Calendar No. 345

106TH CONGRESS

1ST SESSION S. 1788

[Report No. 106–199]

A BILL

To amend titles XVIII, XIX, and XXI of the Social

Security Act to make corrections and refinementsin the medicare, medicaid, and SCHIP programs,as revised and added by the Balanced BudgetAct of 1997.

OCTOBER 26, 1999

Read twice and placed on the calendar
II

Calendar No. 345

106TH CONGRESS

1ST SESSION S. 1788

[Report No. 106–199]

To amend titles XVIII, XIX, and XXI of the Social Security Act to make

corrections and refinements in the medicare, medicaid, and SCHIP programs, as revised and added by the Balanced Budget Act of 1997.

IN THE SENATE OF THE UNITED STATES

OCTOBER 26, 1999

Mr. ROTH, from the Committee on Finance, reported the following original

bill; which was read twice and placed on the calendar

A BILL

To amend titles XVIII, XIX, and XXI of the Social Security

Act to make corrections and refinements in the medicare,

medicaid, and SCHIP programs, as revised and added

by the Balanced Budget Act of 1997.

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; TABLE OF CONTENTS.

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

4 ‘‘Medicare, Medicaid, and SCHIP Adjustment Act of

5 1999’’.

6 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex7 cept as otherwise specifically provided, whenever in this

8 Act an amendment is expressed in terms of an amendment

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

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

11 provision of the Social Security Act.

12 (c) TABLE OF CONTENTS.—The table of contents of

13 this Act is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of contents.

TITLE I—PROVISIONS RELATING TO PART A ONLY

Subtitle A—Skilled Nursing Facility Services

Sec. 101. Increase in payment for certain high cost patients.

Sec. 102. Provision for part B add-ons for facilities participating in the

NHCMQ demonstration project.

Sec. 103. Exemption of facilities from 3-year transition period under the prospective payment system for skilled nursing facility services.

Sec. 104. Study and report regarding State licensure and certification standards and respiratory therapy competency examinations.

Sec. 105. Study and report on alternative payment methods for skilled nursing

facilities specializing in care of high cost, chronically ill beneficiaries.

Subtitle B—Hospice Services

Sec. 121. Payment for hospice care.

Sec. 122. Study and report to Congress regarding modification of the payment

rates for hospice care.

Subtitle C—Other Provisions

Sec. 141. Study and report regarding prospective payment system for psychiatric hospitals.

Sec. 142. Revision of prospective payment system for inpatient rehabilitation

services.
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Sec. 143. Exception to CMI qualifier for one year.

Sec. 144. Reclassification of certain counties for purposes of reimbursement

under the medicare program.

Sec. 145. Wage index correction.

Sec. 146. Consideration of an application by a certain entity for medicare certification as an application by a new provider.

Sec. 147. Study and report on county-wide geographic reclassification.

TITLE II—PROVISIONS RELATING TO PART B ONLY

Subtitle A—Hospital Outpatient Department Services

Sec. 201. Multiyear transition to prospective payment system for hospital outpatient department services.

Sec. 202. Study and report to Congress regarding the inclusion of rural and

cancer hospitals in prospective payment system for hospital

outpatient department services.

Sec. 203. Outlier adjustment and transitional pass-through for certain medical

devices, drugs, and biologicals.

Subtitle B—Physicians’ Services

Sec. 221. Modifications of update adjustment factor provisions to reduce oscillations and allow for estimate revisions.

TITLE III—PROVISIONS RELATING TO PARTS A AND B

Subtitle A—Home Health Services

Sec. 301. Delay in the 15 percent reduction in payments under the PPS for

home health services.

Sec. 302. Increase in per visit limit.

Sec. 303. Increase in per beneficiary limits.

Sec. 304. Elimination of 15-minute billing requirement.

Sec. 305. Refinement of home health agency consolidated billing.

Sec. 306. Study and report to Congress regarding the exemption of rural agencies and populations from inclusion in the home health prospective payment system.

Sec. 307. Extension of periodic interim payments for home health agencies.

Subtitle B—Graduate Medical Education

Sec. 321. Revision of multiyear reduction of indirect graduate medical education payments.

Sec. 322. GME payments for certain interns and residents.

TITLE IV—RURAL INITIATIVES

Sec. 401. Sole community hospitals and medicare dependent hospitals.

Sec. 402. Revision of criteria for designation as a critical access hospital.

Sec. 403. Medicare waivers for hospitals in rural areas.

Sec. 404. 2-year extension of medicare dependent hospital (MDH) program.

Sec. 405. Assisting rural graduate medical education residency programs.

TITLE V—PROVISIONS RELATING TO PART C

(MEDICARE+CHOICE PROGRAM)

Subtitle A—Provisions To Accommodate and Protect Medicare Beneficiaries
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Sec. 501. Permitting enrollment in alternative Medicare+Choice plans and

medigap coverage in case of involuntary termination of

Medicare+Choice enrollment.

Sec. 502. Change in effective date of elections and changes of elections of

Medicare+Choice plans.

Sec. 503. Extension of reasonable cost contracts.

Sec. 504. Revision of notice by hospitals regarding coverage of inpatient hospital services.

Sec. 505. Extended disenrollment window for certain involuntarily terminated

enrollees.

Subtitle B—Provisions To Facilitate Implementation of the Medicare+Choice

Program

Sec. 521. Moderation of Medicare+Choice risk adjustment implementation.

Sec. 522. Delay in deadline for submission of adjusted community rates under

Medicare+Choice program and related modifications.

Sec. 523. User fee for Medicare+Choice organizations based on number of enrolled beneficiaries.

Sec. 524. Change in time period for exclusion of Medicare+Choice organizations that have had a contract terminated.

Sec. 525. Flexibility to tailor benefits under Medicare+Choice plans.

Sec. 526. Inapplicability of QISMC to preferred provider organizations.

Sec. 527. Timing of Medicare+Choice health information fairs.

Sec. 528. Rules regarding physician referrals for Medicare+Choice program.

Sec. 529. Clarification regarding the ability of a religious fraternal benefit society to operate a Medicare+Choice private fee-for-service plan.

Subtitle C—Provisions Regarding Special Medicare Populations

Sec. 541. Extension of social health maintenance organization demonstration

project authority.

Sec. 542. Inapplicability of OASIS to PACE.

Sec. 543. Medigap protections for PACE program enrollees.

Sec. 544. Continuation of the frail elderly demonstration project.

Subtitle D—Studies and Reports To Assist in Making Future Improvements

in the Medicare Program

Sec. 561. GAO studies, audits, and reports.

Sec. 562. Medicare Payment Advisory Commission studies and reports.

Sec. 563. Computation and report on medicare original fee-for-service expenditures on a county-by-county basis.

Sec. 564. Study and report on the effects, costs, and feasibility of requiring

medicare original fee-for-service entities and Medicare+Choice

coordinated care plans to comply with uniform quality standards and related reporting requirements.

Sec. 565. Study and report to Congress regarding data submission used to establish risk adjustment methodology under the

Medicare+Choice program.

TITLE VI—OTHER PROVISIONS

Sec. 601. 2-year moratorium on therapy caps.

Sec. 602. Increase in payment amount for renal dialysis services furnished

under the medicare program.

Sec. 603. Increase in payment amount for pap smear laboratory tests.
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Sec. 604. Limitation in reduction of payments to disproportionate share hospitals.

Sec. 605. Clarification of the inherent reasonableness (IR) authority.

Sec. 606. Technical amendments relating to BBA provisions.

Sec. 607. Exclusion from PAYGO scorecard.

TITLE VII—PROVISIONS RELATING TO MEDICAID AND SCHIP

Sec. 701. Medicaid-related BBA technicals.

Sec. 702. Increase in disproportionate share hospital allotment for certain

States and the District of Columbia.

Sec. 703. Making medicaid DSH transition rule permanent.

Sec. 704. Increased allotments for territories under the State children’s health

insurance program.

Sec. 705. Removal of fiscal year limitation on certain transitional administrative costs assistance.

Sec. 706. Stabilizing the SCHIP allotment formula.

Sec. 707. Improved data collection and evaluations of the SCHIP program.

Sec. 708. Grants to States for items and services provided by Federally-qualified health centers and rural health clinics.

Sec. 709. Additional technical corrections.

1 TITLE I—PROVISIONS RELATING

2 TO PART A ONLY

3 Subtitle A—Skilled Nursing

4 Facility Services

5 SEC. 101. INCREASE IN PAYMENT FOR CERTAIN HIGH COST

6 PATIENTS.

7 (a) EXTENSIVE SERVICES AND SPECIAL CARE

8 RUGS.—

9 (1) IN GENERAL.—For purposes of computing

10 payments for covered skilled nursing facility services

11 under paragraph (1) of section 1888(e) of the Social

12 Security Act (42 U.S.C. 1395yy(e)) for such services

13 furnished on or after April 1, 2000, and before Oc14 tober 1, 2001, the Secretary of Health and Human

15 Services (in this section referred to as the ‘‘Sec16 retary’’) shall increase by 25 percent the adjusted
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1 Federal per diem rate otherwise determined under

2 paragraph (4) of such section for such services fur3 nished to any individual entitled to benefits under

4 part A of title XVIII of such Act (42 U.S.C. 1395

5 et seq.) during the period in which the individual is

6 classified under an applicable RUG III category (as

7 defined in paragraph (2)).

8 (2) APPLICABLE RUG III CATEGORY DE9 FINED.—In this subsection, the term ‘‘applicable

10 RUG III category’’ means the RUG III categories

11 identified as SE3, SE2, SE1, SSC, SSB, and SSA

12 in tables 3 and 4 of the final rule published in the

13 Federal Register by the Health Care Financing Ad14 ministration on July 30, 1999 (64 Fed. Reg.

15 41684).

16 (b) REHABILITATION THERAPY RUGS.—For pur17 poses of computing payments for covered skilled nursing

18 facility services under paragraph (1) of section 1888(e)

19 of the Social Security Act (42 U.S.C. 1395yy(e)) for such

20 services furnished on or after April 1, 2000, and before

21 October 1, 2001, the Secretary shall increase the adjusted

22 Federal per diem rate otherwise determined under para23 graph (4) of such section for such services furnished to

24 any individual entitled to benefits under part A of title

25 XVIII of such Act (42 U.S.C. 1395 et seq.) during the
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1 period in which the individual is classified under a RUGS

2 III category (as identified in tables 3 and 4 of the final

3 rule described in subsection (a)(2)) by the applicable pay4 ment add-on determined in accordance with the following

5 table:

RUGS III category Applicable payment add-on

RUC ......................................................................................... $73.57

RVC ......................................................................................... $76.25

RHC ......................................................................................... $54.09

RMC ......................................................................................... $69.98

RMB ........................................................................................ $30.09.

6 (c) RULE OF CONSTRUCTION.—Nothing in this sec7 tion shall be construed as permitting the Secretary of

8 Health and Human Services to include the amount of the

9 increase in the payment under subsection (a) or the

10 amount of the add-on under subsection (b) in updating

11 the Federal per diem rate under section 1888(e)(4) of the

12 Social Security Act (42 U.S.C. 1395yy(e)(4)).

13 SEC. 102. PROVISION FOR PART B ADD-ONS FOR FACILI14 TIES PARTICIPATING IN THE NHCMQ DEM15 ONSTRATION PROJECT.

16 (a) IN GENERAL.—Section 1888(e)(3) (42 U.S.C.

17 1395yy(e)(3)) is amended—

18 (1) in subparagraph (A)—

19 (A) in clause (i), by inserting ‘‘or, in the

20 case of a facility participating in the Nursing

21 Home Case-Mix and Quality Demonstration

22 (RUGS–III), the RUGS–III rate received by
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1 the facility during the cost reporting period be2 ginning in calendar year 1997’’ after ‘‘to non3 settled cost reports’’;

4 (B) in clause (ii), by striking ‘‘furnished

5 during such period’’ and inserting ‘‘furnished

6 during the applicable cost reporting period de7 scribed in clause (i)’’; and

8 (C) in the second sentence, by striking

9 ‘‘with respect to exemptions,’’ and inserting

10 ‘‘with respect to exemptions for facilities (other

11 than for a facility participating in the Nursing

12 Home Case-Mix and Quality Demonstration

13 (RUGS–III)),’’; and

14 (2) in subparagraph (B), to read as follows:

15 ‘‘(B) UPDATE TO FIRST COST REPORTING

16 PERIOD.—The Secretary shall update the

17 amount determined under subparagraph (A),

18 for each cost reporting period after the applica19 ble cost reporting period described in subpara20 graph (A)(i) and up to the first cost reporting

21 period by a factor equal to the skilled nursing

22 facility market basket percentage increase

23 minus 1 percentage point.’’.

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

25 this section shall take effect as if included in the amend-
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1 ments made by section 4432 of the Balanced Budget Act

2 of 1997 (Public Law 105–33; 111 Stat. 414).

3 SEC. 103. EXEMPTION OF FACILITIES FROM 3-YEAR TRANSI4 TION PERIOD UNDER THE PROSPECTIVE PAY5 MENT SYSTEM FOR SKILLED NURSING FACIL6 ITY SERVICES.

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

8 1395yy(e)) is amended—

9 (1) in paragraph (1), in the matter preceding

10 subparagraph (A), by striking ‘‘paragraph (7)’’ and

11 inserting ‘‘paragraphs (7) and (11)’’; and

12 (2) by adding at the end the following:

13 ‘‘(11) EXEMPTION OF FACILITIES FROM 3-YEAR

14 TRANSITION.—A facility may elect to have para15 graph (1)(B) apply in determining the amount of

16 the payment for all costs of covered skilled nursing

17 facility services for each day of such services fur18 nished in cost reporting periods beginning after the

19 date of such election.’’.

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

21 this section shall apply to elections made on or after the

22 date of enactment of this Act.
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1 SEC. 104. STUDY AND REPORT REGARDING STATE LICEN2 SURE AND CERTIFICATION STANDARDS AND

3 RESPIRATORY THERAPY COMPETENCY EX4 AMINATIONS.

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

6 Services shall conduct a study that—

7 (1) identifies variations in State licensure and

8 certification standards for health care providers (in9 cluding nursing and allied health professionals) and

10 other individuals providing respiratory therapy in

11 skilled nursing facilities;

12 (2) examines State requirements relating to res13 piratory therapy competency examinations for such

14 providers and individuals; and

15 (3) determines whether regular respiratory

16 therapy competency examinations or certifications

17 should be required under the medicare program

18 under title XVIII of the Social Security Act (42

19 U.S.C. 1395 et seq.) for such providers and individ20 uals.

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

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

23 Human Services shall submit a report to Congress on the

24 results of the study conducted under this section, together

25 with any recommendations for legislation that the Sec-
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1 retary determines to be appropriate as a result of such

2 study.

3 SEC. 105. STUDY AND REPORT ON ALTERNATIVE PAYMENT

4 METHODS FOR SKILLED NURSING FACILI5 TIES SPECIALIZING IN CARE OF HIGH COST,

6 CHRONICALLY ILL BENEFICIARIES.

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

8 Services shall conduct a study on the feasibility and advis9 ability of—

10 (1) modifying the prospective payment system

11 established under section 1888(e) of the Social Secu12 rity Act (42 U.S.C. 1395yy(e)) for skilled nursing

13 facilities that specialize in providing care to high

14 cost, chronically ill medicare beneficiaries; or

15 (2) exempting such facilities from such system

16 and developing and implementing alternative pay17 ment methods for such facilities.

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

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

20 Human Services shall submit a report to Congress on the

21 study conducted under subsection (a), together with any

22 recommendations for legislation that the Secretary deter23 mines to be appropriate as a result of such study.
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1 Subtitle B—Hospice Services

2 SEC. 121. PAYMENT FOR HOSPICE CARE.

3 (a) IN GENERAL.—Section 1814(i)(1)(C)(ii) (42

4 U.S.C. 1395f(i)(1)(C)(ii)) is amended—

5 (1) in subclause (VI)—

6 (A) by striking ‘‘through 2002’’ and insert7 ing ‘‘and 1999’’; and

8 (B) by striking ‘‘and’’ at the end;

9 (2) by redesignating subclause (VII) as sub10 clause (VIII); and

11 (3) by inserting after subclause (VI), the fol12 lowing:

13 ‘‘(VII) for each of fiscal years 2000 through

14 2002, the market basket percentage increase for the

15 fiscal year involved minus 0.5 percentage point;

16 and’’.

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

18 this section shall take effect on October 1, 1999.

19 SEC. 122. STUDY AND REPORT TO CONGRESS REGARDING

20 MODIFICATION OF THE PAYMENT RATES FOR

21 HOSPICE CARE.

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

23 States shall conduct a study to determine the feasibility

24 and advisability of updating the payment rates and the

25 cap amount determined with respect to a fiscal year under
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1 section 1814(i) of the Social Security Act (42 U.S.C.

2 1395f(i)) for routine home care and other services in3 cluded in hospice care. Such study shall examine the cost

4 factors used to determine such rates and such amount and

5 shall evaluate whether such factors should be modified,

6 eliminated, or supplemented with additional cost factors.

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

8 of enactment of this Act, the Comptroller General of the

9 United States shall submit a report to Congress on the

10 study conducted under subsection (a), together with any

11 recommendations for legislation that the Comptroller Gen12 eral determines to be appropriate as a result of such

13 study.

14 Subtitle C—Other Provisions

15 SEC. 141. STUDY AND REPORT REGARDING PROSPECTIVE

16 PAYMENT SYSTEM FOR PSYCHIATRIC HOS17 PITALS.

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

19 Services shall conduct a study on the feasibility and advis20 ability of developing and implementing a prospective pay21 ment system for items and services provided by psychiatric

22 hospitals (as defined in section 1861(f) of the Social Secu23 rity Act (42 U.S.C. 1395x(f))) to beneficiaries under the

24 medicare program under title XVIII of such Act (42

25 U.S.C. 1395 et seq.). In conducting such study, the Sec-
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1 retary should take into consideration the unique cir2 cumstances affecting psychiatric hospitals that are located

3 in rural areas (as defined in section 1886(d)(2)(D) of such

4 Act (42 U.S.C. 1395ww(d)(2)(D))).

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

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

7 Human Services shall submit a report to Congress on the

8 study conducted under subsection (a), together with any

9 recommendations for legislation that the Secretary deter10 mines to be appropriate as a result of such study.

11 SEC. 142. REVISION OF PROSPECTIVE PAYMENT SYSTEM

12 FOR INPATIENT REHABILITATION SERVICES.

13 (a) PAYMENT UNIT.—Section 1886(j)(1)(D) of the

14 Social Security Act (42 U.S.C. 1395ww(j)(1)(D)) is

15 amended to read as follows:

16 ‘‘(D) For purposes of this subsection, the

17 term ‘payment unit’ means a discharge.’’.

18 (b) PATIENT CASE MIX GROUPS.—Section

19 1886(j)(2)(A)(i) of the Social Security Act (42 U.S.C.

20 1395ww(j)(2)(A)(i)) is amended to read as follows:

21 ‘‘(i) classes of patient discharges of

22 rehabilitation facilities by functional-re23 lated groups (each in this subsection re24 ferred to as a ‘case mix group’), based on

25 impairment, age, comorbidities, and func-
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1 tional capability of the patient and such

2 other factors as the Secretary deems ap3 propriate to improve the explanatory power

4 of functional independence measure-func5 tion related groups; and’’.

6 (c) STUDY AND REPORT.—

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

8 Human Services shall conduct a study on the impact

9 that the prospective payment system for inpatient

10 rehabilitation services under section 1886(j) of the

11 Social Security Act (42 U.S.C. 1395ww(j)) has on

12 utilization of services, beneficiary access to services,

13 non-therapy ancillary services, and other factors that

14 the Secretary determines are appropriate.

15 (2) REPORT.—Not later than 2 years after im16 plementation of the prospective payment system de17 scribed in paragraph (1), the Secretary of Health

18 and Human Services shall submit a report to the ap19 propriate committees of Congress on the study con20 ducted under such paragraph, together with any rec21 ommendations for legislation regarding adjustments

22 to the payment amounts under such system that the

23 Secretary determines are appropriate as a result of

24 such study.
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1 SEC. 143. EXCEPTION TO CMI QUALIFIER FOR ONE YEAR.

