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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1224 Introduced in House (IH)]

106th CONGRESS
  1st Session
                                H. R. 1224

   To amend the Internal Revenue Code of 1986 and title XVIII of the 
Social Security Act to provide for comprehensive financing for graduate 
                           medical education.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 23, 1999

Mr. Cardin (for himself, Mr. Stark, Mr. Kleczka, Mr. Lewis of Georgia, 
 Mr. Levin, and Mr. Bentsen) 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 the Internal Revenue Code of 1986 and title XVIII of the 
Social Security Act to provide for comprehensive financing for graduate 
                           medical education.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``All-Payer Graduate 
Medical Education Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
    TITLE I--HEALTH CARE WORKFORCE TRUST FUND; PAYMENTS TO TEACHING 
                               HOSPITALS

            Subtitle A--Establishment and Financing of Fund

Sec. 101. Establishment.
Sec. 102. Financing for fund; fees on insured and self-insured health 
                            plans.
         Subtitle B--Additional Payments to Teaching Hospitals

Sec. 111. Formula payments regarding private-sector share of costs of 
                            graduate medical education.
Sec. 112. Application for payments.
Sec. 113. Annual amount of payments.
Sec. 114. Definitions.
Sec. 115. Study.
Subtitle C--Conforming Changes in Medicare Payment for Direct Costs of 
                       Graduate Medical Education

Sec. 121. Changes in medicare formula for payment of direct GME costs.
Sec. 122. Exception from limitation on number of residents for rural 
                            and underserved urban areas.
Sec. 123. Study on appropriate levels of documentation for professional 
                            services of teaching physicians.
                 TITLE II--HEALTH WORKFORCE PRIORITIES

Sec. 201. Plan to reduce residency training positions.
      TITLE III--MODIFICATION IN MEDICARE PAYMENT FOR IME AND DSH

Sec. 301. Modification regarding payments for indirect costs of 
                            graduate medical education.
Sec. 302. Modification of DSH.
TITLE IV--ADDITIONAL PAYMENTS FOR GRADUATE EDUCATION FOR NON-PHYSICIAN 
                          HEALTH PROFESSIONALS

Sec. 401. Payments for graduate education for non-physician health 
                            professionals.

    TITLE I--HEALTH CARE WORKFORCE TRUST FUND; PAYMENTS TO TEACHING 
                               HOSPITALS

            Subtitle A--Establishment and Financing of Fund

SEC. 101. ESTABLISHMENT.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 (relating to trust fund code) is amended by adding at the 
end the following new section:

``SEC. 9511. HEALTH CARE WORKFORCE TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Health Care 
Workforce Trust Fund', consisting of such amounts as may be 
appropriated or credited to such Trust Fund as provided in this section 
and section 9602(b).
    ``(b) Transfers to Fund.--
            ``(1) In general.--There are hereby appropriated to the 
        Health Care Workforce Trust Fund--
                    ``(A) amounts equivalent to the net revenues 
                received in the Treasury from the fees imposed under 
                subchapter B of chapter 34 (relating to fees on health 
                insurance and health-related administrative services);
                    ``(B) subject to paragraph (2), from the Federal 
                Hospital Insurance Trust Fund (established under 
                section 1817 of the Social Security Act) amounts 
                determined by the Secretary of Health and Human 
                Services to be equivalent to the reductions in payments 
                made from such Trust Fund by virtue of the amendments 
                made by the All-Payer Graduate Medical Education Act; 
                and
                    ``(C) subject to paragraph (2), from the Federal 
                Supplementary Medical Insurance Trust Fund (established 
                under section 1841 of the Social Security Act) amounts 
                determined by the Secretary of Health and Human 
                Services to be equivalent to the reductions in payments 
                made from such Trust Fund by virtue of the amendments 
                made by the All-Payer Graduate Medical Education Act.
            (2) Limitation on transfers from medicare trust funds.--If 
        the sum of the amounts otherwise transferred (but for this 
        paragraph) under subparagraph (B) and (C) of paragraph (1) for 
        a fiscal year would exceed $300,000,000, the amounts so 
        transferred under each respective subparagraph shall be reduced 
        in a pro-rated manner so that the total so transferred is equal 
        to $300,000,000.
    ``(c) Expenditures From Fund.--Amounts in the Health Care Workforce 
Trust Fund are available to the Secretary of Health and Human Services 
for making payments under sections 111 and 401 of the All-Payer 
Graduate Medical Education Act.
    ``(d) Net Revenues.--For purposes of this section, the term `net 
revenues' means the amount estimated by the Secretary based on the 
excess of--
            ``(1) the fees received in the Treasury under subchapter B 
        of chapter 34, over
            ``(2) the decrease in the tax imposed by chapter 1 
        resulting from the fees imposed by such subchapter.''.
    (b) Clerical Amendment.--The table of sections for such subchapter 
A is amended by adding at the end thereof the following new item:

                              ``Sec. 9511. Health Care Workforce Trust 
                                        Fund.''.

SEC. 102. FINANCING FOR FUND; FEES ON INSURED AND SELF-INSURED HEALTH 
              PLANS.

    (a) General Rule.--Chapter 34 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subchapter:

         ``Subchapter B--Insured and Self-Insured Health Plans

                              ``Sec. 4375. Health insurance and health-
                                        related administrative 
                                        services.
                              ``Sec. 4376. Self-insured health plans.
                              ``Sec. 4377. Definitions and special 
                                        rules.

``SEC. 4375. HEALTH INSURANCE AND HEALTH-RELATED ADMINISTRATIVE 
              SERVICES.

