 (1) and recommendations on the appropriateness of
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1 incorporating the system into medicare payment for

2 renal dialysis services.

3 (d) GAO STUDY ON ACCESS TO SERVICES.—

4 (1) STUDY.—The Comptroller General of the

5 United States shall study access of medicare bene6 ficiaries to renal dialysis services. Such study shall

7 include whether there is a sufficient supply of facili8 ties to furnish needed renal dialysis services, whether

9 medicare payment levels are appropriate, taking into

10 account audited costs of facilities for all services fur11 nished, to ensure continued access to such services,

12 and improvements in access (and quality of care)

13 that may result in the increased use of long nightly

14 and short daily hemodialysis modalities.

15 (2) REPORT.—Not later than January 1, 2003,

16 the Comptroller General shall submit to Congress a

17 report on the study conducted under paragraph (1).

18 SEC. 423. PAYMENT FOR AMBULANCE SERVICES.

19 (a) RESTORATION OF FULL CPI INCREASE FOR

20 2001.—Section 1834(l)(3) (42 U.S.C. 1395m(l)(3)) is

21 amended by striking ‘‘reduced in the case of 2001 and

22 2002’’ each place it appears and inserting ‘‘reduced in the

23 case of 2002’’.

24 (b) MILEAGE PAYMENTS.—Section 1834(l)(2)(E)

25 (42 U.S.C. 1395m(l)(2)(E)) is amended by inserting be-
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1 fore the period at the end the following: ‘‘, except that,

2 beginning on the date on which the Secretary implements

3 such fee schedule, such phase-in shall provide for full pay4 ment of any national mileage rate for ambulance services

5 provided by suppliers that are paid by carriers in any of

6 the 50 States where payment by a carrier for such services

7 for all such suppliers in such State did not, prior to the

8 implementation of the fee schedule, include a separate

9 amount for all mileage within the county from which the

10 beneficiary is transported’’.

11 (c) EFFECTIVE DATE.—The amendment made by

12 subsection (a) applies to services furnished on or after the

13 date on which the Secretary of Health and Human Serv14 ices implements the fee schedule under section 1834(l) of

15 the Social Security Act (42 U.S.C. 1395m(l)).

16 SEC. 424. AMBULATORY SURGICAL CENTERS.

17 (a) DELAY IN IMPLEMENTATION OF PROSPECTIVE

18 PAYMENT SYSTEM.—The Secretary of Health and Human

19 Services may not implement a revised prospective payment

20 system for services of ambulatory surgical facilities under

21 section 1833(i) of the Social Security Act (42 U.S.C.

22 1395l(i)) before January 1, 2002.

23 (b) EXTENDING PHASE-IN TO 4 YEARS.—Section

24 226 of the BBRA (113 Stat. 1501A–354) is amended by
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1 striking paragraphs (1) and (2) and inserting the fol2 lowing:

3 ‘‘(1) in the first year of its implementation,

4 only a proportion (specified by the Secretary and not

to exceed 1 5 ⁄4) of the payment for such services shall

6 be made in accordance with such system and the re7 mainder shall be made in accordance with current

8 regulations; and

9 ‘‘(2) in each of the following 2 years a propor10 tion (specified by the Secretary and not to exceed

1⁄2, and 3 11 ⁄4, respectively) of the payment for such

12 services shall be made under such system and the

13 remainder shall be made in accordance with current

14 regulations.’’.

15 (c) DEADLINE FOR USE OF 1999 OR LATER COST

16 SURVEYS.—Section 226 of BBRA (113 Stat. 1501A–354)

17 is amended by adding at the end the following:

18 ‘‘By not later than January 1, 2003, the Secretary shall

19 incorporate data from a 1999 medicare cost survey or a

20 subsequent cost survey for purposes of implementing or

21 revising such system.’’.

22 SEC. 425. FULL UPDATE FOR DURABLE MEDICAL EQUIP23 MENT.

24 (a) IN GENERAL.—Section 1834(a)(14) (42 U.S.C.

25 1395m(a)(14)) is amended—
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1 (1) by redesignating subparagraph (D) as sub2 paragraph (F);

3 (2) in subparagraph (C)—

4 (A) by striking ‘‘through 2002’’ and insert5 ing ‘‘through 2000’’; and

6 (B) by striking ‘‘and’’ at the end; and

7 (3) by inserting after subparagraph (C) the fol8 lowing new subparagraphs:

9 ‘‘(D) for 2001, the percentage increase in

10 the Consumer Price Index for all urban con11 sumers (U.S. city average) for the 12-month

12 period ending with June 2000;

13 ‘‘(E) for 2002, 0 percentage points; and’’.

14 (b) CONFORMING AMENDMENTS TO BBRA.—Sub15 section (a) of section 228 of BBRA (113 Stat. 1501A–

16 356) is amended—

17 (1) in the matter preceding paragraph (1), by

18 striking ‘‘for such items’’;

19 (2) in paragraph (1), by inserting ‘‘oxygen and

20 oxygen equipment for’’ after ‘‘(1)’’; and

21 (3) in paragraph (2), by inserting ‘‘all such cov22 ered items for’’ after ‘‘(2)’’.

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

24 subsection (b) shall take effect as if included in the enact25 ment of BBRA.
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1 SEC. 426. FULL UPDATE FOR ORTHOTICS AND PROS2 THETICS.

3 Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A))

4 is amended—

5 (1) by redesignating clause (vi) as clause (viii);

6 (2) in clause (v)—

7 (A) by striking ‘‘through 2002’’ and insert8 ing ‘‘through 2000’’; and

9 (B) by striking ‘‘and’’ at the end; and

10 (3) by inserting after clause (v) the following

11 new clause:

12 ‘‘(vi) for 2001, the percentage in13 crease in the consumer price index for all

14 urban consumers (U.S. city average) for

15 the 12-month period ending with June

16 2000;

17 ‘‘(vii) for 2002, 1 percent; and’’.

18 SEC. 427. ESTABLISHMENT OF SPECIAL PAYMENT PROVI19 SIONS AND REQUIREMENTS FOR PROS20 THETICS AND CERTAIN CUSTOM FABRICATED

21 ORTHOTIC ITEMS.

22 (a) IN GENERAL.—Section 1834(h)(1) (42 U.S.C.

23 1395m(h)(1)) is amended by adding at the end the fol24 lowing:
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1 ‘‘(F) SPECIAL PAYMENT RULES FOR CER2 TAIN PROSTHETICS AND CUSTOM FABRICATED

3 ORTHOTICS.—

4 ‘‘(i) IN GENERAL.—No payment shall

5 be made under this subsection for an item

6 of custom fabricated orthotics described in

7 clause (ii) or for an item of prosthetics un8 less such item is—

9 ‘‘(I) furnished by a qualified

10 practitioner; and

11 ‘‘(II) fabricated by a qualified

12 practitioner or a qualified supplier at

13 a facility that meets such criteria as

14 the Secretary determines appropriate.

15 ‘‘(ii) DESCRIPTION OF CUSTOM FAB16 RICATED ITEM.—

17 ‘‘(I) IN GENERAL.—An item de18 scribed in this clause is an item of

19 custom fabricated orthotics that re20 quires education, training, and experi21 ence to custom fabricate and that is

22 included in a list established by the

23 Secretary in subclause (II). Such an

24 item does not include shoes and shoe

25 inserts.
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1 ‘‘(II) LIST OF ITEMS.—The Sec2 retary, in consultation with appro3 priate experts in orthotics (including

4 national organizations representing

5 manufacturers of orthotics), shall es6 tablish and update as appropriate a

7 list of items to which this subpara8 graph applies. No item may be in9 cluded in such list unless the item is

10 individually fabricated for the patient

11 over a positive model of the patient.

12 ‘‘(iii) QUALIFIED PRACTITIONER DE13 FINED.—In this subparagraph, the term

14 ‘qualified practitioner’ means a physician

15 or other individual who—

16 ‘‘(I) is a qualified physical thera17 pist or a qualified occupational thera18 pist;

19 ‘‘(II) in the case of a State that

20 provides for the licensing of orthotics

21 and prosthetics, is licensed in

22 orthotics or prosthetics by the State

23 in which the item is supplied; or

24 ‘‘(III) in the case of a State that

25 does not provide for the licensing of
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1 orthotics and prosthetics, is specifi2 cally trained and educated to provide

3 or manage the provision of prosthetics

4 and custom-designed or fabricated

5 orthotics, and is certified by the

6 American Board for Certification in

7 Orthotics and Prosthetics, Inc. or by

8 the Board for Orthotist/Prosthetist

9 Certification, or is credentialed and

10 approved by a program that the Sec11 retary determines, in consultation

12 with appropriate experts in orthotics

13 and prosthetics, has training and edu14 cation standards that are necessary to

15 provide such prosthetics and orthotics.

16 ‘‘(iv) QUALIFIED SUPPLIER DE17 FINED.—In this subparagraph, the term

18 ‘qualified supplier’ means any entity that

19 is accredited by the American Board for

20 Certification in Orthotics and Prosthetics,

21 Inc. or by the Board for Orthotist/Pros22 thetist Certification, or accredited and ap23 proved by a program that the Secretary

24 determines has accreditation and approval
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1 standards that are essentially equivalent to

2 those of such Board.’’.

3 (b) EFFECTIVE DATE.—Not later than 1 year after

4 the date of the enactment of this Act, the Secretary of

5 Health and Human Services shall promulgate revised reg6 ulations to carry out the amendment made by subsection

7 (a) using a negotiated rulemaking process under sub8 chapter III of chapter 5 of title 5, United States Code.

9 (c) GAO STUDY AND REPORT.—

10 (1) STUDY.—The Comptroller General of the

11 United States shall conduct a study on HCFA Rul12 ing 96–1, issued on September 1, 1996, with respect

13 to distinguishing orthotics from durable medical

14 equipment under the medicare program under title

15 XVIII of the Social Security Act. The study shall as16 sess the following matters:

17 (A) The compliance of the Secretary of

18 Health and Human Services with the Adminis19 trative Procedures Act (under chapter 5 of title

20 5, United States Code) in making such ruling.

21 (B) The potential impact of such ruling on

22 the health care furnished to medicare bene23 ficiaries under the medicare program, especially

24 those beneficiaries with degenerative musculo25 skeletal conditions.
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1 (C) The potential for fraud and abuse

2 under the medicare program if payment were

3 provided for orthotics used as a component of

4 durable medical equipment only when made

5 under the special payment provision for certain

6 prosthetics and custom fabricated orthotics

7 under section 1834(h)(1)(F) of the Social Secu8 rity Act, as added by subsection (a) and fur9 nished by qualified practitioners under that sec10 tion.

11 (D) The impact on payments under titles

12 XVIII and XIX of the Social Security Act if

13 such ruling were overturned.

14 (2) REPORT.—Not later than 6 months after

15 the date of the enactment of this Act, the Comp16 troller General shall submit to Congress a report on

17 the study conducted under paragraph (1).

18 SEC. 428. REPLACEMENT OF PROSTHETIC DEVICES AND

19 PARTS.

20 (a) IN GENERAL.—Section 1834(h)(1) (42 U.S.C.

21 1395m(h)(1)), as amended by section 427(a), is further

22 amended by adding at the end the following new subpara23 graph:

24 ‘‘(G) REPLACEMENT OF PROSTHETIC DE25 VICES AND PARTS.—
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1 ‘‘(i) IN GENERAL.—Payment shall be

2 made for the replacement of prosthetic de3 vices which are artificial limbs, or for the

4 replacement of any part of such devices,

5 without regard to continuous use or useful

6 lifetime restrictions if an ordering physi7 cian determines that the provision of a re8 placement device, or a replacement part of

9 such a device, is necessary because of any

10 of the following:

11 ‘‘(I) A change in the physio12 logical condition of the patient.

13 ‘‘(II) An irreparable change in

14 the condition of the device, or in a

15 part of the device.

16 ‘‘(III) The condition of the de17 vice, or the part of the device, re18 quires repairs and the cost of such re19 pairs would be more than 60 percent

20 of the cost of a replacement device, or,

21 as the case may be, of the part being

22 replaced.

23 ‘‘(ii) CONFIRMATION MAY BE RE24 QUIRED IF REPLACEMENT DEVICE OR

25 PART IS LESS THAN 3 YEARS OLD.—If a
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1 physician determines that a replacement

2 device, or a replacement part, is necessary

3 pursuant to clause (i)—

4 ‘‘(I) such determination shall be

5 controlling; and

6 ‘‘(II) such replacement device or

7 part shall be deemed to be reasonable

8 and necessary for purposes of section

9 1862(a)(1)(A);

10 except that if the device, or part, being re11 placed is less than 3 years old (calculated

12 from the date on which the beneficiary

13 began to use the device or part), the Sec14 retary may also require confirmation of ne15 cessity of the replacement device, or, as the

16 case may be, the replacement part.’’.

17 (b) PREEMPTION OF RULE.—The provisions of sec18 tion 1834(h)(1)(G) as added by subsection (a) shall super19 sede any rule that as of the date of the enactment of this

20 Act may have applied a 5-year replacement rule with re21 gard to prosthetic devices.

22 (c) EFFECTIVE DATE.—The amendment made by

23 subsection (a) shall apply to items replaced on or after

24 April 1, 2001.
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1 SEC. 429. REVISED PART B PAYMENT FOR DRUGS AND

2 BIOLOGICALS AND RELATED SERVICES.

3 (a) RECOMMENDATIONS FOR REVISED PAYMENT

4 METHODOLOGY FOR DRUGS AND BIOLOGICALS.—

5 (1) STUDY.—

6 (A) IN GENERAL.—The Comptroller Gen7 eral of the United States shall conduct a study

8 on the reimbursement for drugs and biologicals

9 under the current medicare payment method10 ology (provided under section 1842(o) of the

11 Social Security Act (42 U.S.C. 1395u(o)) and

12 for related services under part B of title XVIII

13 of such Act. In the study, the Comptroller Gen14 eral shall—

15 (i) identify the average prices at

16 which such drugs and biologicals are ac17 quired by physicians and other suppliers;

18 (ii) quantify the difference between

19 such average prices and the reimbursement

20 amount under such section; and

21 (iii) determine the extent to which (if

22 any) payment under such part is adequate

23 to compensate physicians, providers of

24 services, or other suppliers of such drugs

25 and biologicals for costs incurred in the ad-
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1 ministration, handling, or storage of such

2 drugs or biologicals.

3 (B) CONSULTATION.—In conducting the

4 study under subparagraph (A), the Comptroller

5 General shall consult with physicians, providers

6 of services, and suppliers of drugs and

7 biologicals under the medicare program under

8 title XVIII of such Act, as well as other organi9 zations involved in the distribution of such

10 drugs and biologicals to such physicians, pro11 viders of services, and suppliers.

12 (2) REPORT.—Not later than 9 months after

13 the date of the enactment of this Act, the Comp14 troller General shall submit to Congress and to the

15 Secretary of Health and Human Services a report

16 on the study conducted under this subsection, and

17 shall include in such report recommendations for re18 vised payment methodologies described in paragraph

19 (3).

20 (3) RECOMMENDATIONS FOR REVISED PAY21 MENT METHODOLOGIES.—

22 (A) IN GENERAL.—The Comptroller Gen23 eral shall provide specific recommendations for

24 revised payment methodologies for reimburse25 ment for drugs and biologicals and for related
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1 services under the medicare program. The

2 Comptroller General may include in the

3 recommendations—

4 (i) proposals to make adjustments

5 under subsection (c) of section 1848 of the

6 Social Security Act (42 U.S.C. 1395w–4)

7 for the practice expense component of the

8 physician fee schedule under such section

9 for the costs incurred in the administra10 tion, handling, or storage of certain cat11 egories of such drugs and biologicals, if ap12 propriate; and

13 (ii) proposals for new payments to

14 providers of services or suppliers for such

15 costs, if appropriate.

16 (B) ENSURING PATIENT ACCESS TO

17 CARE.—In making recommendations under this

18 paragraph, the Comptroller General shall en19 sure that any proposed revised payment meth20 odology is designed to ensure that medicare

21 beneficiaries continue to have appropriate ac22 cess to health care services under the medicare

23 program.
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1 (C) MATTERS CONSIDERED.—In making

2 recommendations under this paragraph, the

3 Comptroller General shall consider—

4 (i) the method and amount of reim5 bursement for similar drugs and biologicals

6 made by large group health plans;

7 (ii) as a result of any revised payment

8 methodology, the potential for patients to

9 receive inpatient or outpatient hospital

10 services in lieu of services in a physician’s

11 office; and

12 (iii) the effect of any revised payment

13 methodology on the delivery of drug thera14 pies by hospital outpatient departments.

15 (D) COORDINATION WITH BBRA STUDY.—

16 In making recommendations under this para17 graph, the Comptroller General shall conclude

18 and take into account the results of the study

19 provided for under section 213(a) of BBRA

20 (113 Stat. 1501A–350).

21 (b) IMPLEMENTATION OF NEW PAYMENT METHOD22 OLOGY.—

23 (1) IN GENERAL.—Notwithstanding any other

24 provision of law, based on the recommendations con25 tained in the report under subsection (a), the Sec-
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1 retary of Health and Human Services, subject to

2 paragraph (2), shall revise the payment methodology

3 under section 1842(o) of the Social Security Act (42

4 U.S.C. 1395u(o)) for drugs and biologicals furnished

5 under part B of the medicare program. To the ex6 tent the Secretary determines appropriate, the Sec7 retary may provide for the adjustments to payments

8 amounts referred to in subsection (a)(3)(A)(i) or ad9 ditional payments referred to in subsection

10 (a)(2)(A)(ii).

11 (2) LIMITATION.—In revising the payment

12 methodology under paragraph (1), in no case may

13 the estimated aggregate payments for drugs and

14 biologicals under the revised system (including addi15 tional payments referred to in subsection

16 (a)(3)(A)(ii)) exceed the aggregate amount of pay17 ment for such drugs and biologicals, as projected by

18 the Secretary, that would have been made under the

19 payment methodology in effect under such section

20 1842(o).

21 (c) TEMPORARY INJUNCTION AGAINST REDUCTIONS

22 IN PAYMENT RATES.—Notwithstanding any other provi23 sion of law, the Administrator of the Health Care Financ24 ing Administration may not directly or indirectly increase

25 or decrease the rates of reimbursement (in effect on Sep-
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1 tember 1, 2000) for drugs and biologicals under the cur2 rent medicare payment methodology (provided under sec3 tion 1842(o) of such Act (42 U.S.C. 1395u(o)) until such

4 time as the Secretary has reviewed the report submitted

5 under subsection (a)(2).

6 SEC. 430. CONTRAST ENHANCED DIAGNOSTIC PROCE7 DURES UNDER HOSPITAL PROSPECTIVE PAY8 MENT SYSTEM.

9 (a) SEPARATE CLASSIFICATION.—Section 1833(t)(2)

10 (42 U.S.C. 1395l(t)(2)) is amended—

11 (1) by striking ‘‘and’’ at the end of subpara12 graph (E);

13 (2) by striking the period at the end of sub14 paragraph (F) and inserting ‘‘; and’’; and

15 (3) by inserting after subparagraph (F) the fol16 lowing new subparagraph:

17 ‘‘(G) the Secretary shall create additional

18 groups of covered OPD services that classify

19 separately those procedures that utilize contrast

20 media from those that do not.’’.

21 (b) CONFORMING AMENDMENT.—Section 1861(t)(1)

22 (42 U.S.C. 1395x(t)(1)) is amended by inserting ‘‘(includ23 ing contrast agents)’’ after ‘‘only such drugs’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section apply to items and services furnished on or

3 after January 1, 2001.

4 SEC. 431. QUALIFICATIONS FOR COMMUNITY MENTAL

5 HEALTH CENTERS.

6 (a) MEDICARE PROGRAM.—Section 1861(ff)(3)(B)

7 (42 U.S.C. 1395x(ff)(3)(B)) is amended by striking ‘‘enti8 ty’’ and all that follows and inserting the following: ‘‘entity

9 that—

10 ‘‘(i)(I) provides the mental health services de11 scribed in section 1913(c)(1) of the Public Health

12 Service Act; or

13 ‘‘(II) in the case of an entity operating in a

14 State that by law precludes the entity from pro15 viding itself the service described in subparagraph

16 (E) of such section, provides for such service by con17 tract with an approved organization or entity (as de18 termined by the Secretary);

19 ‘‘(ii) meets applicable licensing or certification

20 requirements for community mental health centers

21 in the State in which it is located; and

22 ‘‘(iii) meets such additional conditions as the

23 Secretary shall specify to ensure (I) the health and

24 safety of individuals being furnished such services,

25 (II) the effective and efficient furnishing of such
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1 services, and (III) the compliance of such entity with

2 the criteria described in section 1931(c)(1) of the

3 Public Health Service Act.’’.

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

5 subsection (a) applies with respect to community mental

6 health centers with respect to services furnished on or

7 after the first day of the third month beginning after the

8 date of the enactment of this Act.

9 SEC. 432. MODIFICATION OF MEDICARE BILLING REQUIRE10 MENTS FOR CERTAIN INDIAN PROVIDERS.

11 (a) IN GENERAL.—Section 1880(a) (42 U.S.C.

12 1395qq(a)) is amended by adding at the end the following

13 new sentence: ‘‘A hospital or a free-standing ambulatory

14 care clinic (as defined by the Secretary), whether operated

15 by the Indian Health Service or by an Indian tribe or trib16 al organization (as those terms are defined in section 4

17 of the Indian Health Care Improvement Act), shall be eli18 gible for payments for services for which payment is made

19 pursuant to section 1848, notwithstanding sections

20 1814(c) and 1835(d), if and for so long as it meets all

21 of the requirements which are applicable generally to such

22 payments, services, hospitals, and clinics.’’.

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

24 this section shall apply to services furnished on or after

25 January 1, 2001.
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1 SEC. 433. GAO STUDY ON COVERAGE OF SURGICAL FIRST

2 ASSISTING SERVICES OF CERTIFIED REG3 ISTERED NURSE FIRST ASSISTANTS.

4 (a) STUDY.—The Comptroller General of the United

5 States shall conduct a study on the effect on the medicare

6 program under title XVIII of the Social Security Act and

7 on medicare beneficiaries of coverage under the program

8 of surgical first assisting services of certified registered

9 nurse first assistants. The Comptroller General shall con10 sider the following when conducting the study:

11 (1) Any impact on the quality of care furnished

12 to medicare beneficiaries by reason of such coverage.

13 (2) Appropriate education and training require14 ments for certified registered nurse first assistants

15 who furnish such first assisting services.

16 (3) Appropriate rates of payment under the

17 program to such certified registered nurse first as18 sistants for furnishing such services, taking into ac19 count the costs of compensation, overhead, and su20 pervision attributable to certified registered nurse

21 first assistants.

22 (b) REPORT.—Not later than 1 year after the date

23 of the enactment of this Act, the Comptroller General shall

24 submit to Congress a report on the study conducted under

25 subsection (a).
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1 SEC. 434. MEDPAC STUDY AND REPORT ON MEDICARE RE2 IMBURSEMENT FOR SERVICES PROVIDED BY

3 CERTAIN PROVIDERS.

4 (a) STUDY.—The Medicare Payment Advisory Com5 mission shall conduct a study on the appropriateness of

6 the current payment rates under the medicare program

7 under title XVIII of the Social Security Act for services

8 provided by a—

9 (1) certified nurse-midwife (as defined in sub10 section (gg)(2) of section 1861 of such Act (42

11 U.S.C. 1395x);

12 (2) physician assistant (as defined in subsection

13 (aa)(5)(A) of such section);

14 (3) nurse practitioner (as defined in such sub15 section); and

16 (4) clinical nurse specialist (as defined in sub17 section (aa)(5)(B) of such section).

