‘‘(3)(A) in the case of services described in sec-
tion 1832(a)(2)(D)(i) (relating to rural health clinic
services), the costs which—
‘‘(i) are (I) reasonable and related to the
cost of furnishing such services or (II) based on
such other tests of reasonableness as the Sec-
retary may prescribe in regulations, including
those authorized under section 1861(v)(1)(A);
‘‘(ii) do not exceed the limit under sub-
section (f);
‘‘(iii) are reduced by any deductible or co-
insurance amount a clinic or center may charge
as described in clause (ii) of the second sen-
tence of section 1861(aa)(2); and
‘‘(iv) do not exceed 80 percent of such
costs determined under the preceding clauses
(other than for items and services described in
section 1861(s)(10)(A)); and
‘‘(B) in the case of services described in section
1832(a)(2)(D)(ii) (relating to Federally qualified
health center services), the costs which—
‘‘(i) are (I) reasonable and related to the
cost of furnishing such services or (II) based on
such other tests of reasonableness as the Sec-
retary may prescribe in regulations, including
those authorized under section 1861(v)(1)(A);
‘‘(ii) are reduced by the amount a provider
may charge as described in clause (ii) of section
1866(a)(2)(A); and
‘‘(iii) do not exceed 80 percent of such
costs determined under the preceding clauses
(other than for items and services described in
section 1861(s)(10)(A));’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after Janu-
ary 1, 1998.
SEC. 412. PROSPECTIVE PAYMENT SYSTEM FOR RURAL
HEALTH CLINIC SERVICES.
(a) ESTABLISHMENT OF SYSTEM.—Section 1833 (42
U.S.C. 1395l), as amended by section 4523(a) of the Bal-
anced Budget Act of 1997, is amended by adding at the
end the following:
‘‘(u) PROSPECTIVE PAYMENT SYSTEM FOR RURAL
HEALTH CLINIC SERVICES.—
‘‘(1) ESTABLISHMENT OF SYSTEM.—The Sec-
retary shall establish by regulation a prospective
payment system for rural health clinic services. The
regulation shall be issued no later than June 30,
2000.
‘‘(2) ADJUSTMENTS FOR INAPPROPRIATE UTILI-
ZATION.—The Secretary may provide for adjust-
ments to the payment levels under the prospective
payment system to take into account excessive utili-
zation (if any) of rural health clinic services.
‘‘(3) ANNUAL
UPDATE.—The Secretary shall
provide for an annual update to the payment levels
under the prospective payment system.
‘‘(4) BUDGET NEUTRAL PAYMENTS.—The Sec-
retary shall establish the initial payment levels under
paragraph (1) in a manner that results in aggregate
payments (including payments by individuals to
whom services are provided) for the first year, as es-
timated by the Secretary, equal to the aggregate
payments that would have otherwise been made
under this part for the services covered under the
system.’’.
(b) APPLICATION TO COINSURANCE.—Clause (ii) of
the second sentence of section 1861(aa)(2) (42 U.S.C.
1395x(aa)(2)), as amended by section 411(a), is further
amended by striking ‘‘described in section 1833(b) or
clause (ii) of the first sentence of section 1866(a)(2)(A)
(but any coinsurance amount shall not exceed 20 percent
of the limit described in section 1833(f), and’’ and insert-
ing ‘‘described in section 1833(b) (for any deductible
amount) and 20 percent of the payment basis under the
prospective payment system established under section
1833(t) (for any coinsurance amount, but’’.
(c) OTHER CONFORMING AMENDMENTS.—Section
1833 (42 U.S.C. 1395l) is amended—
(1) in subsection (a)(3)(A), as amended by sec-
tion 411(b), by striking ‘‘rural health clinic serv-
ices),’’ and all that follows and inserting ‘‘rural
health clinic services), 80 percent of the payment
basis under the prospective payment system estab-
lished under section 1833(u) (or 100 percent of such
payment basis, for items and services described in
section 1861(s)(10)(A)); and’’; and
(2) by striking subsection (f).
(d) EFFECTIVE DATE.—The amendments made by
subsections (b) and (c) apply to services furnished on or
after January 1 of the first year that begins at least 6
months after the date on which regulations are issued
under section 1833(u) of the Social Security Act (42
U.S.C. 1395l(u)), as added by subsection (a).
Æ