    ``(a) Imposition of Fee.--There is hereby imposed--
            ``(1) on each specified health insurance policy, a fee 
        equal to 1 percent of the premiums received under such policy, 
        and
            ``(2) on each amount received for health-related 
        administrative services, a fee equal to 1 percent of the amount 
        so received.
    ``(b) Liability for Fee.--
            ``(1) Health insurance.--The fee imposed by subsection 
        (a)(1) shall be paid by the issuer of the policy.
            ``(2) Health-related administrative services.--The fee 
        imposed by subsection (a)(2) shall be paid by the person 
        providing the health-related administrative services.
    ``(c) Specified Health Insurance Policy.--For purposes of this 
section--
            ``(1) In general.--Except as otherwise provided in this 
        section, the term `specified health insurance policy' means any 
        accident or health insurance policy issued with respect to 
        individuals residing in the United States.
            ``(2) Exemption of certain policies.--The term `specified 
        health insurance policy' does not include any insurance policy 
        if substantially all of the coverage provided under such policy 
        relates to--
                    ``(A) liabilities incurred under workers' 
                compensation laws,
                    ``(B) tort liabilities,
                    ``(C) liabilities relating to ownership or use of 
                property,
                    ``(D) credit insurance, or
                    ``(E) such other similar liabilities as the 
                Secretary may specify by regulations.
            ``(3) Special rule where policy provides other coverage.--
        In the case of any specified health insurance policy under 
        which amounts are payable other than for accident and health 
        coverage, in determining the amount of the fee imposed by 
        subsection (a)(1) on any premium received under such policy, 
        there shall be excluded the amount of the charge for the non-
        accident and health coverage if--
                    ``(A) the charge for such non-accident and health 
                coverage is either separately stated in the policy, or 
                furnished to the policyholder in a separate statement, 
                and
                    ``(B) such charge is reasonable in relation to the 
                total charges under the policy.
        In any other case, the entire amount of the premium received 
        under such a policy shall be subject to the fees under 
        subsection (a)(1).
            ``(4) Treatment of prepaid health coverage arrangements.--
                    ``(A) In general.--In the case of any arrangement 
                described in subparagraph (B)--
                            ``(i) such arrangement shall be treated as 
                        a specified health insurance policy,
                            ``(ii) the payments or premiums referred to 
                        in subparagraph (B)(i) shall be treated as 
                        premiums received for a specified health 
                        insurance policy, and
                            ``(iii) the person referred to in 
                        subparagraph (B)(i) shall be treated as the 
                        issuer.
                    ``(B) Description of arrangements.--An arrangement 
                is described in this subparagraph if under such 
                arrangement--
                            ``(i) fixed payments or premiums are 
                        received as consideration for any person's 
                        agreement to provide or arrange for the 
                        provision of accident or health coverage to 
                        residents of the United States, regardless of 
                        how such coverage is provided or arranged to be 
                        provided, and
                            ``(ii) substantially all of the risks of 
                        the rates of utilization of services is assumed 
                        by such person or the provider of such 
                        services.
    ``(d) Health-Related Administrative Services.--For purposes of this 
section, the term `health-related administrative services' means--
            ``(1) the processing of claims or performance of other 
        administrative services in connection with accident or health 
        coverage under a specified health insurance policy if the 
        charge for such services is not included in the premiums under 
        such policy, and
            ``(2) processing claims, arranging for provision of 
        accident or health coverage, or performing other administrative 
        services in connection with an applicable self-insured health 
        plan (as defined in section 4376(c)) established or maintained 
        by another person.

``SEC. 4376. SELF-INSURED HEALTH PLANS.

    ``(a) Imposition of Fee.--In the case of any applicable self-
insured health plan, there is hereby imposed a fee for each month equal 
to 1 percent of the sum of--
            ``(1) the accident and health coverage expenditures for 
        such month under such plan, and
            ``(2) the direct administrative expenditures for such month 
        under such plan.
    ``(b) Liability for Fee.--
            ``(1) In general.--The fee imposed by subsection (a) shall 
        be paid by the plan sponsor.
            ``(2) Plan sponsor.--For purposes of paragraph (1) the term 
        `plan sponsor' means--
                    ``(A) the employer in the case of a plan 
                established or maintained by a single employer,
                    ``(B) the employee organization in the case of a 
                plan established or maintained by an employee 
                organization,
                    ``(C) in the case of--
                            ``(i) a plan established or maintained by 2 
                        or more employers or jointly by 1 or more 
employers and 1 or more employee organizations,
                            ``(ii) a multiple employer welfare 
                        arrangement, or
                            ``(iii) a voluntary employees' beneficiary 
                        association described in section 501(c)(9),
                the association, committee, joint board of trustees, or 
                other similar group of representatives of the parties 
                who establish or maintain the plan, or
                    ``(D) the cooperative or association described in 
                subsection (c)(2)(F) in the case of a plan established 
                or maintained by such a cooperative or association.
    ``(c) Applicable Self-Insured Health Plan.--For purposes of this 
section, the term `applicable self-insured health plan' means any plan 
for providing accident or health coverage if--
            ``(1) any portion of such coverage is provided other than 
        through an insurance policy, and
            ``(2) such plan is established or maintained--
                    ``(A) by one or more employers for the benefit of 
                their employees or former employees,
                    ``(B) by one or more employee organizations for the 
                benefit of their members or former members,
                    ``(C) jointly by 1 or more employers and 1 or more 
                employee organizations for the benefit of employees or 
                former employees,
                    ``(D) by a voluntary employees' beneficiary 
                association described in section 501(c)(9),
                    ``(E) by any organization described in section 
                501(c)(6), or
                    ``(F) in the case of a plan not described in the 
                preceding subparagraphs, by a multiple employer welfare 
                arrangement (as defined in section 3(40) of Employee 
                Retirement Income Security Act of 1974), a rural 
                electric cooperative (as defined in section 
                3(40)(B)(iv) of such Act), or a rural telephone 
                cooperative association (as defined in section 
                3(40)(B)(v) of such Act).
    ``(d) Accident and Health Coverage Expenditures.--For purposes of 
this section--
            ``(1) In general.--The accident and health coverage 
        expenditures of any applicable self-insured health plan for any 
        month is the aggregate expenditures for such month for accident 
        and health coverage provided under such plan to the extent such 
        expenditures are not subject to the fees under section 4375.
            ``(2) Treatment of reimbursements.--In determining accident 
        and health coverage expenditures during any month of any 
        applicable self-insured health plan, reimbursements (by 
        insurance or otherwise) received during such month for accident 
        and health coverage expenditures shall be taken into account as 
        a reduction in accident and health coverage expenditures.
            ``(3) Certain expenditures disregarded.--Paragraph (1) 
        shall not apply to any expenditure for the acquisition or 
        improvement of land or for the acquisition or improvement of 
        any property to be used in connection with the provision of 
        accident and health coverage which is subject to the allowance 
        under section 167, except that, for purposes of paragraph (1), 
        allowances under section 167 shall be considered as 
        expenditures.
    ``(e) Direct Administrative Expenditures.--For purposes of this 
section, the term `direct administrative expenditures' means the 
administrative expenditures under the plan to the extent such 
expenditures are not subject to the fees under section 4375. In 
determining the amount of such expenditures, rules similar to the rules 
of subsection (d)(3) shall apply.

