I
106TH CONGRESS
2D SESSION
H. R. 5661
To amend titles XVIII, XIX, and XXI of the Social Security Act to provide
benefits improvements and beneficiary protections in the Medicare and
Medicaid Programs and the State child health insurance program
(SCHIP), as revised by the Balanced Budget Act of 1997 and the
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 14, 2000
Mr. THOMAS (for himself, Mr. BLILEY, and Mr. BILIRAKIS) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Commerce, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend titles XVIII, XIX, and XXI of the Social Security
Act to provide benefits improvements and beneficiary
protections in the Medicare and Medicaid Programs and
the State child health insurance program (SCHIP), as
revised by the Balanced Budget Act of 1997 and the
Medicare, Medicaid, and SCHIP Balanced Budget Re-
finement Act of 1999, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU-
RITY ACT; REFERENCES TO OTHER ACTS;
TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
Act an amendment is expressed in terms of an amendment
to or repeal of a section or other provision, the reference
shall be considered to be made to that section or other
provision of the Social Security Act.
(c) REFERENCES TO OTHER ACTS.—In this Act:
(1) BALANCED
BUDGET
ACT
OF
1997.—The
term ‘‘BBA’’ means the Balanced Budget Act of
1997 (Public Law 105–33; 111 Stat. 251).
(2) MEDICARE, MEDICAID, AND
SCHIP
BAL-
ANCED
BUDGET
REFINEMENT
ACT
OF
1999.—The
term ‘‘BBRA’’ means the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement Act of 1999
(Appendix F, 113 Stat. 1501A–321), as enacted into
law by section 1000(a)(6) of Public Law 106–113.
(d) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to other Acts;
table of contents.
TITLE I—MEDICARE BENEFICIARY IMPROVEMENTS
Subtitle A—Improved Preventive Benefits
Sec. 101. Coverage of biennial screening pap smear and pelvic exams.
Sec. 102. Coverage of screening for glaucoma.
Sec. 103. Coverage of screening colonoscopy for average risk individuals.
Sec. 104. Modernization of screening mammography benefit.
Sec. 105. Coverage of medical nutrition therapy services for beneficiaries with
diabetes or a renal disease.
Subtitle B—Other Beneficiary Improvements
Sec. 111. Acceleration of reduction of beneficiary copayment for hospital out-
patient department services.
Sec. 112. Preservation of coverage of drugs and biologicals under part B of the
medicare program.
Sec. 113. Elimination of time limitation on medicare benefits for immuno-
suppressive drugs.
Sec. 114. Imposition of billing limits on drugs.
Sec. 115. Waiver of 24-month waiting period for medicare coverage of individ-
uals disabled with amyotrophic lateral sclerosis (ALS).
Subtitle C—Demonstration Projects and Studies
Sec. 121. Demonstration project for disease management for severely chron-
ically ill medicare beneficiaries.
Sec. 122. Cancer prevention and treatment demonstration for ethnic and racial
minorities.
Sec. 123. Study on medicare coverage of routine thyroid screening.
Sec. 124. MedPAC study on consumer coalitions.
Sec. 125. Study on limitation on State payment for medicare cost-sharing af-
fecting access to services for qualified medicare beneficiaries.
Sec. 126. Studies on preventive interventions in primary care for older Ameri-
cans.
Sec. 127. MedPAC study and report on medicare coverage of cardiac and pul-
monary rehabilitation therapy services.
Sec. 128. Lifestyle modification program demonstration.
TITLE II—RURAL HEALTH CARE IMPROVEMENTS
Subtitle A—Critical Access Hospital Provisions
Sec. 201. Clarification of no beneficiary cost-sharing for clinical diagnostic lab-
oratory tests furnished by critical access hospitals.
Sec. 202. Assistance with fee schedule payment for professional services under
all-inclusive rate.
Sec. 203. Exemption of critical access hospital swing beds from SNF PPS.
Sec. 204. Payment in critical access hospitals for emergency room on-call physi-
cians.
Sec. 205. Treatment of ambulance services furnished by certain critical access
hospitals.
Sec. 206. GAO study on certain eligibility requirements for critical access hos-
pitals.
Subtitle B—Other Rural Hospitals Provisions
Sec. 211. Treatment of rural disproportionate share hospitals.
Sec. 212. Option to base eligibility for medicare dependent, small rural hospital
program on discharges during two of the three most recently
audited cost reporting periods.
Sec. 213. Extension of option to use rebased target amounts to all sole commu-
nity hospitals.
Sec. 214. MedPAC analysis of impact of volume on per unit cost of rural hos-
pitals with psychiatric units.
Subtitle C—Other Rural Provisions
Sec. 221. Assistance for providers of ambulance services in rural areas.
Sec. 222. Payment for certain physician assistant services.
Sec. 223. Revision of medicare reimbursement for telehealth services.
Sec. 224. Expanding access to rural health clinics.
Sec. 225. MedPAC study on low-volume, isolated rural health care providers.
TITLE III—PROVISIONS RELATING TO PART A
Subtitle A—Inpatient Hospital Services
Sec. 301. Revision of acute care hospital payment update for 2001.
Sec. 302. Additional modification in transition for indirect medical education
(IME) percentage adjustment.
Sec. 303. Decrease in reductions for disproportionate share hospital (DSH)
payments.
Sec. 304. Wage index improvements.
Sec. 305. Payment for inpatient services of rehabilitation hospitals.
Sec. 306. Payment for inpatient services of psychiatric hospitals.
Sec. 307. Payment for inpatient services of long-term care hospitals.
Subtitle B—Adjustments to PPS Payments for Skilled Nursing Facilities
Sec. 311. Elimination of reduction in skilled nursing facility (SNF) market bas-
ket update in 2001.
Sec. 312. Increase in nursing component of PPS Federal rate.
Sec. 313. Application of SNF consolidated billing requirement limited to part
A covered stays.
Sec. 314. Adjustment of rehabilitation RUGs to correct anomaly in payment
rates.
Sec. 315. Establishment of process for geographic reclassification.
Subtitle C—Hospice Care
Sec. 321. Five percent increase in payment base.
Sec. 322. Clarification of physician certification.
Sec. 323. MedPAC report on access to, and use of, hospice benefit.
Subtitle D—Other Provisions
Sec. 331. Relief from medicare part A late enrollment penalty for group buy-
in for State and local retirees.
TITLE IV—PROVISIONS RELATING TO PART B
Subtitle A—Hospital Outpatient Services
Sec. 401. Revision of hospital outpatient PPS payment update.
Sec. 402. Clarifying process and standards for determining eligibility of devices
for pass-through payments under hospital outpatient PPS.
Sec. 403. Application of OPD PPS transitional corridor payments to certain
hospitals that did not submit a 1996 cost report.
Sec. 404. Application of rules for determining provider-based status for certain
entities.
Sec. 405. Treatment of children’s hospitals under prospective payment system.
Sec. 406. Inclusion of temperature monitored cryoablation in transitional pass-
through for certain medical devices, drugs, and biologicals
under OPD PPS.
Subtitle B—Provisions Relating to Physicians’ Services
Sec. 411. GAO studies relating to physicians’ services.
Sec. 412. Physician group practice demonstration.
Sec. 413. Study on enrollment procedures for groups that retain independent
contractor physicians.
Subtitle C—Other Services
Sec. 421. One-year extension of moratorium on therapy caps; report on stand-
ards for supervision of physical therapy assistants.
Sec. 422. Update in renal dialysis composite rate.
Sec. 423. Payment for ambulance services.
Sec. 424. Ambulatory surgical centers.
Sec. 425. Full update for durable medical equipment.
Sec. 426. Full update for orthotics and prosthetics.
Sec. 427. Establishment of special payment provisions and requirements for
prosthetics and certain custom-fabricated orthotic items.
Sec. 428. Replacement of prosthetic devices and parts.
Sec. 429. Revised part B payment for drugs and biologicals and related serv-
ices.
Sec. 430. Contrast enhanced diagnostic procedures under hospital prospective
payment system.
Sec. 431. Qualifications for community mental health centers.
Sec. 432. Payment of physician and nonphysician services in certain Indian
providers.
Sec. 433. GAO study on coverage of surgical first assisting services of certified
registered nurse first assistants.
Sec. 434. MedPAC study and report on medicare reimbursement for services
provided by certain providers.
Sec. 435. MedPAC study and report on medicare coverage of services provided
by certain nonphysician providers.
Sec. 436. GAO study and report on the costs of emergency and medical trans-
portation services.
Sec. 437. GAO studies and reports on medicare payments.
Sec. 438. MedPAC study on access to outpatient pain management services.
TITLE V—PROVISIONS RELATING TO PARTS A AND B
Subtitle A—Home Health Services
Sec. 501. One-year additional delay in application of 15 percent reduction on
payment limits for home health services.
Sec. 502. Restoration of full home health market basket update for home
health services for fiscal year 2001.
Sec. 503. Temporary two-month periodic interim payment.
Sec. 504. Use of telehealth in delivery of home health services.
Sec. 505. Study on costs to home health agencies of purchasing nonroutine
medical supplies.
Sec. 506. Treatment of branch offices; GAO study on supervision of home
health care provided in isolated rural areas.
Sec. 507. Clarification of the homebound definition under the medicare home
health benefit.
Sec. 508. Temporary increase for home health services furnished in a rural
area.
Subtitle B—Direct Graduate Medical Education
Sec. 511. Increase in floor for direct graduate medical education payments.
Sec. 512. Change in distribution formula for Medicare+Choice-related nursing
and allied health education costs.
Subtitle C—Changes in Medicare Coverage and Appeals Process
Sec. 521. Revisions to medicare appeals process.
Sec. 522. Revisions to medicare coverage process.
Subtitle D—Improving Access to New Technologies
Sec. 531. Reimbursement improvements for new clinical laboratory tests and
durable medical equipment.
Sec. 532. Retention of HCPCS level III codes.
Sec. 533. Recognition of new medical technologies under inpatient hospital
PPS.
Subtitle E—Other Provisions
Sec. 541. Increase in reimbursement for bad debt.
Sec. 542. Treatment of certain physician pathology services under medicare.
Sec. 543. Extension of advisory opinion authority.
Sec. 544. Change in annual MedPAC reporting.
Sec. 545. Development of patient assessment instruments.
Sec. 546. GAO report on impact of the Emergency Medical Treatment and Ac-
tive Labor Act (EMTALA) on hospital emergency departments.
Sec. 547. Clarification of application of temporary payment increases for 2001.
TITLE 
VI—PROVISIONS 
RELATING 
TO 
PART 
C
(MEDICARE+CHOICE PROGRAM) AND OTHER MEDICARE MAN-
AGED CARE PROVISIONS
Subtitle A—Medicare+Choice Payment Reforms
Sec. 601. Increase in minimum payment amount.
Sec. 602. Increase in minimum percentage increase.
Sec. 603. Phase-in of risk adjustment.
Sec. 604. Transition to revised Medicare+Choice payment rates.
Sec. 605. Revision of payment rates for ESRD patients enrolled in
Medicare+Choice plans.
Sec. 606. Permitting premium reductions as additional benefits under
Medicare+Choice plans.
Sec. 607. Full implementation of risk adjustment for congestive heart failure
enrollees for 2001.
Sec. 608. Expansion of application of Medicare+Choice new entry bonus.
Sec. 609. Report on inclusion of certain costs of the Department of Veterans
Affairs 
and 
military 
facility 
services 
in 
calculating
Medicare+Choice payment rates.
Subtitle B—Other Medicare+Choice Reforms
Sec. 611. Payment of additional amounts for new benefits covered during a
contract term.
Sec. 612. Restriction on implementation of significant new regulatory require-
ments midyear.
Sec. 613. Timely approval of marketing material that follows model marketing
language.
Sec. 614. Avoiding duplicative regulation.
Sec. 615. Election of uniform local coverage policy for Medicare+Choice plan
covering multiple localities.
Sec. 616. Eliminating health disparities in Medicare+Choice program.
Sec. 617. Medicare+Choice program compatibility with employer or union
group health plans.
Sec. 618. Special medigap enrollment antidiscrimination provision for certain
beneficiaries.
Sec. 619. Restoring effective date of elections and changes of elections of
Medicare+Choice plans.
Sec. 620. Permitting ESRD beneficiaries to enroll in another Medicare+Choice
plan if the plan in which they are enrolled is terminated.
Sec. 621. Providing choice for skilled nursing facility services under the
Medicare+Choice program.
Sec. 622. Providing for accountability of Medicare+Choice plans.
Sec. 623. Increased civil money penalty for Medicare+Choice organizations that
terminate contracts mid-year.
Subtitle C—Other Managed Care Reforms
Sec. 631. One-year extension of social health maintenance organization
(SHMO) demonstration project.
Sec. 632. Revised terms and conditions for extension of medicare community
nursing organization (CNO) demonstration project.
Sec. 633. Extension of medicare municipal health services demonstration
projects.
Sec. 634. Service area expansion for medicare cost contracts during transition
period.
TITLE VII—MEDICAID
Sec. 701. DSH payments.
Sec. 702. New prospective payment system for Federally-qualified health cen-
ters and rural health clinics.
Sec. 703. Streamlined approval of continued State-wide section 1115 medicaid
waivers.
Sec. 704. Medicaid county-organized health systems.
Sec. 705. Deadline for issuance of final regulation relating to medicaid upper
payment limits.
Sec. 706. Alaska FMAP.
Sec. 707. One-year extension of welfare-to-work transition.
Sec. 708. Additional entities qualified to determine medicaid presumptive eligi-
bility for low-income children.
Sec. 709. Development of uniform QMB/SLMB application form.
Sec. 710. Technical corrections.
TITLE VIII—STATE CHILDREN’S HEALTH INSURANCE PROGRAM
Sec. 801. Special rule for redistribution and availability of unused fiscal year
1998 and 1999 SCHIP allotments.
Sec. 802. Authority to pay medicaid expansion SCHIP costs from title XXI ap-
propriation.
Sec. 803. Application of medicaid child presumptive eligibility provisions.
TITLE IX—OTHER PROVISIONS
Subtitle A—PACE Program
Sec. 901. Extension of transition for current waivers.
Sec. 902. Continuing of certain operating arrangements permitted.
Sec. 903. Flexibility in exercising waiver authority.
Subtitle B—Outreach to Eligible Low-Income Medicare Beneficiaries
Sec. 911. Outreach on availability of medicare cost-sharing assistance to eligible
low-income medicare beneficiaries.
Subtitle C—Maternal and Child Health Block Grant
Sec. 921. Increase in authorization of appropriations for the maternal and child
health services block grant.
Subtitle D—Diabetes
Sec. 931. Increase in appropriations for special diabetes programs for type I di-
abetes and Indians.
Sec. 932. Appropriations for Ricky Ray Hemophilia Relief Fund.