18 (b) REPORT.—Not later than 18 months after the

19 date of the enactment of this Act, the Commission shall

20 submit to Congress a report on the study conducted under

21 subsection (a), together with any recommendations for leg22 islation that the Commission determines to be appropriate

23 as a result of such study.
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1 SEC. 435. MEDPAC STUDY AND REPORT ON MEDICARE COV2 ERAGE OF SERVICES PROVIDED BY CERTAIN

3 NONPHYSICIAN PROVIDERS.

4 (a) STUDY.—

5 (1) IN GENERAL.—The Medicare Payment Ad6 visory Commission shall conduct a study to deter7 mine the appropriateness of providing coverage

8 under the medicare program under title XVIII of the

9 Social Security Act for services provided by a—

10 (A) surgical technologist;

11 (B) marriage counselor;

12 (C) marriage and family therapist;

13 (D) pastoral care counselor; and

14 (E) licensed professional counselor of men15 tal health.

16 (2) COSTS TO PROGRAM.—The study shall con17 sider the short-term and long-term benefits, and

18 costs to the medicare program, of providing the cov19 erage described in paragraph (1).

20 (b) REPORT.—Not later than 18 months after the

21 date of the enactment of this Act, the Commission shall

22 submit to Congress a report on the study conducted under

23 subsection (a), together with any recommendations for leg24 islation that the Commission determines to be appropriate

25 as a result of such study.
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1 SEC. 436. GAO STUDY AND REPORT ON THE COSTS OF

2 EMERGENCY AND MEDICAL TRANSPOR3 TATION SERVICES.

4 (a) STUDY.—The Comptroller General of the United

5 States shall conduct a study on the costs of providing

6 emergency and medical transportation services across the

7 range of acuity levels of conditions for which such trans8 portation services are provided.

9 (b) REPORT.—Not later than 18 months after the

10 date of the enactment of this Act, the Comptroller General

11 shall submit to Congress a report on the study conducted

12 under subsection (a), together with recommendations for

13 any changes in methodology or payment level necessary

14 to fairly compensate suppliers of emergency and medical

15 transportation services and to ensure the access of bene16 ficiaries under the medicare program under title XVIII of

17 the Social Security Act.

18 SEC. 437. GAO STUDIES AND REPORTS ON MEDICARE PAY19 MENTS.

20 (a) GAO STUDY ON HCFA POST-PAYMENT AUDIT

21 PROCESS.—

22 (1) STUDY.—The Comptroller General of the

23 United States shall conduct a study on the post-pay24 ment audit process under the medicare program

25 under title XVIII of the Social Security Act as such

26 process applies to physicians, including the proper
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1 level of resources that the Health Care Financing

2 Administration should devote to educating physi3 cians regarding—

4 (A) coding and billing;

5 (B) documentation requirements; and

6 (C) the calculation of overpayments.

7 (2) REPORT.—Not later than 18 months after

8 the date of the enactment of this Act, the Comp9 troller General shall submit to Congress a report on

10 the study conducted under paragraph (1) together

11 with specific recommendations for changes or im12 provements in the post-payment audit process de13 scribed in such paragraph.

14 (b) GAO STUDY ON ADMINISTRATION AND OVER15 SIGHT.—

16 (1) STUDY.—The Comptroller General of the

17 United States shall conduct a study on the aggre18 gate effects of regulatory, audit, oversight, and pa19 perwork burdens on physicians and other health care

20 providers participating in the medicare program

21 under title XVIII of the Social Security Act.

22 (2) REPORT.—Not later than 18 months after

23 the date of the enactment of this Act, the Comp24 troller General shall submit to Congress a report on

25 the study conducted under paragraph (1) together
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1 with recommendations regarding any area in

2 which—

3 (A) a reduction in paperwork, an ease of

4 administration, or an appropriate change in

5 oversight and review may be accomplished; or

6 (B) additional payments or education are

7 needed to assist physicians and other health

8 care providers in understanding and complying

9 with any legal or regulatory requirements.

10 SEC. 438. MEDPAC STUDY ON ACCESS TO OUTPATIENT PAIN

11 MANAGEMENT SERVICES.

12 (a) STUDY.—The Medicare Payment Advisory Com13 mission shall conduct a study on the barriers to coverage

14 and payment for outpatient interventional pain medicine

15 procedures under the medicare program under title XVIII

16 of the Social Security Act. Such study shall examine—

17 (1) the specific barriers imposed under the

18 medicare program on the provision of pain manage19 ment procedures in hospital outpatient departments,

20 ambulatory surgery centers, and physicians’ offices;

21 and

22 (2) the consistency of medicare payment poli23 cies for pain management procedures in those dif24 ferent settings.
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1 (b) REPORT.—Not later than 1 year after the date

2 of the enactment of this Act, the Commission shall submit

3 to Congress a report on the study.

4 TITLE V—PROVISIONS

5 RELATING TO PARTS A AND B

6 Subtitle A—Home Health Services

7 SEC. 501. 1-YEAR ADDITIONAL DELAY IN APPLICATION OF

8 15 PERCENT REDUCTION ON PAYMENT LIM9 ITS FOR HOME HEALTH SERVICES.

10 (a) IN GENERAL.—Section 1895(b)(3)(A)(i) (42

11 U.S.C. 1395fff(b)(3)(A)(i)) is amended—

12 (1) by redesignating subclause (II) as subclause

13 (III);

14 (2) in subclause (III), as redesignated, by strik15 ing ‘‘described in subclause (I)’’ and inserting ‘‘de16 scribed in subclause (II)’’; and

17 (3) by inserting after subclause (I) the fol18 lowing new subclause:

19 ‘‘(II) For the 12-month period

20 beginning after the period described

21 in subclause (I), such amount (or

22 amounts) shall be equal to the amount

23 (or amounts) determined under sub24 clause (I), updated under subpara25 graph (B).’’.
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1 (b) CHANGE IN REPORT.—Section 302(c) of BBRA

2 (113 Stat. 1501A–360) is amended—

3 (1) by striking ‘‘Not later than’’ and all that

4 follows through ‘‘(42 U.S.C. 1395fff)’’ and inserting

5 ‘‘Not later than April 1, 2002’’; and

6 (2) by striking ‘‘Secretary’’ and inserting

7 ‘‘Comptroller General of the United States’’.

8 (c) CASE MIX ADJUSTMENT CORRECTIONS.—

9 (1) IN GENERAL.—Section 1895(b)(3)(B) (42

10 U.S.C. 1395fff(b)(3)(B)) is amended by adding at

11 the end the following new clause:

12 ‘‘(iv) ADJUSTMENT FOR CASE MIX

13 CHANGES.—Insofar as the Secretary deter14 mines that the adjustments under para15 graph (4)(A)(i) for a previous fiscal year

16 (or estimates that such adjustments for a

17 future fiscal year) did (or are likely to) re18 sult in a change in aggregate payments

19 under this subsection during the fiscal year

20 that are a result of changes in the coding

21 or classification of different units of serv22 ices that do not reflect real changes in case

23 mix, the Secretary may adjust the stand24 ard prospective payment amount (or

25 amounts) under paragraph (3) for subse-
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1 quent fiscal years so as to eliminate the ef2 fect of such coding or classification

3 changes.’’.

4 (2) EFFECTIVE DATE.—The amendment made

5 by paragraph (1) applies to episodes concluding on

6 or after October 1, 2001.

7 SEC. 502. RESTORATION OF FULL HOME HEALTH MARKET

8 BASKET UPDATE FOR HOME HEALTH SERV9 ICES FOR FISCAL YEAR 2001.

10 (a) IN GENERAL.—Section 1861(v)(1)(L)(x) (42

11 U.S.C. 1395x(v)(1)(L)(x)) is amended—

12 (1) by striking ‘‘2001,’’; and

13 (2) by adding at the end the following: ‘‘With

14 respect to cost reporting periods beginning during

15 fiscal year 2001, the update to any limit under this

16 subparagraph shall be the home health market bas17 ket index.’’.

18 (b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR

19 2001 BASED ON ADJUSTED PROSPECTIVE PAYMENT

20 AMOUNTS.—

21 (1) IN GENERAL.—Notwithstanding the amend22 ments made by subsection (a), for purposes of mak23 ing payments under section 1895(b) of the Social

24 Security Act (42 U.S.C. 1395fff(b)) for home health
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1 services for fiscal year 2001, the Secretary of Health

2 and Human Services shall—

3 (A) with respect to episodes and visits end4 ing on or after October 1, 2000, and before

5 April 1, 2001, use the final standardized and

6 budget neutral prospective payment amounts

7 for 60 day episodes and standardized average

8 per visit amounts for fiscal year 2001 as pub9 lished by the Secretary in Federal Register of

10 the July 3, 2000 (65 Federal Register 41128–

11 41214); and

12 (B) with respect to episodes and visits end13 ing on or after April 1, 2001, and before Octo14 ber 1, 2001, use such amounts increased by 2.2

15 percent.

16 (2) NO EFFECT ON OTHER PAYMENTS OR DE17 TERMINATIONS.—The Secretary shall not take the

18 provisions of paragraph (1) into account for pur19 poses of payments, determinations, or budget neu20 trality adjustments under section 1895 of the Social

21 Security Act.

22 SEC. 503. TEMPORARY TWO-MONTH EXTENSION OF PERI23 ODIC INTERIM PAYMENTS.

24 (a) TEMPORARY EXTENSION.—Notwithstanding sub25 section (d) of section 4603 of BBA (42 U.S.C. 1395fff
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1 note), as amended by section 5101(c)(2) of the Tax and

2 Trade Relief Extension Act of 1998 (contained in division

3 J of Public Law 105–277)), the amendments made by

4 subsection (b) of such section 4603 shall not take effect

5 until December 1, 2000, in the case of a home health

6 agency that was receiving periodic interim payments under

7 section 1815(e)(2) as of September 30, 2000.

8 (b) PAYMENT RULE.—The amount of such periodic

9 interim payment made to a home health agency by reason

10 of subsection (a) during each of November and December,

11 2000, shall be equal to the amount of such payment made

12 to the agency in their last full monthly periodic interim

13 payment. Such amount of payment shall be included in

14 the tentative settlement of the last cost report for the

15 home health agency under the payment system in effect

16 prior to the implementation of the prospective payment

17 system under section 1895(b) of the Social Security Act

18 (42 U.S.C. 1395fff(b)).

19 SEC. 504. USE OF TELEHEALTH IN DELIVERY OF HOME

20 HEALTH SERVICES.

21 Section 1895 (42 U.S.C. 1395fff) is amended by add22 ing at the end the following new subsection:

23 ‘‘(e) CONSTRUCTION RELATED TO HOME HEALTH

24 SERVICES.—
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1 ‘‘(1) TELECOMMUNICATIONS.—Nothing in this

2 section shall be construed as preventing a home

3 health agency furnishing a home health unit of serv4 ice for which payment is made under the prospective

5 payment system established by this section for such

6 units of service from furnishing services via a tele7 communication system if such services—

8 ‘‘(A) do not substitute for in-person home

9 health services ordered as part of a plan of care

10 certified by a physician pursuant to section

11 1814(a)(2)(C) or section 1835(a)(2)(A); and

12 ‘‘(B) are not considered a home health

13 visit for purposes of eligibility or payment

14 under this title.

15 ‘‘(2) PHYSICIAN CERTIFICATION.—Nothing in

16 this section shall be construed as waiving the re17 quirement for a physician certification under section

18 1814(a)(2)(C) or section 1835(a)(2)(A) of such Act

19 (42 U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) for the

20 payment for home health services, whether or not

21 furnished via a telecommunications system.’’.
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1 SEC. 505. STUDY ON COSTS TO HOME HEALTH AGENCIES

2 OF PURCHASING NONROUTINE MEDICAL

3 SUPPLIES.

4 (a) STUDY.—The Comptroller General of the United

5 States shall conduct a study on variations in prices paid

6 by home health agencies furnishing home health services

7 under the medicare program under title XVIII of the So8 cial Security Act in purchasing nonroutine medical sup9 plies, including ostomy supplies, and volumes if such sup10 plies used, shall determine the effect (if any) of variations

11 on prices and volumes in the provision of such services.

12 (b) REPORT.—Not later than October 1, 2001, the

13 Comptroller General shall submit to Congress a report on

14 the study conducted under subsection (a), and shall in15 clude in the report recommendations respecting whether

16 payment for nonroutine medical supplies furnished in con17 nection with home health services should be made sepa18 rately from the prospective payment system for such serv19 ices.

20 SEC. 506. TREATMENT OF BRANCH OFFICES; GAO STUDY

21 ON SUPERVISION OF HOME HEALTH CARE

22 PROVIDED IN ISOLATED RURAL AREAS.

23 (a) TREATMENT OF BRANCH OFFICES.—

24 (1) IN GENERAL.—Notwithstanding any other

25 provision of law, in determining for purposes of title

26 XVIII of the Social Security Act whether an office
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1 of a home health agency constitutes a branch office

2 or a separate home health agency, neither the time

3 nor distance between a parent office of the home

4 health agency and a branch office shall be the sole

5 determinant of a home health agency’s branch office

6 status.

7 (2) CONSIDERATION OF FORMS OF TECH8 NOLOGY IN DEFINITION OF SUPERVISION.—The Sec9 retary of Health and Human Services may include

10 forms of technology in determining what constitutes

11 ‘‘supervision’’ for purposes of determining a home

12 heath agency’s branch office status under paragraph

13 (1).

14 (b) GAO STUDY.—

15 (1) STUDY.—The Comptroller General of the

16 United States shall conduct a study of the provision

17 of adequate supervision to maintain quality of home

18 health services delivered under the medicare pro19 gram under title XVIII of the Social Security Act in

20 isolated rural areas. The study shall evaluate the

21 methods that home health agency branches and

22 subunits use to maintain adequate supervision in the

23 delivery of services to clients residing in those areas,

24 how these methods of supervision compare to re25 quirements that subunits independently meet medi-
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1 care conditions of participation, and the resources

2 utilized by subunits to meet such conditions.

3 (2) REPORT.—Not later than January 1, 2002,

4 the Comptroller General shall submit to Congress a

5 report on the study conducted under paragraph (1).

6 The report shall include recommendations on wheth7 er exceptions are needed for subunits and branches

8 of home health agencies under the medicare program

9 to maintain access to the home health benefit or

10 whether alternative policies should be developed to

11 assure adequate supervision and access and rec12 ommendations on whether a national standard for

13 supervision is appropriate.

14 SEC. 507. CLARIFICATION OF THE HOMEBOUND DEFINI15 TION UNDER THE MEDICARE HOME HEALTH

16 BENEFIT.

17 (a) CLARIFICATION.—

18 (1) IN GENERAL.—Sections 1814(a) and

19 1835(a) (42 U.S.C. 1395f(a) and 1395n(a)) are

20 each amended—

21 (A) in the last sentence, by striking ‘‘, and

22 that absences of the individual from home are

23 infrequent or of relatively short duration, or are

24 attributable to the need to receive medical

25 treatment’’; and
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1 (B) by adding at the end the following new

2 sentences: ‘‘Any absence of an individual from

3 the home attributable to the need to receive

4 health care treatment, including regular ab5 sences for the purpose of participating in thera6 peutic, psychosocial, or medical treatment in an

7 adult day-care program that is licensed or cer8 tified by a State, or accredited, to furnish adult

9 day-care services in the State shall not dis10 qualify an individual from being considered to

11 be ‘confined to his home’. Any other absence of

12 an individual from the home shall not so dis13 qualify an individual if the absence is of infre14 quent or of relatively short duration. For pur15 poses of the preceding sentence, any absence for

16 the purpose of attending a religious service

17 shall be deemed to be an absence of infrequent

18 or short duration.’’.

19 (2) EFFECTIVE DATE.—The amendments made

20 by paragraph (1) shall apply to items and services

21 provided on or after the date of enactment of this

22 Act.

23 (b) STUDY.—

24 (1) IN GENERAL.—The Comptroller General of

25 the United States shall conduct an evaluation of the
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1 effect of the amendment on the cost of and access

2 to home health services under the medicare program

3 under title XVIII of the Social Security Act.

4 (2) REPORT.—Not later than 1 year after the

5 date of the enactment of this Act, the Comptroller

6 General shall submit to Congress a report on the

7 study conducted under paragraph (1).

8 Subtitle B—Direct Graduate

9 Medical Education

10 SEC. 511. INCREASE IN FLOOR FOR DIRECT GRADUATE

11 MEDICAL EDUCATION PAYMENTS.

12 Section 1886(h)(2)(D)(iii) (42 U.S.C.

13 1395ww(h)(2)(D)(iii)) is amended—

14 (1) in the heading, by striking ‘‘IN FISCAL YEAR

15 2001 AT 70 PERCENT OF’’ and inserting ‘‘FOR’’; and

16 (2) by inserting after ‘‘70 percent’’ the fol17 lowing: ‘‘, and for the cost reporting period begin18 ning during fiscal year 2002 shall not be less than

19 85 percent,’’.

20 SEC. 512. CHANGE IN DISTRIBUTION FORMULA FOR

21 MEDICARE+CHOICE-RELATED NURSING AND

22 ALLIED HEALTH EDUCATION COSTS.

23 (a) IN GENERAL.—Section 1886(l)(2)(C) (42 U.S.C.

24 1395ww(l)(2)(C)) is amended by striking all that follows
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1 ‘‘multiplied by’’ and inserting the following: ‘‘the ratio

2 of—

3 ‘‘(i) the product of (I) the Secretary’s

4 estimate of the ratio of the amount of pay5 ments made under section 1861(v) to the

6 hospital for nursing and allied health edu7 cation activities for the hospital’s cost re8 porting period ending in the second pre9 ceding fiscal year, to the hospital’s total in10 patient days for such period, and (II) the

11 total number of inpatient days (as estab12 lished by the Secretary) for such period

13 which are attributable to services furnished

14 to individuals who are enrolled under a

15 risk sharing contract with an eligible orga16 nization under section 1876 and who are

17 entitled to benefits under part A or who

18 are enrolled with a Medicare+Choice orga19 nization under part C; to

20 ‘‘(ii) the sum of the products deter21 mined under clause (i) for such cost re22 porting periods.’’.

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

24 subsection (a) applies to portions of cost reporting periods

25 occurring on or after January 1, 2001.
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1 Subtitle C—Changes in Medicare

2 Coverage and Appeals Process

3 SEC. 521. REVISIONS TO MEDICARE APPEALS PROCESS.

4 (a) CONDUCT OF RECONSIDERATIONS OF DETER5 MINATIONS BY INDEPENDENT CONTRACTORS.—Section

6 1869 (42 U.S.C. 1395ff) is amended to read as follows:

7 ‘‘DETERMINATIONS; APPEALS

8 ‘‘SEC. 1869. (a) INITIAL DETERMINATIONS.—

9 ‘‘(1) PROMULGATIONS OF REGULATIONS.—The

10 Secretary shall promulgate regulations and make ini11 tial determinations with respect to benefits under

12 part A or part B in accordance with those regula13 tions for the following:

14 ‘‘(A) The initial determination of whether

15 an individual is entitled to benefits under such

16 parts.

17 ‘‘(B) The initial determination of the

18 amount of benefits available to the individual

19 under such parts.

20 ‘‘(C) Any other initial determination with

21 respect to a claim for benefits under such parts,

22 including an initial determination by the Sec23 retary that payment may not be made, or may

24 no longer be made, for an item or service under

25 such parts, an initial determination made by a
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1 utilization and quality control peer review orga2 nization under section 1154(a)(2), and an ini3 tial determination made by an entity pursuant

4 to a contract (other than a contract under sec5 tion 1852) with the Secretary to administer

6 provisions of this title or title XI.

7 ‘‘(2) DEADLINES FOR MAKING INITIAL DETER8 MINATIONS.—

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (B), in promulgating regulations under

11 paragraph (1), initial determinations shall be

12 concluded by not later than the 45-day period

13 beginning on the date the fiscal intermediary or

14 the carrier, as the case may be, receives a claim

15 for benefits from an individual as described in

16 paragraph (1). Notice of such determination

17 shall be mailed to the individual filing the claim

18 before the conclusion of such 45-day period.

19 ‘‘(B) CLEAN CLAIMS.—Subparagraph (A)

20 shall not apply with respect to any claim that

21 is subject to the requirements of section

22 1816(c)(2) or section 1842(c)(2).

23 ‘‘(3) REDETERMINATIONS.—

24 ‘‘(A) IN GENERAL.—In promulgating regu25 lations under paragraph (1) with respect to ini-
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1 tial determinations, such regulations shall pro2 vide for a fiscal intermediary or a carrier to

3 make a redetermination with respect to a claim

4 for benefits that is denied in whole or in part.

5 ‘‘(B) LIMITATIONS.—

6 ‘‘(i) APPEALS RIGHTS.—No initial de7 termination may be reconsidered or ap8 pealed under subsection (b) unless the fis9 cal intermediary or carrier has made a re10 determination of that initial determination

11 under this paragraph.

12 ‘‘(ii) DECISION MAKER.—No redeter13 mination may be made by any individual

14 involved in the initial determination.

15 ‘‘(C) DEADLINES.—

16 ‘‘(i) FILING FOR REDETERMINA17 TION.—A redetermination under subpara18 graph (A) shall be available only if notice

19 is filed with the Secretary to request the

20 redetermination by not later than the end

21 of the 120-day period beginning on the

22 date the individual receives notice of the

23 initial determination under paragraph (2).

24 ‘‘(ii) CONCLUDING REDETERMINATIONS.—

25 Redeterminations shall be concluded by not
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1 later than the 30-day period beginning on the

2 date the fiscal intermediary or the carrier, as

3 the case may be, receives a request for a rede4 termination. Notice of such determination shall

5 be mailed to the individual filing the claim be6 fore the conclusion of such 30-day period.

7 ‘‘(D) CONSTRUCTION.—For purposes of

8 the succeeding provisions of this section a rede9 termination under this paragraph shall be con10 sidered to be part of the initial determination.

11 ‘‘(b) APPEAL RIGHTS.—

12 ‘‘(1) IN GENERAL.—

13 ‘‘(A) RECONSIDERATION OF INITIAL DE14 TERMINATION.—Subject to subparagraph (D),

15 any individual dissatisfied with any initial de16 termination under subsection (a)(1) shall be en17 titled to reconsideration of the determination,

18 and, subject to subparagraphs (D) and (E), a

19 hearing thereon by the Secretary to the same

20 extent as is provided in section 205(b) and to

21 judicial review of the Secretary’s final decision

22 after such hearing as is provided in section

23 205(g). For purposes of the preceding sentence,

24 any reference to the ‘Commissioner of Social

25 Security’ or the ‘Social Security Administration’
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1 in subsection (g) or (l) of section 205 shall be

2 considered a reference to the ‘Secretary’ or the

3 ‘Department of Health and Human Services’,

4 respectively.

