`[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1788 Placed on Calendar Senate (PCS)]





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

_______________________________________________________________________

                            October 26, 1999

                 Read twice and placed on the calendar





                                                       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.

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

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; TABLE OF 
              CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare, 
Medicaid, and SCHIP Adjustment Act of 1999''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to that section 
or other provision of the Social Security Act.
    (c) Table of Contents.--The table of contents of 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.
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

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.
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.

              TITLE I--PROVISIONS RELATING TO PART A ONLY

             Subtitle A--Skilled Nursing Facility Services

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

    (a) Extensive Services and Special Care RUGS.--
            (1) In general.--For purposes of computing payments for 
        covered skilled nursing facility services under paragraph (1) 
        of section 1888(e) of the Social Security Act (42 U.S.C. 
        1395yy(e)) for such services furnished on or after April 1, 
        2000, and before October 1, 2001, the Secretary of Health and 
        Human Services (in this section referred to as the 
        ``Secretary'') shall increase by 25 percent the adjusted 
        Federal per diem rate otherwise determined under paragraph (4) 
        of such section for such services furnished to any individual 
        entitled to benefits under part A of title XVIII of such Act 
        (42 U.S.C. 1395 et seq.) during the period in which the 
        individual is classified under an applicable RUG III category 
        (as defined in paragraph (2)).
            (2) Applicable rug iii category defined.--In this 
        subsection, the term ``applicable RUG III category'' means the 
        RUG III categories identified as SE3, SE2, SE1, SSC, SSB, and 
        SSA in tables 3 and 4 of the final rule published in the 
        Federal Register by the Health Care Financing Administration on 
        July 30, 1999 (64 Fed. Reg. 41684).
    (b) Rehabilitation Therapy RUGS.--For purposes of computing 
payments for covered skilled nursing facility services under paragraph 
(1) of section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)) 
for such services furnished on or after April 1, 2000, and before 
October 1, 2001, the Secretary shall increase the adjusted Federal per 
diem rate otherwise determined under paragraph (4) of such section for 
such services furnished to any individual entitled to benefits under 
part A of title XVIII of such Act (42 U.S.C. 1395 et seq.) during the 
period in which the individual is classified under a RUGS III category 
(as identified in tables 3 and 4 of the final rule described in 
subsection (a)(2)) by the applicable payment add-on determined in 
accordance with the following table:

RUGS III category                              Applicable paymentadd-on
    RUC...........................................              $73.57 
    RVC...........................................              $76.25 
    RHC...........................................              $54.09 
    RMC...........................................              $69.98 
    RMB...........................................              $30.09.
    (c) Rule of Construction.--Nothing in this section shall be 
construed as permitting the Secretary of Health and Human Services to 
include the amount of the increase in the payment under subsection (a) 
or the amount of the add-on under subsection (b) in updating the 
Federal per diem rate under section 1888(e)(4) of the Social Security 
Act (42 U.S.C. 1395yy(e)(4)).

SEC. 102. PROVISION FOR PART B ADD-ONS FOR FACILITIES PARTICIPATING IN 
              THE NHCMQ DEMONSTRATION PROJECT.

    (a) In General.--Section 1888(e)(3) (42 U.S.C. 1395yy(e)(3)) is 
amended--
            (1) in subparagraph (A)--
                    (A) in clause (i), by inserting ``or, in the case 
                of a facility participating in the Nursing Home Case-
                Mix and Quality Demonstration (RUGS-III), the RUGS-III 
                rate received by the facility during the cost reporting 
                period beginning in calendar year 1997'' after ``to 
                non-settled cost reports'';
                    (B) in clause (ii), by striking ``furnished during 
                such period'' and inserting ``furnished during the 
                applicable cost reporting period described in clause 
                (i)''; and
                    (C) in the second sentence, by striking ``with 
                respect to exemptions,'' and inserting ``with respect 
                to exemptions for facilities (other than for a facility 
                participating in the Nursing Home Case-Mix and Quality 
                Demonstration (RUGS-III)),''; and
            (2) in subparagraph (B), to read as follows:
                    ``(B) Update to first cost reporting period.--The 
                Secretary shall update the amount determined under 
                subparagraph (A), for each cost reporting period after 
                the applicable cost reporting period described in 
                subparagraph (A)(i) and up to the first cost reporting 
                period by a factor equal to the skilled nursing 
                facility market basket percentage increase minus 1 
                percentage point.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendments made by section 4432 of the 
Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 414).

SEC. 103. EXEMPTION OF FACILITIES FROM 3-YEAR TRANSITION PERIOD UNDER 
              THE PROSPECTIVE PAYMENT SYSTEM FOR SKILLED NURSING 
              FACILITY SERVICES.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)) is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by striking ``paragraph (7)'' and inserting ``paragraphs 
        (7) and (11)''; and
            (2) by adding at the end the following:
            ``(11) Exemption of facilities from 3-year transition.--A 
        facility may elect to have paragraph (1)(B) apply in 
        determining the amount of the payment for all costs of covered 
        skilled nursing facility services for each day of such services 
        furnished in cost reporting periods beginning after the date of 
        such election.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to elections made on or after the date of enactment of this Act.

SEC. 104. STUDY AND REPORT REGARDING STATE LICENSURE AND CERTIFICATION 
              STANDARDS AND RESPIRATORY THERAPY COMPETENCY 
              EXAMINATIONS.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study that--
            (1) identifies variations in State licensure and 
        certification standards for health care providers (including 
        nursing and allied health professionals) and other individuals 
        providing respiratory therapy in skilled nursing facilities;
            (2) examines State requirements relating to respiratory 
        therapy competency examinations for such providers and 
        individuals; and
            (3) determines whether regular respiratory therapy 
        competency examinations or certifications should be required 
        under the medicare program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) for such providers and 
        individuals.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary of Health and Human Services shall submit a 
report to Congress on the results of the study conducted under this 
section, together with any recommendations for legislation that the 
Secretary determines to be appropriate as a result of such study.

SEC. 105. STUDY AND REPORT ON ALTERNATIVE PAYMENT METHODS FOR SKILLED 
              NURSING FACILITIES SPECIALIZING IN CARE OF HIGH COST, 
              CHRONICALLY ILL BENEFICIARIES.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study on the feasibility and advisability of--
            (1) modifying the prospective payment system established 
        under section 1888(e) of the Social Security Act (42 U.S.C. 
        1395yy(e)) for skilled nursing facilities that specialize in 
        providing care to high cost, chronically ill medicare 
        beneficiaries; or
            (2) exempting such facilities from such system and 
        developing and implementing alternative payment methods for 
        such facilities.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary of Health and Human Services shall submit a 
report to Congress on the study conducted under subsection (a), 
together with any recommendations for legislation that the Secretary 
determines to be appropriate as a result of such study.

                      Subtitle B--Hospice Services

SEC. 121. PAYMENT FOR HOSPICE CARE.

    (a) In General.--Section 1814(i)(1)(C)(ii) (42 U.S.C. 
1395f(i)(1)(C)(ii)) is amended--
            (1) in subclause (VI)--
                    (A) by striking ``through 2002'' and inserting 
                ``and 1999''; and
                    (B) by striking ``and'' at the end;
            (2) by redesignating subclause (VII) as subclause (VIII); 
        and
            (3) by inserting after subclause (VI), the following:
            ``(VII) for each of fiscal years 2000 through 2002, the 
        market basket percentage increase for the fiscal year involved 
        minus 0.5 percentage point; and''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1999.

SEC. 122. STUDY AND REPORT TO CONGRESS REGARDING MODIFICATION OF THE 
              PAYMENT RATES FOR HOSPICE CARE.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study to determine the feasibility and advisability of 
updating the payment rates and the cap amount determined with respect 
to a fiscal year under section 1814(i) of the Social Security Act (42 
U.S.C. 1395f(i)) for routine home care and other services included in 
hospice care. Such study shall examine the cost factors used to 
determine such rates and such amount and shall evaluate whether such 
factors should be modified, eliminated, or supplemented with additional 
cost factors.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General of the United States shall submit a 
report to Congress on the study conducted under subsection (a), 
together with any recommendations for legislation that the Comptroller 
General determines to be appropriate as a result of such study.

                      Subtitle C--Other Provisions

SEC. 141. STUDY AND REPORT REGARDING PROSPECTIVE PAYMENT SYSTEM FOR 
              PSYCHIATRIC HOSPITALS.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study on the feasibility and advisability of developing and 
implementing a prospective payment system for items and services 
provided by psychiatric hospitals (as defined in section 1861(f) of the 
Social Security Act (42 U.S.C. 1395x(f))) to beneficiaries under the 
medicare program under title XVIII of such Act (42 U.S.C. 1395 et 
seq.). In conducting such study, the Secretary should take into 
consideration the unique circumstances affecting psychiatric hospitals 
that are located in rural areas (as defined in section 1886(d)(2)(D) of 
such Act (42 U.S.C. 1395ww(d)(2)(D))).
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, the Secretary of Health and Human Services shall submit a 
report to Congress on the study conducted under subsection (a), 
together with any recommendations for legislation that the Secretary 
determines to be appropriate as a result of such study.

SEC. 142. REVISION OF PROSPECTIVE PAYMENT SYSTEM FOR INPATIENT 
              REHABILITATION SERVICES.

    (a) Payment Unit.--Section 1886(j)(1)(D) of the Social Security Act 
(42 U.S.C. 1395ww(j)(1)(D)) is amended to read as follows:
                    ``(D) For purposes of this subsection, the term 
                `payment unit' means a discharge.''.
    (b) Patient Case Mix Groups.--Section 1886(j)(2)(A)(i) of the 
Social Security Act (42 U.S.C. 1395ww(j)(2)(A)(i)) is amended to read 
as follows:
                            ``(i) classes of patient discharges of 
                        rehabilitation facilities by functional-related 
                        groups (each in this subsection referred to as 
                        a `case mix group'), based on impairment, age, 
                        comorbidities, and functional capability of the 
                        patient and such other factors as the Secretary 
                        deems appropriate to improve the explanatory 
                        power of functional independence measure-
                        function related groups; and''.
    (c) Study and Report.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study on the impact that the prospective 
        payment system for inpatient rehabilitation services under 
        section 1886(j) of the Social Security Act (42 U.S.C. 
        1395ww(j)) has on utilization of services, beneficiary access 
        to services, non-therapy ancillary services, and other factors 
        that the Secretary determines are appropriate.
            (2) Report.--Not later than 2 years after implementation of 
        the prospective payment system described in paragraph (1), the 
        Secretary of Health and Human Services shall submit a report to 
        the appropriate committees of Congress on the study conducted 
        under such paragraph, together with any recommendations for 
        legislation regarding adjustments to the payment amounts under 
        such system that the Secretary determines are appropriate as a 
        result of such study.

SEC. 143. EXCEPTION TO CMI QUALIFIER FOR ONE YEAR.

    Notwithstanding any other provision of law, for purposes of fiscal 
year 2000, the Northwest Mississippi Regional Medical Center located in 
Clarksdale, Mississippi shall be deemed to have satisfied the case mix 
index criteria under section 1886(d)(5)(C)(ii) of the Social Security 
Act (42 U.S.C. 1395ww(d)(5)(C)(ii)) for classification as a rural 
referral center.

SEC. 144. RECLASSIFICATION OF CERTAIN COUNTIES FOR PURPOSES OF 
              REIMBURSEMENT UNDER THE MEDICARE PROGRAM.

    (a) In General.--For purposes of receiving reimbursement under the 
medicare program under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.)--
            (1) Iredell County, North Carolina is deemed to be located 
        in the Charlotte-Gastonia-Rock Hill-N.C.-S.C. Metropolitan 
        Statistical Area; and
            (2) the large urban area of New York, New York is deemed to 
        include Orange County, New York.
    (b) Effective Date.--This section shall apply with respect to 
discharges occurring on or after October 1, 1999.

SEC. 145. WAGE INDEX CORRECTION.

    Notwithstanding any other provision of law, the Secretary of Health 
and Human Services shall--
            (1) recalculate the Hattiesburg Mississippi Metropolitan 
        Statistical Area (MSA) wage index for fiscal year 2000 using 
        fiscal year 1996 wage and hour data for Wesley Medical Center;
            (2) issue a wage index correction for fiscal year 2000; and
            (3) make such adjustments to the prospective payment system 
        determined under section 1886(d) of the Social Security Act (42 
        U.S.C. 1395ww(d)) as may be necessary to take into account such 
        corrected wage index.

SEC. 146. CONSIDERATION OF AN APPLICATION BY A CERTAIN ENTITY FOR 
              MEDICARE CERTIFICATION AS AN APPLICATION BY A NEW 
              PROVIDER.

    Notwithstanding any other provision of law, the Secretary of Health 
and Human Services shall consider an application (or a reapplication) 
for certification of a long-term care facility under the medicare 
program under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) that is, or was, submitted after January 1, 1994, by a subsidiary 
of a not-for-profit, municipally-owned, and medicare-certified 
hospital, where such long-term care facility has had a change of 
management from the previous owner prior to acquisition by such 
subsidiary, as an application by a prospective provider.

SEC. 147. STUDY AND REPORT ON COUNTY-WIDE GEOGRAPHIC RECLASSIFICATION.

    (a) Study.--The Secretary of Health and Human Services, in 
consultation with the Medicare Geographic Classification Review Board, 
shall conduct a study to determine--
            (1) whether the prospective payment rates established under 
        section 1886(d) of the Social Security Act (42 U.S.C. 
        1395ww(d)) are an adequate proxy for the costs of inpatient 
        hospital services; and
            (2) whether the standard for county-wide geographic 
        reclassification needs to be updated or revised.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary of Health and Human Services shall submit a 
report to Congress on the study conducted under subsection (a), 
together with any recommendations for legislation that the Secretary 
determines to be appropriate as a result of such study.

              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.

