1866(a)(2)(A)(ii), and the deductible under sec-
tion 1833(b).
‘‘(F) PRE-BBA AMOUNT DEFINED.—
‘‘(i) IN GENERAL.—In this paragraph,
the ‘pre-BBA amount’ means, with respect
to covered OPD services furnished by a
hospital in a year, an amount equal to the
product of the reasonable cost of the hos-
pital for such services for the portions of
the hospital’s cost reporting period (or pe-
riods) occurring in the year and the base
OPD payment-to-cost ratio for the hospital
(as defined in clause (ii)).
‘‘(ii) BASE
PAYMENT-TO-COST-RATIO
DEFINED.—For purposes of this subpara-
graph, the ‘base payment-to-cost ratio’ for
a hospital means the ratio of—
‘‘(I) the hospital’s reimbursement
under this part for covered OPD serv-
ices furnished during the cost report-
ing period ending in 1996, including
any reimbursement for such services
through cost-sharing described in sub-
paragraph (E), to
‘‘(II) the reasonable cost of such
services for such period.
The Secretary shall determine such ratios
as if the amendments made by section
4521 of the Balanced Budget Act of 1997
were in effect in 1996.
‘‘(G) INTERIM PAYMENTS.—The Secretary
shall make payments under this paragraph to
hospitals on an interim basis, subject to retro-
spective adjustments based on settled cost re-
ports.
‘‘(H) NO
EFFECT
ON
COPAYMENTS.—
Nothing in this paragraph shall be construed to
affect the unadjusted copayment amount de-
scribed in paragraph (3)(B) or the copayment
amount under paragraph (8).
‘‘(I) APPLICATION
WITHOUT
REGARD
TO
BUDGET
NEUTRALITY.—The additional pay-
ments made under this paragraph—
‘‘(i) shall not be considered an adjust-
ment under paragraph (2)(E); and
‘‘(ii) shall not be implemented in a
budget neutral manner.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of BBA.
SEC. 203. STUDY AND REPORT TO CONGRESS REGARDING
THE SPECIAL TREATMENT OF RURAL AND
CANCER HOSPITALS IN PROSPECTIVE PAY-
MENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.
(a) STUDY.—
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission (referred to in this section as
‘‘MedPAC’’) shall conduct a study to determine the
appropriateness (and the appropriate method) of
providing payments to hospitals described in para-
graph (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 pro-
spective payment system established by the Sec-
retary in accordance with such section.
(2) HOSPITALS DESCRIBED.—The hospitals de-
scribed in this paragraph are the following:
(A) A medicare-dependent, small rural hos-
pital (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) Rural health clinics (as defined in sec-
tion 1861(aa)(2) of such Act (42 U.S.C.
1395x(aa)(2)).
(D) Rural referral centers (as so classified
under section 1886(d)(5)(C) of such Act (42
U.S.C. 1395ww(d)(5)(C)).
(E) Any other rural hospital with not more
than 100 beds.
(F) Any other rural hospital that the Sec-
retary determines appropriate.
(G) 
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 the enactment of this Act, MedPAC shall submit a re-
port to the Secretary of Health and Human Services and
Congress on the study conducted under subsection (a), to-
gether 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 sub-
section (b) to the Secretary of Health and Human Serv-
ices, the Secretary shall submit comments on such report
to Congress.
SEC. 204. LIMITATION ON OUTPATIENT HOSPITAL COPAY-
MENT FOR A PROCEDURE TO THE HOSPITAL
DEDUCTIBLE AMOUNT.
(a) IN GENERAL.—Section 1833(t)(8) (42 U.S.C.
1395l(t)(8)), as redesignated by sections 201(a)(1) and
202(a)(2), is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and
(C)’’;
(2) by redesignating subparagraphs (C) and
(D) as subparagraphs (D) and (E), respectively; and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) LIMITING
COPAYMENT
AMOUNT
TO
INPATIENT HOSPITAL DEDUCTIBLE AMOUNT.—
In no case shall the copayment amount for a
procedure performed in a year exceed the
amount of the inpatient hospital deductible es-
tablished under section 1813(b) for that year.’’.
(b) INCREASE IN PAYMENT TO REFLECT REDUC-
TION IN COPAYMENT.—Section 1833(t)(4)(C) (42 U.S.C.
1395l(t)(4)(C)) is amended by inserting ‘‘, plus the
amount of any reduction in the copayment amount attrib-
utable to paragraph (8)(C)’’ before the period at the end.
(c) EFFECTIVE DATE.—The amendments made by
this section apply as if included in the enactment of BBA
and shall only apply to procedures performed for which
payment is made on the basis of the prospective payment
system under section 1833(t) of the Social Security Act.
Subtitle B—Physician Services
SEC. 211. MODIFICATION OF UPDATE ADJUSTMENT FAC-
TOR PROVISIONS TO REDUCE UPDATE OSCIL-
LATIONS 
AND 
REQUIRE 
ESTIMATE 
REVI-
SIONS.
(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 insert-
ing ‘‘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 new
paragraph:
‘‘(4) UPDATE
FOR
YEARS
BEGINNING
WITH
2001.—
‘‘(A) IN GENERAL.—Unless otherwise pro-
vided by law, subject to the budget-neutrality
factor determined by the Secretary under sub-
section (c)(2)(B)(ii) and subject to adjustment
under subparagraph (F), the update to the sin-
gle 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 de-
fined 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 sub-
paragraph (B) for the year.
‘‘(B) UPDATE ADJUSTMENT FACTOR.—For
purposes of subparagraph (A)(ii), subject to
subparagraph (D), the ‘update adjustment fac-
tor’ for a year is equal (as estimated by the
Secretary) to the sum of the following:
‘‘(i) PRIOR YEAR ADJUSTMENT COM-
PONENT.—An amount determined by—
‘‘(I) computing the difference
(which may be positive or negative)
between the amount of the allowed ex-
penditures for physicians’ services for
the prior year (as determined under
subparagraph (C)) and the amount of
the actual expenditures for such serv-
ices 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 COM-
PONENT.—An amount determined by—
‘‘(I) computing the difference
(which may be positive or negative)
between the amount of the allowed ex-
penditures 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 serv-
ices 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 sub-
section (f) for the year for which the
update adjustment factor is to be de-
termined; and
‘‘(III) multiplying that quotient
by 0.33.
‘‘(C) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—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 expendi-
tures for such period as determined under
paragraph (3)(C).
‘‘(ii) TRANSITION TO CALENDAR YEAR
ALLOWED
EXPENDITURES.—Subject 
to
subparagraph (E), the allowed expendi-
tures for—
‘‘(I) the 9-month period begin-
ning April 1, 1999, shall be the Sec-
retary’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 para-
graph (3)(C) for such year.
‘‘(iii) YEARS BEGINNING WITH 2000.—
The allowed expenditures for a year (be-
ginning with 2000) is equal to the allowed
expenditures for physicians’ services for
the previous year, increased by the sustain-
able growth rate under subsection (f) for
the year involved.
‘‘(D) RESTRICTION ON UPDATE ADJUST-
MENT 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
EX-
PENDITURES 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 sub-
section (f)(3).
‘‘(F) TRANSITIONAL
ADJUSTMENT
DE-
SIGNED
TO
PROVIDE
FOR
BUDGET
NEU-
TRALITY.—Under this subparagraph the Sec-
retary 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 physi-
cians’ 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 sustainable
growth rate and of the conversion factor
which will apply to physicians’ services for
the succeeding year and data used in mak-
ing 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 esti-
mate of the conversion factor submitted under
section 1848(d)(1)(E)(ii)’’ before the period at
the end.
(C) ONE-TIME PUBLICATION OF INFORMA-
TION
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 subsection
(d)(4)(C)(ii) of section 1848 of the Social
Security Act (42 U.S.C. 1395w–4), 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 subsection (d) of such section
for 1999; and
(iii) the sustainable growth rate under
subsection (f) of such section for 2000.
(3) CONFORMING AMENDMENTS.—
(A) Section 1848 (42 U.S.C. 1395w–4) is
amended—
(i) in subsection (d)(1)(A), by insert-
ing ‘‘(for years before 2001) and, for years
beginning with 2001, multiplied by the up-
date (established under paragraph (4)) for
the year involved’’ after ‘‘for the year in-
volved’’; and
(ii) in subsection (f)(2)(D), by insert-
ing ‘‘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 amending paragraph (1) to read as fol-
lows:
‘‘(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 new subparagraph:
‘‘(C) APPLICABLE PERIOD.—The term ‘ap-
plicable 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 para-
graph (4); and
(5) by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) DATA TO BE USED.—For purposes of de-
termining the update adjustment factor under sub-
section (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 cal-
culations 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 Sep-
tember 1, 2000.
‘‘(B) FOR 2002.—For purposes of such cal-
culations 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 deter-
mined for that year under this subsection.
Nothing in this paragraph shall be construed as af-
fecting the sustainable growth rates established for
fiscal year 1998 or fiscal year 1999.’’.
(c) STUDY AND REPORT REGARDING THE UTILIZA-
TION OF PHYSICIANS’ SERVICES BY MEDICARE BENE-
FICIARIES.—
(1) STUDY BY SECRETARY.—The Secretary of
Health and Human Services, acting through the Ad-
ministrator 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 speci-
fied in this paragraph are the following:
(A) The various methods for accurately es-
timating the economic impact on expenditures
for physicians’ services under the original medi-
care 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 capabili-
ties;
(ii) advancements in scientific tech-
nology;
(iii) demographic changes in the types
of medicare beneficiaries that receive bene-
fits under such program; and
(iv) geographic changes in locations
where medicare beneficiaries receive bene-
fits under such program.
(B) The rate of usage of physicians’ serv-
ices 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 bene-
ficiaries under age 65.
(C) Other factors that may be reliable pre-
dictors 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 CONGRESS.—Not later than 3
years after the date of the enactment of this Act, the
Secretary of Health and Human Services shall sub-
mit a report to Congress setting forth the results of
the study conducted pursuant to paragraph (1), to-
gether with any recommendations the Secretary de-
termines are appropriate.
(4) MEDPAC REPORT TO CONGRESS.—Not later
than 180 days after the date of submission of the
report under paragraph (3), the Medicare Payment
Advisory Commission shall submit a report to Con-
gress that includes—
(A) an analysis and evaluation of the re-
port submitted under paragraph (3); and
(B) such recommendations as 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.
SEC. 212. USE OF DATA COLLECTED BY ORGANIZATIONS
AND ENTITIES IN DETERMINING PRACTICE
EXPENSE RELATIVE VALUES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall establish by regulation (after notice
and opportunity for public comment) a process (including
data collection standards) under which the Secretary will
accept for use and will use, to the maximum extent prac-
ticable and consistent with sound data practices, data col-
lected or developed by entities and organizations (other
than the Department of Health and Human Services) to
supplement the data normally collected by that Depart-
ment in determining the practice expense component
under section 1848(c)(2)(C)(ii) of the Social Security Act
(42 U.S.C. 1395w–4(c)(2)(C)(ii)) for purposes of deter-
mining relative values for payment for physicians’ services
under the fee schedule under section 1848 of such Act
(42 U.S.C. 1395w–4). The Secretary shall first promul-
gate such regulation on an interim final basis in a manner
that permits the submission and use of data in the com-
putation of practice expense relative value units for pay-
ment rates for 2001.
(b) PUBLICATION OF INFORMATION.—The Secretary
shall include, in the publication of the estimated and final
updates under section 1848(c) of such Act (42 U.S.C.
1395w–4(c)) for payments for 2001 and for 2002, a de-
scription of the process established under subsection (a)
for the use of external data in making adjustments in rel-
ative value units and the extent to which the Secretary
has used such external data in making such adjustments
for each such year, particularly in cases in which the data
otherwise used are inadequate because such data are not
based upon a large enough sample size to be statistically
reliable.
SEC. 213. GAO STUDY ON RESOURCES REQUIRED TO PRO-
VIDE SAFE AND EFFECTIVE OUTPATIENT
CANCER THERAPY.
(a) STUDY.—The Comptroller General of the United
States shall conduct a nationwide study to determine the
physician and non-physician clinical resources necessary to
provide safe outpatient cancer therapy services and the ap-
propriate payment rates for such services under the medi-
care program. In making such determination, the Comp-
troller General shall—
(1) determine the adequacy of practice expense
relative value units associated with the utilization of
those clinical resources;
(2) determine the adequacy of work units in the
practice expense formula; and
(3) assess various standards to assure the pro-
vision of safe outpatient cancer therapy services.
(b) REPORT TO CONGRESS.—The Comptroller Gen-
eral shall submit to Congress a report on the study con-
ducted under subsection (a). The report shall include rec-
ommendations regarding practice expense adjustments to
the payment methodology under part B of title XVIII of
the Social Security Act, including the development and in-
clusion of adequate work units to assure the adequacy of
payment amounts for safe outpatient cancer therapy serv-
ices. The study shall also include an estimate of the cost
of implementing such recommendations.
Subtitle C—Other Services
SEC. 221. REVISION OF PROVISIONS RELATING TO THER-
APY SERVICES.
(a) 2-YEAR MORATORIUM ON CAPS.—
(1) IN GENERAL.—Section 1833(g) of the So-
cial 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 insert-
ing ‘‘Subject to paragraph (4), in the case’’;
and
(B) by adding at the end the following:
‘‘(4) This subsection shall not apply to expenses in-
curred with respect to services furnished during 2000 and
2001.’’.
(2) FOCUSED
MEDICAL
REVIEWS
OF
CLAIMS
DURING
MORATORIUM
PERIOD.—During years in
which paragraph (4) of section 1833(g) of the Social
Security Act (42 U.S.C. 1395l(g)) applies (under the
amendment made by paragraph (1)(B)), the Sec-
retary of Health and Human Services shall conduct
focused medical reviews of claims for reimbursement
for services described in paragraph (1) or (3) of
such section, with an emphasis on such claims for
services that are provided to residents of skilled
nursing facilities.
(b) TECHNICAL AMENDMENT RELATING TO BEING
UNDER THE CARE OF A PHYSICIAN.—
(1) IN
GENERAL.—Section 1861 (42 U.S.C.
1395x) is amended—
(A) in subsection (p)(1), by striking ‘‘or
(3)’’ and inserting ‘‘, (3), or (4)’’; and
(B) in subsection (r)(4), by inserting ‘‘for
purposes of subsection (p)(1) and’’ after ‘‘but
only’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) apply to services furnished on or
after January 1, 2000.
(c) REVISION OF REPORT.—
(1) IN GENERAL.—Section 4541(d)(2) of BBA
(42 U.S.C. 1395l note) is amended to read as fol-
lows:
‘‘(2) REPORT.—Not later than January 1,
2001, the Secretary of Health and Human Services
shall submit to Congress a report that includes rec-
ommendations on—
‘‘(A) the establishment of a mechanism for
assuring appropriate utilization of outpatient
physical therapy services, outpatient occupa-
tional therapy services, and speech-language pa-
thology services that are covered under the
medicare program under title XVIII of the So-
cial Security Act (42 U.S.C. 1395); and
‘‘(B) the establishment of an alternative
payment policy for such services based on clas-
sification 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 ap-
propriate, in place of the uniform dollar limita-
tions 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 BBA.
(d) 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 na-
tionwide patterns, and patterns by region,
types of settings, and diagnosis or condi-
tion) of outpatient physical therapy serv-
ices, outpatient occupational therapy serv-
ices, and speech-language pathology serv-
ices that are covered under the medicare
program under title XVIII of the Social
Security Act (42 U.S.C. 1395) and pro-
vided 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 sta-
tistically significant number of claims for reim-
bursement for the services described in sub-
paragraph (A).
(2) REPORT.—Not later than June 30, 2001,
the Secretary of Health and Human Services shall
submit a report to Congress on the study conducted
under paragraph (1), together with any rec-
ommendations for legislation that the Secretary de-
termines to be appropriate as a result of such study.
SEC. 222. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) IN GENERAL.—Section 1881(b)(7) (42 U.S.C.
1395rr(b)(7)) is amended by adding at the end the fol-
lowing new flush sentence:
‘‘The Secretary shall increase the amount of each com-
posite rate payment for dialysis services furnished during
2000 by 1.2 percent above such composite rate payment
amounts for such services furnished on December 31,
1999, and for such services furnished on or after January
1, 2001, by 1.2 percent above such composite rate pay-
ment amounts for such services furnished on December
31, 2000.’’.