``SEC. 4377. DEFINITIONS AND SPECIAL RULES.

    ``(a) Definitions.--For purposes of this subchapter--
            ``(1) Accident and health coverage.--The term `accident and 
        health coverage' means any coverage which, if provided by an 
        insurance policy, would cause such policy to be a specified 
        health insurance policy (as defined in section 4375(c)).
            ``(2) Insurance policy.--The term `insurance policy' means 
        any policy or other instrument whereby a contract of insurance 
        is issued, renewed, or extended.
            ``(3) Premium.--The term `premium' means the gross amount 
        of premiums and other consideration (including advance 
        premiums, deposits, fees, and assessments) arising from 
        policies issued by a person acting as the primary insurer, 
        adjusted for any return or additional premiums paid as a result 
        of endorsements, cancellations, audits, or retrospective 
        rating.
            ``(4) United States.--The term `United States' includes any 
        possession of the United States.
    ``(b) Treatment of Governmental Entities.--
            ``(1) In general.--For purposes of this subchapter--
                    ``(A) the term `person' includes any governmental 
                entity, and
                    ``(B) notwithstanding any other law or rule of law, 
                governmental entities shall not be exempt from the fees 
                imposed by this subchapter except as provided in 
                paragraph (2).
            ``(2) Treatment of exempt governmental programs.--In the 
        case of an exempt governmental program--
                    ``(A) no fee shall be imposed under section 4375 on 
                any premium received pursuant to such program or on any 
                amount received for health-related administrative 
                services pursuant to such program, and
                    ``(B) no fee shall be imposed under section 4376 on 
                any expenditures pursuant to such program.
            ``(3) Exempt governmental program defined.--For purposes of 
        this subchapter, the term `exempt governmental program' means--
                    ``(A) the insurance programs established by parts 
                A, B, and C of title XVIII of the Social Security Act,
                    ``(B) the medical assistance program established by 
                title XIX or XXI of the Social Security Act,
                    ``(C) any program established by Federal law for 
                providing medical care (other than through insurance 
                policies) to individuals (or the spouses and dependents 
                thereof) by reason of such individuals being--
                            ``(i) members of the Armed Forces of the 
                        United States, or
                            ``(ii) veterans, and
                    ``(D) any program established by Federal law for 
                providing medical care (other than through insurance 
                policies) to members of Indian tribes (as defined in 
                section 4(d) of the Indian Health Care Improvement 
                Act).
    ``(c) Treatment as Tax.--For purposes of subtitle F, the fees 
imposed by this subchapter shall be treated as if they were taxes.
    ``(d) No Cover Over to Possessions.--Notwithstanding any other 
provision of law, no amount collected under this subchapter shall be 
covered over to any possession of the United States.''
    (b) Clerical Amendment.--Chapter 34 of such Code is amended by 
striking the chapter heading and inserting the following:

           ``CHAPTER 34--TAXES ON CERTAIN INSURANCE POLICIES

                              ``Subchapter A. Policies issued by 
                                        foreign insurers.
                              ``Subchapter B. Insured and self-insured 
                                        health plans.

         ``Subchapter A--Policies Issued By Foreign Insurers''.

    (c) Effective Date.--The amendments made by this section shall 
apply with respect to premiums received and expenses incurred after 
December 31, 1999.

         Subtitle B--Additional Payments to Teaching Hospitals

SEC. 111. FORMULA PAYMENTS REGARDING PRIVATE-SECTOR SHARE OF COSTS OF 
              GRADUATE MEDICAL EDUCATION.

    (a) In General.--In the case of each teaching hospital that in 
accordance with section 112 submits to the Secretary an application for 
calendar year 2002 or any subsequent calendar year (referred to in this 
title as an ``eligible hospital'' for the year involved), the Secretary 
shall in accordance with section 113 make payments for such year to the 
hospital.
    (b) Definitions.--For purposes of this subtitle, the term 
``teaching hospital'' means any hospital that operates an approved 
medical residency training program (as defined in section 1886(h)(5)(A) 
of the Social Security Act).