5 ‘‘(B) REPRESENTATION BY PROVIDER OR

6 SUPPLIER.—

7 ‘‘(i) IN GENERAL.—Sections 206(a),

8 1102, and 1871 shall not be construed as

9 authorizing the Secretary to prohibit an in10 dividual from being represented under this

11 section by a person that furnishes or sup12 plies the individual, directly or indirectly,

13 with services or items, solely on the basis

14 that the person furnishes or supplies the

15 individual with such a service or item.

16 ‘‘(ii) MANDATORY WAIVER OF RIGHT

17 TO PAYMENT FROM BENEFICIARY.—Any

18 person that furnishes services or items to

19 an individual may not represent an indi20 vidual under this section with respect to

21 the issue described in section 1879(a)(2)

22 unless the person has waived any rights for

23 payment from the beneficiary with respect

24 to the services or items involved in the ap25 peal.
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1 ‘‘(iii) PROHIBITION ON PAYMENT FOR

2 REPRESENTATION.—If a person furnishes

3 services or items to an individual and rep4 resents the individual under this section,

5 the person may not impose any financial li6 ability on such individual in connection

7 with such representation.

8 ‘‘(iv) REQUIREMENTS FOR REP9 RESENTATIVES OF A BENEFICIARY.—The

10 provisions of section 205(j) and section

11 206 (other than subsection (a)(4) of such

12 section) regarding representation of claim13 ants shall apply to representation of an in14 dividual with respect to appeals under this

15 section in the same manner as they apply

16 to representation of an individual under

17 those sections.

18 ‘‘(C) SUCCESSION OF RIGHTS IN CASES OF

19 ASSIGNMENT.—The right of an individual to an

20 appeal under this section with respect to an

21 item or service may be assigned to the provider

22 of services or supplier of the item or service

23 upon the written consent of such individual

24 using a standard form established by the Sec25 retary for such an assignment.
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1 ‘‘(D) TIME LIMITS FOR FILING APPEALS.—

2 ‘‘(i) RECONSIDERATIONS.—Reconsid3 eration under subparagraph (A) shall be

4 available only if the individual described in

5 subparagraph (A) files notice with the Sec6 retary to request reconsideration by not

7 later than the end of the 180-day period

8 beginning on the date the individual re9 ceives notice of the redetermination under

10 subsection (a)(3), or within such additional

11 time as the Secretary may allow.

12 ‘‘(ii) HEARINGS CONDUCTED BY THE

13 SECRETARY.—The Secretary shall establish

14 in regulations time limits for the filing of

15 a request for a hearing by the Secretary in

16 accordance with provisions in sections 205

17 and 206.

18 ‘‘(E) AMOUNTS IN CONTROVERSY.—

19 ‘‘(i) IN GENERAL.—A hearing (by the

20 Secretary) shall not be available to an indi21 vidual under this section if the amount in

22 controversy is less than $100, and judicial

23 review shall not be available to the indi24 vidual if the amount in controversy is less

25 than $1,000.
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1 ‘‘(ii) AGGREGATION OF CLAIMS.—In

2 determining the amount in controversy, the

3 Secretary, under regulations, shall allow

4 two or more appeals to be aggregated if

5 the appeals involve—

6 ‘‘(I) the delivery of similar or re7 lated services to the same individual

8 by one or more providers of services

9 or suppliers, or

10 ‘‘(II) common issues of law and

11 fact arising from services furnished to

12 two or more individuals by one or

13 more providers of services or sup14 pliers.

15 ‘‘(F) EXPEDITED PROCEEDINGS.—

16 ‘‘(i) EXPEDITED DETERMINATION.—

17 In the case of an individual who has re18 ceived notice by a provider of services that

19 the provider of services plans—

20 ‘‘(I) to terminate services pro21 vided to an individual and a physician

22 certifies that failure to continue the

23 provision of such services is likely to

24 place the individual’s health at signifi25 cant risk, or
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1 ‘‘(II) to discharge the individual

2 from the provider of services,

3 the individual may request, in writing or

4 orally, an expedited determination or an

5 expedited reconsideration of an initial de6 termination made under subsection (a)(1),

7 as the case may be, and the Secretary shall

8 provide such expedited determination or

9 expedited reconsideration.

10 ‘‘(ii) EXPEDITED HEARING.—In a

11 hearing by the Secretary under this sec12 tion, in which the moving party alleges

13 that no material issues of fact are in dis14 pute, the Secretary shall make an expe15 dited determination as to whether any such

16 facts are in dispute and, if not, shall

17 render a decision expeditiously.

18 ‘‘(G) REOPENING AND REVISION OF DE19 TERMINATIONS.—The Secretary may reopen or

20 revise any initial determination or reconsidered

21 determination described in this subsection

22 under guidelines established by the Secretary in

23 regulations.

24 ‘‘(c) CONDUCT OF RECONSIDERATIONS BY INDE25 PENDENT CONTRACTORS.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall enter

2 into contracts with qualified independent contractors

3 to conduct reconsiderations of initial determinations

4 made under subparagraphs (B) and (C) of sub5 section (a)(1). Contracts shall be for an initial term

6 of three years and shall be renewable on a triennial

7 basis thereafter.

8 ‘‘(2) QUALIFIED INDEPENDENT CON9 TRACTOR.—For purposes of this subsection, the

10 term ‘qualified independent contractor’ means an en11 tity or organization that is independent of any orga12 nization under contract with the Secretary that

13 makes initial determinations under subsection

14 (a)(1), and that meets the requirements established

15 by the Secretary consistent with paragraph (3).

16 ‘‘(3) REQUIREMENTS.—Any qualified inde17 pendent contractor entering into a contract with the

18 Secretary under this subsection shall meet the all of

19 the following requirements:

20 ‘‘(A) IN GENERAL.—The qualified inde21 pendent contractor shall perform such duties

22 and functions and assume such responsibilities

23 as may be required by the Secretary to carry

24 out the provisions of this subsection, and shall

25 have sufficient training and expertise in medical
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1 science and legal matters to make reconsider2 ations under this subsection.

3 ‘‘(B) RECONSIDERATIONS.—

4 ‘‘(i) IN GENERAL.—The qualified

5 independent contractor shall review initial

6 determinations. In the case an initial de7 termination made with respect to whether

8 an item or service is reasonable and nec9 essary for the diagnosis or treatment of ill10 ness or injury (under section

11 1862(a)(1)(A)), such review shall include

12 consideration of the facts and cir13 cumstances of the initial determination by

14 a panel of physicians or other appropriate

15 health care professionals and any decisions

16 with respect to the reconsideration shall be

17 based on applicable information, including

18 clinical experience and medical, technical,

19 and scientific evidence.

20 ‘‘(ii) EFFECT OF NATIONAL AND

21 LOCAL COVERAGE DETERMINATIONS.—

22 ‘‘(I) NATIONAL COVERAGE DE23 TERMINATIONS.—If the Secretary has

24 made a national coverage determina25 tion pursuant to the requirements es-
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1 tablished under the third sentence of

2 section 1862(a), such determination

3 shall be binding on the qualified inde4 pendent contractor in making a deci5 sion with respect to a reconsideration

6 under this section.

7 ‘‘(II) LOCAL COVERAGE DETER8 MINATIONS.—If the Secretary has

9 made a local coverage determination,

10 such determination shall not be bind11 ing on the qualified independent con12 tractor in making a decision with re13 spect to a reconsideration under this

14 section. Notwithstanding the previous

15 sentence, the qualified independent

16 contractor shall consider the local cov17 erage determination in making such

18 decision.

19 ‘‘(III) ABSENCE OF NATIONAL OR

20 LOCAL COVERAGE DETERMINATION.—

21 In the absence of such a national cov22 erage determination or local coverage

23 determination, the qualified inde24 pendent contractor shall make a deci25 sion with respect to the reconsider-
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1 ation based on applicable information,

2 including clinical experience and med3 ical, technical, and scientific evidence.

4 ‘‘(C) DEADLINES FOR DECISIONS.—

5 ‘‘(i) RECONSIDERATIONS.—Except as

6 provided in clauses (iii) and (iv), the quali7 fied independent contractor shall conduct

8 and conclude a reconsideration under sub9 paragraph (B), and mail the notice of the

10 decision with respect to the reconsideration

11 by not later than the end of the 30-day pe12 riod beginning on the date a request for

13 reconsideration has been timely filed.

14 ‘‘(ii) CONSEQUENCES OF FAILURE TO

15 MEET DEADLINE.—In the case of a failure

16 by the qualified independent contractor to

17 mail the notice of the decision by the end

18 of the period described in clause (i) or to

19 provide notice by the end of the period de20 scribed in clause (iii), as the case may be,

21 the party requesting the reconsideration or

22 appeal may request a hearing before the

23 Secretary, notwithstanding any require24 ments for a reconsidered determination for
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1 purposes of the party’s right to such hear2 ing.

3 ‘‘(iii) EXPEDITED RECONSIDER4 ATIONS.—The qualified independent con5 tractor shall perform an expedited recon6 sideration under subsection (b)(1)(F) as

7 follows:

8 ‘‘(I) DEADLINE FOR DECISION.—

9 Notwithstanding section 216(j) and

10 subject to clause (iv), not later than

11 the end of the 72-hour period begin12 ning on the date the qualified inde13 pendent contractor has received a re14 quest for such reconsideration and has

15 received such medical or other records

16 needed for such reconsideration, the

17 qualified independent contractor shall

18 provide notice (by telephone and in

19 writing) to the individual and the pro20 vider of services and attending physi21 cian of the individual of the results of

22 the reconsideration. Such reconsider23 ation shall be conducted regardless of

24 whether the provider of services or

25 supplier will charge the individual for
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1 continued services or whether the indi2 vidual will be liable for payment for

3 such continued services.

4 ‘‘(II) CONSULTATION WITH BEN5 EFICIARY.—In such reconsideration,

6 the qualified independent contractor

7 shall solicit the views of the individual

8 involved.

9 ‘‘(III) SPECIAL RULE FOR HOS10 PITAL DISCHARGES.—A reconsider11 ation of a discharge from a hospital

12 shall be conducted under this clause

13 in accordance with the provisions of

14 paragraphs (2), (3), and (4) of section

15 1154(e) as in effect on the date that

16 precedes the date of the enactment of

17 this subparagraph.

18 ‘‘(iv) EXTENSION.—An individual re19 questing a reconsideration under this sub20 paragraph may be granted such additional

21 time as the individual specifies (not to ex22 ceed 14 days) for the qualified independent

23 contractor to conclude the reconsideration.

24 The individual may request such additional

25 time in orally or in writing.
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1 ‘‘(D) LIMITATION ON INDIVIDUAL REVIEW2 ING DETERMINATIONS.—

3 ‘‘(i) PHYSICIANS AND HEALTH CARE

4 PROFESSIONAL.—No physician or health

5 care professional under the employ of a

6 qualified independent contractor may

7 review—

8 ‘‘(I) determinations regarding

9 health care services furnished to a pa10 tient if the physician or health care

11 professional was directly responsible

12 for furnishing such services; or

13 ‘‘(II) determinations regarding

14 health care services provided in or by

15 an institution, organization, or agen16 cy, if the physician or any member of

17 the family of the physician or health

18 care professional has, directly or indi19 rectly, a significant financial interest

20 in such institution, organization, or

21 agency.

22 ‘‘(ii) FAMILY DESCRIBED.—For pur23 poses of this paragraph, the family of a

24 physician or health care professional in25 cludes the spouse (other than a spouse who
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1 is legally separated from the physician or

2 health care professional under a decree of

3 divorce or separate maintenance), children

4 (including stepchildren and legally adopted

5 children), grandchildren, parents, and

6 grandparents of the physician or health

7 care professional.

8 ‘‘(E) EXPLANATION OF DECISION.—Any

9 decision with respect to a reconsideration of a

10 qualified independent contractor shall be in

11 writing, and shall include a detailed explanation

12 of the decision as well as a discussion of the

13 pertinent facts and applicable regulations ap14 plied in making such decision, and in the case

15 of a determination of whether an item or serv16 ice is reasonable and necessary for the diag17 nosis or treatment of illness or injury (under

18 section 1862(a)(1)(A)) an explanation of the

19 medical and scientific rational for the decision.

20 ‘‘(F) NOTICE REQUIREMENTS.—Whenever

21 a qualified independent contractor makes a de22 cision with respect to a reconsideration under

23 this subsection, the qualified independent con24 tractor shall promptly notify the entity respon-
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1 sible for the payment of claims under part A or

2 part B of such decision.

3 ‘‘(G) DISSEMINATION OF DECISIONS ON

4 RECONSIDERATIONS.—Each qualified inde5 pendent contractor shall make available all deci6 sions with respect to reconsiderations of such

7 qualified independent contractors to fiscal inter8 mediaries (under section 1816), carriers (under

9 section 1842), peer review organizations (under

10 part B of title XI), Medicare+Choice organiza11 tions offering Medicare+Choice plans under

12 part C, other entities under contract with the

13 Secretary to make initial determinations under

14 part A or part B or title XI, and to the public.

15 The Secretary shall establish a methodology

16 under which qualified independent contractors

17 shall carry out this subparagraph.

18 ‘‘(H) ENSURING CONSISTENCY IN DECI19 SIONS.—Each qualified independent contractor

20 shall monitor its decisions with respect to re21 considerations to ensure the consistency of such

22 decisions with respect to requests for reconsid23 eration of similar or related matters.

24 ‘‘(I) DATA COLLECTION.—
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1 ‘‘(i) IN GENERAL.—Consistent with

2 the requirements of clause (ii), a qualified

3 independent contractor shall collect such

4 information relevant to its functions, and

5 keep and maintain such records in such

6 form and manner as the Secretary may re7 quire to carry out the purposes of this sec8 tion and shall permit access to and use of

9 any such information and records as the

10 Secretary may require for such purposes.

11 ‘‘(ii) TYPE OF DATA COLLECTED.—

12 Each qualified independent contractor

13 shall keep accurate records of each deci14 sion made, consistent with standards es15 tablished by the Secretary for such pur16 pose. Such records shall be maintained in

17 an electronic database in a manner that

18 provides for identification of the following:

19 ‘‘(I) Specific claims that give rise

20 to appeals.

21 ‘‘(II) Situations suggesting the

22 need for increased education for pro23 viders of services, physicians, or sup24 pliers.
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1 ‘‘(III) Situations suggesting the

2 need for changes in national or local

3 coverage policy.

4 ‘‘(IV) Situations suggesting the

5 need for changes in local medical re6 view policies.

7 ‘‘(iii) ANNUAL REPORTING.—Each

8 qualified independent contractor shall sub9 mit annually to the Secretary (or otherwise

10 as the Secretary may request) records

11 maintained under this paragraph for the

12 previous year.

13 ‘‘(J) HEARINGS BY THE SECRETARY.—The

14 qualified independent contractor shall (i) pre15 pare such information as is required for an ap16 peal of a decision of the contractor with respect

17 to a reconsideration to the Secretary for a hear18 ing, including as necessary, explanations of

19 issues involved in the decision and relevant poli20 cies, and (ii) participate in such hearings as re21 quired by the Secretary.

22 ‘‘(4) NUMBER OF QUALIFIED INDEPENDENT

23 CONTRACTORS.—The Secretary shall enter into con24 tracts with not fewer than 12 qualified independent

25 contractors under this subsection.
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1 ‘‘(5) LIMITATION ON QUALIFIED INDEPENDENT

2 CONTRACTOR LIABILITY.—No qualified independent

3 contractor having a contract with the Secretary

4 under this subsection and no person who is em5 ployed by, or who has a fiduciary relationship with,

6 any such qualified independent contractor or who

7 furnishes professional services to such qualified inde8 pendent contractor, shall be held by reason of the

9 performance of any duty, function, or activity re10 quired or authorized pursuant to this subsection or

11 to a valid contract entered into under this sub12 section, to have violated any criminal law, or to be

13 civilly liable under any law of the United States or

14 of any State (or political subdivision thereof) pro15 vided due care was exercised in the performance of

16 such duty, function, or activity.

17 ‘‘(d) DEADLINES FOR HEARINGS BY THE SEC18 RETARY.—

19 ‘‘(1) HEARING BY ADMINISTRATIVE LAW

20 JUDGE.—

21 ‘‘(A) IN GENERAL.—Except as provided in

22 subparagraph (B), an administrative law judge

23 shall conduct and conclude a hearing on a deci24 sion of a qualified independent contractor under

25 subsection (c) and render a decision on such
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1 hearing by not later than the end of the 90-day

2 period beginning on the date a request for hear3 ing has been timely filed.

4 ‘‘(B) WAIVER OF DEADLINE BY PARTY

5 SEEKING HEARING.—The 90-day period under

6 subparagraph (A) shall not apply in the case of

7 a motion or stipulation by the party requesting

8 the hearing to waive such period.

9 ‘‘(2) DEPARTMENTAL APPEALS BOARD RE10 VIEW.—

11 ‘‘(A) IN GENERAL.—The Departmental

12 Appeals Board of the Department of Health

13 and Human Services shall conduct and conclude

14 a review of the decision on a hearing described

15 in paragraph (1) and make a decision or re16 mand the case to the administrative law judge

17 for reconsideration by not later than the end of

18 the 90-day period beginning on the date a re19 quest for review has been timely filed.

20 ‘‘(B) DAB HEARING PROCEDURE.—In re21 viewing a decision on a hearing under this para22 graph, the Departmental Appeals Board shall

23 review the case de novo.

24 ‘‘(3) CONSEQUENCES OF FAILURE TO MEET

25 DEADLINES.—
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1 ‘‘(A) HEARING BY ADMINISTRATIVE LAW

2 JUDGE.—In the case of a failure by an adminis3 trative law judge to render a decision by the

4 end of the period described in paragraph (1),

5 the party requesting the hearing may request a

6 review by the Departmental Appeals Board of

7 the Department of Health and Human Services,

8 notwithstanding any requirements for a hearing

9 for purposes of the party’s right to such a re10 view.

11 ‘‘(B) DEPARTMENTAL APPEALS BOARD RE12 VIEW.—In the case of a failure by the Depart13 mental Appeals Board to render a decision by

14 the end of the period described in paragraph

15 (2), the party requesting the hearing may seek

16 judicial review, notwithstanding any require17 ments for a hearing for purposes of the party’s

18 right to such judicial review.

19 ‘‘(e) ADMINISTRATIVE PROVISIONS.—

20 ‘‘(1) LIMITATION ON REVIEW OF CERTAIN REG21 ULATIONS.—A regulation or instruction that relates

22 to a method for determining the amount of payment

23 under part B and that was initially issued before

24 January 1, 1981, shall not be subject to judicial re25 view.
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1 ‘‘(2) OUTREACH.—The Secretary shall perform

2 such outreach activities as are necessary to inform

3 individuals entitled to benefits under this title and

4 providers of services and suppliers with respect to

5 their rights of, and the process for, appeals made

6 under this section. The Secretary shall use the toll7 free telephone number maintained by the Secretary

8 under section 1804(b) to provide information re9 garding appeal rights and respond to inquiries re10 garding the status of appeals.

11 ‘‘(3) CONTINUING EDUCATION REQUIREMENT

12 FOR QUALIFIED INDEPENDENT CONTRACTORS AND

13 ADMINISTRATIVE LAW JUDGES.—The Secretary shall

14 provide to each qualified independent contractor,

15 and, in consultation with the Commissioner of Social

16 Security, to administrative law judges that decide

17 appeals of reconsiderations of initial determinations

18 or other decisions or determinations under this sec19 tion, such continuing education with respect to cov20 erage of items and services under this title or poli21 cies of the Secretary with respect to part B of title

22 XI as is necessary for such qualified independent

23 contractors and administrative law judges to make

24 informed decisions with respect to appeals.

25 ‘‘(4) REPORTS.—
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1 ‘‘(A) ANNUAL REPORT TO CONGRESS.—

2 The Secretary shall submit to Congress an an3 nual report describing the number of appeals

4 for the previous year, identifying issues that re5 quire administrative or legislative actions, and

6 including any recommendations of the Secretary

7 with respect to such actions. The Secretary

8 shall include in such report an analysis of de9 terminations by qualified independent contrac10 tors with respect to inconsistent decisions and

11 an analysis of the causes of any such inconsist12 encies.

13 ‘‘(B) SURVEY.—Not less frequently than

14 every 5 years, the Secretary shall conduct a

15 survey of a valid sample of individuals entitled

16 to benefits under this title who have filed ap17 peals of determinations under this section, pro18 viders of services, and suppliers to determine

19 the satisfaction of such individuals or entities

20 with the process for appeals of determinations

21 provided for under this section and education

22 and training provided by the Secretary with re23 spect to that process. The Secretary shall sub24 mit to Congress a report describing the results

25 of the survey, and shall include any rec-
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1 ommendations for administrative or legislative

2 actions that the Secretary determines appro3 priate.’’.

4 (b) APPLICABILITY OF REQUIREMENTS AND LIMITA5 TIONS ON LIABILITY OF QUALIFIED INDEPENDENT CON6 TRACTORS TO MEDICARE+CHOICE INDEPENDENT AP7 PEALS CONTRACTORS.—Section 1852(g)(4) (42 U.S.C.

8 1395w–22(g)(4)) is amended by adding at the end the fol9 lowing: ‘‘The provisions of section 1869(c)(5) shall apply

10 to independent outside entities under contract with the

11 Secretary under this paragraph.’’.

12 (c) CONFORMING AMENDMENT.—Section 1154(e)

13 (42 U.S.C. 1320c–3(e)) is amended by striking para14 graphs (2), (3), and (4).

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

16 this section apply with respect to initial determinations

17 made on or after October 1, 2002.

18 SEC. 522. REVISIONS TO MEDICARE COVERAGE PROCESS.

19 (a) REVIEW OF DETERMINATIONS.—Section 1869

20 (42 U.S.C. 1395ff), as amended by section 521, is further

21 amended by adding at the end the following new sub22 section:

23 ‘‘(f) REVIEW OF COVERAGE DETERMINATIONS.—

24 ‘‘(1) NATIONAL COVERAGE DETERMINATIONS.—
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1 ‘‘(A) IN GENERAL.—Review of any na2 tional coverage determination shall be subject to

3 the following limitations:

4 ‘‘(i) Such a determination shall not be

5 reviewed by any administrative law judge.

6 ‘‘(ii) Such a determination shall not

7 be held unlawful or set aside on the ground

8 that a requirement of section 553 of title

9 5, United States Code, or section 1871(b)

10 of this title, relating to publication in the

11 Federal Register or opportunity for public

12 comment, was not satisfied.

13 ‘‘(iii) Upon the filing of a complaint

14 by an aggrieved party, such a determina15 tion shall be reviewed by the Departmental

16 Appeals Board of the Department of

17 Health and Human Services. In con18 ducting such a review, the Departmental

19 Appeals Board shall review the record and

20 shall permit discovery and the taking of

21 evidence to evaluate the reasonableness of

22 the determination, if the Board determines

23 that the record is incomplete or lacks ade24 quate information to support the validity

25 of the determination. In reviewing such a
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1 determination, the Departmental Appeals

2 Board shall defer only to the reasonable

3 findings of fact, reasonable interpretations

4 of law, and reasonable applications of fact

5 to law by the Secretary.

6 ‘‘(iv) A decision of the Departmental

7 Appeals Board constitutes a final agency

8 action and is subject to judicial review.