(b) CONFORMING AMENDMENT.—The second sen-
tence of section 9335(a)(1) of the Omnibus Budget Rec-
onciliation Act of 1986 (42 U.S.C. 1395rr note) is amend-
ed by inserting ‘‘and before January 1, 2000,’’ after ‘‘on
or after January 1, 1991,’’.
(c) STUDY ON PAYMENT LEVEL FOR HOME HEMO-
DIALYSIS.—The Medicare Payment Advisory Commission
shall conduct a study on the appropriateness of the dif-
ferential in payment under the medicare program for
hemodialysis services furnished in a facility and such serv-
ices furnished in a home. Not later than 18 months after
the date of the enactment of this Act, the Commission
shall submit to Congress a report on such study and shall
include recommendations regarding changes in medicare
payment policy in response to the study.
SEC. 223. IMPLEMENTATION OF THE INHERENT REASON-
ABLENESS (IR) AUTHORITY.
(a) LIMITATION ON USE.—The Secretary of Health
and Human Services may not use, or permit fiscal inter-
mediaries or carriers to use, the inherent reasonableness
authority provided under section 1842(b)(8) of the Social
Security Act (42 U.S.C. 1395u(b)(8)) until after—
(1) the Comptroller General of the United
States releases a report pursuant to the request for
such a report made on March 1, 1999, regarding the
impact of the Secretary’s, fiscal intermediaries’, and
carriers’ use of such authority; and
(2) the Secretary has published a notice of final
rulemaking in the Federal Register that relates to
such authority and that responds to such report and
to comments received in response to the Secretary’s
interim final regulation relating to such authority
that was published in the Federal Register on Janu-
ary 7, 1998.
(b) REEVALUATION OF IR CRITERIA.—In promul-
gating the final regulation under subsection (a)(2), the
Secretary shall—
(1) reevaluate the appropriateness of the cri-
teria included in such interim final regulation for
identifying payments which are excessive or defi-
cient; and
(2) take appropriate steps to ensure the use of
valid and reliable data when exercising such author-
ity.
(c) 
TECHNICAL
CORRECTION.—Section
1842(b)(8)(A)(i)(I) (42 U.S.C. 1395u(b)(8)(A)(i)(I)) is
amended by striking ‘‘the application of this part’’ and
inserting ‘‘the application of this title to payment under
this part’’.
SEC. 224. INCREASE IN REIMBURSEMENT FOR PAP SMEARS.
(a) PAP
SMEAR
PAYMENT
INCREASE.—Section
1833(h) (42 U.S.C. 1395l(h)) is amended by adding at
the end the following new paragraph:
‘‘(7) Notwithstanding paragraphs (1) and (4), the
Secretary shall establish a national minimum payment
amount under this subsection 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 as a primary screening
method for detection of cervical cancer) equal to $14.60
for tests furnished in 2000. For such tests furnished in
subsequent years, such national minimum payment
amount shall be adjusted annually as provided in para-
graph (2).’’.
(b) SENSE OF CONGRESS.—It is the sense of the
Congress that—
(1) the Health Care Financing Administration
has been slow to incorporate or provide incentives
for providers to use new screening diagnostic health
care technologies in the area of cervical cancer;
(2) some new technologies have been developed
which optimize the effectiveness of pap smear
screening; and
(3) the Health Care Financing Administration
should institute an appropriate increase in the pay-
ment rate for new cervical cancer screening tech-
nologies that have been approved by the Food and
Drug Administration and that are significantly more
effective than a conventional pap smear.
SEC. 225. REFINEMENT OF AMBULANCE SERVICES DEM-
ONSTRATION PROJECT.
Effective as if included in the enactment of BBA, sec-
tion 4532 of BBA (42 U.S.C. 1395m note) is amended—
(1) in subsection (a), by adding at the end the
following: ‘‘Not later than July 1, 2000, the Sec-
retary shall publish a request for proposals for such
projects.’’; and
(2) by amending paragraph (2) of subsection
(b) to read as follows:
‘‘(2) CAPITATED PAYMENT RATE DEFINED.—In
this subsection, the term ‘capitated payment rate’
means, with respect to a demonstration project—
‘‘(A) in its first year, a rate established for
the project by the Secretary, using the most
current available data, in a manner that en-
sures that aggregate payments under the
project will not exceed the aggregate payment
that would have been made for ambulance serv-
ices under part B of title XVIII of the Social
Security Act in the local area of government’s
jurisdiction; and
‘‘(B) in a subsequent year, the capitated
payment rate established for the previous year
increased by an appropriate inflation adjust-
ment factor.’’.
SEC. 226. PHASE-IN OF PPS FOR AMBULATORY SURGICAL
CENTERS.
If the Secretary of Health and Human Services im-
plements a revised prospective payment system for serv-
ices of ambulatory surgical facilities under section 1833(i)
of the Social Security Act (42 U.S.C. 1395l(i)), prior to
incorporating data from the 1999 Medicare cost survey
or a subsequent cost survey, such system shall be imple-
mented in a manner so that—
(1) in the first year of its implementation, only
a proportion (specified by the Secretary and not to
exceed 1⁄3) of the payment for such services shall be
made in accordance with such system and the re-
mainder shall be made in accordance with current
regulations; and
(2) in the following year a proportion (specified
by the Secretary and not to exceed 2⁄3) of the pay-
ment for such services shall be made under such sys-
tem and the remainder shall be made in accordance
with current regulations.
SEC. 227. EXTENSION OF MEDICARE BENEFITS FOR IM-
MUNOSUPPRESSIVE DRUGS.
(a) IN
GENERAL.—Section 1861(s)(2)(J)(v) (42
U.S.C. 1395x(s)(2)(J)(v)) is amended by inserting before
the semicolon at the end the following: ‘‘plus such addi-
tional number of months (if any) provided under section
1832(b)’’.
(b) SPECIFICATION
OF NUMBER
OF ADDITIONAL
MONTHS.—Section 1832 (42 U.S.C. 1395k) is amended—
(1) by redesignating subsection (b) as sub-
section (c); and
(2) by inserting after subsection (a) the fol-
lowing new subsection:
‘‘(b) EXTENSION
OF
COVERAGE
OF
IMMUNO-
SUPPRESSIVE DRUGS.—
‘‘(1) EXTENSION.—
‘‘(A) IN
GENERAL.—The Secretary shall
specify consistent with this subsection an addi-
tional number of months (which may be por-
tions of months) of coverage of immuno-
suppressive drugs for each cohort (as defined in
subparagraph (C)) in a year during the 5-year
period beginning with 2000. The number of
such months for the cohort—
‘‘(i) for 2000 shall be 8 months; and
‘‘(ii) for 2001 shall, subject to para-
graph (2)(A)(i), be 8 months.
‘‘(B) 
APPLICATION
OF
ADDITIONAL
MONTHS IN A YEAR ONLY TO COHORT IN THAT
YEAR.—
‘‘(i) IN
GENERAL.—The additional
months specified under this subsection for
a cohort in a year in such 5-year period
shall apply under section 1861(s)(2)(J)(v)
only to individuals within such cohort for
such year.
‘‘(ii) 
CONSTRUCTION.—Nothing 
in
this subsection shall be construed as pre-
venting additional months of coverage pro-
vided for a cohort for a year from extend-
ing coverage to drugs furnished in months
in the succeeding year.
‘‘(C) COHORT
DEFINED.—In this sub-
section, the term ‘cohort’ means, with respect to
a year, those individuals who would (but for
this subsection) exhaust benefits under section
1861(s)(2)(J)(v) for prescription drugs used in
immunosuppressive therapy furnished at any
time during such year.
‘‘(2) TIMING
OF
SPECIFICATION.—Consistent
with paragraphs (3) and (4)—
‘‘(A) MAY 1, 2001.—Not later than May 1,
2001, the Secretary—
‘‘(i) may increase the number of
months for the cohort for 2001 above the
months 
provided 
under 
paragraph
(1)(A)(ii); and
‘‘(ii) shall compute and specify the
number of additional months of benefits
that will be available for the cohort for
2002.
‘‘(B) MAY
1, 2002
AND
2003.—Not later
than May 1 of 2002 and 2003, the Secretary
shall compute and specify the number of addi-
tional months of benefits that will be available
for the cohort for the following year under this
subsection. Such number may be more or less
than 8 months.
‘‘(3) BASIS FOR SPECIFICATION.—Using appro-
priate actuarial methods, the Secretary shall com-
pute the number of additional months for the cohort
for a year under this subsection in a manner so that
the total expenditures under this part attributable to
this subsection, as computed based upon the best
available data at the time additional months are
specified under this subsection, do not exceed
$150,000,000. Subject to paragraph (4), the Sec-
retary shall seek to compute such months in a man-
ner that provides for a level number of months for
each cohort in each year in the last 4 years of the
5-year period described in paragraph (1)(A).
‘‘(4) ANNUAL ADJUSTMENT TO MAINTAIN AG-
GREGATE EXPENDITURES WITHIN LIMITS.—In com-
puting and specifying the number of additional
months under paragraph (2), the Secretary shall ad-
just the number of additional months under this
subsection for a cohort for a year from that provided
in the previous year within such 5-year period to the
extent necessary to take into account, based upon
the best available data, differences between actual
and estimated expenditures under this part attrib-
utable to this subsection for previous years and to
comply with the limitation on total expenditures
under paragraph (3).’’.
(c) TRANSITIONAL PASS-THROUGH OF ADDITIONAL
COSTS
UNDER
MEDICARE+CHOICE
PROGRAM
FOR
2000.—The provisions of subparagraphs (A) and (B) of
section 1852(a)(5) of the Social Security Act (42 U.S.C.
1395w–22(a)(5)) shall apply with respect to the coverage
of additional benefits for immunosuppressive drugs under
the amendments made by this section for drugs furnished
in 2000 in the same manner as if such amendments con-
stituted a national coverage determination described in the
matter in such section before subparagraph (A).
(d) REPORT ON IMMUNOSUPPRESSIVE DRUG BEN-
EFIT.—
(1) IN
GENERAL.—Not later than March 1,
2003, the Secretary of Health and Human Services
shall submit to Congress a report on the operation
of this section and the amendments made by this
section. The report shall include—
(A) an analysis of the impact of this sec-
tion; and
(B) recommendations regarding an appro-
priate cost-effective method for providing cov-
erage of immunosuppressive drugs under the
medicare program on a permanent basis.
(2) 
CONSIDERATIONS.—In 
making 
rec-
ommendations under paragraph (1)(B), the Sec-
retary shall identify potential modifications to the
immunosuppressive drug benefit that would best
promote the objectives of—
(A) improving health outcomes (by de-
creasing transplant rejection rates that are at-
tributable to failure to comply with immuno-
suppressive drug regimens);
(B) achieving cost savings to the medicare
program (by decreasing the need for secondary
transplants and other care relating to post-
transplant complications); and
(C) meeting the needs of those medicare
beneficiaries who, because of income or other
factors, would be less likely to maintain an im-
munosuppressive drug regimen in the absence
of such modifications.
SEC. 228. TEMPORARY INCREASE IN PAYMENT RATES FOR
DURABLE MEDICAL EQUIPMENT AND OXY-
GEN.
(a) IN GENERAL.—For purposes of payments under
section 1834(a) of the Social Security Act (42 U.S.C.
1395m(a)) for covered items (as defined in paragraph (13)
of that section) furnished during 2001 and 2002, the Sec-
retary of Health and Human Services shall increase the
study, the Commission shall consider data on these
centers gathered in demonstration projects.
(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commission
shall submit to Congress a report on such study and
shall include in the report recommendations on the
feasibility, costs, and savings of covering such serv-
ices under the medicare program.
(b) AHCPR STUDY ON EFFECT OF CREDENTIALING
OF TECHNOLOGISTS AND SONOGRAPHERS ON QUALITY OF
ULTRASOUND.—
(1) STUDY.—The Administrator for Health
Care Policy and Research shall provide for a study
that, with respect to the provision of ultrasound
under the medicare and medicaid programs under ti-
tles XVIII and XIX of the Social Security Act, com-
pares differences in quality between ultrasound fur-
nished by individuals who are credentialed by private
entities or organizations and ultrasound furnished
by those who are not so credentialed. Such study
shall examine and evaluate differences in error rates,
resulting complications, and patient outcomes as a
result of the differences in credentialing. In design-
ing the study, the Administrator shall consult with
organizations nationally recognized for their exper-
tise in ultrasound.
(2) REPORT.—Not later than two years after
the date of the enactment of this Act, the Adminis-
trator shall submit a report to Congress on the
study conducted under paragraph (1).
(c) MEDPAC STUDY ON THE COMPLEXITY OF THE
MEDICARE PROGRAM AND THE LEVELS OF BURDENS
PLACED ON PROVIDERS THROUGH FEDERAL REGULA-
TIONS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall undertake a comprehensive study
to review the regulatory burdens placed on all class-
es of health care providers under parts A and B of
the medicare program under title XVIII of the So-
cial Security Act and to determine the costs these
burdens impose on the nation’s health care system.
The study shall also examine the complexity of the
current regulatory system and its impact on pro-
viders.
(2) REPORT.—Not later than December 31,
2001, the Commission shall submit to Congress one
or more reports on the study conducted under para-
graph (1). The report shall include recommendations
regarding—
(A) how the Health Care Financing Ad-
ministration can reduce the regulatory burdens
placed on patients and providers; and
(B) legislation that may be appropriate to
reduce the complexity of the medicare program,
including improvement of the rules regarding
billing, compliance, and fraud and abuse.
(d) GAO CONTINUED MONITORING OF DEPARTMENT
OF JUSTICE APPLICATION OF GUIDELINES ON USE OF
FALSE CLAIMS ACT IN CIVIL HEALTH CARE MATTERS.—
The Comptroller General of the United States shall—
(1) continue the monitoring, begun under sec-
tion 118 of the Department of Justice Appropria-
tions Act, 1999 (included in Public Law 105–277)
of the compliance of the Department of Justice and
all United States Attorneys with the ‘‘Guidance on
the Use of the False Claims Act in Civil Health
Care Matters’’ issued by the Department of Justice
on June 3, 1998, including any revisions to that
guidance; and
(2) not later than April 1, 2000, and of each
of the two succeeding years, submit a report on such
compliance to the appropriate Committees of Con-
gress.
TITLE III—PROVISIONS
RELATING TO PARTS A AND B
Subtitle A—Home Health Services
SEC. 301. ADJUSTMENT TO REFLECT ADMINISTRATIVE
COSTS NOT INCLUDED IN THE INTERIM PAY-
MENT SYSTEM; GAO REPORT ON COSTS OF
COMPLIANCE WITH OASIS DATA COLLECTION
REQUIREMENTS.
(a) ADJUSTMENT TO REFLECT ADMINISTRATIVE
COSTS.—
(1) IN GENERAL.—In the case of a home health
agency that furnishes home health services to a
medicare beneficiary, for each such beneficiary to
whom the agency furnished such services during the
agency’s cost reporting period beginning in fiscal
year 2000, the Secretary of Health and Human
Services shall pay the agency, in addition to any
amount 
of 
payment 
made 
under 
section
1861(v)(1)(L) of the Social Security Act (42 U.S.C.
1395x(v)(1)(L)) for the beneficiary and only for
such cost reporting period, an aggregate amount of
$10 to defray costs incurred by the agency attrib-
utable to data collection and reporting requirements
under the Outcome and Assessment Information Set
(OASIS) required by reason of section 4602(e) of
BBA (42 U.S.C. 1395fff note).
(2) PAYMENT SCHEDULE.—
(A) MIDYEAR PAYMENT.—Not later than
April 1, 2000, the Secretary shall pay to a
home health agency an amount that the Sec-
retary estimates to be 50 percent of the aggre-
gate amount payable to the agency by reason of
this subsection.
(B) UPON SETTLED COST REPORT.—The
Secretary shall pay the balance of amounts pay-
able to an agency under this subsection on the
date that the cost report submitted by the agen-
cy for the cost reporting period beginning in fis-
cal year 2000 is settled.