Subtitle E—Information on Nursing Facility Staffing
Sec. 941. Posting of information on nursing facility staffing.
Subtitle F—Adjustment of Multiemployer Plan Benefits Guaranteed
Sec. 951. Multiemployer plan benefits guaranteed.
TITLE I—MEDICARE
BENEFICIARY IMPROVEMENTS
Subtitle A—Improved Preventive
Benefits
SEC. 101. COVERAGE OF BIENNIAL SCREENING PAP SMEAR
AND PELVIC EXAMS.
(a) IN GENERAL.—
(1) BIENNIAL SCREENING PAP SMEAR.—Section
1861(nn)(1) (42 U.S.C. 1395x(nn)(1)) is amended
by striking ‘‘3 years’’ and inserting ‘‘2 years’’.
(2) BIENNIAL SCREENING PELVIC EXAM.—Sec-
tion 1861(nn)(2) (42 U.S.C. 1395x(nn)(2)) is
amended by striking ‘‘3 years’’ and inserting ‘‘2
years’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to items and services furnished
on or after July 1, 2001.
SEC. 102. COVERAGE OF SCREENING FOR GLAUCOMA.
(a) COVERAGE.—Section 1861(s)(2) (42 U.S.C.
1395x(s)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (S);
(2) by inserting ‘‘and’’ at the end of subpara-
graph (T); and
(3) by adding at the end the following:
‘‘(U) screening for glaucoma (as defined in sub-
section (uu)) for individuals determined to be at
high risk for glaucoma, individuals with a family his-
tory of glaucoma and individuals with diabetes;’’.
(b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.
1395x) is amended by adding at the end the following new
subsection:
‘‘Screening for Glaucoma
‘‘(uu) The term ‘screening for glaucoma’ means a di-
lated eye examination with an intraocular pressure meas-
urement, and a direct ophthalmoscopy or a slit-lamp bio-
microscopic examination for the early detection of glau-
coma which is furnished by or under the direct supervision
of an optometrist or ophthalmologist who is legally author-
ized to furnish such services under State law (or the State
regulatory mechanism provided by State law) of the State
in which the services are furnished, as would otherwise
be covered if furnished by a physician or as an incident
to a physician’s professional service, if the individual in-
volved has not had such an examination in the preceding
year.’’.
(c) 
CONFORMING
AMENDMENT.—Section
1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is amended—
(1) by striking ‘‘and,’’; and
(2) by adding at the end the following: ‘‘and, in
the case of screening for glaucoma, which is per-
formed more frequently than is provided under sec-
tion 1861(uu),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 2002.
SEC. 103. COVERAGE OF SCREENING COLONOSCOPY FOR
AVERAGE RISK INDIVIDUALS.
(a) IN GENERAL.—Section 1861(pp) (42 U.S.C.
1395x(pp)) is amended—
(1) in paragraph (1)(C), by striking ‘‘In the
case of an individual at high risk for colorectal can-
cer, screening colonoscopy’’ and inserting ‘‘Screening
colonoscopy’’; and
(2) in paragraph (2), by striking ‘‘In paragraph
(1)(C), an’’ and inserting ‘‘An’’.
(b) 
FREQUENCY
LIMITS
FOR
SCREENING
COLONOSCOPY.—Section 1834(d) (42 U.S.C. 1395m(d))
is amended—
(1) in paragraph (2)(E)(ii), by inserting before
the period at the end the following: ‘‘or, in the case
of an individual who is not at high risk for colorectal
cancer, if the procedure is performed within the 119
months after a previous screening colonoscopy’’; and
(2) in paragraph (3)—
(A) in the heading by striking ‘‘FOR INDI-
VIDUALS AT HIGH RISK FOR COLORECTAL CAN-
CER’’;
(B) in subparagraph (A), by striking ‘‘for
individuals at high risk for colorectal cancer (as
defined in section 1861(pp)(2))’’; and
(C) in subparagraph (E), by inserting be-
fore the period at the end the following: ‘‘or for
other individuals if the procedure is performed
within the 119 months after a previous screen-
ing colonoscopy or within 47 months after a
previous screening flexible sigmoidoscopy’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to colorectal cancer screening serv-
ices provided on or after July 1, 2001.
SEC. 104. MODERNIZATION OF SCREENING MAMMOGRAPHY
BENEFIT.
(a) INCLUSION IN PHYSICIAN FEE SCHEDULE.—Sec-
tion 1848( j)(3) (42 U.S.C. 1395w–4( j)(3)) is amended by
inserting ‘‘(13),’’ after ‘‘(4),’’.
(b) CONFORMING AMENDMENT.—Section 1834(c)
(42 U.S.C. 1395m(c)) is amended to read as follows:
‘‘(c) PAYMENT
AND STANDARDS
FOR SCREENING
MAMMOGRAPHY.—
‘‘(1) IN GENERAL.—With respect to expenses
incurred for screening mammography (as defined in
section 1861(jj)), payment may be made only—
‘‘(A) for screening mammography con-
ducted consistent with the frequency permitted
under paragraph (2); and
‘‘(B) if the screening mammography is
conducted by a facility that has a certificate (or
provisional certificate) issued under section 354
of the Public Health Service Act.
‘‘(2) FREQUENCY COVERED.—
‘‘(A) IN GENERAL.—Subject to revision by
the Secretary under subparagraph (B)—
‘‘(i) no payment may be made under
this part for screening mammography per-
formed on a woman under 35 years of age;
‘‘(ii) payment may be made under this
part for only one screening mammography
performed on a woman over 34 years of
age, but under 40 years of age; and
‘‘(iii) in the case of a woman over 39
years of age, payment may not be made
under this part for screening mammog-
raphy performed within 11 months fol-
lowing the month in which a previous
screening mammography was performed.
‘‘(B) REVISION OF FREQUENCY.—
‘‘(i) REVIEW.—The Secretary, in con-
sultation with the Director of the National
Cancer Institute, shall review periodically
the appropriate frequency for performing
screening mammography, based on age
and such other factors as the Secretary be-
lieves to be pertinent.
‘‘(ii) REVISION OF FREQUENCY.—The
Secretary, taking into consideration the re-
view made under clause (i), may revise
from time to time the frequency with
which screening mammography may be
paid for under this subsection.’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply with respect to screen-
ing mammographies furnished on or after January 1,
2002.
(d) PAYMENT FOR NEW TECHNOLOGIES.—
(1) TESTS FURNISHED IN 2001.—
(A) SCREENING.—For a screening mam-
mography (as defined in section 1861(jj) of the
Social Security Act (42 U.S.C. 1395x(jj))) fur-
nished during the period beginning on April 1,
2001, and ending on December 31, 2001, that
uses a new technology, payment for such
screening mammography shall be made as fol-
lows:
(i) In the case of a technology which
directly takes a digital image (without in-
volving film), in an amount equal to 150
percent of the amount of payment under
section 1848 of such Act (42 U.S.C.
1395w–4) for a bilateral diagnostic mam-
mography (under HCPCS code 76091) for
such year.
(ii) In the case of a technology which
allows conversion of a standard film mam-
mogram into a digital image and subse-
quently analyzes such resulting image with
software to identify possible problem areas,
in an amount equal to the limit that would
otherwise 
be 
applied 
under 
section
1834(c)(3) 
of 
such 
Act 
(42 
U.S.C.
1395m(c)(3)) for 2001, increased by $15.
(B) BILATERAL
DIAGNOSTIC
MAMMOG-
RAPHY.—For a bilateral diagnostic mammog-
raphy furnished during the period beginning on
April 1, 2001, and ending on December 31,
2001, that uses a new technology described in
subparagraph (A), payment for such mammog-
raphy shall be the amount of payment provided
for under such subparagraph.
(C) ALLOCATION OF AMOUNTS.—The Sec-
retary shall provide for an appropriate alloca-
tion of the amounts under subparagraphs (A)
and (B) between the professional and technical
components.
(D) IMPLEMENTATION
OF
PROVISION.—
The Secretary of Health and Human Services
may implement the provisions of this paragraph
by program memorandum or otherwise.
(2) CONSIDERATION OF NEW HCPCS CODE FOR
NEW
TECHNOLOGIES
AFTER
2001.—The Secretary
shall determine, for such mammographies performed
after 2001, whether the assignment of a new
HCPCS code is appropriate for mammography that
uses a new technology. If the Secretary determines
that a new code is appropriate for such mammog-
raphy, the Secretary shall provide for such new code
for such tests furnished after 2001.
(3) NEW TECHNOLOGY DESCRIBED.—For pur-
poses of this subsection, a new technology with re-
spect to a mammography is an advance in tech-
nology with respect to the test or equipment that re-
sults in the following:
(A) A significant increase or decrease in
the resources used in the test or in the manu-
facture of the equipment.
(B) A significant improvement in the per-
formance of the test or equipment.
(C) A significant advance in medical tech-
nology that is expected to significantly improve
the treatment of medicare beneficiaries.
(4) 
HCPCS 
CODE
DEFINED.—The 
term
‘‘HCPCS code’’ means a code under the Health
Care Financing Administration Common Procedure
Coding System (HCPCS).
SEC. 105. COVERAGE OF MEDICAL NUTRITION THERAPY
SERVICES FOR BENEFICIARIES WITH DIABE-
TES OR A RENAL DISEASE.
(a) COVERAGE.—Section 1861(s)(2) (42 U.S.C.
1395x(s)(2)), as amended by section 102(a), is amended—
(1) in subparagraph (T), by striking ‘‘and’’ at
the end;
(2) in subparagraph (U), by inserting ‘‘and’’ at
the end; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(V) medical nutrition therapy services (as de-
fined in subsection (vv)(1)) in the case of a bene-
ficiary with diabetes or a renal disease who—
‘‘(i) has not received diabetes outpatient
self-management training services within a time
period determined by the Secretary;
‘‘(ii) is not receiving maintenance dialysis
for which payment is made under section 1881;
and
‘‘(iii) meets such other criteria determined
by the Secretary after consideration of protocols
established by dietitian or nutrition professional
organizations;’’.
(b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.
1395x), as amended by section 102(b), is amended by add-
ing at the end the following:
‘‘Medical Nutrition Therapy Services; Registered
Dietitian or Nutrition Professional
‘‘(vv)(1) The term ‘medical nutrition therapy serv-
ices’ means nutritional diagnostic, therapy, and counseling
services for the purpose of disease management which are
furnished by a registered dietitian or nutrition profes-
sional (as defined in paragraph (2)) pursuant to a referral
by a physician (as defined in subsection (r)(1)).
‘‘(2) Subject to paragraph (3), the term ‘registered
dietitian or nutrition professional’ means an individual
who—
‘‘(A) holds a baccalaureate or higher degree
granted by a regionally accredited college or univer-
sity in the United States (or an equivalent foreign
degree) with completion of the academic require-
ments of a program in nutrition or dietetics, as ac-
credited by an appropriate national accreditation or-
ganization recognized by the Secretary for this pur-
pose;
‘‘(B) has completed at least 900 hours of super-
vised dietetics practice under the supervision of a
registered dietitian or nutrition professional; and
‘‘(C)(i) is licensed or certified as a dietitian or
nutrition professional by the State in which the serv-
ices are performed; or
‘‘(ii) in the case of an individual in a State that
does not provide for such licensure or certification,
meets such other criteria as the Secretary estab-
lishes.
‘‘(3) Subparagraphs (A) and (B) of paragraph (2)
shall not apply in the case of an individual who, as of the
date of the enactment of this subsection, is licensed or cer-
tified as a dietitian or nutrition professional by the State
in which medical nutrition therapy services are per-
formed.’’.
(c) PAYMENT.—Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended—
(1) by striking ‘‘and’’ before ‘‘(S)’’; and
(2) by inserting before the semicolon at the end
the following: ‘‘, and (T) with respect to medical nu-
trition therapy services (as defined in section
1861(vv)), the amount paid shall be 80 percent of
the lesser of the actual charge for the services or 85
percent of the amount determined under the fee
schedule established under section 1848(b) for the
same services if furnished by a physician’’.
(d) APPLICATION OF LIMITS ON BILLING.—Section
1842(b)(18)(C) (42 U.S.C. 1395u(b)(18)(C)) is amended
by adding at the end the following new clause:
‘‘(vi) A registered dietitian or nutrition profes-
sional.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 2002.
(f ) STUDY.—Not later than July 1, 2003, the Sec-
retary of Health and Human Services shall submit to Con-
gress a report that contains recommendations with respect
to the expansion to other medicare beneficiary populations
of the medical nutrition therapy services benefit (furnished
under the amendments made by this section).
Subtitle B—Other Beneficiary
Improvements
SEC. 111. ACCELERATION OF REDUCTION OF BENEFICIARY
COPAYMENT FOR HOSPITAL OUTPATIENT DE-
PARTMENT SERVICES.
(a) REDUCING THE UPPER LIMIT ON BENEFICIARY
COPAYMENT.—
(1) IN
GENERAL.—Section 1833(t)(8)(C) (42
U.S.C. 1395l(t)(8)(C)) is amended to read as fol-
lows:
‘‘(C) 
LIMITATION
ON
COPAYMENT
AMOUNT.—
‘‘(i) TO
INPATIENT
HOSPITAL
DE-
DUCTIBLE AMOUNT.—In no case shall the
copayment amount for a procedure per-
formed in a year exceed the amount of the
inpatient hospital deductible established
under section 1813(b) for that year.
‘‘(ii) TO
SPECIFIED
PERCENTAGE.—
The Secretary shall reduce the national
unadjusted copayment amount for a cov-
ered OPD service (or group of such serv-
ices) furnished in a year in a manner so
that the effective copayment rate (deter-
mined on a national unadjusted basis) for
that service in the year does not exceed the
following percentage:
‘‘(I) For procedures performed in
2001, on or after April 1, 2001, 57
percent.
‘‘(II) For procedures performed
in 2002 or 2003, 55 percent.
‘‘(III) For procedures performed
in 2004, 50 percent.
‘‘(IV) For procedures performed
in 2005, 45 percent.
‘‘(V) For procedures performed
in 2006 and thereafter, 40 percent.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply with respect to services
furnished on or after April 1, 2001.
(b) CONSTRUCTION
REGARDING
LIMITING
IN-
CREASES IN COST-SHARING.—Nothing in this Act or the
Social Security Act shall be construed as preventing a hos-
pital from waiving the amount of any coinsurance for out-
patient hospital services under the medicare program
under title XVIII of the Social Security Act that may have
been increased as a result of the implementation of the
prospective payment system under section 1833(t) of the
Social Security Act (42 U.S.C. 1395l(t)).