9 ‘‘(B) DEFINITION OF NATIONAL COVERAGE

10 DETERMINATION.—For purposes of this section,

11 the term ‘national coverage determination’

12 means a determination by the Secretary with

13 respect to whether or not a particular item or

14 service is covered nationally under this title, but

15 does not include a determination of what code,

16 if any, is assigned to a particular item or serv17 ice covered under this title or a determination

18 with respect to the amount of payment made

19 for a particular item or service so covered.

20 ‘‘(2) LOCAL COVERAGE DETERMINATION.—

21 ‘‘(A) IN GENERAL.—Review of any local

22 coverage determination shall be subject to the

23 following limitations:

24 ‘‘(i) Upon the filing of a complaint by

25 an aggrieved party, such a determination
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1 shall be reviewed by an administrative law

2 judge of the Social Security Administra3 tion. The administrative law judge shall re4 view the record and shall permit discovery

5 and the taking of evidence to evaluate the

6 reasonableness of the determination, if the

7 administrative law judge determines that

8 the record is incomplete or lacks adequate

9 information to support the validity of the

10 determination. In reviewing such a deter11 mination, the administrative law judge

12 shall defer only to the reasonable findings

13 of fact, reasonable interpretations of law,

14 and reasonable applications of fact to law

15 by the Secretary.

16 ‘‘(ii) Upon the filing of a complaint by

17 an aggrieved party, a decision of an admin18 istrative law judge under clause (i) shall be

19 reviewed by the Departmental Appeals

20 Board of the Department of Health and

21 Human Services.

22 ‘‘(iii) A decision of the Departmental

23 Appeals Board constitutes a final agency

24 action and is subject to judicial review.
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1 ‘‘(B) DEFINITION OF LOCAL COVERAGE

2 DETERMINATION.—For purposes of this section,

3 the term ‘local coverage determination’ means a

4 determination by a fiscal intermediary or a car5 rier under part A or part B, as applicable, re6 specting whether or not a particular item or

7 service is covered on an intermediary- or car8 rier-wide basis under such parts, in accordance

9 with section 1862(a)(1)(A).

10 ‘‘(3) NO MATERIAL ISSUES OF FACT IN DIS11 PUTE.—In the case of a determination that may oth12 erwise be subject to review under paragraph

13 (1)(A)(iii) or paragraph (2)(A)(i), where the moving

14 party alleges that—

15 ‘‘(A) there are no material issues of fact in

16 dispute, and

17 ‘‘(B) the only issue of law is the constitu18 tionality of a provision of this title, or that a

19 regulation, determination, or ruling by the Sec20 retary is invalid,

21 the moving party may seek review by a court of com22 petent jurisdiction without filing a complaint under

23 such paragraph and without otherwise exhausting

24 other administrative remedies.
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1 ‘‘(4) PENDING NATIONAL COVERAGE DETER2 MINATIONS.—

3 ‘‘(A) IN GENERAL.—In the event the Sec4 retary has not issued a national coverage or

5 noncoverage determination with respect to a

6 particular type or class of items or services, an

7 aggrieved person (as described in paragraph

8 (5)) may submit to the Secretary a request to

9 make such a determination with respect to such

10 items or services. By not later than the end of

11 the 90-day period beginning on the date the

12 Secretary receives such a request (notwith13 standing the receipt by the Secretary of new

14 evidence (if any) during such 90-day period),

15 the Secretary shall take one of the following ac16 tions:

17 ‘‘(i) Issue a national coverage deter18 mination, with or without limitations.

19 ‘‘(ii) Issue a national noncoverage de20 termination.

21 ‘‘(iii) Issue a determination that no

22 national coverage or noncoverage deter23 mination is appropriate as of the end of

24 such 90-day period with respect to national

25 coverage of such items or services.
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1 ‘‘(iv) Issue a notice that states that

2 the Secretary has not completed a review

3 of the request for a national coverage de4 termination and that includes an identi5 fication of the remaining steps in the Sec6 retary’s review process and a deadline by

7 which the Secretary will complete the re8 view and take an action described in sub9 clause (I), (II), or (III).

10 ‘‘(B) In the case of an action described in

11 clause (i)(IV), if the Secretary fails to take an

12 action referred to in such clause by the deadline

13 specified by the Secretary under such clause,

14 then the Secretary is deemed to have taken an

15 action described in clause (i)(III) as of the

16 deadline.

17 ‘‘(C) When issuing a determination under

18 clause (i), the Secretary shall include an expla19 nation of the basis for the determination. An

20 action taken under clause (i) (other than sub21 clause (IV)) is deemed to be a national coverage

22 determination for purposes of review under sub23 paragraph (A).

24 ‘‘(5) STANDING.—An action under this sub25 section seeking review of a national coverage deter-
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1 mination or local coverage determination may be ini2 tiated only by individuals entitled to benefits under

3 part A, or enrolled under part B, or both, who are

4 in need of the items or services that are the subject

5 of the coverage determination.

6 ‘‘(6) PUBLICATION ON THE INTERNET OF DECI7 SIONS OF HEARINGS OF THE SECRETARY.—Each de8 cision of a hearing by the Secretary with respect to

9 a national coverage determination shall be made

10 public, and the Secretary shall publish each decision

11 on the Medicare Internet site of the Department of

12 Health and Human Services. The Secretary shall re13 move from such decision any information that would

14 identify any individual, provider of services, or sup15 plier.

16 ‘‘(7) ANNUAL REPORT ON NATIONAL COVERAGE

17 DETERMINATIONS.—

18 ‘‘(A) IN GENERAL.—Not later than De19 cember 1 of each year, beginning in 2001, the

20 Secretary shall submit to Congress a report

21 that sets forth a detailed compilation of the ac22 tual time periods that were necessary to com23 plete and fully implement national coverage de24 terminations that were made in the previous fis25 cal year for items, services, or medical devices
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1 not previously covered as a benefit under this

2 title, including, with respect to each new item,

3 service, or medical device, a statement of the

4 time taken by the Secretary to make and imple5 ment the necessary coverage, coding, and pay6 ment determinations, including the time taken

7 to complete each significant step in the process

8 of making and implementing such determina9 tions.

10 ‘‘(B) PUBLICATION OF REPORTS ON THE

11 INTERNET.—The Secretary shall publish each

12 report submitted under clause (i) on the medi13 care Internet site of the Department of Health

14 and Human Services.

15 ‘‘(8) CONSTRUCTION.—Nothing in this sub16 section shall be construed as permitting administra17 tive or judicial review pursuant to this section inso18 far as such review is explicitly prohibited or re19 stricted under another provision of law.’’.

20 (b) ESTABLISHMENT OF A PROCESS FOR COVERAGE

21 DETERMINATIONS.—Section 1862(a) (42 U.S.C.

22 1395y(a)) is amended by adding at the end the following

23 new sentence: ‘‘In making a national coverage determina24 tion (as defined in paragraph (1)(B) of section 1869(f))

25 the Secretary shall ensure that the public is afforded no-
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1 tice and opportunity to comment prior to implementation

2 by the Secretary of the determination; meetings of advi3 sory committees established under section 1114(f) with re4 spect to the determination are made on the record; in

5 making the determination, the Secretary has considered

6 applicable information (including clinical experience and

7 medical, technical, and scientific evidence) with respect to

8 the subject matter of the determination; and in the deter9 mination, provide a clear statement of the basis for the

10 determination (including responses to comments received

11 from the public), the assumptions underlying that basis,

12 and make available to the public the data (other than pro13 prietary data) considered in making the determination.’’.

14 (c) IMPROVEMENTS TO THE MEDICARE ADVISORY

15 COMMITTEE PROCESS.—Section 1114 (42 U.S.C. 1314)

16 is amended by adding at the end the following new sub17 section:

18 ‘‘(i)(1) Any advisory committee appointed under sub19 section (f) to advise the Secretary on matters relating to

20 the interpretation, application, or implementation of sec21 tion 1862(a)(1) shall assure the full participation of a

22 nonvoting member in the deliberations of the advisory

23 committee, and shall provide such nonvoting member ac24 cess to all information and data made available to voting
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1 members of the advisory committee, other than informa2 tion that—

3 ‘‘(A) is exempt from disclosure pursuant to sub4 section (a) of section 552 of title 5, United States

5 Code, by reason of subsection (b)(4) of such section

6 (relating to trade secrets); or

7 ‘‘(B) the Secretary determines would present a

8 conflict of interest relating to such nonvoting mem9 ber.

10 ‘‘(2) If an advisory committee described in paragraph

11 (1) organizes into panels of experts according to types of

12 items or services considered by the advisory committee,

13 any such panel of experts may report any recommendation

14 with respect to such items or services directly to the Sec15 retary without the prior approval of the advisory com16 mittee or an executive committee thereof.’’.

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

18 this section apply with respect to—

19 (1) a review of any national or local coverage

20 determination filed,

21 (2) a request to make such a determination

22 made,

23 (3) a national coverage determination made,

24 on or after October 1, 2001.
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1 Subtitle D—Improving Access to

2 New Technologies

3 SEC. 531. REIMBURSEMENT IMPROVEMENTS FOR NEW

4 CLINICAL LABORATORY TESTS AND DURA5 BLE MEDICAL EQUIPMENT.

6 (a) PAYMENT RULE FOR NEW LABORATORY

7 TESTS.—Section 1833(h)(4)(B)(viii) (42 U.S.C.

8 1395l(h)(4)(B)(viii)) is amended by inserting before the

9 period at the end the following: ‘‘(or 100 percent of such

10 median in the case of a clinical diagnostic laboratory test

11 performed on or after January 1, 2001, that the Secretary

12 determines is a new test for which no limitation amount

13 has previously been established under this subpara14 graph)’’.

15 (b) ESTABLISHMENT OF CODING AND PAYMENT

16 PROCEDURES FOR NEW CLINICAL DIAGNOSTIC LABORA17 TORY TESTS AND OTHER ITEMS ON A FEE SCHEDULE.—

18 Not later than 1 year after the date of the enactment of

19 this Act, the Secretary of Health and Human Services

20 shall establish procedures for coding and payment deter21 minations for the categories of new clinical diagnostic lab22 oratory tests and new durable medical equipment under

23 part B of the title XVIII of the Social Security Act that

24 permit public consultation in a manner consistent with the
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1 procedures established for implementing coding modifica2 tions for ICD–9–CM.

3 (c) REPORT ON PROCEDURES USED FOR ADVANCED,

4 IMPROVED TECHNOLOGIES.—Not later than 1 year after

5 the date of the enactment of this Act, the Secretary of

6 Health and Human Services shall submit to Congress a

7 report that identifies the specific procedures used by the

8 Secretary under part B of title XVIII of the Social Secu9 rity Act to adjust payments for clinical diagnostic labora10 tory tests and durable medical equipment which are classi11 fied to existing codes where, because of an advance in

12 technology with respect to the test or equipment, there has

13 been a significant increase or decrease in the resources

14 used in the test or in the manufacture of the equipment,

15 and there has been a significant improvement in the per16 formance of the test or equipment. The report shall in17 clude such recommendations for changes in law as may

18 be necessary to assure fair and appropriate payment levels

19 under such part for such improved tests and equipment

20 as reflects increased costs necessary to produce improved

21 results.

22 SEC. 532. RETENTION OF HCPCS LEVEL III CODES.

23 (a) IN GENERAL.—The Secretary of Health and

24 Human Services shall maintain and continue the use of

25 level III codes of the HCPCS coding system (as such sys-
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1 tem was in effect on August 16, 2000) through December

2 31, 2003, and shall make such codes available to the pub3 lic.

4 (b) DEFINITION.—For purposes of this section, the

5 term ‘‘HCPCS Level III codes’’ means the alphanumeric

6 codes for local use under the Health Care Financing Ad7 ministration Common Procedure Coding System

8 (HCPCS).

9 SEC. 533. RECOGNITION OF NEW MEDICAL TECHNOLOGIES

10 UNDER INPATIENT HOSPITAL PPS.

11 (a) EXPEDITING RECOGNITION OF NEW TECH12 NOLOGIES INTO INPATIENT PPS CODING SYSTEM.—

13 (1) REPORT.—Not later than April 1, 2001, the

14 Secretary of Health and Human Services shall sub15 mit to Congress a report on methods of expeditiously

16 incorporating new medical services and technologies

17 into the clinical coding system used with respect to

18 payment for inpatient hospital services furnished

19 under the medicare program under title XVIII of the

20 Social Security Act, together with a detailed descrip21 tion of the Secretary’s preferred methods to achieve

22 this purpose.

23 (2) IMPLEMENTATION.—Not later than October

24 1, 2001, the Secretary shall implement the preferred
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1 methods described in the report transmitted pursu2 ant to paragraph (1).

3 (b) ENSURING APPROPRIATE PAYMENTS FOR HOS4 PITALS INCORPORATING NEW MEDICAL SERVICES AND

5 TECHNOLOGIES.—

6 (1) ESTABLISHMENT OF MECHANISM.—Section

7 1886(d)(5) (42 U.S.C. 1395ww(d)(5)) is amended

8 by adding at the end the following new subpara9 graphs:

10 ‘‘(K)(i) Effective for discharges beginning on or after

11 October 1, 2001, the Secretary shall establish a mecha12 nism to recognize the costs of new medical services and

13 technologies under the payment system established under

14 this subsection. Such mechanism shall be established after

15 notice and opportunity for public comment (in the publica16 tions required by subsection (e)(5) for a fiscal year or oth17 erwise).

18 ‘‘(ii) The mechanism established pursuant to clause

19 (i) shall—

20 ‘‘(I) apply to a new medical service or tech21 nology if, based on the estimated costs incurred with

22 respect to discharges involving such service or tech23 nology, the DRG prospective payment rate otherwise

24 applicable to such discharges under this subsection

25 is inadequate;
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1 ‘‘(II) provide for the collection of data with re2 spect to the costs of a new medical service or tech3 nology described in subclause (I) for a period of not

4 less than two years and not more than three years

5 beginning on the date on which an inpatient hospital

6 code is issued with respect to the service or tech7 nology;

8 ‘‘(III) subject to paragraph (4)(C)(iii), provide

9 for additional payment to be made under this sub10 section with respect to discharges involving a new

11 medical service or technology described in subclause

12 (I) that occur during the period described in sub13 clause (II) in an amount that adequately reflects the

14 estimated average cost of such service or technology;

15 and

16 ‘‘(IV) provide that discharges involving such a

17 service or technology that occur after the close of the

18 period described in subclause (II) will be classified

19 within a new or existing diagnosis-related group with

20 a weighting factor under paragraph (4)(B) that is

21 derived from cost data collected with respect to dis22 charges occurring during such period.

23 ‘‘(iii) For purposes of clause (ii)(II), the term ‘inpa24 tient hospital code’ means any code that is used with re25 spect to inpatient hospital services for which payment may
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1 be made under this subsection and includes an alpha2 numeric code issued under the International Classification

3 of Diseases, 9th Revision, Clinical Modification (‘ICD–9–

4 CM’) and its subsequent revisions.

5 ‘‘(iv) For purposes of clause (ii)(III), the term ‘addi6 tional payment’ means, with respect to a discharge for a

7 new medical service or technology described in clause

8 (ii)(I), an amount that exceeds the prospective payment

9 rate otherwise applicable under this subsection to dis10 charges involving such service or technology that would

11 be made but for this subparagraph.

12 ‘‘(v) The requirement under clause (ii)(III) for an ad13 ditional payment may be satisfied by means of a new-tech14 nology group (described in subparagraph (L)), an add-on

15 payment, a payment adjustment, or any other similar

16 mechanism for increasing the amount otherwise payable

17 with respect to a discharge under this subsection. The Sec18 retary may not establish a separate fee schedule for such

19 additional payment for such services and technologies, by

20 utilizing a methodology established under subsection (a)

21 or (h) of section 1834 to determine the amount of such

22 additional payment, or by other similar mechanisms or

23 methodologies.

24 ‘‘(vi) For purposes of this subparagraph and sub25 paragraph (L), a medical service or technology will be con-
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1 sidered a ‘new medical service or technology’ if the service

2 or technology meets criteria established by the Secretary

3 after notice and an opportunity for public comment.

4 ‘‘(L)(i) In establishing the mechanism under sub5 paragraph (K), the Secretary may establish new-tech6 nology groups into which a new medical service or tech7 nology will be classified if, based on the estimated average

8 costs incurred with respect to discharges involving such

9 service or technology, the DRG prospective payment rate

10 otherwise applicable to such discharges under this sub11 section is inadequate.

12 ‘‘(ii) Such groups—

13 ‘‘(I) shall not be based on the costs associated

14 with a specific new medical service or technology;

15 but

16 ‘‘(II) shall, in combination with the applicable

17 standardized amounts and the weighting factors as18 signed to such groups under paragraph (4)(B), re19 flect such cost cohorts as the Secretary determines

20 are appropriate for all new medical services and

21 technologies that are likely to be provided as inpa22 tient hospital services in a fiscal year.

23 ‘‘(iii) The methodology for classifying specific hos24 pital discharges within a diagnosis-related group under

25 paragraph (4)(A) or a new-technology group shall provide
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1 that a specific hospital discharge may not be classified

2 within both a diagnosis-related group and a new-tech3 nology group.’’.

4 (2) PRIOR CONSULTATION.—The Secretary of

5 Health and Human Services shall consult with

6 groups representing hospitals, physicians, and manu7 facturers of new medical technologies before pub8 lishing the notice of proposed rulemaking required

9 by section 1886(d)(5)(K)(i) of the Social Security

10 Act (as added by paragraph (1)).

11 (3) CONFORMING AMENDMENT.—Section

12 1886(d)(4)(C)(i) (42 U.S.C. 1395ww(d)(4)(C)(i)) is

13 amended by striking ‘‘technology,’’ and inserting

14 ‘‘technology (including a new medical service or

15 technology under paragraph (5)(K)),’’.

16 Subtitle E—Other Provisions

17 SEC. 541. INCREASE IN REIMBURSEMENT FOR BAD DEBT.

18 Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is

19 amended—

20 (1) in clause (ii), by striking ‘‘and’’ at the end;

21 (2) in clause (iii)—

22 (A) by striking ‘‘during a subsequent fiscal

23 year’’ and inserting ‘‘during fiscal year 2000’’;

24 and
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1 (B) by striking the period at the end and

2 inserting ‘‘, and’’; and

3 (3) by adding at the end the following new

4 clause:

5 ‘‘(iv) for cost reporting periods beginning dur6 ing a subsequent fiscal year, by 30 percent of such

7 amount otherwise allowable.’’.

8 SEC. 542. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY

9 SERVICES UNDER MEDICARE.

10 (a) IN GENERAL.—When an independent laboratory

11 furnishes the technical component of a physician pathol12 ogy service to a fee-for-service medicare beneficiary who

13 is an inpatient or outpatient of a covered hospital, the Sec14 retary of Health and Human Services shall treat such

15 component as a service for which payment shall be made

16 to the laboratory under section 1848 of the Social Security

17 Act (42 U.S.C. 1395w–4) and not as an inpatient hospital

18 service for which payment is made to the hospital under

19 section 1886(d) of such Act (42 U.S.C. 1395ww(d)) or

20 as an outpatient hospital service for which payment is

21 made to the hospital under section 1833(t) of such Act

22 (42 U.S.C. 1395l(t)).

23 (b) DEFINITIONS.—For purposes of this section:

24 (1) COVERED HOSPITAL.—The term ‘‘covered

25 hospital’’ means, with respect to an inpatient or an
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1 outpatient, a hospital that had an arrangement with

2 an independent laboratory that was in effect as of

3 July 22, 1999, under which a laboratory furnished

4 the technical component of physician pathology serv5 ices to fee-for-service medicare beneficiaries who

6 were hospital inpatients or outpatients, respectively,

7 and submitted claims for payment for such compo8 nent to a medicare carrier (that has a contract with

9 the Secretary under section 1842 of the Social Secu10 rity Act, 42 U.S.C. 1395u) and not to such hospital.

11 (2) FEE-FOR-SERVICE MEDICARE BENE12 FICIARY.—The term ‘‘fee-for-service medicare bene13 ficiary’’ means an individual who—

14 (A) is entitled to benefits under part A, or

15 enrolled under part B, or both, of such title;

16 and

17 (B) is not enrolled in any of the following:

18 (i) A Medicare+Choice plan under

19 part C of such title.

20 (ii) A plan offered by an eligible orga21 nization under section 1876 of such Act

22 (42 U.S.C. 1395mm).

23 (iii) A program of all-inclusive care

24 for the elderly (PACE) under section 1894

25 of such Act (42 U.S.C. 1395eee).
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1 (iv) A social health maintenance orga2 nization (SHMO) demonstration project

3 established under section 4018(b) of the

4 Omnibus Budget Reconciliation Act of

5 1987 (Public Law 100–203).

6 (c) EFFECTIVE DATE.—This section applies to serv7 ices furnished during the 2-year period beginning on Jan8 uary 1, 2001.

9 (d) GAO REPORT.—

10 (1) STUDY.—The Comptroller General of the

11 United States shall conduct a study of the effects of

12 the previous provisions of this section on hospitals

13 and laboratories and access of fee-for-service medi14 care beneficiaries to the technical component of phy15 sician pathology services.

16 (2) REPORT.—Not later than April 1, 2002, the

17 Comptroller General shall submit to Congress a re18 port on such study. The report shall include rec19 ommendations about whether such provisions should

20 be extended after the end of the period specified in

21 subsection (c) for either or both inpatient and out22 patient hospital services, and whether the provisions

23 should be extended to other hospitals.
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1 SEC. 543. EXTENSION OF ADVISORY OPINION AUTHORITY.

2 Section 1128D(b)(6) (42 U.S.C. 1320a–7d(b)(6)) is

3 amended by striking ‘‘and before the date which is 4 years

4 after such date of enactment’’.

5 SEC. 544. CHANGE IN ANNUAL MEDPAC REPORTING.

6 (a) REVISION OF DEADLINES FOR SUBMISSION OF

7 REPORTS.—

8 (1) IN GENERAL.—Section 1805(b)(1)(D) (42

9 U.S.C. 1395b–6(b)(1)(D)) is amended by striking

10 ‘‘June 1 of each year (beginning with 1998),’’ and

11 inserting ‘‘June 15 of each year,’’.

12 (2) EFFECTIVE DATE.—The amendment made

13 by paragraph (1) applies beginning with 2001.

14 (b) REQUIREMENT FOR ON THE RECORD VOTES ON

15 RECOMMENDATIONS.—Section 1805(b) (42 U.S.C.

16 1395b–6(b)) is amended by adding at the end the fol17 lowing new paragraph:

18 ‘‘(7) VOTING AND REPORTING REQUIRE19 MENTS.—With respect to each recommendation con20 tained in a report submitted under paragraph (1),

21 each member of the Commission shall vote on the

22 recommendation, and the Commission shall include,

23 by member, the results of that vote in the report

24 containing the recommendation.’’.
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1 SEC. 545. DEVELOPMENT OF PATIENT ASSESSMENT IN2 STRUMENTS.

3 (a) DEVELOPMENT.—

4 (1) IN GENERAL.—Not later than January 1,

5 2005, the Secretary of Health and Human Services

6 shall submit to the Committee on Ways and Means

7 and the Committee on Commerce of the House of

8 Representatives and the Committee on Finance of

9 the Senate a report on the development of standard

10 instruments for the assessment of the health and

11 functional status of patients, for whom items and

12 services described in subsection (b) are furnished,

13 and include in the report a recommendation on the

14 use of such standard instruments for payment pur15 poses.