(3) PAYMENT FROM TRUST FUNDS.—Payments
under this subsection shall be made, in appropriate
part as specified by the Secretary, from the Federal
Hospital Insurance Trust Fund and from the Fed-
eral Supplementary Medical Insurance Trust Fund.
(4) DEFINITIONS.—In this subsection:
(A) HOME
HEALTH
AGENCY.—The term
‘‘home health agency’’ has the meaning given
that term under section 1861(o) of the Social
Security Act (42 U.S.C. 1395x(o)).
100
(B) HOME HEALTH SERVICES.—The term
‘‘home health services’’ has the meaning given
that term under section 1861(m) of such Act
(42 U.S.C. 1395x(m)).
(C) MEDICARE
BENEFICIARY.—The term
‘‘medicare beneficiary’’ means a beneficiary de-
scribed in section 1861(v)(1)(L)(vi)(II) of the
Social 
Security 
Act 
(42 
U.S.C.
1395x(v)(1)(L)(vi)(II)).
(b) GAO REPORT ON COSTS OF COMPLIANCE WITH
OASIS DATA COLLECTION REQUIREMENTS.—
(1) REPORT TO CONGRESS.—
(A) IN
GENERAL.—Not later than 180
days after the date of the enactment of this
Act, the Comptroller General of the United
States shall submit to Congress a report on the
matters described in subparagraph (B) with re-
spect to the data collection requirement of pa-
tients of such agencies under the Outcome and
Assessment Information Set (OASIS) standard
as part of the comprehensive assessment of pa-
tients.
(B) MATTERS STUDIED.—For purposes of
subparagraph (A), the matters described in this
subparagraph include the following:
101
(i) An assessment of the costs in-
curred by medicare home health agencies
in complying with such data collection re-
quirement.
(ii) An analysis of the effect of such
data collection requirement on the privacy
interests of patients from whom data is
collected.
(C) AUDIT.—The Comptroller General
shall conduct an independent audit of the costs
described in subparagraph (B)(i). Not later
than 180 days after receipt of the report under
subparagraph (A), the Comptroller General
shall submit to Congress a report describing the
Comptroller General’s findings with respect to
such audit, and shall include comments on the
report submitted to Congress by the Secretary
of Health and Human Services under subpara-
graph (A).
(2) DEFINITIONS.—In this subsection:
(A) COMPREHENSIVE ASSESSMENT OF PA-
TIENTS.—The term ‘‘comprehensive assessment
of patients’’ means the rule published by the
Health Care Financing Administration that re-
quires, as a condition of participation in the
102
medicare program, a home health agency to
provide a patient-specific comprehensive assess-
ment that accurately reflects the patient’s cur-
rent status and that incorporates the Outcome
and Assessment Information Set (OASIS).
(B) OUTCOME AND ASSESSMENT INFORMA-
TION SET.—The term ‘‘Outcome and Assess-
ment Information Set’’ means the standard pro-
vided under the rule relating to data items that
must be used in conducting a comprehensive as-
sessment of patients.
SEC. 302. DELAY IN APPLICATION OF 15 PERCENT REDUC-
TION IN PAYMENT RATES FOR HOME HEALTH
SERVICES UNTIL ONE YEAR AFTER IMPLE-
MENTATION OF PROSPECTIVE PAYMENT SYS-
TEM.
(a) CONTINGENCY REDUCTION.—Section 4603 of
BBA (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 amended by striking subsection (e).
(b) 
PROSPECTIVE
PAYMENT
SYSTEM.—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 Ex-
103
tension Act of 1998 (contained in division J of Public Law
105–277)) is amended to read as follows:
‘‘(i) IN GENERAL.—Under such sys-
tem the Secretary shall provide for com-
putation of a standard prospective pay-
ment amount (or amounts) as follows:
‘‘(I) Such amount (or amounts)
shall initially be based on the most
current audited cost report data avail-
able to the Secretary and shall be
computed in a manner so that the
total amounts payable under the sys-
tem for the 12-month period begin-
ning on the date the Secretary imple-
ments the system shall be equal to the
total amount that would have been
made if the system had not been in ef-
fect.
‘‘(II) For periods beginning after
the period described in subclause (I),
such amount (or amounts) shall be
equal to the amount (or amounts)
that would have been determined
under subclause (I) that would have
been made for fiscal year 2001 if the
104
system had not been in effect but if
the reduction in limits described in
clause (ii) had been in effect, updated
under subparagraph (B).
Each such amount shall be standardized in
a manner that eliminates the effect of vari-
ations in relative case mix and area wage
adjustments among different home health
agencies in a budget neutral manner con-
sistent with the case mix and wage level
adjustments provided under paragraph
(4)(A). Under the system, the Secretary
may recognize regional differences or dif-
ferences based upon whether or not the
services or agency are in an urbanized
area.’’.
(c) REPORT.—Not later than the date that is six
months after the date the Secretary of Health and Human
Services implements the prospective payment system for
home health services under section 1895 of the Social Se-
curity Act (42 U.S.C. 1395fff), the Secretary shall submit
to Congress a report analyzing the need for the 15 percent
reduction under subsection (b)(3)(A)(ii) of such section,
or for any reduction, in the computation of the base pay-
105
ment amounts under the prospective payment system for
home health services established under such section.
SEC. 303. INCREASE IN PER BENEFICIARY LIMITS.
(a) INCREASE IN PER BENEFICIARY LIMITS.—Sec-
tion 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 Di-
vision 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
new clause:
‘‘(ix) Notwithstanding the per beneficiary limit under
clause (viii), if the limit imposed under clause (v) (deter-
mined without regard to this clause) for a cost reporting
period beginning during or after fiscal year 2000 is less
than the median described in clause (vi)(I) (but deter-
mined as if any reference in clause (v) to ‘98 percent’ were
a reference to ‘100 percent’), the limit otherwise imposed
under clause (v) for such provider and period shall be in-
creased by 2 percent.’’.
(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 302(b), is fur-
ther amended—
106
(1) in subclause (I), by inserting ‘‘and if section
1861(v)(1)(L)(ix) had not been enacted’’ before the
semicolon; and
(2) in subclause (II), by inserting ‘‘and if sec-
tion 1861(v)(1)(L)(ix) had not been enacted’’ after
‘‘if the system had not been in effect’’.
(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. CLARIFICATION OF SURETY BOND REQUIRE-
MENTS.
(a) HOME HEALTH AGENCIES.—Section 1861(o)(7)
(42 U.S.C. 1395x(o)(7)) is amended to read as follows:
‘‘(7) provides the Secretary with a surety
bond—
‘‘(A) effective for a period of 4 years (as
specified by the Secretary) or in the case of a
change in the ownership or control of the agen-
cy (as determined by the Secretary) during or
after such 4-year period, an additional period of
time that the Secretary determines appropriate,
such additional period not to exceed 4 years
from the date of such change in ownership or
control;
107
‘‘(B) in a form specified by the Secretary;
and
‘‘(C) for a year in the period described in
subparagraph (A) in an amount that is equal to
the lesser of $50,000 or 10 percent of the ag-
gregate amount of payments to the agency
under this title and title XIX for that year, as
estimated by the Secretary; and’’.
(b) COORDINATION OF SURETY BONDS.—Part A of
title XI of the Social Security Act is amended by inserting
after section 1128E the following new section:
‘‘COORDINATION OF MEDICARE AND MEDICAID SURETY
BOND PROVISIONS
‘‘SEC. 1128F. In the case of a home health agency
that is subject to a surety bond requirement under title
XVIII and title XIX, the surety bond provided to satisfy
the requirement under one such title shall satisfy the re-
quirement under the other such title so long as the bond
applies to guarantee return of overpayments under both
such titles.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act, and in applying section 1861(o)(7) of the Social
Security Act (42 U.S.C. 1395x(o)(7)), as amended by sub-
section (a), the Secretary of Health and Human Services
may take into account the previous period for which a
108
home health agency had a surety bond in effect under such
section before such date.
SEC. 305. REFINEMENT OF HOME HEALTH AGENCY CON-
SOLIDATED BILLING.
(a) IN GENERAL.—Section 1842(b)(6)(F) (42 U.S.C.
1395u(b)(6)(F)) is amended by inserting ‘‘(including med-
ical supplies described in section 1861(m)(5), but exclud-
ing 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 in-
serting ‘‘(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. TECHNICAL AMENDMENT CLARIFYING APPLICA-
BLE MARKET BASKET INCREASE FOR PPS.
Section 
1895(b)(3)(B)(ii)(I) 
(42 
U.S.C.
1395fff(b)(3)(B)(ii)(I)) is amended by striking ‘‘fiscal
year 2002 or 2003’’ and inserting ‘‘each of fiscal years
2002 and 2003’’.
109
SEC. 307. STUDY AND REPORT TO CONGRESS REGARDING
THE EXEMPTION OF RURAL AGENCIES AND
POPULATIONS 
FROM 
INCLUSION 
IN 
THE
HOME HEALTH PROSPECTIVE PAYMENT SYS-
TEM.
(a) STUDY.—The Medicare Payment Advisory Com-
mission (referred to in this section as ‘‘MedPAC’’) shall
conduct a study to determine the feasibility and advis-
ability 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 indi-
vidual 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 accord-
ance with section 1895 of the Social Security Act (42
U.S.C. 1395fff).
(b) REPORT.—Not later than 2 years after the date
of the enactment of this Act, MedPAC shall submit a re-
port 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.
110
Subtitle B—Direct Graduate
Medical Education
SEC. 311. USE OF NATIONAL AVERAGE PAYMENT METHOD-
OLOGY IN COMPUTING DIRECT GRADUATE
MEDICAL EDUCATION (DGME) PAYMENTS.
(a) IN GENERAL.—Section 1886(h)(2) (42 U.S.C.
1395ww(h)(2)) is amended—
(1) in subparagraph (D)(i), by striking ‘‘clause
(ii)’’ and inserting ‘‘a subsequent clause’’;
(2) by adding at the end of subparagraph (D)
the following new clauses:
‘‘(iii) FLOOR IN FISCAL YEAR 2001 AT
70 PERCENT OF LOCALITY ADJUSTED NA-
TIONAL
AVERAGE
PER
RESIDENT
AMOUNT.—The approved FTE resident
amount for a hospital for the cost report-
ing period beginning during fiscal year
2001 shall not be less than 70 percent of
the locality adjusted national average per
resident amount computed under subpara-
graph (E) for the hospital and period.
‘‘(iv) ADJUSTMENT IN RATE OF IN-
CREASE
FOR
HOSPITALS
WITH
FTE
AP-
PROVED AMOUNT ABOVE 140 PERCENT OF
111
LOCALITY ADJUSTED NATIONAL AVERAGE
PER RESIDENT AMOUNT.—
‘‘(I) FREEZE FOR FISCAL YEARS
2001 AND 2002.—For a cost reporting
period beginning during fiscal year
2001 or fiscal year 2002, if the ap-
proved FTE resident amount for a
hospital for the preceding cost report-
ing period exceeds 140 percent of the
locality adjusted national average per
resident amount computed under sub-
paragraph (E) for that hospital and
period, subject to subclause (III), the
approved FTE resident amount for
the period involved shall be the same
as the approved FTE resident amount
for the hospital for such preceding
cost reporting period.
‘‘(II) 2 PERCENT DECREASE IN
UPDATE FOR FISCAL YEARS 2003, 2004,
AND 2005.—For a cost reporting pe-
riod beginning during fiscal year
2003, fiscal year 2004, or fiscal year
2005, if the approved FTE resident
amount for a hospital for the pre-
112
ceding cost reporting period exceeds
140 percent of the locality adjusted
national average per resident amount
computed under subparagraph (E) for
that hospital and preceding period,
the approved FTE resident amount
for the period involved shall be up-
dated in the manner described in sub-
paragraph (D)(i) except that, subject
to subclause (III), the consumer price
index applied for a 12-month period
shall be reduced (but not below zero)
by 2 percentage points.
‘‘(III) NO
ADJUSTMENT
BELOW
140 PERCENT.—In no case shall sub-
clause (I) or (II) reduce an approved
FTE resident amount for a hospital
for a cost reporting period below 140
percent of the locality adjusted na-
tional average per resident amount
computed under subparagraph (E) for
such hospital and period.’’;
(3) by redesignating subparagraph (E) as sub-
paragraph (F); and
113
(4) by inserting after subparagraph (D) the fol-
lowing new subparagraph:
‘‘(E) DETERMINATION
OF
LOCALITY
AD-
JUSTED
NATIONAL
AVERAGE
PER
RESIDENT
AMOUNT.—The Secretary shall determine a lo-
cality adjusted national average per resident
amount with respect to a cost reporting period
of a hospital beginning during a fiscal year as
follows:
‘‘(i) DETERMINING HOSPITAL SINGLE
PER
RESIDENT
AMOUNT.—The Secretary
shall compute for each hospital operating
an approved graduate medical education
program a single per resident amount
equal to the average (weighted by number
of full-time equivalent residents, as deter-
mined under paragraph (4)) of the primary
care per resident amount and the non-pri-
mary care per resident amount computed
under paragraph (2) for cost reporting pe-
riods ending during fiscal year 1997.
‘‘(ii) STANDARDIZING PER RESIDENT
AMOUNTS.—The Secretary shall compute a
standardized per resident amount for each
such hospital by dividing the single per
114
resident amount computed under clause (i)
by an average of the 3 geographic index
values (weighted by the national average
weight for each of the work, practice ex-
pense, and malpractice components) as ap-
plied under section 1848(e) for 1999 for
the fee schedule area in which the hospital
is located.
‘‘(iii) COMPUTING OF WEIGHTED AV-
ERAGE.—The Secretary shall compute the
average of the standardized per resident
amounts computed under clause (ii) for
such hospitals, with the amount for each
hospital weighted by the average number
of full-time equivalent residents at such
hospital (as determined under paragraph
(4)).
‘‘(iv) COMPUTING NATIONAL AVERAGE
PER
RESIDENT
AMOUNT.—The Secretary
shall compute the national average per
resident amount, for a hospital’s cost re-
porting period that begins during fiscal
year 2001, equal to the weighted average
computed under clause (iii) increased by
the estimated percentage increase in the
115
consumer price index for all urban con-
sumers during the period beginning with
the month that represents the midpoint of
the cost reporting periods described in
clause (i) and ending with the midpoint of
the hospital’s cost reporting period that be-
gins during fiscal year 2001.
‘‘(v) ADJUSTING FOR LOCALITY.—The
Secretary shall compute the product of—
‘‘(I) the national average per
resident 
amount 
computed 
under
clause (iv) for the hospital, and
‘‘(II) the geographic index value
average (described and applied under
clause (ii)) for the fee schedule area
in which the hospital is located.
‘‘(vi) 
COMPUTING
LOCALITY
AD-
JUSTED
AMOUNT.—The locality adjusted
national per resident amount for a hospital
for—
‘‘(I) the cost reporting period be-
ginning during fiscal year 2001 is the
product computed under clause (v); or
‘‘(II) each subsequent cost re-
porting period is equal to the locality
116
adjusted national per resident amount
for the hospital for the previous cost
reporting period (as determined under
this clause) updated, through the mid-
point of the period, by projecting the
estimated percentage change in the
consumer price index for all urban
consumers during the 12-month pe-
riod ending at that midpoint.’’.
(b) 
CONFORMING
AMENDMENTS.—Section
1886(h)(2)(D) (42 U.S.C. 1395ww(h)(2)(D)) is further
amended—
(1) in clause (i)—
(A) by striking ‘‘PERIODS.—(i)’’ and in-
serting the following (and conforming the in-
dentation of the succeeding matter accordingly):
‘‘PERIODS.—
‘‘(i) IN GENERAL.—’’; and
(B) by striking ‘‘the amount determined’’
and inserting ‘‘the approved FTE resident
amount determined’’; and
(2) in clause (ii)—
(A) by indenting the clause 2 ems to the
right; and
117
(B) by inserting ‘‘FREEZE IN UPDATE FOR
FISCAL YEARS 1994 AND 1995.—’’ after ‘‘(ii)’’.
SEC. 312. INITIAL RESIDENCY PERIOD FOR CHILD NEU-
ROLOGY RESIDENCY TRAINING PROGRAMS.
(a) IN GENERAL.—Section 1886(h)(5) (42 U.S.C.
