II

106TH CONGRESS

1ST SESSION S. 391

To provide for payments to children’s hospitals that operate graduate medical

education programs.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 8, 1999

Mr. KERREY (for himself, Mr. BOND, Mr. KENNEDY, Mr. GORTON, Mr.

GRAHAM, Mr. DEWINE, Mr. MOYNIHAN, Mr. DURBIN, Mr. INOUYE, Mr.

MACK, and Mrs. MURRAY) introduced the following bill; which was read

twice and referred to the Committee on Finance

A BILL

To provide for payments to children’s hospitals that operate

graduate medical education programs.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Children’s Hospitals

5 Education and Research Act of 1999’’.

6 SEC. 2. PROGRAM OF PAYMENTS TO CHILDREN’S HOS7 PITALS THAT OPERATE GRADUATE MEDICAL

8 EDUCATION PROGRAMS.

9 (a) PAYMENTS.—
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1 (1) IN GENERAL.—The Secretary shall make

2 payments under this section to each children’s hos3 pital for each hospital cost reporting period under

4 the medicare program beginning in or after fiscal

5 year 2000 and before fiscal year 2004 for the—

6 (A) direct expenses associated with operat7 ing approved medical residency training pro8 grams; and

9 (B) indirect expenses associated with the

10 treatment of more severely ill patients and the

11 additional costs related to the teaching of resi12 dents.

13 (2) PAYMENT AMOUNTS.—Subject to paragraph

14 (3), the following amounts shall be payable under

15 this section to a children’s hospital for a cost report16 ing period described in paragraph (1):

17 (A) DIRECT EXPENSES.—The amount de18 termined under subsection (b) for direct ex19 penses described in paragraph (1)(A).

20 (B) INDIRECT EXPENSES.—The amount

21 determined under subsection (c) for indirect ex22 penses described in paragraph (1)(B)

23 (3) CAPPED AMOUNT.—

24 (A) IN GENERAL.—The payments to chil25 dren’s hospitals established in this subsection
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1 for cost reporting periods ending in any fiscal

2 year shall not exceed the funds appropriated

3 under subsection (e) for that fiscal year.

4 (B) PRO RATA REDUCTIONS OF PAYMENTS

5 FOR DIRECT EXPENSES.—If the Secretary de6 termines that the amount of funds appropriated

7 under subsection (e)(1) for cost reporting peri8 ods ending in any fiscal year is insufficient to

9 provide the total amount of payments otherwise

10 due for such periods, the Secretary shall reduce

11 each of the amounts payable under this section

12 pursuant to paragraph (2)(A) for such period

13 on a pro rata basis to reflect such shortfall.

14 (b) AMOUNT OF PAYMENT FOR DIRECT MEDICAL

15 EDUCATION.—

16 (1) IN GENERAL.—The amount determined

17 under this subsection for payments to a children’s

18 hospital for direct expenses relating to approved

19 medical residency training programs for a cost re20 porting period beginning in or after fiscal year 2000

21 and before fiscal year 2004 is equal to the product

22 of—

23 (A) the updated per resident amount for

24 direct medical education, as determined under
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1 paragraph (2), for the cost reporting period;

2 and

3 (B) the number of full-time equivalent resi4 dents in the hospital’s approved medical resi5 dency training programs (as determined under

6 section 1886(h)(4) of the Social Security Act

7 (42 U.S.C. 1395ww(h)(4))) for the cost report8 ing period.

9 (2) UPDATED PER RESIDENT AMOUNT FOR DI10 RECT MEDICAL EDUCATION.—The updated per resi11 dent amount for direct medical education for a hos12 pital for a cost reporting period ending in a fiscal

13 year is an amount equal to the per resident amount

14 for cost reporting periods ending during fiscal year

15 1999 for the hospital involved (as determined by the

16 Secretary using the methodology described in section

17 1886(h)(2)(E)) of such Act (42 U.S.C.

18 1395ww(h)(2)(E))) increased by the percentage in19 crease in the Consumer Price Index for All Urban

20 Consumers (United States city average) from fiscal

21 year 1999 through the fiscal year involved.

22 (c) AMOUNT OF PAYMENT FOR INDIRECT MEDICAL

23 EDUCATION.—

24 (1) IN GENERAL.—The amount determined

25 under this subsection for payments to a children’s
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1 hospital for indirect expenses associated with the

2 treatment of more severely ill patients and the addi3 tional costs related to the teaching of residents for

4 a cost reporting period beginning in or after fiscal

5 year 2000 and before fiscal year 2004 is equal to

6 an amount determined appropriate by the Secretary.