2 Notwithstanding any other provision of law, for pur3 poses of fiscal year 2000, the Northwest Mississippi Re4 gional Medical Center located in Clarksdale, Mississippi

5 shall be deemed to have satisfied the case mix index cri6 teria under section 1886(d)(5)(C)(ii) of the Social Secu7 rity Act (42 U.S.C. 1395ww(d)(5)(C)(ii)) for classification

8 as a rural referral center.

9 SEC. 144. RECLASSIFICATION OF CERTAIN COUNTIES FOR

10 PURPOSES OF REIMBURSEMENT UNDER THE

11 MEDICARE PROGRAM.

12 (a) IN GENERAL.—For purposes of receiving reim13 bursement under the medicare program under title XVIII

14 of the Social Security Act (42 U.S.C. 1395 et seq.)—

15 (1) Iredell County, North Carolina is deemed to

16 be located in the Charlotte-Gastonia-Rock Hill-N.C.-

17 S.C. Metropolitan Statistical Area; and

18 (2) the large urban area of New York, New

19 York is deemed to include Orange County, New

20 York.

21 (b) EFFECTIVE DATE.—This section shall apply with

22 respect to discharges occurring on or after October 1,

23 1999.

24 SEC. 145. WAGE INDEX CORRECTION.

25 Notwithstanding any other provision of law, the Sec26 retary of Health and Human Services shall—
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1 (1) recalculate the Hattiesburg Mississippi Met2 ropolitan Statistical Area (MSA) wage index for fis3 cal year 2000 using fiscal year 1996 wage and hour

4 data for Wesley Medical Center;

5 (2) issue a wage index correction for fiscal year

6 2000; and

7 (3) make such adjustments to the prospective

8 payment system determined under section 1886(d)

9 of the Social Security Act (42 U.S.C. 1395ww(d)) as

10 may be necessary to take into account such cor11 rected wage index.

12 SEC. 146. CONSIDERATION OF AN APPLICATION BY A CER13 TAIN ENTITY FOR MEDICARE CERTIFICATION

14 AS AN APPLICATION BY A NEW PROVIDER.

15 Notwithstanding any other provision of law, the Sec16 retary of Health and Human Services shall consider an

17 application (or a reapplication) for certification of a long18 term care facility under the medicare program under title

19 XVIII of the Social Security Act (42 U.S.C. 1395 et seq.)

20 that is, or was, submitted after January 1, 1994, by a

21 subsidiary of a not-for-profit, municipally-owned, and

22 medicare-certified hospital, where such long-term care fa23 cility has had a change of management from the previous

24 owner prior to acquisition by such subsidiary, as an appli25 cation by a prospective provider.
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1 SEC. 147. STUDY AND REPORT ON COUNTY-WIDE GEO2 GRAPHIC RECLASSIFICATION.

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

4 Services, in consultation with the Medicare Geographic

5 Classification Review Board, shall conduct a study to

6 determine—

7 (1) whether the prospective payment rates es8 tablished under section 1886(d) of the Social Secu9 rity Act (42 U.S.C. 1395ww(d)) are an adequate

10 proxy for the costs of inpatient hospital services; and

11 (2) whether the standard for county-wide geo12 graphic reclassification needs to be updated or re13 vised.

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

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

16 Human Services shall submit a report to Congress on the

17 study conducted under subsection (a), together with any

18 recommendations for legislation that the Secretary deter19 mines to be appropriate as a result of such study.
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1 TITLE II—PROVISIONS

2 RELATING TO PART B ONLY

3 Subtitle A—Hospital Outpatient

4 Department Services

5 SEC. 201. MULTIYEAR TRANSITION TO PROSPECTIVE PAY6 MENT SYSTEM FOR HOSPITAL OUTPATIENT

7 DEPARTMENT SERVICES.

8 (a) IN GENERAL.—Section 1833(t) (42 U.S.C.

9 1395(t)) is amended by adding at the end the following:

10 ‘‘(10) MULTIYEAR TRANSITION.—

11 ‘‘(A) IN GENERAL.—In the case of covered

12 OPD services furnished by a hospital during a

13 transition year, the Secretary shall increase the

14 payments for such services under the prospec15 tive payment system established under this sub16 section by the amount (if any) that the Sec17 retary determines is necessary to ensure that

18 the payment to cost ratio of the hospital for the

19 transition year (as defined in subparagraph

20 (D)(iii)) equals the applicable percentage (as

21 defined in subparagraph (D)(i)) of the payment

22 to cost ratio of the hospital for 1996.

23 ‘‘(B) PAYMENT TO COST RATIO.—
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1 ‘‘(i) IN GENERAL.—The payment to

2 cost ratio of a hospital for any year is the

3 ratio which—

4 ‘‘(I) the hospital’s reimbursement

5 under this part for covered OPD serv6 ices furnished during the year, includ7 ing any reimbursement for such serv8 ices through cost-sharing described in

9 subparagraph (D)(ii); bears to

10 ‘‘(II) the cost of such services.

11 ‘‘(ii) CALCULATION OF 1996 PAYMENT

12 TO COST RATIO.—The Secretary shall de13 termine each hospital’s payment to cost

14 ratio for 1996 as if the amendments made

15 by section 4521 of the Balanced Budget

16 Act of 1997 were in effect in 1996.

17 ‘‘(iii) TRANSITION YEARS.—The Sec18 retary shall estimate the payment to cost

19 ratio of each hospital for each transition

20 year before the beginning of such year.

21 ‘‘(C) INTERIM PAYMENTS.—

22 ‘‘(i) IN GENERAL.—The Secretary

23 shall make interim payments to a hospital

24 during any transition year for which the
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1 Secretary estimates a payment is required

2 under subparagraph (A).

3 ‘‘(ii) ADJUSTMENTS.—If the Secretary

4 makes payments under clause (i) for any

5 transition year, the Secretary shall make

6 retrospective adjustments to each hospital

7 based on its settled cost report so that the

8 amount of any additional payment to a

9 hospital for such year equals the amount

10 described in subparagraph (A).

11 ‘‘(D) DEFINITIONS.—In this paragraph:

12 ‘‘(i) APPLICABLE PERCENTAGE.—The

13 term ‘applicable percentage’ means, with

14 respect to covered OPD services furnished

15 during—

16 ‘‘(I) the first full calendar year

17 (and any portion of the immediately

18 preceding calendar year) for which the

19 prospective payment system under

20 this subsection is in effect, 90 percent;

21 ‘‘(II) the second full calendar

22 year for which such system is in ef23 fect, 85 percent; and
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1 ‘‘(III) the third full calendar year

2 for which such system is in effect, 80

3 percent.

4 ‘‘(ii) COST-SHARING.—The term ‘cost5 sharing’ includes—

6 ‘‘(I) copayment amounts de7 scribed in paragraph (5);

8 ‘‘(II) coinsurance described in

9 section 1866(a)(2)(A)(ii); and

10 ‘‘(III) the deductible described

11 under section 1833(b).

12 ‘‘(iii) TRANSITION YEAR.—The term

13 ‘transition year’ means any year (or por14 tion thereof) described in clause (i).

15 ‘‘(E) EFFECT ON COPAYMENTS.—Nothing

16 in this paragraph shall be construed as affect17 ing the unadjusted copayment amount de18 scribed in paragraph (3)(B).

19 ‘‘(F) APPLICATION WITHOUT REGARD TO

20 BUDGET NEUTRALITY.—The transitional pay21 ments made under this paragraph—

22 ‘‘(i) shall not be considered an adjust23 ment under paragraph (2)(E); and

24 ‘‘(ii) shall not be implemented in a

25 budget neutral manner.’’.
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1 (b) SPECIAL RULE FOR RURAL AND CANCER HOS2 PITALS.—Section 1833(t) (42 U.S.C. 1395(t)), as amend3 ed by subsection (a), is amended by adding at the end

4 the following:

5 ‘‘(11) SPECIAL RULE FOR RURAL AND CANCER

6 HOSPITALS.—

7 ‘‘(A) IN GENERAL.—For each calendar

8 year or portion thereof (beginning with 2000),

9 in the case of covered OPD services furnished

10 by a medicare-dependent, small rural hospital

11 (as defined in section 1886(d)(5)(G)(iv)), a sole

12 community hospital (as defined in section

13 1886(d)(5)(D)(iii)), or in a hospital described

14 in section 1886(d)(1)(B)(v), the Secretary shall

15 increase the payments for such services under

16 the prospective payment system established

17 under this subsection by the amount (if any)

18 that the Secretary determines is necessary to

19 ensure that the payment to cost ratio of the

20 hospital (as determined pursuant to paragraph

21 (10)(B)) for the year equals the payment to

22 cost ratio of the hospital for 1996 (as cal23 culated under clause (ii) of such paragraph).

24 ‘‘(B) INTERIM PAYMENTS.—
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1 ‘‘(i) IN GENERAL.—The Secretary

2 shall make interim payments to a hospital

3 during any year for which the Secretary

4 estimates a payment is required under sub5 paragraph (A).

6 ‘‘(ii) ADJUSTMENTS.—If the Secretary

7 makes payments under clause (i) for any

8 year, the Secretary shall make retrospec9 tive adjustments to each hospital based on

10 its settled cost report so that the amount

11 of any additional payment to a hospital for

12 such year equals the amount described in

13 subparagraph (A).

14 ‘‘(C) EFFECT ON COPAYMENTS.—Nothing

15 in this paragraph shall be construed as affect16 ing the unadjusted copayment amount de17 scribed in paragraph (3)(B).

18 ‘‘(D) APPLICATION WITHOUT REGARD TO

19 BUDGET NEUTRALITY.—The payments made

20 under this paragraph—

21 ‘‘(i) shall not be considered an adjust22 ment under paragraph (2)(E); and

23 ‘‘(ii) shall not be implemented in a

24 budget neutral manner.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on the date of enactment of

3 this Act.

4 SEC. 202. STUDY AND REPORT TO CONGRESS REGARDING

5 THE INCLUSION OF RURAL AND CANCER

6 HOSPITALS IN PROSPECTIVE PAYMENT SYS7 TEM FOR HOSPITAL OUTPATIENT DEPART8 MENT SERVICES.

9 (a) STUDY.—

10 (1) IN GENERAL.—The Medicare Payment Ad11 visory Commission (referred to in this section as

12 ‘‘MedPAC’’) shall conduct a study to determine the

13 feasibility and advisability of providing payments to

14 hospitals described in paragraph (2) for covered

15 OPD services (as defined in paragraph (1)(B) of

16 section 1833(t) of the Social Security Act (42

17 U.S.C. 1395l(t))) based on the prospective payment

18 system established by the Secretary in accordance

19 with such section.

20 (2) HOSPITALS DESCRIBED.—The hospitals de21 scribed in this paragraph are the following:

22 (A) A medicare-dependent, small rural hos23 pital (as defined in section 1886(d)(5)(G)(iv) of

24 the Social Security Act (42 U.S.C.

25 1395ww(d)(5)(G)(iv))).
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1 (B) A sole community hospital (as defined

2 in section 1886(d)(5)(D)(iii) of such Act (42

3 U.S.C. 1395ww(d)(5)(D)(iii))).

4 (C) A hospital described in section

5 1886(d)(1)(B)(v) of such Act (42 U.S.C.

6 1395ww(d)(1)(B)(v)).

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

8 of enactment of this Act, MedPAC shall submit a report

9 to the Secretary of Health and Human Services and Con10 gress on the study conducted under subsection (a), to11 gether with any recommendations for legislation that

12 MedPAC determines to be appropriate as a result of such

13 study.

14 (c) COMMENTS.—Not later than 60 days after the

15 date on which MedPAC submits the report under sub16 section (b) to the Secretary of Health and Human Serv17 ices, the Secretary shall submit comments on such report

18 to Congress.

19 SEC. 203. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS20 THROUGH FOR CERTAIN MEDICAL DEVICES,

21 DRUGS, AND BIOLOGICALS.

22 (a) OUTLIER ADJUSTMENT.—Section 1833(t) (42

23 U.S.C. 1395l(t)), as amended by section 201, is

24 amended—
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1 (1) by redesignating paragraphs (5) through

2 (11) as paragraphs (7) through (13), respectively;

3 and

4 (2) by inserting after paragraph (4) the fol5 lowing:

6 ‘‘(5) OUTLIER ADJUSTMENT.—

7 ‘‘(A) IN GENERAL.—The Secretary shall

8 provide for an additional payment for each cov9 ered OPD service (or group of services) for

10 which a hospital’s charges, adjusted to cost,

11 exceed—

12 ‘‘(i) a fixed multiple of the sum of—

13 ‘‘(I) the applicable medicare

14 OPD fee schedule amount determined

15 under paragraph (3)(D), as adjusted

16 under paragraph (4)(A) (other than

17 for adjustments under this paragraph

18 or paragraph (6)); and

19 ‘‘(II) any transitional pass20 through payment under paragraph

21 (6); and

22 ‘‘(ii) at the option of the Secretary,

23 such fixed dollar amount as the Secretary

24 may establish.
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1 ‘‘(B) AMOUNT OF ADJUSTMENT.—The

2 amount of the additional payment under sub3 paragraph (A) shall be determined by the Sec4 retary and shall approximate the marginal cost

5 of care beyond the applicable cutoff point under

6 such subparagraph.

7 ‘‘(C) LIMIT ON AGGREGATE OUTLIER AD8 JUSTMENTS.—

9 ‘‘(i) IN GENERAL.—The total of the

10 additional payments made under this para11 graph for covered OPD services furnished

12 in a year (as estimated by the Secretary

13 before the beginning of the year) may not

14 exceed the applicable percentage (specified

15 in clause (ii)) of the total program pay16 ments estimated to be made under this

17 subsection for all covered OPD services

18 furnished in that year. If this paragraph is

19 first applied to less than a full year, the

20 previous sentence shall apply only to the

21 portion of such year.

22 ‘‘(ii) APPLICABLE PERCENTAGE.—For

23 purposes of clause (i), the term ‘applicable

24 percentage’ means a percentage specified
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1 by the Secretary up to (but not to ex2 ceed)—

3 ‘‘(I) for a year (or portion of a

4 year) before 2004, 2.5 percent; and

5 ‘‘(II) for 2004 and thereafter,

6 3.0 percent.’’.

7 (b) TRANSITIONAL PASS-THROUGH FOR ADDITIONAL

8 COSTS OF INNOVATIVE MEDICAL DEVICES, DRUGS, AND

9 BIOLOGICALS.—Such section is further amended by in10 serting after paragraph (5) the following:

11 ‘‘(6) TRANSITIONAL PASS-THROUGH FOR ADDI12 TIONAL COSTS OF INNOVATIVE MEDICAL DEVICES,

13 DRUGS, AND BIOLOGICALS.—

14 ‘‘(A) IN GENERAL.—The Secretary shall

15 provide for an additional payment under this

16 paragraph for a covered OPD service (or group

17 of services) that includes the provision of any of

18 the following:

19 ‘‘(i) CURRENT ORPHAN DRUGS.—A

20 drug or biological that is used for a rare

21 disease or condition with respect to which

22 the drug or biological has been designated

23 as an orphan drug under section 526 of

24 the Federal Food, Drug and Cosmetic Act

25 if payment for the drug or biological as an
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1 outpatient hospital service under this part

2 was being made on the first date that the

3 system under this subsection is imple4 mented.

5 ‘‘(ii) CURRENT CANCER THERAPY

6 DRUGS AND BIOLOGICALS.—A drug or bio7 logical that is used in cancer therapy, in8 cluding a chemotherapeutic agent,

9 antiemetic, hematopoietic growth factor,

10 colony stimulating factor, and a biological

11 response modifier, if payment for the drug

12 or biological as an outpatient hospital serv13 ice under this part was being made on

14 such first date.

15 ‘‘(iii) RADIOPHARMACEUTICAL DRUGS

16 AND BIOLOGICAL PRODUCTS.—Radio17 pharmaceutical drugs or biological prod18 ucts used in diagnostic, monitoring, and

19 therapeutic nuclear medicine procedures.

20 ‘‘(iv) NEW MEDICAL DEVICES, DRUGS,

21 AND BIOLOGICALS.—A medical device,

22 drug, or biological not described in clause

23 (i), (ii), or (iii) if—

24 ‘‘(I) payment for the device,

25 drug, or biological as an outpatient
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1 hospital services under this part was

2 not being made as of December 31,

3 1996; and

4 ‘‘(II) the cost of the device, drug,

5 or biological is not insignificant in re6 lation to the OPD fee schedule

7 amount (as calculated under para8 graph (3)(D)) payable for the service

9 (or group of services) involved.

10 ‘‘(B) LIMITED PERIOD OF PAYMENT.—The

11 payment under this paragraph with respect to

12 a medical device, drug, or biological shall only

13 apply during a period of at least 2 years, but

14 not more than 3 years, that begins—

15 ‘‘(i) on the first date this subsection is

16 implemented in the case of a drug or bio17 logical described in clause (i), (ii), (iii) of

18 subparagraph (A) and in the case of a de19 vice, drug, or biological described in clause

20 (iv) of such subparagraph for which pay21 ment under this part is made as an out22 patient hospital service before such first

23 date; or

24 ‘‘(ii) in the case of a device, drug, or

25 biological described in subparagraph
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1 (A)(iv) not described in clause (i), on the

2 first date on which payment is made under

3 this part for the device, drug, or biological

4 as an outpatient hospital service.

5 ‘‘(C) AMOUNT OF ADDITIONAL PAY6 MENT.—Subject to subparagraph (D)(iii), the

7 amount of the payment under this paragraph

8 with respect to a device, drug, or biological pro9 vided as part of a covered OPD service is—

10 ‘‘(i) in the case of a drug or biological,

11 the amount by which the amount deter12 mined under section 1842(o) for the drug

13 or biological exceeds the portion of the oth14 erwise applicable medicare OPD fee sched15 ule that the Secretary determines is associ16 ated with the drug or biological; or

17 ‘‘(ii) in the case of a medical device,

18 the amount by which the hospital’s charges

19 for the device, adjusted to cost, exceeds the

20 portion (described in clause (i)) associated

21 with the device.

22 ‘‘(D) LIMIT ON AGGREGATE ANNUAL AD23 JUSTMENT.—

24 ‘‘(i) IN GENERAL.—The total of the

25 additional payments made under this para-
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1 graph for covered OPD services furnished

2 in a year (as estimated by the Secretary

3 before the beginning of the year) may not

4 exceed the applicable percentage (specified

5 in clause (ii)) of the total program pay6 ments estimated to be made under this

7 subsection for all covered OPD services

8 furnished in that year. If this paragraph is

9 first applied to less than a full year, the

10 previous sentence shall apply only to the

11 portion of such year.

12 ‘‘(ii) APPLICABLE PERCENTAGE.—For

13 purposes of clause (i), the term ‘applicable

14 percentage’ means—

15 ‘‘(I) for a year (or portion of a

16 year) before 2004, 2.5 percent; and

17 ‘‘(II) for 2004 and thereafter, a

18 percentage specified by the Secretary

19 up to (but not to exceed) 2.0 percent.

20 ‘‘(iii) UNIFORM PROSPECTIVE REDUC21 TION IF AGGREGATE LIMIT PROJECTED TO

22 BE EXCEEDED.—If the Secretary projects

23 or estimates before the beginning of a year

24 that the amount of the additional pay25 ments under this paragraph for the year
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1 (or portion thereof) (as determined under

2 clause (i) without regard to this clause)

3 will exceed the limit established under such

4 clause, the Secretary shall reduce pro rata

5 the amount of each of the additional pay6 ments under this paragraph for that year

7 (or portion thereof) in order to ensure that

8 the aggregate additional payments under

9 this paragraph (as so estimated) do not ex10 ceed such limit.’’.

11 (c) APPLICATION OF NEW ADJUSTMENTS ON A

12 BUDGET NEUTRAL BASIS.—Section 1833(t)(2)(E) (42

13 U.S.C. 1395l(t)(2)(E)) is amended by striking ‘‘other ad14 justments, in a budget neutral manner, as determined to

15 be necessary to ensure equitable payments, such outlier

16 adjustments or’’ and inserting ‘‘, in a budget neutral man17 ner, outlier adjustments under paragraph (5) and transi18 tional pass-through payments under paragraph (6) and

19 other adjustments as determined to be necessary to ensure

20 equitable payments, such as’’.