16 (2) DESIGN FOR COMPARISON OF COMMON ELE17 MENTS.—The Secretary shall design such standard

18 instruments in a manner such that—

19 (A) elements that are common to the items

20 and services described in subsection (b) may be

21 readily comparable and are statistically compat22 ible;

23 (B) only elements necessary to meet pro24 gram objectives are collected; and
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1 (C) the standard instruments supersede

2 any other assessment instrument used before

3 that date.

4 (3) CONSULTATION.—In developing an assess5 ment instrument under paragraph (1), the Secretary

6 shall consult with the Medicare Payment Advisory

7 Commission, the Agency for Healthcare Research

8 and Quality, and qualified organizations rep9 resenting providers of services and suppliers under

10 title XVIII.

11 (b) DESCRIPTION OF SERVICES.—For purposes of

12 subsection (a), items and services described in this sub13 section are those items and services furnished to individ14 uals entitled to benefits under part A, or enrolled under

15 part B, or both of title XVIII of the Social Security Act

16 for which payment is made under such title, and include

17 the following:

18 (1) Inpatient and outpatient hospital services.

19 (2) Inpatient and outpatient rehabilitation serv20 ices.

21 (3) Covered skilled nursing facility services.

22 (4) Home health services.

23 (5) Physical or occupational therapy or speech24 language pathology services.
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1 (6) Items and services furnished to such indi2 viduals determined to have end stage renal disease.

3 (7) Partial hospitalization services and other

4 mental health services.

5 (8) Any other service for which payment is

6 made under such title as the Secretary determines to

7 be appropriate.

8 SEC. 546. GAO REPORT ON IMPACT OF THE EMERGENCY

9 MEDICAL TREATMENT AND ACTIVE LABOR

10 ACT (EMTALA) ON HOSPITAL EMERGENCY DE11 PARTMENTS.

12 (a) REPORT.—The Comptroller General of the

13 United States shall submit a report to the Committee on

14 Commerce and the Committee on Ways and Means of the

15 House of Representatives and the Committee on Finance

16 of the Senate by May 1, 2001, on the effect of the Emer17 gency Medical Treatment and Active Labor Act on hos18 pitals, emergency physicians, and physicians covering

19 emergency department call throughout the United States.

20 (b) REPORT REQUIREMENTS.—The report should

21 evaluate—

22 (1) the extent to which hospitals, emergency

23 physicians, and physicians covering emergency de24 partment call provide uncompensated services in re25 lation to the requirements of EMTALA;
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1 (2) the extent to which the regulatory require2 ments and enforcement of EMTALA have expanded

3 beyond the legislation’s original intent;

4 (3) estimates for the total dollar amount of

5 EMTALA-related care uncompensated costs to

6 emergency physicians, physicians covering emer7 gency department call, hospital emergency depart8 ments, and other hospital services;

9 (4) the extent to which different portions of the

10 United States may be experiencing different levels of

11 uncompensated EMTALA-related care;

12 (5) the extent to which EMTALA would be

13 classified as an unfunded mandate if it were enacted

14 today;

15 (6) the extent to which States have programs to

16 provide financial support for such uncompensated

17 care;

18 (7) possible sources of funds, including medi19 care hospital bad debt accounts, that are available to

20 hospitals to assist with the cost of such uncompen21 sated care; and

22 (8) the financial strain that illegal immigration

23 populations, the uninsured, and the underinsured

24 place on hospital emergency departments, other hos-
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1 pital services, emergency physicians, and physicians

2 covering emergency department call.

3 (c) DEFINITION.—In this section, the terms ‘‘Emer4 gency Medical Treatment and Active Labor Act’’ and

5 ‘‘EMTALA’’ mean section 1867 of the Social Security Act

6 (42 U.S.C. 1395dd).

7 TITLE VI—PROVISIONS RELAT8 ING TO PART C

9 (MEDICARE+CHOICE PRO10 GRAM) AND OTHER MEDI11 CARE MANAGED CARE PROVI12 SIONS

13 Subtitle A—Medicare+Choice

14 Payment Reforms

15 SEC. 601. INCREASE IN MINIMUM PAYMENT AMOUNT.

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

17 23(c)(1)(B)(ii)) is amended—

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

19 inserting ‘‘(ii)(I) Subject to subclauses (II) and

20 (III), for a succeeding year’’; and

21 (2) by adding at the end the following new sub22 clauses:

23 ‘‘(II) For 2001, for any area in a

24 Metropolitan Statistical Area within any of

25 the 50 States and the District of Columbia
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1 with a population of more than 250,000,

2 $525 (and for any other area within any of

3 the 50 States, $475).

4 ‘‘(III) For 2001, for any area in a

5 Metropolitan Statistical Area outside the

6 50 States and the District of Columbia

7 with a population of more than 250,000,

8 $525 (and for any other area outside the

9 50 States and the District of Columbia,

10 $475), but not to exceed 120 percent of

11 the amount determined under this sub12 paragraph for such area for 2000.’’.

13 SEC. 602. INCREASE IN MINIMUM PERCENTAGE INCREASE.

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

15 23(c)(1)(C)(ii)) is amended by inserting ‘‘(or 103 percent

16 in the case of 2001)’’ after ‘‘102 percent’’.

17 SEC. 603. 10-YEAR PHASE-IN OF RISK ADJUSTMENT.

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

19 23(a)(3)(C)(ii)) is amended—

20 (1) in subclause (I), by striking ‘‘and 2001’’

21 and inserting ‘‘and each succeeding year through the

22 first year in which risk adjustment is based on data

23 from inpatient hospital and ambulatory settings’’;

24 and
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1 (2) by amending subclause (II) to read as fol2 lows:

3 ‘‘(II) beginning after such first

4 year, insofar as such risk adjustment

5 is based on data from inpatient hos6 pital and ambulatory settings, the

7 methodology shall be phased in equal

8 increments over a 10-year period that

9 begins with such first year.’’.

10 SEC. 604. TRANSITION TO REVISED MEDICARE+CHOICE

11 PAYMENT RATES.

12 (a) ANNOUNCEMENT OF REVISED

13 MEDICARE+CHOICE PAYMENT RATES.—Within 2 weeks

14 after the date of the enactment of this Act, the Secretary

15 of Health and Human Services shall determine, and shall

16 announce (in a manner intended to provide notice to inter17 ested parties) Medicare+Choice capitation rates under

18 section 1853 of the Social Security Act (42 U.S.C.

19 1395w–23) for 2001, revised in accordance with the provi20 sions of this Act.

21 (b) REENTRY INTO PROGRAM PERMITTED FOR

22 MEDICARE+CHOICE PROGRAMS IN 2000.—A

23 Medicare+Choice organization that provided notice to the

24 Secretary of Health and Human Services before the date

25 of the enactment of this Act that it was terminating its
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1 contract under part C of title XVIII of the Social Security

2 Act or was reducing the service area of a

3 Medicare+Choice plan offered under such part shall be

4 permitted to continue participation under such part, or to

5 maintain the service area of such plan, for 2001 if it pro6 vides the Secretary with the information described in sec7 tion 1854(a)(1) of the Social Security Act (42 U.S.C.

8 1395w–24(a)(1)) within 2 weeks after the date revised

9 rates are announced by the Secretary under subsection

10 (a).

11 (c) REVISED SUBMISSION OF PROPOSED PREMIUMS

12 AND RELATED INFORMATION.—If—

13 (1) a Medicare+Choice organization provided

14 notice to the Secretary of Health and Human Serv15 ices as of July 3, 2000, that it was renewing its con16 tract under part C of title XVIII of the Social Secu17 rity Act for all or part of the service area or areas

18 served under its current contract, and

19 (2) any part of the service area or areas ad20 dressed in such notice includes a payment area for

21 which the Medicare+Choice capitation rate under

22 section 1853(c) of such Act (42 U.S.C. 1395w–

23 23(c)) for 2001, as determined under subsection (a),

24 is higher than the rate previously determined for

25 such year,
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1 such organization shall revise its submission of the infor2 mation described in section 1854(a)(1) of the Social Secu3 rity Act (42 U.S.C. 1395w–24(a)(1)), and shall submit

4 such revised information to the Secretary, within 2 weeks

5 after the date revised rates are announced by the Sec6 retary under subsection (a). In making such submission,

7 the organization may only reduce premiums, cost-sharing,

8 enhance benefits, or utilize the stabilization fund described

9 in section 1854(f)(2) of such Act (42 U.S.C. 1395w–

10 24(f)(2)).

11 (d) DISREGARD OF NEW RATE ANNOUNCEMENT IN

12 APPLYING PASS-THROUGH FOR NEW NATIONAL COV13 ERAGE DETERMINATIONS.—For purposes of applying sec14 tion 1852(a)(5) of the Social Security Act (42 U.S.C.

15 1395w–22(a)(5)), the announcement of revised rates

16 under subsection (a) shall not be treated as an announce17 ment under section 1853(b) of such Act (42 U.S.C.

18 1395w–23(b)).

19 SEC. 605. REVISION OF PAYMENT RATES FOR ESRD PA20 TIENTS ENROLLED IN MEDICARE+CHOICE

21 PLANS.

22 (a) IN GENERAL.—Section 1853(a)(1)(B) (42 U.S.C.

23 1395w–23(a)(1)(B)) is amended by adding at the end the

24 following: ‘‘In establishing such rates, the Secretary shall

25 provide for appropriate adjustments to increase each rate
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1 to reflect the demonstration rate (including the risk ad2 justment methodology associated with such rate) of the

3 social health maintenance organization end-stage renal

4 disease capitation demonstrations (established by section

5 2355 of the Deficit Reduction Act of 1984, as amended

6 by section 13567(b) of the Omnibus Budget Reconciliation

7 Act of 1993), and shall compute such rates by taking into

8 account such factors as renal treatment modality, age, and

9 the underlying cause of the end-stage renal disease.’’.

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

11 subsection (a) shall apply to payments for months begin12 ning with January 2002.

13 (c) PUBLICATION.—Not later than 6 months after

14 the date of the enactment of this Act, the Secretary of

15 Health and Human Services shall publish for public com16 ment a description of the appropriate adjustments de17 scribed in the last sentence of section 1853(a)(1)(B) of

18 the Social Security Act (42 U.S.C. 1395w–23(a)(1)(B)),

19 as added by subsection (a). The Secretary shall publish

20 such adjustments in final form by not later than July 1,

21 2001, so that the amendment made by subsection (a) is

22 implemented on a timely basis consistent with subsection

23 (b).
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1 SEC. 606. PERMITTING PREMIUM REDUCTIONS AS ADDI2 TIONAL BENEFITS UNDER

3 MEDICARE+CHOICE PLANS.

4 (a) IN GENERAL.—

5 (1) AUTHORIZATION OF PART B PREMIUM RE6 DUCTIONS.—Section 1854(f)(1) (42 U.S.C. 1395w–

7 24(f)(1)) is amended—

8 (A) by redesignating subparagraph (E) as

9 subparagraph (F); and

10 (B) by inserting after subparagraph (D)

11 the following new subparagraph:

12 ‘‘(E) PREMIUM REDUCTIONS.—

13 ‘‘(i) IN GENERAL.—Subject to clause

14 (ii), as part of providing any additional

15 benefits required under subparagraph (A),

16 a Medicare+Choice organization may elect

17 a reduction in its payments under section

18 1853(a)(1)(A) with respect to a

19 Medicare+Choice plan and the Secretary

20 shall apply such reduction to reduce the

21 premium under section 1839 of each en22 rollee in such plan as provided in section

23 1840(i).

24 ‘‘(ii) AMOUNT OF REDUCTION.—The

25 amount of the reduction under clause (i)
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1 with respect to any enrollee in a

2 Medicare+Choice plan—

3 ‘‘(I) may not exceed 125 percent

4 of the premium described under sec5 tion 1839(a)(3); and

6 ‘‘(II) shall apply uniformly to

7 each enrollee of the Medicare+Choice

8 plan to which such reduction ap9 plies.’’.

10 (2) CONFORMING AMENDMENTS.—

11 (A) ADJUSTMENT OF PAYMENTS TO

12 MEDICARE+CHOICE ORGANIZATIONS.—Section

13 1853(a)(1)(A) (42 U.S.C. 1395w–23(a)(1)(A))

14 is amended by inserting ‘‘reduced by the

15 amount of any reduction elected under section

16 1854(f)(1)(E) and’’ after ‘‘for that area,’’.

17 (B) ADJUSTMENT AND PAYMENT OF PART

18 B PREMIUMS.—

19 (i) ADJUSTMENT OF PREMIUMS.—

20 Section 1839(a)(2) (42 U.S.C.

21 1395r(a)(2)) is amended by striking

22 ‘‘shall’’ and all that follows and inserting

23 the following: ‘‘shall be the amount deter24 mined under paragraph (3), adjusted as

25 required in accordance with subsections
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1 (b), (c), and (f), and to reflect 80 percent

2 of any reduction elected under section

3 1854(f)(1)(E).’’.

4 (ii) PAYMENT OF PREMIUMS.—Section

5 1840 (42 U.S.C. 1395s) is amended by

6 adding at the end the following new sub7 section:

8 ‘‘(i) In the case of an individual enrolled in a

9 Medicare+Choice plan, the Secretary shall provide for

10 necessary adjustments of the monthly beneficiary pre11 mium to reflect 80 percent of any reduction elected under

12 section 1854(f)(1)(E). This premium adjustment may be

13 provided directly or as an adjustment to any social secu14 rity, railroad retirement, and civil service retirement bene15 fits, to the extent which the Secretary determines that

16 such an adjustment is appropriate with the concurrence

17 of the agencies responsible for the administration of such

18 benefits.’’.

19 (C) INFORMATION COMPARING PLAN PRE20 MIUMS UNDER PART C.—Section 1851(d)(4)(B)

21 (42 U.S.C. 1395w–21(d)(4)(B)) is amended—

22 (i) by striking ‘‘PREMIUMS.—The’’

23 and inserting ‘‘PREMIUMS.—

24 ‘‘(i) IN GENERAL.—The’’; and
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1 (ii) by adding at the end the following

2 new clause:

3 ‘‘(ii) REDUCTIONS.—The reduction in

4 part B premiums, if any.’’.

5 (D) TREATMENT OF REDUCTION FOR PUR6 POSES OF DETERMINING GOVERNMENT CON7 TRIBUTION UNDER PART B.—Section 1844 (42

8 U.S.C. 1395w) is amended by adding at the

9 end the following new subsection:

10 ‘‘(c) The Secretary shall determine the Government

11 contribution under subparagraphs (A) and (B) of sub12 section (a)(1) without regard to any premium reduction

13 resulting from an election under section 1854(f)(1)(E).’’.

14 (b) EFFECTIVE DATE.—The amendments made by

15 subsection (a) shall apply to years beginning with 2002.

16 SEC. 607. FULL IMPLEMENTATION OF RISK ADJUSTMENT

17 FOR CONGESTIVE HEART FAILURE ENROLL18 EES FOR 2001.

19 (a) IN GENERAL.—Section 1853(a)(3)(C) (42 U.S.C.

20 1395w–23(a)(3)(C)) is amended—

21 (1) in clause (ii), by striking ‘‘Such risk adjust22 ment’’ and inserting ‘‘Except as provided in clause

23 (iii), such risk adjustment’’; and

24 (2) by adding at the end the following new

25 clause:
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1 ‘‘(iii) FULL IMPLEMENTATION OF

2 RISK ADJUSTMENT FOR CONGESTIVE

3 HEART FAILURE ENROLLEES FOR 2001.—

4 ‘‘(I) EXEMPTION FROM PHASE5 IN.—Subject to subclause (II), the

6 Secretary shall fully implement the

7 risk adjustment methodology de8 scribed in clause (i) with respect to

9 each individual who has had a quali10 fying congestive heart failure inpa11 tient diagnosis (as determined by the

12 Secretary under such risk adjustment

13 methodology) during the period begin14 ning on July 1, 1999, and ending on

15 June 30, 2000, and who is enrolled in

16 a coordinated care plan that is the

17 only coordinated care plan offered on

18 January 1, 2001, in the service area

19 of the individual.

20 ‘‘(II) PERIOD OF APPLICATION.—

21 Subclause (I) shall only apply during

22 the 1-year period beginning on Janu23 ary 1, 2001.’’.

24 (b) EXCLUSION FROM DETERMINATION OF THE

25 BUDGET NEUTRALITY FACTOR.—Section 1853(c)(5) (42
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1 U.S.C. 1395w–23(c)(5)) is amended by striking ‘‘sub2 section (i)’’ and inserting ‘‘subsections (a)(3)(C)(iii) and

3 (i)’’.

4 SEC. 608. EXPANSION OF APPLICATION OF

5 MEDICARE+CHOICE NEW ENTRY BONUS.

6 (a) IN GENERAL.—Section 1853(i)(1) (42 U.S.C.

7 1395w–23(i)(1)) is amended in the matter preceding sub8 paragraph (A) by inserting ‘‘, or filed notice with the Sec9 retary as of October 3, 2000, that they will not be offering

10 such a plan as of January 1, 2001’’ after ‘‘January 1,

11 2000’’.

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

13 subsection (a) shall apply as if included in the enactment

14 of BBRA.

15 SEC. 609. REPORT ON INCLUSION OF CERTAIN COSTS OF

16 THE DEPARTMENT OF VETERANS AFFAIRS

17 AND MILITARY FACILITY SERVICES IN CAL18 CULATING MEDICARE+CHOICE PAYMENT

19 RATES.

20 The Secretary of Health and Human Services shall

21 report to Congress by not later than January 1, 2003,

22 on a method to phase-in the costs of military facility serv23 ices furnished by the Department of Veterans Affairs, and

24 the costs of military facility services furnished by the De25 partment of Defense, to medicare-eligible beneficiaries in
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1 the calculation of an area’s Medicare+Choice capitation

2 payment. Such report shall include on a county-by-county

3 basis—

4 (1) the actual or estimated cost of such services

5 to medicare-eligible beneficiaries;

6 (2) the change in Medicare+Choice capitation

7 payment rates if such costs are included in the cal8 culation of payment rates;

9 (3) one or more proposals for the implementa10 tion of payment adjustments to Medicare+Choice

11 plans in counties where the payment rate has been

12 affected due to the failure to calculate the cost of

13 such services to medicare-eligible beneficiaries; and

14 (4) a system to ensure that when a

15 Medicare+Choice enrollee receives covered services

16 through a facility of the Department of Veterans Af17 fairs or the Department of Defense there is an ap18 propriate payment recovery to the medicare program

19 under title XVIII of the Social Security Act.
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1 Subtitle B—Other Medicare+Choice

2 Reforms

3 SEC. 611. PAYMENT OF ADDITIONAL AMOUNTS FOR NEW

4 BENEFITS COVERED DURING A CONTRACT

5 TERM.

6 (a) IN GENERAL.—Section 1853(c)(7) (42 U.S.C.

7 1395w–23(c)(7)) is amended to read as follows:

8 ‘‘(7) ADJUSTMENT FOR NATIONAL COVERAGE

9 DETERMINATIONS AND LEGISLATIVE CHANGES IN

10 BENEFITS.—If the Secretary makes a determination

11 with respect to coverage under this title or there is

12 a change in benefits required to be provided under

13 this part that the Secretary projects will result in a

14 significant increase in the costs to Medicare+Choice

15 of providing benefits under contracts under this part

16 (for periods after any period described in section

17 1852(a)(5)), the Secretary shall adjust appropriately

18 the payments to such organizations under this part.

19 Such projection and adjustment shall be based on an

20 analysis by the Chief Actuary of the Health Care Fi21 nancing Administration of the actuarial costs associ22 ated with the new benefits.’’.

23 (b) CONFORMING AMENDMENT.—Section 1852(a)(5)

24 (42 U.S.C. 1395w–22(a)(5)) is amended—
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1 (1) in the heading, by inserting ‘‘AND LEGISLA2 TIVE CHANGES IN BENEFITS’’ after ‘‘NATIONAL COV3 ERAGE DETERMINATIONS’’;

4 (2) by inserting ‘‘or legislative change in bene5 fits required to be provided under this part’’ after

6 ‘‘national coverage determination’’;

7 (3) in subparagraph (A), by inserting ‘‘or legis8 lative change in benefits’’ after ‘‘such determina9 tion’’;

10 (4) in subparagraph (B), by inserting ‘‘or legis11 lative change’’ after ‘‘if such coverage determina12 tion’’; and

13 (5) by adding at the end the following:

14 ‘‘The projection under the previous sentence shall be

15 based on an analysis by the Chief Actuary of the

16 Health Care Financing Administration of the actu17 arial costs associated with the coverage determina18 tion or legislative change in benefits.’’.

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

20 this section are effective on the date of the enactment of

21 this Act and apply to national coverage determinations

22 and legislative changes in benefits occurring on or after

23 such date.
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1 SEC. 612. RESTRICTION ON IMPLEMENTATION OF SIGNIFI2 CANT NEW REGULATORY REQUIREMENTS

3 MIDYEAR.

4 (a) IN GENERAL.—Section 1856(b) (42 U.S.C.

5 1395w–26(b)) is amended by adding at the end the fol6 lowing new paragraph:

7 ‘‘(4) PROHIBITION OF MIDYEAR IMPLEMENTA8 TION OF SIGNIFICANT NEW REGULATORY REQUIRE9 MENTS.—The Secretary may not implement, other

10 than at the beginning of a calendar year, regulations

11 under this section that impose new, significant regu12 latory requirements on a Medicare+Choice organiza13 tion or plan.’’.

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

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

16 of this Act.

17 SEC. 613. TIMELY APPROVAL OF MARKETING MATERIAL

18 THAT FOLLOWS MODEL MARKETING LAN19 GUAGE.

20 (a) IN GENERAL.—Section 1851(h) (42 U.S.C.

21 1395w–21(h)) is amended—

22 (1) in paragraph (1)(A), by inserting ‘‘(or 10

23 days in the case described in paragraph (5))’’ after

24 ‘‘45 days’’; and

25 (2) by adding at the end the following new

26 paragraph:
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1 ‘‘(5) SPECIAL TREATMENT OF MARKETING MA2 TERIAL FOLLOWING MODEL MARKETING LAN3 GUAGE.—In the case of marketing material of an or4 ganization that uses, without modification, proposed

5 model language specified by the Secretary, the pe6 riod specified in paragraph (1)(A) shall be reduced

7 from 45 days to 10 days.’’.

8 (b) EFFECTIVE DATE.—The amendments made by

9 subsection (a) apply to marketing material submitted on

10 or after January 1, 2001.

11 SEC. 614. AVOIDING DUPLICATIVE REGULATION.

12 (a) IN GENERAL.—Section 1856(b)(3)(B) (42 U.S.C.