1395ww(h)(5)) is amended—
(1) in the last sentence of subparagraph (F), by
striking ‘‘The initial residency period’’ and inserting
‘‘Subject to subparagraph (G)(v), the initial resi-
dency period’’; and
(2) in subparagraph (G)—
(A) in clause (i) by striking ‘‘and (iv)’’ and
inserting ‘‘(iv), and (v)’’; and
(B) by adding at the end the following new
clause:
‘‘(v) CHILD
NEUROLOGY
TRAINING
PROGRAMS.—In the case of a resident en-
rolled in a child neurology residency train-
ing program, the period of board eligibility
and the initial residency period shall be the
period of board eligibility for pediatrics
plus 2 years.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply on and after July 1, 2000, to resi-
118
dency programs that began before, on, or after the date
of the enactment of this Act.
(c) MEDPAC REPORT.—The Medicare Payment Ad-
visory Commission shall include in its report submitted to
Congress in March of 2001 recommendations regarding
the appropriateness of the initial residency period used
under section 1886(h)(5)(F) of the Social Security Act
(42 U.S.C. 1395ww(h)(5)(F)) for other residency training
programs in a specialty that require preliminary years of
study in another specialty.
Subtitle C—Technical Corrections
SEC. 321. BBA TECHNICAL CORRECTIONS.
(a) SECTION 4201.—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 govern-
ment) 
in 
a 
rural 
area 
(as 
defined 
in 
section
1886(d)(2)(D)) that’’ and inserting ‘‘that is located in a
county (or equivalent unit of local government) in a rural
area (as defined in section 1886(d)(2)(D)), and that’’.
(b) SECTION 4204.—(1) Section 1886(d)(5)(G) (42
U.S.C. 1395ww(d)(5)(G)) is amended—
(A) in clause (i), by striking ‘‘or beginning on
or after October 1, 1997, and before October 1,
2001,’’ and inserting ‘‘or discharges occurring on or
119
after October 1, 1997, and before October 1,
2001,’’; and
(B) in clause (ii)(II), by striking ‘‘or beginning
on or after October 1, 1997, and before October 1,
2001,’’ and inserting ‘‘or discharges occurring on or
after October 1, 1997, and before October 1,
2001,’’.
(2) 
Section 
1886(b)(3)(D) 
(42 
U.S.C.
1395ww(b)(3)(D)) is amended in the matter preceding
clause (i) by striking ‘‘and for cost reporting periods be-
ginning on or after October 1, 1997, and before October
1, 2001,’’ and inserting ‘‘and for discharges beginning on
or after October 1, 1997, and before October 1, 2001,’’.
(c) SECTION 4319.—Section 1847(b)(2) (42 U.S.C.
1395w–3(b)(2)) is amended by inserting ‘‘and’’ after
‘‘specified by the Secretary’’.
(d) SECTION 4401.—Section 4401(b)(1)(B) of BBA
(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 ‘‘sec-
tion 1886(b)(3)(B)(i)(XIV) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)(i)(XIV)))’’.
(e) SECTION 4402.—The last sentence of section
1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended
120
by striking ‘‘September 30, 2002,’’ and inserting ‘‘October
1, 2002,’’.
(f) SECTION 4419.—The first sentence of section
1886(b)(4)(A)(i) (42 U.S.C. 1395ww(b)(4)(A)(i)) is
amended by striking ‘‘or unit’’.
(g) SECTION 4432.—(1) 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’’.
(2) 
Section 
1833(h)(5)(A)(iii) 
(42 
U.S.C.
1395l(h)(5)(A)(iii)) is amended—
(A) by striking ‘‘or critical access hospital,’’ and
inserting ‘‘, critical access hospital, or skilled nurs-
ing facility,’’; and
(B) by inserting ‘‘or skilled nursing facility’’ be-
fore the period.
(h) SECTION
4416.—Section 1886(b)(7)(A)(i)(II)
(42 U.S.C. 1395ww(b)(7)(A)(i)(II)) is amended by insert-
ing ‘‘(as estimated by the Secretary)’’ after ‘‘median’’.
(i) SECTION 4442.—Section 4442(b) of BBA (42
U.S.C. 1395f note) is amended by striking ‘‘applies to cost
reporting periods beginning’’ and inserting ‘‘applies to
items and services furnished’’.
(j) HIPAA SECTION 201.—
(1) IN GENERAL.—Section 1817(k)(2)(C)(i) (42
U.S.C. 1395i(k)(2)(C)(i)) is amended by striking
121
‘‘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).
(k) OTHER TECHNICAL AMENDMENTS.—
(1) SECTION 4611.—Section 1812(b) (42 U.S.C.
1395d(b)) is amended in the matter following para-
graph (3) by inserting ‘‘during’’ after ‘‘100 visits’’.
(2) SECTION 4511.—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 4551.—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 4315.— Section 1842(s)(2)(E) (42
U.S.C. 1395u(s)(2)(E)) is amended by inserting a
period at the end.
(5) SECTIONS 4103, 4104, AND 4106.—
122
(A) SECTION 4103.—Section 1848(j)(3) (42
U.S.C. 1395w–4(j)(3)) is amended by striking
‘‘1861(oo)(2),’’ and inserting ‘‘1861(oo)(2))’’.
(B) SECTION 4104.—Such section is fur-
ther amended by striking ‘‘(B) ,’’ and inserting
‘‘(B),’’.
(C) SECTION 4106.—Such section is further
amended by striking ‘‘and (15)’’ and inserting
‘‘, and (15)’’.
(6) SECTION 4001.—(A) Section 1851(i)(2) (42
U.S.C. 1395w–21(i)(2)) is amended by striking
‘‘and’’ after ‘‘1857(f)(2),’’.
(B) Section 1852 (42 U.S.C. 1395w–22) is
amended—
(i) in subsection (a)(3)(A)—
(I) by striking the comma after ‘‘MSA
plan’’; and
(II) by inserting a comma after ‘‘the
coverage)’’;
(ii) in subsection (g)—
(I) in paragraph (1)(B), by inserting
‘‘or’’ after ‘‘in whole’’; and
(II) in paragraph (3)(B)(ii), by insert-
ing a period at the end;
123
(iii) in subsection (h)(2), by striking the
comma and inserting a semicolon; and
(iv) in subsection (k)(2)(C)(ii), by striking
‘‘balancing’’ and inserting ‘‘balance’’.
(C) Section 1854(a) (42 U.S.C. 1395w–24(a))
is amended—
(i) 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 mat-
ter preceding clause (i), by inserting ‘‘sec-
tion’’ after ‘‘described in’’;
(ii) 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
(iii) in paragraph (4)—
(I) in the matter preceding subpara-
graph (A), by inserting ‘‘section’’ after
‘‘described in’’;
(II) in subparagraph (A), in the mat-
ter preceding clause (i), by inserting ‘‘sec-
tion’’ after ‘‘described in’’; and
124
(III) in subparagraph (B), by insert-
ing ‘‘section’’ after ‘‘described in’’.
(7) SECTION
4557.—Section 1861(s)(2)(T)(ii)
(42 U.S.C. 1395x(s)(2)(T)(ii)) is amended by strik-
ing the period and inserting a semicolon.
(8) SECTION
4205.—Section 1861(aa)(2) (42
U.S.C. 1395x(aa)(2)) is amended—
(A) in subparagraph (I), by striking the
comma at the end and inserting a semicolon;
and
(B) by realigning subparagraph (I) so as
to align the left margin of such subparagraph
with the left margin of subparagraph (H); and
(9) SECTION
4454.—Section 1861(ss)(1)(G)(i)
(42 U.S.C. 1395x(ss)(1)(G)(i)) is amended—
(A) by striking ‘‘owed’’ and inserting
‘‘owned’’; and
(B) by striking ‘‘of’’ and inserting ‘‘or’’.
(10) SECTION
4103.—Section 1862(a)(7) (42
U.S.C. 1395y(a)(7)) is amended by striking ‘‘sub-
paragraphs’’ and inserting ‘‘subparagraph’’.
(11) SECTION
4002.—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;
125
(B) in subparagraph (N)(iv), by striking
‘‘and’’ at the end; and
(C) in subparagraph (O), by striking the
semicolon at the end and inserting a comma.
(12) SECTION
4321.—Section 1866(a)(1) (42
U.S.C. 1395cc(a)(1)) is amended—
(A) in subparagraph (Q), by striking the
semicolon at the end and inserting a comma;
and
(B) in subparagraph (R), by inserting ‘‘,
and’’ at the end.
(13) SECTION
4003.—Section 1882(g)(1) (42
U.S.C. 1395ss(g)(1)) is amended by striking ‘‘or’’
after ‘‘does not include’’.
(14) SECTION 4031.—Section 1882(s)(2)(D) (42
U.S.C. 1395ss(s)(2)(D)), is amended in the matter
preceding clause (i), by inserting ‘‘section’’ after ‘‘as
defined in’’.
(15) SECTION
4421.—Section 1886(b) (42
U.S.C. 1395ww(b)) is amended—
(A) in paragraph (1), in the matter fol-
lowing subparagraph (C), by inserting a comma
after ‘‘paragraph (2)’’; and
(B) in paragraph (3)(B)(ii)—
126
(i) in subclause (VI), by striking the
semicolon and inserting a comma; and
(ii) in subclause (VII), by striking the
semicolon and inserting a comma.
(16) SECTION 4403.—Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended by inserting a
comma after ‘‘1986’’.
(17) SECTION 4406.—Section 1886(d)(9)(A)(ii)
(42 U.S.C. 1395ww(d)(9)(A)(ii)) is amended by in-
serting a comma after ‘‘1987’’.
(18) SECTION 4432.—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’’.
(19) SECTION
4603.—Section 1895(b)(1) (42
U.S.C. 1395fff(b)(1)) is amended by striking ‘‘the
this section’’ and inserting ‘‘this section’’.
(l) SECTION 1135 OF THE SOCIAL SECURITY ACT.—
Effective on the date of the enactment of this Act, section
1135 (42 U.S.C. 1320b–5) is repealed.
127
(m) EFFECTIVE DATE.—Except as otherwise pro-
vided, the amendments made by this section shall take ef-
fect as if included in the enactment of BBA.
TITLE IV—RURAL PROVIDER
PROVISIONS
Subtitle A—Rural Hospitals
SEC. 401. PERMITTING RECLASSIFICATION OF CERTAIN
URBAN HOSPITALS AS RURAL HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8) (42 U.S.C.
1395ww(d)(8)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E)(i) For purposes of this subsection, not later
than 60 days after the receipt of an application (in a form
and manner determined by the Secretary) from a sub-
section (d) hospital described in clause (ii), the Secretary
shall treat the hospital as being located in the rural area
(as defined in paragraph (2)(D)) of the State in which
the hospital is located.
‘‘(ii) For purposes of clause (i), a subsection (d) hos-
pital described in this clause is a subsection (d) hospital
that is located in an urban area (as defined in paragraph
(2)(D)) and satisfies any of the following criteria:
‘‘(I) The hospital is located in a rural census
tract of a metropolitan statistical area (as deter-
mined under the most recent modification of the
128
Goldsmith Modification, originally published in the
Federal Register on February 27, 1992 (57 Fed.
Reg. 6725)).
‘‘(II) The hospital is located in an area des-
ignated by any law or regulation of such State as a
rural area (or is designated by such State as a rural
hospital).
‘‘(III) The hospital would qualify as a rural, re-
gional, or national referral center under paragraph
(5)(C) or as a sole community hospital under para-
graph (5)(D) if the hospital were located in a rural
area.
‘‘(IV) The hospital meets such other criteria as
the Secretary may specify.’’.
(b) CONFORMING CHANGES.—(1) Section 1833(t)
(42 U.S.C. 1395l(t)), as amended by sections 201 and
202, is further amended by adding at the end the following
new paragraph:
‘‘(13) MISCELLANEOUS PROVISIONS.—
‘‘(A) APPLICATION OF RECLASSIFICATION
OF CERTAIN HOSPITALS.—If a hospital is being
treated as being located in a rural area under
section 1886(d)(8)(E), that hospital shall be
treated under this subsection as being located
in that rural area.’’.
129
(2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–
4(c)(2)(B)(i)) is amended, in the matter preceding sub-
clause (I), by inserting ‘‘or is treated as being located in
a rural area pursuant to section 1886(d)(8)(E)’’ after
‘‘section 1886(d)(2)(D))’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall become effective on January 1, 2000.
SEC. 402. UPDATE OF STANDARDS APPLIED FOR GEO-
GRAPHIC RECLASSIFICATION FOR CERTAIN
HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8)(B) (42 U.S.C.
1395ww(d)(8)(B)) is amended—
(1) by inserting ‘‘(i)’’ after ‘‘(B)’’;
(2) by striking ‘‘published in the Federal Reg-
ister on January 3, 1980’’ and inserting ‘‘described
in clause (ii)’’; and
(3) by adding at the end the following new
clause:
‘‘(ii) The standards described in this clause for cost
reporting periods beginning in a fiscal year—
‘‘(I) before fiscal year 2003, are the standards
published in the Federal Register on January 3,
1980, or, at the election of the hospital with respect
to fiscal years 2001 and 2002, standards so pub-
lished on March 30, 1990; and
130
‘‘(II) after fiscal year 2002, are the standards
published in the Federal Register by the Director of
the Office of Management and Budget based on the
most recent available decennial population data.
Subparagraphs (C) and (D) shall not apply with respect
to the application of subclause (I).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply with respect to discharges occurring
during cost reporting periods beginning on or after Octo-
ber 1, 1999.
SEC. 403. IMPROVEMENTS IN THE CRITICAL ACCESS HOS-
PITAL (CAH) PROGRAM.
(a) APPLYING 96-HOUR LIMIT ON AN ANNUAL, AV-
ERAGE BASIS.—
(1) IN
GENERAL.—Section 1820(c)(2)(B)(iii)
(42 U.S.C. 1395i–4(c)(2)(B)(iii)) is amended by
striking ‘‘for a period not to exceed 96 hours’’ and
all that follows and inserting ‘‘for a period that does
not exceed, as determined on an annual, average
basis, 96 hours per patient;’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) takes effect on the date of the en-
actment of this Act.
(b) PERMITTING FOR-PROFIT HOSPITALS TO QUAL-
IFY
FOR DESIGNATION
AS
A CRITICAL ACCESS HOS-
131
PITAL.—Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–
4(c)(2)(B)(i)) is amended in the matter preceding sub-
clause (I), by striking ‘‘nonprofit or public hospital’’ and
inserting ‘‘hospital’’.
(c) ALLOWING CLOSED OR DOWNSIZED HOSPITALS
TO CONVERT TO CRITICAL ACCESS HOSPITALS.—Section
1820(c)(2) (42 U.S.C. 1395i–4(c)(2)) is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B), (C),
and (D)’’; and
(2) by adding at the end the following new sub-
paragraphs:
‘‘(C) RECENTLY
CLOSED
FACILITIES.—A
State may designate a facility as a critical ac-
cess hospital if the facility—
‘‘(i) was a hospital that ceased oper-
ations on or after the date that is 10 years
before the date of the enactment of this
subparagraph; and
‘‘(ii) as of the effective date of such
designation, meets the criteria for designa-
tion under subparagraph (B).
‘‘(D) DOWNSIZED
FACILITIES.—A State
may designate a health clinic or a health center
132
(as defined by the State) as a critical access
hospital if such clinic or center—
‘‘(i) is licensed by the State as a
health clinic or a health center;
‘‘(ii) 
was 
a 
hospital 
that 
was
downsized to a health clinic or health cen-
ter; and
‘‘(iii) as of the effective date of such
designation, meets the criteria for designa-
tion under subparagraph (B).’’.
(d) ELECTION OF COST-BASED PAYMENT OPTION
FOR OUTPATIENT CRITICAL ACCESS HOSPITAL SERV-
ICES.—
(1) IN GENERAL.—Section 1834(g) (42 U.S.C.
1395m(g)) is amended to read as follows:
‘‘(g) PAYMENT FOR OUTPATIENT CRITICAL ACCESS
HOSPITAL SERVICES.—
‘‘(1) IN
GENERAL.—The amount of payment
for outpatient critical access hospital services of a
critical access hospital is the reasonable costs of the
hospital in providing such services, unless the hos-
pital makes the election under paragraph (2).