21 (d) LIMITATION ON JUDICIAL REVIEW FOR NEW AD22 JUSTMENTS.—Section 1833(t)(11) (42 U.S.C.

23 1395l(t)(11)), as redesignated by subsection (a)(1), is

24 amended—
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1 (1) by striking ‘‘and’’ at the end of subpara2 graph (C);

3 (2) by striking the period at the end of sub4 paragraph (D) and inserting ‘‘; and’’; and

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

6 ‘‘(E) the determination of the fixed mul7 tiple or a fixed dollar cutoff amount, the mar8 ginal cost of care, or applicable percentage

9 under paragraph (5), or the determination of

10 insignificance of cost, the period and amount of

11 the additional payments, the portion of the

12 medicare OPD fee schedule amount associated

13 with particular devices, drugs, or biologicals,

14 and the application of any pro rata reduction

15 under paragraph (6).’’.

16 (e) INCLUSION OF MEDICAL DEVICES UNDER SYS17 TEM.—Section 1833(t)(1)(B) (42 U.S.C. 1395l(t)(1)(B))

18 is amended—

19 (1) in clause (ii), by striking ‘‘clause (iii)’’ and

20 inserting ‘‘clause (iv)’’ and by striking ‘‘but’’; and

21 (2) by redesignating clause (iii) as clause (iv)

22 and inserting after clause (ii) the following:

23 ‘‘(iii) includes medical devices (such

24 as implantable medical devices); but’’.
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1 (f) AUTHORIZING PAYMENT WEIGHTS BASED ON

2 MEAN HOSPITAL COSTS.—Section 1833(t)(2)(C) (42

3 U.S.C. 1395l(t)(2)(C)) is amended by inserting ‘‘(or, at

4 the election of the Secretary, mean)’’ after ‘‘median’’.

5 (g) LIMITING VARIATION OF COSTS OF SERVICES

6 CLASSIFIED WITH A GROUP.—Section 1833(t)(2) (42

7 U.S.C. 1395l(t)(2)) is amended by adding at the end the

8 following: ‘‘For purposes of subparagraph (B), items and

9 services within a group shall not be treated as ‘comparable

10 with respect to the use of resources’ if the highest median

11 cost (or mean cost, if elected by the Secretary under sub12 paragraph (C)) for an item or service within the group

13 is more than 2 times greater than the lowest median cost

14 (or mean cost, if so elected) for an item or service within

15 the group; except that the Secretary may make exceptions

16 in unusual cases, such as low volume items and services.’’.

17 (h) ANNUAL REVIEW OF OPD PPS COMPONENTS.—

18 (1) IN GENERAL.—Section 1833(t)(8)(A) (42

19 U.S.C. 1395l(t)(8)(A)) (as redesignated by sub20 section (a)(1)) is amended by striking ‘‘may periodi21 cally review’’ and inserting ‘‘shall review not less

22 often than annually’’.

23 (2) EFFECTIVE DATE.—The amendment made

24 by paragraph (1) applies beginning with 2002.
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1 (i) EFFECTIVE DATE.—Except as provided in this

2 section, the amendments made by this section shall be ef3 fective as if included in the amendments made by section

4 4523 of the Balanced Budget Act of 1997 (Public Law

5 105–33; 111 Stat. 445).

6 Subtitle B—Physicians’ Services

7 SEC. 221. MODIFICATIONS OF UPDATE ADJUSTMENT FAC8 TOR PROVISIONS TO REDUCE OSCILLATIONS

9 AND ALLOW FOR ESTIMATE REVISIONS.

10 (a) UPDATE ADJUSTMENT FACTOR.—

11 (1) IN GENERAL.—Section 1848(d) (42 U.S.C.

12 1395w–4(d)) is amended—

13 (A) in paragraph (3)—

14 (i) in the heading, by inserting ‘‘FOR

15 1999 AND 2000’’ after ‘‘UPDATE’’;

16 (ii) in subparagraph (A), by striking

17 ‘‘a year beginning with 1999’’ and insert18 ing ‘‘1999 and 2000’’; and

19 (iii) in subparagraph (C), by inserting

20 ‘‘and paragraph (4)’’ after ‘‘For purposes

21 of this paragraph’’; and

22 (B) by adding at the end the following:

23 ‘‘(4) UPDATE FOR YEARS BEGINNING WITH

24 2001.—
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1 ‘‘(A) IN GENERAL.—Unless otherwise pro2 vided by law, subject to the budget-neutrality

3 factor determined by the Secretary under sub4 section (c)(2)(B)(ii) and subject to adjustment

5 under subparagraph (F), the update to the sin6 gle conversion factor established in paragraph

7 (1)(C) for a year beginning with 2001 is equal

8 to the product of—

9 ‘‘(i) 1 plus the Secretary’s estimate of

10 the percentage increase in the MEI (as de11 fined in section 1842(i)(3)) for the year

12 (divided by 100); and

13 ‘‘(ii) 1 plus the Secretary’s estimate of

14 the update adjustment factor under sub15 paragraph (B) for the year.

16 ‘‘(B) UPDATE ADJUSTMENT FACTOR.—For

17 purposes of subparagraph (A)(ii), subject to

18 subparagraph (D), the ‘update adjustment fac19 tor’ for a year is equal (as estimated by the

20 Secretary) to the sum of the following:

21 ‘‘(i) PRIOR YEAR ADJUSTMENT COM22 PONENT.—An amount determined by—

23 ‘‘(I) computing the difference

24 (which may be positive or negative)

25 between the amount of the allowed ex-
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1 penditures for physicians’ services for

2 the prior year (as determined under

3 subparagraph (C)) and the amount of

4 the actual expenditures for such serv5 ices for that year;

6 ‘‘(II) dividing that difference by

7 the amount of the actual expenditures

8 for such services for that year; and

9 ‘‘(III) multiplying that quotient

10 by 0.75.

11 ‘‘(ii) CUMULATIVE ADJUSTMENT COM12 PONENT.—An amount determined by—

13 ‘‘(I) computing the difference

14 (which may be positive or negative)

15 between the amount of the allowed ex16 penditures for physicians’ services (as

17 determined under subparagraph (C))

18 from April 1, 1996, through the end

19 of the prior year and the amount of

20 the actual expenditures for such serv21 ices during that period;

22 ‘‘(II) dividing that difference by

23 actual expenditures for such services

24 for the prior year as increased by the

25 sustainable growth rate under sub-
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1 section (f) for the year for which the

2 update adjustment factor is to be de3 termined; and

4 ‘‘(III) multiplying that quotient

5 by 0.33.

6 ‘‘(C) DETERMINATION OF ALLOWED EX7 PENDITURES.—For purposes of this paragraph:

8 ‘‘(i) PERIOD UP TO APRIL 1, 1999.—

9 The allowed expenditures for physicians’

10 services for a period before April 1, 1999,

11 shall be the amount of the allowed expendi12 tures for such period as determined under

13 paragraph (3)(C).

14 ‘‘(ii) TRANSITION TO CALENDAR YEAR

15 ALLOWED EXPENDITURES.—Subject to

16 subparagraph (E), the allowed expendi17 tures for—

18 ‘‘(I) the 9-month period begin19 ning April 1, 1999, shall be the Sec20 retary’s estimate of the amount of the

21 allowed expenditures that would be

22 permitted under paragraph (3)(C) for

23 such period; and

24 ‘‘(II) the year of 1999, shall be

25 the Secretary’s estimate of the
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1 amount of the allowed expenditures

2 that would be permitted under para3 graph (3)(C) for such year.

4 ‘‘(iii) YEARS BEGINNING WITH 2000.—

5 The allowed expenditures for a year (be6 ginning with 2000) is equal to the allowed

7 expenditures for physicians’ services for

8 the previous year, increased by the sustain9 able growth rate under subsection (f) for

10 the year involved.

11 ‘‘(D) RESTRICTION ON UPDATE ADJUST12 MENT FACTOR.—The update adjustment factor

13 determined under subparagraph (B) for a year

14 may not be less than ¥0.07 or greater than

15 0.03.

16 ‘‘(E) RECALCULATION OF ALLOWED EX17 PENDITURES FOR UPDATES BEGINNING WITH

18 2001.—For purposes of determining the update

19 adjustment factor for a year beginning with

20 2001, the Secretary shall recompute the allowed

21 expenditures for previous periods beginning on

22 or after April 1, 1999, consistent with sub23 section (f)(3).

24 ‘‘(F) TRANSITIONAL ADJUSTMENT DE25 SIGNED TO PROVIDE FOR BUDGET NEU-
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1 TRALITY.—Under this subparagraph the Sec2 retary shall provide for an adjustment to the

3 update under subparagraph (A)—

4 ‘‘(i) for each of 2001, 2002, 2003,

5 and 2004, of ¥0.2 percent; and

6 ‘‘(ii) for 2005 of +0.8 percent.’’.

7 (2) PUBLICATION CHANGE.—

8 (A) IN GENERAL.—Section 1848(d)(1)(E)

9 (42 U.S.C. 1395w–4(d)(1)(E)) is amended to

10 read as follows:

11 ‘‘(E) PUBLICATION AND DISSEMINATION

12 OF INFORMATION.—The Secretary shall—

13 ‘‘(i) cause to have published in the

14 Federal Register not later than November

15 1 of each year (beginning with 2000) the

16 conversion factor which will apply to physi17 cians’ services for the succeeding year, the

18 update determined under paragraph (4)

19 for such succeeding year, and the allowed

20 expenditures under such paragraph for

21 such succeeding year; and

22 ‘‘(ii) make available to the Medicare

23 Payment Advisory Commission and the

24 public by March 1 of each year (beginning

25 with 2000) an estimate of the conversion
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1 factor which will apply to physicians’ serv2 ices for the succeeding year and data used

3 in making such estimate.’’.

4 (B) MEDPAC REVIEW OF CONVERSION

5 FACTOR ESTIMATES.—Section 1805(b)(1)(D)

6 (42 U.S.C. 1395b–6(b)(1)(D)) is amended by

7 inserting ‘‘and including a review of the esti8 mate of the conversion factor submitted under

9 section 1848(d)(1)(E)(ii)’’ before the period at

10 the end.

11 (C) 1-TIME PUBLICATION OF INFORMATION

12 ON TRANSITION.—The Secretary of Health and

13 Human Services shall cause to have published

14 in the Federal Register, not later than 90 days

15 after the date of the enactment of this section,

16 the Secretary’s determination, based upon the

17 best available data, of—

18 (i) the allowed expenditures under

19 subclauses (I) and (II) of section

20 1848(d)(4)(C)(ii) of the Social Security

21 Act, as added by subsection (a)(1)(B), for

22 the 9-month period beginning on April 1,

23 1999, and for 1999;
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1 (ii) the estimated actual expenditures

2 described in section 1848(d) of such Act

3 for 1999; and

4 (iii) the sustainable growth rate under

5 section 1848(f) of such Act (42 U.S.C.

6 1395w–4(f)) for 2000.

7 (3) CONFORMING AMENDMENTS.—

8 (A) Section 1848 (42 U.S.C. 1395w–4) is

9 amended—

10 (i) in subsection (d)(1)(A), by insert11 ing ‘‘(for years before 2001) and, for years

12 beginning with 2001, multiplied by the up13 date (established under paragraph (4)) for

14 the year involved’’ after ‘‘for the year in15 volved’’; and

16 (ii) in subsection (f)(2)(D), by insert17 ing ‘‘or (d)(4)(B), as the case may be’’

18 after ‘‘(d)(3)(B)’’.

19 (B) Section 1833(l)(4)(A)(i)(VII) (42

20 U.S.C. 1395l(l)(4)(A)(i)(VII)) is amended by

21 striking ‘‘1848(d)(3)’’ and inserting ‘‘1848(d)’’.

22 (b) SUSTAINABLE GROWTH RATES.—Section 1848(f)

23 (42 U.S.C. 1395w–4(f)) is amended—

24 (1) by striking paragraph (1) and inserting the

25 following:
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1 ‘‘(1) PUBLICATION.—The Secretary shall cause

2 to have published in the Federal Register not later

3 than—

4 ‘‘(A) November 1, 2000, the sustainable

5 growth rate for 2000 and 2001; and

6 ‘‘(B) November 1 of each succeeding year

7 the sustainable growth rate for such succeeding

8 year and each of the preceding 2 years.’’;

9 (2) in paragraph (2)—

10 (A) in the matter before subparagraph (A),

11 by striking ‘‘fiscal year 1998)’’ and inserting

12 ‘‘fiscal year 1998 and ending with fiscal year

13 2000) and a year beginning with 2000’’; and

14 (B) in subparagraphs (A) through (D), by

15 striking ‘‘fiscal year’’ and inserting ‘‘applicable

16 period’’ each place it appears;

17 (3) in paragraph (3), by adding at the end the

18 following:

19 ‘‘(C) APPLICABLE PERIOD.—The term ‘ap20 plicable period’ means—

21 ‘‘(i) a fiscal year, in the case of fiscal

22 year 1998, fiscal year 1999, and fiscal year

23 2000; or

24 ‘‘(ii) a calendar year with respect to a

25 year beginning with 2000;
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1 as the case may be.’’;

2 (4) by redesignating paragraph (3) as para3 graph (4); and

4 (5) by inserting after paragraph (2) the fol5 lowing:

6 ‘‘(3) DATA TO BE USED.—For purposes of de7 termining the update adjustment factor under sub8 section (d)(4)(B) for a year beginning with 2001,

9 the sustainable growth rates taken into consideration

10 in the determination under paragraph (2) shall be

11 determined as follows:

12 ‘‘(A) FOR 2001.—For purposes of such cal13 culations for 2001, the sustainable growth rates

14 for fiscal year 2000 and the years 2000 and

15 2001 shall be determined on the basis of the

16 best data available to the Secretary as of Sep17 tember 1, 2000.

18 ‘‘(B) FOR 2002.—For purposes of such cal19 culations for 2002, the sustainable growth rates

20 for fiscal year 2000 and for years 2000, 2001,

21 and 2002 shall be determined on the basis of

22 the best data available to the Secretary as of

23 September 1, 2001.
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1 ‘‘(C) FOR 2003 AND SUCCEEDING YEARS.—

2 For purposes of such calculations for a year

3 after 2002—

4 ‘‘(i) the sustainable growth rates for

5 that year and the preceding 2 years shall

6 be determined on the basis of the best data

7 available to the Secretary as of September

8 1 of the year preceding the year for which

9 the calculation is made; and

10 ‘‘(ii) the sustainable growth rate for

11 any year before a year described in clause

12 (i) shall be the rate as most recently deter13 mined for that year under this subsection.

14 Nothing in this paragraph shall be construed as af15 fecting the sustainable growth rates established for

16 fiscal year 1998 or fiscal year 1999.’’.

17 (c) STUDY AND REPORT REGARDING THE UTILIZA18 TION OF PHYSICIANS’ SERVICES BY MEDICARE BENE19 FICIARIES.—

20 (1) STUDY BY SECRETARY.—The Secretary,

21 acting through the Administrator of the Agency for

22 Health Care Policy and Research, shall conduct a

23 study of the issues specified in paragraph (2).

24 (2) ISSUES TO BE STUDIED.—The issues speci25 fied in this paragraph are the following:
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1 (A) The various methods for accurately es2 timating the economic impact on expenditures

3 for physicians’ services under the original medi4 care fee-for-service program under parts A and

5 B of title XVIII of the Social Security Act (42

6 U.S.C. 1395 et seq.) resulting from—

7 (i) improvements in medical capabili8 ties;

9 (ii) advancements in scientific tech10 nology;

11 (iii) demographic changes in the types

12 of medicare beneficiaries that receive bene13 fits under such program; and

14 (iv) geographic changes in locations

15 where medicare beneficiaries receive bene16 fits under such program.

17 (B) The rate of usage of physicians’ serv18 ices under the original medicare fee-for-service

19 program under parts A and B of title XVIII of

20 the Social Security Act (42 U.S.C. 1395 et

21 seq.) among beneficiaries between ages 65 and

22 74, 75 and 84, 85 and over, and disabled bene23 ficiaries under age 65.

24 (C) Other factors that may be reliable pre25 dictors of beneficiary utilization of physicians’
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1 services under the original medicare fee-for2 service program under parts A and B of title

3 XVIII of the Social Security Act (42 U.S.C.

4 1395 et seq.).

5 (3) REPORT TO MEDPAC.—Not later than 3

6 years after the date of enactment of this Act, the

7 Secretary of Health and Human Services shall sub8 mit a report to MedPAC setting forth the results of

9 the study conducted pursuant to paragraph (1), to10 gether with any recommendations the Secretary de11 termines are appropriate.

12 (4) MEDPAC REPORT TO CONGRESS.—Not later

13 than 180 days after receipt of the report submitted

14 to MedPAC under paragraph (1), MedPAC shall

15 submit a copy of such report to the committees of

16 jurisdiction in Congress, together with an analysis

17 and evaluation of such report and any recommenda18 tions that it determines are appropriate.

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

20 this section shall be effective in determining the conversion

21 factor under section 1848(d) of the Social Security Act

22 (42 U.S.C. 1395w–4(d)) for years beginning with 2001

23 and shall not apply to or affect any update (or any update

24 adjustment factor) for any year before 2001.
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1 TITLE III—PROVISIONS

2 RELATING TO PARTS A AND B

3 Subtitle A—Home Health Services

4 SEC. 301. DELAY IN THE 15 PERCENT REDUCTION IN PAY5 MENTS UNDER THE PPS FOR HOME HEALTH

6 SERVICES.

7 (a) CONTINGENCY REDUCTION.—Section 4603(e) of

8 the Balanced Budget Act of 1997 (42 U.S.C. 1395fff

9 note), as amended by section 5101(c)(3) of the Tax and

10 Trade Relief Extension Act of 1998 (contained in division

11 J of Public Law 105–277), is repealed.

12 (b) DELAY IN REDUCTION UNDER THE PPS.—Sec13 tion 1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)), as

14 amended by section 5101 of the Tax and Trade Relief Ex15 tension Act of 1998 (contained in division J of Public Law

16 105–277), is amended to read as follows:

17 ‘‘(i) IN GENERAL.—Under such sys18 tem the Secretary shall provide for com19 putation of a standard prospective pay20 ment amount (or amounts) as follows:

21 ‘‘(I) Such amount (or amounts)

22 shall initially be based on the most

23 current audited cost report data avail24 able to the Secretary and shall be

25 computed in a manner so that the
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1 total amounts payable under the sys2 tem for fiscal year 2001 shall be equal

3 to the total amount that would have

4 been made if the system had not been

5 in effect, but if the reduction in limits

6 described in clause (ii) (applied by

7 substituting ‘5’ for ‘15’) had been in

8 effect.

9 ‘‘(II) For fiscal year 2002, such

10 amount (or amounts) shall be equal to

11 the amount (or amounts) that would

12 have been determined under subclause

13 (I) if the reduction in limits described

14 in clause (ii) (applied by substituting

15 ‘10’ for ‘15’) had been in effect for

16 fiscal year 2001, and updated under

17 subparagraph (B) for fiscal year

18 2002.

19 ‘‘(III) For fiscal year 2003, such

20 amount (or amounts) shall be equal to

21 the amount (or amounts) that would

22 have been determined under subclause

23 (I) if the reduction in limits described

24 in clause (ii) had been in effect for

25 fiscal year 2001, and updated under
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1 subparagraph (B) for fiscal years

2 2002 and 2003.

3 Each such amount shall be standardized in

4 a manner that eliminates the effect of vari5 ations in relative case mix and wage levels

6 among different home health agencies in a

7 budget neutral manner consistent with the

8 case mix and wage level adjustments pro9 vided under paragraph (4)(A). Under the

10 system, the Secretary may recognize re11 gional differences or differences based

12 upon whether or not the services or agency

13 are in an urbanized area.’’.