13 1395w–26(b)(3)(B)) is amended—

14 (1) in clause (i), by inserting ‘‘(including cost15 sharing requirements)’’ after ‘‘Benefit require16 ments’’; and

17 (2) by adding at the end the following new

18 clause:

19 ‘‘(iv) Requirements relating to mar20 keting materials and summaries and sched21 ules of benefits regarding a

22 Medicare+Choice plan.’’.

23 (b) EFFECTIVE DATE.—The amendments made by

24 subsection (a) take effect on the date of the enactment

25 of this Act.
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1 SEC. 615. ELECTION OF UNIFORM LOCAL COVERAGE POL2 ICY FOR MEDICARE+CHOICE PLAN COVERING

3 MULTIPLE LOCALITIES.

4 Section 1852(a)(2) (42 U.S.C. 1395w–22(a)(2)) is

5 amended by adding at the end the following new subpara6 graph:

7 ‘‘(C) ELECTION OF UNIFORM COVERAGE

8 POLICY.—In the case of a Medicare+Choice or9 ganization that offers a Medicare+Choice plan

10 in an area in which more than one local cov11 erage policy is applied with respect to different

12 parts of the area, the organization may elect to

13 have the local coverage policy for the part of

14 the area that is most beneficial to

15 Medicare+Choice enrollees (as identified by the

16 Secretary) apply with respect to all

17 Medicare+Choice enrollees enrolled in the

18 plan.’’.

19 SEC. 616. ELIMINATING HEALTH DISPARITIES IN

20 MEDICARE+CHOICE PROGRAM.

21 (a) QUALITY ASSURANCE PROGRAM FOCUS ON RA22 CIAL AND ETHNIC MINORITIES.—Subparagraphs (A) and

23 (B) of section 1852(e)(2) (42 U.S.C. 1395w–22(e)(2)) are

24 each amended by adding at the end the following:

25 ‘‘Such program shall include a separate focus

26 (with respect to all the elements described in
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1 this subparagraph) on racial and ethnic minori2 ties.’’.

3 (b) REPORT.—Section 1852(e) (42 U.S.C. 1395w–

4 22(e)) is amended by adding at the end the following new

5 paragraph:

6 ‘‘(5) REPORT TO CONGRESS.—

7 ‘‘(A) IN GENERAL.—Not later than 2 years

8 after the date of the enactment of this para9 graph, and biennially thereafter, the Secretary

10 shall submit to Congress a report regarding

11 how quality assurance programs conducted

12 under this subsection focus on racial and ethnic

13 minorities.

14 ‘‘(B) CONTENTS OF REPORT.—Each such

15 report shall include the following:

16 ‘‘(i) A description of the means by

17 which such programs focus on such racial

18 and ethnic minorities.

19 ‘‘(ii) An evaluation of the impact of

20 such programs on eliminating health dis21 parities and on improving health outcomes,

22 continuity and coordination of care, man23 agement of chronic conditions, and con24 sumer satisfaction.
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1 ‘‘(iii) Recommendations on ways to re2 duce clinical outcome disparities among ra3 cial and ethnic minorities.’’.

4 SEC. 617. MEDICARE+CHOICE PROGRAM COMPATIBILITY

5 WITH EMPLOYER OR UNION GROUP HEALTH

6 PLANS.

7 (a) IN GENERAL.—Section 1857 (42 U.S.C. 1395w–

8 27) is amended by adding at the end the following new

9 subsection:

10 ‘‘(i) MEDICARE+CHOICE PROGRAM COMPATIBILITY

11 WITH EMPLOYER OR UNION GROUP HEALTH PLANS.—

12 To facilitate the offering of Medicare+Choice plans under

13 contracts between Medicare+Choice organizations and

14 employers, labor organizations, or the trustees of a fund

15 established by 1 or more employers or labor organizations

16 (or combination thereof) to furnish benefits to the entity’s

17 employees, former employees (or combination thereof) or

18 members or former members (or combination thereof) of

19 the labor organizations, the Secretary may waive or mod20 ify requirements that hinder the design of, the offering

21 of, or the enrollment in such Medicare+Choice plans.’’.

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

23 subsection (a) applies with respect to years beginning with

24 2001.
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1 SEC. 618. SPECIAL MEDIGAP ENROLLMENT ANTIDISCRIMI2 NATION PROVISION FOR CERTAIN BENE3 FICIARIES.

4 (a) DISENROLLMENT WINDOW IN ACCORDANCE

5 WITH BENEFICIARY’S CIRCUMSTANCE.—Section

6 1882(s)(3) (42 U.S.C. 1395ss(s)(3)) is amended—

7 (1) in subparagraph (A), in the matter fol8 lowing clause (iii), by striking ‘‘, subject to subpara9 graph (E), seeks to enroll under the policy not later

10 than 63 days after the date of the termination of en11 rollment described in such subparagraph’’ and in12 serting ‘‘seeks to enroll under the policy during the

13 period specified in subparagraph (E)’’; and

14 (2) by striking subparagraph (E) and inserting

15 the following new subparagraph:

16 ‘‘(E) For purposes of subparagraph (A), the time pe17 riod specified in this subparagraph is—

18 ‘‘(i) in the case of an individual described in

19 subparagraph (B)(i), the period beginning on the

20 date the individual receives a notice of termination

21 or cessation of all supplemental health benefits (or,

22 if no such notice is received, notice that a claim has

23 been denied because of such a termination or ces24 sation) and ending on the date that is 63 days after

25 the applicable notice;
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1 ‘‘(ii) in the case of an individual described in

2 clause (ii), (iii), (v), or (vi) of subparagraph (B)

3 whose enrollment is terminated involuntarily, the pe4 riod beginning on the date that the individual re5 ceives a notice of termination and ending on the

6 date that is 63 days after the date the applicable

7 coverage is terminated;

8 ‘‘(iii) in the case of an individual described in

9 subparagraph (B)(iv)(I), the period beginning on the

10 earlier of (I) the date that the individual receives a

11 notice of termination, a notice of the issuer’s bank12 ruptcy or insolvency, or other such similar notice, if

13 any, and (II) the date that the applicable coverage

14 is terminated, and ending on the date that is 63

15 days after the date the coverage is terminated;

16 ‘‘(iv) in the case of an individual described in

17 clause (ii), (iii), (iv)(II), (iv)(III), (v), or (vi) of sub18 paragraph (B) who disenrolls voluntarily, the period

19 beginning on the date that is 60 days before the ef20 fective date of the disenrollment and ending on the

21 date that is 63 days after such effective date; and

22 ‘‘(v) in the case of an individual described in

23 subparagraph (B) but not described in the preceding

24 provisions of this subparagraph, the period begin25 ning on the effective date of the disenrollment and
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1 ending on the date that is 63 days after such effec2 tive date.’’.

3 (b) EXTENDED MEDIGAP ACCESS FOR INTERRUPTED

4 TRIAL PERIODS.—Section 1882(s)(3) (42 U.S.C.

5 1395ss(s)(3)), as amended by subsection (a), is further

6 amended by adding at the end the following new subpara7 graph:

8 ‘‘(F)(i) Subject to clause (ii), for purposes of this

9 paragraph—

10 ‘‘(I) in the case of an individual described in

11 subparagraph (B)(v) (or deemed to be so described,

12 pursuant to this subparagraph) whose enrollment

13 with an organization or provider described in sub14 clause (II) of such subparagraph is involuntarily ter15 minated within the first 12 months of such enroll16 ment, and who, without an intervening enrollment,

17 enrolls with another such organization or provider,

18 such subsequent enrollment shall be deemed to be an

19 initial enrollment described in such subparagraph;

20 and

21 ‘‘(II) in the case of an individual described in

22 clause (vi) of subparagraph (B) (or deemed to be so

23 described, pursuant to this subparagraph) whose en24 rollment with a plan or in a program described in

25 such clause is involuntarily terminated within the
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1 first 12 months of such enrollment, and who, with2 out an intervening enrollment, enrolls in another

3 such plan or program, such subsequent enrollment

4 shall be deemed to be an initial enrollment described

5 in such clause.

6 ‘‘(ii) For purposes of clauses (v) and (vi) of subpara7 graph (B), no enrollment of an individual with an organi8 zation or provider described in clause (v)(II), or with a

9 plan or in a program described in clause (vi), may be

10 deemed to be an initial enrollment under this clause after

11 the 2-year period beginning on the date on which the indi12 vidual first enrolled with such an organization, provider,

13 plan, or program.’’.

14 SEC. 619. RESTORING EFFECTIVE DATE OF ELECTIONS AND

15 CHANGES OF ELECTIONS OF

16 MEDICARE+CHOICE PLANS.

17 (a) OPEN ENROLLMENT.—Section 1851(f)(2) (42

18 U.S.C. 1395w–21(f)(2)) is amended by striking ‘‘, except

19 that if such election or change is made after the 10th day

20 of any calendar month, then the election or change shall

21 not take effect until the first day of the second calendar

22 month following the date on which the election or change

23 is made’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to elections and changes of cov3 erage made on or after January 1, 2001.

4 SEC. 620. PERMITTING ESRD BENEFICIARIES TO ENROLL

5 IN ANOTHER MEDICARE+CHOICE PLAN IF

6 THE PLAN IN WHICH THEY ARE ENROLLED IS

7 TERMINATED.

8 (a) IN GENERAL.—Section 1851(a)(3)(B) (42 U.S.C.

9 1395w–21(a)(3)(B)) is amended by striking ‘‘except that’’

10 and all that follows and inserting the following: ‘‘except

11 that—

12 ‘‘(i) an individual who develops end13 stage renal disease while enrolled in a

14 Medicare+Choice plan may continue to be

15 enrolled in that plan; and

16 ‘‘(ii) in the case of such an individual

17 who is enrolled in a Medicare+Choice plan

18 under clause (i) (or subsequently under

19 this clause), if the enrollment is discon20 tinued under circumstances described in

21 section 1851(e)(4)(A), then the individual

22 will be treated as a ‘Medicare+Choice eli23 gible individual’ for purposes of electing to

24 continue enrollment in another

25 Medicare+Choice plan.’’.
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1 (b) EFFECTIVE DATE.—

2 (1) IN GENERAL.—The amendment made by

3 subsection (a) shall apply to terminations and

4 discontinuations occurring on or after the date of

5 the enactment of this Act.

6 (2) APPLICATION TO PRIOR PLAN TERMI7 NATIONS.—Clause (ii) of section 1851(a)(3)(B) of

8 the Social Security Act (as inserted by subsection

9 (a)) also shall apply to individuals whose enrollment

10 in a Medicare+Choice plan was terminated or dis11 continued after December 31, 1998, and before the

12 date of the enactment of this Act. In applying this

13 paragraph, such an individual shall be treated, for

14 purposes of part C of title XVIII of the Social Secu15 rity Act, as having discontinued enrollment in such

16 a plan as of the date of the enactment of this Act.

17 SEC. 621. PROVIDING CHOICE FOR SKILLED NURSING FA18 CILITY SERVICES UNDER THE

19 MEDICARE+CHOICE PROGRAM.

20 (a) IN GENERAL.—Section 1852 (42 U.S.C. 1395w–

21 22) is amended by adding at the end the following new

22 subsection:

23 ‘‘(l) RETURN TO HOME SKILLED NURSING FACILI24 TIES FOR COVERED POST-HOSPITAL EXTENDED CARE

25 SERVICES.—
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1 ‘‘(1) ENSURING RETURN TO HOME SNF.—

2 ‘‘(A) IN GENERAL.—In providing coverage

3 of post-hospital extended care services, a

4 Medicare+Choice plan shall provide for such

5 coverage through a home skilled nursing facility

6 if the following conditions are met:

7 ‘‘(i) ENROLLEE ELECTION.—The en8 rollee elects to receive such coverage

9 through such facility.

10 ‘‘(ii) SNF AGREEMENT.—The facility

11 has a contract with the Medicare+Choice

12 organization for the provision of such serv13 ices, or the facility agrees to accept sub14 stantially similar payment under the same

15 terms and conditions that apply to simi16 larly situated skilled nursing facilities that

17 are under contract with the

18 Medicare+Choice organization for the pro19 vision of such services and through which

20 the enrollee would otherwise receive such

21 services.

22 ‘‘(B) MANNER OF PAYMENT TO HOME

23 SNF.—The organization shall provide payment

24 to the home skilled nursing facility consistent
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1 with the contract or the agreement described in

2 subparagraph (A)(ii), as the case may be.

3 ‘‘(2) NO LESS FAVORABLE COVERAGE.—The

4 coverage provided under paragraph (1) (including

5 scope of services, cost-sharing, and other criteria of

6 coverage) shall be no less favorable to the enrollee

7 than the coverage that would be provided to the en8 rollee with respect to a skilled nursing facility the

9 post-hospital extended care services of which are

10 otherwise covered under the Medicare+Choice plan.

11 ‘‘(3) RULE OF CONSTRUCTION.—Nothing in

12 this subsection shall be construed to do the fol13 lowing:

14 ‘‘(A) To require coverage through a skilled

15 nursing facility that is not otherwise qualified

16 to provide benefits under part A for medicare

17 beneficiaries not enrolled in a Medicare+Choice

18 plan.

19 ‘‘(B) To prevent a skilled nursing facility

20 from refusing to accept, or imposing conditions

21 upon the acceptance of, an enrollee for the re22 ceipt of post-hospital extended care services.

23 ‘‘(4) DEFINITIONS.—In this subsection:

24 ‘‘(A) HOME SKILLED NURSING FACIL25 ITY.—The term ‘home skilled nursing facility’
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1 means, with respect to an enrollee who is enti2 tled to receive post-hospital extended care serv3 ices under a Medicare+Choice plan, any of the

4 following skilled nursing facilities:

5 ‘‘(i) SNF RESIDENCE AT TIME OF AD6 MISSION.—The skilled nursing facility in

7 which the enrollee resided at the time of

8 admission to the hospital preceding the re9 ceipt of such post-hospital extended care

10 services.

11 ‘‘(ii) SNF IN CONTINUING CARE RE12 TIREMENT COMMUNITY.—A skilled nursing

13 facility that is providing such services

14 through a continuing care retirement com15 munity (as defined in subparagraph (B))

16 which provided residence to the enrollee at

17 the time of such admission.

18 ‘‘(iii) SNF RESIDENCE OF SPOUSE AT

19 TIME OF DISCHARGE.—The skilled nursing

20 facility in which the spouse of the enrollee

21 is residing at the time of discharge from

22 such hospital.

23 ‘‘(B) CONTINUING CARE RETIREMENT

24 COMMUNITY.—The term ‘continuing care retire25 ment community’ means, with respect to an en-
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1 rollee in a Medicare+Choice plan, an arrange2 ment under which housing and health-related

3 services are provided (or arranged) through an

4 organization for the enrollee under an agree5 ment that is effective for the life of the enrollee

6 or for a specified period.’’.

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

8 subsection (a) applies with respect to contracts entered

9 into or renewed on or after the date of the enactment of

10 this Act.

11 (c) MEDPAC STUDY.—

12 (1) STUDY.—The Medicare Payment Advisory

13 Commission shall conduct a study analyzing the ef14 fects of the amendment made by subsection (a) on

15 Medicare+Choice organizations. In conducting such

16 study, the Commission shall examine the effects (if

17 any) such amendment has had on—

18 (A) the scope of additional benefits pro19 vided under the Medicare+Choice program;

20 (B) the administrative and other costs in21 curred by Medicare+Choice organizations;

22 (C) the contractual relationships between

23 such organizations and skilled nursing facilities.

24 (2) REPORT.—Not later than 2 years after the

25 date of the enactment of this Act, the Commission
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1 shall submit to Congress a report on the study con2 ducted under paragraph (1).

3 SEC. 622. PROVIDING FOR ACCOUNTABILITY OF

4 MEDICARE+CHOICE PLANS.

5 (a) MANDATORY REVIEW OF ACR SUBMISSIONS BY

6 THE CHIEF ACTUARY OF THE HEALTH CARE FINANCING

7 ADMINISTRATION.—Section 1854(a)(5)(A) (42 U.S.C.

8 1395w–24(a)(5)(A)) is amended—

9 (1) by striking ‘‘value’’ and inserting ‘‘values’’;

10 and

11 (2) by adding at the end the following: ‘‘The

12 Chief Actuary of the Health Care Financing Admin13 istration shall review the actuarial assumptions and

14 data used by the Medicare+Choice organization with

15 respect to such rates, amounts, and values so sub16 mitted to determine the appropriateness of such as17 sumptions and data.’’.

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

19 subsection (a) applies to submissions made on or after

20 January 1, 2001.
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1 Subtitle C—Other Managed Care

2 Reforms

3 SEC. 631. 1-YEAR EXTENSION OF SOCIAL HEALTH MAINTE4 NANCE ORGANIZATION (SHMO) DEMONSTRA5 TION PROJECT.

6 Section 4018(b)(1) of the Omnibus Budget Reconcili7 ation Act of 1987, as amended by section 531(a)(1) of

8 BBRA (113 Stat. 1501A–388), is amended by striking

9 ‘‘18 months’’ and inserting ‘‘30 months’’.

10 SEC. 632. REVISED TERMS AND CONDITIONS FOR EXTEN11 SION OF MEDICARE COMMUNITY NURSING

12 ORGANIZATION (CNO) DEMONSTRATION

13 PROJECT.

14 (a) IN GENERAL.—Section 532 of BBRA (113 Stat.

15 1501A–388) is amended—

16 (1) in subsection (a), by striking the second

17 sentence; and

18 (2) by striking subsection (b) and inserting the

19 following new subsection:

20 ‘‘(b) TERMS AND CONDITIONS.—

21 ‘‘(1) JANUARY THROUGH SEPTEMBER 2000.—

22 For the 9-month period beginning with January

23 2000, any such demonstration project shall be con24 ducted under the same terms and conditions as ap25 plied to such demonstration during 1999.
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1 ‘‘(2) OCTOBER 2000 THROUGH DECEMBER

2 2001.—For the 15-month period beginning with Oc3 tober 2000, any such demonstration project shall be

4 conducted under the same terms and conditions as

5 applied to such demonstration during 1999, except

6 that the following modifications shall apply:

7 ‘‘(A) BASIC CAPITATION RATE.—The basic

8 capitation rate paid for services covered under

9 the project (other than case management serv10 ices) per enrollee per month and furnished

11 during—

12 ‘‘(i) the period beginning with October

13 1, 2000, and ending with December 31,

14 2000, shall be determined by actuarially

15 adjusting the actual capitation rate paid

16 for such services in 1999 for inflation, uti17 lization, and other changes to the CNO

18 service package, and by reducing such ad19 justed capitation rate by 10 percent in the

20 case of the demonstration sites located in

21 Arizona, Minnesota, and Illinois, and 15

22 percent for the demonstration site located

23 in New York; and

24 ‘‘(ii) 2001 shall be determined by ac25 tuarially adjusting the capitation rate de-
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1 termined under clause (i) for inflation, uti2 lization, and other changes to the CNO

3 service package.

4 ‘‘(B) TARGETED CASE MANAGEMENT

5 FEE.—Effective October 1, 2000—

6 ‘‘(i) the case management fee per en7 rollee per month for—

8 ‘‘(I) the period described in sub9 paragraph (A)(i) shall be determined

10 by actuarially adjusting the case man11 agement fee for 1999 for inflation;

12 and

13 ‘‘(II) 2001 shall be determined

14 by actuarially adjusting the amount

15 determined under subclause (I) for in16 flation; and

17 ‘‘(ii) such case management fee shall

18 be paid only for enrollees who are classified

19 as moderately frail or frail pursuant to cri20 teria established by the Secretary.

21 ‘‘(C) GREATER UNIFORMITY IN CLINICAL

22 FEATURES AMONG SITES.—Each project shall

23 implement for each site—

24 ‘‘(i) protocols for periodic telephonic

25 contact with enrollees based on—
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1 ‘‘(I) the results of such standard2 ized written health assessment; and

3 ‘‘(II) the application of appro4 priate care planning approaches;

5 ‘‘(ii) disease management programs

6 for targeted diseases (such as congestive

7 heart failure, arthritis, diabetes, and hy8 pertension) that are highly prevalent in the

9 enrolled populations;

10 ‘‘(iii) systems and protocols to track

11 enrollees through hospitalizations, includ12 ing pre-admission planning, concurrent

13 management during inpatient hospital

14 stays, and post-discharge assessment, plan15 ning, and follow-up; and

16 ‘‘(iv) standardized patient educational

17 materials for specified diseases and health

18 conditions.

19 ‘‘(D) QUALITY IMPROVEMENT.—Each

20 project shall implement at each site once during

21 the 15-month period—

22 ‘‘(i) enrollee satisfaction surveys; and

23 ‘‘(ii) reporting on specified quality in24 dicators for the enrolled population.

25 ‘‘(c) EVALUATION.—
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1 ‘‘(1) PRELIMINARY REPORT.—Not later than

2 July 1, 2001, the Secretary of Health and Human

3 Services shall submit to the Committees on Ways

4 and Means and Commerce of the House of Rep5 resentatives and the Committee on Finance of the

6 Senate a preliminary report that—

7 ‘‘(A) evaluates such demonstration projects

8 for the period beginning July 1, 1997, and end9 ing December 31, 1999, on a site-specific basis

10 with respect to the impact on per beneficiary

11 spending, specific health utilization measures,

12 and enrollee satisfaction; and

13 ‘‘(B) includes a similar evaluation of such

14 projects for the portion of the extension period

15 that occurs after September 30, 2000.

16 ‘‘(2) FINAL REPORT.—The Secretary shall sub17 mit a final report to such Committees on such dem18 onstration projects not later than July 1, 2002.

19 Such report shall include the same elements as the

20 preliminary report required by paragraph (1), but

21 for the period after December 31, 1999.

22 ‘‘(3) METHODOLOGY FOR SPENDING COMPARI23 SONS.—Any evaluation of the impact of the dem24 onstration projects on per beneficiary spending in-
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1 cluded in such reports shall include a comparison

2 of—

3 ‘‘(A) data for all individuals who—

4 ‘‘(i) were enrolled in such demonstra5 tion projects as of the first day of the pe6 riod under evaluation; and

7 ‘‘(ii) were enrolled for a minimum of

8 6 months thereafter; with

9 ‘‘(B) data for a matched sample of individ10 uals who are enrolled under part B of title

11 XVIII of the Social Security Act and are not

12 enrolled in such a project, or in a

13 Medicare+Choice plan under part C of such

14 title, a plan offered by an eligible organization

15 under section 1876 of such Act, or a health

16 care prepayment plan under section

17 1833(a)(1)(A) of such Act.’’.

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

19 subsection (a) shall be effective as if included in the enact20 ment of section 532 of BBRA (113 Stat. 1501A–388).

21 SEC. 633. EXTENSION OF MEDICARE MUNICIPAL HEALTH

22 SERVICES DEMONSTRATION PROJECTS.

23 Section 9215(a) of the Consolidated Omnibus Budget

24 Reconciliation Act of 1985 (42 U.S.C. 1395b–1 note), as

25 amended by section 6135 of the Omnibus Budget Rec-
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1 onciliation Act of 1989, section 13557 of the Omnibus

2 Budget Reconciliation Act of 1993, section 4017 of BBA,

3 and section 534 of BBRA (113 Stat. 1501A–390), is

4 amended by striking ‘‘December 31, 2002’’ and inserting

5 ‘‘December 31, 2004’’.