(c) GAO STUDY OF REDUCTION IN MEDIGAP PRE-
MIUM LEVELS RESULTING FROM REDUCTIONS IN COIN-
SURANCE.—The Comptroller General of the United States
shall work, in concert with the National Association of In-
surance Commissioners, to evaluate the extent to which
the premium levels for medicare supplemental policies re-
flect the reductions in coinsurance resulting from the
amendment made by subsection (a). Not later than April
1, 2004, the Comptroller General shall submit to Congress
a report on such evaluation and the extent to which the
reductions in beneficiary coinsurance effected by such
amendment have resulted in actual savings to medicare
beneficiaries.
SEC. 112. PRESERVATION OF COVERAGE OF DRUGS AND
BIOLOGICALS UNDER PART B OF THE MEDI-
CARE PROGRAM.
(a) IN GENERAL.—Section 1861(s)(2) (42 U.S.C.
1395x(s)(2)) is amended, in each of subparagraphs (A)
and (B), by striking ‘‘(including drugs and biologicals
which cannot, as determined in accordance with regula-
tions, be self-administered)’’ and inserting ‘‘(including
drugs and biologicals which are not usually self-adminis-
tered by the patient)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to drugs and biologicals admin-
istered on or after the date of the enactment of this Act.
SEC. 113. ELIMINATION OF TIME LIMITATION ON MEDI-
CARE BENEFITS FOR IMMUNOSUPPRESSIVE
DRUGS.
(a) IN GENERAL.—Section 1861(s)(2)(J) (42 U.S.C.
1395x(s)(2)(J)) is amended by striking ‘‘, but only’’ and
all that follows up to the semicolon at the end.
(b) CONFORMING AMENDMENTS.—
(1) EXTENDED COVERAGE.—Section 1832 (42
U.S.C. 1395k) is amended—
(A) by striking subsection (b); and
(B) by redesignating subsection (c) as sub-
section (b).
(2) PASS-THROUGH; REPORT.—Section 227 of
BBRA is amended by striking subsection (d).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to drugs furnished on or after
the date of the enactment of this Act.
SEC. 114. IMPOSITION OF BILLING LIMITS ON DRUGS.
(a) IN
GENERAL.—Section 1842(o) (42 U.S.C.
1395u(o)) is amended by adding at the end the following
new paragraph:
‘‘(3)(A) Payment for a charge for any drug or biologi-
cal for which payment may be made under this part may
be made only on an assignment-related basis.
‘‘(B) The provisions of subsection (b)(18)(B) shall
apply to charges for such drugs or biologicals in the same
manner as they apply to services furnished by a practi-
tioner described in subsection (b)(18)(C).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items furnished on or after
January 1, 2001.
SEC. 115. WAIVER OF 24-MONTH WAITING PERIOD FOR
MEDICARE COVERAGE OF INDIVIDUALS DIS-
ABLED WITH AMYOTROPHIC LATERAL SCLE-
ROSIS (ALS).
(a) IN GENERAL.—Section 226 (42 U.S.C. 426) is
amended—
(1) by redesignating subsection (h) as sub-
section ( j) and by moving such subsection to the end
of the section; and
(2) by inserting after subsection (g) the fol-
lowing new subsection:
‘‘(h) For purposes of applying this section in the case
of an individual medically determined to have amyotrophic
lateral sclerosis (ALS), the following special rules apply:
‘‘(1) Subsection (b) shall be applied as if there
were no requirement for any entitlement to benefits,
or status, for a period longer than 1 month.
‘‘(2) The entitlement under such subsection
shall begin with the first month (rather than twenty-
fifth month) of entitlement or status.
‘‘(3) Subsection (f ) shall not be applied.’’.
(b) CONFORMING AMENDMENT.—Section 1837 (42
U.S.C. 1395p) is amended by adding at the end the fol-
lowing new subsection:
‘‘( j) In applying this section in the case of an indi-
vidual who is entitled to benefits under part A pursuant
to the operation of section 226(h), the following special
rules apply:
‘‘(1) The initial enrollment period under sub-
section (d) shall begin on the first day of the first
month in which the individual satisfies the require-
ment of section 1836(1).
‘‘(2) In applying subsection (g)(1), the initial
enrollment period shall begin on the first day of the
first month of entitlement to disability insurance
benefits referred to in such subsection.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to benefits for months beginning
July 1, 2001.
Subtitle C—Demonstration
Projects and Studies
SEC. 121. DEMONSTRATION PROJECT FOR DISEASE MAN-
AGEMENT FOR SEVERELY CHRONICALLY ILL
MEDICARE BENEFICIARIES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a demonstration project
under this section (in this section referred to as the
‘‘project’’) to demonstrate the impact on costs and health
outcomes of applying disease management to medicare
beneficiaries with diagnosed, advanced-stage congestive
heart failure, diabetes, or coronary heart disease. In no
case may the number of participants in the project exceed
30,000 at any time.
(b) VOLUNTARY PARTICIPATION.—
(1) ELIGIBILITY.—Medicare beneficiaries are
eligible to participate in the project only if—
(A) they meet specific medical criteria
demonstrating the appropriate diagnosis and
the advanced nature of their disease;
(B) their physicians approve of participa-
tion in the project; and
(C) 
they 
are 
not 
enrolled 
in 
a
Medicare+Choice plan.
(2) BENEFITS.—A beneficiary who is enrolled
in the project shall be eligible—
(A) for disease management services re-
lated to their chronic health condition; and
(B) for payment for all costs for prescrip-
tion drugs without regard to whether or not
they relate to the chronic health condition, ex-
cept that the project may provide for modest
cost-sharing with respect to prescription drug
coverage.
(c) CONTRACTS WITH DISEASE MANAGEMENT ORGA-
NIZATIONS.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall carry out the project through
contracts with up to three disease management orga-
nizations. The Secretary shall not enter into such a
contract with an organization unless the organiza-
tion demonstrates that it can produce improved
health outcomes and reduce aggregate medicare ex-
penditures consistent with paragraph (2).
(2) 
CONTRACT
PROVISIONS.—Under 
such
contracts—
(A) such an organization shall be required
to provide for prescription drug coverage de-
scribed in subsection (b)(2)(B);
(B) such an organization shall be paid a
fee negotiated and established by the Secretary
in a manner so that (taking into account sav-
ings in expenditures under parts A and B of
the medicare program under title XVIII of the
Social Security Act) there will be a net reduc-
tion in expenditures under the medicare pro-
gram as a result of the project; and
(C) such an organization shall guarantee,
through an appropriate arrangement with a re-
insurance company or otherwise, the net reduc-
tion in expenditures described in subparagraph
(B).
(3) PAYMENTS.—Payments to such organiza-
tions shall be made in appropriate proportion from
the Trust Funds established under title XVIII of the
Social Security Act.
(d) APPLICATION
OF MEDIGAP PROTECTIONS
TO
DEMONSTRATION PROJECT ENROLLEES.—(1) Subject to
paragraph (2), the provisions of section 1882(s)(3) (other
than clauses (i) through (iv) of subparagraph (B)) and
1882(s)(4) of the Social Security Act shall apply to enroll-
ment (and termination of enrollment) in the demonstra-
tion project under this section, in the same manner as they
apply to enrollment (and termination of enrollment) with
a Medicare+Choice organization in a Medicare+Choice
plan.
(2) In applying paragraph (1)—
(A) any reference in clause (v) or (vi) of section
1882(s)(3)(B) of such Act to 12 months is deemed
a reference to the period of the demonstration
project; and
(B) the notification required under section
1882(s)(3)(D) of such Act shall be provided in a
manner specified by the Secretary of Health and
Human Services.
(e) DURATION.—The project shall last for not longer
than 3 years.
(f ) WAIVER.—The Secretary of Health and Human
Services shall waive such provisions of title XVIII of the
Social Security Act as may be necessary to provide for
payment for services under the project in accordance with
subsection (c)(3).
(g) REPORT.—The Secretary of Health and Human
Services shall submit to Congress an interim report on the
project not later than 2 years after the date it is first im-
plemented and a final report on the project not later than
6 months after the date of its completion. Such reports
shall include information on the impact of the project on
costs and health outcomes and recommendations on the
cost-effectiveness of extending or expanding the project.
SEC. 122. CANCER PREVENTION AND TREATMENT DEM-
ONSTRATION FOR ETHNIC AND RACIAL MI-
NORITIES.
(a) DEMONSTRATION.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the
‘‘Secretary’’) shall conduct demonstration projects
(in this section referred to as ‘‘demonstration
projects’’) for the purpose of developing models and
evaluating methods that—
(A) improve the quality of items and serv-
ices provided to target individuals in order to
facilitate reduced disparities in early detection
and treatment of cancer;
(B) improve clinical outcomes, satisfaction,
quality of life, and appropriate use of medicare-
covered services and referral patterns among
those target individuals with cancer;
(C) eliminate disparities in the rate of pre-
ventive cancer screening measures, such as pap
smears and prostate cancer screenings, among
target individuals; and
(D) promote collaboration with community-
based organizations to ensure cultural com-
petency of health care professionals and lin-
guistic access for persons with limited English
proficiency.
(2) TARGET
INDIVIDUAL
DEFINED.—In this
section, the term ‘‘target individual’’ means an indi-
vidual of a racial and ethnic minority group, as de-
fined by section 1707 of the Public Health Service
Act, who is entitled to benefits under part A, and
enrolled under part B, of title XVIII of the Social
Security Act.
(b) PROGRAM DESIGN.—
(1) INITIAL DESIGN.—Not later than 1 year
after the date of the enactment of this Act, the Sec-
retary shall evaluate best practices in the private
sector, community programs, and academic research
of methods that reduce disparities among individuals
of racial and ethnic minority groups in the preven-
tion and treatment of cancer and shall design the
demonstration projects based on such evaluation.
(2) NUMBER AND PROJECT AREAS.—Not later
than 2 years after the date of the enactment of this
Act, the Secretary shall implement at least nine
demonstration projects, including the following:
(A) Two projects for each of the four fol-
lowing major racial and ethnic minority groups:
(i) American Indians, including Alas-
ka Natives, Eskimos, and Aleuts.
(ii) Asian Americans and Pacific Is-
landers.
(iii) Blacks.
(iv) Hispanics.
The two projects must target different ethnic
subpopulations.
(B) One project within the Pacific Islands.
(C) At least one project each in a rural
area and inner-city area.
(3) EXPANSION
OF
PROJECTS; IMPLEMENTA-
TION
OF
DEMONSTRATION
PROJECT
RESULTS.—If
the initial report under subsection (c) contains an
evaluation that demonstration projects—
(A) reduce expenditures under the medi-
care program under title XVIII of the Social
Security Act; or
(B) do not increase expenditures under the
medicare program and reduce racial and ethnic
health disparities in the quality of health care
services provided to target individuals and in-
crease satisfaction of beneficiaries and health
care providers;
the Secretary shall continue the existing demonstra-
tion projects and may expand the number of dem-
onstration projects.
(c) REPORT TO CONGRESS.—
(1) IN GENERAL.—Not later than 2 years after
the date the Secretary implements the initial dem-
onstration projects, and biannually thereafter, the
Secretary shall submit to Congress a report regard-
ing the demonstration projects.
(2) CONTENTS OF REPORT.—Each report under
paragraph (1) shall include the following:
(A) A description of the demonstration
projects.
(B) An evaluation of—
(i) the cost-effectiveness of the dem-
onstration projects;
(ii) the quality of the health care serv-
ices provided to target individuals under
the demonstration projects; and
(iii) beneficiary and health care pro-
vider satisfaction under the demonstration
projects.
(C) Any other information regarding the
demonstration projects that the Secretary de-
termines to be appropriate.
(d) WAIVER AUTHORITY.—The Secretary shall waive
compliance with the requirements of title XVIII of the So-
cial Security Act to such extent and for such period as
the Secretary determines is necessary to conduct dem-
onstration projects.
(e) FUNDING.—
(1) DEMONSTRATION PROJECTS.—
(A) STATE PROJECTS.—Except as provided
in subparagraph (B), the Secretary shall pro-
vide for the transfer from the Federal Hospital
Insurance Trust Fund and the Federal Supple-
mentary Insurance Trust Fund under title
XVIII of the Social Security Act, in such pro-
portions as the Secretary determines to be ap-
propriate, of such funds as are necessary for
the costs of carrying out the demonstration
projects.
(B) TERRITORY PROJECTS.—In the case of
a demonstration project described in subsection
(b)(2)(B), amounts shall be available only as
provided in any Federal law making appropria-
tions for the territories.
(2) LIMITATION.—In conducting demonstration
projects, the Secretary shall ensure that the aggre-
gate payments made by the Secretary do not exceed
the sum of the amount which the Secretary would
have paid under the program for the prevention and
treatment of cancer if the demonstration projects
were not implemented, plus $25,000,000.
SEC. 123. STUDY ON MEDICARE COVERAGE OF ROUTINE
THYROID SCREENING.
(a) STUDY.—The Secretary of Health and Human
Services shall request the National Academy of Sciences,
and as appropriate in conjunction with the United States
Preventive Services Task Force, to conduct a study on the
addition of coverage of routine thyroid screening using a
thyroid stimulating hormone test as a preventive benefit
provided to medicare beneficiaries under title XVIII of the
Social Security Act for some or all medicare beneficiaries.
In conducting the study, the Academy shall consider the
short-term and long-term benefits, and costs to the medi-
care program, of such addition.
(b) REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Secretary of Health and
Human Services shall submit a report on the findings of
the study conducted under subsection (a) to the Com-
mittee on Ways and Means and the Committee on Com-
merce of the House of Representatives and the Committee
on Finance of the Senate.
SEC. 124. MEDPAC STUDY ON CONSUMER COALITIONS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study that examines the use of
consumer coalitions in the marketing of Medicare+Choice
plans under the medicare program under title XVIII of
the Social Security Act. The study shall examine—
(1) the potential for increased efficiency in the
medicare 
program 
through 
greater 
beneficiary
knowledge of their health care options, decreased
marketing costs of Medicare+Choice organizations,
and creation of a group market;
(2) the implications of Medicare+Choice plans
and medicare supplemental policies (under section
1882 of the Social Security Act (42 U.S.C. 1395ss))
offering medicare beneficiaries in the same geo-
graphic location different benefits and premiums
based on their affiliation with a consumer coalition;
(3) how coalitions should be governed, how they
should be accountable to the Secretary of Health
and Human Services, and how potential conflicts of
interest in the activities of consumer coalitions
should be avoided; and
(4) how such coalitions should be funded.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Commission shall submit
to Congress a report on the study conducted under sub-
section (a). The report shall include a recommendation on
whether and how a demonstration project might be con-
ducted for the operation of consumer coalitions under the
medicare program.