    (a) In General.--Section 1833(t) (42 U.S.C. 1395(t)) is amended by 
adding at the end the following:
            ``(10) Multiyear transition.--
                    ``(A) In general.--In the case of covered OPD 
                services furnished by a hospital during a transition 
                year, the Secretary shall increase the payments for 
                such services under the prospective payment system 
                established under this subsection by the amount (if 
                any) that the Secretary determines is necessary to 
                ensure that the payment to cost ratio of the hospital 
                for the transition year (as defined in subparagraph 
                (D)(iii)) equals the applicable percentage (as defined 
                in subparagraph (D)(i)) of the payment to cost ratio of 
                the hospital for 1996.
                    ``(B) Payment to cost ratio.--
                            ``(i) In general.--The payment to cost 
                        ratio of a hospital for any year is the ratio 
                        which--
                                    ``(I) the hospital's reimbursement 
                                under this part for covered OPD 
                                services furnished during the year, 
                                including any reimbursement for such 
                                services through cost-sharing described 
                                in subparagraph (D)(ii); bears to
                                    ``(II) the cost of such services.
                            ``(ii) Calculation of 1996 payment to cost 
                        ratio.--The Secretary shall determine each 
                        hospital's payment to cost ratio for 1996 as if 
                        the amendments made by section 4521 of the 
                        Balanced Budget Act of 1997 were in effect in 
                        1996.
                            ``(iii) Transition years.--The Secretary 
                        shall estimate the payment to cost ratio of 
                        each hospital for each transition year before 
                        the beginning of such year.
                    ``(C) Interim payments.--
                            ``(i) In general.--The Secretary shall make 
                        interim payments to a hospital during any 
                        transition year for which the Secretary 
                        estimates a payment is required under 
                        subparagraph (A).
                            ``(ii) Adjustments.--If the Secretary makes 
                        payments under clause (i) for any transition 
                        year, the Secretary shall make retrospective 
                        adjustments to each hospital based on its 
                        settled cost report so that the amount of any 
                        additional payment to a hospital for such year 
                        equals the amount described in subparagraph 
                        (A).
                    ``(D) Definitions.--In this paragraph:
                            ``(i) Applicable percentage.--The term 
                        `applicable percentage' means, with respect to 
                        covered OPD services furnished during--
                                    ``(I) the first full calendar year 
                                (and any portion of the immediately 
                                preceding calendar year) for which the 
                                prospective payment system under this 
                                subsection is in effect, 90 percent;
                                    ``(II) the second full calendar 
                                year for which such system is in 
                                effect, 85 percent; and
                                    ``(III) the third full calendar 
                                year for which such system is in 
                                effect, 80 percent.
                            ``(ii) Cost-sharing.--The term `cost-
                        sharing' includes--
                                    ``(I) copayment amounts described 
                                in paragraph (5);
                                    ``(II) coinsurance described in 
                                section 1866(a)(2)(A)(ii); and
                                    ``(III) the deductible described 
                                under section 1833(b).
                            ``(iii) Transition year.--The term 
                        `transition year' means any year (or portion 
                        thereof) described in clause (i).
                    ``(E) Effect on copayments.--Nothing in this 
                paragraph shall be construed as affecting the 
                unadjusted copayment amount described in paragraph 
                (3)(B).
                    ``(F) Application without regard to budget 
                neutrality.--The transitional payments made under this 
                paragraph--
                            ``(i) shall not be considered an adjustment 
                        under paragraph (2)(E); and
                            ``(ii) shall not be implemented in a budget 
                        neutral manner.''.
    (b) Special Rule for Rural and Cancer Hospitals.--Section 1833(t) 
(42 U.S.C. 1395(t)), as amended by subsection (a), is amended by adding 
at the end the following:
            ``(11) Special rule for rural and cancer hospitals.--
                    ``(A) In general.--For each calendar year or 
                portion thereof (beginning with 2000), in the case of 
                covered OPD services furnished by a medicare-dependent, 
                small rural hospital (as defined in section 
                1886(d)(5)(G)(iv)), a sole community hospital (as 
                defined in section 1886(d)(5)(D)(iii)), or in a 
                hospital described in section 1886(d)(1)(B)(v), the 
                Secretary shall increase the payments for such services 
                under the prospective payment system established under 
                this subsection by the amount (if any) that the 
                Secretary determines is necessary to ensure that the 
                payment to cost ratio of the hospital (as determined 
                pursuant to paragraph (10)(B)) for the year equals the 
                payment to cost ratio of the hospital for 1996 (as 
                calculated under clause (ii) of such paragraph).
                    ``(B) Interim payments.--
                            ``(i) In general.--The Secretary shall make 
                        interim payments to a hospital during any year 
                        for which the Secretary estimates a payment is 
                        required under subparagraph (A).
                            ``(ii) Adjustments.--If the Secretary makes 
                        payments under clause (i) for any year, the 
                        Secretary shall make retrospective adjustments 
                        to each hospital based on its settled cost 
                        report so that the amount of any additional 
                        payment to a hospital for such year equals the 
                        amount described in subparagraph (A).
                    ``(C) Effect on copayments.--Nothing in this 
                paragraph shall be construed as affecting the 
                unadjusted copayment amount described in paragraph 
                (3)(B).
                    ``(D) Application without regard to budget 
                neutrality.--The payments made under this paragraph--
                            ``(i) shall not be considered an adjustment 
                        under paragraph (2)(E); and
                            ``(ii) shall not be implemented in a budget 
                        neutral manner.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 202. STUDY AND REPORT TO CONGRESS REGARDING THE INCLUSION OF RURAL 
              AND CANCER HOSPITALS IN PROSPECTIVE PAYMENT SYSTEM FOR 
              HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        (referred to in this section as ``MedPAC'') shall conduct a 
        study to determine the feasibility and advisability of 
        providing payments to hospitals described in paragraph (2) for 
        covered OPD services (as defined in paragraph (1)(B) of section 
        1833(t) of the Social Security Act (42 U.S.C. 1395l(t))) based 
        on the prospective payment system established by the Secretary 
        in accordance with such section.
            (2) Hospitals described.--The hospitals described in this 
        paragraph are the following:
                    (A) A medicare-dependent, small rural hospital (as 
                defined in section 1886(d)(5)(G)(iv) of the Social 
                Security Act (42 U.S.C. 1395ww(d)(5)(G)(iv))).
                    (B) A sole community hospital (as defined in 
                section 1886(d)(5)(D)(iii) of such Act (42 U.S.C. 
                1395ww(d)(5)(D)(iii))).
                    (C) A hospital described in section 
                1886(d)(1)(B)(v) of such Act (42 U.S.C. 
                1395ww(d)(1)(B)(v)).
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, MedPAC shall submit a report to the Secretary of Health and 
Human Services and Congress on the study conducted under subsection 
(a), together with any recommendations for legislation that MedPAC 
determines to be appropriate as a result of such study.
    (c) Comments.--Not later than 60 days after the date on which 
MedPAC submits the report under subsection (b) to the Secretary of 
Health and Human Services, the Secretary shall submit comments on such 
report to Congress.

SEC. 203. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS-THROUGH FOR CERTAIN 
              MEDICAL DEVICES, DRUGS, AND BIOLOGICALS.

    (a) Outlier Adjustment.--Section 1833(t) (42 U.S.C. 1395l(t)), as 
amended by section 201, is amended--
            (1) by redesignating paragraphs (5) through (11) as 
        paragraphs (7) through (13), respectively; and
            (2) by inserting after paragraph (4) the following:
            ``(5) Outlier adjustment.--
                    ``(A) In general.--The Secretary shall provide for 
                an additional payment for each covered OPD service (or 
                group of services) for which a hospital's charges, 
                adjusted to cost, exceed--
                            ``(i) a fixed multiple of the sum of--
                                    ``(I) the applicable medicare OPD 
                                fee schedule amount determined under 
                                paragraph (3)(D), as adjusted under 
                                paragraph (4)(A) (other than for 
                                adjustments under this paragraph or 
                                paragraph (6)); and
                                    ``(II) any transitional pass-
                                through payment under paragraph (6); 
                                and
                            ``(ii) at the option of the Secretary, such 
                        fixed dollar amount as the Secretary may 
                        establish.
                    ``(B) Amount of adjustment.--The amount of the 
                additional payment under subparagraph (A) shall be 
                determined by the Secretary and shall approximate the 
                marginal cost of care beyond the applicable cutoff 
                point under such subparagraph.
                    ``(C) Limit on aggregate outlier adjustments.--
                            ``(i) In general.--The total of the 
                        additional payments made under this paragraph 
                        for covered OPD services furnished in a year 
                        (as estimated by the Secretary before the 
                        beginning of the year) may not exceed the 
                        applicable percentage (specified in clause 
                        (ii)) of the total program payments estimated 
                        to be made under this subsection for all 
                        covered OPD services furnished in that year. If 
                        this paragraph is first applied to less than a 
                        full year, the previous sentence shall apply 
                        only to the portion of such year.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means a percentage specified by the Secretary 
up to (but not to exceed)--
                                    ``(I) for a year (or portion of a 
                                year) before 2004, 2.5 percent; and
                                    ``(II) for 2004 and thereafter, 3.0 
                                percent.''.
    (b) Transitional Pass-Through for Additional Costs of Innovative 
Medical Devices, Drugs, and Biologicals.--Such section is further 
amended by inserting after paragraph (5) the following:
            ``(6) Transitional pass-through for additional costs of 
        innovative medical devices, drugs, and biologicals.--
                    ``(A) In general.--The Secretary shall provide for 
                an additional payment under this paragraph for a 
                covered OPD service (or group of services) that 
                includes the provision of any of the following:
                            ``(i) Current orphan drugs.--A drug or 
                        biological that is used for a rare disease or 
                        condition with respect to which the drug or 
                        biological has been designated as an orphan 
                        drug under section 526 of the Federal Food, 
                        Drug and Cosmetic Act if payment for the drug 
                        or biological as an outpatient hospital service 
                        under this part was being made on the first 
                        date that the system under this subsection is 
                        implemented.
                            ``(ii) Current cancer therapy drugs and 
                        biologicals.--A drug or biological that is used 
                        in cancer therapy, including a chemotherapeutic 
                        agent, antiemetic, hematopoietic growth factor, 
                        colony stimulating factor, and a biological 
                        response modifier, if payment for the drug or 
                        biological as an outpatient hospital service 
                        under this part was being made on such first 
                        date.
                            ``(iii) Radiopharmaceutical drugs and 
                        biological products.--Radiopharmaceutical drugs 
                        or biological products used in diagnostic, 
                        monitoring, and therapeutic nuclear medicine 
                        procedures.
                            ``(iv) New medical devices, drugs, and 
                        biologicals.--A medical device, drug, or 
                        biological not described in clause (i), (ii), 
                        or (iii) if--
                                    ``(I) payment for the device, drug, 
                                or biological as an outpatient hospital 
                                services under this part was not being 
                                made as of December 31, 1996; and
                                    ``(II) the cost of the device, 
                                drug, or biological is not 
                                insignificant in relation to the OPD 
                                fee schedule amount (as calculated 
                                under paragraph (3)(D)) payable for the 
                                service (or group of services) 
                                involved.
                    ``(B) Limited period of payment.--The payment under 
                this paragraph with respect to a medical device, drug, 
                or biological shall only apply during a period of at 
                least 2 years, but not more than 3 years, that begins--
                            ``(i) on the first date this subsection is 
                        implemented in the case of a drug or biological 
                        described in clause (i), (ii), (iii) of 
                        subparagraph (A) and in the case of a device, 
                        drug, or biological described in clause (iv) of 
                        such subparagraph for which payment under this 
                        part is made as an outpatient hospital service 
                        before such first date; or
                            ``(ii) in the case of a device, drug, or 
                        biological described in subparagraph (A)(iv) 
                        not described in clause (i), on the first date 
                        on which payment is made under this part for 
                        the device, drug, or biological as an 
                        outpatient hospital service.
                    ``(C) Amount of additional payment.--Subject to 
                subparagraph (D)(iii), the amount of the payment under 
                this paragraph with respect to a device, drug, or 
                biological provided as part of a covered OPD service 
                is--
                            ``(i) in the case of a drug or biological, 
                        the amount by which the amount determined under 
                        section 1842(o) for the drug or biological 
                        exceeds the portion of the otherwise applicable 
                        medicare OPD fee schedule that the Secretary 
                        determines is associated with the drug or 
                        biological; or
                            ``(ii) in the case of a medical device, the 
                        amount by which the hospital's charges for the 
                        device, adjusted to cost, exceeds the portion 
                        (described in clause (i)) associated with the 
                        device.
                    ``(D) Limit on aggregate annual adjustment.--
                            ``(i) In general.--The total of the 
                        additional payments made under this paragraph 
                        for covered OPD services furnished in a year 
                        (as estimated by the Secretary before the 
                        beginning of the year) may not exceed the 
                        applicable percentage (specified in clause 
                        (ii)) of the total program payments estimated 
                        to be made under this subsection for all 
                        covered OPD services furnished in that year. If 
                        this paragraph is first applied to less than a 
                        full year, the previous sentence shall apply 
                        only to the portion of such year.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means--
                                    ``(I) for a year (or portion of a 
                                year) before 2004, 2.5 percent; and
                                    ``(II) for 2004 and thereafter, a 
                                percentage specified by the Secretary 
                                up to (but not to exceed) 2.0 percent.
                            ``(iii) Uniform prospective reduction if 
                        aggregate limit projected to be exceeded.--If 
                        the Secretary projects or estimates before the 
                        beginning of a year that the amount of the 
additional payments under this paragraph for the year (or portion 
thereof) (as determined under clause (i) without regard to this clause) 
will exceed the limit established under such clause, the Secretary 
shall reduce pro rata the amount of each of the additional payments 
under this paragraph for that year (or portion thereof) in order to 
ensure that the aggregate additional payments under this paragraph (as 
so estimated) do not exceed such limit.''.
    (c) Application of New Adjustments on a Budget Neutral Basis.--
Section 1833(t)(2)(E) (42 U.S.C. 1395l(t)(2)(E)) is amended by striking 
``other adjustments, in a budget neutral manner, as determined to be 
necessary to ensure equitable payments, such outlier adjustments or'' 
and inserting ``, in a budget neutral manner, outlier adjustments under 
paragraph (5) and transitional pass-through payments under paragraph 
(6) and other adjustments as determined to be necessary to ensure 
equitable payments, such as''.
    (d) Limitation on Judicial Review for New Adjustments.--Section 
1833(t)(11) (42 U.S.C. 1395l(t)(11)), as redesignated by subsection 
(a)(1), is amended--
            (1) by striking ``and'' at the end of subparagraph (C);
            (2) by striking the period at the end of subparagraph (D) 
        and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(E) the determination of the fixed multiple or a 
                fixed dollar cutoff amount, the marginal cost of care, 
                or applicable percentage under paragraph (5), or the 
                determination of insignificance of cost, the period and 
                amount of the additional payments, the portion of the 
                medicare OPD fee schedule amount associated with 
                particular devices, drugs, or biologicals, and the 
                application of any pro rata reduction under paragraph 
                (6).''.
    (e) Inclusion of Medical Devices Under System.--Section 
1833(t)(1)(B) (42 U.S.C. 1395l(t)(1)(B)) is amended--
            (1) in clause (ii), by striking ``clause (iii)'' and 
        inserting ``clause (iv)'' and by striking ``but''; and
            (2) by redesignating clause (iii) as clause (iv) and 
        inserting after clause (ii) the following:
                            ``(iii) includes medical devices (such as 
                        implantable medical devices); but''.
    (f) Authorizing Payment Weights Based on Mean Hospital Costs.--
Section 1833(t)(2)(C) (42 U.S.C. 1395l(t)(2)(C)) is amended by 
inserting ``(or, at the election of the Secretary, mean)'' after 
``median''.
    (g) Limiting Variation of Costs of Services Classified With a 
Group.--Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended by adding 
at the end the following: ``For purposes of subparagraph (B), items and 
services within a group shall not be treated as `comparable with 
respect to the use of resources' if the highest median cost (or mean 
cost, if elected by the Secretary under subparagraph (C)) for an item 
or service within the group is more than 2 times greater than the 
lowest median cost (or mean cost, if so elected) for an item or service 
within the group; except that the Secretary may make exceptions in 
unusual cases, such as low volume items and services.''.
    (h) Annual Review of OPD PPS Components.--
            (1) In general.--Section 1833(t)(8)(A) (42 U.S.C. 
        1395l(t)(8)(A)) (as redesignated by subsection (a)(1)) is 
        amended by striking ``may periodically review'' and inserting 
        ``shall review not less often than annually''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies beginning with 2002.
    (i) Effective Date.--Except as provided in this section, the 
amendments made by this section shall be effective as if included in 
the amendments made by section 4523 of the Balanced Budget Act of 1997 
(Public Law 105-33; 111 Stat. 445).

                    Subtitle B--Physicians' Services

SEC. 221. MODIFICATIONS OF UPDATE ADJUSTMENT FACTOR PROVISIONS TO 
              REDUCE OSCILLATIONS AND ALLOW FOR ESTIMATE REVISIONS.