SEC. 112. APPLICATION FOR PAYMENTS.

    (a) In General.--For purposes of section 111(a), an application for 
payments under such section for a calendar year is in accordance with 
this section if--
            (1) the application is submitted not later than the date 
        specified by the Secretary;
            (2) the application contains the agreements required in 
        this subtitle; and
            (3) the application is in such form, is made in such 
        manner, and contains such agreements, assurances, and 
        information as the Secretary determines to be necessary to 
        carry out this subtitle, including the assurance described in 
        subsection (b).
    (b) Assurance Regarding Use of Direct Graduate Medical Education 
Funds in Support of Teaching Physicians.--The assurance described in 
this subsection is an assurance that at least 20 percent of the funds 
provided to the hospital under section 113(a)(1) (relating to direct 
graduate medical education funding) is expended to compensate 
physicians for their time spent in teaching residents in an approved 
medical residency training program.

SEC. 113. ANNUAL AMOUNT OF PAYMENTS.

    (a) In General.--From amounts in the Health Care Workforce Trust 
Fund under section 9511 of the Internal Revenue Code of 1986, the 
Secretary shall make payments under section 111 to an eligible hospital 
for a calendar year as follows:
            (1) Payments, made on a periodic basis, whose sum is equal 
        to the amount determined under subsection (c) for the hospital 
        for the year (which amount relates to the direct costs for 
        graduate medical education attributable to certain 
        individuals).
            (2) Payments (in addition to payments under paragraph (1)), 
        made on a periodic basis, whose sum is equal to the amount 
        determined under subsection (d) for the hospital for the year 
        (which amount relates to the per-discharge indirect costs of 
        the hospital for graduate medical education attributable to 
        certain individuals).
    (b) Effective Dates for Payments.--Payments under paragraph (1) of 
subsection (a) are effective for portions of cost reporting periods 
occurring on or after January 1, 2001. Payments under paragraph (2) of 
such subsection are effective for patient discharges occurring on or 
after such date.
    (c) Amount of Payments; Direct Costs.--
            (1) In general.--For purposes of paragraph (1) of 
        subsection (a), the amount determined under this subsection for 
        an eligible hospital for a calendar year is the product of--
                    (A) the aggregate nonmedicare training amount for 
                the hospital, as defined in paragraph (2); and
                    (B) the direct-cost Fund payout percentage, as 
                defined in paragraph (4).
            (2) Aggregate nonmedicare training amount.--For purposes of 
        this subtitle, the term ``aggregate nonmedicare training 
        amount'', with respect to the eligible hospital involved, means 
        (subject to paragraph (3)(D)) an amount equal to the product of 
        subparagraphs (A) and (B), as follows:
                    (A) The number of full-time-equivalent training 
                participants in the approved physician training 
                programs of the hospital for the academic year in which 
                the calendar year begins, not to exceed the maximum 
                total number permitted under section 1886(h)(4)(F) of 
                the Social Security Act.
                    (B) An amount equal to the product of--
                            (i) the national average FTE wage-related 
                        compensation, as defined in paragraph (3); and
                            (ii) a percentage equal to the fraction of 
                        the total inpatient hospital and outpatient 
                        hospital revenues (as established by the 
                        Secretary) during the cost reporting period 
                        which are attributable to patients with respect 
                        to whom payment may be made under health 
                        insurance coverage (whether through a group 
                        health plan or otherwise) or under a group 
                        health plan.
                For purposes of clause (ii), payment made under the 
                medicare or medicaid programs (under titles XVIII or 
                XIX of the Social Security Act) shall not be treated as 
                payment under health insurance coverage.
            (3) National average fte wage-related compensation.--
                    (A) In general.--For purposes of this subtitle, the 
                term ``national average FTE wage-related compensation'' 
                means the national average of the costs of resident 
                salaries and related fringe benefits per training 
                participant for all approved physician training 
                programs and all medical specialities, as adjusted 
                under subparagraphs (B) and (C). Such national average 
                shall be based upon a national resident wage survey for 
                salaries and related fringe benefits as of July 1, 
                1998, as determined by the Secretary and shall not 
                include costs of overhead or supervision.
                    (B) Annual adjustments per consumer price index.--
                The national average applicable under subparagraph (A) 
                for a calendar year for such programs is, subject to 
                subparagraph (C), the amount determined under 
                subparagraph (A) increased by the estimated percentage 
                change in the consumer price index from January 1999 
                through the midpoint of the year involved, with 
                appropriate adjustments to reflect previous under- or 
                over-estimations under this subparagraph in the 
                projected percentage change in the consumer price 
                index.
                    (C) Individual adjustments per area wage index.--
                The national average determined under subparagraph (A) 
                and adjusted under subparagraph (B) for a calendar year 
                shall, in the case of the approved physician training 
                programs of the eligible hospital involved, be adjusted 
                by a factor to reflect regional differences in wage and 
                wage-related costs, as determined in accordance with 
                the area wage index applicable (as of the beginning of 
                such year) to hospitals in the labor-market area 
                involved, as determined under section 1886(d)(3)(E) of 
                the Social Security Act.
                    (D) Alternative rule for certain hospitals.--
                            (i) Election for applicability of rule.--In 
                        the case of an eligible hospital for which the 
                        election under section 1861(b)(7) of the Social 
                        Security Act was in effect on July 1, 1998, and 
                        has remained in effect continuously from such 
                        date, the following applies:
                                    (I) The hospital may, with respect 
                                to the determination under paragraph 
                                (2) of the aggregate nonmedicare 
                                training amount for the hospital, elect 
                                to have the alternative rule described 
                                in clause (ii) applied to the hospital.
                                    (II) If the election under such 
                                section 1861(b)(7) ceases to be in 
                                effect, any election made by the 
                                hospital under subclause (I) is 
                                terminated.