6 SEC. 634. SERVICE AREA EXPANSION FOR MEDICARE COST

7 CONTRACTS DURING TRANSITION PERIOD.

8 Section 1876(h)(5) (42 U.S.C. 1395mm(h)(5)) is

9 amended—

10 (1) by redesignating subparagraph (B) as sub11 paragraph (C); and

12 (2) by inserting after subparagraph (A), the fol13 lowing new subparagraph:

14 ‘‘(B) Subject to subparagraph (C), the Secretary

15 shall approve an application for a modification to a rea16 sonable cost contract under this section in order to expand

17 the service area of such contract if—

18 ‘‘(i) such application is submitted to the Sec19 retary on or before September 1, 2003; and

20 ‘‘(ii) the Secretary determines that the organi21 zation with the contract continues to meet the re22 quirements applicable to such organizations and con23 tracts under this section.’’.
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1 TITLE VII—MEDICAID

2 SEC. 701. DSH PAYMENTS.

3 (a) MODIFICATIONS TO DSH ALLOTMENTS.—

4 (1) INCREASED ALLOTMENTS FOR FISCAL

5 YEARS 2001 AND 2002.—

6 (A) IN GENERAL.—Section 1923(f) (42

7 U.S.C. 1396r–4(f))) is amended—

8 (i) in paragraph (2), by striking ‘‘The

9 DSH allotment’’ and inserting ‘‘Subject to

10 paragraph (4), the DSH allotment’’;

11 (ii) by redesignating paragraph (4) as

12 paragraph (6); and

13 (iii) by inserting after paragraph (3)

14 the following new paragraph:

15 ‘‘(4) SPECIAL RULE FOR FISCAL YEARS 2001

16 AND 2002.—

17 ‘‘(A) IN GENERAL.—Notwithstanding para18 graph (2), the DSH allotment for any State

19 for—

20 ‘‘(i) fiscal year 2001, shall be the

21 DSH allotment determined under para22 graph (2) for fiscal year 2000 increased,

23 subject to subparagraph (B) and para24 graph (5), by the percentage change in the

25 consumer price index for all urban con-
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1 sumers (all items; U.S. city average) for

2 fiscal year 2000; and

3 ‘‘(ii) fiscal year 2002, shall be the

4 DSH allotment determined under clause

5 (i) increased, subject to subparagraph (B)

6 and paragraph (5), by the percentage

7 change in the consumer price index for all

8 urban consumers (all items; U.S. city aver9 age) for fiscal year 2001.

10 ‘‘(B) LIMITATION.—Subparagraph (B) of

11 paragraph (3) shall apply to subparagraph (A)

12 of this paragraph in the same manner as that

13 subparagraph (B) applies to paragraph (3)(A).

14 ‘‘(C) NO APPLICATION TO ALLOTMENTS

15 AFTER FISCAL YEAR 2002.—The DSH allotment

16 for any State for fiscal year 2003 or any suc17 ceeding fiscal year shall be determined under

18 paragraph (3) without regard to the DSH allot19 ments determined under subparagraph (A) of

20 this paragraph.’’.

21 (2) SPECIAL RULE FOR MEDICAID DSH ALLOT22 MENT FOR EXTREMELY LOW DSH STATES.—

23 (A) IN GENERAL.—Section 1923(f) (42

24 U.S.C. 1396r–4(f)), as amended by paragraph
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1 (1), is amended by inserting after paragraph

2 (4) the following new paragraph:

3 ‘‘(5) SPECIAL RULE FOR EXTREMELY LOW DSH

4 STATES.—In the case of a State in which the total

5 expenditures under the State plan (including Federal

6 and State shares) for disproportionate share hospital

7 adjustments under this section for fiscal year 1999,

8 as reported to the Administrator of the Health Care

9 Financing Administration as of August 31, 2000, is

10 greater than 0 but less than 1 percent of the State’s

11 total amount of expenditures under the State plan

12 for medical assistance during the fiscal year, the

13 DSH allotment for fiscal year 2001 shall be in14 creased to 1 percent of the State’s total amount of

15 expenditures under such plan for such assistance

16 during such fiscal year. In subsequent fiscal years,

17 such increased allotment is subject to an increase for

18 inflation as provided in paragraph (3)(A).’’.

19 (B) CONFORMING AMENDMENT.—Section

20 1923(f)(3)(A) (42 U.S.C. 1396r–4(f)(3)(A)) is

21 amended by inserting ‘‘and paragraph (5)’’

22 after ‘‘subparagraph (B)’’.

23 (3) EFFECTIVE DATE.—The amendments made

24 by paragraphs (1) and (2) take effect on the date

25 the final regulation required under section 705(a)
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1 (relating to the application of an aggregate upper

2 payment limit test for State medicaid spending for

3 inpatient hospital services, outpatient hospital serv4 ices, nursing facility services, intermediate care facil5 ity services for the mentally retarded, and clinic

6 services provided by government facilities that are

7 not State-owned or operated facilities) is published

8 in the Federal Register.

9 (b) ASSURING IDENTIFICATION OF MEDICAID MAN10 AGED CARE PATIENTS.—

11 (1) IN GENERAL.—Section 1932 (42 U.S.C.

12 1396u–2) is amended by adding at the end the fol13 lowing new subsection:

14 ‘‘(g) IDENTIFICATION OF PATIENTS FOR PURPOSES

15 OF MAKING DSH PAYMENTS.—Each contract with a

16 managed care entity under section 1903(m) or under sec17 tion 1905(t)(3) shall require the entity either—

18 ‘‘(1) to report to the State information nec19 essary to determine the hospital services provided

20 under the contract (and the identity of hospitals pro21 viding such services) for purposes of applying sec22 tions 1886(d)(5)(F) and 1923; or

23 ‘‘(2) to include a sponsorship code in the identi24 fication card issued to individuals covered under this
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1 title in order that a hospital may identify a patient

2 as being entitled to benefits under this title.’’.

3 (2) CLARIFICATION OF COUNTING MANAGED

4 CARE MEDICAID PATIENTS.—Section 1923 (42

5 U.S.C. 1396r–4) is amended—

6 (A) in subsection (a)(2)(D), by inserting

7 after ‘‘the proportion of low-income and med8 icaid patients’’ the following: ‘‘(including such

9 patients who receive benefits through a man10 aged care entity)’’;

11 (B) in subsection (b)(2), by inserting after

12 ‘‘a State plan approved under this title in a pe13 riod’’ the following: ‘‘(regardless of whether

14 such patients receive medical assistance on a

15 fee-for-service basis or through a managed care

16 entity)’’; and

17 (C) in subsection (b)(3)(A)(i), by inserting

18 after ‘‘under a State plan under this title’’ the

19 following: ‘‘(regardless of whether the services

20 were furnished on a fee-for-service basis or

21 through a managed care entity)’’.

22 (3) EFFECTIVE DATES.—

23 (A) The amendment made by paragraph

24 (1) applies to contracts as of January 1, 2001.
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1 (B) The amendments made by paragraph

2 (2) apply to payments made on or after Janu3 ary 1, 2001.

4 (c) APPLICATION OF MEDICAID DSH TRANSITION

5 RULE TO PUBLIC HOSPITALS IN ALL STATES.—

6 (1) IN GENERAL.—During the period described

7 in paragraph (3), with respect to a State, section

8 4721(e) of the Balanced Budget Act of 1997 (Public

9 Law 105–33; 111 Stat. 514), as amended by section

10 607 of BBRA (113 Stat. 1501A–321) shall be ap11 plied as though—

12 (A) ‘‘September 30, 2002’’ were sub13 stituted for ‘‘July 1, 1997’’ each place it ap14 pears;

15 (B) ‘‘hospitals owned or operated by a

16 State (as defined for purposes of title XIX of

17 such Act), or by an instrumentality or a unit of

18 government within a State (as so defined)’’

19 were substituted for ‘‘the State of California’’;

20 (C) paragraph (3) were redesignated as

21 paragraph (4);

22 (D) ‘‘and’’ were omitted from the end of

23 paragraph (2); and

24 (E) the following new paragraph were in25 serted after paragraph (2):
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1 ‘‘(3) ‘(as defined in subparagraph (B) but with2 out regard to clause (ii) of that subparagraph and

3 subject to subsection (d))’ were substituted for ‘(as

4 defined in subparagraph (B))’ in subparagraph (A)

5 of such section; and’’.

6 (2) SPECIAL RULE.—With respect to California,

7 section 4721(e) of the Balanced Budget Act of 1997

8 (Public Law 105–33; 111 Stat. 514) shall be applied

9 without regard to paragraph (1).

10 (3) PERIOD DESCRIBED.—The period described

11 in this paragraph is the period that begins, with re12 spect to a State, on the first day of the first State

13 fiscal year that begins after September 30, 2002,

14 and ends on the last day of the succeeding State fis15 cal year.

16 (4) APPLICATION TO WAIVERS.—With respect

17 to a State operating under a waiver of the require18 ments of title XIX of the Social Security Act (42

19 U.S.C. 1396 et seq.) under section 1115 of such Act

20 (42 U.S.C. 1315), the amount by which any pay21 ment adjustment made by the State under title XIX

22 of such Act (42 U.S.C. 1396 et seq.), after the ap23 plication of section 4721(e) of the Balanced Budget

24 Act of 1997 under paragraph (1) to such State, ex25 ceeds the costs of furnishing hospital services pro-
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1 vided by hospitals described in such section shall be

2 fully reflected as an increase in the baseline expendi3 ture limit for such waiver.

4 (d) ASSISTANCE FOR CERTAIN PUBLIC HOS5 PITALS.—

6 (1) IN GENERAL.—Beginning with fiscal year

7 2002, notwithstanding section 1923(f) of the Social

8 Security Act (42 U.S.C. 1396r–4(f)) and subject to

9 paragraph (3), with respect to a State, payment ad10 justments made under title XIX of the Social Secu11 rity Act (42 U.S.C. 1396 et seq.) to a hospital de12 scribed in paragraph (2) shall be made without re13 gard to the DSH allotment limitation for the State

14 determined under section 1923(f) of that Act (42

15 U.S.C. 1396r–4(f)).

16 (2) HOSPITAL DESCRIBED.—A hospital is de17 scribed in this paragraph if the hospital—

18 (A) is owned or operated by a State (as de19 fined for purposes of title XIX of the Social Se20 curity Act), or by an instrumentality or a unit

21 of government within a State (as so defined);

22 (B) as of October 1, 2000—

23 (i) is in existence and operating as a

24 hospital described in subparagraph (A);

25 and
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1 (ii) is not receiving disproportionate

2 share hospital payments from the State in

3 which it is located under title XIX of such

4 Act; and

5 (C) has a low-income utilization rate (as

6 defined in section 1923(b)(3) of the Social Se7 curity Act (42 U.S.C. 1396r–4(b)(3))) in excess

8 of 65 percent.

9 (3) LIMITATION ON EXPENDITURES.—

10 (A) IN GENERAL.—With respect to any fis11 cal year, the aggregate amount of Federal fi12 nancial participation that may be provided for

13 payment adjustments described in paragraph

14 (1) for that fiscal year for all States may not

15 exceed the amount described in subparagraph

16 (B) for the fiscal year.

17 (B) AMOUNT DESCRIBED.—The amount

18 described in this subparagraph for a fiscal year

19 is as follows:

20 (i) For fiscal year 2002, $15,000,000.

21 (ii) For fiscal year 2003,

22 $176,000,000.

23 (iii) For fiscal year 2004,

24 $269,000,000.
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1 (iv) For fiscal year 2005,

2 $330,000,000.

3 (v) For fiscal year 2006 and each fis4 cal year thereafter, $375,000,000.

5 (e) DSH PAYMENT ACCOUNTABILITY STANDARDS.—

6 Not later than September 30, 2002, the Secretary of

7 Health and Human Services shall implement account8 ability standards to ensure that Federal funds provided

9 with respect to disproportionate share hospital adjust10 ments made under section 1923 of the Social Security Act

11 (42 U.S.C. 1396r–4) are used to reimburse States and

12 hospitals eligible for such payment adjustments for pro13 viding uncompensated health care to low-income patients

14 and are otherwise made in accordance with the require15 ments of section 1923 of that Act.

16 SEC. 702. NEW PROSPECTIVE PAYMENT SYSTEM FOR FED17 ERALLY-QUALIFIED HEALTH CENTERS AND

18 RURAL HEALTH CLINICS.

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

20 1396a(a)) is amended—

21 (1) in paragraph (13)—

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

23 at the end;

24 (B) in subparagraph (B), by striking

25 ‘‘and’’ at the end; and
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1 (C) by striking subparagraph (C); and

2 (2) by inserting after paragraph (14) the fol3 lowing new paragraph:

4 ‘‘(15) provide for payment for services de5 scribed in clause (B) or (C) of section 1905(a)(2)

6 under the plan in accordance with subsection (aa);’’.

7 (b) NEW PROSPECTIVE PAYMENT SYSTEM.—Section

8 1902 (42 U.S.C. 1396a) is amended by adding at the end

9 the following:

10 ‘‘(aa) PAYMENT FOR SERVICES PROVIDED BY FED11 ERALLY-QUALIFIED HEALTH CENTERS AND RURAL

12 HEALTH CLINICS.—

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

14 2001 and each succeeding fiscal year, the State plan

15 shall provide for payment for services described in

16 section 1905(a)(2)(C) furnished by a Federally17 qualified health center and services described in sec18 tion 1905(a)(2)(B) furnished by a rural health clinic

19 in accordance with the provisions of this subsection.

20 ‘‘(2) FISCAL YEAR 2001.—Subject to paragraph

21 (4), for services furnished during fiscal year 2001,

22 the State plan shall provide for payment for such

23 services in an amount (calculated on a per visit

24 basis) that is equal to 100 percent of the average of

25 the costs of the center or clinic of furnishing such
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1 services during fiscal years 1999 and 2000 which

2 are reasonable and related to the cost of furnishing

3 such services, or based on such other tests of reason4 ableness as the Secretary prescribes in regulations

5 under section 1833(a)(3), or, in the case of services

6 to which such regulations do not apply, the same

7 methodology used under section 1833(a)(3), ad8 justed to take into account any increase or decrease

9 in the scope of such services furnished by the center

10 or clinic during fiscal year 2001.

11 ‘‘(3) FISCAL YEAR 2002 AND SUCCEEDING FIS12 CAL YEARS.—Subject to paragraph (4), for services

13 furnished during fiscal year 2002 or a succeeding

14 fiscal year, the State plan shall provide for payment

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

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

17 such services under this subsection for the preceding

18 fiscal year—

19 ‘‘(A) increased by the percentage increase

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

21 applicable to primary care services (as defined

22 in section 1842(i)(4)) for that fiscal year; and

23 ‘‘(B) adjusted to take into account any in24 crease or decrease in the scope of such services
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1 furnished by the center or clinic during that fis2 cal year.

3 ‘‘(4) ESTABLISHMENT OF INITIAL YEAR PAY4 MENT AMOUNT FOR NEW CENTERS OR CLINICS.—In

5 any case in which an entity first qualifies as a Fed6 erally-qualified health center or rural health clinic

7 after fiscal year 2000, the State plan shall provide

8 for payment for services described in section

9 1905(a)(2)(C) furnished by the center or services

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

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

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

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

14 of furnishing such services during such fiscal year

15 based on the rates established under this subsection

16 for the fiscal year for other such centers or clinics

17 located in the same or adjacent area with a similar

18 case load or, in the absence of such a center or clin19 ic, in accordance with the regulations and method20 ology referred to in paragraph (2) or based on such

21 other tests of reasonableness as the Secretary may

22 specify. For each fiscal year following the fiscal year

23 in which the entity first qualifies as a Federally24 qualified health center or rural health clinic, the
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1 State plan shall provide for the payment amount to

2 be calculated in accordance with paragraph (3).

3 ‘‘(5) ADMINISTRATION IN THE CASE OF MAN4 AGED CARE.—

5 ‘‘(A) IN GENERAL.—In the case of services

6 furnished by a Federally-qualified health center

7 or rural health clinic pursuant to a contract be8 tween the center or clinic and a managed care

9 entity (as defined in section 1932(a)(1)(B)), the

10 State plan shall provide for payment to the cen11 ter or clinic by the State of a supplemental pay12 ment equal to the amount (if any) by which the

13 amount determined under paragraphs (2), (3),

14 and (4) of this subsection exceeds the amount

15 of the payments provided under the contract.

16 ‘‘(B) PAYMENT SCHEDULE.—The supple17 mental payment required under subparagraph

18 (A) shall be made pursuant to a payment

19 schedule agreed to by the State and the Feder20 ally-qualified health center or rural health clin21 ic, but in no case less frequently than every 4

22 months.

23 ‘‘(6) ALTERNATIVE PAYMENT METHODOLO24 GIES.—Notwithstanding any other provision of this

25 section, the State plan may provide for payment in
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1 any fiscal year to a Federally-qualified health center

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

3 a rural health clinic for services described in section

4 1905(a)(2)(B) in an amount which is determined

5 under an alternative payment methodology that—

6 ‘‘(A) is agreed to by the State and the cen7 ter or clinic; and

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

9 clinic of an amount which is at least equal to

10 the amount otherwise required to be paid to the

11 center or clinic under this section.’’.

12 (c) CONFORMING AMENDMENTS.—

13 (1) Section 4712 of the BBA (Public Law 105–

14 33; 111 Stat. 508) is amended by striking sub15 section (c).

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

17 amended by striking ‘‘1902(a)(13)(C)’’ and inserting

18 ‘‘1902(a)(15), 1902(aa),’’.

19 (d) GAO STUDY OF FUTURE REBASING.—The

20 Comptroller General of the United States shall provide for

21 a study on the need for, and how to, rebase or refine costs

22 for making payment under the medicaid program for serv23 ices provided by Federally-qualified health centers and

24 rural health clinics (as provided under the amendments

25 made by this section). The Comptroller General shall pro-
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1 vide for submittal of a report on such study to Congress

2 by not later than 4 years after the date of the enactment

3 of this Act.

4 (e) EFFECTIVE DATE.—The amendments made by

5 this section take effect on October 1, 2000, and apply to

6 services furnished on or after such date.

7 SEC. 703. STREAMLINED APPROVAL OF CONTINUED STATE8 WIDE SECTION 1115 MEDICAID WAIVERS.

9 (a) IN GENERAL.—Section 1115 (42 U.S.C. 1315)

10 is amended by adding at the end the following new sub11 section:

12 ‘‘(f) An application by the chief executive officer of

13 a State for an extension of a waiver project the State is

14 operating under an extension under subsection (e) (in this

15 subsection referred to as the ‘waiver project’) shall be sub16 mitted and approved or disapproved in accordance with

17 the following:

18 ‘‘(1) The application for an extension of the

19 waiver project shall be submitted to the Secretary at

20 least 120 days prior to the expiration of the current

21 period of the waiver project.

22 ‘‘(2) Not later than 45 days after the date such

23 application is received by the Secretary, the Sec24 retary shall notify the State if the Secretary intends

25 to review the terms and conditions of the waiver
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1 project. A failure to provide such notification shall

2 be deemed to be an approval of the application.

3 ‘‘(3) Not later than 45 days after the date a no4 tification is made in accordance with paragraph (2),

5 the Secretary shall inform the State of proposed

6 changes in the terms and conditions of the waiver

7 project. A failure to provide such information shall

8 be deemed to be an approval of the application.

9 ‘‘(4) During the 30-day period that begins on

10 the date information described in paragraph (3) is

11 provided to a State, the Secretary shall negotiate re12 vised terms and conditions of the waiver project with

13 the State.

14 ‘‘(5)(A) Not later than 120 days after the date

15 an application for an extension of the waiver project

16 is submitted to the Secretary (or such later date

17 agreed to by the chief executive officer of the State),

18 the Secretary shall—

19 ‘‘(i) approve the application subject to such

20 modifications in the terms and conditions—

21 ‘‘(I) as have been agreed to by the

22 Secretary and the State; or

23 ‘‘(II) in the absence of such agree24 ment, as are determined by the Secretary

25 to be reasonable, consistent with the over-
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1 all objectives of the waiver project, and not

2 in violation of applicable law; or

3 ‘‘(ii) disapprove the application.

4 ‘‘(B) A failure by the Secretary to approve or

5 disapprove an application submitted under this sub6 section in accordance with the requirements of sub7 paragraph (A) shall be deemed to be an approval of

8 the application subject to such modifications in the

9 terms and conditions as have been agreed to (if any)

10 by the Secretary and the State.

11 ‘‘(6) An approval of an application for an exten12 sion of a waiver project under this subsection shall

13 be for a period not to exceed 3 years.

14 ‘‘(7) An extension of a waiver project under this

15 subsection shall be subject to the final reporting and

16 evaluation requirements of paragraphs (4) and (5)

17 of subsection (e) (taking into account the extension

18 under this subsection with respect to any timing re19 quirements imposed under those paragraphs).’’.

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

21 subsection (a) applies to requests for extensions of dem22 onstration projects pending or submitted on or after the

23 date of the enactment of this Act.
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1 SEC. 704. MEDICAID COUNTY-ORGANIZED HEALTH SYS2 TEMS.

3 (a) IN GENERAL.—Section 9517(c)(3)(C) of the

4 Comprehensive Omnibus Budget Reconciliation Act of

5 1985 is amended by striking ‘‘10 percent’’ and inserting

6 ‘‘14 percent’’.

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

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

9 of this Act.

10 SEC. 705. DEADLINE FOR ISSUANCE OF FINAL REGULATION

11 RELATING TO MEDICAID UPPER PAYMENT

12 LIMITS.

13 (a) IN GENERAL.—Not later than December 31,

14 2000, the Secretary of Health and Human Services (in

15 this section referred to as the ‘‘Secretary’’), notwith16 standing any requirement of the Administrative Proce17 dures Act under chapter 5 of title 5, United States Code,

18 or any other provision of law, shall issue under sections

19 447.272, 447.304, and 447.321 of title 42, Code of Fed20 eral Regulations (and any other section of part 447 of title

21 42, Code of Federal Regulations that the Secretary deter22 mines is appropriate), a final regulation based on the pro23 posed rule announced on October 5, 2000, that—

24 (1) modifies the upper payment limit test ap25 plied to State medicaid spending for inpatient hos26 pital services, outpatient hospital services, nursing
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1 facility services, intermediate care facility services

2 for the mentally retarded, and clinic services by ap3 plying an aggregate upper payment limit to pay4 ments made to government facilities that are not

5 State-owned or operated facilities; and

6 (2) provides for a transition period in accord7 ance with subsection (b).

8 (b) TRANSITION PERIOD.—

9 (1) IN GENERAL.—The final regulation required

10 under subsection (a) shall provide that, with respect

11 to a State described in paragraph (3), the State

12 shall be considered to be in compliance with the final

13 regulation required under subsection (a) so long as,

14 for each State fiscal year during the period de15 scribed in paragraph (4), the State reduces pay16 ments under a State medicaid plan payment provi17 sion or methodology described in paragraph (3), or

18 reduces the actual dollar payment levels described in

19 paragraph (3)(B), so that the amount of the pay20 ments that would otherwise have been made under

21 such provision, methodology, or payment levels by

22 the State for any State fiscal year during such pe23 riod is reduced by 15 percent in the first such State

24 fiscal year, and by an additional 15 percent in each

25 of next 5 State fiscal years.
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1 (2) REQUIREMENT.—Notwithstanding para2 graph (1), the final regulation required under sub3 section (a) shall provide that, for any period (or por4 tion of a period) that occurs on or after October 1,

5 2008, medicaid payments made by a State described

6 in paragraph (3) shall comply with such final regula7 tion.