    (a) Update Adjustment Factor.--
            (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is 
        amended--
                    (A) in paragraph (3)--
                            (i) in the heading, by inserting ``for 1999 
                        and 2000'' after ``Update'';
                            (ii) in subparagraph (A), by striking ``a 
                        year beginning with 1999'' and inserting ``1999 
                        and 2000''; and
                            (iii) in subparagraph (C), by inserting 
                        ``and paragraph (4)'' after ``For purposes of 
                        this paragraph''; and
                    (B) by adding at the end the following:
            ``(4) Update for years beginning with 2001.--
                    ``(A) In general.--Unless otherwise provided by 
                law, subject to the budget-neutrality factor determined 
                by the Secretary under subsection (c)(2)(B)(ii) and 
                subject to adjustment under subparagraph (F), the 
                update to the single conversion factor established in 
                paragraph (1)(C) for a year beginning with 2001 is 
                equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the MEI (as defined 
                        in section 1842(i)(3)) for the year (divided by 
                        100); and
                            ``(ii) 1 plus the Secretary's estimate of 
                        the update adjustment factor under subparagraph 
                        (B) for the year.
                    ``(B) Update adjustment factor.--For purposes of 
                subparagraph (A)(ii), subject to subparagraph (D), the 
                `update adjustment factor' for a year is equal (as 
                estimated by the Secretary) to the sum of the 
                following:
                            ``(i) Prior year adjustment component.--An 
                        amount determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of the allowed 
                                expenditures for physicians' services 
                                for the prior year (as determined under 
                                subparagraph (C)) and the amount of the 
                                actual expenditures for such services 
                                for that year;
                                    ``(II) dividing that difference by 
                                the amount of the actual expenditures 
                                for such services for that year; and
                                    ``(III) multiplying that quotient 
                                by 0.75.
                            ``(ii) Cumulative adjustment component.--An 
                        amount determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of the allowed 
                                expenditures for physicians' services 
                                (as determined under subparagraph (C)) 
                                from April 1, 1996, through the end of 
                                the prior year and the amount of the 
                                actual expenditures for such services 
                                during that period;
                                    ``(II) dividing that difference by 
                                actual expenditures for such services 
                                for the prior year as increased by the 
                                sustainable growth rate under 
                                subsection (f) for the year for which 
                                the update adjustment factor is to be 
                                determined; and
                                    ``(III) multiplying that quotient 
                                by 0.33.
                    ``(C) Determination of allowed expenditures.--For 
                purposes of this paragraph:
                            ``(i) Period up to april 1, 1999.--The 
                        allowed expenditures for physicians' services 
                        for a period before April 1, 1999, shall be the 
                        amount of the allowed expenditures for such 
                        period as determined under paragraph (3)(C).
                            ``(ii) Transition to calendar year allowed 
                        expenditures.--Subject to subparagraph (E), the 
                        allowed expenditures for--
                                    ``(I) the 9-month period beginning 
                                April 1, 1999, shall be the Secretary's 
                                estimate of the amount of the allowed 
                                expenditures that would be permitted 
                                under paragraph (3)(C) for such period; 
                                and
                                    ``(II) the year of 1999, shall be 
                                the Secretary's estimate of the amount 
                                of the allowed expenditures that would 
                                be permitted under paragraph (3)(C) for 
                                such year.
                            ``(iii) Years beginning with 2000.--The 
                        allowed expenditures for a year (beginning with 
                        2000) is equal to the allowed expenditures for 
                        physicians' services for the previous year, 
                        increased by the sustainable growth rate under 
                        subsection (f) for the year involved.
                    ``(D) Restriction on update adjustment factor.--The 
                update adjustment factor determined under subparagraph 
                (B) for a year may not be less than -0.07 or greater 
                than 0.03.
                    ``(E) Recalculation of allowed expenditures for 
                updates beginning with 2001.--For purposes of 
                determining the update adjustment factor for a year 
                beginning with 2001, the Secretary shall recompute the 
                allowed expenditures for previous periods beginning on 
                or after April 1, 1999, consistent with subsection 
                (f)(3).
                    ``(F) Transitional adjustment designed to provide 
                for budget neutrality.--Under this subparagraph the 
                Secretary shall provide for an adjustment to the update 
                under subparagraph (A)--
                            ``(i) for each of 2001, 2002, 2003, and 
                        2004, of -0.2 percent; and
                            ``(ii) for 2005 of +0.8 percent.''.
            (2) Publication change.--
                    (A) In general.--Section 1848(d)(1)(E) (42 U.S.C. 
                1395w-4(d)(1)(E)) is amended to read as follows:
                    ``(E) Publication and dissemination of 
                information.--The Secretary shall--
                            ``(i) cause to have published in the 
                        Federal Register not later than November 1 of 
                        each year (beginning with 2000) the conversion 
                        factor which will apply to physicians' services 
                        for the succeeding year, the update determined 
                        under paragraph (4) for such succeeding year, 
                        and the allowed expenditures under such 
                        paragraph for such succeeding year; and
                            ``(ii) make available to the Medicare 
                        Payment Advisory Commission and the public by 
                        March 1 of each year (beginning with 2000) an 
                        estimate of the conversion factor which will 
                        apply to physicians' services for the 
                        succeeding year and data used in making such 
                        estimate.''.
                    (B) Medpac review of conversion factor estimates.--
                Section 1805(b)(1)(D) (42 U.S.C. 1395b-6(b)(1)(D)) is 
                amended by inserting ``and including a review of the 
                estimate of the conversion factor submitted under 
                section 1848(d)(1)(E)(ii)'' before the period at the 
                end.
                    (C) 1-time publication of information on 
                transition.--The Secretary of Health and Human Services 
                shall cause to have published in the Federal Register, 
                not later than 90 days after the date of the enactment 
                of this section, the Secretary's determination, based 
                upon the best available data, of--
                            (i) the allowed expenditures under 
                        subclauses (I) and (II) of section 
                        1848(d)(4)(C)(ii) of the Social Security Act, 
                        as added by subsection (a)(1)(B), for the 9-
month period beginning on April 1, 1999, and for 1999;
                            (ii) the estimated actual expenditures 
                        described in section 1848(d) of such Act for 
                        1999; and
                            (iii) the sustainable growth rate under 
                        section 1848(f) of such Act (42 U.S.C. 1395w-
                        4(f)) for 2000.
            (3) Conforming amendments.--
                    (A) Section 1848 (42 U.S.C. 1395w-4) is amended--
                            (i) in subsection (d)(1)(A), by inserting 
                        ``(for years before 2001) and, for years 
                        beginning with 2001, multiplied by the update 
                        (established under paragraph (4)) for the year 
                        involved'' after ``for the year involved''; and
                            (ii) in subsection (f)(2)(D), by inserting 
                        ``or (d)(4)(B), as the case may be'' after 
                        ``(d)(3)(B)''.
                    (B) Section 1833(l)(4)(A)(i)(VII) (42 U.S.C. 
                1395l(l)(4)(A)(i)(VII)) is amended by striking 
                ``1848(d)(3)'' and inserting ``1848(d)''.
    (b) Sustainable Growth Rates.--Section 1848(f) (42 U.S.C. 1395w-
4(f)) is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) Publication.--The Secretary shall cause to have 
        published in the Federal Register not later than--
                    ``(A) November 1, 2000, the sustainable growth rate 
                for 2000 and 2001; and
                    ``(B) November 1 of each succeeding year the 
                sustainable growth rate for such succeeding year and 
                each of the preceding 2 years.'';
            (2) in paragraph (2)--
                    (A) in the matter before subparagraph (A), by 
                striking ``fiscal year 1998)'' and inserting ``fiscal 
                year 1998 and ending with fiscal year 2000) and a year 
                beginning with 2000''; and
                    (B) in subparagraphs (A) through (D), by striking 
                ``fiscal year'' and inserting ``applicable period'' 
                each place it appears;
            (3) in paragraph (3), by adding at the end the following:
                    ``(C) Applicable period.--The term `applicable 
                period' means--
                            ``(i) a fiscal year, in the case of fiscal 
                        year 1998, fiscal year 1999, and fiscal year 
                        2000; or
                            ``(ii) a calendar year with respect to a 
                        year beginning with 2000;
                as the case may be.'';
            (4) by redesignating paragraph (3) as paragraph (4); and
            (5) by inserting after paragraph (2) the following:
            ``(3) Data to be used.--For purposes of determining the 
        update adjustment factor under subsection (d)(4)(B) for a year 
        beginning with 2001, the sustainable growth rates taken into 
        consideration in the determination under paragraph (2) shall be 
        determined as follows:
                    ``(A) For 2001.--For purposes of such calculations 
                for 2001, the sustainable growth rates for fiscal year 
                2000 and the years 2000 and 2001 shall be determined on 
                the basis of the best data available to the Secretary 
                as of September 1, 2000.
                    ``(B) For 2002.--For purposes of such calculations 
                for 2002, the sustainable growth rates for fiscal year 
                2000 and for years 2000, 2001, and 2002 shall be 
                determined on the basis of the best data available to 
                the Secretary as of September 1, 2001.
                    ``(C) For 2003 and succeeding years.--For purposes 
                of such calculations for a year after 2002--
                            ``(i) the sustainable growth rates for that 
                        year and the preceding 2 years shall be 
                        determined on the basis of the best data 
                        available to the Secretary as of September 1 of 
                        the year preceding the year for which the 
                        calculation is made; and
                            ``(ii) the sustainable growth rate for any 
                        year before a year described in clause (i) 
                        shall be the rate as most recently determined 
                        for that year under this subsection.
        Nothing in this paragraph shall be construed as affecting the 
        sustainable growth rates established for fiscal year 1998 or 
        fiscal year 1999.''.
    (c) Study and Report Regarding the Utilization of Physicians' 
Services by Medicare Beneficiaries.--
            (1) Study by secretary.--The Secretary, acting through the 
        Administrator of the Agency for Health Care Policy and 
        Research, shall conduct a study of the issues specified in 
        paragraph (2).
            (2) Issues to be studied.--The issues specified in this 
        paragraph are the following:
                    (A) The various methods for accurately estimating 
                the economic impact on expenditures for physicians' 
                services under the original medicare fee-for-service 
                program under parts A and B of title XVIII of the 
                Social Security Act (42 U.S.C. 1395 et seq.) resulting 
                from--
                            (i) improvements in medical capabilities;
                            (ii) advancements in scientific technology;
                            (iii) demographic changes in the types of 
                        medicare beneficiaries that receive benefits 
                        under such program; and
                            (iv) geographic changes in locations where 
                        medicare beneficiaries receive benefits under 
                        such program.
                    (B) The rate of usage of physicians' services under 
                the original medicare fee-for-service program under 
                parts A and B of title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.) among beneficiaries between 
                ages 65 and 74, 75 and 84, 85 and over, and disabled 
                beneficiaries under age 65.
                    (C) Other factors that may be reliable predictors 
                of beneficiary utilization of physicians' services 
under the original medicare fee-for-service program under parts A and B 
of title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.).
            (3) Report to medpac.--Not later than 3 years after the 
        date of enactment of this Act, the Secretary of Health and 
        Human Services shall submit a report to MedPAC setting forth 
        the results of the study conducted pursuant to paragraph (1), 
        together with any recommendations the Secretary determines are 
        appropriate.
            (4) Medpac report to congress.--Not later than 180 days 
        after receipt of the report submitted to MedPAC under paragraph 
        (1), MedPAC shall submit a copy of such report to the 
        committees of jurisdiction in Congress, together with an 
        analysis and evaluation of such report and any recommendations 
        that it determines are appropriate.
    (d) Effective Date.--The amendments made by this section shall be 
effective in determining the conversion factor under section 1848(d) of 
the Social Security Act (42 U.S.C. 1395w-4(d)) for years beginning with 
2001 and shall not apply to or affect any update (or any update 
adjustment factor) for any year before 2001.

            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.

    (a) Contingency Reduction.--Section 4603(e) of the Balanced Budget 
Act of 1997 (42 U.S.C. 1395fff note), as amended by section 5101(c)(3) 
of the Tax and Trade Relief Extension Act of 1998 (contained in 
division J of Public Law 105-277), is repealed.
    (b) Delay in Reduction Under the PPS.--Section 1895(b)(3)(A)(i) (42 
U.S.C. 1395fff(b)(3)(A)(i)), as amended by section 5101 of the Tax and 
Trade Relief Extension Act of 1998 (contained in division J of Public 
Law 105-277), is amended to read as follows:
                            ``(i) In general.--Under such system the 
                        Secretary shall provide for computation of a 
                        standard prospective payment amount (or 
                        amounts) as follows:
                                    ``(I) Such amount (or amounts) 
                                shall initially be based on the most 
                                current audited cost report data 
                                available to the Secretary and shall be 
                                computed in a manner so that the total 
                                amounts payable under the system for 
                                fiscal year 2001 shall be equal to the 
                                total amount that would have been made 
                                if the system had not been in effect, 
                                but if the reduction in limits 
                                described in clause (ii) (applied by 
                                substituting `5' for `15') had been in 
                                effect.
                                    ``(II) For fiscal year 2002, such 
                                amount (or amounts) shall be equal to 
                                the amount (or amounts) that would have 
                                been determined under subclause (I) if 
                                the reduction in limits described in 
                                clause (ii) (applied by substituting 
                                `10' for `15') had been in effect for 
                                fiscal year 2001, and updated under 
                                subparagraph (B) for fiscal year 2002.
                                    ``(III) For fiscal year 2003, such 
                                amount (or amounts) shall be equal to 
                                the amount (or amounts) that would have 
                                been determined under subclause (I) if 
                                the reduction in limits described in 
                                clause (ii) had been in effect for 
                                fiscal year 2001, and updated under 
                                subparagraph (B) for fiscal years 2002 
                                and 2003.
                        Each such amount shall be standardized in a 
                        manner that eliminates the effect of variations 
                        in relative case mix and wage levels among 
                        different home health agencies in a budget 
                        neutral manner consistent with the case mix and 
                        wage level adjustments provided under paragraph 
                        (4)(A). Under the system, the Secretary may 
                        recognize regional differences or differences 
                        based upon whether or not the services or 
                        agency are in an urbanized area.''.

SEC. 302. INCREASE IN PER VISIT LIMIT.

    (a) In General.--Section 1861(v)(1)(L)(i) (42 U.S.C. 
1395x(v)(1)(L)(i)) is amended--
            (1) in subclause (IV), by striking ``or'' at the end;
            (2) in subclause (V)--
                    (A) by inserting ``and before October 1, 1999,'' 
                after ``October 1, 1998,''; and
                    (B) by striking the period at the end and inserting 
                ``, or''; and
            (3) by adding at the end the following:
            ``(VI) October 1, 1999, 112 percent of such median.''.
    (b) Increase Not Included in PPS Base.--The second sentence of 
section 1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)), as amended by 
section 5101(c)(1)(B) of the Tax and Trade Relief Extension Act of 1998 
(contained in division J of Public Law 105-277) and section 301, is 
amended--
            (1) in subclause (I), by inserting ``and if the reference 
        in section 1861(v)(1)(L)(i)(VI) to 112 percent were a reference 
        to 106 percent'' before the period; and
            (2) in each of subclauses (II) and (III), by inserting 
        ``and if the reference in section 1861(v)(1)(L)(i)(VI) to 112 
        percent were a reference to 106 percent'' after ``had been in 
        effect for fiscal year 2001''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services provided on or after October 1, 1999.

SEC. 303. INCREASE IN PER BENEFICIARY LIMITS.

    (a) Increase in Per Beneficiary Limits.--Section 1861(v)(1)(L) of 
the Social Security Act (42 U.S.C. 1395x(v)(1)(L)), as amended by 
section 5101 of the Tax and Trade Relief Extension Act of 1998 
(contained in Division J of Public Law 105-277), is amended--
            (1) by redesignating clause (ix) as clause (x); and
            (2) by inserting after clause (viii) the following:
    ``(ix) Notwithstanding the applicable per beneficiary limit under 
clause (v), (vi), or (viii), for services furnished by home health 
agencies for cost reporting periods beginning during fiscal year 2000, 
the per beneficiary limit applicable under such clause is the per 
beneficiary limit otherwise applicable under such clause increased by 1 
percent. Such increase shall not affect the determination or 
application of the per visit limit under clause (i).''.
    (b) Increase Not Included in PPS Base.--The second sentence of 
section 1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)), as amended by 
section 5101(c)(1)(B) of the Tax and Trade Relief Extension Act of 1998 
(contained in division J of Public Law 105-277) and section 302, is 
amended--
            (1) in subclause (I), by striking ``and if the reference in 
        section 1861(v)(1)(L)(i)(VI) to 112 percent were a reference to 
        106 percent'' and inserting ``, if the reference in section 
        1861(v)(1)(L)(i)(VI) to 112 percent were a reference to 106 
        percent, and if section 1861(v)(1)(L)(ix) had not been 
        enacted''; and
            (2) in each of subclauses (II) and (III), by striking ``and 
        if the reference in section 1861(v)(1)(L)(i)(VI) to 112 percent 
        were a reference to 106 percent'' and inserting ``, if the 
        reference in section 1861(v)(1)(L)(i)(VI) to 112 percent were a 
        reference to 106 percent, and if section 1861(v)(1)(L)(ix) had 
        not been enacted''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished by home health agencies for cost reporting 
periods beginning on or after October 1, 1999.

SEC. 304. ELIMINATION OF 15-MINUTE BILLING REQUIREMENT.

    (a) In General.--Section 1895(c) (42 U.S.C. 1395fff(c)) is amended, 
to read as follows:
    ``(c) Requirements for Payment Information.--With respect to home 
health services furnished on or after October 1, 1998, no claim for 
such a service may be paid under this title unless the claim has the 
unique identifier (provided under section 1842(r)) for the physician 
who prescribed the services or made the certification described in 
section 1814(a)(2) or 1835(a)(2)(A).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to claims submitted on or after the date of enactment of this Act.

SEC. 305. REFINEMENT OF HOME HEALTH AGENCY CONSOLIDATED BILLING.

    (a) In General.--Section 1842(b)(6)(F) (42 U.S.C. 1395u(b)(6)(F)) 
is amended by inserting ``(including medical supplies described in 
section 1861(m)(5), but excluding durable medical equipment to the 
extent provided for in such section)'' after ``home health services''.
    (b) Conforming Amendment.--Section 1862(a)(21) (42 U.S.C. 
1395y(a)(21)) is amended by inserting ``(including medical supplies 
described in section 1861(m)(5), but excluding durable medical 
equipment to the extent provided for in such section)'' after ``home 
health services''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments for services provided on or after the date of 
enactment of this Act.