                                    (III) If the hospital has made the 
                                election under subclause (I) and 
                                subsequently requests that the election 
                                be terminated, the Secretary shall 
                                approve the request. Upon the approval 
                                of the request, the hospital may not 
                                subsequently elect to have the 
                                alternative rule applied to the 
                                hospital.
                            (ii) Description of alternative rule.--With 
                        respect to a determination under paragraph (2) 
                        of the aggregate nonmedicare training amount 
                        for an eligible hospital that has made the 
                        election under clause (i), the alternative rule 
                        described in this clause is as follows:
                                    (I) In lieu of the applicability of 
                                the national FTE training amount (for 
                                purposes of paragraph (2)(B)(i)), the 
                                Secretary shall apply an amount equal 
                                to the approved FTE resident amount in 
                                effect for the hospital under section 
1886(h)(2) of the Social Security Act.
                                    (II) Subject to the modification 
                                applied under subclause (I), the 
                                Secretary shall determine an amount 
                                under paragraph (2).
                                    (III) The Secretary shall determine 
                                an amount equal to the product of the 
                                fraction determined under paragraph 
                                (2)(B)(ii) and the amount of the 
                                physician costs of services recognized 
                                under section 1861(v)(1) of the Social 
                                Security Act pursuant to the election 
                                of the hospital under section 
                                1861(b)(7) of such Act.
                                    (IV) In lieu of the applicability 
                                of the aggregate nonmedicare training 
                                amount (for purposes of paragraph 
                                (1)(A)), the Secretary shall apply an 
                                amount equal to the sum of the amount 
                                determined under subclause (II) and the 
                                amount determined under subclause 
                                (III).
            (4) Direct-cost fund payout percentage.--For purposes of 
        this subtitle, the term ``direct-cost Fund payout percentage'', 
        with respect to the calendar year involved, means a percentage 
        equal to the ratio of--
                    (A) the amount available in the Health Care 
                Workforce Trust Fund for such year (as estimated by the 
                Secretary); to
                    (B) an amount equal to the total amount of payments 
                under subsection (a)(1) that would be made to eligible 
                hospitals for such year if each hospital received, 
                pursuant to paragraph (1), 100 percent of the aggregate 
                nonmedicare training amount determined for the 
                hospital.
    (d) Amount of Payments; Indirect Costs.--
            (1) In general.--For purposes of paragraph (2) of 
        subsection (a), the amount determined under this subsection for 
        an eligible hospital for a calendar year is the product of--
                    (A) an amount equal to the sum of the nonmedicare 
                per-discharge supplemental payments, as defined in 
                paragraph (2); and
                    (B) the indirect-cost Fund payout percentage, as 
                defined in paragraph (3).
            (2) Nonmedicare per-discharge supplemental payment.--
                    (A) In general.--For purposes of this subtitle, the 
                term ``nonmedicare per-discharge supplemental 
                payment'', with respect to a calendar year, means a 
                payment made to an eligible hospital for a discharge 
                during the year of a patient described in subparagraph 
                (B), the amount of which payment is determined in 
                accordance with subparagraph (C).
                    (B) Relevant patients.--For purposes of 
                subparagraph (A), a patient described in this 
                subparagraph is a patient who is not--
                            (i) entitled to benefits under part A of 
                        title XVIII of the Social Security Act; or
                            (ii) eligible for medical assistance under 
                        title XIX of such Act.
                    (C) Amount of per-discharge payment.--For purposes 
                of subparagraph (A), the amount of the payment under 
                such subparagraph for the discharge of a patient 
                described in subparagraph (B) is the product of--
                            (i) the amount which would be determined 
                        with respect to the discharge under section 
                        1886(d)(1)(A)(iii) of the Social Security Act 
                        if the patient were entitled to benefits under 
                        part A of title XVIII of such Act, adjusted by 
                        the Secretary to take into account differences 
                        in health status, utilization of services, and 
                        other demographic characteristics among 
                        individuals entitled to benefits under part A 
                        of title XVIII of such Act and individuals who 
                        are not so entitled; and
                            (ii) the percentage applicable to the 
                        hospital under section 1886(d)(5)(B)(ii) of 
                        such Act.
                    (D) Special rule for certain hospitals.--In the 
                case of a hospital that is located in a State for which 
                a demonstration program under section 1814(b)(3) of the 
                Social Security Act is in effect, the Secretary shall, 
                for purposes of applying subparagraph (C) to discharges 
                from the hospital, make determinations under such 
                subparagraph as if paragraphs (1)(A)(iii) and 
                (5)(B)(ii) of section 1886(d) of such Act applied to 
                the hospital.
            (3) Indirect-cost fund payout percentage.--For purposes of 
        this subtitle, the term ``indirect-cost Fund payout 
        percentage'', with respect the calendar year involved, means a 
        percentage equal to the ratio of--
                    (A) the amount available in the Health Care 
                Workforce Trust Fund for such year remaining after 
                payments for the year have been made under subsection 
                (a)(1) (as such amount is estimated by the Secretary); 
                to
                    (B) the total amount of payments under subsection 
                (a)(2) that would be made to eligible hospitals for 
                such year if each hospital received, pursuant to 
                paragraph (1), 100 percent of an amount equal to the 
                sum of the nonmedicare per-discharge supplemental 
                payments determined for the hospital.
    (e) Definitions.--For purposes of this subtitle, the term ``full-
time-equivalent training participant'' means a full-time equivalent 
resident of the hospital as determined under section 1886(h)(4) of the 
Social Security Act for the cost reporting period involved.