(c) CONSUMER COALITION DEFINED.—For purposes
of this section, the term ‘‘consumer coalition’’ means a
nonprofit, community-based group of organizations that—
(1) provides information to medicare bene-
ficiaries about their health care options under the
medicare program; and
(2) negotiates benefits and premiums for medi-
care beneficiaries who are members or otherwise af-
filiated with the group of organizations with
Medicare+Choice 
organizations 
offering
Medicare+Choice plans, issuers of medicare supple-
mental policies, issuers of long-term care coverage,
and pharmacy benefit managers.
SEC. 125. STUDY ON LIMITATION ON STATE PAYMENT FOR
MEDICARE COST-SHARING AFFECTING AC-
CESS TO SERVICES FOR QUALIFIED MEDI-
CARE BENEFICIARIES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a study to determine if ac-
cess to certain services (including mental health services)
for qualified medicare beneficiaries has been affected by
limitations on a State’s payment for medicare cost-sharing
for such beneficiaries under section 1902(n) of the Social
Security Act (42 U.S.C. 1396a(n)). As part of such study,
the Secretary shall analyze the effect of such payment lim-
itation on providers who serve a disproportionate share of
such beneficiaries.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Secretary shall submit
to Congress a report on the study under subsection (a).
The report shall include recommendations regarding any
changes that should be made to the State payment limits
under section 1902(n) for qualified medicare beneficiaries
to ensure appropriate access to services.
SEC. 126. STUDIES ON PREVENTIVE INTERVENTIONS IN
PRIMARY CARE FOR OLDER AMERICANS.
(a) STUDIES.—The Secretary of Health and Human
Services, acting through the United States Preventive
Services Task Force, shall conduct a series of studies de-
signed to identify preventive interventions that can be de-
livered in the primary care setting and that are most valu-
able to older Americans.
(b) MISSION STATEMENT.—The mission statement of
the United States Preventive Services Task Force is
amended to include the evaluation of services that are of
particular relevance to older Americans.
(c) REPORT.—Not later than 1 year after the date
of the enactment of this Act, and annually thereafter, the
Secretary of Health and Human Services shall submit to
Congress a report on the conclusions of the studies con-
ducted under subsection (a), together with recommenda-
tions for such legislation and administrative actions as the
Secretary considers appropriate.
SEC. 127. MEDPAC STUDY AND REPORT ON MEDICARE COV-
ERAGE OF CARDIAC AND PULMONARY REHA-
BILITATION THERAPY SERVICES.
(a) STUDY.—
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission shall conduct a study on coverage
of cardiac and pulmonary rehabilitation therapy
services under the medicare program under title
XVIII of the Social Security Act.
(2) FOCUS.—In conducting the study under
paragraph (1), the Commission shall focus on the
appropriate—
(A) qualifying diagnoses required for cov-
erage of cardiac and pulmonary rehabilitation
therapy services;
(B) level of physician direct involvement
and supervision in furnishing such services; and
(C) level of reimbursement for such serv-
ices.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a) together with such recommendations for
legislation and administrative action as the Commission
determines appropriate.
SEC. 
128. 
LIFESTYLE 
MODIFICATION 
PROGRAM 
DEM-
ONSTRATION.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall carry out the demonstration project
known as the Lifestyle Modification Program Demonstra-
tion, as described in the Health Care Financing Adminis-
tration Memorandum of Understanding entered into on
November 13, 2000, and as subsequently modified, (in
this section referred to as the ‘‘project’’) in accordance
with the following requirements:
(1) The project shall include no fewer than
1,800 medicare beneficiaries who complete under the
project the entire course of treatment under the
Lifestyle Modification Program.
(2) The project shall be conducted over a course
of 4 years.
(b) STUDY ON COST-EFFECTIVENESS.—
(1) STUDY.—The Secretary shall conduct a
study on the cost-effectiveness of the Lifestyle Modi-
fication Program as conducted under the project. In
determining whether such Program is cost-effective,
the Secretary shall determine (using a control group
under a matched paired experimental design) wheth-
er expenditures incurred for medicare beneficiaries
enrolled under the project exceed expenditures for
the control group of medicare beneficiaries with
similar health conditions who are not enrolled under
the project.
(2) REPORTS.—
(A) INITIAL
REPORT.—Not later that 1
year after the date on which 900 medicare
beneficiaries have completed the entire course
of treatment under the Lifestyle Modification
Program under the project, the Secretary shall
submit to Congress an initial report on the
study conducted under paragraph (1).
(B) FINAL REPORT.—Not later that 1 year
after the date on which 1,800 medicare bene-
ficiaries have completed the entire course of
treatment under such Program under the
project, the Secretary shall submit to Congress
a final report on the study conducted under
paragraph (1).
TITLE II—RURAL HEALTH CARE
IMPROVEMENTS
Subtitle A—Critical Access
Hospital Provisions
SEC. 201. CLARIFICATION OF NO BENEFICIARY COST-SHAR-
ING FOR CLINICAL DIAGNOSTIC LABORA-
TORY TESTS FURNISHED BY CRITICAL AC-
CESS HOSPITALS.
(a) PAYMENT CLARIFICATION.—Section 1834(g) (42
U.S.C. 1395m(g)) is amended by adding at the end the
following new paragraph:
‘‘(4) NO
BENEFICIARY
COST-SHARING
FOR
CLINICAL DIAGNOSTIC LABORATORY SERVICES.—No
coinsurance, deductible, copayment, or other cost-
sharing otherwise applicable under this part shall
apply with respect to clinical diagnostic laboratory
services furnished as an outpatient critical access
hospital service. Nothing in this title shall be con-
strued as providing for payment for clinical diag-
nostic laboratory services furnished as part of out-
patient critical access hospital services, other than
on the basis described in this subsection.’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Paragraphs (1)(D)(i) and (2)(D)(i) of sec-
tion 1833(a) (42 U.S.C. 1395l(a)) are each amended
by striking ‘‘or which are furnished on an outpatient
basis by a critical access hospital’’.
(2) Section 403(d)(2) of BBRA (113 Stat.
1501A–371) is amended by striking ‘‘The amend-
ment made by subsection (a) shall apply’’ and in-
serting ‘‘Paragraphs (1) through (3) of section
1834(g) of the Social Security Act (as amended by
paragraph (1)) apply’’.
(c) EFFECTIVE DATES.—The amendment made—
(1) by subsection (a) shall apply to services fur-
nished on or after the date of the enactment of
BBRA;
(2) by subsection (b)(1) shall apply as if in-
cluded in the enactment of section 403(e)(1) of
BBRA (113 Stat. 1501A–371); and
(3) by subsection (b)(2) shall apply as if in-
cluded in the enactment of section 403(d)(2) of
BBRA (113 Stat. 1501A–371).
SEC. 202. ASSISTANCE WITH FEE SCHEDULE PAYMENT FOR
PROFESSIONAL SERVICES UNDER ALL-INCLU-
SIVE RATE.
(a) IN GENERAL.—Section 1834(g)(2)(B) (42 U.S.C.
1395m(g)(2)(B)) is amended by inserting ‘‘115 percent
of’’ before ‘‘such amounts’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to items and serv-
ices furnished on or after July 1, 2001.
SEC. 203. EXEMPTION OF CRITICAL ACCESS HOSPITAL
SWING BEDS FROM SNF PPS.
(a) IN GENERAL.—Section 1888(e)(7) (42 U.S.C.
1395yy(e)(7)) is amended—
(1) in the heading, by striking ‘‘TRANSITION
FOR’’ and inserting ‘‘TREATMENT OF’’;
(2) in subparagraph (A), by striking ‘‘IN GEN-
ERAL.—The’’ and inserting ‘‘TRANSITION.—Subject
to subparagraph (C), the’’;
(3) in subparagraph (A), by inserting ‘‘(other
than critical access hospitals)’’ after ‘‘facilities de-
scribed in subparagraph (B)’’;
(4) in subparagraph (B), by striking ‘‘, for
which payment’’ and all that follows before the pe-
riod; and
(5) by adding at the end the following new sub-
paragraph:
‘‘(C) EXEMPTION
FROM
PPS
OF
SWING-
BED SERVICES FURNISHED IN CRITICAL ACCESS
HOSPITALS.—The prospective payment system
established under this subsection shall not
apply to services furnished by a critical access
hospital pursuant to an agreement under sec-
tion 1883.’’.
(b) PAYMENT ON A REASONABLE COST BASIS FOR
SWING BED SERVICES FURNISHED BY CRITICAL ACCESS
HOSPITALS.—Section 1883(a) (42 U.S.C. 1395tt(a)) is
amended—
(1) in paragraph (2)(A), by inserting ‘‘(other
than a critical access hospital)’’ after ‘‘any hospital’’;
and
(2) by adding at the end the following new
paragraph:
‘‘(3) Notwithstanding any other provision of this title,
a critical access hospital shall be paid for covered skilled
nursing facility services furnished under an agreement en-
tered into under this section on the basis of the reasonable
costs of such services (as determined under section
1861(v)).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to cost reporting periods beginning
on or after the date of the enactment of this Act.
SEC. 204. PAYMENT IN CRITICAL ACCESS HOSPITALS FOR
EMERGENCY ROOM ON-CALL PHYSICIANS.
(a) IN
GENERAL.—Section 1834(g) (42 U.S.C.
1395m(g)), as amended by section 201(a), is further
amended by adding at the end the following new para-
graph:
‘‘(5) COVERAGE
OF
COSTS
FOR
EMERGENCY
ROOM
ON-CALL
PHYSICIANS.—In determining the
reasonable costs of outpatient critical access hospital
services under paragraphs (1) and (2)(A), the Sec-
retary shall recognize as allowable costs, amounts
(as defined by the Secretary) for reasonable com-
pensation and related costs for emergency room phy-
sicians who are on-call (as defined by the Secretary)
but who are not present on the premises of the crit-
ical access hospital involved, and are not otherwise
furnishing physicians’ services and are not on-call at
any other provider or facility.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to cost reporting periods begin-
ning on or after October 1, 2001.
SEC. 205. TREATMENT OF AMBULANCE SERVICES FUR-
NISHED BY CERTAIN CRITICAL ACCESS HOS-
PITALS.
(a) IN
GENERAL.—Section 1834(l) (42 U.S.C.
1395m(l)) is amended by adding at the end the following
new paragraph:
‘‘(8) SERVICES
FURNISHED
BY
CRITICAL
AC-
CESS HOSPITALS.—Notwithstanding any other provi-
sion of this subsection, the Secretary shall pay the
reasonable costs incurred in furnishing ambulance
services if such services are furnished—
‘‘(A) by a critical access hospital (as de-
fined in section 1861(mm)(1)), or
‘‘(B) by an entity that is owned and oper-
ated by a critical access hospital,
but only if the critical access hospital or entity is the
only provider or supplier of ambulance services that
is located within a 35-mile drive of such critical ac-
cess hospital.’’.
(b) 
CONFORMING
AMENDMENT.—Section
1833(a)(1)(R) (42 U.S.C. 1395l(a)(1)(R)) is amended—
(1) by striking ‘‘ambulance service,’’ and insert-
ing ‘‘ambulance services, (i)’’; and
(2) by inserting before the comma at the end
the following: ‘‘and (ii) with respect to ambulance
services described in section 1834(l)(8), the amounts
paid shall be the amounts determined under section
1834(g) for outpatient critical access hospital serv-
ices’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
the date of the enactment of this Act.
SEC. 206. GAO STUDY ON CERTAIN ELIGIBILITY REQUIRE-
MENTS FOR CRITICAL ACCESS HOSPITALS.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study on the eligibility requirements
for critical access hospitals under section 1820(c) of the
Social Security Act (42 U.S.C. 1395i–4(c)) with respect
to limitations on average length of stay and number of
beds in such a hospital, including an analysis of—
(1) the feasibility of having a distinct part unit
as part of a critical access hospital for purposes of
the medicare program under title XVIII of such Act;
and
(2) the effect of seasonal variations in patient
admissions on critical access hospital eligibility re-
quirements with respect to limitations on average
annual length of stay and number of beds.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Comptroller General shall
submit to Congress a report on the study conducted under
subsection 
(a) 
together 
with 
recommendations
regarding—
(1) whether distinct part units should be per-
mitted as part of a critical access hospital under the
medicare program;
(2) if so permitted, the payment methodologies
that should apply with respect to services provided
by such units;
(3) whether, and to what extent, such units
should be included in or excluded from the bed limits
applicable to critical access hospitals under the
medicare program; and
(4) any adjustments to such eligibility require-
ments to account for seasonal variations in patient
admissions.
Subtitle B—Other Rural Hospitals
Provisions
SEC. 211. TREATMENT OF RURAL DISPROPORTIONATE
SHARE HOSPITALS.
(a) APPLICATION OF UNIFORM THRESHOLD.—Sec-
tion 1886(d)(5)(F)(v) (42 U.S.C. 1395ww(d)(5)(F)(v)) is
amended—
(1) in subclause (II), by inserting ‘‘(or 15 per-
cent, for discharges occurring on or after April 1,
2001)’’ after ‘‘30 percent’’;
(2) in subclause (III), by inserting ‘‘(or 15 per-
cent, for discharges occurring on or after April 1,
2001)’’ after ‘‘40 percent’’; and
(3) in subclause (IV), by inserting ‘‘(or 15 per-
cent, for discharges occurring on or after April 1,
2001)’’ after ‘‘45 percent’’.