SEC. 306. STUDY AND REPORT TO CONGRESS REGARDING THE EXEMPTION OF RURAL 
              AGENCIES AND POPULATIONS FROM INCLUSION IN THE HOME 
              HEALTH PROSPECTIVE PAYMENT SYSTEM.

    (a) Study.--The Medicare Payment Advisory Commission (referred to 
in this section as ``MedPAC'') shall conduct a study to determine the 
feasibility and advisability of exempting home health services provided 
by a home health agency (or by others under arrangements with such 
agency) located in a rural area, or to an individual residing in a 
rural area, from payment under the prospective payment system for such 
services established by the Secretary of Health and Human Services in 
accordance with section 1895 of the Social Security Act (42 U.S.C. 
1395fff).
    (b) Report.--Not later than 2 years after the date of enactment of 
this Act, MedPAC shall submit a report to Congress on the study 
conducted under subsection (a), together with any recommendations for 
legislation that MedPAC determines to be appropriate as a result of 
such study.

SEC. 307. EXTENSION OF PERIODIC INTERIM PAYMENTS FOR HOME HEALTH 
              AGENCIES.

    (a) In General.--Section 1815(e)(2)(D) of the Social Security Act 
(42 U.S.C. 1395g(e)(2)(D)) is amended by inserting ``(until the end of 
the 12-month period following the date that the prospective payment 
system for such services is implemented pursuant to section 1895)'' 
before the semicolon.
    (b) Conforming Amendment.--Section 4603(b) of the Balanced Budget 
Act of 1997 (Public Law 105-33; 111 Stat. 470) is repealed.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

                 Subtitle B--Graduate Medical Education

SEC. 321. REVISION OF MULTIYEAR REDUCTION OF INDIRECT GRADUATE MEDICAL 
              EDUCATION PAYMENTS.

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended by striking subclauses (III), (IV), and 
(V) and inserting the following:
                            ``(III) during each of fiscal years 1999 
                        through 2003, `c' is equal to 1.6; and
                            ``(IV) on or after October 1, 2003, `c' is 
                        equal to 1.35.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 1999.

SEC. 322. GME PAYMENTS FOR CERTAIN INTERNS AND RESIDENTS.

    (a) Indirect and Direct Medical Education.--Each limitation 
regarding the number of residents or interns for which payment may be 
made under section 1886 of the Social Security Act (42 U.S.C. 1395ww) 
is increased by the number of applicable residents (as defined in 
subsection (b)).
    (b) Applicable Resident Defined.--For purposes of this section, the 
term ``applicable resident'' means a resident or intern that--
            (1) participated in graduate medical education at a 
        facility of the Department of Veterans Affairs;
            (2) was subsequently transferred on or after January 1, 
        1997, and before July 31, 1998, to a hospital and the hospital 
        was not a Department of Veterans Affairs facility; and
            (3) was transferred because the approved medical residency 
        program in which the resident or intern participated would lose 
        accreditation by the Accreditation Council on Graduate Medical 
        Education if such program continued to train residents at the 
        Department of Veterans Affairs facility.
    (c) Effective Date.--
            (1) In general.--This section shall take effect as if 
        included in the enactment of the Balanced Budget Act of 1997 
        (Public Law 105-33; 111 Stat. 251).
            (2) Retroactive payments.--If the Secretary of Health and 
        Human Services determines that a hospital operating an approved 
        medical residency program is owed payments as a result of 
        enactment of this section, the Secretary shall make such 
        payments not later than 60 days after the date of enactment of 
        this section.

                      TITLE IV--RURAL INITIATIVES

SEC. 401. SOLE COMMUNITY HOSPITALS AND MEDICARE DEPENDENT HOSPITALS.

    (a) In General.--Section 1886(b)(3)(B)(iv) (42 U.S.C. 
1395ww(b)(3)(B)(iv)) is amended--
            (1) in subclause (III), by striking ``and'' at the end;
            (2) in subclause (IV)--
                    (A) by striking ``fiscal year 1996 and each 
                subsequent fiscal year'' and inserting ``fiscal years 
                1996 through 1999''; and
                    (B) by striking the period at the end and inserting 
                ``, and''; and
            (3) by adding at the end the following:
            ``(V) for fiscal year 2000 and each subsequent fiscal year, 
        the market basket percentage increase.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1999.

SEC. 402. REVISION OF CRITERIA FOR DESIGNATION AS A CRITICAL ACCESS 
              HOSPITAL.

    (a) Criteria for Designation.--Section 1820(c)(2)(B)(iii) (42 
U.S.C. 1395i-4(c)(2)(B)(iii)) is amended by striking ``to exceed 96 
hours'' and all that follows before the semicolon and inserting ``to 
exceed, on average, 96 hours per patient''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 1999.

SEC. 403. MEDICARE WAIVERS FOR HOSPITALS IN RURAL AREAS.

    Notwithstanding section 1886(d)(2)(D) of the Social Security Act 
(42 U.S.C. 1395ww(d)(2)(D)), by not later than 180 days after the date 
of enactment of this Act, the Secretary of Health and Human Services 
shall establish a waiver process in which hospitals under the medicare 
program under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) that are determined by the Office of Management and Budget to be 
located in an urban or large urban area for purposes of reimbursement 
under the medicare program may apply to the Secretary to be considered 
to be located in a rural area for such purposes if such hospital is 
located--
            (1) in a rural area within a metropolitan county, as 
        defined by the most recent update of the Goldsmith 
        Modification; or
            (2) in a rural area as determined by using a census tract 
        definition of a rural area adopted by the Office of Rural 
        Health Policy in awarding grants.

SEC. 404. 2-YEAR EXTENSION OF MEDICARE DEPENDENT HOSPITAL (MDH) 
              PROGRAM.

    (a) Extension of Payment Methodology.--Section 1886(d)(5)(G) (42 
U.S.C. 1395ww(d)(5)(G)) is amended--
            (1) in clause (i), by striking ``and before October 1, 
        2001,'' and inserting ``and before October 1, 2003''; and
            (2) in clause (ii)(II), by striking ``and before October 1, 
        2001,'' and inserting ``and before October 1, 2003''.
    (b) Conforming Amendments.--
            (1) Extension of target amount.--Section 1886(b)(3)(D) (42 
        U.S.C. 1395ww(b)(3)(D)) is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``and before October 1, 2001,'' and inserting ``and 
                before October 1, 2003''; and
                    (B) in clause (iv), by striking ``during fiscal 
                year 1998 through fiscal year 2000'' and inserting 
                ``during fiscal year 1998 through fiscal year 2002''.
            (2) Permitting hospitals to decline reclassification.--
        Section 13501(e)(2) of Omnibus Budget Reconciliation Act of 
        1993 (42 U.S.C. 1395ww note) is amended by striking ``or fiscal 
        year 2000'' and inserting ``or fiscal years 2000 through 
        2002''.

SEC. 405. ASSISTING RURAL GRADUATE MEDICAL EDUCATION RESIDENCY 
              PROGRAMS.

    (a) Indirect Graduate Medical Education Adjustment.--
            (1) In general.--Section 1886(d)(5)(B)(v) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(5)(B)(v)) (as added by 
        section 4621(b) of the Balanced Budget Act of 1997) is 
        amended--
                    (A) by striking ``(v) In determining'' and 
                inserting ``(v)(I) Subject to subclause (II), in 
                determining'';
                    (B) by striking ``in the hospital with respect to 
                the hospital's most recent cost reporting period ending 
                on or before December 31, 1996''; and inserting ``who 
                were appointed by the hospital's approved medical 
residency training programs for the hospital's most recent cost 
reporting period ending on or before December 31, 1996''; and
                    (C) by adding at the end the following:
    ``(II) Beginning on or after January 1, 1997, in the case of a 
hospital that sponsors only 1 allopathic or osteopathic residency 
program, the limit determined for such hospital under subclause (I) 
may, at the hospital's discretion, be increased by 1 for each calendar 
year but shall not exceed a total of 3 more than the limit determined 
for the hospital under subclause (I).''.
            (2) Technical amendments.--Section 1886(d)(5)(B) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by 
        realigning the left margin of clauses (ii), (v), and (vi) so as 
        to align with the left margin of clause (i).
    (b) Direct Graduate Medical Education Adjustment.--
            (1) Limitation on number of residents.--Section 
        1886(h)(4)(F) of the Social Security Act (42 U.S.C. 
        1395ww(h)(4)(F)) (as added by section 4623 of the Balanced 
        Budget Act of 1997) is amended by inserting ``who were 
        appointed by the hospital's approved medical residency training 
        programs'' after ``may not exceed the number of such full-time 
        equivalent residents''.
            (2) Funding for new programs.--The first sentence of 
        section 1886(h)(4)(H)(i) of the Social Security Act (42 U.S.C. 
        1395ww(h)(4)(H)(i)) (as added by section 4623 of the Balanced 
        Budget Act of 1997) is amended by inserting ``and before 
        September 30, 1999'' after ``January 1, 1995''.
            (3) Funding for programs meeting rural needs.--The second 
        sentence of section 1886(h)(4)(H)(i) of the Social Security Act 
        (42 U.S.C. 1395ww(h)(4)(H)(i)) (as added by section 4623 of the 
        Balanced Budget Act of 1997) is amended by striking the period 
        at the end and inserting ``, including facilities that are not 
        located in an underserved rural area but have established 
        separately accredited rural training tracks.''.
    (c) Effective Date.--The amendments made by this Act shall take 
effect as if included in the enactment of the Balanced Budget Act of 
1997.

    TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM)

      Subtitle A--Provisions To Accommodate and Protect Medicare 
                             Beneficiaries

SEC. 501. PERMITTING ENROLLMENT IN ALTERNATIVE MEDICARE+CHOICE PLANS 
              AND MEDIGAP COVERAGE IN CASE OF INVOLUNTARY TERMINATION 
              OF MEDICARE+CHOICE ENROLLMENT.

    (a) Medicare+Choice Plans.--Section 1851(e)(4) (42 U.S.C. 1395w-
21(e)(4)) is amended by striking subparagraph (A) and inserting the 
following:
                    ``(A)(i) the certification of the organization or 
                plan under this part has been terminated, or the 
                organization or plan has notified the individual of an 
                impending termination of such certification; or
                    ``(ii) the organization has terminated or otherwise 
                discontinued providing the plan in the area in which 
                the individual resides, or has notified the individual 
                of an impending termination or discontinuation of such 
                plan;''.
    (b) Medigap Plans.--Section 1882(s)(3)(A) (42 U.S.C. 
1395ss(s)(3)(A)) is amended, in the matter following clause (iii)--
            (1) by inserting ``(or, if elected by the individual, the 
        date of notification of the individual by the plan or 
        organization of the impending termination or discontinuance of 
        the plan in the area in which the individual resides)'' after 
        ``the date of the termination of enrollment described in such 
        subparagraph''; and
            (2) by inserting ``(or the date of such notification)'' 
        after ``the date of termination or disenrollment''.
    (c) Effective Date.--The amendments made by this section shall 
apply to notices of impending terminations or discontinuances made by 
group health plans and Medicare+Choice organizations on or after the 
date of enactment of this Act.

SEC. 502. CHANGE IN EFFECTIVE DATE OF ELECTIONS AND CHANGES OF 
              ELECTIONS OF MEDICARE+CHOICE PLANS.

    (a) Open Enrollment.--Section 1851(f)(2) (42 U.S.C. 1395w-21(f)(2)) 
is amended--
            (1) by inserting ``or change'' before ``is made''; and
            (2) by inserting ``, except that if such election or change 
        is made after the 10th day of any calendar month, then the 
        election or change shall not take effect until the first day of 
        the second calendar month following the date on which the 
        election or change is made'' before the period.
    (b) Effective Date.--The amendments made by this section shall 
apply to elections and changes of coverage made on or after the date of 
enactment of this Act.

SEC. 503. EXTENSION OF REASONABLE COST CONTRACTS.

    Section 1876(h)(5)(B) (42 U.S.C. 1395mm(h)(5)(B)) is amended to 
read as follows:
    ``(B) The Secretary may not extend or renew a reasonable cost 
reimbursement contract under this subsection for any period beyond 
December 31, 2004, and an individual may not be enrolled in a plan 
offered by an organization pursuant to such a contract after December 
31, 2003, unless such individual was enrolled in such plan on such 
date.''.

SEC. 504. REVISION OF NOTICE BY HOSPITALS REGARDING COVERAGE OF 
              INPATIENT HOSPITAL SERVICES.

    (a) In General.--Section 1866(a)(1)(M) (42 U.S.C. 1395cc(a)(1)(M)) 
is amended--
            (1) in the matter preceding clause (i), by striking ``at or 
        about the time of the individual's admission as an inpatient to 
        the hospital'' and inserting ``at least 16 but not more than 24 
        hours before the hospital proposes to discharge the individual 
        from the hospital'';
            (2) in clause (iii)--
                    (i) by inserting ``to the appropriate peer review 
                organization'' after ``hospital services''; and
                    (ii) by striking ``and'' at the end;
            (3) by redesignating clause (iv) as clause (v); and
            (4) by inserting the following after clause (iii):
            ``(iv) in the case of an individual enrolled in a 
        Medicare+Choice plan offered by a Medicare+Choice organization 
        under part C, such information, as determined by the Secretary, 
        regarding the individual's appeal rights that is in addition to 
        the information described in clause (iii), and''.
    (b) Effective Date.--The amendments made by this section shall 
apply to admissions occurring on or after the date of enactment of this 
Act.

SEC. 505. EXTENDED DISENROLLMENT WINDOW FOR CERTAIN INVOLUNTARILY 
              TERMINATED ENROLLEES.

    (a) In General.--Section 1882(s)(3)(B) (42 U.S.C. 1395ss(s)(3)(B)) 
is amended by adding at the end the following flush sentence:
``If any individual is enrolled with any Medicare+Choice organization 
under clause (v), or in any Medicare+Choice plan under clause (vi), and 
the Medicare+Choice plan in which the individual is enrolled is 
terminated or such individual is disenrolled from such plan under the 
circumstances described in section 1851(e)(4)(A), such individual may 
reenroll for a 12-month period (beginning on the date of such 
enrollment) with a Medicare+Choice organization in a Medicare+Choice 
plan, and such reenrollment shall be considered an enrollment under 
clause (v) or (vi) (as applicable).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to terminations or disenrollments occurring on or after the date 
of enactment of this Act.

      Subtitle B--Provisions To Facilitate Implementation of the 
                        Medicare+Choice Program

SEC. 521. MODERATION OF MEDICARE+CHOICE RISK ADJUSTMENT IMPLEMENTATION.

    Section 1853(a)(3)(C) (42 U.S.C. 1395w-23(a)(3)(C)) is amended--
            (1) by redesignating the first sentence as clause (i) with 
        the heading ``In general.--'' and appropriate indentation; and
            (2) by adding at the end the following:
                            ``(ii) Phase-in.--Such risk adjustment 
                        methodology shall be implemented in a phased-in 
                        manner so that the new methodology applies only 
                        to--
                                    ``(I) 10 percent of the payment 
                                amount in 2000 and 2001 (in which the 
                                risk adjustment methodology should 
                                reflect only data from inpatient 
                                settings);
                                    ``(II) 20 percent of such amount in 
                                2002 (in which such methodology should 
                                reflect only data from inpatient 
                                settings);
                                    ``(III) 30 percent of such amount 
                                in 2003 (in which such methodology 
                                should reflect only data from inpatient 
                                settings);
                                    ``(IV) 55 percent of such amount in 
                                2004 (in which such methodology should 
                                reflect a blend of 67 percent of only 
                                data from inpatient settings and 33 
                                percent of data from inpatient and 
                                other settings);
                                    ``(V) 80 percent of such amount in 
                                2005 (in which such methodology should 
                                reflect a blend of 33 percent of only 
                                data from inpatient settings and 67 
                                percent of data from inpatient and 
                                other settings); and
                                    ``(VI) 100 percent of such amount 
                                in any subsequent year (in which such 
                                methodology should reflect data from 
                                inpatient and other settings).''.

SEC. 522. DELAY IN DEADLINE FOR SUBMISSION OF ADJUSTED COMMUNITY RATES 
              UNDER MEDICARE+CHOICE PROGRAM AND RELATED MODIFICATIONS.