8 (3) STATE DESCRIBED.—A State described in

9 this paragraph is a State with a State medicaid plan

10 payment provision or methodology which—

11 (A) was approved, deemed to have been ap12 proved, or was in effect on or before October 1,

13 1992 (including any subsequent amendments or

14 successor provisions or methodologies and

15 whether or not a State plan amendment was

16 made to carry out such provision or method17 ology after such date) or under which claims for

18 Federal financial participation were filed and

19 paid on or before such date; and

20 (B) provides for payments that are in ex21 cess of the upper payment limit test established

22 under the final regulation required under sub23 section (a) (or which would be noncompliant

24 with such final regulation if the actual dollar

25 payment levels made under the payment provi-
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1 sion or methodology in the State fiscal year

2 which begins during 1999 were continued).

3 (4) PERIOD DESCRIBED.—The period described

4 in this paragraph is the period that begins on the

5 first State fiscal year that begins after September

6 30, 2002, and ends on September 30, 2008.

7 SEC. 706. ALASKA FMAP.

8 Notwithstanding the first sentence of section 1905(b)

9 of the Social Security Act (42 U.S.C. 1396d(b)), only with

10 respect to each of fiscal years 2001 through 2005, for pur11 poses of titles XIX and XXI of the Social Security Act,

12 the State percentage used to determine the Federal med13 ical assistance percentage for Alaska shall be that percent14 age which bears the same ratio to 45 percent as the square

15 of the adjusted per capita income of Alaska (determined

16 by dividing the State’s 3-year average per capita income

17 by 1.05) bears to the square of the per capita income of

18 the 50 States.

19 TITLE VIII—STATE CHILDREN’S

20 HEALTH INSURANCE PROGRAM

21 SEC. 801. SPECIAL RULE FOR REDISTRIBUTION AND AVAIL22 ABILITY OF UNUSED FISCAL YEAR 1998 AND

23 1999 SCHIP ALLOTMENTS.

24 (a) CHANGE IN RULES FOR REDISTRIBUTION AND

25 RETENTION OF UNUSED SCHIP ALLOTMENTS FOR FIS-
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1 CAL YEARS 1998 AND 1999.—Section 2104 (42 U.S.C.

2 1397dd) is amended by adding at the end the following

3 new subsection:

4 ‘‘(g) RULE FOR REDISTRIBUTION AND EXTENDED

5 AVAILABILITY OF FISCAL YEARS 1998 AND 1999 ALLOT6 MENTS.—

7 ‘‘(1) AMOUNT REDISTRIBUTED.—

8 ‘‘(A) IN GENERAL.—In the case of a State

9 that expends all of its allotment under sub10 section (b) or (c) for fiscal year 1998 by the

11 end of fiscal year 2000, or for fiscal year 1999

12 by the end of fiscal year 2001, the Secretary

13 shall redistribute to the State under subsection

14 (f) (from the fiscal year 1998 or 1999 allot15 ments of other States, respectively, as deter16 mined by the application of paragraphs (2) and

17 (3) with respect to the respective fiscal year))

18 the following amount:

19 ‘‘(i) STATE.—In the case of 1 of the

20 50 States or the District of Columbia, with

21 respect to—

22 ‘‘(I) the fiscal year 1998 allot23 ment, the amount by which the

24 State’s expenditures under this title in

25 fiscal years 1998, 1999, and 2000 ex-
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1 ceed the State’s allotment for fiscal

2 year 1998 under subsection (b); or

3 ‘‘(II) the fiscal year 1999 allot4 ment, the amount by which the

5 State’s expenditures under this title in

6 fiscal years 1999, 2000, and 2001 ex7 ceed the State’s allotment for fiscal

8 year 1999 under subsection (b).

9 ‘‘(ii) TERRITORY.—In the case of a

10 commonwealth or territory described in

11 subsection (c)(3), an amount that bears

12 the same ratio to 1.05 percent of the total

13 amount described in paragraph (2)(B)(i)(I)

14 as the ratio of the commonwealth’s or ter15 ritory’s fiscal year 1998 or 1999 allotment

16 under subsection (c) (as the case may be)

17 bears to the total of all such allotments for

18 such fiscal year under such subsection.

19 ‘‘(B) EXPENDITURE RULES.—An amount

20 redistributed to a State under this paragraph

21 with respect to fiscal year 1998 or 1999—

22 ‘‘(i) shall not be included in the deter23 mination of the State’s allotment for any

24 fiscal year under this section;
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1 ‘‘(ii) notwithstanding subsection (e),

2 shall remain available for expenditure by

3 the State through the end of fiscal year

4 2002; and

5 ‘‘(iii) shall be counted as being ex6 pended with respect to a fiscal year allot7 ment in accordance with applicable regula8 tions of the Secretary.

9 ‘‘(2) EXTENSION OF AVAILABILITY OF PORTION

10 OF UNEXPENDED FISCAL YEARS 1998 AND 1999 AL11 LOTMENTS.—

12 ‘‘(A) IN GENERAL.—Notwithstanding sub13 section (e):

14 ‘‘(i) FISCAL YEAR 1998 ALLOTMENT.—

15 Of the amounts allotted to a State pursu16 ant to this section for fiscal year 1998 that

17 were not expended by the State by the end

18 of fiscal year 2000, the amount specified in

19 subparagraph (B) for fiscal year 1998 for

20 such State shall remain available for ex21 penditure by the State through the end of

22 fiscal year 2002.

23 ‘‘(ii) FISCAL YEAR 1999 ALLOT24 MENT.—Of the amounts allotted to a State

25 pursuant to this subsection for fiscal year
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1 1999 that were not expended by the State

2 by the end of fiscal year 2001, the amount

3 specified in subparagraph (B) for fiscal

4 year 1999 for such State shall remain

5 available for expenditure by the State

6 through the end of fiscal year 2002.

7 ‘‘(B) AMOUNT REMAINING AVAILABLE FOR

8 EXPENDITURE.—The amount specified in this

9 subparagraph for a State for a fiscal year is

10 equal to—

11 ‘‘(i) the amount by which (I) the total

12 amount available for redistribution under

13 subsection (f) from the allotments for that

14 fiscal year, exceeds (II) the total amounts

15 redistributed under paragraph (1) for that

16 fiscal year; multiplied by

17 ‘‘(ii) the ratio of the amount of such

18 State’s unexpended allotment for that fis19 cal year to the total amount described in

20 clause (i)(I) for that fiscal year.

21 ‘‘(C) USE OF UP TO 10 PERCENT OF RE22 TAINED 1998 ALLOTMENTS FOR OUTREACH AC23 TIVITIES.—Notwithstanding section

24 2105(c)(2)(A), with respect to any State de25 scribed in subparagraph (A)(i), the State may
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1 use up to 10 percent of the amount specified in

2 subparagraph (B) for fiscal year 1998 for ex3 penditures for outreach activities approved by

4 the Secretary.

5 ‘‘(3) DETERMINATION OF AMOUNTS.—For pur6 poses of calculating the amounts described in para7 graphs (1) and (2) relating to the allotment for fis8 cal year 1998 or fiscal year 1999, the Secretary

9 shall use the amounts reported by the States not

10 later than November 30, 2000, or November 30,

11 2001, respectively, on HCFA Form 64 or HCFA

12 Form 21, as approved by the Secretary.’’.

13 (b) EFFECTIVE DATE.—The amendments made by

14 this section shall take effect as if included in the enact15 ment of section 4901 of BBA (111 Stat. 552).

16 SEC. 802. AUTHORITY TO PAY MEDICAID EXPANSION SCHIP

17 COSTS FROM TITLE XXI APPROPRIATION.

18 (a) AUTHORITY TO PAY MEDICAID EXPANSION

19 SCHIP COSTS FROM TITLE XXI APPROPRIATION.—Sec20 tion 2105(a) (42 U.S.C. 1397ee(a)) is amended—

21 (1) by redesignating subparagraphs (A) through

22 (D) of paragraph (2) as clauses (i) through (iv), re23 spectively, and indenting appropriately;

24 (2) by redesignating paragraph (1) as subpara25 graph (C), and indenting appropriately;
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1 (3) by redesignating paragraph (2) as subpara2 graph (D), and indenting appropriately;

3 (4) by striking ‘‘(a) IN GENERAL.—’’ and the

4 remainder of the text that precedes subparagraph

5 (C), as so redesignated, and inserting the following:

6 ‘‘(a) PAYMENTS.—

7 ‘‘(1) IN GENERAL.—Subject to the succeeding

8 provisions of this section, the Secretary shall pay to

9 each State with a plan approved under this title,

10 from its allotment under section 2104, an amount

11 for each quarter equal to the enhanced FMAP (or,

12 in the case of expenditures described in subpara13 graph (B), the Federal medical assistance percent14 age (as defined in the first sentence of section

15 1905(b))) of expenditures in the quarter—

16 ‘‘(A) for child health assistance under the

17 plan for targeted low-income children in the

18 form of providing medical assistance for which

19 payment is made on the basis of an enhanced

20 FMAP under the fourth sentence of section

21 1905(b);

22 ‘‘(B) for the provision of medical assist23 ance on behalf of a child during a presumptive

24 eligibility period under section 1920A;’’; and
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1 (5) by adding after subparagraph (D), as so re2 designated, the following new paragraph:

3 ‘‘(2) ORDER OF PAYMENTS.—Payments under

4 paragraph (1) from a State’s allotment shall be

5 made in the following order:

6 ‘‘(A) First, for expenditures for items de7 scribed in paragraph (1)(A).

8 ‘‘(B) Second, for expenditures for items

9 described in paragraph (1)(B).

10 ‘‘(C) Third, for expenditures for items de11 scribed in paragraph (1)(C).

12 ‘‘(D) Fourth, for expenditures for items

13 described in paragraph (1)(D).’’.

14 (b) ELIMINATION OF REQUIREMENT TO REDUCE

15 TITLE XXI ALLOTMENT BY MEDICAID EXPANSION

16 SCHIP COSTS.—Section 2104 (42 U.S.C. 1397dd) is

17 amended by striking subsection (d).

18 (c) AUTHORITY TO TRANSFER TITLE XXI APPRO19 PRIATIONS TO TITLE XIX APPROPRIATION ACCOUNT AS

20 REIMBURSEMENT FOR MEDICAID EXPENDITURES FOR

21 MEDICAID EXPANSION SCHIP SERVICES.—Notwith22 standing any other provision of law, all amounts appro23 priated under title XXI and allotted to a State pursuant

24 to subsection (b) or (c) of section 2104 of the Social Secu25 rity Act (42 U.S.C. 1397dd) for fiscal years 1998 through
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1 2000 (including any amounts that, but for this provision,

2 would be considered to have expired) and not expended

3 in providing child health assistance or related services for

4 which payment may be made pursuant to subparagraph

5 (C) or (D) of section 2105(a)(1) of such Act (42 U.S.C.

6 1397ee(a)(1)) (as amended by subsection (a)), shall be

7 available to reimburse the Grants to States for Medicaid

8 account in an amount equal to the total payments made

9 to such State under section 1903(a) of such Act (42

10 U.S.C. 1396b(a)) for expenditures in such years for med11 ical assistance described in subparagraphs (A) and (B) of

12 section 2105(a)(1) of such Act (42 U.S.C. 1397ee(a)(1)

13 (as so amended).

14 (d) CONFORMING AMENDMENTS.—

15 (1) Section 1905(b) (42 U.S.C. 1396d(b)) is

16 amended in the fourth sentence by striking ‘‘the

17 State’s allotment under section 2104 (not taking

18 into account reductions under section 2104(d)(2))

19 for the fiscal year reduced by the amount of any

20 payments made under section 2105 to the State

21 from such allotment for such fiscal year’’ and insert22 ing ‘‘the State’s available allotment under section

23 2104’’.
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1 (2) Section 1905(u)(1)(B) (42 U.S.C.

2 1396d(u)(1)(B)) is amended by striking ‘‘and sec3 tion 2104(d)’’.

4 (3) Section 2104 (42 U.S.C. 1397dd), as

5 amended by subsection (b), is further amended—

6 (A) in subsection (b)(1), by striking ‘‘and

7 subsection (d)’’; and

8 (B) in subsection (c)(1), by striking ‘‘sub9 ject to subsection (d),’’.

10 (4) Section 2105(c) (42 U.S.C. 1397ee(c)) is

11 amended—

12 (A) in paragraph (2)(A), by striking all

13 that follows ‘‘Except as provided in this para14 graph,’’ and inserting ‘‘the amount of payment

15 that may be made under subsection (a) for a

16 fiscal year for expenditures for items described

17 in paragraph (1)(D) of such subsection shall

18 not exceed 10 percent of the total amount of ex19 penditures for which payment is made under

20 subparagraphs (A), (C), and (D) of paragraph

21 (1) of such subsection.’’;

22 (B) in paragraph (2)(B), by striking ‘‘de23 scribed in subsection (a)(2)’’ and inserting ‘‘de24 scribed in subsection (a)(1)(D)’’; and
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1 (C) in paragraph (6)(B), by striking ‘‘Ex2 cept as otherwise provided by law,’’ and insert3 ing ‘‘Except as provided in subparagraph (A) or

4 (B) of subsection (a)(1) or any other provision

5 of law,’’.

6 (5) Section 2110(a) (42 U.S.C. 1397jj(a)) is

7 amended by striking ‘‘section 2105(a)(2)(A)’’ and

8 inserting ‘‘section 2105(a)(1)(D)(i)’’.

9 (e) TECHNICAL AMENDMENT.—Section

10 2105(d)(2)(B)(ii) (42 U.S.C. 1397ee(d)(2)(B)(ii)) is

11 amended by striking ‘‘enhanced FMAP under section

12 1905(u)’’ and inserting ‘‘enhanced FMAP under the

13 fourth sentence of section 1905(b)’’.

14 (f) EFFECTIVE DATE.—The amendments made by

15 this section shall be effective as if included in the enact16 ment of section 4901 of the BBA (111 Stat. 552).

17 TITLE IX—OTHER PROVISIONS

18 Subtitle A—PACE Program

19 SEC. 901. EXTENSION OF TRANSITION FOR CURRENT WAIV20 ERS.

21 Section 4803(d)(2) of BBA is amended—

22 (1) in subparagraph (A), by striking ‘‘24

23 months’’ and inserting ‘‘36 months’’;
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1 (2) in subparagraph (A), by striking ‘‘the initial

2 effective date of regulations described in subsection

3 (a)’’ and inserting ‘‘July 1, 2000’’; and

4 (3) in subparagraph (B), by striking ‘‘3 years’’

5 and inserting ‘‘4 years’’.

6 SEC. 902. CONTINUING OF CERTAIN OPERATING ARRANGE7 MENTS PERMITTED.

8 (a) IN GENERAL.—Section 1894(f)(2) (42 U.S.C.

9 1395eee(f)(2)) is amended by adding at the end the fol10 lowing new subparagraph:

11 ‘‘(C) CONTINUATION OF MODIFICATIONS

12 OR WAIVERS OF OPERATIONAL REQUIREMENTS

13 UNDER DEMONSTRATION STATUS.—If a PACE

14 program operating under demonstration author15 ity has contractual or other operating arrange16 ments which are not otherwise recognized in

17 regulation and which were in effect on July 1,

18 2000, the Secretary (in close consultation with,

19 and with the concurrence of, the State admin20 istering agency) shall permit any such program

21 to continue such arrangements so long as such

22 arrangements are found by the Secretary and

23 the State to be reasonably consistent with the

24 objectives of the PACE program.’’.
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1 (b) CONFORMING AMENDMENT.—Section 1934(f)(2)

2 (42 U.S.C. 1396u–4(f)(2)) is amended by adding at the

3 end the following new subparagraph:

4 ‘‘(C) CONTINUATION OF MODIFICATIONS

5 OR WAIVERS OF OPERATIONAL REQUIREMENTS

6 UNDER DEMONSTRATION STATUS.—If a PACE

7 program operating under demonstration author8 ity has contractual or other operating arrange9 ments which are not otherwise recognized in

10 regulation and which were in effect on July 1

11 2000, the Secretary (in close consultation with,

12 and with the concurrence of, the State admin13 istering agency) shall permit any such program

14 to continue such arrangements so long as such

15 arrangements are found by the Secretary and

16 the State to be reasonably consistent with the

17 objectives of the PACE program.’’.

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

19 this section shall be effective as included in the enactment

20 of BBA.

21 SEC. 903. FLEXIBILITY IN EXERCISING WAIVER AUTHORITY.

22 In applying sections 1894(f)(2)(B) and

23 1934(f)(2)(B) of the Social Security Act (42 U.S.C.

24 1395eee(f)(2)(B), 1396u–4(f)(2)(B)), the Secretary of

25 Health and Human Services—
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1 (1) shall approve or deny a request for a modi2 fication or a waiver of provisions of the PACE pro3 tocol not later than 90 days after the date the Sec4 retary receives the request; and

5 (2) may exercise authority to modify or waive

6 such provisions in a manner that responds promptly

7 to the needs of PACE programs relating to areas of

8 employment and the use of community-based pri9 mary care physicians.

10 Subtitle B—Outreach to Eligible

11 Low-Income Medicare Bene12 ficiaries

13 SEC. 911. OUTREACH ON AVAILABILITY OF MEDICARE

14 COST-SHARING ASSISTANCE TO ELIGIBLE

15 LOW-INCOME MEDICARE BENEFICIARIES.

16 (a) OUTREACH.—

17 (1) IN GENERAL.—Title XI (42 U.S.C. 1301 et

18 seq.) is amended by inserting after section 1143 the

19 following new section:

20 ‘‘OUTREACH EFFORTS TO INCREASE AWARENESS OF THE

21 AVAILABILITY OF MEDICARE COST-SHARING

22 ‘‘SEC. 1144. (a) OUTREACH.—

23 ‘‘(1) IN GENERAL.—The Commissioner of So24 cial Security (in this section referred to as the ‘Com25 missioner’) shall conduct outreach efforts to—
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1 ‘‘(A) identify individuals entitled to bene2 fits under the medicare program under title

3 XVIII who may be eligible for medical assist4 ance for payment of the cost of medicare cost5 sharing under the medicaid program pursuant

6 to sections 1902(a)(10)(E) and 1933; and

7 ‘‘(B) notify such individuals of the avail8 ability of such medical assistance under such

9 sections.

10 ‘‘(2) CONTENT OF NOTICE.—Any notice fur11 nished under paragraph (1) shall state that eligi12 bility for medicare cost-sharing assistance under

13 such sections is conditioned upon—

14 ‘‘(A) the individual providing to the State

15 information about income and resources (in the

16 case of an individual residing in a State that

17 imposes an assets test for such eligibility); and

18 ‘‘(B) meeting the applicable eligibility cri19 teria.

20 ‘‘(b) COORDINATION WITH STATES.—

21 ‘‘(1) IN GENERAL.—In conducting the outreach

22 efforts under this section, the Commissioner shall—

23 ‘‘(A) furnish the agency of each State re24 sponsible for the administration of the medicaid

25 program and any other appropriate State agen-
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1 cy with information consisting of the name and

2 address of individuals residing in the State that

3 the Commissioner determines may be eligible

4 for medical assistance for payment of the cost

5 of medicare cost-sharing under the medicaid

6 program pursuant to sections 1902(a)(10)(E)

7 and 1933; and

8 ‘‘(B) update any such information not less

9 frequently than once per year.

10 ‘‘(2) INFORMATION IN PERIODIC UPDATES.—

11 The periodic updates described in paragraph (1)(B)

12 shall include information on individuals who are or

13 may be eligible for the medical assistance described

14 in paragraph (1)(A) because such individuals have

15 experienced reductions in benefits under title II.’’.

16 (2) AMENDMENT TO TITLE XIX.—Section

17 1905(p) (42 U.S.C. 1396d(p)) is amended by adding

18 at the end the following new paragraph:

19 ‘‘(5) For provisions relating to outreach efforts to in20 crease awareness of the availability of medicare cost-shar21 ing, see section 1144.’’.

22 (b) GAO REPORT.—The Comptroller General of the

23 United States shall conduct a study of the impact of sec24 tion 1144 of the Social Security Act (as added by sub25 section (a)(1)) on the enrollment of individuals for medi-
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1 care cost-sharing under the medicaid program. Not later

2 than 18 months after the date that the Commissioner of

3 Social Security first conducts outreach under section 1144

4 of such Act, the Comptroller General shall submit to Con5 gress a report on such study. The report shall include such

6 recommendations for legislative changes as the Comp7 troller General deems appropriate.

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

9 subsections (a) shall take effect one year after the date

10 of the enactment of this Act.

11 Subtitle C—Maternal and Child

12 Health Block Grant

13 SEC. 921. INCREASE IN AUTHORIZATION OF APPROPRIA14 TIONS FOR THE MATERNAL AND CHILD

15 HEALTH SERVICES BLOCK GRANT.

16 (a) IN GENERAL.—Section 501(a) (42 U.S.C.

17 701(a)) is amended in the matter preceding paragraph (1)

18 by striking ‘‘$705,000,000 for fiscal year 1994’’ and in19 serting ‘‘$850,000,000 for fiscal year 2001’’.

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

21 subsection (a) takes effect on October 1, 2000.
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1 Subtitle D—Diabetes

2 SEC. 931. INCREASE IN APPROPRIATIONS FOR SPECIAL DI3 ABETES PROGRAMS FOR TYPE I DIABETES

4 AND INDIANS.

5 (a) SPECIAL DIABETES PROGRAMS FOR TYPE I DIA6 BETES.—Section 330B(b) of the Public Health Service

7 Act (42 U.S.C. 254c–2(b)) is amended—

8 (1) by striking ‘‘Notwithstanding’’ and insert9 ing the following:

10 ‘‘(1) TRANSFERRED FUNDS.—Notwith11 standing’’; and

12 (2) by adding at the end the following:

13 ‘‘(2) APPROPRIATIONS.—For the purpose of

14 making grants under this section, there is appro15 priated, out of any funds in the Treasury not other16 wise appropriated—

17 ‘‘(A) $70,000,000 for each of fiscal years

18 2001 and 2002 (which shall be combined with

19 amounts transferred under paragraph (1) for

20 each such fiscal years); and

21 ‘‘(B) $100,000,000 for fiscal year 2003.’’.

22 (b) SPECIAL DIABETES PROGRAMS FOR INDIANS.—

23 Section 330C(c) of such Act (42 U.S.C. 254c–3(c)) is

24 amended—
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1 (1) by striking ‘‘Notwithstanding’’ and insert2 ing the following:

3 ‘‘(1) TRANSFERRED FUNDS.—Notwith4 standing’’; and

5 (2) by adding at the end the following:

6 ‘‘(2) APPROPRIATIONS.—For the purpose of

7 making grants under this section, there is appro8 priated, out of any money in the Treasury not other9 wise appropriated—

10 ‘‘(A) $70,000,000 for each of fiscal years

11 2001 and 2002 (which shall be combined with

12 amounts transferred under paragraph (1) for

13 each such fiscal years); and

14 ‘‘(B) $100,000,000 for fiscal year 2003.’’.

15 (c) EXTENSION OF FINAL REPORT ON GRANT PRO16 GRAMS.—Section 4923(b)(2) of BBA is amended by strik17 ing ‘‘2002’’ and inserting ‘‘2003’’.

18 SEC. 932. APPROPRIATIONS FOR RICKY RAY HEMOPHILIA

19 RELIEF FUND.

20 Section 101(e) of the Ricky Ray Hemophilia Relief

21 Fund Act of 1998 (42 U.S.C. 300c–22 note) is amended

22 by adding at the end the following: ‘‘There is appropriated

23 to the Fund $475,000,000 for fiscal year 2001, to remain

24 available until expended.’’.

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