SEC. 114. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``aggregate nonmedicare training amount'' has 
        the meaning given such term in section 113(c)(2).
            (2) The term ``direct-cost Fund payout percentage'' has the 
        meaning given such term in section 113(c)(4).
            (3) The term ``full-time-equivalent training participant'' 
        has the meaning given such term in section 113(e).
            (4) The term ``indirect-cost Fund payout percentage'' has 
        the meaning given such term in section 113(d)(3).
            (5) The term ``national average FTE wage-related 
        compensation'' has the meaning given such term in section 
        113(c)(3).
            (6) The term ``nonmedicare per-discharge supplemental 
        payment'' has the meaning given such term in section 113(d)(2).
            (7) The term ``Secretary'' means the Secretary of Health 
        and Human Services, unless the context of usage indicates 
        otherwise.
            (8) The term ``teaching hospital'' has the meaning given 
        such term in section 111(b).

SEC. 115. STUDY.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study of the impact of this subtitle.
    (b) Report.--Not later than 5 years after the date that payments 
are first made under this subtitle, the Secretary shall submit to 
Congress a report on such study and shall include such recommendations 
on the continuation of payments under this subtitle, and such changes 
in such payments, as the Secretary deems appropriate.

Subtitle C--Conforming Changes in Medicare Payment for Direct Costs of 
                       Graduate Medical Education

SEC. 121. CHANGES IN MEDICARE FORMULA FOR PAYMENT OF DIRECT GME COSTS.

    (a) Use of National Average FTE Wage-Related Compensation As Basis 
for Payment.--Section 1886(h)(3)(B)(i) of the Social Security Act (42 
U.S.C. 1395ww(h)(3)(B)(i)) is amended by inserting ``(or, for portions 
of cost reporting periods occurring on or after January 1, 2001, in the 
case of a hospital that does not have in effect the election described 
in section 113(c)(3)(D)(i) of the All-Payer Graduate Medical Education 
Act, the applicable national average FTE wage-related compensation, as 
determined under section 113(c)(3) of such Act)'' after ``for that 
period''.
    (b) Allocation Based on Medicare Revenues.--Section 1886(h)(3) of 
such Act (42 U.S.C. 1395ww(h)(3)) is amended--
            (1) in subparagraph (C), by inserting before the period at 
        the end the following: ``, or, for portions of a cost reporting 
        period occurring on or after January 1, 2001, in the case of a 
        hospital that does not have in effect the election described in 
        section 113(c)(3)(D)(i) of the All-Payer Graduate Medical 
        Education Act, the fraction of the total inpatient hospital and 
        outpatient hospital revenues (as established by the Secretary) 
        during the reporting period which is attributable to patients 
        with respect to whom payment may be made under this title''; 
        and
            (2) in subparagraph (D)(i)(II), by inserting before the 
        period at the end the following: ``or, for portions of a cost 
        reporting period occurring on or after January 1, 2001, in the 
        case of a hospital that does not have in effect the election 
        described in section 113(c)(3)(D)(i) of the All-Payer Graduate 
        Medical Education Act, the fraction of the total inpatient 
        hospital and outpatient hospital revenues (as established by 
        the Secretary) during the reporting period which is 
        attributable to such enrolled individuals''.
    (c) Requirement for Assurance Regarding Use of Direct Graduate 
Medical Education Funds in Support of Teaching Physicians.--Section 
1886(h)(1) of the Social Security Act (42 U.S.C. 1395ww(h)(1)) is 
amended by adding at the end the following: ``The Secretary shall not 
make any payments to a hospital under this subsection unless the 
Secretary receives satisfactory assurances that at least 20 percent of 
the payments so made are expended to compensate physicians for their 
time spent in teaching residents.''.
    (d) Effective Date.--The amendments made by this section apply to 
portions of cost reporting periods occurring on or after January 1, 
2001.

SEC. 122. EXCEPTION FROM LIMITATION ON NUMBER OF RESIDENTS FOR RURAL 
              AND UNDERSERVED URBAN AREAS.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww) is amended--
            (1) in subsection (d)(5)(B), by adding at the end the 
        following: ``The Secretary shall provide for reasonable 
        exemptions and exceptions from the previous sentence in the 
        case of a hospital that has residents who are assigned to serve 
        a rural area or an urban underserved area.''; and
            (2) in subsection (h)(4)(F), by adding at the end the 
        following: ``The Secretary shall provide for reasonable 
        exemptions and exceptions from the previous sentence in the 
        case of a hospital that has residents who are assigned to serve 
        a rural area or an urban underserved area.''.
    (b) Effective Dates.--The amendments made by--
            (1) subsection (a)(1) apply to discharges occurring on or 
        after January 1, 2000; or
            (2) subsection (a)(2) apply to cost reporting periods 
        beginning on or after January 1, 2000.

SEC. 123. STUDY ON APPROPRIATE LEVELS OF DOCUMENTATION FOR PROFESSIONAL 
              SERVICES OF TEACHING PHYSICIANS.

    (a) In General.--The Secretary of Health and Human Services shall, 
in collaboration with the Institute of Medicine and the Association of 
American Medical Colleges, conduct a study of the appropriateness of 
the level of documentation that should be required, as a condition of 
payment under part B of the medicare program for professional services 
of a teaching physician, in a patient's medical record of the services 
provided by that physician.
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Secretary shall submit a report on the study under 
subsection (a) to the Committees on Ways and Means and Commerce of the 
House of Representatives and the Committee on Finance of the Senate.