‘‘(2) ELECTION OF COST-BASED HOSPITAL OUT-
PATIENT SERVICE PAYMENT PLUS FEE SCHEDULE
FOR
PROFESSIONAL
SERVICES.—A critical access
133
hospital may elect to be paid for outpatient critical
access hospital services amounts equal to the sum of
the following, less the amount that such hospital
may charge as described in section 1866(a)(2)(A):
‘‘(A) FACILITY FEE.—With respect to fa-
cility services, not including any services for
which payment may be made under subpara-
graph (B), the reasonable costs of the critical
access hospital in providing such services.
‘‘(B) FEE SCHEDULE FOR PROFESSIONAL
SERVICES.—With respect to professional serv-
ices otherwise included within outpatient critical
access hospital services, such amounts as would
otherwise be paid under this part if such serv-
ices were not included in outpatient critical ac-
cess hospital services.
‘‘(3) DISREGARDING CHARGES.—The payment
amounts under this subsection shall be determined
without regard to the amount of the customary or
other charge.’’.
(2) EFFECTIVE DATE.—The amendment made
by subsection (a) shall apply for cost reporting peri-
ods beginning on or after October 1, 2000.
134
(e) ELIMINATION OF COINSURANCE FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS FURNISHED BY A CRIT-
ICAL ACCESS HOSPITAL ON AN OUTPATIENT BASIS.—
(1) IN
GENERAL.—Paragraphs (1)(D)(i) and
(2)(D)(i) of section 1833(a) (42 U.S.C. 1395l(a))
are each amended by inserting ‘‘or which are fur-
nished on an outpatient basis by a critical access
hospital’’ after ‘‘on an assignment-related basis’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall apply to services furnished on
or after the date of the enactment of this Act.
(f) PARTICIPATION IN SWING BED PROGRAM.—Sec-
tion 1883 (42 U.S.C. 1395tt) is amended—
(1) in subsection (a)(1), by striking ‘‘(other
than a hospital which has in effect a waiver under
subparagraph (A) of the last sentence of section
1861(e))’’; and
(2) in subsection (c), by striking ‘‘, or during
which there is in effect for the hospital a waiver
under subparagraph (A) of the last sentence of sec-
tion 1861(e)’’.
135
SEC. 404. 5-YEAR EXTENSION OF MEDICARE DEPENDENT
HOSPITAL (MDH) PROGRAM.
(a) EXTENSION OF PAYMENT METHODOLOGY.—Sec-
tion 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is
amended—
(1) in clause (i), by striking ‘‘and before Octo-
ber 1, 2001,’’ and inserting ‘‘and before October 1,
2006,’’; and
(2) in clause (ii)(II), by striking ‘‘and before
October 1, 2001,’’ and inserting ‘‘and before Octo-
ber 1, 2006,’’.
(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 in-
serting ‘‘and before October 1, 2006,’’; and
(B) in clause (iv), by striking ‘‘during fis-
cal year 1998 through fiscal year 2000’’ and in-
serting ‘‘during fiscal year 1998 through fiscal
year 2005’’.
(2) PERMITTING HOSPITALS TO DECLINE RE-
CLASSIFICATION.—Section 13501(e)(2) of Omnibus
Budget Reconciliation Act of 1993 (42 U.S.C.
1395ww note), as amended by section 4204(a)(3) of
136
BBA, is amended by striking ‘‘or fiscal year 2000’’
and inserting ‘‘or fiscal year 2000 through fiscal
year 2005’’.
SEC. 405. REBASING FOR CERTAIN SOLE COMMUNITY HOS-
PITALS.
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)) is
amended—
(1) in subparagraph (C), by inserting ‘‘subject
to subparagraph (I),’’ before ‘‘the term ‘target
amount’ means’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(I)(i) For cost reporting periods beginning on or
after October 1, 2000, in the case of a sole community
hospital that for its cost reporting period beginning during
1999 is paid on the basis of the target amount applicable
to the hospital under subparagraph (C) and that elects
(in a form and manner determined by the Secretary) this
subparagraph to apply to the hospital, there shall be sub-
stituted for such target amount—
‘‘(I) with respect to discharges occurring in fis-
cal year 2001, 75 percent of the target amount oth-
erwise applicable to the hospital under subparagraph
(C) (referred to in this clause as the ‘subparagraph
137
(C) target amount’) and 25 percent of the rebased
target amount (as defined in clause (ii));
‘‘(II) with respect to discharges occurring in fis-
cal year 2002, 50 percent of the subparagraph (C)
target amount and 50 percent of the rebased target
amount;
‘‘(III) with respect to discharges occurring in
fiscal year 2003, 25 percent of the subparagraph (C)
target amount and 75 percent of the rebased target
amount; and
‘‘(IV) with respect to discharges occurring after
fiscal year 2003, 100 percent of the rebased target
amount.
‘‘(ii) For purposes of this subparagraph, the ‘rebased
target amount’ has the meaning given the term ‘target
amount’ in subparagraph (C) except that—
‘‘(I) there shall be substituted for the base cost
reporting period the 12-month cost reporting period
beginning during fiscal year 1996;
‘‘(II) any reference in subparagraph (C)(i) to
the ‘first cost reporting period’ described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after October 1,
2000; and
138
‘‘(III) applicable increase percentage shall only
be applied under subparagraph (C)(iv) for dis-
charges occurring in fiscal years beginning with fis-
cal year 2002.’’.
SEC. 406. ONE YEAR SOLE COMMUNITY HOSPITAL PAY-
MENT INCREASE.
Section 
1886(b)(3)(B)(i) 
(42 
U.S.C.
1395ww(b)(3)(B)(i)) is amended—
(1) by redesignating subclause (XVII) as sub-
clause (XVIII);
(2) by striking subclause (XVI); and
(3) by inserting after subclause (XV) the fol-
lowing new subclauses:
‘‘(XVI) for fiscal year 2001, the market basket
percentage increase minus 1.1 percentage points for
hospitals (other than sole community hospitals) in
all areas, and the market basket percentage increase
for sole community hospitals,
‘‘(XVII) for fiscal year 2002, the market basket
percentage increase minus 1.1 percentage points for
hospitals in all areas, and’’.
139
SEC. 407. INCREASED FLEXIBILITY IN PROVIDING GRAD-
UATE PHYSICIAN TRAINING IN RURAL AND
OTHER AREAS.
(a) COUNTING PRIMARY CARE RESIDENTS ON CER-
TAIN APPROVED LEAVES OF ABSENCE IN BASE YEAR
FTE COUNT.—
(1) PAYMENT FOR DIRECT GRADUATE MEDICAL
EDUCATION.—Section 1886(h)(4)(F) (42 U.S.C.
1395ww(h)(4)(F)) is amended—
(A) by redesignating the first sentence as
clause (i) with the heading ‘‘IN GENERAL.—’’
and appropriate indentation; and
(B) by adding at the end the following new
clause:
‘‘(ii) COUNTING PRIMARY CARE RESI-
DENTS ON CERTAIN APPROVED LEAVES OF
ABSENCE IN BASE YEAR FTE COUNT.—
‘‘(I) IN
GENERAL.—In deter-
mining the number of such full-time
equivalent residents for a hospital’s
most recent cost reporting period end-
ing on or before December 31, 1996,
for purposes of clause (i), the Sec-
retary shall count an individual to the
extent that the individual would have
been counted as a primary care resi-
140
dent for such period but for the fact
that the individual, as determined by
the Secretary, was on maternity or
disability leave or a similar approved
leave of absence.
‘‘(II) LIMITATION TO 3 FTE RESI-
DENTS
FOR
ANY
HOSPITAL.—The
total number of individuals counted
under subclause (I) for a hospital may
not exceed 3 full-time equivalent resi-
dents.’’.
(2) PAYMENT
FOR
INDIRECT
MEDICAL
EDU-
CATION.—Section 
1886(d)(5)(B)(v) 
(42 
U.S.C.
1395ww(d)(5)(B)(v)) is amended by adding at the
end the following: ‘‘Rules similar to the rules of sub-
section (h)(4)(F)(ii) shall apply for purposes of this
clause.’’.
(3) EFFECTIVE DATE.—
(A) DGME.—The amendments made by
paragraph (1) apply to cost reporting periods
that begin on or after the date of the enactment
of this Act.
(B) IME.—The amendment made by para-
graph (2) applies to discharges occurring in
141
cost reporting periods that begin on or after
such date of enactment.
(b) PERMITTING 30 PERCENT EXPANSION IN CUR-
RENT GME TRAINING PROGRAMS FOR HOSPITALS LO-
CATED IN RURAL AREAS.—
(1) PAYMENT FOR DIRECT GRADUATE MEDICAL
EDUCATION.—Section 1886(h)(4)(F)(i) (42 U.S.C.
1395ww(h)(4)(F)(i)), as amended by subsection
(a)(1), is amended by inserting ‘‘(or, 130 percent of
such number in the case of a hospital located in a
rural area)’’ after ‘‘may not exceed the number’’.
(2) PAYMENT
FOR
INDIRECT
MEDICAL
EDU-
CATION.—Section 
1886(d)(5)(B)(v) 
(42 
U.S.C.
1395ww(d)(5)(B)(v)) is amended by inserting ‘‘(or,
130 percent of such number in the case of a hospital
located in a rural area)’’ after ‘‘may not exceed the
number’’.
(3) EFFECTIVE DATES.—
(A) DGME.—The amendment made by
paragraph (1) applies to cost reporting periods
beginning on or after April 1, 2000.
(B) IME.—The amendment made by para-
graph (2) applies to discharges occurring on or
after April 1, 2000.
142
(c) SPECIAL RULE
FOR NONRURAL FACILITIES
SERVING RURAL AREAS.—
(1) IN GENERAL.—Section 1886(h)(4)(H) (42
U.S.C. 1395ww(h)(4)(H)) is amended by adding at
the end the following new clause:
‘‘(iv) NONRURAL
HOSPITALS
OPER-
ATING
TRAINING
PROGRAMS
IN
RURAL
AREAS.—In the case of a hospital that is
not located in a rural area but establishes
separately accredited approved medical
residency training programs (or rural
tracks) in an rural area or has an accred-
ited training program with an integrated
rural track, the Secretary shall adjust the
limitation under subparagraph (F) in an
appropriate manner insofar as it applies to
such programs in such rural areas in order
to encourage the training of physicians in
rural areas.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies with respect to—
(A) payments to hospitals under section
1886(h) of the Social Security Act (42 U.S.C.
1395ww(h)) for cost reporting periods begin-
ning on or after April 1, 2000; and
143
(B) payments to hospitals under section
1886(d)(5)(B)(v) of such Act (42 U.S.C.
1395ww(d)(5)(B)(v)) for discharges occurring
on or after April 1, 2000.
(d) NOT COUNTING AGAINST NUMERICAL LIMITA-
TION CERTAIN INTERNS AND RESIDENTS TRANSFERRED
FROM A VA RESIDENCY PROGRAM THAT LOSES ACCREDI-
TATION.—
(1) IN GENERAL.—Any applicable resident de-
scribed in paragraph (2) shall not be taken into ac-
count in applying any limitation regarding the num-
ber of residents or interns for which payment may
be made under section 1886 of the Social Security
Act (42 U.S.C. 1395ww).
(2) APPLICABLE
RESIDENT
DESCRIBED.—An
applicable resident described in this paragraph is a
resident or intern who—
(A) participated in graduate medical edu-
cation at a facility of the Department of Vet-
erans Affairs;
(B) was subsequently transferred on or
after January 1, 1997, and before July 31,
1998, to a hospital that was not a Department
of Veterans Affairs facility; and
144
(C) was transferred because the approved
medical residency program in which the resi-
dent or intern participated would lose accredita-
tion by the Accreditation Council on Graduate
Medical Education if such program continued
to train residents at the Department of Vet-
erans Affairs facility.
(3) EFFECTIVE DATE.—
(A) IN GENERAL.—Paragraph (1) applies
as if included in the enactment of BBA.
(B) RETROACTIVE PAYMENTS.—If the Sec-
retary of Health and Human Services deter-
mines that a hospital operating an approved
medical residency program is owed payments as
a result of enactment of this subsection, the
Secretary shall make such payments not later
than 60 days after the date of the enactment of
this Act.
SEC. 408. ELIMINATION OF CERTAIN RESTRICTIONS WITH
RESPECT TO HOSPITAL SWING BED PRO-
GRAM.
(a) ELIMINATION
OF REQUIREMENT
FOR STATE
CERTIFICATE
OF NEED.—Section 1883(b) (42 U.S.C.
1395tt(b)) is amended to read as follows:
145
‘‘(b) The Secretary may not enter into an agreement
under this section with any hospital unless, except as pro-
vided under subsection (g), the hospital is located in a
rural area and has less than 100 beds.’’.
(b) ELIMINATION OF SWING BED RESTRICTIONS ON
CERTAIN HOSPITALS WITH MORE THAN 49 BEDS.—Sec-
tion 1883(d) (42 U.S.C. 1395tt(d)) is amended—
(1) by striking paragraphs (2) and (3); and
(2) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date that is the first day
after the expiration of the transition period under section
1888(e)(2)(E) of the Social Security Act (42 U.S.C.
1395yy(e)(2)(E)) for payments for covered skilled nursing
facility services under the medicare program.
SEC. 409. GRANT PROGRAM FOR RURAL HOSPITAL TRANSI-
TION TO PROSPECTIVE PAYMENT.
Section 1820(g) (42 U.S.C. 1395i–4(g)) is amended
by adding at the end the following new paragraph:
‘‘(3) UPGRADING DATA SYSTEMS.—
‘‘(A) GRANTS
TO
HOSPITALS.—The Sec-
retary may award grants to hospitals that have
submitted applications in accordance with sub-
paragraph (C) to assist eligible small rural hos-
pitals in meeting the costs of implementing data
146
systems required to meet requirements estab-
lished under the medicare program pursuant to
amendments made by the Balanced Budget Act
of 1997.
‘‘(B) ELIGIBLE
SMALL
RURAL
HOSPITAL
DEFINED.—For purposes of this paragraph, the
term ‘eligible small rural hospital’ means a non-
Federal, short-term general acute care hospital
that—
‘‘(i) is located in a rural area (as de-
fined for purposes of section 1886(d)); and
‘‘(ii) has less than 50 beds.
‘‘(C) APPLICATION.—A hospital seeking a
grant under this paragraph shall submit an ap-
plication to the Secretary on or before such
date and in such form and manner as the Sec-
retary specifies.
‘‘(D) AMOUNT OF GRANT.—A grant to a
hospital under this paragraph may not exceed
$50,000.
‘‘(E) USE OF FUNDS.—A hospital receiving
a grant under this paragraph may use the
funds for the purchase of computer software
and hardware, the education and training of
hospital staff on computer information systems,
147
and to offset costs related to the implementa-
tion of prospective payment systems.
‘‘(F) REPORTS.—
‘‘(i) INFORMATION.—A hospital re-
ceiving a grant under this section shall fur-
nish the Secretary with such information
as the Secretary may require to evaluate
the project for which the grant is made
and to ensure that the grant is expended
for the purposes for which it is made.
‘‘(ii) TIMING OF SUBMISSION.—
‘‘(I) 
INTERIM
REPORTS.—The
Secretary shall report to the Com-
mittee on Ways and Means of the
House of Representatives and the
Committee on Finance of the Senate
at least annually on the grant pro-
gram established under this section,
including in such report information
on the number of grants made, the
nature of the projects involved, the ge-
ographic distribution of grant recipi-
ents, and such other matters as the
Secretary deems appropriate.
148
‘‘(II) FINAL REPORT.—The Sec-
retary shall submit a final report to
such committees not later than 180
days after the completion of all of the
projects for which a grant is made
under this section.’’.