    (a) Delay in Deadline for Submission of Adjusted Community Rates.--
Section 1854(a)(1) (42 U.S.C. 1395w-24(a)(1)) is amended by striking 
``May 1'' and inserting ``July 1'' in the matter preceding subparagraph 
(A).
    (b) Adjustment in Information Disclosure Provisions To Conform To 
Delay in Deadline for ACR Submission.--Section 1851(d)(2)(A)(ii) (42 
U.S.C. 1395w-21(d)(2)(A)(ii)) is amended--
            (1) by inserting after ``information described in paragraph 
        (4) concerning such plans'' the following: ``, to the extent 
        such information is available at the time of preparation of the 
        material for mailing''; and
            (2) by adding at the end the following: ``If any item 
        described in paragraph (4) is not available at the time of 
        preparation of the material for mailing, the Secretary shall 
        provide general information concerning such item.''.
    (c) Medicare+Choice Organization Required To Provide Termination 
Notice by Date for ACR Submission.--Section 1857(c)(1) (42 U.S.C. 
1395w-27(c)(1)) is amended--
            (1) by striking ``Each contract'' and inserting the 
        following:
                    ``(A) In general.--Each contract''; and
            (2) by adding at the end the following:
                    ``(B) Termination notice.--If a Medicare+Choice 
                organization intends to terminate a contract under this 
                section at the end of the current term of the contract, 
                the organization shall notify the Secretary of such 
                intent by not later than July 1 of such term.''.
    (d) Effective Dates.--
            (1) ACR and information disclosure.--The amendments made by 
        subsections (a) and (b) shall apply to submissions required to 
        be made on or after the date of enactment of this Act.
            (2) Termination notice.--The amendment made by subsection 
        (c) shall apply to contract years beginning on or after the 
        date of enactment of this Act.

SEC. 523. USER FEE FOR MEDICARE+CHOICE ORGANIZATIONS BASED ON NUMBER OF 
              ENROLLED BENEFICIARIES.

    (a) Determination.--Section 1857(e)(2) (42 U.S.C. 1395w-27(e)(2)) 
is amended to read as follows:
            ``(2) Cost-sharing in enrollment-related costs.--
                    ``(A) In general.--A Medicare+Choice organization 
                shall pay the fee established by the Secretary under 
                subparagraph (B)(i).
                    ``(B) Fees from plans.--
                            ``(i) In general.--The Secretary is 
                        authorized to charge a fee to each 
                        Medicare+Choice organization with a contract 
                        under this part that is equal to the 
                        organization's pro rata share (as determined by 
                        the Secretary) of the aggregate amount of fees 
                        which the Secretary is directed to collect in a 
                        fiscal year (as determined under clause (ii)).
                            ``(ii) Aggregate amount of fees to be 
                        collected.--For purposes of clause (i), the 
                        aggregate amount of fees which the Secretary is 
                        directed to collect in a fiscal year is an 
                        amount equal to the applicable percentage of 
                        the aggregate expenses incurred by the 
                        Secretary in carrying out the sections 
                        described in clause (iii)(I) in such year. For 
                        purposes of the preceding sentence, the 
                        applicable percentage in a fiscal year is equal 
                        to the ratio (expressed as a percentage) of--
                                    ``(I) the total number of 
                                individuals enrolled in Medicare+Choice 
                                plans in such year; to
                                    ``(II) the total number of 
                                individuals enrolled in part A or B in 
                                such year.
                            ``(iii) Fees collected.--For any fiscal 
                        year, the fees authorized to be collected under 
                        this subparagraph shall be available to the 
                        Secretary--
                                    ``(I) only for the purpose of 
                                carrying out section 1851 (relating to 
                                enrollment and dissemination of 
                                information) and section 4360 of the 
                                Omnibus Budget Reconciliation Act of 
                                1990 (relating to the health insurance 
                                counseling and assistance program); and
                                    ``(II) without further 
                                appropriation.
                    ``(C) Amounts from part a trust fund.--
                            ``(i) In general.--Subject to clause (ii), 
                        amounts in the Federal Hospital Insurance Trust 
                        Fund shall be available to the Secretary in a 
                        fiscal year (beginning in fiscal year 2000) to 
                        cover the expenses associated with carrying out 
                        the sections described in subparagraph 
                        (B)(iii)(I).
                            ``(ii) Limitation.--The total amount 
                        available to the Secretary from the Federal 
                        Hospital Insurance Trust Fund under clause (i) 
                        in any fiscal year shall not exceed 
                        $100,000,000 minus an amount equal to the 
                        amount authorized to be collected under 
                        subparagraph (B)(i) for the fiscal year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to fees charged on or after October 1, 1999.

SEC. 524. CHANGE IN TIME PERIOD FOR EXCLUSION OF MEDICARE+CHOICE 
              ORGANIZATIONS THAT HAVE HAD A CONTRACT TERMINATED.

    (a) In General.--Section 1857(c)(4) (42 U.S.C. 1395w-27(c)(4)) is 
amended by striking ``5-year period'' and inserting ``2-year period''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contract years beginning on or after January 1, 1999.

SEC. 525. FLEXIBILITY TO TAILOR BENEFITS UNDER MEDICARE+CHOICE PLANS.

    (a) In General.--Section 1854 (42 U.S.C. 1395w-24) is amended--
            (1) in subsection (a)(1), by inserting ``(or segment of 
        such an area if permitted under subsection (h))'' after 
        ``service area'' in the matter preceding subparagraph (A); and
            (2) by adding at the end the following:
    ``(h) Permitting Use of Segments of Service Areas.--The Secretary 
shall permit a Medicare+Choice organization to elect to apply the 
provisions of this section uniformly to separate segments of a service 
area (rather than uniformly to an entire service area) as long as such 
segments are composed of 1 or more counties.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to contract years beginning on or after January 1, 2000.

SEC. 526. INAPPLICABILITY OF QISMC TO PREFERRED PROVIDER ORGANIZATIONS.

    (a) In General.--A Medicare+Choice plan that is operating as a 
preferred provider organization plan shall not be subject to the 
requirements of the Quality Improvement System for Managed Care (QISMC) 
established by the Secretary of Health and Human Services to carry out 
section 1852(e) of the Social Security Act (42 U.S.C. 1395w-22(e)) .
    (b) Application of Fee-for-Service Quality System to PPOs.--If the 
Secretary of Health and Human Services establishes a system that is--
            (1) applicable to providers under the original fee-for-
        service program under parts A and B of title XVIII of the 
        Social Security Act (42 U.S.C. 1395 et seq.); and
            (2) similar to the system described in subsection (a);
a Medicare+Choice plan that is operating as a preferred provider 
organization plan shall comply with the requirements of that system.
    (c) Effective Date.--This section shall apply to contract years 
beginning on or after January 1, 2000.

SEC. 527. TIMING OF MEDICARE+CHOICE HEALTH INFORMATION FAIRS.

    (a) In General.--Section 1851(e)(3) (42 U.S.C. 1395w-21(e)(3)) is 
amended in subparagraph (C), by striking ``In the month of November'' 
and inserting ``During the fall season''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of enactment of this Act.

SEC. 528. RULES REGARDING PHYSICIAN REFERRALS FOR MEDICARE+CHOICE 
              PROGRAM.

    (a) In General.--Section 1877(b)(3) (42 U.S.C. 1395nn(b)(3)) is 
amended--
            (1) in subparagraph (C), by striking ``or'' at the end;
            (2) in subparagraph (D), by striking the period at the end 
        and inserting ``, or''; and
            (3) by adding at the end the following:
                    ``(E) that is a Medicare+Choice organization under 
                part C that is offering a coordinated care plan 
                described in section 1851(a)(2)(A) to an individual 
                enrolled with the organization.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of enactment of this Act.

SEC. 529. CLARIFICATION REGARDING THE ABILITY OF A RELIGIOUS FRATERNAL 
              BENEFIT SOCIETY TO OPERATE A MEDICARE+CHOICE PRIVATE FEE-
              FOR-SERVICE PLAN.

    (a) In General.--Section 1859(e)(2) (42 U.S.C. 1395w-28(e)(2)) is 
amended by striking ``section 1851(a)(2)(A)'' and inserting 
``subparagraphs (A) and (C) of section 1851(a)(2)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contract years beginning on or after the date of enactment of this 
Act.

     Subtitle C--Provisions Regarding Special Medicare Populations

SEC. 541. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION 
              DEMONSTRATION PROJECT AUTHORITY.

    Section 4018(b) of the Omnibus Budget Reconciliation Act of 1987 is 
amended--
            (1) in paragraph (1), by striking ``December 31, 2000'' and 
        inserting ``the date that is 1 year after the date on which the 
        Secretary submits to Congress the report described in section 
        4014(c) of the Balanced Budget Act of 1997''; and
            (2) in paragraph (4), by striking ``March 31, 2001'' and 
        inserting ``the date that is 1 year after the date on which 
        Secretary submits to Congress the report described in section 
        4014(c) of the Balanced Budget Act of 1997''.

SEC. 542. INAPPLICABILITY OF OASIS TO PACE.

    Sections 1894(e)(3) and 1934(e)(3) (42 U.S.C. 1395eee(e)(3) and 
1396u-4(e)(3)) are each amended by adding at the end the following:
                    ``(C) Inapplicability of oasis to pace.--
                Notwithstanding the previous provisions of this 
                paragraph, with respect to any home health service 
                provided under a PACE program under this section, the 
                Secretary shall not apply the data collection and 
                reporting requirements under the Outcome and Assessment 
                Information Set (OASIS) to such program or to any 
                enrollee of such program, regardless of whether such 
                service is provided by a PACE program directly or 
                through a contract with a home health agency.''.

SEC. 543. MEDIGAP PROTECTIONS FOR PACE PROGRAM ENROLLEES.

    (a) In General.--Section 1882(s)(3)(B) (42 U.S.C. 1395ss(s)(3)(B)) 
is amended--
            (1) in clause (ii), by inserting ``or the individual is 
        enrolled with a PACE provider under section 1894, and there are 
        circumstances that would permit the discontinuance of the 
        individual's enrollment with such provider under circumstances 
        that are similar to the circumstances that would permit 
        discontinuance of the individual's election under the first 
        sentence of such section if such individual were enrolled in a 
        Medicare+Choice plan'' before the period;
            (2) in clause (v)(II), by inserting ``any PACE provider 
        under section 1894,'' after ``demonstration project 
        authority,''; and
            (3) in clause (vi)--
                    (A) by inserting ``or in a PACE program under 
                section 1894'' after ``part C''; and
                    (B) by striking ``such plan'' and inserting ``such 
                plan or such program''.
    (b) Extended Disenrollment Window for Involuntarily Terminated 
Enrollees.--Section 1882(s)(3)(B) (42 U.S.C. 1395ss(s)(3)(B)), as 
amended by section 505, is amended by adding at the end the following: 
``If any individual is enrolled with any PACE provider under clause 
(v), or in any PACE program under clause (vi), and the PACE program in 
which the individual is enrolled is terminated or such individual is 
disenrolled from such program under circumstances that are similar to 
the circumstances described in section 1851(e)(4)(A), such individual 
may reenroll for a 12-month period (beginning on the date of such 
enrollment) with a PACE provider in a PACE program and such 
reenrollment shall be considered to be an enrollment under clause (v) 
or (vi) (as applicable).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to terminations or discontinuances made on or after the date of 
enactment of this Act.

SEC. 544. CONTINUATION OF THE FRAIL ELDERLY DEMONSTRATION PROJECT.

    With respect to the demonstration project (known as the 
``EverCare'' project) to demonstrate the application of capitation 
payment rates for frail elderly medicare beneficiaries under a 
specialized program that utilizes a specialized interdisciplinary team, 
the Secretary of Health and Human Services shall--
            (1) extend the project for an additional 2-year period from 
        the termination date of the project (as in effect on the date 
        of enactment of this Act); and
            (2) not apply with respect to a frail elderly medicare 
        beneficiary who is receiving services under the demonstration 
        project--
                    (A) during 2000, the risk-adjustment described in 
                section 1853(c)(3) of the Social Security Act (42 
                U.S.C. 1395w-23(c)(3)); or
                    (B) during any year in which the demonstration 
                project is in effect, the rules under subparagraphs (B) 
                and (C) of section 1851(e)(2) of such Act (42 U.S.C. 
                1395w-21(e)(2)) applicable to open enrollment and 
                disenrollment opportunities under the Medicare+Choice 
                program.

Subtitle D--Studies and Reports To Assist in Making Future Improvements 
                        in the Medicare Program

SEC. 561. GAO STUDIES, AUDITS, AND REPORTS.

    (a) Study of Medigap Policies.--
            (1) In general.--The Comptroller General of the United 
        States (in this section referred to as the ``Comptroller 
        General'') shall conduct a study of the issues described in 
        paragraph (2) regarding medicare supplemental policies 
        described in section 1882(g)(1) of the Social Security Act (42 
        U.S.C. 1395ss(g)(1)).
            (2) Issues to be studied.--The issues described in this 
        paragraph are the following:
                    (A) The level of coverage provided by each type of 
                medicare supplemental policy.
                    (B) The current enrollment levels in each type of 
                medicare supplemental policy.
                    (C) The availability of each type of medicare 
                supplemental policy to medicare beneficiaries over age 
                65\1/2\.
                    (D) The number of States that offer each type of 
                medicare supplemental policy.
                    (E) The average out-of-pocket costs (including 
                premiums) per beneficiary under each type of medicare 
                supplemental policy.
            (3) Report.--Not later than July 31, 2001, the Comptroller 
        General shall submit a report to Congress on the results of the 
        study conducted under this subsection, together with any 
        recommendations for legislation that the Comptroller General 
        determines to be appropriate as a result of such study.
    (b) GAO Audit and Reports on the Provision of Medicare+Choice 
Health Information to Beneficiaries.--
            (1) In general.--Beginning in 2000, the Comptroller General 
        shall conduct an annual audit of the expenditures by the 
        Secretary of Health and Human Services during the preceding 
        year in providing information regarding the Medicare+Choice 
        program under part C of title XVIII of the Social Security Act 
        (42 U.S.C. 1395w-21 et seq.) to eligible medicare 
        beneficiaries.
            (3) Reports.--Not later than March 31 of 2001, 2004, 2007, 
        and 2010, the Comptroller General shall submit a report to 
        Congress on the results of the audit of the expenditures of the 
        preceding 3 years conducted pursuant to subsection (a), 
        together with an evaluation of the effectiveness of the means 
        used by the Secretary of Health and Human Services in providing 
        information regarding the Medicare+Choice program under part C 
        of title XVIII of the Social Security Act (42 U.S.C. 1395w-21 
        et seq.) to eligible medicare beneficiaries.

SEC. 562. MEDICARE PAYMENT ADVISORY COMMISSION STUDIES AND REPORTS.

    (a) Risk Adjustment.--
            (1) Study.--The Medicare Payment Advisory Commission 
        established under section 1805 of the Social Security Act (42 
        U.S.C. 1395b-6) (in this section referred to as ``MedPAC'') 
        shall conduct a study that evaluates the methodology used by 
        the Secretary of Health and Human Services in developing the 
        risk factors used in adjusting the Medicare+Choice capitation 
        rate paid to Medicare+Choice organizations under section 1853 
        of the Social Security Act (42 U.S.C. 1395w-23) and includes 
        the issues described in paragraph (2).
            (2) Issues to be studied.--The issues described in this 
        paragraph are the following:
                    (A) The ability of the average risk adjustment 
                factor applied to a Medicare+Choice plan to explain 
                variations in plans' average per capita medicare costs, 
                as reported by Medicare+Choice plans in the plans' 
                adjusted community rate filings.
                    (B) The year-to-year stability of the risk factors 
                applied to each Medicare+Choice plan and the potential 
                for substantial changes in payment for small 
                Medicare+Choice plans.
                    (C) For medicare beneficiaries newly enrolled in 
                Medicare+Choice plans in a given year, the 
                correspondence between the average risk factor 
                calculated from medicare fee-for-service data for those 
                individuals from the period prior to their enrollment 
                in a Medicare+Choice plan and the average risk factor 
                calculated for such individuals during their initial 
                year of enrollment in a Medicare+Choice plan.
                    (D) For medicare beneficiaries disenrolling from or 
                switching among Medicare+Choice plans in a given year, 
                the correspondence between the average risk factor 
                calculated from data pertaining to the period prior to 
                their disenrollment from a Medicare+Choice plan and the 
                average risk factor calculated from data pertaining to 
                the period after disenrollment.
                    (E) An evaluation of the exclusion of 
                ``discretionary'' hospitalizations from consideration 
                in the risk adjustment methodology.
                    (F) Suggestions for changes or improvements in the 
                risk adjustment methodology.
            (3) Report.--Not later than December 1, 2000, MedPAC shall 
        submit a report to Congress on the study conducted under 
        paragraph (1), together with any recommendations for 
        legislation that MedPAC determines to be appropriate as a 
        result of such study.
    (b) Development of Special Payment Rules Under the Medicare+Choice 
Program for Frail Elderly Enrolled in Specialized Programs.--
            (1) Study.--MedPAC shall conduct a study on the development 
        of a payment methodology under the Medicare+Choice program for 
        frail elderly Medicare+Choice beneficiaries enrolled in a 
        Medicare+Choice plan under a specialized program for the frail 
        elderly that--
                    (A) accounts for the prevalence, mix, and severity 
                of chronic conditions among such frail elderly 
                Medicare+Choice beneficiaries;
                    (B) includes medical diagnostic factors from all 
                provider settings (including hospital and nursing 
                facility settings); and
                    (C) includes functional indicators of health status 
                and such other factors as may be necessary to achieve 
                appropriate payments for plans serving such 
                beneficiaries.
    (2) Report.--Not later than 1 year after the date of enactment of 
this Act, MedPAC shall submit a report to Congress on the study 
conducted under paragraph (1), together with any recommendations for 
legislation that MedPAC determines to be appropriate as a result of 
such study.