14 SEC. 302. INCREASE IN PER VISIT LIMIT.

15 (a) IN GENERAL.—Section 1861(v)(1)(L)(i) (42

16 U.S.C. 1395x(v)(1)(L)(i)) is amended—

17 (1) in subclause (IV), by striking ‘‘or’’ at the

18 end;

19 (2) in subclause (V)—

20 (A) by inserting ‘‘and before October 1,

21 1999,’’ after ‘‘October 1, 1998,’’; and

22 (B) by striking the period at the end and

23 inserting ‘‘, or’’; and

24 (3) by adding at the end the following:
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1 ‘‘(VI) October 1, 1999, 112 percent of such me2 dian.’’.

3 (b) INCREASE NOT INCLUDED IN PPS BASE.—The

4 second sentence of section 1895(b)(3)(A)(i) (42 U.S.C.

5 1395fff(b)(3)(A)(i)), as amended by section 5101(c)(1)(B)

6 of the Tax and Trade Relief Extension Act of 1998 (con7 tained in division J of Public Law 105–277) and section

8 301, is amended—

9 (1) in subclause (I), by inserting ‘‘and if the

10 reference in section 1861(v)(1)(L)(i)(VI) to 112 per11 cent were a reference to 106 percent’’ before the pe12 riod; and

13 (2) in each of subclauses (II) and (III), by in14 serting ‘‘and if the reference in section

15 1861(v)(1)(L)(i)(VI) to 112 percent were a ref16 erence to 106 percent’’ after ‘‘had been in effect for

17 fiscal year 2001’’.

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

19 this section shall apply to services provided on or after

20 October 1, 1999.

21 SEC. 303. INCREASE IN PER BENEFICIARY LIMITS.

22 (a) INCREASE IN PER BENEFICIARY LIMITS.—Sec23 tion 1861(v)(1)(L) of the Social Security Act (42 U.S.C.

24 1395x(v)(1)(L)), as amended by section 5101 of the Tax
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1 and Trade Relief Extension Act of 1998 (contained in Di2 vision J of Public Law 105–277), is amended—

3 (1) by redesignating clause (ix) as clause (x);

4 and

5 (2) by inserting after clause (viii) the following:

6 ‘‘(ix) Notwithstanding the applicable per beneficiary

7 limit under clause (v), (vi), or (viii), for services furnished

8 by home health agencies for cost reporting periods begin9 ning during fiscal year 2000, the per beneficiary limit ap10 plicable under such clause is the per beneficiary limit oth11 erwise applicable under such clause increased by 1 per12 cent. Such increase shall not affect the determination or

13 application of the per visit limit under clause (i).’’.

14 (b) INCREASE NOT INCLUDED IN PPS BASE.—The

15 second sentence of section 1895(b)(3)(A)(i) (42 U.S.C.

16 1395fff(b)(3)(A)(i)), as amended by section 5101(c)(1)(B)

17 of the Tax and Trade Relief Extension Act of 1998 (con18 tained in division J of Public Law 105–277) and section

19 302, is amended—

20 (1) in subclause (I), by striking ‘‘and if the ref21 erence in section 1861(v)(1)(L)(i)(VI) to 112 per22 cent were a reference to 106 percent’’ and inserting

23 ‘‘, if the reference in section 1861(v)(1)(L)(i)(VI) to

24 112 percent were a reference to 106 percent, and if
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1 section 1861(v)(1)(L)(ix) had not been enacted’’;

2 and

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

4 striking ‘‘and if the reference in section

5 1861(v)(1)(L)(i)(VI) to 112 percent were a ref6 erence to 106 percent’’ and inserting ‘‘, if the ref7 erence in section 1861(v)(1)(L)(i)(VI) to 112 per8 cent were a reference to 106 percent, and if section

9 1861(v)(1)(L)(ix) had not been enacted’’.

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

11 this section shall apply to services furnished by home

12 health agencies for cost reporting periods beginning on or

13 after October 1, 1999.

14 SEC. 304. ELIMINATION OF 15-MINUTE BILLING REQUIRE15 MENT.

16 (a) IN GENERAL.—Section 1895(c) (42 U.S.C.

17 1395fff(c)) is amended, to read as follows:

18 ‘‘(c) REQUIREMENTS FOR PAYMENT INFORMA19 TION.—With respect to home health services furnished on

20 or after October 1, 1998, no claim for such a service may

21 be paid under this title unless the claim has the unique

22 identifier (provided under section 1842(r)) for the physi23 cian who prescribed the services or made the certification

24 described in section 1814(a)(2) or 1835(a)(2)(A).’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to claims submitted on or after

3 the date of enactment of this Act.

4 SEC. 305. REFINEMENT OF HOME HEALTH AGENCY CON5 SOLIDATED BILLING.

6 (a) IN GENERAL.—Section 1842(b)(6)(F) (42 U.S.C.

7 1395u(b)(6)(F)) is amended by inserting ‘‘(including med8 ical supplies described in section 1861(m)(5), but exclud9 ing durable medical equipment to the extent provided for

10 in such section)’’ after ‘‘home health services’’.

11 (b) CONFORMING AMENDMENT.—Section

12 1862(a)(21) (42 U.S.C. 1395y(a)(21)) is amended by in13 serting ‘‘(including medical supplies described in section

14 1861(m)(5), but excluding durable medical equipment to

15 the extent provided for in such section)’’ after ‘‘home

16 health services’’.

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

18 this section shall apply to payments for services provided

19 on or after the date of enactment of this Act.
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1 SEC. 306. STUDY AND REPORT TO CONGRESS REGARDING

2 THE EXEMPTION OF RURAL AGENCIES AND

3 POPULATIONS FROM INCLUSION IN THE

4 HOME HEALTH PROSPECTIVE PAYMENT SYS5 TEM.

6 (a) STUDY.—The Medicare Payment Advisory Com7 mission (referred to in this section as ‘‘MedPAC’’) shall

8 conduct a study to determine the feasibility and advis9 ability of exempting home health services provided by a

10 home health agency (or by others under arrangements

11 with such agency) located in a rural area, or to an indi12 vidual residing in a rural area, from payment under the

13 prospective payment system for such services established

14 by the Secretary of Health and Human Services in accord15 ance with section 1895 of the Social Security Act (42

16 U.S.C. 1395fff).

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

18 of enactment of this Act, MedPAC shall submit a report

19 to Congress on the study conducted under subsection (a),

20 together with any recommendations for legislation that

21 MedPAC determines to be appropriate as a result of such

22 study.

23 SEC. 307. EXTENSION OF PERIODIC INTERIM PAYMENTS

24 FOR HOME HEALTH AGENCIES.

25 (a) IN GENERAL.—Section 1815(e)(2)(D) of the So26 cial Security Act (42 U.S.C. 1395g(e)(2)(D)) is amended
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1 by inserting ‘‘(until the end of the 12-month period fol2 lowing the date that the prospective payment system for

3 such services is implemented pursuant to section 1895)’’

4 before the semicolon.

5 (b) CONFORMING AMENDMENT.—Section 4603(b) of

6 the Balanced Budget Act of 1997 (Public Law 105–33;

7 111 Stat. 470) is repealed.

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

9 this section shall take effect on the date of enactment of

10 this Act.

11 Subtitle B—Graduate Medical

12 Education

13 SEC. 321. REVISION OF MULTIYEAR REDUCTION OF INDI14 RECT GRADUATE MEDICAL EDUCATION PAY15 MENTS.

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

17 U.S.C. 1395ww(d)(5)(B)(ii)) is amended by striking sub18 clauses (III), (IV), and (V) and inserting the following:

19 ‘‘(III) during each of fiscal years

20 1999 through 2003, ‘c’ is equal to 1.6; and

21 ‘‘(IV) on or after October 1, 2003, ‘c’

22 is equal to 1.35.’’.

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

24 this section shall take effect on October 1, 1999.
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1 SEC. 322. GME PAYMENTS FOR CERTAIN INTERNS AND

2 RESIDENTS.

3 (a) INDIRECT AND DIRECT MEDICAL EDUCATION.—

4 Each limitation regarding the number of residents or in5 terns for which payment may be made under section 1886

6 of the Social Security Act (42 U.S.C. 1395ww) is in7 creased by the number of applicable residents (as defined

8 in subsection (b)).

9 (b) APPLICABLE RESIDENT DEFINED.—For pur10 poses of this section, the term ‘‘applicable resident’’ means

11 a resident or intern that—

12 (1) participated in graduate medical education

13 at a facility of the Department of Veterans Affairs;

14 (2) was subsequently transferred on or after

15 January 1, 1997, and before July 31, 1998, to a

16 hospital and the hospital was not a Department of

17 Veterans Affairs facility; and

18 (3) was transferred because the approved med19 ical residency program in which the resident or in20 tern participated would lose accreditation by the Ac21 creditation Council on Graduate Medical Education

22 if such program continued to train residents at the

23 Department of Veterans Affairs facility.

24 (c) EFFECTIVE DATE.—

25 (1) IN GENERAL.—This section shall take effect

26 as if included in the enactment of the Balanced
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1 Budget Act of 1997 (Public Law 105–33; 111 Stat.

2 251).

3 (2) RETROACTIVE PAYMENTS.—If the Secretary

4 of Health and Human Services determines that a

5 hospital operating an approved medical residency

6 program is owed payments as a result of enactment

7 of this section, the Secretary shall make such pay8 ments not later than 60 days after the date of enact9 ment of this section.

10 TITLE IV—RURAL INITIATIVES

11 SEC. 401. SOLE COMMUNITY HOSPITALS AND MEDICARE

12 DEPENDENT HOSPITALS.

13 (a) IN GENERAL.—Section 1886(b)(3)(B)(iv) (42

14 U.S.C. 1395ww(b)(3)(B)(iv)) is amended—

15 (1) in subclause (III), by striking ‘‘and’’ at the

16 end;

17 (2) in subclause (IV)—

18 (A) by striking ‘‘fiscal year 1996 and each

19 subsequent fiscal year’’ and inserting ‘‘fiscal

20 years 1996 through 1999’’; and

21 (B) by striking the period at the end and

22 inserting ‘‘, and’’; and

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

24 ‘‘(V) for fiscal year 2000 and each subsequent

25 fiscal year, the market basket percentage increase.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on October 1, 1999.

3 SEC. 402. REVISION OF CRITERIA FOR DESIGNATION AS A

4 CRITICAL ACCESS HOSPITAL.

5 (a) CRITERIA FOR DESIGNATION.—Section

6 1820(c)(2)(B)(iii) (42 U.S.C. 1395i–4(c)(2)(B)(iii)) is

7 amended by striking ‘‘to exceed 96 hours’’ and all that

8 follows before the semicolon and inserting ‘‘to exceed, on

9 average, 96 hours per patient’’.

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

11 this section shall take effect on October 1, 1999.

12 SEC. 403. MEDICARE WAIVERS FOR HOSPITALS IN RURAL

13 AREAS.

14 Notwithstanding section 1886(d)(2)(D) of the Social

15 Security Act (42 U.S.C. 1395ww(d)(2)(D)), by not later

16 than 180 days after the date of enactment of this Act,

17 the Secretary of Health and Human Services shall estab18 lish a waiver process in which hospitals under the medi19 care program under title XVIII of the Social Security Act

20 (42 U.S.C. 1395 et seq.) that are determined by the Office

21 of Management and Budget to be located in an urban or

22 large urban area for purposes of reimbursement under the

23 medicare program may apply to the Secretary to be con24 sidered to be located in a rural area for such purposes

25 if such hospital is located—
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1 (1) in a rural area within a metropolitan coun2 ty, as defined by the most recent update of the Gold3 smith Modification; or

4 (2) in a rural area as determined by using a

5 census tract definition of a rural area adopted by

6 the Office of Rural Health Policy in awarding

7 grants.

8 SEC. 404. 2-YEAR EXTENSION OF MEDICARE DEPENDENT

9 HOSPITAL (MDH) PROGRAM.

10 (a) EXTENSION OF PAYMENT METHODOLOGY.—Sec11 tion 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is

12 amended—

13 (1) in clause (i), by striking ‘‘and before Octo14 ber 1, 2001,’’ and inserting ‘‘and before October 1,

15 2003’’; and

16 (2) in clause (ii)(II), by striking ‘‘and before

17 October 1, 2001,’’ and inserting ‘‘and before Octo18 ber 1, 2003’’.

19 (b) CONFORMING AMENDMENTS.—

20 (1) EXTENSION OF TARGET AMOUNT.—Section

21 1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)) is

22 amended—

23 (A) in the matter preceding clause (i), by

24 striking ‘‘and before October 1, 2001,’’ and in25 serting ‘‘and before October 1, 2003’’; and
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1 (B) in clause (iv), by striking ‘‘during fis2 cal year 1998 through fiscal year 2000’’ and in3 serting ‘‘during fiscal year 1998 through fiscal

4 year 2002’’.

5 (2) PERMITTING HOSPITALS TO DECLINE RE6 CLASSIFICATION.—Section 13501(e)(2) of Omnibus

7 Budget Reconciliation Act of 1993 (42 U.S.C.

8 1395ww note) is amended by striking ‘‘or fiscal year

9 2000’’ and inserting ‘‘or fiscal years 2000 through

10 2002’’.

11 SEC. 405. ASSISTING RURAL GRADUATE MEDICAL EDU12 CATION RESIDENCY PROGRAMS.

13 (a) INDIRECT GRADUATE MEDICAL EDUCATION AD14 JUSTMENT.—

15 (1) IN GENERAL.—Section 1886(d)(5)(B)(v) of

16 the Social Security Act (42 U.S.C.

17 1395ww(d)(5)(B)(v)) (as added by section 4621(b)

18 of the Balanced Budget Act of 1997) is amended—

19 (A) by striking ‘‘(v) In determining’’ and

20 inserting ‘‘(v)(I) Subject to subclause (II), in

21 determining’’;

22 (B) by striking ‘‘in the hospital with re23 spect to the hospital’s most recent cost report24 ing period ending on or before December 31,

25 1996’’; and inserting ‘‘who were appointed by
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1 the hospital’s approved medical residency train2 ing programs for the hospital’s most recent cost

3 reporting period ending on or before December

4 31, 1996’’; and

5 (C) by adding at the end the following:

6 ‘‘(II) Beginning on or after January 1, 1997, in the

7 case of a hospital that sponsors only 1 allopathic or osteo8 pathic residency program, the limit determined for such

9 hospital under subclause (I) may, at the hospital’s discre10 tion, be increased by 1 for each calendar year but shall

11 not exceed a total of 3 more than the limit determined

12 for the hospital under subclause (I).’’.

13 (2) TECHNICAL AMENDMENTS.—Section

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

15 1395ww(d)(5)(B)) is amended by realigning the left

16 margin of clauses (ii), (v), and (vi) so as to align

17 with the left margin of clause (i).

18 (b) DIRECT GRADUATE MEDICAL EDUCATION AD19 JUSTMENT.—

20 (1) LIMITATION ON NUMBER OF RESIDENTS.—

21 Section 1886(h)(4)(F) of the Social Security Act (42

22 U.S.C. 1395ww(h)(4)(F)) (as added by section 4623

23 of the Balanced Budget Act of 1997) is amended by

24 inserting ‘‘who were appointed by the hospital’s ap25 proved medical residency training programs’’ after
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1 ‘‘may not exceed the number of such full-time equiv2 alent residents’’.

3 (2) FUNDING FOR NEW PROGRAMS.—The first

4 sentence of section 1886(h)(4)(H)(i) of the Social

5 Security Act (42 U.S.C. 1395ww(h)(4)(H)(i)) (as

6 added by section 4623 of the Balanced Budget Act

7 of 1997) is amended by inserting ‘‘and before Sep8 tember 30, 1999’’ after ‘‘January 1, 1995’’.

9 (3) FUNDING FOR PROGRAMS MEETING RURAL

10 NEEDS.—The second sentence of section

11 1886(h)(4)(H)(i) of the Social Security Act (42

12 U.S.C. 1395ww(h)(4)(H)(i)) (as added by section

13 4623 of the Balanced Budget Act of 1997) is

14 amended by striking the period at the end and in15 serting ‘‘, including facilities that are not located in

16 an underserved rural area but have established sepa17 rately accredited rural training tracks.’’.

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

19 this Act shall take effect as if included in the enactment

20 of the Balanced Budget Act of 1997.
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1 TITLE V—PROVISIONS RELAT2 ING TO PART C

3 (MEDICARE+CHOICE PRO4 GRAM)

5 Subtitle A—Provisions To Accom6 modate and Protect Medicare

7 Beneficiaries

8 SEC. 501. PERMITTING ENROLLMENT IN ALTERNATIVE

9 MEDICARE+CHOICE PLANS AND MEDIGAP

10 COVERAGE IN CASE OF INVOLUNTARY TER11 MINATION OF MEDICARE+CHOICE ENROLL12 MENT.

13 (a) MEDICARE+CHOICE PLANS.—Section 1851(e)(4)

14 (42 U.S.C. 1395w–21(e)(4)) is amended by striking sub15 paragraph (A) and inserting the following:

16 ‘‘(A)(i) the certification of the organization

17 or plan under this part has been terminated, or

18 the organization or plan has notified the indi19 vidual of an impending termination of such cer20 tification; or

21 ‘‘(ii) the organization has terminated or

22 otherwise discontinued providing the plan in the

23 area in which the individual resides, or has no24 tified the individual of an impending termi25 nation or discontinuation of such plan;’’.
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1 (b) MEDIGAP PLANS.—Section 1882(s)(3)(A) (42

2 U.S.C. 1395ss(s)(3)(A)) is amended, in the matter fol3 lowing clause (iii)—

4 (1) by inserting ‘‘(or, if elected by the indi5 vidual, the date of notification of the individual by

6 the plan or organization of the impending termi7 nation or discontinuance of the plan in the area in

8 which the individual resides)’’ after ‘‘the date of the

9 termination of enrollment described in such subpara10 graph’’; and

11 (2) by inserting ‘‘(or the date of such notifica12 tion)’’ after ‘‘the date of termination or

13 disenrollment’’.

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

15 this section shall apply to notices of impending termi16 nations or discontinuances made by group health plans

17 and Medicare+Choice organizations on or after the date

18 of enactment of this Act.

19 SEC. 502. CHANGE IN EFFECTIVE DATE OF ELECTIONS AND

20 CHANGES OF ELECTIONS OF

21 MEDICARE+CHOICE PLANS.

22 (a) OPEN ENROLLMENT.—Section 1851(f)(2) (42

23 U.S.C. 1395w–21(f)(2)) is amended—

24 (1) by inserting ‘‘or change’’ before ‘‘is made’’;

25 and
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1 (2) by inserting ‘‘, except that if such election

2 or change is made after the 10th day of any cal3 endar month, then the election or change shall not

4 take effect until the first day of the second calendar

5 month following the date on which the election or

6 change is made’’ before the period.

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

8 this section shall apply to elections and changes of cov9 erage made on or after the date of enactment of this Act.

10 SEC. 503. EXTENSION OF REASONABLE COST CONTRACTS.

11 Section 1876(h)(5)(B) (42 U.S.C.

12 1395mm(h)(5)(B)) is amended to read as follows:

13 ‘‘(B) The Secretary may not extend or renew a rea14 sonable cost reimbursement contract under this subsection

15 for any period beyond December 31, 2004, and an indi16 vidual may not be enrolled in a plan offered by an organi17 zation pursuant to such a contract after December 31,

18 2003, unless such individual was enrolled in such plan on

19 such date.’’.

20 SEC. 504. REVISION OF NOTICE BY HOSPITALS REGARDING

21 COVERAGE OF INPATIENT HOSPITAL SERV22 ICES.

23 (a) IN GENERAL.—Section 1866(a)(1)(M) (42

24 U.S.C. 1395cc(a)(1)(M)) is amended—
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1 (1) in the matter preceding clause (i), by strik2 ing ‘‘at or about the time of the individual’s admis3 sion as an inpatient to the hospital’’ and inserting

4 ‘‘at least 16 but not more than 24 hours before the

5 hospital proposes to discharge the individual from

6 the hospital’’;

7 (2) in clause (iii)—

8 (i) by inserting ‘‘to the appropriate peer

9 review organization’’ after ‘‘hospital services’’;

10 and

11 (ii) by striking ‘‘and’’ at the end;

12 (3) by redesignating clause (iv) as clause (v);

13 and

14 (4) by inserting the following after clause (iii):

15 ‘‘(iv) in the case of an individual enrolled in a

16 Medicare+Choice plan offered by a

17 Medicare+Choice organization under part C, such

18 information, as determined by the Secretary, regard19 ing the individual’s appeal rights that is in addition

20 to the information described in clause (iii), and’’.