SEC. 410. GAO STUDY ON GEOGRAPHIC RECLASSIFICATION.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study of the current laws
and regulations for geographic reclassification of hospitals
to determine whether such reclassification is appropriate
for purposes of applying wage indices under the medicare
program and whether such reclassification results in more
accurate payments for all hospitals. Such study shall ex-
amine data on the number of hospitals that are reclassi-
fied and their reclassified status in determining payments
under the medicare program. The study shall evaluate—
(1) the magnitude of the effect of geographic
reclassification on rural hospitals that are not reclas-
sified;
(2) whether the current thresholds used in geo-
graphic reclassification reclassify hospitals to the ap-
propriate labor markets;
(3) the effect of eliminating geographic reclassi-
fication through use of the occupational mix data;
149
(4) the group reclassification policy;
(5) changes in the number of reclassifications
and the compositions of the groups;
(6) the effect of State-specific budget neutrality
compared to national budget neutrality; and
(7) whether there are sufficient controls over
the intermediary evaluation of the wage data re-
ported by hospitals.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Comptroller General
of the United States shall submit to Congress a report
on the study conducted under subsection (a).
Subtitle B—Other Rural Provisions
SEC. 411. MEDPAC STUDY OF RURAL PROVIDERS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study of rural providers furnishing
items and services for which payment is made under title
XVIII of the Social Security Act. Such study shall exam-
ine and evaluate the adequacy and appropriateness of the
categories of special payments (and payment methodolo-
gies) established for rural hospitals under the medicare
program, and the impact of such categories on beneficiary
access and quality of health care services.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Medicare Payment
150
Advisory Commission shall submit to Congress a report
on the study conducted under subsection (a).
SEC. 412. EXPANSION OF ACCESS TO PARAMEDIC INTER-
CEPT SERVICES IN RURAL AREAS.
(a) EXPANSION
OF
PAYMENT
AREAS.—Section
4531(c) of BBA (42 U.S.C. 1395x note) is amended by
adding at the end the following flush sentence:
‘‘For purposes of this subsection, an area shall be treated
as a rural area if it is designated as a rural area by any
law or regulation of the State or if it is located in a rural
census tract of a metropolitan statistical area (as deter-
mined under the most recent Goldsmith Modification,
originally published in the Federal Register on February
27, 1992 (57 Fed. Reg. 6725)).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on January 1, 2000, and ap-
plies to ALS intercept services furnished on or after such
date.
SEC. 413. PROMOTING PROMPT IMPLEMENTATION OF
INFORMATICS, 
TELEMEDICINE, 
AND 
EDU-
CATION DEMONSTRATION PROJECT.
Section 4207 of BBA (42 U.S.C. 1395b-1 note) is
amended—
(1) in subsection (a)(1), by adding at the end
the following: ‘‘The Secretary shall make an award
151
for such project not later than 3 months after the
date of the enactment of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of
1999. The Secretary shall accept the proposal ad-
judged to be the best technical proposal as of such
date of enactment without the need for additional
review or resubmission of proposals.’’;
(2) in subsection (a)(2)(A), by inserting before
the period at the end the following: ‘‘that qualify as
Federally designated medically underserved areas or
health professional shortage areas at the time of en-
rollment of beneficiaries under the project’’;
(3) in subsection (c)(2), by striking ‘‘and the
source and amount of non-Federal funds used in the
project’’;
(4) in subsection (d)(2)(A), by striking ‘‘at a
rate of 50 percent of the costs that are reasonable
and’’ and inserting ‘‘for the costs that are’’;
(5) in subsection (d)(2)(B)(i), by striking ‘‘(but
only in the case of patients located in medically un-
derserved areas)’’ and inserting ‘‘or at sites pro-
viding health care to patients located in medically
underserved areas’’;
152
(6) in subsection (d)(2)(C)(i), by striking ‘‘to
deliver medical informatics services under’’ and in-
serting ‘‘for activities related to’’; and
(7) by amending paragraph (4) of subsection
(d) to read as follows:
‘‘(4) COST-SHARING.—The project may not im-
pose cost-sharing on a medicare beneficiary for the
receipt of services under the project. Project costs
will cover all costs to medicare beneficiaries and pro-
viders related to participation in the project.’’.
TITLE 
V—PROVISIONS 
RELAT-
ING 
TO 
PART 
C
(MEDICARE+CHOICE 
PRO-
GRAM) 
AND 
OTHER 
MEDI-
CARE MANAGED CARE PROVI-
SIONS
Subtitle A—Provisions To Accom-
modate and Protect Medicare
Beneficiaries
SEC. 501. CHANGES IN MEDICARE+CHOICE ENROLLMENT
RULES.
(a) PERMITTING ENROLLMENT
IN ALTERNATIVE
MEDICARE+CHOICE PLANS AND MEDIGAP COVERAGE IN
CASE
OF
INVOLUNTARY
TERMINATION
OF
MEDICARE+CHOICE ENROLLMENT.—
153
(1) IN
GENERAL.—Section 1851(e)(4) (42
U.S.C. 1395w–21(e)(4)) is amended by striking sub-
paragraph (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 indi-
vidual of an impending termination of such cer-
tification; or
‘‘(ii) the organization has terminated or
otherwise discontinued providing the plan in the
area in which the individual resides, or has no-
tified the individual of an impending termi-
nation or discontinuation of such plan;’’.
(2) CONFORMING MEDIGAP AMENDMENT.—Sec-
tion 
1882(s)(3) 
(42 
U.S.C. 
1395ss(s)(3)) 
is
amended—
(A) in subparagraph (A) in the matter fol-
lowing clause (iii), by inserting ‘‘, subject to
subparagraph (E),’’ after ‘‘in the case of an in-
dividual described in subparagraph (B) who’’;
and
(B) by adding at the end the following new
subparagraph:
‘‘(E)(i) An individual described in subparagraph
(B)(ii) may elect to apply subparagraph (A) by sub-
154
stituting, for the date of termination of enrollment, the
date on which the individual was notified by the
Medicare+Choice organization of the impending termi-
nation or discontinuance of the Medicare+Choice plan it
offers in the area in which the individual resides, but only
if the individual disenrolls from the plan as a result of
such notification.
‘‘(ii) In the case of an individual making such an elec-
tion, the issuer involved shall accept the application of the
individual submitted before the date of termination of en-
rollment, but the coverage under subparagraph (A) shall
only become effective upon termination of coverage under
the Medicare+Choice plan involved.’’.
(b) CONTINUOUS OPEN ENROLLMENT FOR INSTITU-
TIONALIZED
INDIVIDUALS.—Section 
1851(e)(2) 
(42
U.S.C. 1395w–21(e)(2)) is amended—
(1) in subparagraph (B)(i), by inserting ‘‘and
subparagraph (D)’’ after ‘‘clause (ii)’’;
(2) in subparagraph (C)(i), by inserting ‘‘and
subparagraph (D)’’ after ‘‘clause (ii)’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(D) CONTINUOUS
OPEN
ENROLLMENT
FOR
INSTITUTIONALIZED
INDIVIDUALS.—At
any time after 2001 in the case of a
155
Medicare+Choice eligible individual who is in-
stitutionalized (as defined by the Secretary),
the individual may elect under subsection
(a)(1)—
‘‘(i) to enroll in a Medicare+Choice
plan; or
‘‘(ii) to change the Medicare+Choice
plan in which the individual is enrolled.’’.
(c) CONTINUING ENROLLMENT FOR CERTAIN EN-
ROLLEES.—Section 1851(b)(1) (42 U.S.C. 1395w–
21(b)(1)) is amended—
(1) in subparagraph (A), by inserting ‘‘and ex-
cept as provided in subparagraph (C)’’ after ‘‘may
otherwise provide’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) CONTINUATION
OF
ENROLLMENT
PERMITTED WHERE SERVICE CHANGED.—Not-
withstanding subparagraph (A) and in addition
to subparagraph (B), if a Medicare+Choice or-
ganization eliminates from its service area a
Medicare+Choice payment area that was pre-
viously within its service area, the organization
may elect to offer individuals residing in all or
portions of the affected area who would other-
156
wise be ineligible to continue enrollment the op-
tion 
to 
continue 
enrollment 
in 
a
Medicare+Choice plan it offers so long as—
‘‘(i) the enrollee agrees to receive the
full range of basic benefits (excluding
emergency and urgently needed care) ex-
clusively at facilities designated by the or-
ganization within the plan service area;
and
‘‘(ii) 
there 
is 
no 
other
Medicare+Choice plan offered in the area
in which the enrollee resides at the time of
the organization’s election.’’.
(d) EFFECTIVE DATES.—
(1) The amendments made by subsection (a)
apply to notices of impending terminations or
discontinuances made on or after the date of the en-
actment of this Act.
(2) The amendments made by subsection (c)
apply to elections made on or after the date of the
enactment of this Act with respect to eliminations of
Medicare+Choice payment areas from a service area
that occur before, on, or after the date of the enact-
ment of this Act.
157
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 cal-
endar 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 apply to elections and changes of coverage
made on or after January 1, 2000.
SEC. 503. 2-YEAR EXTENSION OF MEDICARE COST CON-
TRACTS.
Section 
1876(h)(5)(B) 
(42 
U.S.C.
1395mm(h)(5)(B)) is amended by striking ‘‘2002’’ and in-
serting ‘‘2004’’.
158
Subtitle B—Provisions To Facili-
tate 
Implementation 
of 
the
Medicare+Choice Program
SEC. 511. PHASE-IN OF NEW RISK ADJUSTMENT METHOD-
OLOGY; STUDIES AND REPORTS ON RISK AD-
JUSTMENT.
(a) PHASE-IN.—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 appro-
priate indentation; and
(2) by adding at the end the following new
clause:
‘‘(ii) PHASE-IN.—Such risk adjust-
ment methodology shall be implemented in
a phased-in manner so that the method-
ology insofar as it makes adjustments to
capitation rates for health status applies
to—
‘‘(I) 10 percent of 1⁄12 of the an-
nual Medicare+Choice capitation rate
in 2000 and 2001; and
‘‘(II) not more than 20 percent
of such capitation rate in 2002.’’.
(b) MEDPAC STUDY AND REPORT.—
159
(1) STUDY.—The Medicare Payment Advisory
Commission 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 sec-
tion 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 de-
scribed in this paragraph are the following:
(A) The ability of the average risk adjust-
ment factor applied to a Medicare+Choice plan
to explain variations in plans’ average per cap-
ita 
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 en-
rolled in Medicare+Choice plans in a given
year, the correspondence between the average
risk factor calculated from medicare fee-for-
160
service data for those individuals from the pe-
riod 
prior 
to 
their 
enrollment 
in 
a
Medicare+Choice plan and the average risk fac-
tor 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 be-
tween 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 ‘‘dis-
cretionary’’ hospitalizations from consideration
in the risk adjustment methodology.
(F) Suggestions for changes or improve-
ments in the risk adjustment methodology.
(3) REPORT.—Not later than December 1,
2000, the Commission shall submit a report to Con-
gress on the study conducted under paragraph (1),
together with any recommendations for legislation
161
that the Commission determines to be appropriate as
a result of such study.
(c) STUDY AND REPORT REGARDING REPORTING OF
ENCOUNTER DATA.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study on how to re-
duce the costs and burdens on Medicare+Choice or-
ganizations of their complying with reporting re-
quirements for encounter data imposed by the Sec-
retary in establishing and implementing a risk ad-
justment methodology used in making payments to
such organizations under section 1853 of the Social
Security Act (42 U.S.C. 1395w–23). The Secretary
shall 
consult 
with 
representatives 
of
Medicare+Choice organizations in conducting the
study. The study shall address the following issues:
(A) Limiting the number and types of sites
of services (that are in addition to inpatient
sites) for which encounter data must be re-
ported.
(B) Establishing alternative risk adjust-
ment methods that would require submission of
less data.
(C) The potential for Medicare+Choice or-
ganizations to misreport, overreport, or under-
162
report prevalence of diagnoses in outpatient
sites of care, the potential for increases in pay-
ments to Medicare+Choice organizations from
changes in Medicare+Choice plan coding prac-
tices (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 en-
counter data from multiple sites of care.
(D) The impact of such requirements on
the 
willingness 
of 
insurers 
to 
offer
Medicare+Choice MSA plans and options for
modifying encounter data reporting require-
ments to accommodate such plans.
(E) 
Differences 
in 
the 
ability 
of
Medicare+Choice organizations to report en-
counter data, and the potential for adverse com-
petitive impacts on group and staff model
health maintenance organizations or other inte-
grated providers of care based on data report-
ing capabilities.
(2) REPORT.—Not later than January 1, 2001,
the Secretary shall submit a report to Congress on
the study conducted under this subsection, together
with any recommendations for legislation that the
163
Secretary determines to be appropriate as a result of
such study.
SEC. 512. ENCOURAGING OFFERING OF MEDICARE+CHOICE
PLANS IN AREAS WITHOUT PLANS.
Section 1853 (42 U.S.C. 1395w–23) is amended—
(1) in subsection (a)(1), by striking ‘‘sub-
sections (e) and (f)’’ and inserting ‘‘subsections (e),
(g), and (i)’’;
(2) in subsection (c)(5), by inserting ‘‘(other
than those attributable to subsection (i))’’ after
‘‘payments under this part’’; and
(3) by adding at the end the following new sub-
section:
‘‘(i) NEW ENTRY BONUS.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2)
and (3), in the case of Medicare+Choice payment
area in which a Medicare+Choice plan has not been
offered since 1997 (or in which all organizations
that offered a plan since such date have filed notice
with the Secretary, as of October 13, 1999, that
they will not be offering such a plan as of January
1, 2000), the amount of the monthly payment other-
wise made under this section shall be increased—
‘‘(A) only for the first 12 months in which
any Medicare+Choice plan is offered in the
164
area, by 5 percent of the total monthly payment
otherwise computed for such payment area; and
‘‘(B) only for the subsequent 12 months,
by 3 percent of the total monthly payment oth-
erwise computed for such payment area.
‘‘(2) PERIOD OF APPLICATION.—Paragraph (1)
shall only apply to payment for Medicare+Choice
plans which are first offered in a Medicare+Choice
payment area during the 2-year period beginning on
January 1, 2000.
‘‘(3) LIMITATION TO ORGANIZATION OFFERING
FIRST PLAN IN AN AREA.—Paragraph (1) shall only
apply to payment to the first Medicare+Choice orga-
nization that offers a Medicare+Choice plan in each
Medicare+Choice payment area, except that if more
than one such organization first offers such a plan
in an area on the same date, paragraph (1) shall
apply to payment for such organizations.
‘‘(4) CONSTRUCTION.—Nothing in paragraph
(1) shall be construed as affecting the calculation of
the annual Medicare+Choice capitation rate under
subsection (c) for any payment area or as applying
to payment for any period not described in such
paragraph and paragraph (2).
165
‘‘(5) OFFERED DEFINED.—In this subsection,
the term ‘offered’ means, with respect to a
Medicare+Choice plan as of a date, that a
Medicare+Choice eligible individual may enroll with
the plan on that date, regardless of when the enroll-
ment takes effect or when the individual obtains
benefits under the plan.’’.
SEC. 513. MODIFICATION OF 5-YEAR RE-ENTRY RULE FOR
CONTRACT TERMINATIONS.
(a) REDUCTION OF GENERAL EXCLUSION PERIOD
TO 2 YEARS.—Section 1857(c)(4) (42 U.S.C. 1395w–
27(c)(4)) is amended by striking ‘‘5-year period’’ and in-
serting ‘‘2-year period’’.
(b) SPECIFIC EXCEPTION WHERE CHANGE IN PAY-
MENT POLICY.—
(1) IN
GENERAL.—Section 1857(c)(4) (42
U.S.C. 1395w–27(c)(4)) is amended—
(A) by striking ‘‘except in circumstances’’
and inserting ‘‘except as provided in subpara-
graph (B) and except in such other cir-
cumstances’’;
(B) by redesignating the sentence following
‘‘(4)’’ as a subparagraph (A) with an appro-
priate indentation and the heading ‘‘IN GEN-
ERAL.—’’; and
166
(C) by adding at the end the following new
subparagraph:
‘‘(B) 
EARLIER
RE-ENTRY
PERMITTED
WHERE
CHANGE
IN
PAYMENT
POLICY.—Sub-
paragraph (A) shall not apply with respect to
the offering by a Medicare+Choice organization
of 
a 
Medicare+Choice 
plan 
in 
a
Medicare+Choice payment area if during the 6-
month period beginning on the date the organi-
zation notified the Secretary of the intention to
terminate the most recent previous contract,
there was a legislative change enacted (or a reg-
ulatory change adopted) that has the effect of
increasing payment amounts under section
1853 
for 
that 
Medicare+Choice 
payment
area.’’.