(b) ADJUSTMENT OF PAYMENT FORMULAS.—
(1) SOLE
COMMUNITY
HOSPITALS.—Section
1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is
amended—
(A) in clause (iv)(VI), by inserting after
‘‘10 percent’’ the following: ‘‘or, for discharges
occurring on or after April 1, 2001, is equal to
the percent determined in accordance with
clause (x)’’; and
(B) by adding at the end the following new
clause:
‘‘(x) For purposes of clause (iv)(VI) (relating to sole
community hospitals), in the case of a hospital for a cost
reporting period with a disproportionate patient percent-
age (as defined in clause (vi)) that—
‘‘(I) is less than 19.3, the disproportionate
share adjustment percentage is determined in ac-
cordance with the following formula: (P–15)(.65) +
2.5;
‘‘(II) is equal to or exceeds 19.3, but is less
than 30.0, such adjustment percentage is equal to
5.25 percent; or
‘‘(III) is equal to or exceeds 30, such adjust-
ment percentage is equal to 10 percent,
where ‘P’ is the hospital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
(2) RURAL REFERRAL CENTERS.—Such section
is further amended—
(A) in clause (iv)(V), by inserting after
‘‘clause (viii)’’ the following: ‘‘or, for discharges
occurring on or after April 1, 2001, is equal to
the percent determined in accordance with
clause (xi)’’; and
(B) by adding at the end the following new
clause:
‘‘(xi) For purposes of clause (iv)(V) (relating to rural
referral centers), in the case of a hospital for a cost report-
ing period with a disproportionate patient percentage (as
defined in clause (vi)) that—
‘‘(I) is less than 19.3, the disproportionate
share adjustment percentage is determined in ac-
cordance with the following formula: (P–15)(.65) +
2.5;
‘‘(II) is equal to or exceeds 19.3, but is less
than 30.0, such adjustment percentage is equal to
5.25 percent; or
‘‘(III) is equal to or exceeds 30, such adjust-
ment percentage is determined in accordance with
the following formula: (P–30)(.6) + 5.25,
where ‘P’ is the hospital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
(3) SMALL
RURAL
HOSPITALS
GENERALLY.—
Such section is further amended—
(A) in clause (iv)(III), by inserting after
‘‘4 percent’’ the following: ‘‘or, for discharges
occurring on or after April 1, 2001, is equal to
the percent determined in accordance with
clause (xii)’’; and
(B) by adding at the end the following new
clause:
‘‘(xii) For purposes of clause (iv)(III) (relating to
small rural hospitals generally), in the case of a hospital
for a cost reporting period with a disproportionate patient
percentage (as defined in clause (vi)) that—
‘‘(I) is less than 19.3, the disproportionate
share adjustment percentage is determined in ac-
cordance with the following formula: (P–15)(.65) +
2.5; or
‘‘(II) is equal to or exceeds 19.3, such adjust-
ment percentage is equal to 5.25 percent,
where ‘P’ is the hospital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
(4) HOSPITALS THAT ARE BOTH SOLE COMMU-
NITY HOSPITALS AND RURAL REFERRAL CENTERS.—
Such section is further amended, in clause (iv)(IV),
by inserting after ‘‘clause (viii)’’ the following: ‘‘or,
for discharges occurring on or after April 1, 2001,
the greater of the percentages determined under
clause (x) or (xi)’’.
(5) URBAN HOSPITALS WITH LESS THAN 100
BEDS.—Such section is further amended—
(A) in clause (iv)(II), by inserting after ‘‘5
percent’’ the following: ‘‘or, for discharges oc-
curring on or after April 1, 2001, is equal to
the percent determined in accordance with
clause (xiii)’’; and
(B) by adding at the end the following new
clause:
‘‘(xiii) For purposes of clause (iv)(II) (relating to
urban hospitals with less than 100 beds), in the case of
a hospital for a cost reporting period with a dispropor-
tionate patient percentage (as defined in clause (vi))
that—
‘‘(I) is less than 19.3, the disproportionate
share adjustment percentage is determined in ac-
cordance with the following formula: (P–15)(.65) +
2.5; or
‘‘(II) is equal to or exceeds 19.3, such adjust-
ment percentage is equal to 5.25 percent,
where ‘P’ is the hospital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
SEC. 212. OPTION TO BASE ELIGIBILITY FOR MEDICARE DE-
PENDENT, SMALL RURAL HOSPITAL PRO-
GRAM ON DISCHARGES DURING TWO OF THE
THREE MOST RECENTLY AUDITED COST RE-
PORTING PERIODS.
(a) IN
GENERAL.—Section 1886(d)(5)(G)(iv)(IV)
(42 U.S.C. 1395ww(d)(5)(G)(iv)(IV)) is amended by in-
serting ‘‘, or two of the three most recently audited cost
reporting periods for which the Secretary has a settled
cost report,’’ after ‘‘1987’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply with respect to cost reporting peri-
ods beginning on or after April 1, 2001.
SEC. 213. EXTENSION OF OPTION TO USE REBASED TARGET
AMOUNTS TO ALL SOLE COMMUNITY HOS-
PITALS.
(a) IN
GENERAL.—Section 1886(b)(3)(I)(i) (42
U.S.C. 1395ww(b)(3)(I)(i)) is amended—
(1) in the matter preceding subclause (I), by
striking ‘‘that for its cost reporting period beginning
during 1999’’ and all that follows through ‘‘for such
target amount’’ and inserting ‘‘there shall be sub-
stituted for the amount otherwise determined under
subsection (d)(5)(D)(i), if such substitution results
in a greater amount of payment under this section
for the hospital’’;
(2) in subclause (I), by striking ‘‘target amount
otherwise applicable’’ and all that follows through
‘‘target amount’)’’ and inserting ‘‘the amount other-
wise applicable to the hospital under subsection
(d)(5)(D)(i) (referred to in this clause as the ‘sub-
section (d)(5)(D)(i) amount’)’’; and
(3) in each of subclauses (II) and (III), by
striking ‘‘subparagraph (C) target amount’’ and in-
serting ‘‘subsection (d)(5)(D)(i) amount’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of section 405 of BBRA (113 Stat. 1501A–372).
SEC. 214. MEDPAC ANALYSIS OF IMPACT OF VOLUME ON
PER UNIT COST OF RURAL HOSPITALS WITH
PSYCHIATRIC UNITS.
The Medicare Payment Advisory Commission, in its
study conducted pursuant to subsection (a) of section 411
of BBRA (113 Stat. 1501A–377), shall include—
(1) in such study an analysis of the impact of
volume on the per unit cost of rural hospitals with
psychiatric units; and
(2) in its report under subsection (b) of such
section a recommendation on whether special treat-
ment for such hospitals may be warranted.
Subtitle C—Other Rural Provisions
SEC. 221. ASSISTANCE FOR PROVIDERS OF AMBULANCE
SERVICES IN RURAL AREAS.
(a) TRANSITIONAL ASSISTANCE IN CERTAIN MILE-
AGE RATES.—Section 1834(l) (42 U.S.C. 1395m(l)) is
amended by adding at the end the following new para-
graph:
‘‘(8) TRANSITIONAL
ASSISTANCE
FOR
RURAL
PROVIDERS.—In the case of ground ambulance serv-
ices furnished on or after July 1, 2001, and before
January 1, 2004, for which the transportation origi-
nates in a rural area (as defined in section
1886(d)(2)(D)) or in a rural census tract of a met-
ropolitan statistical area (as determined under the
most recent modification of the Goldsmith Modifica-
tion, originally published in the Federal Register on
February 27, 1992 (57 Fed. Reg. 6725)), the fee
schedule established under this subsection shall pro-
vide that, with respect to the payment rate for mile-
age for a trip above 17 miles, and up to 50 miles,
the rate otherwise established shall be increased by
not less than 1⁄2 of the additional payment per mile
established for the first 17 miles of such a trip origi-
nating in a rural area.’’.
(b) GAO STUDIES ON THE COSTS OF AMBULANCE
SERVICES FURNISHED IN RURAL AREAS.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on each of the
matters described in paragraph (2).
(2) MATTERS
DESCRIBED.—The matters re-
ferred to in paragraph (1) are the following:
(A) The cost of efficiently providing ambu-
lance services for trips originating in rural
areas, with special emphasis on collection of
cost data from rural providers.
(B) The means by which rural areas with
low population densities can be identified for
the purpose of designating areas in which the
cost of providing ambulance services would be
expected to be higher than similar services pro-
vided in more heavily populated areas because
of low usage. Such study shall also include an
analysis of the additional costs of providing am-
bulance services in areas designated under the
previous sentence.
(3) REPORT.—Not later than June 30, 2002,
the Comptroller General shall submit to Congress a
report on the results of the studies conducted under
paragraph (1) and shall include recommendations on
steps that should be taken to assure access to ambu-
lance services in rural areas.
(c) ADJUSTMENT IN RURAL RATES.—In providing
for adjustments under subparagraph (D) of section
1834(l)(2) of the Social Security Act (42 U.S.C.
1395m(l)(2)) for years beginning with 2004, the Secretary
of Health and Human Services shall take into consider-
SEC. 223. REVISION OF MEDICARE REIMBURSEMENT FOR
TELEHEALTH SERVICES.
(a) TIME LIMIT
FOR BBA PROVISION.—Section
4206(a) of BBA (42 U.S.C. 1395l note) is amended by
striking ‘‘Not later than January 1, 1999’’ and inserting
‘‘For services furnished on and after January 1, 1999, and
before October 1, 2001’’.
(b) EXPANSION OF MEDICARE PAYMENT FOR TELE-
HEALTH SERVICES.—Section 1834 (42 U.S.C. 1395m) is
amended by adding at the end the following new sub-
section:
‘‘(m) PAYMENT FOR TELEHEALTH SERVICES.—
‘‘(1) IN GENERAL.—The Secretary shall pay for
telehealth services that are furnished via a tele-
communications system by a physician (as defined in
section 1861(r)) or a practitioner (described in sec-
tion 1842(b)(18)(C)) to an eligible telehealth indi-
vidual enrolled under this part notwithstanding that
the individual physician or practitioner providing the
telehealth service is not at the same location as the
beneficiary. For purposes of the preceding sentence,
in the case of any Federal telemedicine demonstra-
tion program conducted in Alaska or Hawaii, the
term ‘telecommunications system’ includes store-
and-forward technologies that provide for the asyn-
chronous transmission of health care information in
single or multimedia formats.
‘‘(2) PAYMENT AMOUNT.—
‘‘(A) DISTANT SITE.—The Secretary shall
pay to a physician or practitioner located at a
distant site that furnishes a telehealth service
to an eligible telehealth individual an amount
equal to the amount that such physician or
practitioner would have been paid under this
title had such service been furnished without
the use of a telecommunications system.
‘‘(B) FACILITY
FEE
FOR
ORIGINATING
SITE.—With respect to a telehealth service, sub-
ject to section 1833(a)(1)(U), there shall be
paid to the originating site a facility fee equal
to—
‘‘(i) for the period beginning on Octo-
ber 1, 2001, and ending on December 31,
2001, and for 2002, $20; and
‘‘(ii) for a subsequent year, the facil-
ity fee specified in clause (i) or this clause
for the preceding year increased by the
percentage increase in the MEI (as defined
in section 1842(i)(3)) for such subsequent
year.
‘‘(C) TELEPRESENTER NOT REQUIRED.—
Nothing in this subsection shall be construed as
requiring an eligible telehealth individual to be
presented by a physician or practitioner at the
originating site for the furnishing of a service
via a telecommunications system, unless it is
medically necessary (as determined by the phy-
sician or practitioner at the distant site).
‘‘(3) LIMITATION ON BENEFICIARY CHARGES.—
‘‘(A) PHYSICIAN
AND
PRACTITIONER.—
The provisions of section 1848(g) and subpara-
graphs (A) and (B) of section 1842(b)(18) shall
apply to a physician or practitioner receiving
payment under this subsection in the same
manner as they apply to physicians or practi-
tioners under such sections.
‘‘(B) ORIGINATING SITE.—The provisions
of section 1842(b)(18) shall apply to originating
sites receiving a facility fee in the same manner
as they apply to practitioners under such sec-
tion.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) DISTANT
SITE.—The term ‘distant
site’ means the site at which the physician or
practitioner is located at the time the service is
provided via a telecommunications system.
‘‘(B) 
ELIGIBLE
TELEHEALTH
INDI-
VIDUAL.—The term ‘eligible telehealth indi-
vidual’ means an individual enrolled under this
part who receives a telehealth service furnished
at an originating site.
‘‘(C) ORIGINATING SITE.—
‘‘(i) IN GENERAL.—The term ‘origi-
nating site’ means only those sites de-
scribed in clause (ii) at which the eligible
telehealth individual is located at the time
the service is furnished via a telecommuni-
cations system and only if such site is
located—
‘‘(I) in an area that is designated
as a rural health professional shortage
area under section 332(a)(1)(A) of
the Public Health Service Act (42
U.S.C. 254e(a)(1)(A));
‘‘(II) in a county that is not in-
cluded in a Metropolitan Statistical
Area; or
‘‘(III) from an entity that partici-
pates in a Federal telemedicine dem-
onstration project that has been ap-
proved by (or receives funding from)
the Secretary of Health and Human
Services as of December 31, 2000.
‘‘(ii) SITES
DESCRIBED.—The sites
referred to in clause (i) are the following
sites:
‘‘(I) The office of a physician or
practitioner.
‘‘(II) A critical access hospital
(as defined in section 1861(mm)(1)).
‘‘(III) A rural health clinic (as
defined in section 1861(aa)(s)).
‘‘(IV) 
A 
Federally 
qualified
health center (as defined in section
1861(aa)(4)).
‘‘(V) A hospital (as defined in
section 1861(e)).
‘‘(D) PHYSICIAN.—The term ‘physician’
has the meaning given that term in section
1861(r).
‘‘(E) PRACTITIONER.—The term ‘practi-
tioner’ has the meaning given that term in sec-
tion 1842(b)(18)(C).
‘‘(F) TELEHEALTH SERVICE.—
‘‘(i) IN
GENERAL.—The term ‘tele-
health service’ means professional con-
sultations, office visits, and office psychi-
atry services (identified as of July 1, 2000,
by HCPCS codes 99241–99275, 99201–
99215, 90804–90809, and 90862 (and as
subsequently modified by the Secretary)),
and any additional service specified by the
Secretary.
‘‘(ii) YEARLY
UPDATE.—The Sec-
retary shall establish a process that pro-
vides, on an annual basis, for the addition
or deletion of services (and HCPCS codes),
as appropriate, to those specified in clause
(i) for authorized payment under para-
graph (1).’’.
(c) CONFORMING AMENDMENT.—Section 1833(a)(1)
(42 U.S.C. 1395l(1)), as amended by section 105(c), is
further amended—
(1) by striking ‘‘and (T)’’ and inserting ‘‘(T)’’;
and
(2) by inserting before the semicolon at the end
the following: ‘‘, and (U) with respect to facility fees
described in section 1834(m)(2)(B), the amounts
paid shall be 80 percent of the lesser of the actual
charge or the amounts specified in such section’’.
(d) STUDY
AND REPORT
ON ADDITIONAL COV-
ERAGE.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study to identify—
(A) settings and sites for the provision of
telehealth services that are in addition to those
permitted under section 1834(m) of the Social
Security Act, as added by subsection (b);
(B) practitioners that may be reimbursed
under such section for furnishing telehealth
services that are in addition to the practitioners
that may be reimbursed for such services under
such section; and
(C) geographic areas in which telehealth
services may be reimbursed that are in addition
to the geographic areas where such services
may be reimbursed under such section.
(2) REPORT.—Not later than 2 years after the
date of the enactment of this Act, the Secretary
shall submit to Congress a report on the study con-
ducted under paragraph (1) together with such rec-
ommendations for legislation that the Secretary de-
termines are appropriate.
(e) EFFECTIVE DATE.—The amendments made by
subsections (b) and (c) shall be effective for services fur-
nished on or after October 1, 2001.
SEC. 224. EXPANDING ACCESS TO RURAL HEALTH CLINICS.
(a) IN GENERAL.—The matter in section 1833(f )
(42 U.S.C. 1395l(f )) preceding paragraph (1) is amended
by striking ‘‘rural hospitals’’ and inserting ‘‘hospitals’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
July 1, 2001.