7 (2) FACTORS.—In determining the amount

8 under paragraph (1), the Secretary shall—

9 (A) take into account variations in case

10 mix among children’s hospitals and the number

11 of full-time equivalent residents in the hospitals’

12 approved medical residency training programs

13 for the cost reporting period; and

14 (B) assure that the aggregate of the pay15 ments for indirect expenses associated with the

16 treatment of more severely ill patients and the

17 additional costs related to the teaching of resi18 dents under this section in a fiscal year are

19 equal to the amount appropriated for such ex20 penses in such year under subsection (e)(2).

21 (d) MAKING OF PAYMENTS.—

22 (1) INTERIM PAYMENTS.—The Secretary shall

23 estimate, before the beginning of each cost reporting

24 period for a hospital for which the payments may be

25 made under this section, the amounts of the pay-
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1 ments for such period and shall (subject to para2 graph (2)) make the payments of such amounts in

3 26 equal interim installments during such period.

4 (2) WITHHOLDING.—The Secretary shall with5 hold up to 25 percent from each interim installment

6 paid under paragraph (1).

7 (3) RECONCILIATION.—At the end of each such

8 period, the hospital shall submit to the Secretary

9 such information as the Secretary determines to be

10 necessary to determine the percent (if any) of the

11 total amount withheld under paragraph (2) that is

12 due under this section for the hospital for the pe13 riod. Based on such determination, the Secretary

14 shall recoup any overpayments made, or pay any

15 balance due. The amount so determined shall be

16 considered a final intermediary determination for

17 purposes of applying section 1878 of the Social Se18 curity Act (42 U.S.C. 1395oo) and shall be subject

19 to review under that section in the same manner as

20 the amount of payment under section 1886(d) of

21 such Act (42 U.S.C. 1395ww(d)) is subject to review

22 under such section.

23 (e) LIMITATION ON EXPENDITURES.—

24 (1) DIRECT MEDICAL EDUCATION.—
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1 (A) IN GENERAL.—Subject to subpara2 graph (B), there are hereby appropriated, out

3 of any money in the Treasury not otherwise ap4 propriated, for payments under this section for

5 direct expenses relating to approved medical

6 residency training programs for cost reporting

7 periods beginning in—

8 (i) fiscal year 2000, $35,000,000;

9 (ii) fiscal year 2001, $95,000,000;

10 (iii) fiscal year 2002, $95,000,000;

11 and

12 (iv) fiscal year 2003, $95,000,000.

13 (B) CARRYOVER OF EXCESS.—If the

14 amount of payments under this section for cost

15 reporting periods beginning in fiscal year 2000,

16 2001, or 2002 is less than the amount provided

17 under this paragraph for such payments for

18 such periods, then the amount available under

19 this paragraph for cost reporting periods begin20 ning in the following fiscal year shall be in21 creased by the amount of such difference.

22 (2) INDIRECT MEDICAL EDUCATION.—There

23 are hereby appropriated, out of any money in the

24 Treasury not otherwise appropriated, for payments

25 under this section for indirect expenses associated
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1 with the treatment of more severely ill patients and

2 the additional costs related to the teaching of resi3 dents for cost reporting periods beginning in—

4 (A) fiscal year 2000, $65,000,000;

5 (B) fiscal year 2001, $190,000,000;

6 (C) fiscal year 2002, $190,000,000; and

7 (D) fiscal year 2003, $190,000,000.

8 (f) RELATION TO MEDICARE AND MEDICAID PAY9 MENTS.—Notwithstanding any other provision of law,

10 payments under this section to a hospital for a cost report11 ing period—

12 (1) are in lieu of any amounts otherwise pay13 able to the hospital under section 1886(h) or

14 1886(d)(5)(B) of the Social Security Act (42 U.S.C.

15 1395ww(h); 1395ww(d)(5)B)) to the hospital for

16 such cost reporting period, but

17 (2) shall not affect the amounts otherwise pay18 able to such hospitals under a State medicaid plan

19 under title XIX of such Act (42 U.S.C. 1396 et

20 seq.).

21 (g) DEFINITIONS.—In this section:

22 (1) APPROVED MEDICAL RESIDENCY TRAINING

23 PROGRAM.—The term ‘‘approved medical residency

24 training program’’ has the meaning given such term
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1 in section 1886(h)(5)(A) of the Social Security Act

2 (42 U.S.C. 1395ww(h)(5)(A)).

3 (2) CHILDREN’S HOSPITAL.—The term ‘‘chil4 dren’s hospital’’ means a hospital described in sec5 tion 1886(d)(1)(B)(iii) of the Social Security Act

6 (42 U.S.C. 1395ww(d)(1)(B)(iii)).

7 (3) DIRECT GRADUATE MEDICAL EDUCATION

8 COSTS.—The term ‘‘direct graduate medical edu9 cation costs’’ has the meaning given such term in

10 section 1886(h)(5)(C) of the Social Security Act (42

11 U.S.C. 1395ww(h)(5)(C)).

12 (4) SECRETARY.—The term ‘‘Secretary’’ means

13 the Secretary of Health and Human Services.

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