SEC. 563. COMPUTATION AND REPORT ON MEDICARE ORIGINAL FEE-FOR-SERVICE 
              EXPENDITURES ON A COUNTY-BY-COUNTY BASIS.

    (a) Computation.--The Secretary of Health and Human Services shall 
compute the expenditures under the original medicare fee-for-service 
program under parts A and B of title XVIII of the Social Security Act 
(42 U.S.C. 1395 et seq.) on a county-by-county basis.
    (b) Report.--Not later than January 1, 2000, and annually 
thereafter, the Secretary of Health and Human Services shall submit a 
report to Congress on the computation performed under subsection (a), 
together with any recommendations for legislation that the Secretary 
determines to be appropriate as a result of such computation.

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.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study on the effects, costs, and feasibility of--
            (1) requiring entities, physicians, and other health care 
        providers that provide items and services under the original 
        medicare fee-for-service program under parts A and B of title 
        XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) to 
        comply with quality standards and related reporting 
        requirements that are comparable to the quality standards and 
        related reporting requirements that are applicable to 
        Medicare+Choice organizations under part C of such title; and
            (2) developing specific quality standards for different 
        types of Medicare+Choice coordinated care plans (as defined in 
        section 1851(a)(2)(A) of the Social Security Act (42 U.S.C. 
        1395w-21(a)(2)(A))).
    (b) Report.--Not later than March 1, 2000, the Secretary of Health 
and Human Services shall submit a report to Congress on the study 
conducted under subsection (a), together with any recommendations for 
legislation that the Secretary determines to be appropriate as a result 
of such study.

SEC. 565. STUDY AND REPORT TO CONGRESS REGARDING DATA SUBMISSION USED 
              TO ESTABLISH RISK ADJUSTMENT METHODOLOGY UNDER THE 
              MEDICARE+CHOICE PROGRAM.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study on reducing the amount of data that is required to be 
submitted by Medicare+Choice organizations in order for the Secretary 
to establish a risk adjustment methodology used in making payments to 
such organizations under section 1853 of the Social Security Act (42 
U.S.C. 1395w-23) and that includes the issues described in subsection 
(b).
    (b) Issues To Be Studied.--The issues described in this subsection 
are the following:
            (1) In consultation with representatives of Medicare+Choice 
        plans, identification of modifications of Health Care Financing 
        Administration administrative systems that would reduce the 
        costs or burden on such plans for reporting encounter data from 
        all sites of service.
            (2) Evaluation of alternative risk adjustment methods that 
        would require submission from Medicare+Choice plans of data 
        only from limited sites of services.
            (3) The potential for Medicare+Choice plans to misreport, 
        overreport, or underreport prevalence of diagnoses in 
        outpatient sites of care, the potential for increases in 
        payments to Medicare+Choice plans from changes in 
        Medicare+Choice plan coding practices (commonly known as 
        ``coding creep'') and proposed methods for detecting and 
        adjusting for such variations in diagnosis coding as part of 
        the risk adjustment methodology using encounter data from all 
        sites of care.
            (4) The impact of the requirement to report complete 
        encounter data on the willingness of insurers to offer high 
        deductible medical savings account plans to medicare 
        beneficiaries, and options for modifying data reporting 
        requirements to accommodate such plans.
            (5) Differences in the ability of Medicare+Choice plans to 
        report complete encounter data, and the potential for adverse 
        competitive impacts on group and staff model health maintenance 
        organizations or other integrated providers of care based on 
        data reporting capabilities.
    (c) Report.--Not later than January 1, 2001, the Secretary of 
Health and Human Services shall submit a report to Congress on the 
study conducted under this section, together with any recommendations 
for legislation that the Secretary determines to be appropriate as a 
result of such study.

                  TITLE VI--OTHER MEDICARE PROVISIONS

SEC. 601. 2-YEAR MORATORIUM ON THERAPY CAPS.

    (a) Moratorium.--
            (1) In general.--Section 1833(g) of the Social Security Act 
        (42 U.S.C. 1395l(g)) is amended--
                    (A) in paragraphs (1) and (3), by striking ``In the 
                case'' each place it appears and inserting ``Subject to 
                paragraph (4), in the case''; and
                    (B) by adding at the end the following:
    ``(4) This subsection shall not apply in 2000 and 2001.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to expenses incurred on or after January 1, 2000.
    (b) Revision of Report.--
            (1) In general.--Section 4541(d)(2) of the Balanced Budget 
        Act of 1997 (42 U.S.C. 1395l note) is amended to read as 
        follows:
            ``(2) Report.--By not later than January 1, 2001, the 
        Secretary of Health and Human Services shall submit to Congress 
        a report that includes recommendations on--
                    ``(A) the establishment of a mechanism for assuring 
                appropriate utilization of outpatient physical therapy 
                services, outpatient occupational therapy services, and 
                speech-language pathology services that are covered 
                under the medicare program under title XVIII of the 
                Social Security Act (42 U.S.C. 1395); and
                    ``(B) the establishment of an alternative payment 
                policy for such services based on classification of 
                individuals by diagnostic category, functional status, 
                prior use of services (in both inpatient and outpatient 
                settings), and such other criteria as the Secretary 
                determines appropriate, in place of the uniform dollar 
                limitations specified in section 1833(g) of such Act, 
                as amended by paragraph (1).
        The recommendations shall include how such a mechanism or 
        policy might be implemented in a budget-neutral manner.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the enactment of section 
        4541 of the Balanced Budget Act of 1997 (Public Law 105-33; 111 
        Stat. 454).
    (c) Study and Report on Utilization.--
            (1) Study.--
                    (A) In general.--The Secretary of Health and Human 
                Services shall conduct a study which compares--
                            (i) utilization patterns (including 
                        nationwide patterns, and patterns by region, 
                        types of settings, and diagnosis or condition) 
                        of outpatient physical therapy services, 
                        outpatient occupational therapy services, and 
                        speech-language pathology services that are 
                        covered under the medicare program under title 
                        XVIII of the Social Security Act (42 U.S.C. 
                        1395) and provided on or after January 1, 2000; 
                        with
                            (ii) such patterns for such services that 
                        were provided in 1998 and 1999.
                    (B) Review of claims.--In conducting the study 
                under this subsection the Secretary of Health and Human 
                Services shall review a statistically significant 
                number of claims for reimbursement for the services 
                described in subparagraph (A).
            (2) Report.--Not later than March 31, 2001, the Secretary 
        of Health and Human Services shall submit a report to Congress 
        on the study conducted under paragraph (1), together with any 
        recommendations for legislation that the Secretary determines 
        to be appropriate as a result of such study.

SEC. 602. INCREASE IN PAYMENT AMOUNT FOR RENAL DIALYSIS SERVICES 
              FURNISHED UNDER THE MEDICARE PROGRAM.

    (a) In General.--Section 1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is 
amended by adding at the end the following flush sentence:
``The amount of each composite rate payment for dialysis services 
furnished on or after October 1, 2000, shall be equal to 102 percent of 
each such composite rate payment amount for such services furnished on 
December 31, 1999.''.
    (b) Conforming Amendment.--
            (1) In general.--Section 9335(a) of the Omnibus Budget 
        Reconciliation Act of 1986 (42 U.S.C. 1395rr note) is amended 
        by striking paragraph (1).
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on October 1, 2000.

SEC. 603. INCREASE IN PAYMENT AMOUNT FOR PAP SMEAR LABORATORY TESTS.

    (a) Pap Smear Payment Increase.--Section 1833(h) (42 U.S.C. 
1395l(h)) is amended by adding at the end the following:
    ``(7) Notwithstanding paragraphs (1) and (4), the Secretary shall 
establish a minimum payment amount under this subsection for all areas 
for a diagnostic or screening pap smear laboratory test (including all 
cervical cancer screening technologies that have been approved by the 
Food and Drug Administration) of not less than $14.60.''.
    (b) Effective Date.--The amendment made by this subsection shall 
apply with respect to laboratory tests furnished on or after January 1, 
2000 and before January 1, 2002.

SEC. 604. LIMITATION IN REDUCTION OF PAYMENTS TO DISPROPORTIONATE SHARE 
              HOSPITALS.

    (a) In General.--Section 1886(d)(5)(F)(ix) (42 U.S.C. 
1395ww(d)(5)(F)(ix)) is amended--
            (1) in subclause (III), by striking ``fiscal year 2000'' 
        and inserting ``fiscal years 2000 and 2001'';
            (2) by striking subclauses (IV); and
            (3) by redesignating subclauses (V) and (VI) as subclauses 
        (IV) and (V), respectively.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendments made by section 4403 of the 
Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 398).

SEC. 605. CLARIFICATION OF THE INHERENT REASONABLENESS (IR) AUTHORITY.

    The Secretary of Health and Human Services may not use, or permit 
fiscal intermediaries or carriers to use, the inherent reasonableness 
authority under part B of title XVIII of such Act until the date that 
is 90 days after the date that the Comptroller General of the United 
States releases a report regarding the impact of the Secretary's, 
fiscal intermediaries', and carriers' use of such authority.

SEC. 606. TECHNICAL AMENDMENTS RELATING TO BBA PROVISIONS.

    (a) Medicare Rural Hospital Flexibility Program.--Section 
1820(c)(2)(B)(i) (42 U.S.C. 1395i-4(c)(2)(B)(i)) is amended by striking 
``and is located in a county (or equivalent unit of local government) 
in a rural area (as defined in section 1886(d)(2)(D))'' and inserting 
``that is located in a rural area (as defined in section 1886(d)(2)(D)) 
and''.
    (b) Rural Health Clinic Services.--Section 4205(a)(1)(B) of the 
Balanced Budget Act of 1997 (42 U.S.C. 1395l note) is amended by 
striking ``services furnished'' and inserting ``cost reporting periods 
beginning''.
    (c) PPS Hospital Payment Update.--Section 4401(b)(1)(B) of the 
Balanced Budget Act of 1997 (42 U.S.C. 1395ww note) is amended by 
striking ``section 1886(b)(3)(B)(i)(XIII) of the Social Security Act 
(42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))'' and inserting ``section 
1886(b)(3)(B)(i)(XIV) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)(i)(XIV))''.
    (d) Maintaining Savings From Temporary Reduction in Capital 
Payments for PPS Hospitals.--The last sentence of section 1886(g)(1)(A) 
(42 U.S.C. 1395ww(g)(1)(A)) is amended by striking ``September 30, 
2002'' and inserting ``October 1, 2002''.
    (e) Prospective Payment for Skilled Nursing Facility Services.--
Section 1888(e)(8)(B) (42 U.S.C. 1395yy(e)(8)(B)) is amended by 
striking ``January 1, 1999,'' and inserting ``July 1, 1999''.
    (f) Transfer of Criminal Fines Recovered as a Result of a Federal 
Health Care Offense to Federal Hospital Insurance Trust Fund.--
            (1) In general.--Section 1817(k)(2)(C)(i) (42 U.S.C. 
        1395i(k)(2)(C)(i)) is amended by striking ``section 
        982(a)(6)(B)'' and inserting ``section 24(a)''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the amendment made by 
        section 201 of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
        1992).
    (g) Medicare Payments to Newly Established PPS Exempt Providers.--
Section 1886(b)(7)(A)(i)(II) (42 U.S.C. 1395ww(b)(7)(A)(i)(II)) is 
amended by inserting ``(as estimated by the Secretary)'' after 
``median''.
    (h) Other Technical Amendments.--
            (1) Section 1812(b) (42 U.S.C. 1395d(b)) is amended in the 
        matter following paragraph (3) by inserting ``during'' after 
        ``100 visits''.
            (2) Section 1833(a)(1)(O) (42 U.S.C. 1395l(a)(1)(O)) is 
        amended by striking the semicolon and inserting a comma.
            (3) Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is 
        amended--
                    (A) in clause (i), by striking the comma at the end 
                and inserting a semicolon; and
                    (B) in clause (v), by striking ``, and'' and 
                inserting ``; and''.
            (4) Section 1842(s)(2)(E) (42 U.S.C. 1395u(s)(2)(E)) is 
        amended by inserting a period at the end.
            (5) Section 1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is 
        amended--
                    (A) by striking ``1861(oo)(2),'' and inserting 
                ``1861(oo)(2))'';
                    (B) by striking ``(B) ,'' and inserting ``(B),''; 
                and
                    (C) by striking ``and (15)'' and inserting ``, and 
                (15)''.
            (6) Section 1851(i)(2) (42 U.S.C. 1395w-21(i)(2)) is 
        amended by striking ``and'' after ``1857(f)(2),''.
            (7) Section 1852 (42 U.S.C. 1395w-22) is amended--
                    (A) in subsection (a)(3)(A)--
                            (i) by striking the comma after ``MSA 
                        plan''; and
                            (ii) by inserting a comma after ``the 
                        coverage)'';
                    (B) in subsection (g)--
                            (i) in paragraph (1)(B), by inserting 
                        ``or'' after ``in whole''; and
                            (ii) in paragraph (3)(B)(ii), by inserting 
                        a period at the end;
                    (C) in subsection (h)(2), by striking the comma and 
                inserting a semicolon; and
                    (D) in subsection (k)(2)(C)(ii), by striking 
                ``balancing'' and inserting ``balance''.
            (8) Section 1854(a) (42 U.S.C. 1395w-24(a)) is amended--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A), in the matter 
                        preceding clause (i), by inserting ``section'' 
                        before ``1852(a)(1)(A)''; and
                            (ii) in subparagraph (B), in the matter 
                        preceding clause (i), by inserting ``section'' 
                        after ``described in'';
                    (B) in paragraph (3)--
                            (i) in subparagraph (A), by inserting 
                        ``section'' after ``described in''; and
                            (ii) in subparagraph (B), by inserting 
                        ``section'' after ``described in''; and
                    (C) in paragraph (4)--
                            (i) in the matter preceding subparagraph 
                        (A), by inserting ``section'' after ``described 
                        in'';
                            (ii) in subparagraph (A), in the matter 
                        preceding clause (i), by inserting ``section'' 
                        after ``described in''; and
                            (iii) in subparagraph (B), by inserting 
                        ``section'' after ``described in''.
            (9) Section 1861 (42 U.S.C. 1395x) is amended--
                    (A) in subsection (s)(2)(T)(ii), by striking the 
                period and inserting a semicolon;
                    (B) in subsection (aa)(2)--
                            (i) in subparagraph (I), by striking the 
                        comma at the end and inserting a semicolon; and
                            (ii) by realigning subparagraph (I) so as 
                        to align the left margin of such subparagraph 
                        with the left margin of subparagraph (H); and
                    (C) in subsection (ss)(1)(G)(i)--
                            (i) by striking ``owed'' and inserting 
                        ``owned''; and
                            (ii) by striking ``of'' and inserting 
                        ``or''.
            (10) Section 1862(a)(7) (42 U.S.C. 1395y(a)(7)) is amended 
        by striking ``subparagraphs'' and inserting ``subparagraph''.
            (11) Section 1866(a)(1) (42 U.S.C. 1395cc(a)(1)) is 
        amended--
                    (A) in subparagraph (I)(iii), by striking the 
                semicolon and inserting a comma;
                    (B) in subparagraph (N)(iv), by striking ``and'' at 
                the end;
                    (C) in subparagraph (O), by striking the semicolon 
                at the end and inserting a comma;
                    (D) in subparagraph (Q), by striking the semicolon 
                at the end and inserting a comma; and
                    (E) in subparagraph (R), by inserting ``, and'' at 
                the end.
            (12) Section 1882 (42 U.S.C. 1395ss) is amended--
                    (A) in subsection (g)(1), by striking ``or'' after 
                ``does not include''; and
                    (B) in subsection (s)(2)(D), in the matter 
                preceding clause (i), by inserting ``section'' after 
                ``as defined in''.
            (13) Section 1886 (42 U.S.C. 1395ww) is amended--
                    (A) in subsection (b)--
                            (i) in paragraph (1), in the matter 
                        following subparagraph (C), by inserting a 
                        comma after ``paragraph (2)''; and
                            (ii) in paragraph (3)(B)(ii)--
                                    (I) in subclause (VI) is amended by 
                                striking the semicolon and inserting a 
                                comma; and
                                    (II) in subclause (VII) is amended 
                                by striking the semicolon and inserting 
                                a comma; and
                    (B) in subsection (d)--
                            (i) in paragraph (5)(F), by inserting a 
                        comma after ``1986''; and
                            (ii) in paragraph (9)(A)(ii), by inserting 
                        a comma after ``1987''.
            (14) Section 1888(e)(4)(E) (42 U.S.C. 1395yy(e)(4)(E)) is 
        amended--
                    (A) in clause (i) by striking ``federal'' and 
                inserting ``Federal''; and
                    (B) in clause (ii), in the matter preceding 
                subclause (I), by striking ``federal'' each place it 
                appears and inserting ``Federal''.
            (15) Section 1895(b)(1) (42 U.S.C. 1395fff(b)(1)) is 
        amended by striking ``the this section'' and inserting ``this 
        section''.
    (i) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall take effect as if included in the enactment 
of the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 251).