                 TITLE II--HEALTH WORKFORCE PRIORITIES

SEC. 201. PLAN TO REDUCE RESIDENCY TRAINING POSITIONS.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Health and Human Services shall 
develop a plan to reduce, beginning with the residency year that begins 
July 1, 2005, the number of first year training positions in medical 
residency training programs in the United States to 110 percent of the 
annual number of students graduating from a medical school in the 
United States.
    (b) Monitoring Distribution.--In implementing the plan under this 
section, the Secretary shall monitor the distribution of resident 
specialties in order to assure that there is an adequate proportion of 
primary care physicians to fulfill the country's needs and to ensure 
access to health care for underserved populations.
    (c) Implementation.--In implementing the plan under this section, 
the Secretary shall take into consideration the reduced revenues to 
affected hospitals and shall develop a formula to restore to such 
hospitals a portion of the funds that would have been expended had the 
plan under this section not been in effect.
    (d) Consultation.--The plan under this section shall be developed 
in conjunction with the Institute of Medicine, the Council on Graduate 
Medical Education, the Association of American Medical Colleges, the 
American Hospital Association, the American Medical Association, the 
American Osteopathic Association, and other organizations deemed 
appropriate by the Secretary.
    (e) Report to Congress.--Not later than 1 year after the date of 
the enactment of this Act, the Secretary shall submit to the Committee 
on Ways and Means in the House of Representatives, and to the Committee 
on Finance in the Senate, a report on the plan developed under this 
section.
    (f) Enforcement.--
            (1) In general.--Notwithstanding any other provision of 
        law, but subject to paragraph (2), for purposes of computing 
        the amount of payment to be made under subsection (d)(5)(B) or 
        (h) of section 1886 of the Social Security Act (42 U.S.C. 
        1395ww) for any hospital that the Secretary determines has a 
        medical residency training program in which the number of first 
        year residents exceeds the maximum number permitted for such 
        program under the plan implemented under subsection (a), the 
        number of residents counted shall be reduced by 5 multiplied by 
        the number of such excess.
            (2) Exception for hospitals elective alternative 
        treatment.--Paragraph (1) does not apply to a hospital for 
        which the election under section 1861(b)(7) of the Social 
        Security Act was in effect on July 1, 1998.

      TITLE III--MODIFICATION IN MEDICARE PAYMENT FOR IME AND DSH

SEC. 301. MODIFICATION REGARDING PAYMENTS FOR INDIRECT COSTS OF 
              GRADUATE MEDICAL EDUCATION.

    (a) Modification From 5.5% to 4.8%.--Section 1886(d)(5)(B)(ii) of 
the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended--
            (1) by striking ``and'' at the end of subclause (IV),
            (2) by amending subclause (V) to read as follows:
                            ``(V) during fiscal year 2001, `c' is equal 
                        to 1.35; and''; and
            (3) by adding at the end the following:
                            ``(VI) on or after October 1, 2001, `c' is 
                        equal to 1.18.''.
    (B) Reporting of IME Payments.--The Secretary of Health and Human 
Services, in collaboration with the Institute of Medicine, the Council 
on Graduate Medical Education, the Association of American Medical 
Colleges, the American Hospital Association, and other organizations 
deemed appropriate by the Secretary, shall develop and implement a plan 
for hospitals that receive additional payments under section 
1886(d)(5)(B) of the Social Security Act to report annually to the 
Secretary information on how such hospitals contributed to education, 
improvements in clinical services and research infrastructure, and 
community services operated by or in such hospitals. The first such 
report shall be submitted for cost reporting periods beginning during 
fiscal year 2002.

SEC. 302. MODIFICATION OF DSH.