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

22 this section shall apply to admissions occurring on or after

23 the date of enactment of this Act.
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1 SEC. 505. EXTENDED DISENROLLMENT WINDOW FOR CER2 TAIN INVOLUNTARILY TERMINATED ENROLL3 EES.

4 (a) IN GENERAL.—Section 1882(s)(3)(B) (42 U.S.C.

5 1395ss(s)(3)(B)) is amended by adding at the end the fol6 lowing flush sentence:

7 ‘‘If any individual is enrolled with any Medicare+Choice

8 organization under clause (v), or in any Medicare+Choice

9 plan under clause (vi), and the Medicare+Choice plan in

10 which the individual is enrolled is terminated or such indi11 vidual is disenrolled from such plan under the cir12 cumstances described in section 1851(e)(4)(A), such indi13 vidual may reenroll for a 12-month period (beginning on

14 the date of such enrollment) with a Medicare+Choice or15 ganization in a Medicare+Choice plan, and such reenroll16 ment shall be considered an enrollment under clause (v)

17 or (vi) (as applicable).’’.

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

19 this section shall apply to terminations or disenrollments

20 occurring on or after the date of enactment of this Act.
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1 Subtitle B—Provisions To Facili2 tate Implementation of the

3 Medicare+Choice Program

4 SEC. 521. MODERATION OF MEDICARE+CHOICE RISK AD5 JUSTMENT IMPLEMENTATION.

6 Section 1853(a)(3)(C) (42 U.S.C. 1395w–

7 23(a)(3)(C)) is amended—

8 (1) by redesignating the first sentence as clause

9 (i) with the heading ‘‘IN GENERAL.—’’ and appro10 priate indentation; and

11 (2) by adding at the end the following:

12 ‘‘(ii) PHASE-IN.—Such risk adjust13 ment methodology shall be implemented in

14 a phased-in manner so that the new meth15 odology applies only to—

16 ‘‘(I) 10 percent of the payment

17 amount in 2000 and 2001 (in which

18 the risk adjustment methodology

19 should reflect only data from inpatient

20 settings);

21 ‘‘(II) 20 percent of such amount

22 in 2002 (in which such methodology

23 should reflect only data from inpatient

24 settings);
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1 ‘‘(III) 30 percent of such amount

2 in 2003 (in which such methodology

3 should reflect only data from inpatient

4 settings);

5 ‘‘(IV) 55 percent of such amount

6 in 2004 (in which such methodology

7 should reflect a blend of 67 percent of

8 only data from inpatient settings and

9 33 percent of data from inpatient and

10 other settings);

11 ‘‘(V) 80 percent of such amount

12 in 2005 (in which such methodology

13 should reflect a blend of 33 percent of

14 only data from inpatient settings and

15 67 percent of data from inpatient and

16 other settings); and

17 ‘‘(VI) 100 percent of such

18 amount in any subsequent year (in

19 which such methodology should reflect

20 data from inpatient and other set21 tings).’’.
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1 SEC. 522. DELAY IN DEADLINE FOR SUBMISSION OF AD2 JUSTED COMMUNITY RATES UNDER

3 MEDICARE+CHOICE PROGRAM AND RELATED

4 MODIFICATIONS.

5 (a) DELAY IN DEADLINE FOR SUBMISSION OF AD6 JUSTED COMMUNITY RATES.—Section 1854(a)(1) (42

7 U.S.C. 1395w–24(a)(1)) is amended by striking ‘‘May 1’’

8 and inserting ‘‘July 1’’ in the matter preceding subpara9 graph (A).

10 (b) ADJUSTMENT IN INFORMATION DISCLOSURE

11 PROVISIONS TO CONFORM TO DELAY IN DEADLINE FOR

12 ACR SUBMISSION.—Section 1851(d)(2)(A)(ii) (42 U.S.C.

13 1395w–21(d)(2)(A)(ii)) is amended—

14 (1) by inserting after ‘‘information described in

15 paragraph (4) concerning such plans’’ the following:

16 ‘‘, to the extent such information is available at the

17 time of preparation of the material for mailing’’; and

18 (2) by adding at the end the following: ‘‘If any

19 item described in paragraph (4) is not available at

20 the time of preparation of the material for mailing,

21 the Secretary shall provide general information con22 cerning such item.’’.

23 (c) MEDICARE+CHOICE ORGANIZATION REQUIRED

24 TO PROVIDE TERMINATION NOTICE BY DATE FOR ACR

25 SUBMISSION.—Section 1857(c)(1) (42 U.S.C. 1395w–

26 27(c)(1)) is amended—
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1 (1) by striking ‘‘Each contract’’ and inserting

2 the following:

3 ‘‘(A) IN GENERAL.—Each contract’’; and

4 (2) by adding at the end the following:

5 ‘‘(B) TERMINATION NOTICE.—If a

6 Medicare+Choice organization intends to termi7 nate a contract under this section at the end of

8 the current term of the contract, the organiza9 tion shall notify the Secretary of such intent by

10 not later than July 1 of such term.’’.

11 (d) EFFECTIVE DATES.—

12 (1) ACR AND INFORMATION DISCLOSURE.—The

13 amendments made by subsections (a) and (b) shall

14 apply to submissions required to be made on or after

15 the date of enactment of this Act.

16 (2) TERMINATION NOTICE.—The amendment

17 made by subsection (c) shall apply to contract years

18 beginning on or after the date of enactment of this

19 Act.

20 SEC. 523. USER FEE FOR MEDICARE+CHOICE ORGANIZA21 TIONS BASED ON NUMBER OF ENROLLED

22 BENEFICIARIES.

23 (a) DETERMINATION.—Section 1857(e)(2) (42

24 U.S.C. 1395w–27(e)(2)) is amended to read as follows:
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1 ‘‘(2) COST-SHARING IN ENROLLMENT-RELATED

2 COSTS.—

3 ‘‘(A) IN GENERAL.—A Medicare+Choice

4 organization shall pay the fee established by the

5 Secretary under subparagraph (B)(i).

6 ‘‘(B) FEES FROM PLANS.—

7 ‘‘(i) IN GENERAL.—The Secretary is

8 authorized to charge a fee to each

9 Medicare+Choice organization with a con10 tract under this part that is equal to the

11 organization’s pro rata share (as deter12 mined by the Secretary) of the aggregate

13 amount of fees which the Secretary is di14 rected to collect in a fiscal year (as deter15 mined under clause (ii)).

16 ‘‘(ii) AGGREGATE AMOUNT OF FEES

17 TO BE COLLECTED.—For purposes of

18 clause (i), the aggregate amount of fees

19 which the Secretary is directed to collect in

20 a fiscal year is an amount equal to the ap21 plicable percentage of the aggregate ex22 penses incurred by the Secretary in car23 rying out the sections described in clause

24 (iii)(I) in such year. For purposes of the

25 preceding sentence, the applicable percent-
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1 age in a fiscal year is equal to the ratio

2 (expressed as a percentage) of—

3 ‘‘(I) the total number of individ4 uals enrolled in Medicare+Choice

5 plans in such year; to

6 ‘‘(II) the total number of individ7 uals enrolled in part A or B in such

8 year.

9 ‘‘(iii) FEES COLLECTED.—For any

10 fiscal year, the fees authorized to be col11 lected under this subparagraph shall be

12 available to the Secretary—

13 ‘‘(I) only for the purpose of car14 rying out section 1851 (relating to en15 rollment and dissemination of infor16 mation) and section 4360 of the Om17 nibus Budget Reconciliation Act of

18 1990 (relating to the health insurance

19 counseling and assistance program);

20 and

21 ‘‘(II) without further appropria22 tion.

23 ‘‘(C) AMOUNTS FROM PART A TRUST

24 FUND.—
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1 ‘‘(i) IN GENERAL.—Subject to clause

2 (ii), amounts in the Federal Hospital In3 surance Trust Fund shall be available to

4 the Secretary in a fiscal year (beginning in

5 fiscal year 2000) to cover the expenses as6 sociated with carrying out the sections de7 scribed in subparagraph (B)(iii)(I).

8 ‘‘(ii) LIMITATION.—The total amount

9 available to the Secretary from the Federal

10 Hospital Insurance Trust Fund under

11 clause (i) in any fiscal year shall not ex12 ceed $100,000,000 minus an amount equal

13 to the amount authorized to be collected

14 under subparagraph (B)(i) for the fiscal

15 year.’’.

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

17 this section shall apply to fees charged on or after October

18 1, 1999.

19 SEC. 524. CHANGE IN TIME PERIOD FOR EXCLUSION OF

20 MEDICARE+CHOICE ORGANIZATIONS THAT

21 HAVE HAD A CONTRACT TERMINATED.

22 (a) IN GENERAL.—Section 1857(c)(4) (42 U.S.C.

23 1395w–27(c)(4)) is amended by striking ‘‘5-year period’’

24 and inserting ‘‘2-year period’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to contract years beginning on or

3 after January 1, 1999.

4 SEC. 525. FLEXIBILITY TO TAILOR BENEFITS UNDER

5 MEDICARE+CHOICE PLANS.

6 (a) IN GENERAL.—Section 1854 (42 U.S.C. 1395w–

7 24) is amended—

8 (1) in subsection (a)(1), by inserting ‘‘(or seg9 ment of such an area if permitted under subsection

10 (h))’’ after ‘‘service area’’ in the matter preceding

11 subparagraph (A); and

12 (2) by adding at the end the following:

13 ‘‘(h) PERMITTING USE OF SEGMENTS OF SERVICE

14 AREAS.—The Secretary shall permit a Medicare+Choice

15 organization to elect to apply the provisions of this section

16 uniformly to separate segments of a service area (rather

17 than uniformly to an entire service area) as long as such

18 segments are composed of 1 or more counties.’’.

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

20 this section shall apply to contract years beginning on or

21 after January 1, 2000.

22 SEC. 526. INAPPLICABILITY OF QISMC TO PREFERRED PRO23 VIDER ORGANIZATIONS.

24 (a) IN GENERAL.—A Medicare+Choice plan that is

25 operating as a preferred provider organization plan shall
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1 not be subject to the requirements of the Quality Improve2 ment System for Managed Care (QISMC) established by

3 the Secretary of Health and Human Services to carry out

4 section 1852(e) of the Social Security Act (42 U.S.C.

5 1395w–22(e)) .

6 (b) APPLICATION OF FEE-FOR-SERVICE QUALITY

7 SYSTEM TO PPOS.—If the Secretary of Health and

8 Human Services establishes a system that is—

9 (1) applicable to providers under the original

10 fee-for-service program under parts A and B of title

11 XVIII of the Social Security Act (42 U.S.C. 1395 et

12 seq.); and

13 (2) similar to the system described in sub14 section (a);

15 a Medicare+Choice plan that is operating as a preferred

16 provider organization plan shall comply with the require17 ments of that system.

18 (c) EFFECTIVE DATE.—This section shall apply to

19 contract years beginning on or after January 1, 2000.

20 SEC. 527. TIMING OF MEDICARE+CHOICE HEALTH INFOR21 MATION FAIRS.

22 (a) IN GENERAL.—Section 1851(e)(3) (42 U.S.C.

23 1395w–21(e)(3)) is amended in subparagraph (C), by

24 striking ‘‘In the month of November’’ and inserting ‘‘Dur25 ing the fall season’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall take effect on the date of enactment of

3 this Act.

4 SEC. 528. RULES REGARDING PHYSICIAN REFERRALS FOR

5 MEDICARE+CHOICE PROGRAM.

6 (a) IN GENERAL.—Section 1877(b)(3) (42 U.S.C.

7 1395nn(b)(3)) is amended—

8 (1) in subparagraph (C), by striking ‘‘or’’ at

9 the end;

10 (2) in subparagraph (D), by striking the period

11 at the end and inserting ‘‘, or’’; and

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

13 ‘‘(E) that is a Medicare+Choice organiza14 tion under part C that is offering a coordinated

15 care plan described in section 1851(a)(2)(A) to

16 an individual enrolled with the organization.’’.

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

18 this section shall take effect on the date of enactment of

19 this Act.

20 SEC. 529. CLARIFICATION REGARDING THE ABILITY OF A

21 RELIGIOUS FRATERNAL BENEFIT SOCIETY

22 TO OPERATE A MEDICARE+CHOICE PRIVATE

23 FEE-FOR-SERVICE PLAN.

24 (a) IN GENERAL.—Section 1859(e)(2) (42 U.S.C.

25 1395w–28(e)(2)) is amended by striking ‘‘section
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1 1851(a)(2)(A)’’ and inserting ‘‘subparagraphs (A) and (C)

2 of section 1851(a)(2)’’.

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

4 this section shall apply to contract years beginning on or

5 after the date of enactment of this Act.

6 Subtitle C—Provisions Regarding

7 Special Medicare Populations

8 SEC. 541. EXTENSION OF SOCIAL HEALTH MAINTENANCE

9 ORGANIZATION DEMONSTRATION PROJECT

10 AUTHORITY.

11 Section 4018(b) of the Omnibus Budget Reconcili12 ation Act of 1987 is amended—

13 (1) in paragraph (1), by striking ‘‘December

14 31, 2000’’ and inserting ‘‘the date that is 1 year

15 after the date on which the Secretary submits to

16 Congress the report described in section 4014(c) of

17 the Balanced Budget Act of 1997’’; and

18 (2) in paragraph (4), by striking ‘‘March 31,

19 2001’’ and inserting ‘‘the date that is 1 year after

20 the date on which Secretary submits to Congress the

21 report described in section 4014(c) of the Balanced

22 Budget Act of 1997’’.
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1 SEC. 542. INAPPLICABILITY OF OASIS TO PACE.

2 Sections 1894(e)(3) and 1934(e)(3) (42 U.S.C.

3 1395eee(e)(3) and 1396u–4(e)(3)) are each amended by

4 adding at the end the following:

5 ‘‘(C) INAPPLICABILITY OF OASIS TO

6 PACE.—Notwithstanding the previous provisions

7 of this paragraph, with respect to any home

8 health service provided under a PACE program

9 under this section, the Secretary shall not apply

10 the data collection and reporting requirements

11 under the Outcome and Assessment Informa12 tion Set (OASIS) to such program or to any

13 enrollee of such program, regardless of whether

14 such service is provided by a PACE program di15 rectly or through a contract with a home health

16 agency.’’.

17 SEC. 543. MEDIGAP PROTECTIONS FOR PACE PROGRAM EN18 ROLLEES.

19 (a) IN GENERAL.—Section 1882(s)(3)(B) (42 U.S.C.

20 1395ss(s)(3)(B)) is amended—

21 (1) in clause (ii), by inserting ‘‘or the individual

22 is enrolled with a PACE provider under section

23 1894, and there are circumstances that would per24 mit the discontinuance of the individual’s enrollment

25 with such provider under circumstances that are

26 similar to the circumstances that would permit dis-
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1 continuance of the individual’s election under the

2 first sentence of such section if such individual were

3 enrolled in a Medicare+Choice plan’’ before the pe4 riod;

5 (2) in clause (v)(II), by inserting ‘‘any PACE

6 provider under section 1894,’’ after ‘‘demonstration

7 project authority,’’; and

8 (3) in clause (vi)—

9 (A) by inserting ‘‘or in a PACE program

10 under section 1894’’ after ‘‘part C’’; and

11 (B) by striking ‘‘such plan’’ and inserting

12 ‘‘such plan or such program’’.

13 (b) EXTENDED DISENROLLMENT WINDOW FOR IN14 VOLUNTARILY TERMINATED ENROLLEES.—Section

15 1882(s)(3)(B) (42 U.S.C. 1395ss(s)(3)(B)), as amended

16 by section 505, is amended by adding at the end the fol17 lowing: ‘‘If any individual is enrolled with any PACE pro18 vider under clause (v), or in any PACE program under

19 clause (vi), and the PACE program in which the individual

20 is enrolled is terminated or such individual is disenrolled

21 from such program under circumstances that are similar

22 to the circumstances described in section 1851(e)(4)(A),

23 such individual may reenroll for a 12-month period (begin24 ning on the date of such enrollment) with a PACE pro25 vider in a PACE program and such reenrollment shall be
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1 considered to be an enrollment under clause (v) or (vi)

2 (as applicable).’’.

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

4 this section shall apply to terminations or discontinuances

5 made on or after the date of enactment of this Act.

6 SEC. 544. CONTINUATION OF THE FRAIL ELDERLY DEM7 ONSTRATION PROJECT.

8 With respect to the demonstration project (known as

9 the ‘‘EverCare’’ project) to demonstrate the application of

10 capitation payment rates for frail elderly medicare bene11 ficiaries under a specialized program that utilizes a spe12 cialized interdisciplinary team, the Secretary of Health

13 and Human Services shall—

14 (1) extend the project for an additional 2-year

15 period from the termination date of the project (as

16 in effect on the date of enactment of this Act); and

17 (2) not apply with respect to a frail elderly

18 medicare beneficiary who is receiving services under

19 the demonstration project—

20 (A) during 2000, the risk-adjustment de21 scribed in section 1853(c)(3) of the Social Secu22 rity Act (42 U.S.C. 1395w–23(c)(3)); or

23 (B) during any year in which the dem24 onstration project is in effect, the rules under

25 subparagraphs (B) and (C) of section
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1 1851(e)(2) of such Act (42 U.S.C. 1395w–

2 21(e)(2)) applicable to open enrollment and

3 disenrollment opportunities under the

4 Medicare+Choice program.

5 Subtitle D—Studies and Reports To

6 Assist in Making Future Im7 provements in the Medicare

8 Program

9 SEC. 561. GAO STUDIES, AUDITS, AND REPORTS.

10 (a) STUDY OF MEDIGAP POLICIES.—

11 (1) IN GENERAL.—The Comptroller General of

12 the United States (in this section referred to as the

13 ‘‘Comptroller General’’) shall conduct a study of the

14 issues described in paragraph (2) regarding medi15 care supplemental policies described in section

16 1882(g)(1) of the Social Security Act (42 U.S.C.

17 1395ss(g)(1)).

18 (2) ISSUES TO BE STUDIED.—The issues de19 scribed in this paragraph are the following:

20 (A) The level of coverage provided by each

21 type of medicare supplemental policy.

22 (B) The current enrollment levels in each

23 type of medicare supplemental policy.
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1 (C) The availability of each type of medi2 care supplemental policy to medicare beneficiaries over age 651 3 ⁄2.

4 (D) The number of States that offer each

5 type of medicare supplemental policy.

6 (E) The average out-of-pocket costs (in7 cluding premiums) per beneficiary under each

8 type of medicare supplemental policy.

9 (3) REPORT.—Not later than July 31, 2001,

10 the Comptroller General shall submit a report to

11 Congress on the results of the study conducted

12 under this subsection, together with any rec13 ommendations for legislation that the Comptroller

14 General determines to be appropriate as a result of

15 such study.

16 (b) GAO AUDIT AND REPORTS ON THE PROVISION

17 OF MEDICARE+CHOICE HEALTH INFORMATION TO

18 BENEFICIARIES.—

19 (1) IN GENERAL.—Beginning in 2000, the

20 Comptroller General shall conduct an annual audit

21 of the expenditures by the Secretary of Health and

22 Human Services during the preceding year in pro23 viding information regarding the Medicare+Choice

24 program under part C of title XVIII of the Social
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1 Security Act (42 U.S.C. 1395w–21 et seq.) to eligi2 ble medicare beneficiaries.

3 (3) REPORTS.—Not later than March 31 of

4 2001, 2004, 2007, and 2010, the Comptroller Gen5 eral shall submit a report to Congress on the results

6 of the audit of the expenditures of the preceding 3

7 years conducted pursuant to subsection (a), together

8 with an evaluation of the effectiveness of the means

9 used by the Secretary of Health and Human Serv10 ices in providing information regarding the

11 Medicare+Choice program under part C of title

12 XVIII of the Social Security Act (42 U.S.C. 1395w–

13 21 et seq.) to eligible medicare beneficiaries.

