II

105TH CONGRESS

2D SESSION S. 1993

To amend title XVIII of the Social Security Act to adjust the formula

used to determine cost limits for home health agencies under the Medicare program, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 28, 1998

Ms. COLLINS (for herself, Mr. CHAFEE, Mr. LEAHY, Mr. JEFFORDS, Mr.

FEINGOLD, Mr. DURBIN, Mr. HARKIN, Ms. SNOWE, Mr. REED, Mr.

SANTORUM, Mr. TORRICELLI, Mr. LEVIN, Mr. DASCHLE, and Mr. SPECTER) introduced the following bill; which was read twice and referred to

the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to adjust

the formula used to determine cost limits for home health

agencies under the Medicare program, 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,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Medicare Home Health

5 Equity Act of 1998’’.
2

•S 1993 IS

1 SEC. 2. REVISION OF HOME HEALTH INTERIM PAYMENT

2 FORMULA.

3 (a) RESTORATION OF COST LIMITS.—Section

4 1861(v)(1)(L)(i)(IV) of the Social Security Act (42 U.S.C.

5 1395x(v)(1)(L)(i)(IV)) (as added by section 4602 of the

6 Balanced Budget Act of 1997) is amended—

7 (1) by striking ‘‘105 percent’’ and inserting

8 ‘‘112 percent’’; and

9 (2) by striking ‘‘median’’ and inserting ‘‘mean’’.

10 (b) CHANGE IN ADDITIONS TO COST LIMITS.—Sec11 tion 1861(v)(1)(L)(v) of the Social Security Act (42

12 U.S.C. 1395x(v)(1)(L)(v)) (as added by section 4602 of

13 the Balanced Budget Act of 1997) is amended to read

14 as follows:

15 ‘‘(v)(I) For services furnished by home health agen16 cies for cost reporting periods beginning on or after Octo17 ber 1, 1997, the Secretary shall provide for an interim

18 system of limits. Payment shall not exceed the costs deter19 mined under the preceding provisions of this subpara20 graph or, if lower, the product of—

21 ‘‘(aa) an agency-specific per beneficiary annual

22 limitation calculated based 75 percent on the reason23 able costs (including nonroutine medical supplies) of

24 the standardized national average cost per patient in

25 calendar year 1994, or best estimate thereof, (as

26 published in the Health Care Financing Review
3

•S 1993 IS

1 Medicare and Medicaid 1997 Statistical Supplement)

2 and based 25 percent on the reasonable costs (in3 cluding nonroutine medical supplies) of the stand4 ardized regional average cost per patient for the

5 agency’s census division in calendar year 1995 (as

6 so published), such national and regional costs up7 dated by the home health market basket index and

8 adjusted pursuant to clause (II); and

9 ‘‘(bb) the agency’s unduplicated census count of

10 patients (entitled to benefits under this title) for the

11 cost reporting period subject to the limitation.

12 ‘‘(II) The labor-related portion of the updated na13 tional and regional costs described in subclause (I)(aa)

14 shall be adjusted by the area wage index applicable under

15 section 1886(d)(3)(E) for the area in which the agency

16 is located (as determined without regard to any reclassi17 fication of the area under section 1886(d)(8)(B) or a deci18 sion of the Medicare Geographic Classification Review

19 Board or the Secretary under section 1886(d)(10) for cost

20 reporting periods beginning after October 1, 1995).’’.

21 (c) CONFORMING AMENDMENTS.—

22 (1) Section 1861(v)(1)(L)(vi) of the Social Se23 curity Act (42 U.S.C. 1395x(v)(1)(L)(vi)) (as added

24 by section 4602 of the Balanced Budget Act of

25 1997) is amended to read as follows:
4

•S 1993 IS

1 ‘‘(vi) In any case in which the Secretary determines

2 that beneficiaries use services furnished by more than 1

3 home health agency for purposes of circumventing the per

4 beneficiary annual limitation in clause (v), the per bene5 ficiary limitations shall be prorated among the agencies.’’.

6 (2) Section 1861(v)(1)(L)(vii)(I) of the Social

7 Security Act (42 U.S.C. 1395x(v)(1)(L)(vii)(I)) (as

8 added by section 4602 of the Balanced Budget Act

9 of 1997) is amended by striking ‘‘clause (v)(I)’’ and

10 inserting ‘‘clause (v)(I)(aa)’’.

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

12 this section shall apply as if included in the enactment

13 of the Balanced Budget Act of 1997.

14 SEC. 3. CBO ESTIMATE OF HOME HEALTH PAYMENT SAV15 INGS.

16 (a) ESTIMATE.—Not later than 60 days after the

17 date of enactment of this Act, and annually thereafter

18 until the prospective payment system for home health

19 agencies established by section 1895 of the Social Security

20 Act (42 U.S.C. 1395fff) is in effect, the Director of the

21 Congressional Budget Office (referred to in this section

22 as the ‘‘Director’’) shall estimate the amount of savings

23 to the Medicare program under title XVIII of such Act

24 (42 U.S.C. 1395 et seq.) resulting from the interim pay25 ment system for home health services established by the
5

•S 1993 IS

1 amendments to section 1861 of such Act (42 U.S.C.

2 1395x) made by section 4602 of the Balanced Budget Act

3 of 1997.

4 (b) CERTIFICATION.—If the Director determines that

5 the amount estimated under subsection (a) exceeds the

6 amount of savings to the Medicare program that the Di7 rector estimated immediately prior to the enactment of the

8 Balanced Budget Act of 1997 by reason of such interim

9 payment system, then the Director shall certify such ex10 cess to the Secretary of Health and Human Services (re11 ferred to in this subsection as the ‘‘Secretary’’).

12 (c) ADJUSTMENT.—

13 (1) IN GENERAL.—If the Director certifies an

14 amount to the Secretary pursuant to subsection (b),

15 the Secretary shall prescribe rules under which ap16 propriate adjustments are made to the amount of

17 payments to home health agencies otherwise made

18 under subparagraph (L) of section 1861(v)(1) of the

19 Social Security Act (42 U.S.C. 1395x(v)(1)(L)) (as

20 amended by section 4602 of the Balanced Budget

21 Act of 1997) in the case of outliers—

22 (A) where events beyond the home health

23 agency’s control or extraordinary cir24 cumstances, including the case mix of such

25 agency, create reasonable costs for a payment
6

•S 1993 IS

1 year which exceed the applicable payment lim2 its; or

3 (B) in any case not described in subpara4 graph (A) where the Secretary deems such an

5 adjustment appropriate.

6 (2) AMOUNT.—The total amount of adjust7 ments made under paragraph (2) for a year may not

8 exceed the amount certified to the Secretary pursu9 ant to subsection (b) for such year. To the extent

10 that such adjustments in a year would otherwise ex11 ceed the amount certified to the Secretary pursuant

12 to subsection (b) for such year, the Secretary shall

13 reduce the payments to home health agencies in a

14 pro rata manner so that the adjustments do not ex15 ceed such amount.

Æ