SEC. 225. MEDPAC STUDY ON LOW-VOLUME, ISOLATED
RURAL HEALTH CARE PROVIDERS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on the effect of low patient
and procedure volume on the financial status of low-vol-
ume, isolated rural health care providers participating in
the medicare program under title XVIII of the Social Se-
curity Act.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a) indicating—
(1) whether low-volume, isolated rural health
care providers are having, or may have, significantly
decreased medicare margins or other financial dif-
ficulties resulting from any of the payment meth-
odologies described in subsection (c);
(2) whether the status as a low-volume, isolated
rural health care provider should be designated
under the medicare program and any criteria that
should be used to qualify for such a status; and
(3) any changes in the payment methodologies
described in subsection (c) that are necessary to pro-
vide appropriate reimbursement under the medicare
program to low-volume, isolated rural health care
providers (as designated pursuant to paragraph (2)).
(c) PAYMENT METHODOLOGIES DESCRIBED.—The
payment methodologies described in this subsection are
the following:
(1) The prospective payment system for hos-
pital outpatient department services under section
1833(t) of the Social Security Act (42 U.S.C.
1395l(t)).
(2) The fee schedule for ambulance services
under section 1834(l) of such Act (42 U.S.C.
1395m(l)).
(3) The prospective payment system for inpa-
tient hospital services under section 1886 of such
Act (42 U.S.C. 1395ww).
(4) The prospective payment system for routine
service costs of skilled nursing facilities under sec-
tion 1888(e) of such Act (42 U.S.C. 1395yy(e)).
(5) The prospective payment system for home
health services under section 1895 of such Act (42
U.S.C. 1395fff ).
TITLE III—PROVISIONS
RELATING TO PART A
Subtitle A—Inpatient Hospital
Services
SEC. 301. REVISION OF ACUTE CARE HOSPITAL PAYMENT
UPDATE FOR 2001.
(a) IN
GENERAL.—Section 1886(b)(3)(B)(i) (42
U.S.C. 1395ww(b)(3)(B)(i)) is amended—
(1) in subclause (XVI), by striking ‘‘minus 1.1
percentage points for hospitals (other than sole com-
munity hospitals) in all areas, and the market bas-
ket percentage increase for sole community hos-
pitals,’’ and inserting ‘‘for hospitals in all areas,’’;
(2) in subclause (XVII)—
(A) by striking ‘‘minus 1.1 percentage
points’’ and inserting ‘‘minus 0.55 percentage
points; and
(B) by striking ‘‘and’’ at the end;
(3) by redesignating subclause (XVIII) as sub-
clause (XIX);
(4) in subclause (XIX), as so redesignated, by
striking ‘‘fiscal year 2003’’ and inserting ‘‘fiscal year
2004’’; and
(5) by inserting after subclause (XVII) the fol-
lowing new subclause:
‘‘(XVIII) for fiscal year 2003, the market bas-
ket percentage increase minus 0.55 percentage
points for hospitals in all areas, and’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding the amendment made by sub-
section (a), for purposes of making payments for fiscal
year 2001 for inpatient hospital services furnished by sub-
section (d) hospitals (as defined in section 1886(d)(1)(B)
of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)),
the ‘‘applicable percentage increase’’ referred to in section
1886(b)(3)(B)(i) 
of 
such 
Act 
(42 
U.S.C.
1395ww(b)(3)(B)(i))—
(1) for discharges occurring on or after October
1, 2000, and before April 1, 2001, shall be deter-
mined in accordance with subclause (XVI) of such
section as in effect on the day before the date of the
enactment of this Act; and
(2) for discharges occurring on or after April 1,
2001, and before October 1, 2001, shall be equal
to—
(A) the market basket percentage increase
plus 1.1 percentage points for hospitals (other
than sole community hospitals) in all areas; and
(B) the market basket percentage increase
for sole community hospitals.
(c) CONSIDERATION
OF PRICE
OF BLOOD
AND
BLOOD PRODUCTS
IN MARKET BASKET INDEX.—The
Secretary of Health and Human Services shall, when next
(after the date of the enactment of this Act) rebasing and
revising the hospital market basket index (as defined in
section 1886(b)(3)(B)(iii) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)(iii))), consider the prices of
blood and blood products purchased by hospitals and de-
termine whether those prices are adequately reflected in
such index.
(d) MEDPAC STUDY AND REPORT REGARDING CER-
TAIN HOSPITAL COSTS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall conduct a study on—
(A) any increased costs incurred by sub-
section (d) hospitals (as defined in paragraph
(1)(B) of section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d))) in providing inpa-
tient hospital services to medicare beneficiaries
under title XVIII of such Act during the period
beginning on October 1, 1983, and ending on
September 30, 1999, that were attributable
to—
(i) complying with new blood safety
measure requirements; and
(ii) providing such services using new
technologies;
(B) the extent to which the prospective
payment system for such services under such
section provides adequate and timely recogni-
tion of such increased costs;
(C) the prospects for (and to the extent
practicable, the magnitude of ) cost increases
that hospitals will incur in providing such serv-
ices that are attributable to complying with new
blood safety measure requirements and pro-
viding such services using new technologies dur-
ing the 10 years after the date of the enact-
ment of this Act; and
(D) the feasibility and advisability of es-
tablishing mechanisms under such payment sys-
tem to provide for more timely and accurate
recognition of such cost increases in the future.
(2) CONSULTATION.—In conducting the study
under this subsection, the Commission shall consult
with representatives of the blood community,
including—
(A) hospitals;
(B) organizations involved in the collection,
processing, and delivery of blood; and
(C) organizations involved in the develop-
ment of new blood safety technologies.
(3) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commission
shall submit to Congress a report on the study con-
ducted under paragraph (1) together with such rec-
ommendations for legislation and administrative ac-
tion as the Commission determines appropriate.
(e) ADJUSTMENT
FOR
INPATIENT
CASE
MIX
CHANGES.—
(1) IN GENERAL.—Section 1886(d)(3)(A) (42
U.S.C. 1395ww(d)(3)(A)) is amended by adding at
the end the following new clause:
‘‘(vi) Insofar as the Secretary determines that
the adjustments under paragraph (4)(C)(i) for a
previous fiscal year (or estimates that such adjust-
ments for a future fiscal year) did (or are likely to)
result in a change in aggregate payments under this
subsection during the fiscal year that are a result of
changes in the coding or classification of discharges
that do not reflect real changes in case mix, the Sec-
retary may adjust the average standardized amounts
computed under this paragraph for subsequent fiscal
years so as to eliminate the effect of such coding or
classification changes.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to discharges occurring
on or after October 1, 2001.
SEC. 302. ADDITIONAL MODIFICATION IN TRANSITION FOR
INDIRECT MEDICAL EDUCATION (IME) PER-
CENTAGE ADJUSTMENT.
(a) IN GENERAL.—Section 1886(d)(5)(B)(ii) (42
U.S.C. 1395ww(d)(5)(B)(ii)) is amended—
(1) in subclause (V) by striking ‘‘and’’ at the
end;
(2) by redesignating subclause (VI) as sub-
clause (VII);
(3) in subclause (VII) as so redesignated, by
striking ‘‘2001’’ and inserting ‘‘2002’’; and
(4) by inserting after subclause (V) the fol-
lowing new subclause:
‘‘(VI) during fiscal year 2002, ‘c’ is equal
to 1.6; and’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding paragraph (5)(B)(ii)(V) of sec-
tion 1886(d) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(B)(ii)(V)), for purposes of making pay-
ments for subsection (d) hospitals (as defined in para-
graph (1)(B) of such section) with indirect costs of med-
ical education, the indirect teaching adjustment factor re-
ferred to in paragraph (5)(B)(ii) of such section shall be
determined, for discharges occurring on or after April 1,
2001, and before October 1, 2001, as if ‘‘c’’ in paragraph
(5)(B)(ii)(V) of such section equalled 1.66 rather than
1.54.
(c) CONFORMING AMENDMENT RELATING TO DE-
TERMINATION
OF
STANDARDIZED
AMOUNT.—Section
1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is
amended by inserting ‘‘or of section 302 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protec-
tion Act of 2000’’ after ‘‘Balanced Budget Refinement Act
of 1999’’.
(d) 
CLERICAL
AMENDMENTS.—Section
1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B)), as amended
by subsection (a), is further amended by moving the in-
dentation of each of the following 2 ems to the left:
(1) Clauses (ii), (v), and (vi).
(2) Subclauses (I) (II), (III), (IV), (V), and
(VII) of clause (ii).
(3) Subclauses (I) and (II) of clause (vi) and
the flush sentence at the end of such clause.
SEC. 303. DECREASE IN REDUCTIONS FOR DISPROPOR-
TIONATE SHARE HOSPITAL (DSH) PAYMENTS.
(a) IN GENERAL.—Section 1886(d)(5)(F)(ix) (42
U.S.C. 1395ww(d)(5)(F)(ix)) is amended—
(1) in subclause (III), by striking ‘‘each of’’ and
by inserting ‘‘and 2 percent, respectively’’ after ‘‘3
percent’’; and
(2) in subclause (IV), by striking ‘‘4 percent’’
and inserting ‘‘3 percent’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding the amendment made by sub-
section (a)(1), for purposes of making disproportionate
share payments for subsection (d) hospitals (as defined
in section 1886(d)(1)(B) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)) for fiscal year 2001, the addi-
tional payment amount otherwise determined under clause
(ii) of section 1886(d)(5)(F) of the Social Security Act
(42 U.S.C. 1395ww(d)(5)(F))—
(1) for discharges occurring on or after October
1, 2000, and before April 1, 2001, shall be adjusted
as provided by clause (ix)(III) of such section as in
effect on the day before the date of the enactment
of this Act; and
(2) for discharges occurring on or after April 1,
2001, and before October 1, 2001, shall, instead of
being reduced by 3 percent as provided by clause
(ix)(III) of such section as in effect after the date
of the enactment of this Act, be reduced by 1 per-
cent.
(c) CONFORMING AMENDMENTS RELATING TO DE-
TERMINATION
OF
STANDARDIZED
AMOUNT.—Section
1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)), is
amended—
(1) by striking ‘‘1989 or’’ and inserting
‘‘1989,’’; and
(2) by inserting ‘‘, or the enactment of section
303 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000’’ after
‘‘Omnibus Budget Reconciliation Act of 1990’’.
(d) TECHNICAL AMENDMENT.—
(1) IN GENERAL.—Section 1886(d)(5)(F)(i) (42
U.S.C. 1395ww(d)(5)(F)(i)) is amended by striking
‘‘and before October 1, 1997,’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) is effective as if included in the en-
actment of BBA.
(e) REFERENCE TO CHANGES IN DSH FOR RURAL
HOSPITALS.—For additional changes in the DSH pro-
gram for rural hospitals, see section 211.
SEC. 304. WAGE INDEX IMPROVEMENTS.
(a) DURATION OF WAGE INDEX RECLASSIFICATION;
USE OF 3-YEAR WAGE DATA.—Section 1886(d)(10)(D)
(42 U.S.C. 1395ww(d)(10)(D)) is amended by adding at
the end the following new clauses:
‘‘(v) Any decision of the Board to reclassify a sub-
section (d) hospital for purposes of the adjustment factor
described in subparagraph (C)(i)(II) for fiscal year 2001
or any fiscal year thereafter shall be effective for a period
of 3 fiscal years, except that the Secretary shall establish
procedures under which a subsection (d) hospital may
elect to terminate such reclassification before the end of
such period.
‘‘(vi) Such guidelines shall provide that, in making
decisions on applications for reclassification for the pur-
poses described in clause (v) for fiscal year 2003 and any
succeeding fiscal year, the Board shall base any compari-
son of the average hourly wage for the hospital with the
average hourly wage for hospitals in an area on—
‘‘(I) an average of the average hourly wage
amount for the hospital from the most recently pub-
lished hospital wage survey data of the Secretary (as
of the date on which the hospital applies for reclassi-
fication) and such amount from each of the two im-
mediately preceding surveys; and
‘‘(II) an average of the average hourly wage
amount for hospitals in such area from the most re-
cently published hospital wage survey data of the
Secretary (as of the date on which the hospital ap-
plies for reclassification) and such amount from each
of the two immediately preceding surveys.’’.
(b) PROCESS TO PERMIT STATEWIDE WAGE INDEX
CALCULATION AND APPLICATION.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall establish a process (based on
the voluntary process utilized by the Secretary of
Health and Human Services under section 1848 of
the Social Security Act (42 U.S.C. 1395w–4) for
purposes of computing and applying a statewide geo-
graphic adjustment factor) under which an appro-
priate statewide entity may apply to have all the ge-
ographic areas in a State treated as a single geo-
graphic area for purposes of computing and applying
the area wage index under section 1886(d)(3)(E) of
such Act (42 U.S.C. 1395ww(d)(3)(E)). Such proc-
ess shall be established by October 1, 2001, for re-
classifications beginning in fiscal year 2003.
(2) PROHIBITION ON INDIVIDUAL HOSPITAL RE-
CLASSIFICATION.—Notwithstanding any other provi-
sion of law, if the Secretary applies a statewide geo-
graphic wage index under paragraph (1) with re-
spect to a State, any application submitted by a hos-
pital in that State under section 1886(d)(10) of the
Social Security Act (42 U.S.C. 1395ww(d)(10)) for
geographic reclassification shall not be considered.
(c) COLLECTION
OF INFORMATION
ON OCCUPA-
TIONAL MIX.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall provide for the collection of
data every 3 years on occupational mix for employ-
ees of each subsection (d) hospital (as defined in
section 1886(d)(1)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(D))) in the provision of inpa-
tient hospital services, in order to construct an occu-
pational mix adjustment in the hospital area wage
index applied under section 1886(d)(3)(E) of such
Act (42 U.S.C. 1395ww(d)(3)(E)).
(2) APPLICATION.—The third sentence of sec-
tion 1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is
amended by striking ‘‘To the extent determined fea-
sible by the Secretary, such survey shall measure’’
and inserting ‘‘Not less often than once every 3
years the Secretary (through such survey or other-
wise) shall measure’’.
(3) EFFECTIVE DATE.—By not later than Sep-
tember 30, 2003, for application beginning October
1, 2004, the Secretary shall first complete—
(A) the collection of data under paragraph
(1); and
(B) the measurement under the third sen-
tence of section 1886(d)(3)(E), as amended by
paragraph (2).
SEC. 305. PAYMENT FOR INPATIENT SERVICES OF REHA-
BILITATION HOSPITALS.
(a) ASSISTANCE WITH ADMINISTRATIVE COSTS AS-
SOCIATED WITH COMPLETION
OF PATIENT ASSESS-
MENT.—Section 
1886( j)(3)(B) 
(42 
U.S.C.