14 SEC. 562. MEDICARE PAYMENT ADVISORY COMMISSION

15 STUDIES AND REPORTS.

16 (a) RISK ADJUSTMENT.—

17 (1) STUDY.—The Medicare Payment Advisory

18 Commission established under section 1805 of the

19 Social Security Act (42 U.S.C. 1395b–6) (in this

20 section referred to as ‘‘MedPAC’’) shall conduct a

21 study that evaluates the methodology used by the

22 Secretary of Health and Human Services in devel23 oping the risk factors used in adjusting the

24 Medicare+Choice capitation rate paid to

25 Medicare+Choice organizations under section 1853
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1 of the Social Security Act (42 U.S.C. 1395w–23)

2 and includes the issues described in paragraph (2).

3 (2) ISSUES TO BE STUDIED.—The issues de4 scribed in this paragraph are the following:

5 (A) The ability of the average risk adjust6 ment factor applied to a Medicare+Choice plan

7 to explain variations in plans’ average per cap8 ita medicare costs, as reported by

9 Medicare+Choice plans in the plans’ adjusted

10 community rate filings.

11 (B) The year-to-year stability of the risk

12 factors applied to each Medicare+Choice plan

13 and the potential for substantial changes in

14 payment for small Medicare+Choice plans.

15 (C) For medicare beneficiaries newly en16 rolled in Medicare+Choice plans in a given

17 year, the correspondence between the average

18 risk factor calculated from medicare fee-for19 service data for those individuals from the pe20 riod prior to their enrollment in a

21 Medicare+Choice plan and the average risk fac22 tor calculated for such individuals during their

23 initial year of enrollment in a Medicare+Choice

24 plan.
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1 (D) For medicare beneficiaries disenrolling

2 from or switching among Medicare+Choice

3 plans in a given year, the correspondence be4 tween the average risk factor calculated from

5 data pertaining to the period prior to their

6 disenrollment from a Medicare+Choice plan

7 and the average risk factor calculated from

8 data pertaining to the period after

9 disenrollment.

10 (E) An evaluation of the exclusion of ‘‘dis11 cretionary’’ hospitalizations from consideration

12 in the risk adjustment methodology.

13 (F) Suggestions for changes or improve14 ments in the risk adjustment methodology.

15 (3) REPORT.—Not later than December 1,

16 2000, MedPAC shall submit a report to Congress on

17 the study conducted under paragraph (1), together

18 with any recommendations for legislation that

19 MedPAC determines to be appropriate as a result of

20 such study.

21 (b) DEVELOPMENT OF SPECIAL PAYMENT RULES

22 UNDER THE MEDICARE+CHOICE PROGRAM FOR FRAIL

23 ELDERLY ENROLLED IN SPECIALIZED PROGRAMS.—

24 (1) STUDY.—MedPAC shall conduct a study on

25 the development of a payment methodology under
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1 the Medicare+Choice program for frail elderly

2 Medicare+Choice beneficiaries enrolled in a

3 Medicare+Choice plan under a specialized program

4 for the frail elderly that—

5 (A) accounts for the prevalence, mix, and

6 severity of chronic conditions among such frail

7 elderly Medicare+Choice beneficiaries;

8 (B) includes medical diagnostic factors

9 from all provider settings (including hospital

10 and nursing facility settings); and

11 (C) includes functional indicators of health

12 status and such other factors as may be nec13 essary to achieve appropriate payments for

14 plans serving such beneficiaries.

15 (2) REPORT.—Not later than 1 year after the date

16 of enactment of this Act, MedPAC shall submit a report

17 to Congress on the study conducted under paragraph (1),

18 together with any recommendations for legislation that

19 MedPAC determines to be appropriate as a result of such

20 study.

21 SEC. 563. COMPUTATION AND REPORT ON MEDICARE

22 ORIGINAL FEE-FOR-SERVICE EXPENDITURES

23 ON A COUNTY-BY-COUNTY BASIS.

24 (a) COMPUTATION.—The Secretary of Health and

25 Human Services shall compute the expenditures under the
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1 original medicare fee-for-service program under parts A

2 and B of title XVIII of the Social Security Act (42 U.S.C.

3 1395 et seq.) on a county-by-county basis.

4 (b) REPORT.—Not later than January 1, 2000, and

5 annually thereafter, the Secretary of Health and Human

6 Services shall submit a report to Congress on the com7 putation performed under subsection (a), together with

8 any recommendations for legislation that the Secretary de9 termines to be appropriate as a result of such computa10 tion.

11 SEC. 564. STUDY AND REPORT ON THE EFFECTS, COSTS,

12 AND FEASIBILITY OF REQUIRING MEDICARE

13 ORIGINAL FEE-FOR-SERVICE ENTITIES AND

14 MEDICARE+CHOICE COORDINATED CARE

15 PLANS TO COMPLY WITH UNIFORM QUALITY

16 STANDARDS AND RELATED REPORTING RE17 QUIREMENTS.

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

19 Services shall conduct a study on the effects, costs, and

20 feasibility of—

21 (1) requiring entities, physicians, and other

22 health care providers that provide items and services

23 under the original medicare fee-for-service program

24 under parts A and B of title XVIII of the Social Se25 curity Act (42 U.S.C. 1395 et seq.) to comply with
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1 quality standards and related reporting requirements

2 that are comparable to the quality standards and re3 lated reporting requirements that are applicable to

4 Medicare+Choice organizations under part C of

5 such title; and

6 (2) developing specific quality standards for dif7 ferent types of Medicare+Choice coordinated care

8 plans (as defined in section 1851(a)(2)(A) of the So9 cial Security Act (42 U.S.C. 1395w–21(a)(2)(A))).

10 (b) REPORT.—Not later than March 1, 2000, the

11 Secretary of Health and Human Services shall submit a

12 report to Congress on the study conducted under sub13 section (a), together with any recommendations for legisla14 tion that the Secretary determines to be appropriate as

15 a result of such study.

16 SEC. 565. STUDY AND REPORT TO CONGRESS REGARDING

17 DATA SUBMISSION USED TO ESTABLISH RISK

18 ADJUSTMENT METHODOLOGY UNDER THE

19 MEDICARE+CHOICE PROGRAM.

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

21 Services shall conduct a study on reducing the amount of

22 data that is required to be submitted by Medicare+Choice

23 organizations in order for the Secretary to establish a risk

24 adjustment methodology used in making payments to such

25 organizations under section 1853 of the Social Security
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1 Act (42 U.S.C. 1395w–23) and that includes the issues

2 described in subsection (b).

3 (b) ISSUES TO BE STUDIED.—The issues described

4 in this subsection are the following:

5 (1) In consultation with representatives of

6 Medicare+Choice plans, identification of modifica7 tions of Health Care Financing Administration ad8 ministrative systems that would reduce the costs or

9 burden on such plans for reporting encounter data

10 from all sites of service.

11 (2) Evaluation of alternative risk adjustment

12 methods that would require submission from

13 Medicare+Choice plans of data only from limited

14 sites of services.

15 (3) The potential for Medicare+Choice plans to

16 misreport, overreport, or underreport prevalence of

17 diagnoses in outpatient sites of care, the potential

18 for increases in payments to Medicare+Choice plans

19 from changes in Medicare+Choice plan coding prac20 tices (commonly known as ‘‘coding creep’’) and pro21 posed methods for detecting and adjusting for such

22 variations in diagnosis coding as part of the risk ad23 justment methodology using encounter data from all

24 sites of care.
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1 (4) The impact of the requirement to report

2 complete encounter data on the willingness of insur3 ers to offer high deductible medical savings account

4 plans to medicare beneficiaries, and options for

5 modifying data reporting requirements to accommo6 date such plans.

7 (5) Differences in the ability of

8 Medicare+Choice plans to report complete encounter

9 data, and the potential for adverse competitive im10 pacts on group and staff model health maintenance

11 organizations or other integrated providers of care

12 based on data reporting capabilities.

13 (c) REPORT.—Not later than January 1, 2001, the

14 Secretary of Health and Human Services shall submit a

15 report to Congress on the study conducted under this sec16 tion, together with any recommendations for legislation

17 that the Secretary determines to be appropriate as a result

18 of such study.

19 TITLE VI—OTHER MEDICARE

20 PROVISIONS

21 SEC. 601. 2-YEAR MORATORIUM ON THERAPY CAPS.

22 (a) MORATORIUM.—

23 (1) IN GENERAL.—Section 1833(g) of the So24 cial Security Act (42 U.S.C. 1395l(g)) is amended—
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1 (A) in paragraphs (1) and (3), by striking

2 ‘‘In the case’’ each place it appears and insert3 ing ‘‘Subject to paragraph (4), in the case’’;

4 and

5 (B) by adding at the end the following:

6 ‘‘(4) This subsection shall not apply in 2000 and

7 2001.’’.

8 (2) EFFECTIVE DATE.—The amendments made

9 by paragraph (1) shall apply to expenses incurred on

10 or after January 1, 2000.

11 (b) REVISION OF REPORT.—

12 (1) IN GENERAL.—Section 4541(d)(2) of the

13 Balanced Budget Act of 1997 (42 U.S.C. 1395l

14 note) is amended to read as follows:

15 ‘‘(2) REPORT.—By not later than January 1,

16 2001, the Secretary of Health and Human Services

17 shall submit to Congress a report that includes rec18 ommendations on—

19 ‘‘(A) the establishment of a mechanism for

20 assuring appropriate utilization of outpatient

21 physical therapy services, outpatient occupa22 tional therapy services, and speech-language pa23 thology services that are covered under the

24 medicare program under title XVIII of the So25 cial Security Act (42 U.S.C. 1395); and
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1 ‘‘(B) the establishment of an alternative

2 payment policy for such services based on clas3 sification of individuals by diagnostic category,

4 functional status, prior use of services (in both

5 inpatient and outpatient settings), and such

6 other criteria as the Secretary determines ap7 propriate, in place of the uniform dollar limita8 tions specified in section 1833(g) of such Act,

9 as amended by paragraph (1).

10 The recommendations shall include how such a

11 mechanism or policy might be implemented in a

12 budget-neutral manner.’’.

13 (2) EFFECTIVE DATE.—The amendment made

14 by paragraph (1) shall take effect as if included in

15 the enactment of section 4541 of the Balanced

16 Budget Act of 1997 (Public Law 105–33; 111 Stat.

17 454).

18 (c) STUDY AND REPORT ON UTILIZATION.—

19 (1) STUDY.—

20 (A) IN GENERAL.—The Secretary of

21 Health and Human Services shall conduct a

22 study which compares—

23 (i) utilization patterns (including na24 tionwide patterns, and patterns by region,

25 types of settings, and diagnosis or condi-
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1 tion) of outpatient physical therapy serv2 ices, outpatient occupational therapy serv3 ices, and speech-language pathology serv4 ices that are covered under the medicare

5 program under title XVIII of the Social

6 Security Act (42 U.S.C. 1395) and pro7 vided on or after January 1, 2000; with

8 (ii) such patterns for such services

9 that were provided in 1998 and 1999.

10 (B) REVIEW OF CLAIMS.—In conducting

11 the study under this subsection the Secretary of

12 Health and Human Services shall review a sta13 tistically significant number of claims for reim14 bursement for the services described in sub15 paragraph (A).

16 (2) REPORT.—Not later than March 31, 2001,

17 the Secretary of Health and Human Services shall

18 submit a report to Congress on the study conducted

19 under paragraph (1), together with any rec20 ommendations for legislation that the Secretary de21 termines to be appropriate as a result of such study.
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1 SEC. 602. INCREASE IN PAYMENT AMOUNT FOR RENAL DI2 ALYSIS SERVICES FURNISHED UNDER THE

3 MEDICARE PROGRAM.

4 (a) IN GENERAL.—Section 1881(b)(7) (42 U.S.C.

5 1395rr(b)(7)) is amended by adding at the end the fol6 lowing flush sentence:

7 ‘‘The amount of each composite rate payment for dialysis

8 services furnished on or after October 1, 2000, shall be

9 equal to 102 percent of each such composite rate payment

10 amount for such services furnished on December 31,

11 1999.’’.

12 (b) CONFORMING AMENDMENT.—

13 (1) IN GENERAL.—Section 9335(a) of the Om14 nibus Budget Reconciliation Act of 1986 (42 U.S.C.

15 1395rr note) is amended by striking paragraph (1).

16 (2) EFFECTIVE DATE.—The amendment made

17 by paragraph (1) shall take effect on October 1,

18 2000.

19 SEC. 603. INCREASE IN PAYMENT AMOUNT FOR PAP SMEAR

20 LABORATORY TESTS.

21 (a) PAP SMEAR PAYMENT INCREASE.—Section

22 1833(h) (42 U.S.C. 1395l(h)) is amended by adding at

23 the end the following:

24 ‘‘(7) Notwithstanding paragraphs (1) and (4), the

25 Secretary shall establish a minimum payment amount

26 under this subsection for all areas for a diagnostic or
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1 screening pap smear laboratory test (including all cervical

2 cancer screening technologies that have been approved by

3 the Food and Drug Administration) of not less than

4 $14.60.’’.

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

6 this subsection shall apply with respect to laboratory tests

7 furnished on or after January 1, 2000 and before January

8 1, 2002.

9 SEC. 604. LIMITATION IN REDUCTION OF PAYMENTS TO

10 DISPROPORTIONATE SHARE HOSPITALS.

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

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

13 (1) in subclause (III), by striking ‘‘fiscal year

14 2000’’ and inserting ‘‘fiscal years 2000 and 2001’’;

15 (2) by striking subclauses (IV); and

16 (3) by redesignating subclauses (V) and (VI) as

17 subclauses (IV) and (V), respectively.

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

19 this section shall take effect as if included in the amend20 ments made by section 4403 of the Balanced Budget Act

21 of 1997 (Public Law 105–33; 111 Stat. 398).

22 SEC. 605. CLARIFICATION OF THE INHERENT REASONABLE23 NESS (IR) AUTHORITY.

24 The Secretary of Health and Human Services may

25 not use, or permit fiscal intermediaries or carriers to use,
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1 the inherent reasonableness authority under part B of title

2 XVIII of such Act until the date that is 90 days after

3 the date that the Comptroller General of the United States

4 releases a report regarding the impact of the Secretary’s,

5 fiscal intermediaries’, and carriers’ use of such authority.

6 SEC. 606. TECHNICAL AMENDMENTS RELATING TO BBA

7 PROVISIONS.

8 (a) MEDICARE RURAL HOSPITAL FLEXIBILITY PRO9 GRAM.—Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–

10 4(c)(2)(B)(i)) is amended by striking ‘‘and is located in

11 a county (or equivalent unit of local government) in a

12 rural area (as defined in section 1886(d)(2)(D))’’ and in13 serting ‘‘that is located in a rural area (as defined in sec14 tion 1886(d)(2)(D)) and’’.

15 (b) RURAL HEALTH CLINIC SERVICES.—Section

16 4205(a)(1)(B) of the Balanced Budget Act of 1997 (42

17 U.S.C. 1395l note) is amended by striking ‘‘services fur18 nished’’ and inserting ‘‘cost reporting periods beginning’’.

19 (c) PPS HOSPITAL PAYMENT UPDATE.—Section

20 4401(b)(1)(B) of the Balanced Budget Act of 1997 (42

21 U.S.C. 1395ww note) is amended by striking ‘‘section

22 1886(b)(3)(B)(i)(XIII) of the Social Security Act (42

23 U.S.C. 1395ww(b)(3)(B)(i)(XIII))’’ and inserting ‘‘section

24 1886(b)(3)(B)(i)(XIV) of the Social Security Act (42

25 U.S.C. 1395ww(b)(3)(B)(i)(XIV))’’.
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1 (d) MAINTAINING SAVINGS FROM TEMPORARY RE2 DUCTION IN CAPITAL PAYMENTS FOR PPS HOSPITALS.—

3 The last sentence of section 1886(g)(1)(A) (42 U.S.C.

4 1395ww(g)(1)(A)) is amended by striking ‘‘September 30,

5 2002’’ and inserting ‘‘October 1, 2002’’.

6 (e) PROSPECTIVE PAYMENT FOR SKILLED NURSING

7 FACILITY SERVICES.—Section 1888(e)(8)(B) (42 U.S.C.

8 1395yy(e)(8)(B)) is amended by striking ‘‘January 1,

9 1999,’’ and inserting ‘‘July 1, 1999’’.

10 (f) TRANSFER OF CRIMINAL FINES RECOVERED AS

11 A RESULT OF A FEDERAL HEALTH CARE OFFENSE TO

12 FEDERAL HOSPITAL INSURANCE TRUST FUND.—

13 (1) IN GENERAL.—Section 1817(k)(2)(C)(i) (42

14 U.S.C. 1395i(k)(2)(C)(i)) is amended by striking

15 ‘‘section 982(a)(6)(B)’’ and inserting ‘‘section

16 24(a)’’.

17 (2) EFFECTIVE DATE.—The amendment made

18 by this subsection shall take effect as if included in

19 the amendment made by section 201 of the Health

20 Insurance Portability and Accountability Act of

21 1996 (Public Law 104–191; 110 Stat. 1992).

22 (g) MEDICARE PAYMENTS TO NEWLY ESTABLISHED

23 PPS EXEMPT PROVIDERS.—Section 1886(b)(7)(A)(i)(II)

24 (42 U.S.C. 1395ww(b)(7)(A)(i)(II)) is amended by insert25 ing ‘‘(as estimated by the Secretary)’’ after ‘‘median’’.
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1 (h) OTHER TECHNICAL AMENDMENTS.—

2 (1) Section 1812(b) (42 U.S.C. 1395d(b)) is

3 amended in the matter following paragraph (3) by

4 inserting ‘‘during’’ after ‘‘100 visits’’.

5 (2) Section 1833(a)(1)(O) (42 U.S.C.

6 1395l(a)(1)(O)) is amended by striking the semi7 colon and inserting a comma.

8 (3) Section 1834(h)(4)(A) (42 U.S.C.

9 1395m(h)(4)(A)) is amended—

10 (A) in clause (i), by striking the comma at

11 the end and inserting a semicolon; and

12 (B) in clause (v), by striking ‘‘, and’’ and

13 inserting ‘‘; and’’.

14 (4) Section 1842(s)(2)(E) (42 U.S.C.

15 1395u(s)(2)(E)) is amended by inserting a period at

16 the end.

17 (5) Section 1848(j)(3) (42 U.S.C. 1395w–

18 4(j)(3)) is amended—

19 (A) by striking ‘‘1861(oo)(2),’’ and insert20 ing ‘‘1861(oo)(2))’’;

21 (B) by striking ‘‘(B) ,’’ and inserting

22 ‘‘(B),’’; and

23 (C) by striking ‘‘and (15)’’ and inserting ‘‘,

24 and (15)’’.
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1 (6) Section 1851(i)(2) (42 U.S.C. 1395w–

2 21(i)(2)) is amended by striking ‘‘and’’ after

3 ‘‘1857(f)(2),’’.

4 (7) Section 1852 (42 U.S.C. 1395w–22) is

5 amended—

6 (A) in subsection (a)(3)(A)—

7 (i) by striking the comma after ‘‘MSA

8 plan’’; and

9 (ii) by inserting a comma after ‘‘the

10 coverage)’’;

11 (B) in subsection (g)—

12 (i) in paragraph (1)(B), by inserting

13 ‘‘or’’ after ‘‘in whole’’; and

14 (ii) in paragraph (3)(B)(ii), by insert15 ing a period at the end;

16 (C) in subsection (h)(2), by striking the

17 comma and inserting a semicolon; and

18 (D) in subsection (k)(2)(C)(ii), by striking

19 ‘‘balancing’’ and inserting ‘‘balance’’.

20 (8) Section 1854(a) (42 U.S.C. 1395w–24(a))

21 is amended—

22 (A) in paragraph (2)—

23 (i) in subparagraph (A), in the matter

24 preceding clause (i), by inserting ‘‘section’’

25 before ‘‘1852(a)(1)(A)’’; and
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1 (ii) in subparagraph (B), in the mat2 ter preceding clause (i), by inserting ‘‘sec3 tion’’ after ‘‘described in’’;

4 (B) in paragraph (3)—

5 (i) in subparagraph (A), by inserting

6 ‘‘section’’ after ‘‘described in’’; and

7 (ii) in subparagraph (B), by inserting

8 ‘‘section’’ after ‘‘described in’’; and

9 (C) in paragraph (4)—

10 (i) in the matter preceding subpara11 graph (A), by inserting ‘‘section’’ after

12 ‘‘described in’’;

13 (ii) in subparagraph (A), in the mat14 ter preceding clause (i), by inserting ‘‘sec15 tion’’ after ‘‘described in’’; and

16 (iii) in subparagraph (B), by inserting

17 ‘‘section’’ after ‘‘described in’’.