SEC. 607. EXCLUSION FROM PAYGO SCORECARD.

    Any net deficit increase resulting from the enactment of this Act 
shall not be counted for purposes of section 252 of the Balanced Budget 
and Emergency Deficit Control Act of 1985 (2 U.S.C. 902).

          TITLE VII--PROVISIONS RELATING TO MEDICAID AND SCHIP

SEC. 701. MEDICAID-RELATED BBA TECHNICALS.

    (a) Cross-Reference Corrections.--
            (1) Section 1902(a)(10)(A)(ii)(XIV) (42 U.S.C. 
        1396a(a)(10)(A)(ii)(XIV)) is amended by striking 
        ``1905(u)(2)(C)'' and inserting ``1905(u)(2)(B)''.
            (2) Section 1903(f)(4) (42 U.S.C. 1396b(f)(4)) is amended, 
        in the matter preceding subparagraph (A), by striking 
        ``1905(p)(1), or 1905(u)'' and inserting 
        ``1902(a)(10)(A)(ii)(XIII), 1902(a)(10)(A)(ii)(XIV), or 
        1905(p)(1)''.
            (3) Section 1905(a)(15) (42 U.S.C. 1396d(a)(15)) is amended 
        by striking ``1902(a)(31)(A)'' and inserting ``1902(a)(31)''.
            (4) The amendments made by this subsection shall take 
        effect as if included in the enactment of the Balanced Budget 
        Act of 1997 (Public Law 105-33; 111 Stat. 251).
    (b) Elimination of Duplicative Requirements for External Quality 
Review of Medicaid Managed Care Organizations.--
            (1) Section 1902(a)(30) (42 U.S.C. 1396a(a)(30)) is 
        amended--
                    (A) in subparagraph (A), by adding ``and'' at the 
                end;
                    (B) in subparagraph (B)(ii), by striking ``and'' at 
                the end; and
                    (C) by striking subparagraph (C).
            (2) Section 1902(d) (42 U.S.C. 1396a(d)) is amended--
                    (A) by striking ``an entity which meets the 
                requirements of section 1152, as determined by the 
                Secretary, for the performance of the quality review 
                functions described in subsection (a)(30)(C), or'';
                    (B) by striking ``(including quality review 
                functions described in subsection (a)(30)(C))''; and
                    (C) by striking ``entity or'' each place it 
                appears.
            (3) Section 1903 (42 U.S.C. 1396b) is amended--
                    (A) in subsection (a)(3)(C)(i)--
                            (i) by striking ``or quality review''; and
                            (ii) by striking ``or by an entity which 
                        meets the requirements of section 1152, as 
                        determined by the Secretary,''; and
                    (B) in subsection (m)(6)(B)--
                            (i) in clause (ii), by adding ``and'' at 
                        the end;
                            (ii) in clause (iii), by striking ``; and'' 
                        and inserting a period; and
                            (iii) by striking clause (iv).
            (4) The amendments made by this subsection apply as of such 
        date as the Secretary of Health and Human Services certifies to 
        Congress that it is fully implementing section 1932(c)(2) of 
        the Social Security Act (42 U.S.C. 1396u-2(c)(2)).
    (c) Making Enhanced Match Under SCHIP Program Inapplicable to 
Medicaid DSH Payments.--
            (1) The last sentence of section 1905(b) (42 U.S.C. 
        1396d(b)) is amended by inserting ``(other than expenditures 
        under section 1923)'' after ``with respect to expenditures''.
            (2) The amendment made by paragraph (1) takes effect on 
        October 1, 1999, and applies to expenditures made on or after 
        such date.
    (d) Making Deferment of the Effective Date for Outpatient Drug 
Agreements Optional for States.--
            (1) Section 1927(a)(1) (42 U.S.C. 1396r-8(a)(1)) is amended 
        by striking ``shall not be effective until'' and inserting 
        ``shall become effective as of the date on which the agreement 
        is entered into or, at State option, on any date thereafter on 
        or before''.
            (2) The amendment made by paragraph (1) applies to 
        agreements entered into on or after the date of enactment of 
        this Act.

SEC. 702. INCREASE IN DISPROPORTIONATE SHARE HOSPITAL ALLOTMENT FOR 
              CERTAIN STATES AND THE DISTRICT OF COLUMBIA.

    (a) In General.--The table included in section 1923(f)(2) (42 
U.S.C. 1396r-4(f)(2)) is amended under each of the columns for FY 00, 
FY 01, and FY 02--
            (1) at the line for the District of Columbia, by striking 
        ``23'' and inserting ``32'';
            (2) at the line for Minnesota, by striking ``16'' and 
        inserting ``33'';
            (3) at the line for New Mexico, by striking ``5'' and 
        inserting ``9''; and
            (4) at the line for Wyoming, by striking ``0'' and 
        inserting ``.100''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 1999, and applies to expenditures made on or after 
such date.

SEC. 703. MAKING MEDICAID DSH TRANSITION RULE PERMANENT.

    (a) In General.--Section 4721(e) of the Balanced Budget Act of 1997 
(42 U.S.C. 1396r-4 note) is amended--
            (1) in the matter before paragraph (1), by striking 
        ``1923(g)(2)(A)'' and ``1396r-4(g)(2)(A)'' and inserting 
        ``1923(g)(2)'' and ``1396r-4(g)(2)'', respectively;
            (2) in paragraphs (1) and (2)--
                    (A) by striking ``, and before July 1, 1999''; and
                    (B) by striking ``in such section'' and inserting 
                ``in subparagraph (A) of such section''; and
            (3) by striking ``and'' at the end of paragraph (1), by 
        striking the period at the end of paragraph (2) and inserting 
        ``; and'', and by adding at the end the following:
            ``(3) effective for State fiscal years that begin on or 
        after July 1, 1999, `or (b)(1)(B)' were inserted in section 
        1923(g)(2)(B)(ii)(I) after `(b)(1)(A)'.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 4721(e) of the 
Balanced Budget Act of 1997 (Public Law 105-33; 110 Stat. 514).

SEC. 704. INCREASED ALLOTMENTS FOR TERRITORIES UNDER THE STATE 
              CHILDREN'S HEALTH INSURANCE PROGRAM.

    Section 2104(c)(4)(B) (42 U.S.C. 1397dd(c)(4)(B)) is amended by 
inserting ``, $34,200,000 for each of fiscal years 2000 and 2001, 
$25,200,000 for each of fiscal years 2002 through 2004, $32,400,000 for 
each of fiscal years 2005 and 2006, and $40,000,000 for fiscal year 
2007'' before the period.

SEC. 705. REMOVAL OF FISCAL YEAR LIMITATION ON CERTAIN TRANSITIONAL 
              ADMINISTRATIVE COSTS ASSISTANCE.

    (a) In General.--Section 1931(h) (42 U.S.C. 1396u-1(h)) is 
amended--
            (1) in paragraph (3), by striking ``and ending with fiscal 
        year 2000''; and
            (2) by striking paragraph (4).
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 114 of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (Public 
Law 104-193; 110 Stat. 2177).

SEC. 706. STABILIZING THE SCHIP ALLOTMENT FORMULA.

    (a) In General.--Section 2104(b) (42 U.S.C. 1397dd(b)) is amended--
            (1) in paragraph (2)(A)--
                    (A) in clause (i), by striking ``through 2000'' and 
                inserting ``and 1999''; and
                    (B) in clause (ii), by striking ``2001'' and 
                inserting ``2000'';
            (2) by amending paragraph (4) to read as follows:
            ``(4) Floors and ceilings in state allotments.--
                    ``(A) In general.--The proportion of the allotment 
                under this subsection for a subsection (b) State (as 
                defined in subparagraph (D)) for fiscal year 2000 and 
                each fiscal year thereafter shall be subject to the 
                following floors and ceilings:
                            ``(i) Floor of $2,000,000.--A floor equal 
                        to $2,000,000 divided by the total of the 
                        amount available under this subsection for all 
                        such allotments for the fiscal year.
                            ``(ii) Annual floor of 10 percent below 
                        preceding fiscal year's proportion.--A floor of 
                        90 percent of the proportion for the State for 
                        the preceding fiscal year.
                            ``(iii) Cumulative floor of 30 percent 
                        below the fy 1999 proportion.--A floor of 70 
                        percent of the proportion for the State for 
                        fiscal year 1999.
                            ``(iv) Cumulative ceiling of 45 percent 
                        above fy 1999 proportion.--A ceiling of 145 
                        percent of the proportion for the State for 
                        fiscal year 1999.
                    ``(B) Reconciliation.--
                            ``(i) Elimination of any deficit by 
                        establishing a percentage increase ceiling for 
                        states with highest annual percentage 
                        increases.--To the extent that the application 
                        of subparagraph (A) would result in the sum of 
                        the proportions of the allotments for all 
                        subsection (b) States exceeding 1.0, the 
                        Secretary shall establish a maximum percentage 
                        increase in such proportions for all subsection 
                        (b) States for the fiscal year in a manner so 
                        that such sum equals 1.0.
                            ``(ii) Allocation of surplus through pro 
                        rata increase.--To the extent that the 
                        application of subparagraph (A) would result in 
                        the sum of the proportions of the allotments 
                        for all subsection (b) States being less than 
                        1.0, the proportions of such allotments (as 
                        computed before the application of floors under 
                        clauses (i), (ii), and (iii) of subparagraph 
                        (A)) for all subsection (b) States shall be 
                        increased in a pro rata manner (but not to 
                        exceed the ceiling established under 
                        subparagraph (A)(iv)) so that (after the 
                        application of such floors and ceiling) such 
                        sum equals 1.0.
                    ``(C) Construction.--This paragraph shall not be 
                construed as applying to (or taking into account) 
                amounts of allotments redistributed under subsection 
                (f).
                    ``(D) Definitions.--In this paragraph:
                            ``(i) Proportion of allotment.--The term 
                        `proportion' means, with respect to the 
                        allotment of a subsection (b) State for a 
                        fiscal year, the amount of the allotment of 
                        such State under this subsection for the fiscal 
                        year divided by the total of the amount 
                        available under this subsection for all such 
                        allotments for the fiscal year.
                            ``(ii) Subsection (b) state.--The term 
                        `subsection (b) State' means one of the 50 
                        States or the District of Columbia.'';
            (3) in paragraph (2)(B), by striking ``the fiscal year'' 
        and inserting ``the calendar year in which such fiscal year 
        begins''; and
            (4) in paragraph (3)(B), by striking ``the fiscal year 
        involved'' and inserting ``the calendar year in which such 
        fiscal year begins''.
    (b) Effective Date.--The amendments made by this section apply to 
allotments determined under title XXI of the Social Security Act (42 
U.S.C. 1397aa et seq.) for fiscal year 2000 and each fiscal year 
thereafter.

SEC. 707. IMPROVED DATA COLLECTION AND EVALUATIONS OF THE SCHIP 
              PROGRAM.

    (a) Funding for Reliable Annual State-by-State Estimates on the 
Number of Children Who Do Not Have Health Insurance Coverage.--Section 
2108 (42 U.S.C. 1397hh) is amended by adding at the end the following:
    ``(c) Adjustment to Current Population Survey To Include State-by-
State Data Relating to Children Without Health Insurance Coverage.--
            ``(1) In general.--The Secretary of Commerce shall make 
        appropriate adjustments to the annual Current Population Survey 
        conducted by the Bureau of the Census in order to produce 
        statistically reliable annual State data on the number of low-
        income children who do not have health insurance coverage, so 
        that real changes in the uninsurance rates of children can 
        reasonably be detected. The Current Population Survey should 
        produce data under this subsection that categorizes such 
        children by family income, age, and race or ethnicity. The 
        adjustments made to produce such data shall include, where 
        appropriate, expanding the sample size used in the State 
        sampling units, expanding the number of sampling units in a 
        State, and an appropriate verification element.
            ``(2) Appropriation.--Out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated $10,000,000 for fiscal year 2000 and each fiscal 
        year thereafter for the purpose of carrying out this 
        subsection.''.
    (b) Funding for Children's Health Care Access and Utilization 
State-by-State Data.--Section 2108 (42 U.S.C. 1397hh), as amended by 
subsection (a), is amended by adding at the end the following:
    ``(d) Collection of Children's Health Care Access and Utilization 
State-Level Data.--
            ``(1) In general.--The Secretary, acting through the 
        National Center for Health Statistics (in this subsection 
        referred to as the `Center'), shall collect data on children's 
        health insurance through the State and Local Area Integrated 
        Telephone Survey (SLAITS) for the 50 States and the District of 
        Columbia. Sufficient data shall be collected so as to provide 
        reliable, annual, State-by-State information on the health care 
        access and utilization of children in low-income households, 
        and to allow for comparisons between demographic subgroups 
        categorized with respect to family income, age, and race or 
        ethnicity.
            ``(2) Survey design and content.--
                    ``(A) In general.--In carrying out paragraph (1), 
                the Secretary, acting through the Center--
                            ``(i) shall obtain input from appropriate 
                        sources, including States, in designing the 
                        survey and making content decisions; and
                            ``(ii) at the request of a State, may 
                        collect additional data to assist with a 
                        State's evaluation of the program established 
                        under this title.
                    ``(B) Reimbursement of costs of additional data.--A 
                State shall reimburse the Center for services provided 
                under subparagraph (A)(ii).
            ``(3) Appropriation.--Out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated $9,000,000 for fiscal year 2000 and each fiscal 
        year thereafter for the purpose of carrying out this 
        subsection.''.
    (c) Federal Evaluation of State Children's Health Insurance 
Programs.--Section 2108 (42 U.S.C. 1397hh), as amended by subsections 
(a) and (b), is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following:
    ``(c) Federal Evaluation.--
            ``(1) In general.--The Secretary, directly or through 
        contracts or interagency agreements, shall conduct an 
        independent evaluation of 10 States with approved child health 
        plans.
            ``(2) Selection of states.--In selecting States for the 
        evaluation conducted under this subsection, the Secretary shall 
        choose 10 States that utilize diverse approaches to providing 
        child health assistance, represent various geographic areas 
        (including a mix of rural and urban areas), and contain a 
        significant portion of uncovered children.
            ``(3) Matters included.--In addition to the elements 
        described in subsection (b)(1), the evaluation conducted under 
        this subsection shall include, but is not limited to, the 
        following:
                    ``(A) Surveys of the target population (enrollees, 
                disenrollees, and individuals eligible for but not 
                enrolled in the program under this title).
                    ``(B) Evaluation of effective and ineffective 
                outreach and enrollment practices with respect to 
                children (for both the program under this title and the 
                medicaid program under title XIX), and identification 
                of enrollment barriers and key elements of effective 
                outreach and enrollment practices, including practices 
                that have successfully enrolled hard-to-reach 
                populations such as children who are eligible for 
                medical assistance under title XIX but have not been 
                enrolled previously in the medicaid program under that 
                title.
                    ``(C) Evaluation of the extent to which State 
                medicaid eligibility practices and procedures under the 
                medicaid program under title XIX are a barrier to the 
                enrollment of children under that program, and the 
                extent to which coordination (or lack of coordination) 
                between that program and the program under this title 
                affects the enrollment of children under both programs.
                    ``(D) An assessment of the effect of cost-sharing 
                on utilization, enrollment, and coverage retention.
                    ``(E) Evaluation of disenrollment or other 
                retention issues, such as switching to private 
                coverage, failure to pay premiums, or barriers in the 
                recertification process.
            ``(4) Submission to congress.--Not later than December 31, 
        2001, the Secretary shall submit to Congress the results of the 
        evaluation conducted under this subsection.
            ``(5) Funding.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated $10,000,000 for fiscal year 2000 for the purpose 
        of conducting the evaluation authorized under this subsection. 
        Amounts appropriated under this paragraph shall remain 
        available without fiscal year limitation.''.
    (d) Inspector General Audit and GAO Report on Enrollees Eligible 
for Medicaid.--Section 2108 (42 U.S.C. 1397hh), as amended by 
subsection (c), is amended by adding at the end the following:
    ``(f) Inspector General Audit and GAO Report.--
            ``(1) Audit.--Beginning with fiscal year 2000, and every 
        third fiscal year thereafter, the Secretary, through the 
        Inspector General of the Department of Health and Human 
        Services, shall audit a sample from among the States described 
        in paragraph (2) in order to--
                    ``(A) determine the number, if any, 
                of enrollees under the plan under this title who are 
                eligible for medical assistance under title XIX (other 
                than as optional targeted 
                low-income children under section 
                1902(a)(10)(A)(ii)(XIV)); and
                    ``(B) assess the progress made in reducing the 
                number of targeted uncovered low-income children 
                relative to the goals established in the State child 
                health plan, as reported to the Secretary in accordance 
                with subsection (a)(2).
            ``(2) State described.--A State described in this paragraph 
        is a State with an approved State child health plan under this 
        title that does not, as part of such plan, provide health 
        benefits coverage under the State's medicaid program under 
        title XIX.
            ``(3) Monitoring and report from gao.--The Comptroller 
        General of the United States shall monitor the audits conducted 
        under this subsection and, not later than March 1 of each 
        fiscal year after a fiscal year in which an audit is conducted 
        under this subsection, shall submit a report to Congress on the 
        results of the audit conducted during the prior fiscal year.''.
    (e) Coordination of Data Collection With Data Requirements Under 
the Maternal and Child Health Services Block Grant.--Subparagraphs 
(C)(ii) and (D)(ii) of section 506(a)(2) (42 U.S.C. 706(a)(2)) are each 
amended by inserting ``or the State plan under title XXI'' after 
``title XIX''.
    (f) Coordination of Data Surveys and Reports.--The Secretary of 
Health and Human Services, through the Assistant Secretary for Planning 
and Evaluation, shall establish a clearinghouse for the consolidation 
and coordination of all Federal databases and reports regarding 
children's health.