1395ww( j)(3)(B)) is amended by striking ‘‘98 percent’’
and inserting ‘‘98 percent for fiscal year 2001 and 100
percent for fiscal year 2002’’.
(b) ELECTION TO APPLY FULL PROSPECTIVE PAY-
MENT RATE WITHOUT PHASE-IN.—
(1) IN
GENERAL.—Paragraph (1) of section
1886( j) (42 U.S.C. 1395ww( j)) is amended—
(A) in subparagraph (A), by inserting
‘‘other than a facility making an election under
subparagraph (F)’’ before ‘‘in a cost reporting
period’’;
(B) in subparagraph (B), by inserting ‘‘or,
in the case of a facility making an election
under subparagraph (F), for any cost reporting
period described in such subparagraph,’’ after
‘‘2002,’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(F) ELECTION TO APPLY FULL PROSPEC-
TIVE PAYMENT SYSTEM.—A rehabilitation facil-
ity may elect, not later than 30 days before its
first cost reporting period for which the pay-
ment methodology under this subsection applies
to the facility, to have payment made to the fa-
cility under this subsection under the provisions
of subparagraph (B) (rather than subparagraph
(A)) for each cost reporting period to which
such payment methodology applies.’’.
(2) CLARIFICATION.—Paragraph (3)(B) of such
section is amended by inserting ‘‘but not taking into
account any payment adjustment resulting from an
election permitted under paragraph (1)(F)’’ after
‘‘paragraphs (4) and (6)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect as if included in the enactment of
BBA.
SEC. 306. PAYMENT FOR INPATIENT SERVICES OF PSY-
CHIATRIC HOSPITALS.
With respect to hospitals described in clause (i) of
section 1886(d)(1)(B) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)) and psychiatric units described
in the matter following clause (v) of such section, in mak-
ing incentive payments to such hospitals under section
1886(b)(1)(A) of such Act (42 U.S.C. 1395ww(b)(1)(A))
for cost reporting periods beginning on or after October
1, 2000, and before October 1, 2001, the Secretary of
Health and Human Services, in clause (ii) of such section,
shall substitute ‘‘3 percent’’ for ‘‘2 percent’’.
SEC. 307. PAYMENT FOR INPATIENT SERVICES OF LONG-
TERM CARE HOSPITALS.
(a) INCREASED TARGET AMOUNTS AND CAPS FOR
LONG-TERM CARE HOSPITALS BEFORE IMPLEMENTA-
TION OF THE PROSPECTIVE PAYMENT SYSTEM.—
(1) IN
GENERAL.—Section 1886(b)(3) (42
U.S.C. 1395ww(b)(3)) is amended—
(A) in subparagraph (H)(ii)(III), by insert-
ing ‘‘subject to subparagraph (J),’’ after
‘‘2002,’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(J) For cost reporting periods beginning during fis-
cal year 2001, for a hospital described in subsection
(d)(1)(B)(iv)—
‘‘(i) the limiting or cap amount otherwise deter-
mined under subparagraph (H) shall be increased by
2 percent; and
‘‘(ii) the target amount otherwise determined
under subparagraph (A) shall be increased by 25
percent (subject to the limiting or cap amount deter-
mined under subparagraph (H), as increased by
clause (i)).’’.
(2) APPLICATION.—The amendments made by
subsection (a) and by section 122 of BBRA (113
Stat. 1501A–331) shall not be taken into account in
the development and implementation of the prospec-
tive payment system under section 123 of BBRA
(113 Stat. 1501A–331).
(b) IMPLEMENTATION OF PROSPECTIVE PAYMENT
SYSTEM FOR LONG-TERM CARE HOSPITALS.—
(1) MODIFICATION OF REQUIREMENT.—In de-
veloping the prospective payment system for pay-
ment for inpatient hospital services provided in long-
term 
care 
hospitals 
described 
in 
section
1886(d)(1)(B)(iv) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)(iv)) under the medicare
program under title XVIII of such Act required
under section 123 of BBRA, the Secretary of Health
and Human Services shall examine the feasibility
and the impact of basing payment under such a sys-
tem on the use of existing (or refined) hospital diag-
nosis-related groups (DRGs) that have been modi-
fied to account for different resource use of long-
term care hospital patients as well as the use of the
most recently available hospital discharge data. The
Secretary shall examine and may provide for appro-
priate adjustments to the long-term hospital pay-
ment system, including adjustments to DRG
weights, area wage adjustments, geographic reclassi-
fication, outliers, updates, and a disproportionate
share 
adjustment 
consistent 
with 
section
1886(d)(5)(F) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(F)).
(2) DEFAULT
IMPLEMENTATION
OF
SYSTEM
BASED ON EXISTING DRG METHODOLOGY.—If the
Secretary is unable to implement the prospective
payment system under section 123 of the BBRA by
October 1, 2002, the Secretary shall implement a
prospective payment system for such hospitals that
bases payment under such a system using existing
hospital diagnosis-related groups (DRGs), modified
where feasible to account for resource use of long-
term care hospital patients using the most recently
available hospital discharge data for such services
furnished on or after that date.
Subtitle B—Adjustments to PPS
Payments for Skilled Nursing
Facilities
SEC. 311. ELIMINATION OF REDUCTION IN SKILLED NURS-
ING FACILITY (SNF) MARKET BASKET UP-
DATE IN 2001.
(a) IN GENERAL.—Section 1888(e)(4)(E)(ii) (42
U.S.C. 1395yy(e)(4)(E)(ii)) is amended—
(1) by redesignating subclauses (II) and (III)
as subclauses (III) and (IV), respectively;
(2) in subclause (III), as so redesignated—
(A) by striking ‘‘each of fiscal years 2001
and 2002’’ and inserting ‘‘each of fiscal years
2002 and 2003’’; and
(B) by striking ‘‘minus 1 percentage
point’’ and inserting ‘‘minus 0.5 percentage
points’’; and
(3) by inserting after subclause (I) the fol-
lowing new subclause:
‘‘(II) for fiscal year 2001, the
rate computed for the previous fiscal
year increased by the skilled nursing
facility 
market 
basket 
percentage
change for the fiscal year;’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding the amendments made by sub-
section (a), for purposes of making payments for covered
skilled nursing facility services under section 1888(e) of
the Social Security Act (42 U.S.C. 1395yy(e)) for fiscal
year 2001, the Federal per diem rate referred to in para-
graph (4)(E)(ii) of such section—
(1) for the period beginning on October 1,
2000, and ending on March 31, 2001, shall be the
rate determined in accordance with the law as in ef-
fect on the day before the date of the enactment of
this Act; and
(2) for the period beginning on April 1, 2001,
and ending on September 30, 2001, shall be the rate
that would have been determined under such section
if ‘‘plus 1 percentage point’’ had been substituted
for ‘‘minus 1 percentage point’’ under subclause (II)
of such paragraph (as in effect on the day before the
date of the enactment of this Act).
(c) 
RELATION
TO
TEMPORARY
INCREASE
IN
BBRA.—The increases provided under section 101 of
BBRA (113 Stat. 1501A–325) shall be in addition to any
increase resulting from the amendments made by sub-
section (a).
(d) GAO REPORT ON ADEQUACY OF SNF PAYMENT
RATES.—Not later than July 1, 2002, the Comptroller
General of the United States shall submit to Congress a
report on the adequacy of medicare payment rates to
skilled nursing facilities and the extent to which medicare
contributes to the financial viability of such facilities. Such
report shall take into account the role of private payors,
medicaid, and case mix on the financial performance of
these facilities, and shall include an analysis (by specific
RUG classification) of the number and characteristics of
such facilities.
(e) HCFA STUDY OF CLASSIFICATION SYSTEMS FOR
SNF RESIDENTS.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the dif-
ferent systems for categorizing patients in medicare
skilled nursing facilities in a manner that accounts
for the relative resource utilization of different pa-
tient types.
(2) REPORT.—Not later than January 1, 2005,
the Secretary shall submit to Congress a report on
the study conducted under subsection (a). Such re-
port shall include such recommendations regarding
changes in law as may be appropriate.
SEC. 312. INCREASE IN NURSING COMPONENT OF PPS FED-
ERAL RATE.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall increase by 16.66 percent the nurs-
ing component of the case-mix adjusted Federal prospec-
tive payment rate specified in Tables 3 and 4 of the final
rule published in the Federal Register by the Health Care
Financing Administration on July 31, 2000 (65 Fed. Reg.
46770) and as subsequently updated, effective for services
furnished on or after April 1, 2001, and before October
1, 2002.
(b) GAO AUDIT OF NURSING STAFF RATIOS.—
(1) AUDIT.—The Comptroller General of the
United States shall conduct an audit of nursing
staffing ratios in a representative sample of medi-
care skilled nursing facilities. Such sample shall
cover selected States and shall include broad rep-
resentation with respect to size, ownership, location,
and medicare volume. Such audit shall include an
examination of payroll records and medicaid cost re-
ports of individual facilities.
(2) REPORT.—Not later than August 1, 2002,
the Comptroller General shall submit to Congress a
report on the audits conducted under paragraph (1).
Such report shall include an assessment of the im-
pact of the increased payments under this subtitle
on increased nursing staff ratios and shall make rec-
ommendations as to whether increased payments
under subsection (a) should be continued.
SEC. 313. APPLICATION OF SNF CONSOLIDATED BILLING
REQUIREMENT LIMITED TO PART A COV-
ERED STAYS.
(a) IN GENERAL.—Section 1862(a)(18) (42 U.S.C.
1395y(a)(18)) is amended by striking ‘‘or of a part of a
facility that includes a skilled nursing facility (as deter-
mined under regulations),’’ and inserting ‘‘during a period
in which the resident is provided covered post-hospital ex-
tended care services (or, for services described in section
1861(s)(2)(D), which are furnished to such an individual
without regard to such period),’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) is amended—
(A) by inserting ‘‘by, or under arrangements
made by, a skilled nursing facility’’ after ‘‘fur-
nished’’;
(B) by striking ‘‘or of a part of a facility that
includes a skilled nursing facility (as determined
under regulations)’’; and
(C) by striking ‘‘(without regard to whether or
not the item or service was furnished by the facility,
by others under arrangement with them made by the
facility, under any other contracting or consulting
arrangement, or otherwise)’’.
(2) Section 1842(t) (42 U.S.C. 1395u(t)) is amended
by striking ‘‘by a physician’’ and ‘‘or of a part of a facility
that includes a skilled nursing facility (as determined
under regulations),’’.
(3) 
Section 
1866(a)(1)(H)(ii)(I) 
(42 
U.S.C.
1395cc(a)(1)(H)(ii)(I)) is amended by inserting after
‘‘who is a resident of the skilled nursing facility’’ the fol-
lowing: ‘‘during a period in which the resident is provided
covered post-hospital extended care services (or, for serv-
ices described in section 1861(s)(2)(D), that are furnished
to such an individual without regard to such period)’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply to services furnished
on or after January 1, 2001.
(d) OVERSIGHT.—The Secretary of Health and
Human Services, through the Office of the Inspector Gen-
eral in the Department of Health and Human Services
or otherwise, shall monitor payments made under part B
of the title XVIII of the Social Security Act for items and
services furnished to residents of skilled nursing facilities
during a time in which the residents are not being pro-
vided medicare covered post-hospital extended care serv-
ices to ensure that there is not duplicate billing for serv-
ices or excessive services provided.
SEC. 314. ADJUSTMENT OF REHABILITATION RUGS TO COR-
RECT ANOMALY IN PAYMENT RATES.
(a) ADJUSTMENT FOR REHABILITATION RUGS.—
(1) IN GENERAL.—For purposes of computing
payments for covered skilled nursing facility services
under paragraph (1) of section 1888(e) of the Social
Security Act (42 U.S.C. 1395yy(e)) for such services
furnished on or after April 1, 2001, and before the
date described in section 101(c)(2) of BBRA (113
Stat. 1501A–324), the Secretary of Health and
Human Services shall increase by 6.7 percent the
adjusted Federal per diem rate otherwise determined
under paragraph (4) of such section (but for this
section) for covered skilled nursing facility services
for RUG–III rehabilitation groups described in para-
graph (2) furnished to an individual during the pe-
riod in which such individual is classified in such a
RUG–III category.
(2) REHABILITATION
GROUPS
DESCRIBED.—
The RUG–III rehabilitation groups for which the
adjustment described in paragraph (1) applies are
RUC, RUB, RUA, RVC, RVB, RVA, RHC, RHB,
RHA, RMC, RMB, RMA, RLB, and RLA, as speci-
fied in Tables 3 and 4 of the final rule published in
the Federal Register by the Health Care Financing
Administration on July 31, 2000 (65 Fed. Reg.
46770).
(b) CORRECTION WITH RESPECT TO REHABILITA-
TION RUGS.—
(1) IN
GENERAL.—Section 101(b) of BBRA
(113 Stat. 1501A–324) is amended by striking
‘‘CA1, RHC, RMC, and RMB’’ and inserting ‘‘and
CA1’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after April 1, 2001.
(c) REVIEW BY OFFICE OF INSPECTOR GENERAL.—
The Inspector General of the Department of Health and
Human Services shall review the medicare payment struc-
ture for services classified within rehabilitation resource
utilization groups (RUGs) (as in effect after the date of
the enactment of the BBRA) to assess whether payment
incentives exist for the delivery of inadequate care. Not
later than October 1, 2001, the Inspector General shall
submit to Congress a report on such review.
SEC. 315. ESTABLISHMENT OF PROCESS FOR GEOGRAPHIC
RECLASSIFICATION.
(a) IN GENERAL.—The Secretary of Health and
Human Services may establish a procedure for the geo-
graphic reclassification of a skilled nursing facility for pur-
poses of payment for covered skilled nursing facility serv-
ices under the prospective payment system established
under section 1888(e) of the Social Security Act (42
U.S.C. 1395yy(e)). Such procedure may be based upon the
method for geographic reclassifications for inpatient hos-
pitals established under section 1886(d)(10) of the Social
Security Act (42 U.S.C. 1395ww(d)(10)).
(b) REQUIREMENT FOR SKILLED NURSING FACILITY
WAGE DATA.—In no case may the Secretary implement
the procedure under subsection (a) before such time as
the Secretary has collected data necessary to establish an
area wage index for skilled nursing facilities based on
wage data from such facilities.
Subtitle C—Hospice Care
SEC. 321. FIVE PERCENT INCREASE IN PAYMENT BASE.
(a) IN GENERAL.—Section 1814(i)(1)(C)(ii)(VI) (42
U.S.C. 1395f(i)(1)(C)(ii)(VI)) is amended by inserting ‘‘,
plus, in the case of fiscal year 2001, 5.0 percentage
points’’ before the semicolon at the end.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to hospice care furnished on or
after April 1, 2001. In applying clause (ii) of section
1814(i)(1)(C) of the Social Security Act (42 U.S.C.