    (a) Collection of Charge Data.--Section 1886(d)(5)(F) of the Social 
Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended by adding at the 
end the following new clause:
    ``(x) The Secretary shall collect from all subsection (d) hospitals 
annual data on inpatient and outpatient charges, including all such 
charges--
            ``(I) for all patients;
            ``(II) for patients who are eligible for benefits 
        (excluding any State supplementation) under the supplemental 
security income program under title XVI and entitled to benefits under 
part A;
            ``(III) for patients who are entitled to (or, if they 
        applied, would be eligible for) medical assistance under title 
        XIX;
            ``(IV) for patients who are beneficiaries of indigent care 
        programs sponsored by State or local governments; and
            ``(V) to the extent that payment is not made because of an 
        inability of the patient to pay (or have payment made on the 
        patient's behalf for) such charges.''.
    (b) Revision of Formula for Disproportionate Patient Percentage.--
Clause (vi) of such section is amended to read as follows:
    ``(vi) In this subparagraph, the term `disproportionate patient 
percentage' means, with respect to a cost reporting period of a 
hospital--
            ``(I) the charges described in subclauses (II) through (V) 
        of clause (x) for such period; divided by
            (II) the charges described in clause (x)(I) for such 
        period.''.
    (c) Establishing General Qualifying Disproportionate Patient 
Percentage Threshold to Cover Half of PPS Hospitals.--Clause (v) of 
such section is amended by striking ``equals, or exceeds--'' and all 
that follows and inserting ``equals or exceeds a threshold percentage, 
which is established by the Secretary in a manner so that, if the 
amendments made by section 302 of the All-Payer Graduate Medical 
Education Act had been in effect for cost reporting periods ending in 
fiscal year 2000, 50 percent of subsection (d) hospitals would have 
been eligible for an additional payment under this subparagraph for 
such periods. The Secretary shall establish such threshold percentage 
based upon data collected by the Secretary under clause (x) for such 
cost reporting periods.''.
    (d) Establishing Uniform General Payment Formula.--Such section is 
further amended--
            (1) in clause (iv), by striking ``and that--'' and all that 
        follows and inserting ``is equal to (P-T)(CF), where--
            ``(I) `P' is the hospital's disproportionate patient 
        percentage (as defined in clause (vi));
            ``(II) `T' is equal to the threshold percentage established 
        by the Secretary under clause (v); and
            ``(III) `CF' is equal to such conversion factor as the 
        Secretary may establish so that, applying such conversion 
        factor as if the amendments made by section 302 of the All-
        Payer Graduate Medical Education Act had been in effect for 
        cost reporting periods ending in fiscal year 2000, the total of 
        the additional payments that would have been made under this 
        subparagraph is equal to the total of the payments actually 
        made under this subparagraph (not taking into account such 
        amendments).
The Secretary shall establish the conversion factor under subclause 
(III) based upon data collected by the Secretary under clause (x) for 
cost reporting periods ending in fiscal year 2000.''; and
            (2) by striking clauses (vii) and (viii).
    (e) Carving Out DSH Payments from Payments to Medicare+Choice 
Organizations and Paying the Amounts Directly to DSH Hospitals Treating 
Medicare+Choice Enrollees.--
            (1) In general.--Section 1853(c)(3) of the Social Security 
        Act (42 U.S.C. 1395w-23(c)(3)) is amended--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraphs (B) and (D)'';
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E); and
                    (C) by inserting after subparagraph (C) the 
                following new subparagraph:
                    ``(D) Removal of payments attributable to 
                disproportionate share payments from calculation of 
                adjusted average per capita cost.--
                            ``(i) In general.--In determining the area-
                        specific Medicare+Choice capitation rate under 
                        subparagraph (A) for a year (beginning with 
                        2002), the annual per capita rate of payment 
                        for 1998 determined under section 1876(a)(1)(C) 
                        shall be adjusted, subject to clause (ii) to 
                        exclude from the rate the additional payments 
                        that the Secretary estimates were payment 
                        during 1997 for additional payments described 
                        in section 1886(d)(5)(F).
                            ``(ii) Treatment of payments covered under 
                        state hospital reimbursement system.--To the 
                        extent that the Secretary estimates that an 
                        annual per capita rate of payment for 1997 
                        described in clause (i) reflects payments to 
                        hospitals reimbursed under section 1814(b)(3), 
                        the Secretary shall estimate a payment 
                        adjustment that is comparable to the payment 
                        adjustment that would have been made under 
clause (i) if the hospitals had not been reimbursed under such 
section.''.
            (2) Additional payments for managed care enrollees.--
        Section 1886(d)(5)(F) of such Act ((42 U.S.C. 1395ww(d)(5)(F)) 
        is amended--
                    (A) in clause (ii), by striking ``clause (ix)'' and 
                inserting ``clauses (ix) and (x)'', and
                    (B) by adding at the end the following:
    ``(ix)(I) For portions of cost reporting periods occurring on or 
after January 1, 2002, the Secretary shall provide for an additional 
payment amount for each applicable discharge of any subsection (d) 
hospital that is a disproportionate share hospital (as described in 
clause (i)).
    ``(II) For purposes of this clause, the term `applicable discharge' 
means the discharge of any individual who is enrolled under a risk-
sharing contract with an eligible organization under section 1876 and 
who is entitled to benefits under part A or any individual who is 
enrolled with a Medicare+Choice organization under part C.
    ``(III) The amount of the payment under this clause with respect to 
any applicable discharge shall be equal to the estimated average per 
discharge amount that would otherwise have been paid under this 
subparagraph if the individuals had not been enrolled as described in 
subclause (II).
    ``(IV) The Secretary shall establish rules for an additional 
payment amount, for any hospital reimbursed under a reimbursement 
system authorized under section 1814(b)(3) if such hospital would 
qualify as a disproportionate share hospital under clause (i) were it 
not so reimbursed. Such payment shall be determined in the same manner 
as the amount of payment is determined under this clause for 
disproportionate share hospitals.''.
    (e) Effective Date.--The amendments made by subsections (a) through 
(d) of this section apply to payments for discharges occurring on or 
after January 1, 2002.

TITLE IV--ADDITIONAL PAYMENTS FOR GRADUATE EDUCATION FOR NON-PHYSICIAN 
                          HEALTH PROFESSIONALS

SEC. 401. PAYMENTS FOR GRADUATE EDUCATION FOR NON-PHYSICIAN HEALTH 
              PROFESSIONALS.

    (a) Development of Plan.--
            (1) In general.--Not later than 3 years after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services shall develop (and submit to Congress a report on) a 
        plan to provide support to institutions that provide graduate 
        health care education for non-physician health professionals.
            (2) Consultation.--The Secretary shall develop the plan in 
        consultation with the Council on Graduate Medical Education, 
        the Institute of Medicine, the American Hospital Association, 
        the Association of American Medical Colleges, the American 
        Association of Colleges of Nursing, the American Nurses 
        Association, the American Physical Therapy Association, the 
        American Occupational Therapy Association, the American Speech-
        Language-Hearing Association, and other organizations as deemed 
        appropriate by the Secretary.
    (b) Payments.--For each fiscal year, beginning with first fiscal 
year that begins after the report under subsection (a) has been 
submitted to Congress, the Secretary of Health and Human Services shall 
provide from the Health Care Workforce Trust Fund (established under 
section 9511 of the Internal Revenue Code of 1986) for support in the 
aggregate amount of $300,000,000 for institutions providing graduate 
health care education for non-physician health professionals. Such 
support shall be provided under such terms and conditions as the 
Secretary establishes in order to carry out the plan developed under 
subsection (a).
                                 <all>
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