(2) CONSTRUCTION RELATING TO ADDITIONAL
EXCEPTIONS.—Nothing in the amendment made by
paragraph (1)(C) shall be construed to affect the au-
thority of the Secretary of Health and Human Serv-
ices to provide for exceptions in addition to the ex-
ception provided in such amendment, including ex-
ceptions provided under Operational Policy Letter
#103 (OPL99.103).
167
(c) EFFECTIVE DATE.—The amendments made by
this section apply to contract terminations occurring be-
fore, on, or after the date of the enactment of this Act.
SEC. 514. CONTINUED COMPUTATION AND PUBLICATION
OF MEDICARE ORIGINAL FEE-FOR-SERVICE
EXPENDITURES 
ON 
A 
COUNTY-SPECIFIC
BASIS.
(a) IN
GENERAL.—Section 1853(b) (42 U.S.C.
1395w–23(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) CONTINUED COMPUTATION AND PUBLICA-
TION
OF
COUNTY-SPECIFIC
PER
CAPITA
FEE-FOR-
SERVICE
EXPENDITURE
INFORMATION.—The Sec-
retary, through the Chief Actuary of the Health
Care Financing Administration, shall provide for the
computation and publication, on an annual basis be-
ginning with 2001 at the time of publication of the
annual Medicare+Choice capitation rates under
paragraph (1), of the following information for the
original medicare fee-for-service program under
parts A and B (exclusive of individuals eligible for
coverage 
under 
section 
226A) 
for 
each
Medicare+Choice payment area for the second cal-
endar year ending before the date of publication:
168
‘‘(A) Total expenditures per capita per
month, computed separately for part A and for
part B.
‘‘(B) The expenditures described in sub-
paragraph (A) reduced by the best estimate of
the expenditures (such as graduate medical
education and disproportionate share hospital
payments) not related to the payment of claims.
‘‘(C) The average risk factor for the cov-
ered population based on diagnoses reported for
medicare inpatient services, using the same
methodology as is expected to be applied in
making payments under subsection (a).
‘‘(D) Such average risk factor based on di-
agnoses for inpatient and other sites of service,
using the same methodology as is expected to
be applied in making payments under sub-
section (a).’’.
(b) SPECIAL RULE FOR 2001.—In providing for the
publication of information under section 1853(b)(4) of the
Social Security Act (42 U.S.C. 1395w–23(b)(4)), as added
by subsection (a), in 2001, the Secretary of Health and
Human Services shall also include the information de-
scribed in such section for 1998, as well as for 1999.
169
SEC. 515. 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 seg-
ment 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 one or more Medicare+Choice
payment areas.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section apply to contract years beginning on or after
January 1, 2001.
SEC. 516. DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES.
(a) DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED 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 subpara-
graph (A).
170
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to information submitted by
Medicare+Choice organizations for years beginning with
1999.
SEC. 517. REDUCTION IN ADJUSTMENT IN NATIONAL PER
CAPITA MEDICARE+CHOICE GROWTH PER-
CENTAGE FOR 2002.
Section 
1853(c)(6)(B)(v) 
(42 
U.S.C. 
1395w–
23(c)(6)(B)(v)) is amended by striking ‘‘0.5 percentage
points’’ and inserting ‘‘0.3 percentage points’’.
SEC. 518. DEEMING OF MEDICARE+CHOICE ORGANIZATION
TO MEET REQUIREMENTS.
Section 1852(e)(4) (42 U.S.C. 1395w–22(e)(4)) is
amended to read as follows:
‘‘(4) TREATMENT OF ACCREDITATION.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide that a Medicare+Choice organization is
deemed to meet all the requirements described
in any specific clause of subparagraph (B) if
the organization is accredited (and periodically
reaccredited) by a private accrediting organiza-
tion under a process that the Secretary has de-
termined assures that the accrediting organiza-
tion applies and enforces standards that meet
or exceed the standards established under sec-
171
tion 1856 to carry out the requirements in such
clause.
‘‘(B) REQUIREMENTS
DESCRIBED.—The
provisions described in this subparagraph are
the following:
‘‘(i) Paragraphs (1) and (2) of this
subsection (relating to quality assurance
programs).
‘‘(ii) Subsection (b) (relating to anti-
discrimination).
‘‘(iii) Subsection (d) (relating to ac-
cess to services).
‘‘(iv) Subsection (h) (relating to con-
fidentiality 
and 
accuracy 
of 
enrollee
records).
‘‘(v) Subsection (i) (relating to infor-
mation on advance directives).
‘‘(vi) Subsection (j) (relating to pro-
vider participation rules).
‘‘(C) TIMELY ACTION ON APPLICATIONS.—
The Secretary shall determine, within 210 days
after the date the Secretary receives an applica-
tion by a private accrediting organization and
using 
the 
criteria 
specified 
in 
section
1865(b)(2), whether the process of the private
172
accrediting organization meets the requirements
with respect to any specific clause in subpara-
graph (B) with respect to which the application
is made. The Secretary may not deny such an
application on the basis that it seeks to meet
the requirements with respect to only one, or
more than one, such specific clause.
‘‘(D) CONSTRUCTION.—Nothing in this
paragraph shall be construed as limiting the au-
thority of the Secretary under section 1857, in-
cluding the authority to terminate contracts
with Medicare+Choice organizations under sub-
section (c)(2) of such section.’’.
SEC. 519. TIMING OF MEDICARE+CHOICE HEALTH INFOR-
MATION FAIRS.
(a) IN GENERAL.—Section 1851(e)(3)(C) (42 U.S.C.
1395w–21(e)(3)(C)) is amended by striking ‘‘In the month
of November’’ and inserting ‘‘During the fall season’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) first applies to campaigns conducted begin-
ning in 2000.
SEC. 520. QUALITY ASSURANCE REQUIREMENTS FOR PRE-
FERRED PROVIDER ORGANIZATION PLANS.
(a) IN GENERAL.—Section 1852(e)(2) (42 U.S.C.
1395w–22(e)(2)) is amended—
173
(1) in subparagraph (A), by striking ‘‘or a non-
network MSA plan’’ and inserting ‘‘, a non-network
MSA plan, or a preferred provider organization
plan’;
(2) in subparagraph (B)—
(A) in the heading, by striking ‘‘AND NON-
NETWORK MSA PLANS’’ and inserting ‘‘, NON-
NETWORK MSA PLANS, AND PREFERRED PRO-
VIDER ORGANIZATION PLANS’’; and
(B) by striking ‘‘or a non-network MSA
plan’’ and inserting ‘‘, a non-network MSA
plan, or a preferred provider organization
plan’’;
(3) by adding at the end the following:
‘‘(D) DEFINITION
OF
PREFERRED
PRO-
VIDER
ORGANIZATION
PLAN.—In this para-
graph, the term ‘preferred provider organization
plan’ means a Medicare+Choice plan that—
‘‘(i) has a network of providers that
have agreed to a contractually specified re-
imbursement for covered benefits with the
organization offering the plan;
‘‘(ii) provides for reimbursement for
all covered benefits regardless of whether
174
such benefits are provided within such net-
work of providers; and
‘‘(iii) is offered by an organization
that is not licensed or organized under
State law as a health maintenance organi-
zation.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to contract years beginning on or
after January 1, 2000.
(c) QUALITY IMPROVEMENT STANDARDS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall conduct a study on the appro-
priate quality improvement standards that should
apply to—
(A) each type of Medicare+Choice plan de-
scribed in section 1851(a)(2) of the Social Se-
curity Act (42 U.S.C. 1395w–21(a)(2)), includ-
ing each type of Medicare+Choice plan that is
a coordinated care plan (as described in sub-
paragraph (A) of such section); and
(B) the original medicare fee-for-service
program under parts A and B title XVIII of
such Act (42 U.S.C. 1395 et seq.).
(2) CONSIDERATIONS.—Such study shall spe-
cifically examine the effects, costs, and feasibility of
175
requiring entities, physicians, and other health care
providers that provide items and services under the
original medicare fee-for-service program to comply
with quality standards and related reporting require-
ments that are comparable to the quality standards
and related reporting requirements that are applica-
ble to Medicare+Choice organizations.
(3) REPORT.—Not later than 2 years after the
date of the enactment of this Act, such Commission
shall submit a report to Congress on the study con-
ducted under this subsection, together with any rec-
ommendations for legislation that it determines to be
appropriate as a result of such study.
SEC. 521. CLARIFICATION OF NONAPPLICABILITY OF CER-
TAIN PROVISIONS OF DISCHARGE PLANNING
PROCESS TO MEDICARE+CHOICE PLANS.
Section 1861(ee) (42 U.S.C. 1395x(ee)(2)(H)) is
amended by adding at the end the following:
‘‘(3) With respect to a discharge plan for an indi-
vidual who is enrolled with a Medicare+Choice organiza-
tion under a Medicare+Choice plan and is furnished inpa-
tient hospital services by a hospital under a contract with
the organization—
‘‘(A) the discharge planning evaluation under
paragraph (2)(D) is not required to include informa-
176
tion on the availability of home health services
through individuals and entities which do not have
a contract with the organization; and
‘‘(B) notwithstanding subparagraph (H)(i), the
plan may specify or limit the provider (or providers)
of post-hospital home health services or other post-
hospital services under the plan.’’.
SEC. 522. USER FEE FOR MEDICARE+CHOICE ORGANIZA-
TIONS BASED ON NUMBER OF ENROLLED
BENEFICIARIES.
(a) IN GENERAL.—Section 1857(e)(2) (42 U.S.C.
1395w–27(e)(2)) is amended—
(1) in subparagraph (B), by striking ‘‘Any
amounts collected are authorized to be appropriated
only for’’ and inserting ‘‘Any amounts collected shall
be available without further appropriation to the
Secretary for’’;
(2) by amending subparagraph (C) to read as
follows:
‘‘(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There are authorized to be appro-
priated for the purposes described in subpara-
graph (B) for each fiscal year beginning with
fiscal 
year 
2001 
an 
amount 
equal 
to
$100,000,000, reduced by the amount of fees
177
authorized to be collected under this paragraph
for the fiscal year.’’;
(3) in subparagraph (D)(ii)—
(A) in subclause (II), by striking ‘‘and’’;
(B) in subclause (III), by striking ‘‘ and
each subsequent fiscal year.’’ and inserting ‘‘;
and’’; and
(C) by adding at the end the following:
‘‘(IV) the Medicare+Choice portion
(as defined in subparagraph (E)) of
$100,000,000 in fiscal year 2001 and each
succeeding fiscal year.’’; and
(4) by adding at the end the following:
‘‘(E) MEDICARE+CHOICE
PORTION
DE-
FINED.—In 
this 
paragraph, 
the 
term
‘Medicare+Choice portion’ means, for a fiscal
year, the ratio, as estimated by the Secretary,
of—
‘‘(i) the average number of individuals
enrolled in Medicare+Choice plans during
the fiscal year, to
‘‘(ii) the average number of individ-
uals entitled to benefits under part A, and
enrolled under part B, during the fiscal
year.’’.
178
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to fees charged on or after January
1, 2001. The Secretary of Health and Human Services
may not increase the fees charged under section
1857(e)(2) of the Social Security Act (42 U.S.C. 1395w–
27(e)(2)) for the 3-month period beginning with October
2000 above the level in effect during the previous 9-month
period.
SEC. 523. CLARIFICATION REGARDING THE ABILITY OF A
RELIGIOUS FRATERNAL BENEFIT SOCIETY
TO OPERATE ANY MEDICARE+CHOICE PLAN.
Section 1859(e)(2) (42 U.S.C. 1395w–29(e)(2)) is
amended in the matter preceding subparagraph (A) by
striking ‘‘section 1851(a)(2)(A)’’ and inserting ‘‘section
1851(a)(2)’’.
SEC. 524. 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;
(3) by adding at the end the following:
(2) in subparagraph (D), by striking the period
at the end and inserting ‘‘, or’’; and
179
‘‘(E) that is a Medicare+Choice organiza-
tion 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 apply to services furnished on or after
the date of the enactment of this Act.
Subtitle 
C—Demonstration
Projects and Special Medicare
Populations
SEC. 531. EXTENSION OF SOCIAL HEALTH MAINTENANCE
ORGANIZATION 
DEMONSTRATION 
(SHMO)
PROJECT AUTHORITY.
(a) EXTENSION.—Section 4018(b) of the Omnibus
Budget Reconciliation Act of 1987 (Public Law 100–203)
is amended—
(1) in paragraph (1), by striking ‘‘December
31, 2000’’ and inserting ‘‘the date that is 18 months
after the date that the Secretary submits to Con-
gress the report described in section 4014(c) of the
Balanced Budget Act of 1997’’;
(2) in paragraph (4), by striking ‘‘March 31,
2001’’ and inserting ‘‘the date that is 21 months
after the date on which Secretary submits to Con-
180
gress the report described in section 4014(c) of the
Balanced Budget Act of 1997’’; and
(3) by adding at the end of paragraph (4) the
following: ‘‘Not later than 6 months after the date
the Secretary submits such final report, the Medi-
care Payment Advisory Commission shall submit to
Congress a report containing recommendations re-
garding such project.’’.
(b) SUBSTITUTION
OF AGGREGATE CAP.—Section
13567(c) of the Omnibus Budget Reconciliation Act of
1993 (Public Law 103–66) is amended to read as follows:
‘‘(c) AGGREGATE LIMIT
ON NUMBER
OF MEM-
BERS.—The Secretary of Health and Human Services
may not impose a limit on the number of individuals that
may participate in a project conducted under section 2355
of the Deficit Reduction Act of 1984, other than an aggre-
gate limit of not less than 324,000 for all sites.’’.
SEC. 532. EXTENSION OF MEDICARE COMMUNITY NURSING
ORGANIZATION DEMONSTRATION PROJECT.
(a) EXTENSION.—Notwithstanding any other provi-
sion of law, any demonstration project conducted under
section 4079 of the Omnibus Budget Reconciliation Act
of 1987 (Public Law 100–123; 42 U.S.C. 1395mm note)
and conducted for the additional period of 2 years as pro-
vided for under section 4019 of BBA, shall be conducted
181
for an additional period of 2 years. The Secretary of
Health and Human Services shall provide for such reduc-
tion in payments under such project in the extension pe-
riod provided under the previous sentence as the Secretary
determines is necessary to ensure that total Federal ex-
penditures during the extension period under the project
do not exceed the total Federal expenditures that would
have been made under title XVIII of the Social Security
Act if such project had not been so extended.
(b) REPORT.—Not later than July 1, 2001, the Sec-
retary of Health and Human Services shall submit to Con-
gress a report describing the results of any demonstration
project conducted under section 4079 of the Omnibus
Budget Reconciliation Act of 1987, and describing the
data collected by the Secretary relevant to the analysis of
the results of such project, including the most recently
available data through the end of 2000.
SEC. 533. MEDICARE+CHOICE COMPETITIVE BIDDING DEM-
ONSTRATION PROJECT.
Section 4011 of BBA (42 U.S.C. 1395w–23 note) is
amended—
(1) in subsection (a)—
(A) by striking ‘‘The Secretary’’ and in-
serting the following (and conforming the in-
182
dentation for the remainder of the subsection
accordingly):
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, the Secretary’’; and
(B) by adding at the end the following:
‘‘(2) DELAY IN IMPLEMENTATION.—The Sec-
retary shall not implement the project until January
1, 2002, or, if later, 6 months after the date the
Competitive Pricing Advisory Committee has sub-
mitted to Congress a report on each of the following
topics:
‘‘(A) INCORPORATION OF ORIGINAL MEDI-
CARE
FEE-FOR-SERVICE
PROGRAM
INTO
PROJECT.—What changes would be required in
the project to feasibly incorporate the original
medicare 
fee-for-service 
program 
into 
the
project in the areas in which the project is oper-
ational.
‘‘(B) QUALITY
ACTIVITIES.—The nature
and extent of the quality reporting and moni-
toring activities that should be required of plans
participating in the project, the estimated costs
that plans will incur as a result of these re-
quirements, and the current ability of the
Health Care Financing Administration to col-
183
lect and report comparable data, sufficient to
support comparable quality reporting and moni-
toring activities with respect to beneficiaries en-
rolled in the original medicare fee-for-service
program generally.