SEC. 708. GRANTS TO STATES FOR ITEMS AND SERVICES PROVIDED BY 
              FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH 
              CLINICS.

    (a) Establishment.--
            (1) In general.--Beginning with fiscal year 2001, the 
        Secretary shall award a grant to a State described in paragraph 
        (2) for payment for items and services provided by Federally-
        qualified health centers and rural health clinics located in 
        the State--
                    (A) to individuals who are not eligible for medical 
                assistance under the State plan under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.); and
                    (B) that would be considered medical assistance 
                under the State plan under such title if such items and 
                services were provided to an individual eligible for 
                such assistance.
            (2) State described.--
                    (A) In general.--A State described in this 
                paragraph is a State that has not elected to provide 
                payment for Federally-qualified health center services 
                and rural health clinic services provided under the 
                State plan under title XIX of the Social Security Act, 
                or under a waiver of such plan approved under section 
                1115 of that Act (42 U.S.C. 1315), in accordance with 
                the phase-out of the reasonable cost basis for payment 
                for such services provided in section 1902(a)(13)(C) of 
                the Social Security Act (42 U.S.C. 1396a(a)(13)(C)), as 
                amended by section 4712(a) of the Balanced Budget Act 
                of 1997 (Public Law 105-33; 111 Stat. 508).
                    (B) Exception.--In the case of a State that, as of 
                October 1, 1999, has elected to provide payment for 95 
                percent of the costs of Federally-qualified health 
                center services and rural health clinic services 
                furnished during fiscal year 2000 under such State plan 
                or waiver, in accordance with section 1902(a)(13)(C) of 
                the Social Security Act (as so amended), the State 
                shall be considered to be a State described in 
                subparagraph (A) if the State reverts to providing 
                payment for 100 percent of the costs of such services 
                under such State plan or waiver during fiscal years 
                2001 through 2003.
            (3) Application.--A State shall submit an application for a 
        grant under this section at such time, in such manner, and 
        containing, in addition to the methodology required under 
        subsection (c)(1), such information as the Secretary may 
        determine.
    (b) Amount of Grants.--
            (1) Based on number of low-income individuals.--
                    (A) In general.--Out of funds appropriated under 
                subsection (d) for each of fiscal years 2001 through 
                2003, the Secretary shall, subject to paragraphs (2) 
                and (3), allot to each State eligible for a grant under 
                this section for the fiscal year an amount equal to the 
                ratio of--
                            (i) the number of low-income individuals in 
                        the State for the fiscal year; to
                            (ii) the total number of such individuals 
                        in all such States for the fiscal year.
                    (B) Determination of number of low-income 
                individuals.--For purposes of subparagraph (A), a 
                determination of the number of low-income individuals 
                for a State for a fiscal year shall be made on the 
                basis of the arithmetic average of the number of such 
                individuals, as reported and defined in the 3 most 
                recent March supplements to the Current Population 
                Survey of the Bureau of the Census before the beginning 
                of the calendar year in which such fiscal year begins.
            (2) Minimum amount.--In no case shall the amount of a grant 
        to a State under this section for any fiscal year be less than 
        $400,000.
            (3) Reconciliation.--The Secretary shall make pro rata 
        adjustments as necessary to the allotments determined under 
        this subsection in order to comply with the requirement of 
        paragraph (2).
            (4) No matching requirement.--Nothing in this section shall 
        be construed as requiring a State to expend or provide funds in 
        order to receive funds under a grant made under this section.
            (5) 3-year availability of amounts allotted.--Amounts 
        allotted to a State under a grant made under this section for a 
        fiscal year shall remain available for expenditure by the State 
        through the end of the second succeeding fiscal year.
    (c) Limitations on Use of Funds.--
            (1) In general.--Subject to paragraph (2), funds provided 
        to a State under a grant made under this section for any fiscal 
        year--
                    (A) shall be distributed among all the Federally-
                qualified health centers and rural health clinics 
                located in the State in accordance with a methodology 
approved in advance by the Secretary that imposes a uniform criteria 
for such distribution, based on factors such as size of caseload and 
treatment costs; and
                    (B) may only be used for payment for items and 
                services described in subsection (a)(1).
            (2) State option to retain funds for administrative 
        costs.--A State that receives a grant under this section for a 
        fiscal year may retain up to 15 percent of the amount allotted 
        to the State for the fiscal year for administrative 
        expenditures incurred by the State with respect to Federally-
        qualified health centers and rural health clinics located in 
        the State.
    (d) Appropriation.--Out of any funds in the Treasury not otherwise 
appropriated, there is authorized to be appropriated and there is 
appropriated to make grants under this section $25,000,000 for each of 
fiscal years 2001 through 2003.
    (e) Definitions.--In this section:
            (1) Federally-qualified health center; federally-qualified 
        health center services.--The terms ``Federally-qualified health 
        center'' and ``Federally-qualified health center services'' 
        have the meanings given those terms in section 1905(l)(2) of 
        the Social Security Act (42 U.S.C. 1396d(l)(2)).
            (2) Rural health clinic; rural health clinic services.--The 
        terms ``rural health clinic'' and ``rural health clinic 
        services'' have the meanings given those terms in section 
        1905(l)(1) of the Social Security Act (42 U.S.C. 1396d(l)(1)).
            (3) Secretary.--The term `Secretary' means the Secretary of 
        Health and Human Services.
    (f) GAO Study and Report.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study to determine the impact on Federally-
        qualified health centers and rural health clinics of the phase-
        out of the reasonable cost basis for payment for Federally-
        qualified health center services and rural health clinic 
        services provided in section 1902(a)(13)(C) of the Social 
        Security Act (42 U.S.C. 1396a(a)(13)(C)), as amended by section 
        4712(a) of the Balanced Budget Act of 1997 (Public Law 105-33; 
        111 Stat. 508).
            (2) Report.--Beginning with November 1, 2000, and anuually 
        thereafter through November 1, 2003, the Comptroller General 
        shall submit a report to Congress on the results of the study 
        conducted under this subsection, together with any 
        recommendations for legislation that the Comptroller General 
        determines to be appropriate as a result of such study.

SEC. 709. ADDITIONAL TECHNICAL CORRECTIONS.

    (a) Section 1902(a)(64) (42 U.S.C. 1396a(a)(64)) is amended by 
adding ``and'' at the end.
    (b) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking 
``of of'' and inserting ``of''.
    (c) Section 1902(l) (42 U.S.C. 1396a(l)) is amended--
            (1) in paragraph (1)(C), by striking ``children children'' 
        and inserting ``children'';
            (2) in paragraph (3), in the matter preceding subparagraph 
        (A), by striking the first comma after ``(a)(10)(A)(i)(VII)''; 
        and
            (3) in paragraph (4)(B), by inserting a comma after 
        ``(a)(10)(A)(i)(IV)''.
    (d) Section 1902(v) (42 U.S.C. 1396a(v)) is amended by striking 
``(1)''.
    (e) Section 1903(b)(4) (42 U.S.C. 1396b(b)(4)) is amended, in the 
matter preceding subparagraph (A), by inserting ``of'' after ``for the 
use''.
    (f) The left margins of clauses (i) and (ii) of section 
1903(d)(3)(B) (42 U.S.C. 1396b(d)(3)(B)) are each realigned so as to 
align with the left margin of section 1903(d)(3)(A).
    (g) Section 1903(f)(2) (42 U.S.C. 1396b(f)(2)) is amended by 
striking the extra period at the end.
    (h) Section 1903(i)(14) (1396b(i)(14)) is amended by adding ``or'' 
after the semicolon.
    (i) Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is amended--
            (1) in clause (vi), by striking the semicolon the first 
        place it appears; and
            (2) by redesignating the clause (xi) added by section 
        4701(c)(3) of the Balanced Budget Act of 1997 (Public Law 105-
        33; 111 Stat. 493) as clause (xii).
    (j) Section 1903(o) (42 U.S.C. 1396b(o)) is amended by striking 
``1974))'' and inserting ``1974)''.
    (k) Section 1903(w) (42 U.S.C. 1396b(w)) is amended--
            (1) in paragraph (1)(B), by striking ``puroses'' and 
        inserting ``purposes'';
            (2) in paragraph (3)(B), by inserting a comma after 
        ``(D)''; and
            (3) by realigning the left margin of clause (viii) in 
        paragraph (7)(A) so as to align with the left margin of clause 
        (vii) of that paragraph.+
    (l) Section 1905(b)(1) (42 U.S.C. 1396d(b)(1)) is amended by 
striking ``per centum,,'' and inserting ``per centum,''.
    (m) Section 1905(l)(2)(B) (42 U.S.C. 1936d(l)(2)(B)) is amended by 
striking ``a entity'' and inserting ``an entity''.
    (n) The heading for section 1910 (42 U.S.C. 1396i) is amended by 
striking ``of'' the first place it appears.
    (o) Section 1915 (42 U.S.C. 1396n) is amended--
            (1) in subsection (b), by striking ``1902(a)(13)(E)'' and 
        inserting ``1902(a)(13)(C)'';
            (2) in the last sentence of subsection (d)(5)(B)(iii), by 
        striking ``75'' and inserting ``65''; and
            (3) in subsection (h), by striking ``90 day'' and inserting 
        ``90 days''.
    (p) Section 1919 (42 U.S.C. 1396r) is amended--
            (1) in subsection (b)(3)(C)(i)(I), by striking ``not later 
        than'' the first place it appears; and
            (2) in subsection (d)(4)(A), by striking ``1124'' and 
        inserting ``1124)''.
    (q) Section 1920(b)(2)(D)(i)(I) (42 U.S.C. 1396r-1(b)(2)(D)(i)(I)) 
is amended by striking ``329, 330, or 340'' and inserting ``330 or 
330A''.
    (r) Section 1920A(d)(1)(B) (42 U.S.C. 1396r-1a(d)(1)(B)) is amended 
by striking ``a entity'' and inserting ``an entity''.
    (s) Section 1923(c)(3)(B) (42 U.S.C. 1396r-4(c)(3)(B)) is amended 
by striking ``patients.'' and inserting ``patients,''.
    (t) Section 1925 (42 U.S.C. 1396r-6) is amended--
            (1) in subsection (a)(3)(C), by striking ``(i)(VI) 
        (i)(VII),,'' and inserting ``(i)(VI), (i)(VII),''; and
            (2) in subsection (b)(3)(C)(i), by striking ``(i)(IV) 
        (i)(VI) (i)(VII),,'' and inserting ``(i)(IV), (i)(VI), 
        (i)(VII),''.
    (u) Section 1927 (42 U.S.C. 1396r-8) is amended--
            (1) in subsection (g)(2)(A)(ii)(II)(cc), by striking 
        ``individuals'' and inserting ``individual's'';
            (2) in subsection (i)(1), by striking ``the the'' and 
        inserting ``the''; and
            (3) in subsection (k)(7)--
                    (A) in subparagraph (A)(iv), by striking 
                ``distributers'' and inserting ``distributors''; and
                    (B) in subparagraph (C)(i), by striking 
                ``pharmaceuutically'' and inserting 
                ``pharmaceutically''.
    (v) Section 1929 (42 U.S.C. 1396t) is amended--
            (1) in subsection (c)(2), by realigning the left margins of 
        clauses (i) and (ii) of subparagraph (E) so as to align with 
        the left margins of clauses (i) and (ii) of subparagraph (F) of 
        that subsection;
            (2) in subsection (k)(1)(A)(i), by striking ``settings,'' 
        and inserting ``settings),''; and
            (3) in subsection (l), by striking ``State wideness'' and 
        inserting ``Statewideness''.
    (w) Section 1932 (42 U.S.C. 1396u-2) is amended--
            (1) in subsection (c)(2)(C), by inserting ``part'' before 
        ``C of title XVIII''; and
            (2) in subsection (d)--
                    (A) in paragraph (1)(C)(ii), by striking ``Act'' 
                and inserting ``Regulation''; and
                    (B) in paragraph (2)(B), by striking ``1903(t)(3)'' 
                and inserting ``1905(t)(3)''.
    (x) Section 1933(b)(4) (42 U.S.C. 1396u-3(b)(4)) is amended by 
inserting ``a'' after ``for a month in''.
    (y) Section 2104(b)(3)(B) (42 U.S.C. 1397dd(b)(3)(B)) is amended by 
striking ``States.'' and inserting ``States,''.
    (z) Section 2105(d)(2)(B)(iii) (42 U.S.C. 1397ee(d)(2)(B)(iii)) is 
amended by inserting ``in'' after ``described''.
    (aa) Section 2109(a) (42 U.S.C.1397ii(a)) is amended--
            (1) in paragraph (1), by striking ``title II'' and 
        inserting ``title I''; and
            (2) in paragraph (2), by inserting ``)'' before the period.
    (bb)(1) The section 1908 (42 U.S.C. 1396g-1) that relates to 
required laws relating to medical child support is redesignated as 
section 1908A.
    (2) Section 1902(a)(60) (42 U.S.C. 1396b(a)(60)) is amended by 
striking ``1908'' and inserting ``1908A''.
    (cc) Effective October 1, 2003, section 1915(b) (42 U.S.C. 
1396n(b)) is amended, in the matter preceding paragraph (1), by 
striking ``sections 1902(a)(13)(C) and'' and inserting ``section''.
    (dd) Except as otherwise provided, the amendments made by this 
section shall take effect on the date of enactment of this Act.`