18 (9) Section 1861 (42 U.S.C. 1395x) is

19 amended—

20 (A) in subsection (s)(2)(T)(ii), by striking

21 the period and inserting a semicolon;

22 (B) in subsection (aa)(2)—

23 (i) in subparagraph (I), by striking

24 the comma at the end and inserting a

25 semicolon; and
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1 (ii) by realigning subparagraph (I) so

2 as to align the left margin of such sub3 paragraph with the left margin of subpara4 graph (H); and

5 (C) in subsection (ss)(1)(G)(i)—

6 (i) by striking ‘‘owed’’ and inserting

7 ‘‘owned’’; and

8 (ii) by striking ‘‘of’’ and inserting

9 ‘‘or’’.

10 (10) Section 1862(a)(7) (42 U.S.C.

11 1395y(a)(7)) is amended by striking ‘‘subpara12 graphs’’ and inserting ‘‘subparagraph’’.

13 (11) Section 1866(a)(1) (42 U.S.C.

14 1395cc(a)(1)) is amended—

15 (A) in subparagraph (I)(iii), by striking

16 the semicolon and inserting a comma;

17 (B) in subparagraph (N)(iv), by striking

18 ‘‘and’’ at the end;

19 (C) in subparagraph (O), by striking the

20 semicolon at the end and inserting a comma;

21 (D) in subparagraph (Q), by striking the

22 semicolon at the end and inserting a comma;

23 and

24 (E) in subparagraph (R), by inserting ‘‘,

25 and’’ at the end.
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1 (12) Section 1882 (42 U.S.C. 1395ss) is

2 amended—

3 (A) in subsection (g)(1), by striking ‘‘or’’

4 after ‘‘does not include’’; and

5 (B) in subsection (s)(2)(D), in the matter

6 preceding clause (i), by inserting ‘‘section’’

7 after ‘‘as defined in’’.

8 (13) Section 1886 (42 U.S.C. 1395ww) is

9 amended—

10 (A) in subsection (b)—

11 (i) in paragraph (1), in the matter fol12 lowing subparagraph (C), by inserting a

13 comma after ‘‘paragraph (2)’’; and

14 (ii) in paragraph (3)(B)(ii)—

15 (I) in subclause (VI) is amended

16 by striking the semicolon and insert17 ing a comma; and

18 (II) in subclause (VII) is amend19 ed by striking the semicolon and in20 serting a comma; and

21 (B) in subsection (d)—

22 (i) in paragraph (5)(F), by inserting a

23 comma after ‘‘1986’’; and

24 (ii) in paragraph (9)(A)(ii), by insert25 ing a comma after ‘‘1987’’.
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1 (14) Section 1888(e)(4)(E) (42 U.S.C.

2 1395yy(e)(4)(E)) is amended—

3 (A) in clause (i) by striking ‘‘federal’’ and

4 inserting ‘‘Federal’’; and

5 (B) in clause (ii), in the matter preceding

6 subclause (I), by striking ‘‘federal’’ each place

7 it appears and inserting ‘‘Federal’’.

8 (15) Section 1895(b)(1) (42 U.S.C.

9 1395fff(b)(1)) is amended by striking ‘‘the this sec10 tion’’ and inserting ‘‘this section’’.

11 (i) EFFECTIVE DATE.—Except as otherwise pro12 vided, the amendments made by this section shall take ef13 fect as if included in the enactment of the Balanced Budg14 et Act of 1997 (Public Law 105–33; 111 Stat. 251).

15 SEC. 607. EXCLUSION FROM PAYGO SCORECARD.

16 Any net deficit increase resulting from the enactment

17 of this Act shall not be counted for purposes of section

18 252 of the Balanced Budget and Emergency Deficit Con19 trol Act of 1985 (2 U.S.C. 902).

20 TITLE VII—PROVISIONS RELAT21 ING TO MEDICAID AND SCHIP

22 SEC. 701. MEDICAID-RELATED BBA TECHNICALS.

23 (a) CROSS-REFERENCE CORRECTIONS.—
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1 (1) Section 1902(a)(10)(A)(ii)(XIV) (42 U.S.C.

2 1396a(a)(10)(A)(ii)(XIV)) is amended by striking

3 ‘‘1905(u)(2)(C)’’ and inserting ‘‘1905(u)(2)(B)’’.

4 (2) Section 1903(f)(4) (42 U.S.C. 1396b(f)(4))

5 is amended, in the matter preceding subparagraph

6 (A), by striking ‘‘1905(p)(1), or 1905(u)’’ and in7 serting ‘‘1902(a)(10)(A)(ii)(XIII),

8 1902(a)(10)(A)(ii)(XIV), or 1905(p)(1)’’.

9 (3) Section 1905(a)(15) (42 U.S.C.

10 1396d(a)(15)) is amended by striking

11 ‘‘1902(a)(31)(A)’’ and inserting ‘‘1902(a)(31)’’.

12 (4) The amendments made by this subsection

13 shall take effect as if included in the enactment of

14 the Balanced Budget Act of 1997 (Public Law 105–

15 33; 111 Stat. 251).

16 (b) ELIMINATION OF DUPLICATIVE REQUIREMENTS

17 FOR EXTERNAL QUALITY REVIEW OF MEDICAID MAN18 AGED CARE ORGANIZATIONS.—

19 (1) Section 1902(a)(30) (42 U.S.C.

20 1396a(a)(30)) is amended—

21 (A) in subparagraph (A), by adding ‘‘and’’

22 at the end;

23 (B) in subparagraph (B)(ii), by striking

24 ‘‘and’’ at the end; and

25 (C) by striking subparagraph (C).
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1 (2) Section 1902(d) (42 U.S.C. 1396a(d)) is

2 amended—

3 (A) by striking ‘‘an entity which meets the

4 requirements of section 1152, as determined by

5 the Secretary, for the performance of the qual6 ity review functions described in subsection

7 (a)(30)(C), or’’;

8 (B) by striking ‘‘(including quality review

9 functions described in subsection (a)(30)(C))’’;

10 and

11 (C) by striking ‘‘entity or’’ each place it

12 appears.

13 (3) Section 1903 (42 U.S.C. 1396b) is

14 amended—

15 (A) in subsection (a)(3)(C)(i)—

16 (i) by striking ‘‘or quality review’’;

17 and

18 (ii) by striking ‘‘or by an entity which

19 meets the requirements of section 1152, as

20 determined by the Secretary,’’; and

21 (B) in subsection (m)(6)(B)—

22 (i) in clause (ii), by adding ‘‘and’’ at

23 the end;

24 (ii) in clause (iii), by striking ‘‘; and’’

25 and inserting a period; and
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1 (iii) by striking clause (iv).

2 (4) The amendments made by this subsection

3 apply as of such date as the Secretary of Health and

4 Human Services certifies to Congress that it is fully

5 implementing section 1932(c)(2) of the Social Secu6 rity Act (42 U.S.C. 1396u–2(c)(2)).

7 (c) MAKING ENHANCED MATCH UNDER SCHIP

8 PROGRAM INAPPLICABLE TO MEDICAID DSH PAY9 MENTS.—

10 (1) The last sentence of section 1905(b) (42

11 U.S.C. 1396d(b)) is amended by inserting ‘‘(other

12 than expenditures under section 1923)’’ after ‘‘with

13 respect to expenditures’’.

14 (2) The amendment made by paragraph (1)

15 takes effect on October 1, 1999, and applies to ex16 penditures made on or after such date.

17 (d) MAKING DEFERMENT OF THE EFFECTIVE DATE

18 FOR OUTPATIENT DRUG AGREEMENTS OPTIONAL FOR

19 STATES.—

20 (1) Section 1927(a)(1) (42 U.S.C. 1396r–

21 8(a)(1)) is amended by striking ‘‘shall not be effec22 tive until’’ and inserting ‘‘shall become effective as

23 of the date on which the agreement is entered into

24 or, at State option, on any date thereafter on or be25 fore’’.
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1 (2) The amendment made by paragraph (1) ap2 plies to agreements entered into on or after the date

3 of enactment of this Act.

4 SEC. 702. INCREASE IN DISPROPORTIONATE SHARE HOS5 PITAL ALLOTMENT FOR CERTAIN STATES

6 AND THE DISTRICT OF COLUMBIA.

7 (a) IN GENERAL.—The table included in section

8 1923(f)(2) (42 U.S.C. 1396r–4(f)(2)) is amended under

9 each of the columns for FY 00, FY 01, and FY 02—

10 (1) at the line for the District of Columbia, by

11 striking ‘‘23’’ and inserting ‘‘32’’;

12 (2) at the line for Minnesota, by striking ‘‘16’’

13 and inserting ‘‘33’’;

14 (3) at the line for New Mexico, by striking ‘‘5’’

15 and inserting ‘‘9’’; and

16 (4) at the line for Wyoming, by striking ‘‘0’’

17 and inserting ‘‘.100’’.

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

19 this section shall take effect on October 1, 1999, and ap20 plies to expenditures made on or after such date.

21 SEC. 703. MAKING MEDICAID DSH TRANSITION RULE PER22 MANENT.

23 (a) IN GENERAL.—Section 4721(e) of the Balanced

24 Budget Act of 1997 (42 U.S.C. 1396r–4 note) is

25 amended—
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1 (1) in the matter before paragraph (1), by

2 striking ‘‘1923(g)(2)(A)’’ and ‘‘1396r–4(g)(2)(A)’’

3 and inserting ‘‘1923(g)(2)’’ and ‘‘1396r–4(g)(2)’’,

4 respectively;

5 (2) in paragraphs (1) and (2)—

6 (A) by striking ‘‘, and before July 1,

7 1999’’; and

8 (B) by striking ‘‘in such section’’ and in9 serting ‘‘in subparagraph (A) of such section’’;

10 and

11 (3) by striking ‘‘and’’ at the end of paragraph

12 (1), by striking the period at the end of paragraph

13 (2) and inserting ‘‘; and’’, and by adding at the end

14 the following:

15 ‘‘(3) effective for State fiscal years that begin

16 on or after July 1, 1999, ‘or (b)(1)(B)’ were in17 serted in section 1923(g)(2)(B)(ii)(I) after

18 ‘(b)(1)(A)’.’’.

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

20 this section shall take effect as if included in the enact21 ment of section 4721(e) of the Balanced Budget Act of

22 1997 (Public Law 105–33; 110 Stat. 514).
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1 SEC. 704. INCREASED ALLOTMENTS FOR TERRITORIES

2 UNDER THE STATE CHILDREN’S HEALTH IN3 SURANCE PROGRAM.

4 Section 2104(c)(4)(B) (42 U.S.C. 1397dd(c)(4)(B))

5 is amended by inserting ‘‘, $34,200,000 for each of fiscal

6 years 2000 and 2001, $25,200,000 for each of fiscal years

7 2002 through 2004, $32,400,000 for each of fiscal years

8 2005 and 2006, and $40,000,000 for fiscal year 2007’’

9 before the period.

10 SEC. 705. REMOVAL OF FISCAL YEAR LIMITATION ON CER11 TAIN TRANSITIONAL ADMINISTRATIVE COSTS

12 ASSISTANCE.

13 (a) IN GENERAL.—Section 1931(h) (42 U.S.C.

14 1396u–1(h)) is amended—

15 (1) in paragraph (3), by striking ‘‘and ending

16 with fiscal year 2000’’; and

17 (2) by striking paragraph (4).

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

19 this section shall take effect as if included in the enact20 ment of section 114 of the Personal Responsibility and

21 Work Opportunity Reconciliation Act of 1996 (Public Law

22 104–193; 110 Stat. 2177).

23 SEC. 706. STABILIZING THE SCHIP ALLOTMENT FORMULA.

24 (a) IN GENERAL.—Section 2104(b) (42 U.S.C.

25 1397dd(b)) is amended—

26 (1) in paragraph (2)(A)—
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1 (A) in clause (i), by striking ‘‘through

2 2000’’ and inserting ‘‘and 1999’’; and

3 (B) in clause (ii), by striking ‘‘2001’’ and

4 inserting ‘‘2000’’;

5 (2) by amending paragraph (4) to read as fol6 lows:

7 ‘‘(4) FLOORS AND CEILINGS IN STATE ALLOT8 MENTS.—

9 ‘‘(A) IN GENERAL.—The proportion of the

10 allotment under this subsection for a subsection

11 (b) State (as defined in subparagraph (D)) for

12 fiscal year 2000 and each fiscal year thereafter

13 shall be subject to the following floors and ceil14 ings:

15 ‘‘(i) FLOOR OF $2,000,000.—A floor

16 equal to $2,000,000 divided by the total of

17 the amount available under this subsection

18 for all such allotments for the fiscal year.

19 ‘‘(ii) ANNUAL FLOOR OF 10 PERCENT

20 BELOW PRECEDING FISCAL YEAR’S PRO21 PORTION.—A floor of 90 percent of the

22 proportion for the State for the preceding

23 fiscal year.

24 ‘‘(iii) CUMULATIVE FLOOR OF 30 PER25 CENT BELOW THE FY 1999 PROPORTION.—
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1 A floor of 70 percent of the proportion for

2 the State for fiscal year 1999.

3 ‘‘(iv) CUMULATIVE CEILING OF 45

4 PERCENT ABOVE FY 1999 PROPORTION.—A

5 ceiling of 145 percent of the proportion for

6 the State for fiscal year 1999.

7 ‘‘(B) RECONCILIATION.—

8 ‘‘(i) ELIMINATION OF ANY DEFICIT BY

9 ESTABLISHING A PERCENTAGE INCREASE

10 CEILING FOR STATES WITH HIGHEST AN11 NUAL PERCENTAGE INCREASES.—To the

12 extent that the application of subpara13 graph (A) would result in the sum of the

14 proportions of the allotments for all sub15 section (b) States exceeding 1.0, the Sec16 retary shall establish a maximum percent17 age increase in such proportions for all

18 subsection (b) States for the fiscal year in

19 a manner so that such sum equals 1.0.

20 ‘‘(ii) ALLOCATION OF SURPLUS

21 THROUGH PRO RATA INCREASE.—To the

22 extent that the application of subpara23 graph (A) would result in the sum of the

24 proportions of the allotments for all sub25 section (b) States being less than 1.0, the
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1 proportions of such allotments (as com2 puted before the application of floors under

3 clauses (i), (ii), and (iii) of subparagraph

4 (A)) for all subsection (b) States shall be

5 increased in a pro rata manner (but not to

6 exceed the ceiling established under sub7 paragraph (A)(iv)) so that (after the appli8 cation of such floors and ceiling) such sum

9 equals 1.0.

10 ‘‘(C) CONSTRUCTION.—This paragraph

11 shall not be construed as applying to (or taking

12 into account) amounts of allotments redistrib13 uted under subsection (f).

14 ‘‘(D) DEFINITIONS.—In this paragraph:

15 ‘‘(i) PROPORTION OF ALLOTMENT.—

16 The term ‘proportion’ means, with respect

17 to the allotment of a subsection (b) State

18 for a fiscal year, the amount of the allot19 ment of such State under this subsection

20 for the fiscal year divided by the total of

21 the amount available under this subsection

22 for all such allotments for the fiscal year.

23 ‘‘(ii) SUBSECTION (b) STATE.—The

24 term ‘subsection (b) State’ means one of
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1 the 50 States or the District of Colum2 bia.’’;

3 (3) in paragraph (2)(B), by striking ‘‘the fiscal

4 year’’ and inserting ‘‘the calendar year in which

5 such fiscal year begins’’; and

6 (4) in paragraph (3)(B), by striking ‘‘the fiscal

7 year involved’’ and inserting ‘‘the calendar year in

8 which such fiscal year begins’’.

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

10 this section apply to allotments determined under title

11 XXI of the Social Security Act (42 U.S.C. 1397aa et seq.)

12 for fiscal year 2000 and each fiscal year thereafter.

13 SEC. 707. IMPROVED DATA COLLECTION AND EVALUA14 TIONS OF THE SCHIP PROGRAM.

15 (a) FUNDING FOR RELIABLE ANNUAL STATE-BY16 STATE ESTIMATES ON THE NUMBER OF CHILDREN WHO

17 DO NOT HAVE HEALTH INSURANCE COVERAGE.—Section

18 2108 (42 U.S.C. 1397hh) is amended by adding at the

19 end the following:

20 ‘‘(c) ADJUSTMENT TO CURRENT POPULATION SUR21 VEY TO INCLUDE STATE-BY-STATE DATA RELATING TO

22 CHILDREN WITHOUT HEALTH INSURANCE COVERAGE.—

23 ‘‘(1) IN GENERAL.—The Secretary of Com24 merce shall make appropriate adjustments to the an25 nual Current Population Survey conducted by the
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1 Bureau of the Census in order to produce statis2 tically reliable annual State data on the number of

3 low-income children who do not have health insur4 ance coverage, so that real changes in the

5 uninsurance rates of children can reasonably be de6 tected. The Current Population Survey should

7 produce data under this subsection that categorizes

8 such children by family income, age, and race or eth9 nicity. The adjustments made to produce such data

10 shall include, where appropriate, expanding the sam11 ple size used in the State sampling units, expanding

12 the number of sampling units in a State, and an ap13 propriate verification element.

14 ‘‘(2) APPROPRIATION.—Out of any money in

15 the Treasury of the United States not otherwise ap16 propriated, there are appropriated $10,000,000 for

17 fiscal year 2000 and each fiscal year thereafter for

18 the purpose of carrying out this subsection.’’.

19 (b) FUNDING FOR CHILDREN’S HEALTH CARE AC20 CESS AND UTILIZATION STATE-BY-STATE DATA.—Section

21 2108 (42 U.S.C. 1397hh), as amended by subsection (a),

22 is amended by adding at the end the following:

23 ‘‘(d) COLLECTION OF CHILDREN’S HEALTH CARE

24 ACCESS AND UTILIZATION STATE-LEVEL DATA.—
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1 ‘‘(1) IN GENERAL.—The Secretary, acting

2 through the National Center for Health Statistics

3 (in this subsection referred to as the ‘Center’), shall

4 collect data on children’s health insurance through

5 the State and Local Area Integrated Telephone Sur6 vey (SLAITS) for the 50 States and the District of

7 Columbia. Sufficient data shall be collected so as to

8 provide reliable, annual, State-by-State information

9 on the health care access and utilization of children

10 in low-income households, and to allow for compari11 sons between demographic subgroups categorized

12 with respect to family income, age, and race or eth13 nicity.

14 ‘‘(2) SURVEY DESIGN AND CONTENT.—

15 ‘‘(A) IN GENERAL.—In carrying out para16 graph (1), the Secretary, acting through the

17 Center—

18 ‘‘(i) shall obtain input from appro19 priate sources, including States, in design20 ing the survey and making content deci21 sions; and

22 ‘‘(ii) at the request of a State, may

23 collect additional data to assist with a

24 State’s evaluation of the program estab25 lished under this title.
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1 ‘‘(B) REIMBURSEMENT OF COSTS OF ADDI2 TIONAL DATA.—A State shall reimburse the

3 Center for services provided under subpara4 graph (A)(ii).

5 ‘‘(3) APPROPRIATION.—Out of any money in

6 the Treasury of the United States not otherwise ap7 propriated, there are appropriated $9,000,000 for

8 fiscal year 2000 and each fiscal year thereafter for

9 the purpose of carrying out this subsection.’’.

10 (c) FEDERAL EVALUATION OF STATE CHILDREN’S

11 HEALTH INSURANCE PROGRAMS.—Section 2108 (42

12 U.S.C. 1397hh), as amended by subsections (a) and (b),

13 is amended—

14 (1) by redesignating subsections (c) and (d) as

15 subsections (d) and (e), respectively; and

16 (2) by inserting after subsection (b) the fol17 lowing:

18 ‘‘(c) FEDERAL EVALUATION.—

19 ‘‘(1) IN GENERAL.—The Secretary, directly or

20 through contracts or interagency agreements, shall

21 conduct an independent evaluation of 10 States with

22 approved child health plans.