‘‘(C) RURAL PROJECT.—The current via-
bility of initiating a project site in a rural area,
given the site specific budget neutrality require-
ments of the project under subsection (g), and
insofar as the Committee decides that the addi-
tion of such a site is not viable, recommenda-
tions on how the project might best be changed
so that such a site is viable.
‘‘(D) BENEFIT STRUCTURE.—The nature
and extent of the benefit structure that should
be required of plans participating in the project,
the rationale for such benefit structure, the po-
tential implications that any benefit standard-
ization requirement may have on the number of
plan choices available to a beneficiary in an
area designated under the project, the potential
implications of requiring participating plans to
offer variations on any standardized benefit
package the committee might recommend, such
that a beneficiary could elect to pay a higher
184
percentage of out-of-pocket costs in exchange
for a lower premium (or premium rebate as the
case may be), and the potential implications of
expanding the project (in conjunction with the
potential inclusion of the original medicare fee-
for-service program) to require medicare supple-
mental insurance plans operating in an area
designated under the project to offer a coordi-
nated and comparable standardized benefit
package.
‘‘(3) CONFORMING
DEADLINES.—Any dates
specified in the succeeding provisions of this section
shall be delayed (as specified by the Secretary) in a
manner consistent with the delay effected under
paragraph (2).’’; and
(2) in subsection (c)(1)(A)—
(A) by striking ‘‘and’’ at the end of clause
(i); and
(B) by adding at the end the following new
clause:
‘‘(iii) establish beneficiary premiums
for plans offered in such area in a manner
such that a beneficiary who enrolls in an
offered plan the per capita bid for which is
less than the standard per capita govern-
185
ment contribution (as established by the
competitive pricing methodology estab-
lished for such area) may, at the plan’s
election, be offered a rebate of some or all
of the medicare part B premium that such
individual must otherwise pay in order to
participate in a Medicare+Choice plan
under 
the 
Medicare+Choice 
program;
and’’.
SEC. 534. EXTENSION OF MEDICARE MUNICIPAL HEALTH
SERVICES DEMONSTRATION PROJECTS.
Section 9215(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended by section 6135
of the Omnibus Budget Reconciliation Act of 1989, section
13557 of the Omnibus Budget Reconciliation Act of 1993,
and section 4017 of BBA, is amended by striking ‘‘Decem-
ber 31, 2000’’ and inserting ‘‘December 31, 2002’’.
SEC. 535. MEDICARE COORDINATED CARE DEMONSTRA-
TION PROJECT.
Section 4016(e)(1)(A)(ii) of BBA (42 U.S.C. 1395b–
1 note) is amended to read as follows:
‘‘(ii) CANCER HOSPITAL.—In the case
of the project described in subsection
(b)(2)(C), the Secretary shall provide for
the transfer from the Federal Hospital In-
186
surance Trust Fund and the Federal Sup-
plementary Insurance Trust Fund under
title XVIII of the Social Security Act (42
U.S.C. 1395i, 1395t), in such proportions
as the Secretary determines to be appro-
priate, of such funds as are necessary to
cover costs of the project, including costs
for information infrastructure and recur-
ring costs of case management services,
flexible benefits, and program manage-
ment.’’.
SEC. 536. MEDIGAP PROTECTIONS FOR PACE PROGRAM EN-
ROLLEES.
(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 65 years of age or older and 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 cir-
cumstances 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;
187
(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) EFFECTIVE DATE.—The amendments made by
this section shall apply to terminations or discontinuances
made on or after the date of the enactment of this Act.
Subtitle D—Medicare+Choice Nurs-
ing and Allied Health Profes-
sional Education Payments
SEC. 
541. 
MEDICARE+CHOICE 
NURSING 
AND 
ALLIED
HEALTH PROFESSIONAL EDUCATION PAY-
MENTS.
(a) ADDITIONAL PAYMENTS FOR NURSING AND AL-
LIED HEALTH EDUCATION.—Section 1886 (42 U.S.C.
1395ww) is amended by adding at the end the following
new subsection:
‘‘(l) PAYMENT FOR NURSING AND ALLIED HEALTH
EDUCATION FOR MANAGED CARE ENROLLEES.—
‘‘(1) IN GENERAL.—For portions of cost report-
ing periods occurring in a year (beginning with
189
porting periods occurring in the year to deter-
mine a total amount of additional payments for
nursing and allied health education to be dis-
tributed to hospitals under this subsection for
portions of cost reporting periods occurring in
the year; except that in no case shall such total
amount exceed $60,000,000 in any year.
‘‘(C) APPLICATION
TO
HOSPITAL.—The
amount of payment under this subsection to a
hospital for portions of cost reporting periods
occurring in a year is equal to the total amount
of payments determined under subparagraph
(B) for the year multiplied by the Secretary’s
estimate of the ratio of the amount of payments
made under section 1861(v) to the hospital for
nursing and allied health education activities
for the hospital’s cost reporting period ending
in the second preceding fiscal year to the total
of such amounts for all hospitals for such cost
reporting periods.’’.
(b) ADJUSTMENTS IN PAYMENTS FOR DIRECT GRAD-
UATE MEDICAL EDUCATION.—Section 1886(h)(3)(D) (42
U.S.C. 1395ww(h)(3)(D)) is amended—
(1) in clause (i), by inserting ‘‘, subject to
clause (iii),’’ after ‘‘shall equal’’;
190
(2) by redesignating clause (iii) as clause (iv);
and
(3) by inserting after clause (ii) the following
new clause:
‘‘(iii) PROPORTIONAL REDUCTION FOR
NURSING
AND
ALLIED
HEALTH
EDU-
CATION.—The Secretary shall estimate a
proportional adjustment in payments to all
hospitals determined under clauses (i) and
(ii) for portions of cost reporting periods
beginning in a year (beginning with 2000)
such that the proportional adjustment re-
duces payments in an amount for such
year equal to the total additional payment
amounts for nursing and allied health edu-
cation determined under subsection (l) for
portions of cost reporting periods occurring
in that year.’’.
Subtitle E—Studies and Reports
SEC. 551. REPORT ON ACCOUNTING FOR VA AND DOD EX-
PENDITURES 
FOR 
MEDICARE 
BENE-
FICIARIES.
Not later April 1, 2001, the Secretary of Health and
Human Services, jointly with the Secretaries of Defense
and of Veterans Affairs, shall submit to Congress a report
191
on the estimated use of health care services furnished by
the Departments of Defense and of Veterans Affairs to
medicare beneficiaries, including both beneficiaries under
the original medicare fee-for-service program and under
the Medicare+Choice program. The report shall include
an analysis of how best to properly account for expendi-
tures 
for 
such 
services 
in 
the 
computation 
of
Medicare+Choice capitation rates.
SEC. 552. MEDICARE PAYMENT ADVISORY COMMISSION
STUDIES AND REPORTS.
(a) DEVELOPMENT OF SPECIAL PAYMENT RULES
UNDER THE MEDICARE+CHOICE PROGRAM FOR FRAIL
ELDERLY ENROLLED IN SPECIALIZED PROGRAMS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall conduct a study on the develop-
ment 
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;
192
(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 nec-
essary to achieve appropriate payments for
plans serving such beneficiaries.
(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commission
shall submit a report to Congress on the study con-
ducted under paragraph (1), together with any rec-
ommendations for legislation that the Commission
determines to be appropriate as a result of such
study.
(b) REPORT ON MEDICARE MSA (MEDICAL SAVINGS
ACCOUNT) PLANS.—Not later than 1 year after the date
of the enactment of this Act, the Medicare Payment As-
sessment Commission shall submit to Congress a report
on specific legislative changes that should be made to
make MSA plans (as defined in section 1859(b)(3) of the
Social Security Act, 42 U.S.C. 1395w–29(b)(3)) a viable
option under the Medicare+Choice program.
SEC. 553. GAO STUDIES, AUDITS, AND REPORTS.
(a) STUDY OF MEDIGAP POLICIES.—
193
(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 medi-
care 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 de-
scribed 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 medi-
care supplemental policy to medicare bene-
ficiaries over age 651⁄2.
(D) The number and type of medicare sup-
plemental policies offered in each State.
(E) The average out-of-pocket costs (in-
cluding premiums) per beneficiary under each
type of medicare supplemental policy.
(2) 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 rec-
194
ommendations 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 pro-
viding 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 eligi-
ble medicare beneficiaries.
(3) REPORTS.—Not later than March 31 of
2001, 2004, 2007, and 2010, the Comptroller Gen-
eral 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 Serv-
ices 
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.
195
TITLE VI—MEDICAID
SEC. 601. INCREASE IN DSH ALLOTMENT FOR CERTAIN
STATES AND THE DISTRICT OF COLUMBIA.
(a) IN GENERAL.—The table 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) in the entry for the District of Columbia, by
striking ‘‘23’’ and inserting ‘‘32’’;
(2) in the entry for Minnesota, by striking ‘‘16’’
and inserting ‘‘33’’;
(3) in the entry for New Mexico, by striking
‘‘5’’ and inserting ‘‘9’’; and
(4) in the entry for Wyoming, by striking ‘‘0’’
and inserting ‘‘0.1’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) take effect on October 1, 1999, and applies
to expenditures made on or after such date.
SEC. 602. REMOVAL OF FISCAL YEAR LIMITATION ON CER-
TAIN 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).
196
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of section 114 of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (Public Law
104–193; 110 Stat. 2177).
SEC. 603. MODIFICATION OF THE PHASE-OUT OF PAYMENT
FOR FEDERALLY-QUALIFIED HEALTH CEN-
TER SERVICES AND RURAL HEALTH CLINIC
SERVICES BASED ON REASONABLE COSTS.
(a) MODIFICATION OF PHASE-OUT.—
(1) IN
GENERAL.—Section 1902(a)(13)(C)(i)
(42 U.S.C. 1396a(a)(13)(C)(i)) is amended by strik-
ing ‘‘90 percent for services furnished during fiscal
year 2001, 85 percent for services furnished during
fiscal year 2002, or 70 percent for services furnished
during fiscal year 2003’’ and inserting ‘‘fiscal year
2001, or fiscal year 2002, 90 percent for services
furnished during fiscal year 2003, or 85 percent for
services furnished during fiscal year 2004’’.
(2) CONFORMING
AMENDMENT
TO
END
OF
TRANSITIONAL
PAYMENT
RULES.—Section 4712(c)
of BBA (111 Stat. 509) is amended by striking
‘‘2003’’ and inserting ‘‘2004’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect as if included in
197
the enactment of section 4712 of BBA (111 Stat.
508).
(b) GAO STUDY AND REPORT.—Not later than 1
year after the date of the enactment of this Act, the Comp-
troller General of the United States shall submit a report
to Congress that evaluates the effect on Federally-quali-
fied health centers and rural health clinics and on the pop-
ulations served by such centers and clinics of the phase-
out and elimination of the reasonable cost basis for pay-
ment for Federally-qualified health center services and
rural health clinic services provided under section
1902(a)(13)(C)(i) of the Social Security Act (42 U.S.C.
1396a(a)(13)(C)(i)), as amended by section 4712 of BBA
(111 Stat. 508) and subsection (a) of this section. Such
report shall include an analysis of the amount, method,
and impact of payments made by States that have pro-
vided for payment under title XIX of such Act for such
services on a basis other than payment of costs which are
reasonable and related to the cost of furnishing such serv-
ices, together with any recommendations for legislation,
including whether a new payment system is needed, that
the Comptroller General determines to be appropriate as
a result of the study.
198
SEC. 604. PARITY IN REIMBURSEMENT FOR CERTAIN UTILI-
ZATION AND QUALITY CONTROL SERVICES;
ELIMINATION 
OF 
DUPLICATIVE 
REQUIRE-
MENTS FOR EXTERNAL QUALITY REVIEW OF
MEDICAID MANAGED CARE ORGANIZATIONS.
(a) PARITY IN REIMBURSEMENT FOR CERTAIN UTI-
LIZATION AND QUALITY CONTROL SERVICES.—
(1) INTERIM
AMENDMENT
TO
REMOVE
REF-
ERENCES
TO
QUALITY
REVIEW.—Section 1902(d)
(42 U.S.C. 1396a(d)) is amended by striking ‘‘for
the performance of the quality review functions de-
scribed in subsection (a)(30)(C),’’.
(2) FINAL
AMENDMENTS
TO
REMOVE
REF-
ERENCES TO QUALITY REVIEW.—
(A) SECTION 1902.—Section 1902(d) (42
U.S.C. 1396a(d)) is amended by striking ‘‘(in-
cluding quality review functions described in
subsection (a)(30)(C))’’.
(B) 
SECTION
1903.—Section
1903(a)(3)(C)(i) (42 U.S.C. 1396b(a)(3)(C)(i))
is amended by striking ‘‘or quality review’’.
(b) ELIMINATION OF DUPLICATIVE REQUIREMENTS
FOR EXTERNAL QUALITY REVIEW OF MEDICAID MAN-
AGED CARE ORGANIZATIONS.—
(1) IN
GENERAL.—Section 1902(a)(30) (42
U.S.C. 1396a(a)(30)) is amended—
199
(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) 
CONFORMING
AMENDMENT.—Section
1903(m)(6)(B) (42 U.S.C. 1396b(m)(6)(B)) is
amended—
(A) in clause (ii), by adding ‘‘and’’ at the
end;
(B) in clause (iii), by striking ‘‘; and’’ and
inserting a period; and
(C) by striking clause (iv).
(c) EFFECTIVE DATES.—
(1) The amendment made by subsection (a)(1)
applies to expenditures made on and after the date
of the enactment of this Act.
(2) The amendments made by subsections
(a)(2) and (b) apply as of such date as the Secretary
of Health and Human Services certifies to Congress
that the Secretary is fully implementing section
1932(c)(2) of the Social Security Act (42 U.S.C.
1396u–2(c)(2)).
200
SEC. 605. INAPPLICABILITY OF ENHANCED MATCH UNDER
THE STATE CHILDREN’S HEALTH INSURANCE
PROGRAM TO MEDICAID DSH PAYMENTS.
(a) IN GENERAL.—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’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on October 1, 1999, and applies
to expenditures made on or after such date.
SEC. 606. OPTIONAL DEFERMENT OF THE EFFECTIVE DATE
FOR OUTPATIENT DRUG AGREEMENTS.
(a) IN GENERAL.—Section 1927(a)(1) (42 U.S.C.
1396r–8(a)(1)) is amended by striking ‘‘shall not be effec-
tive 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’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to agreements entered into on or
after the date of enactment of this Act.
SEC. 607. MAKING MEDICAID DSH TRANSITION RULE PER-
MANENT.
(a) IN GENERAL.—Section 4721(e) of BBA (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)’’
201
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 in-
serting ‘‘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 new paragraph:
‘‘(3) effective for State fiscal years that begin
on or after July 1, 1999, ‘or (b)(1)(B)’ were in-
serted 
in 
section 
1923(g)(2)(B)(ii)(I) 
after
‘(b)(1)(A)’.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect as if included in the enact-
ment of section 4721(e) of BBA.
SEC. 608. MEDICAID 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’’.
202
(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 re-
aligned 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—
203
(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 BBA (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 mar-
gin 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 in-
serting ‘‘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—
204
(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 insert-
ing ‘‘an entity’’.
(s) Section 1923(c)(3)(B) (42 U.S.C. 1396r–
4(c)(3)(B)) is amended by striking ‘‘patients.’’ and insert-
ing ‘‘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
205
(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 strik-
ing ‘‘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 ‘‘pharma-
ceutically’’.
(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 ‘‘set-
tings,’’ and inserting ‘‘settings),’’; and
(3) in subsection (l), by striking ‘‘State wide-
ness’’ and inserting ‘‘Statewideness’’.
(w) Section 1932 (42 U.S.C. 1396u–2) is amended—
216
come 
children 
under 
section
1902(a)(10)(A)(ii)(XIV)); and
‘‘(B) assess the progress made in reducing
the number of uncovered low-income children,
including the progress made to achieve the stra-
tegic objectives and performance goals included
in the State child health plan under section
2107(a).
‘‘(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.’’.
(d) COORDINATION
OF DATA COLLECTION WITH
DATA REQUIREMENTS UNDER
THE MATERNAL
AND
CHILD HEALTH SERVICES BLOCK GRANT.—