23 ‘‘(2) SELECTION OF STATES.—In selecting

24 States for the evaluation conducted under this sub25 section, the Secretary shall choose 10 States that
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1 utilize diverse approaches to providing child health

2 assistance, represent various geographic areas (in3 cluding a mix of rural and urban areas), and contain

4 a significant portion of uncovered children.

5 ‘‘(3) MATTERS INCLUDED.—In addition to the

6 elements described in subsection (b)(1), the evalua7 tion conducted under this subsection shall include,

8 but is not limited to, the following:

9 ‘‘(A) Surveys of the target population (en10 rollees, disenrollees, and individuals eligible for

11 but not enrolled in the program under this

12 title).

13 ‘‘(B) Evaluation of effective and ineffective

14 outreach and enrollment practices with respect

15 to children (for both the program under this

16 title and the medicaid program under title

17 XIX), and identification of enrollment barriers

18 and key elements of effective outreach and en19 rollment practices, including practices that have

20 successfully enrolled hard-to-reach populations

21 such as children who are eligible for medical as22 sistance under title XIX but have not been en23 rolled previously in the medicaid program under

24 that title.
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1 ‘‘(C) Evaluation of the extent to which

2 State medicaid eligibility practices and proce3 dures under the medicaid program under title

4 XIX are a barrier to the enrollment of children

5 under that program, and the extent to which

6 coordination (or lack of coordination) between

7 that program and the program under this title

8 affects the enrollment of children under both

9 programs.

10 ‘‘(D) An assessment of the effect of cost11 sharing on utilization, enrollment, and coverage

12 retention.

13 ‘‘(E) Evaluation of disenrollment or other

14 retention issues, such as switching to private

15 coverage, failure to pay premiums, or barriers

16 in the recertification process.

17 ‘‘(4) SUBMISSION TO CONGRESS.—Not later

18 than December 31, 2001, the Secretary shall submit

19 to Congress the results of the evaluation conducted

20 under this subsection.

21 ‘‘(5) FUNDING.—Out of any money in the

22 Treasury of the United States not otherwise appro23 priated, there are appropriated $10,000,000 for fis24 cal year 2000 for the purpose of conducting the eval25 uation authorized under this subsection. Amounts
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1 appropriated under this paragraph shall remain

2 available without fiscal year limitation.’’.

3 (d) INSPECTOR GENERAL AUDIT AND GAO REPORT

4 ON ENROLLEES ELIGIBLE FOR MEDICAID.—Section 2108

5 (42 U.S.C. 1397hh), as amended by subsection (c), is

6 amended by adding at the end the following:

7 ‘‘(f) INSPECTOR GENERAL AUDIT AND GAO RE8 PORT.—

9 ‘‘(1) AUDIT.—Beginning with fiscal year 2000,

10 and every third fiscal year thereafter, the Secretary,

11 through the Inspector General of the Department of

12 Health and Human Services, shall audit a sample

13 from among the States described in paragraph (2)

14 in order to—

15 ‘‘(A) determine the number, if any,

16 of enrollees under the plan under this title who

17 are eligible for medical assistance under title

18 XIX (other than as optional targeted

19 low-income children under section

20 1902(a)(10)(A)(ii)(XIV)); and

21 ‘‘(B) assess the progress made in reducing

22 the number of targeted uncovered low-income

23 children relative to the goals established in the

24 State child health plan, as reported to the Sec25 retary in accordance with subsection (a)(2).
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1 ‘‘(2) STATE DESCRIBED.—A State described in

2 this paragraph is a State with an approved State

3 child health plan under this title that does not, as

4 part of such plan, provide health benefits coverage

5 under the State’s medicaid program under title XIX.

6 ‘‘(3) MONITORING AND REPORT FROM GAO.—

7 The Comptroller General of the United States shall

8 monitor the audits conducted under this subsection

9 and, not later than March 1 of each fiscal year after

10 a fiscal year in which an audit is conducted under

11 this subsection, shall submit a report to Congress on

12 the results of the audit conducted during the prior

13 fiscal year.’’.

14 (e) COORDINATION OF DATA COLLECTION WITH

15 DATA REQUIREMENTS UNDER THE MATERNAL AND

16 CHILD HEALTH SERVICES BLOCK GRANT.—Subpara17 graphs (C)(ii) and (D)(ii) of section 506(a)(2) (42 U.S.C.

18 706(a)(2)) are each amended by inserting ‘‘or the State

19 plan under title XXI’’ after ‘‘title XIX’’.

20 (f) COORDINATION OF DATA SURVEYS AND RE21 PORTS.—The Secretary of Health and Human Services,

22 through the Assistant Secretary for Planning and Evalua23 tion, shall establish a clearinghouse for the consolidation

24 and coordination of all Federal databases and reports re25 garding children’s health.
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1 SEC. 708. GRANTS TO STATES FOR ITEMS AND SERVICES

2 PROVIDED BY FEDERALLY-QUALIFIED

3 HEALTH CENTERS AND RURAL HEALTH CLIN4 ICS.

5 (a) ESTABLISHMENT.—

6 (1) IN GENERAL.—Beginning with fiscal year

7 2001, the Secretary shall award a grant to a State

8 described in paragraph (2) for payment for items

9 and services provided by Federally-qualified health

10 centers and rural health clinics located in the

11 State—

12 (A) to individuals who are not eligible for

13 medical assistance under the State plan under

14 title XIX of the Social Security Act (42 U.S.C.

15 1396 et seq.); and

16 (B) that would be considered medical as17 sistance under the State plan under such title

18 if such items and services were provided to an

19 individual eligible for such assistance.

20 (2) STATE DESCRIBED.—

21 (A) IN GENERAL.—A State described in

22 this paragraph is a State that has not elected

23 to provide payment for Federally-qualified

24 health center services and rural health clinic

25 services provided under the State plan under

26 title XIX of the Social Security Act, or under
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1 a waiver of such plan approved under section

2 1115 of that Act (42 U.S.C. 1315), in accord3 ance with the phase-out of the reasonable cost

4 basis for payment for such services provided in

5 section 1902(a)(13)(C) of the Social Security

6 Act (42 U.S.C. 1396a(a)(13)(C)), as amended

7 by section 4712(a) of the Balanced Budget Act

8 of 1997 (Public Law 105–33; 111 Stat. 508).

9 (B) EXCEPTION.—In the case of a State

10 that, as of October 1, 1999, has elected to pro11 vide payment for 95 percent of the costs of

12 Federally-qualified health center services and

13 rural health clinic services furnished during fis14 cal year 2000 under such State plan or waiver,

15 in accordance with section 1902(a)(13)(C) of

16 the Social Security Act (as so amended), the

17 State shall be considered to be a State de18 scribed in subparagraph (A) if the State reverts

19 to providing payment for 100 percent of the

20 costs of such services under such State plan or

21 waiver during fiscal years 2001 through 2003.

22 (3) APPLICATION.—A State shall submit an ap23 plication for a grant under this section at such time,

24 in such manner, and containing, in addition to the
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1 methodology required under subsection (c)(1), such

2 information as the Secretary may determine.

3 (b) AMOUNT OF GRANTS.—

4 (1) BASED ON NUMBER OF LOW-INCOME INDI5 VIDUALS.—

6 (A) IN GENERAL.—Out of funds appro7 priated under subsection (d) for each of fiscal

8 years 2001 through 2003, the Secretary shall,

9 subject to paragraphs (2) and (3), allot to each

10 State eligible for a grant under this section for

11 the fiscal year an amount equal to the ratio

12 of—

13 (i) the number of low-income individ14 uals in the State for the fiscal year; to

15 (ii) the total number of such individ16 uals in all such States for the fiscal year.

17 (B) DETERMINATION OF NUMBER OF LOW18 INCOME INDIVIDUALS.—For purposes of sub19 paragraph (A), a determination of the number

20 of low-income individuals for a State for a fiscal

21 year shall be made on the basis of the arith22 metic average of the number of such individ23 uals, as reported and defined in the 3 most re24 cent March supplements to the Current Popu25 lation Survey of the Bureau of the Census be-
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1 fore the beginning of the calendar year in which

2 such fiscal year begins.

3 (2) MINIMUM AMOUNT.—In no case shall the

4 amount of a grant to a State under this section for

5 any fiscal year be less than $400,000.

6 (3) RECONCILIATION.—The Secretary shall

7 make pro rata adjustments as necessary to the allot8 ments determined under this subsection in order to

9 comply with the requirement of paragraph (2).

10 (4) NO MATCHING REQUIREMENT.—Nothing in

11 this section shall be construed as requiring a State

12 to expend or provide funds in order to receive funds

13 under a grant made under this section.

14 (5) 3-YEAR AVAILABILITY OF AMOUNTS ALLOT15 TED.—Amounts allotted to a State under a grant

16 made under this section for a fiscal year shall re17 main available for expenditure by the State through

18 the end of the second succeeding fiscal year.

19 (c) LIMITATIONS ON USE OF FUNDS.—

20 (1) IN GENERAL.—Subject to paragraph (2),

21 funds provided to a State under a grant made under

22 this section for any fiscal year—

23 (A) shall be distributed among all the Fed24 erally-qualified health centers and rural health

25 clinics located in the State in accordance with
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1 a methodology approved in advance by the Sec2 retary that imposes a uniform criteria for such

3 distribution, based on factors such as size of

4 caseload and treatment costs; and

5 (B) may only be used for payment for

6 items and services described in subsection

7 (a)(1).

8 (2) STATE OPTION TO RETAIN FUNDS FOR AD9 MINISTRATIVE COSTS.—A State that receives a grant

10 under this section for a fiscal year may retain up to

11 15 percent of the amount allotted to the State for

12 the fiscal year for administrative expenditures in13 curred by the State with respect to Federally-quali14 fied health centers and rural health clinics located in

15 the State.

16 (d) APPROPRIATION.—Out of any funds in the Treas17 ury not otherwise appropriated, there is authorized to be

18 appropriated and there is appropriated to make grants

19 under this section $25,000,000 for each of fiscal years

20 2001 through 2003.

21 (e) DEFINITIONS.—In this section:

22 (1) FEDERALLY-QUALIFIED HEALTH CENTER;

23 FEDERALLY-QUALIFIED HEALTH CENTER SERV24 ICES.—The terms ‘‘Federally-qualified health cen25 ter’’ and ‘‘Federally-qualified health center services’’
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1 have the meanings given those terms in section

2 1905(l)(2) of the Social Security Act (42 U.S.C.

3 1396d(l)(2)).

4 (2) RURAL HEALTH CLINIC; RURAL HEALTH

5 CLINIC SERVICES.—The terms ‘‘rural health clinic’’

6 and ‘‘rural health clinic services’’ have the meanings

7 given those terms in section 1905(l)(1) of the Social

8 Security Act (42 U.S.C. 1396d(l)(1)).

9 (3) SECRETARY.—The term ‘Secretary’ means

10 the Secretary of Health and Human Services.

11 (f) GAO STUDY AND REPORT.—

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

13 United States shall conduct a study to determine the

14 impact on Federally-qualified health centers and

15 rural health clinics of the phase-out of the reason16 able cost basis for payment for Federally-qualified

17 health center services and rural health clinic services

18 provided in section 1902(a)(13)(C) of the Social Se19 curity Act (42 U.S.C. 1396a(a)(13)(C)), as amended

20 by section 4712(a) of the Balanced Budget Act of

21 1997 (Public Law 105–33; 111 Stat. 508).

22 (2) REPORT.—Beginning with November 1,

23 2000, and anuually thereafter through November 1,

24 2003, the Comptroller General shall submit a report

25 to Congress on the results of the study conducted
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1 under this subsection, together with any rec2 ommendations for legislation that the Comptroller

3 General determines to be appropriate as a result of

4 such study.

5 SEC. 709. ADDITIONAL TECHNICAL CORRECTIONS.

6 (a) Section 1902(a)(64) (42 U.S.C. 1396a(a)(64)) is

7 amended by adding ‘‘and’’ at the end.

8 (b) Section 1902(j) (42 U.S.C. 1396a(j)) is amended

9 by striking ‘‘of of’’ and inserting ‘‘of’’.

10 (c) Section 1902(l) (42 U.S.C. 1396a(l)) is

11 amended—

12 (1) in paragraph (1)(C), by striking ‘‘children

13 children’’ and inserting ‘‘children’’;

14 (2) in paragraph (3), in the matter preceding

15 subparagraph (A), by striking the first comma after

16 ‘‘(a)(10)(A)(i)(VII)’’; and

17 (3) in paragraph (4)(B), by inserting a comma

18 after ‘‘(a)(10)(A)(i)(IV)’’.

19 (d) Section 1902(v) (42 U.S.C. 1396a(v)) is amended

20 by striking ‘‘(1)’’.

21 (e) Section 1903(b)(4) (42 U.S.C. 1396b(b)(4)) is

22 amended, in the matter preceding subparagraph (A), by

23 inserting ‘‘of’’ after ‘‘for the use’’.

24 (f) The left margins of clauses (i) and (ii) of section

25 1903(d)(3)(B) (42 U.S.C. 1396b(d)(3)(B)) are each re-
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1 aligned so as to align with the left margin of section

2 1903(d)(3)(A).

3 (g) Section 1903(f)(2) (42 U.S.C. 1396b(f)(2)) is

4 amended by striking the extra period at the end.

5 (h) Section 1903(i)(14) (1396b(i)(14)) is amended by

6 adding ‘‘or’’ after the semicolon.

7 (i) Section 1903(m)(2)(A) (42 U.S.C.

8 1396b(m)(2)(A)) is amended—

9 (1) in clause (vi), by striking the semicolon the

10 first place it appears; and

11 (2) by redesignating the clause (xi) added by

12 section 4701(c)(3) of the Balanced Budget Act of

13 1997 (Public Law 105–33; 111 Stat. 493) as clause

14 (xii).

15 (j) Section 1903(o) (42 U.S.C. 1396b(o)) is amended

16 by striking ‘‘1974))’’ and inserting ‘‘1974)’’.

17 (k) Section 1903(w) (42 U.S.C. 1396b(w)) is

18 amended—

19 (1) in paragraph (1)(B), by striking ‘‘puroses’’

20 and inserting ‘‘purposes’’;

21 (2) in paragraph (3)(B), by inserting a comma

22 after ‘‘(D)’’; and

23 (3) by realigning the left margin of clause (viii)

24 in paragraph (7)(A) so as to align with the left mar25 gin of clause (vii) of that paragraph.+
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1 (l) Section 1905(b)(1) (42 U.S.C. 1396d(b)(1)) is

2 amended by striking ‘‘per centum,,’’ and inserting ‘‘per

3 centum,’’.

4 (m) Section 1905(l)(2)(B) (42 U.S.C.

5 1936d(l)(2)(B)) is amended by striking ‘‘a entity’’ and in6 serting ‘‘an entity’’.

7 (n) The heading for section 1910 (42 U.S.C. 1396i)

8 is amended by striking ‘‘OF’’ the first place it appears.

9 (o) Section 1915 (42 U.S.C. 1396n) is amended—

10 (1) in subsection (b), by striking

11 ‘‘1902(a)(13)(E)’’ and inserting ‘‘1902(a)(13)(C)’’;

12 (2) in the last sentence of subsection

13 (d)(5)(B)(iii), by striking ‘‘75’’ and inserting ‘‘65’’;

14 and

15 (3) in subsection (h), by striking ‘‘90 day’’ and

16 inserting ‘‘90 days’’.

17 (p) Section 1919 (42 U.S.C. 1396r) is amended—

18 (1) in subsection (b)(3)(C)(i)(I), by striking

19 ‘‘not later than’’ the first place it appears; and

20 (2) in subsection (d)(4)(A), by striking ‘‘1124’’

21 and inserting ‘‘1124)’’.

22 (q) Section 1920(b)(2)(D)(i)(I) (42 U.S.C. 1396r–

23 1(b)(2)(D)(i)(I)) is amended by striking ‘‘329, 330, or

24 340’’ and inserting ‘‘330 or 330A’’.
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1 (r) Section 1920A(d)(1)(B) (42 U.S.C. 1396r–

2 1a(d)(1)(B)) is amended by striking ‘‘a entity’’ and insert3 ing ‘‘an entity’’.

4 (s) Section 1923(c)(3)(B) (42 U.S.C. 1396r–

5 4(c)(3)(B)) is amended by striking ‘‘patients.’’ and insert6 ing ‘‘patients,’’.

7 (t) Section 1925 (42 U.S.C. 1396r–6) is amended—

8 (1) in subsection (a)(3)(C), by striking ‘‘(i)(VI)

9 (i)(VII),,’’ and inserting ‘‘(i)(VI), (i)(VII),’’; and

10 (2) in subsection (b)(3)(C)(i), by striking

11 ‘‘(i)(IV) (i)(VI) (i)(VII),,’’ and inserting ‘‘(i)(IV),

12 (i)(VI), (i)(VII),’’.

13 (u) Section 1927 (42 U.S.C. 1396r–8) is amended—

14 (1) in subsection (g)(2)(A)(ii)(II)(cc), by strik15 ing ‘‘individuals’’ and inserting ‘‘individual’s’’;

16 (2) in subsection (i)(1), by striking ‘‘the the’’

17 and inserting ‘‘the’’; and

18 (3) in subsection (k)(7)—

19 (A) in subparagraph (A)(iv), by striking

20 ‘‘distributers’’ and inserting ‘‘distributors’’; and

21 (B) in subparagraph (C)(i), by striking

22 ‘‘pharmaceuutically’’ and inserting ‘‘pharma23 ceutically’’.

24 (v) Section 1929 (42 U.S.C. 1396t) is amended—
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1 (1) in subsection (c)(2), by realigning the left

2 margins of clauses (i) and (ii) of subparagraph (E)

3 so as to align with the left margins of clauses (i)

4 and (ii) of subparagraph (F) of that subsection;

5 (2) in subsection (k)(1)(A)(i), by striking ‘‘set6 tings,’’ and inserting ‘‘settings),’’; and

7 (3) in subsection (l), by striking ‘‘State wide8 ness’’ and inserting ‘‘Statewideness’’.

9 (w) Section 1932 (42 U.S.C. 1396u–2) is amended—

10 (1) in subsection (c)(2)(C), by inserting ‘‘part’’

11 before ‘‘C of title XVIII’’; and

12 (2) in subsection (d)—

13 (A) in paragraph (1)(C)(ii), by striking

14 ‘‘Act’’ and inserting ‘‘Regulation’’; and

15 (B) in paragraph (2)(B), by striking

16 ‘‘1903(t)(3)’’ and inserting ‘‘1905(t)(3)’’.

17 (x) Section 1933(b)(4) (42 U.S.C. 1396u–3(b)(4)) is

18 amended by inserting ‘‘a’’ after ‘‘for a month in’’.

19 (y) Section 2104(b)(3)(B) (42 U.S.C.

20 1397dd(b)(3)(B)) is amended by striking ‘‘States.’’ and

21 inserting ‘‘States,’’.

22 (z) Section 2105(d)(2)(B)(iii) (42 U.S.C.

23 1397ee(d)(2)(B)(iii)) is amended by inserting ‘‘in’’ after

24 ‘‘described’’.
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1 (aa) Section 2109(a) (42 U.S.C.1397ii(a)) is

2 amended—

3 (1) in paragraph (1), by striking ‘‘title II’’ and

4 inserting ‘‘title I’’; and

5 (2) in paragraph (2), by inserting ‘‘)’’ before

6 the period.

7 (bb)(1) The section 1908 (42 U.S.C. 1396g–1) that

8 relates to required laws relating to medical child support

9 is redesignated as section 1908A.

10 (2) Section 1902(a)(60) (42 U.S.C. 1396b(a)(60)) is

11 amended by striking ‘‘1908’’ and inserting ‘‘1908A’’.

12 (cc) Effective October 1, 2003, section 1915(b) (42

13 U.S.C. 1396n(b)) is amended, in the matter preceding

14 paragraph (1), by striking ‘‘sections 1902(a)(13)(C) and’’

15 and inserting ‘‘section’’.

16 (dd) Except as otherwise provided, the amendments

17 made by this section shall take effect on the date of enact18 ment of this Act.