1395f(i)(1)(C)) beginning with fiscal year 2002, the pay-
ment rates in effect under such section during the period
beginning on April 1, 2001, and ending on September 30,
shall be treated as the payment rates in effect during fis-
cal year 2001.
(c) NO EFFECT ON BBRA TEMPORARY INCREASE.—
The provisions of this section shall have no effect on the
application of section 131 of BBRA.
(d) APPLICATION
OF
WAGE
INDEX.—Notwith-
standing section 1814(i) of the Social Security Act (42
U.S.C. 1395f(i)), the Secretary of Health and Human
Services shall use 1.0043 as the hospice wage index value
for the Wichita, Kansas Metropolitan Statistical Area in
calculating payments under such section for a hospice pro-
gram providing hospice care in such area during fiscal
year 2000. The Secretary may provide for an appropriate
timely lump sum payment to reflect the application of the
previous sentence.
(e) 
TECHNICAL
AMENDMENT.—Section
1814(a)(7)(A)(ii) 
(42 
U.S.C. 
1395f(a)(7)(A)(ii)) 
is
amended by striking the period at the end and inserting
a semicolon.
SEC. 322. CLARIFICATION OF PHYSICIAN CERTIFICATION.
(a) CERTIFICATION BASED ON NORMAL COURSE OF
ILLNESS.—
(1) IN GENERAL.—Section 1814(a) (42 U.S.C.
1395f(a)) is amended by adding at the end the fol-
lowing new sentence: ‘‘The certification regarding
terminal illness of an individual under paragraph (7)
shall be based on the physician’s or medical direc-
tor’s clinical judgment regarding the normal course
of the individual’s illness.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to certifications made
on or after the date of the enactment of this Act.
(b) STUDY AND REPORT ON PHYSICIAN CERTIFI-
CATION REQUIREMENT FOR HOSPICE BENEFITS.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study to examine
the appropriateness of the certification regarding
terminal illness of an individual under section
1814(a)(7) of the Social Security Act (42 U.S.C.
1395f(a)(7)) that is required in order for such indi-
vidual to receive hospice benefits under the medicare
program under title XVIII of such Act. In con-
ducting such study, the Secretary shall take into ac-
count the effect of the amendment made by sub-
section (a).
(2) REPORT.—Not later than 2 years after the
date of the enactment of this Act, the Secretary of
Health and Human Services shall submit to Con-
gress a report on the study conducted under para-
graph (1), together with any recommendations for
legislation that the Secretary deems appropriate.
SEC. 323. MEDPAC REPORT ON ACCESS TO, AND USE OF,
HOSPICE BENEFIT.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission shall conduct a study to examine the factors
affecting the use of hospice benefits under the medicare
program under title XVIII of the Social Security Act, in-
cluding a delay in the time (relative to death) of entry
into a hospice program, and differences in such use be-
tween urban and rural hospice programs and based upon
the presenting condition of the patient.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a), together with any recommendations for leg-
islation that the Commission deems appropriate.
Subtitle D—Other Provisions
SEC. 331. RELIEF FROM MEDICARE PART A LATE ENROLL-
MENT PENALTY FOR GROUP BUY-IN FOR
STATE AND LOCAL RETIREES.
(a) IN GENERAL.—Section 1818 (42 U.S.C. 1395i–
2) is amended—
(1) in subsection (c)(6), by inserting before the
semicolon at the end the following: ‘‘and shall be
subject to reduction in accordance with subsection
(d)(6)’’; and
(2) by adding at the end of subsection (d) the
following new paragraph:
‘‘(6)(A) In the case where a State, a political subdivi-
sion of a State, or an agency or instrumentality of a State
or political subdivision thereof determines to pay, for the
life of each individual, the monthly premiums due under
paragraph (1) on behalf of each of the individuals in a
qualified State or local government retiree group who
meets the conditions of subsection (a), the amount of any
increase otherwise applicable under section 1839(b) (as
100
applied and modified by subsection (c)(6) of this section)
with respect to the monthly premium for benefits under
this part for an individual who is a member of such group
shall be reduced by the total amount of taxes paid under
section 3101(b) of the Internal Revenue Code of 1986 by
such individual and under section 3111(b) by the employ-
ers of such individual on behalf of such individual with
respect to employment (as defined in section 3121(b) of
such Code).
‘‘(B) For purposes of this paragraph, the term ‘quali-
fied State or local government retiree group’ means all of
the individuals who retire prior to a specified date that
is before January 1, 2002, from employment in one or
more occupations or other broad classes of employees of—
‘‘(i) the State;
‘‘(ii) a political subdivision of the State; or
‘‘(iii) an agency or instrumentality of the State
or political subdivision of the State.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to premiums for months begin-
ning with January 1, 2002.
101
TITLE IV—PROVISIONS
RELATING TO PART B
Subtitle A—Hospital Outpatient
Services
SEC. 401. REVISION OF HOSPITAL OUTPATIENT PPS PAY-
MENT UPDATE.
(a) IN GENERAL.—Section 1833(t)(3)(C)(iii) (42
U.S.C. 1395l(t)(3)(C)(iii)) is amended by striking ‘‘in
each of 2000, 2001, and 2002’’ and inserting ‘‘in each
of 2000 and 2002’’.
(b) ADJUSTMENT FOR CASE MIX CHANGES.—
(1) IN
GENERAL.—Section 1833(t)(3)(C) (42
U.S.C. 1395l(t)(3)(C)) is amended—
(A) by redesignating clause (iii) as clause
(iv); and
(B) by inserting after clause (ii) the fol-
lowing new clause:
‘‘(iii) ADJUSTMENT FOR SERVICE MIX
CHANGES.—Insofar as the Secretary deter-
mines that the adjustments for service mix
under paragraph (2) for a previous year
(or estimates that such adjustments for a
future year) did (or are likely to) result in
a change in aggregate payments under this
subsection during the year that are a re-
102
sult of changes in the coding or classifica-
tion of covered OPD services that do not
reflect real changes in service mix, the Sec-
retary may adjust the conversion factor
computed under this subparagraph for
subsequent years so as to eliminate the ef-
fect of such coding or classification
changes.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall take effect as if included in
the enactment of BBA.
(c) SPECIAL RULE FOR PAYMENT FOR 2001.—Not-
withstanding the amendment made by subsection (a), for
purposes of making payments under section 1833(t) of the
Social Security Act (42 U.S.C. 1395l(t)) for covered OPD
services furnished during 2001, the medicare OPD fee
schedule amount under such section—
(1) for services furnished on or after January
1, 2001, and before April 1, 2001, shall be the medi-
care OPD fee schedule amount for 2001 as deter-
mined under the provisions of law in effect on the
day before the date of the enactment of this Act;
and
(2) for services furnished on or after April 1,
2001, and before January 1, 2002, shall be the fee
103
schedule amount (as determined taking into account
the amendment made by subsection (a)), increased
by a transitional percentage allowance equal to 0.32
percent (to account for the timing of implementation
of the full market basket update).
SEC. 402. CLARIFYING PROCESS AND STANDARDS FOR DE-
TERMINING ELIGIBILITY OF DEVICES FOR
PASS-THROUGH PAYMENTS UNDER HOSPITAL
OUTPATIENT PPS.
(a) IN GENERAL.—Section 1833(t)(6) (42 U.S.C.
1395l(t)(6)) is amended—
(1) by redesignating subparagraphs (C) and
(D) as subparagraphs (D) and (E), respectively; and
(2) by striking subparagraph (B) and inserting
the following new subparagraphs:
‘‘(B) USE
OF
CATEGORIES
IN
DETER-
MINING ELIGIBILITY OF A DEVICE FOR PASS-
THROUGH
PAYMENTS.—The following provi-
sions apply for purposes of determining whether
a medical device qualifies for additional pay-
ments under clause (ii) or (iv) of subparagraph
(A):
‘‘(i) ESTABLISHMENT OF INITIAL CAT-
EGORIES.—
104
‘‘(I) IN
GENERAL.—The Sec-
retary shall initially establish under
this clause categories of medical de-
vices based on type of device by April
1, 2001. Such categories shall be es-
tablished in a manner such that each
medical device that meets the require-
ments of clause (ii) or (iv) of subpara-
graph (A) as of January 1, 2001, is
included in such a category and no
such device is included in more than
one category. For purposes of the pre-
ceding sentence, whether a medical
device meets such requirements as of
such date shall be determined on the
basis of the program memoranda
issued before such date.
‘‘(II) AUTHORIZATION OF IMPLE-
MENTATION
OTHER
THAN
THROUGH
REGULATIONS.—The categories may
be established under this clause by
program memorandum or otherwise,
after consultation with groups rep-
resenting hospitals, manufacturers of
105
medical devices, and other affected
parties.
‘‘(ii) ESTABLISHING
CRITERIA
FOR
ADDITIONAL CATEGORIES.—
‘‘(I) IN
GENERAL.—The Sec-
retary shall establish criteria that will
be used for creation of additional cat-
egories (other than those established
under clause (i)) through rulemaking
(which may include use of an interim
final rule with comment period).
‘‘(II) 
STANDARD.—Such 
cat-
egories shall be established under this
clause in a manner such that no med-
ical device is described by more than
one category. Such criteria shall in-
clude a test of whether the average
cost of devices that would be included
in a category and are in use at the
time the category is established is not
insignificant, as described in subpara-
graph (A)(iv)(II).
‘‘(III) DEADLINE.—Criteria shall
first be established under this clause
by July 1, 2001. The Secretary may
106
establish in compelling circumstances
categories under this clause before the
date such criteria are established.
‘‘(IV) ADDING
CATEGORIES.—
The Secretary shall promptly establish
a new category of medical devices
under this clause for any medical de-
vice that meets the requirements of
subparagraph (A)(iv) and for which
none of the categories in effect (or
that were previously in effect) is ap-
propriate.
‘‘(iii) PERIOD FOR WHICH CATEGORY
IS IN EFFECT.—A category of medical de-
vices established under clause (i) or (ii)
shall be in effect for a period of at least 2
years, but not more than 3 years, that
begins—
‘‘(I) in the case of a category es-
tablished under clause (i), on the first
date on which payment was made
under this paragraph for any device
described by such category (including
payments made during the period be-
fore April 1, 2001); and
107
‘‘(II) in the case of any other
category, on the first date on which
payment is made under this para-
graph for any medical device that is
described by such category.
‘‘(iv) REQUIREMENTS
TREATED
AS
MET.—A medical device shall be treated as
meeting the requirements of subparagraph
(A)(iv), regardless of whether the device
meets the requirement of subclause (I) of
such subparagraph, if—
‘‘(I) the device is described by a
category established and in effect
under clause (i); or
‘‘(II) the device is described by a
category established and in effect
under clause (ii) and an application
under section 515 of the Federal
Food, Drug, and Cosmetic Act has
been approved with respect to the de-
vice, or the device has been cleared for
market under section 510(k) of such
Act, or the device is exempt from the
requirements of section 510(k) of
such Act pursuant to subsection (l) or
108
(m) of section 510 of such Act or sec-
tion 520(g) of such Act.
Nothing in this clause shall be construed
as requiring an application or prior ap-
proval (other than that described in sub-
clause (II)) in order for a covered device
described by a category to qualify for pay-
ment under this paragraph.
‘‘(C) LIMITED PERIOD OF PAYMENT.—
‘‘(i) DRUGS AND BIOLOGICALS.—The
payment under this paragraph with respect
to a drug or biological shall only apply dur-
ing a period of at least 2 years, but not
more than 3 years, that begins—
‘‘(I) on the first date this sub-
section is implemented in the case of
a drug or biological described in
clause (i), (ii), or (iii) of subparagraph
(A) and in the case of a drug or bio-
logical described in subparagraph
(A)(iv) and for which payment under
this part is made as an outpatient
hospital service before such first date;
or
109
‘‘(II) in the case of a drug or bio-
logical described in subparagraph
(A)(iv) not described in subclause (I),
on the first date on which payment is
made under this part for the drug or
biological as an outpatient hospital
service.
‘‘(ii) MEDICAL
DEVICES.—Payment
shall be made under this paragraph with
respect to a medical device only if such
device—
‘‘(I) is described by a category of
medical devices established and in ef-
fect under subparagraph (B); and
‘‘(II) is provided as part of a
service (or group of services) paid for
under this subsection and provided
during the period for which such cat-
egory is in effect under such subpara-
graph.’’.
(b) CONFORMING AMENDMENTS.—Section 1833(t)
(42 U.S.C. 1395l(t)) is further amended—
(1) in paragraph (6)(A)(iv)(II), by striking ‘‘the
cost of the device, drug, or biological’’ and inserting
110
‘‘the cost of the drug or biological or the average
cost of the category of devices’’;
(2) in paragraph (6)(D) (as redesignated by
subsection 
(a)(1)), 
by 
striking 
‘‘subparagraph
(D)(iii)’’ in the matter preceding clause (i) and in-
serting ‘‘subparagraph (E)(iii)’’; and
(3) in paragraph (12)(E), by striking ‘‘addi-
tional payments (consistent with paragraph (6)(B))’’
and inserting ‘‘additional payments, the determina-
tion and deletion of initial and new categories (con-
sistent with subparagraphs (B) and (C) of para-
graph (6))’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act.
(d) TRANSITION.—
(1) IN GENERAL.—In the case of a medical de-
vice provided as part of a service (or group of serv-
ices) furnished during the period before initial cat-
egories are implemented under subparagraph (B)(i)
of section 1833(t)(6) of the Social Security Act (as
amended by subsection (a)), payment shall be made
for such device under such section in accordance
with the provisions in effect before the date of the
enactment of this Act. In addition, beginning on the
111
date that is 30 days after the date of the enactment
of this Act, payment shall be made for such a device
that is not included in a program memorandum de-
scribed in such subparagraph if the Secretary of
Health and Human Services determines that the de-
vice (including a device that would have been in-
cluded in such program memoranda but for the re-
quirement of subparagraph (A)(iv)(I) of that sec-
tion) is likely to be described by such an initial cat-
egory.
(2) APPLICATION OF CURRENT PROCESS.—Not-
withstanding any other provision of law, the Sec-
retary shall continue to accept applications with re-
spect to medical devices under the process estab-
lished pursuant to paragraph (6) of section 1833(t)
of the Social Security Act (as in effect on the day
before the date of the enactment of this Act)
through December 1, 2000, and any device—
(A) with respect to which an application
was submitted (pursuant to such process) on or
before such date; and
(B) that meets the requirements of clause
(ii) or (iv) of subparagraph (A) of such para-
graph (as determined pursuant to such proc-
ess),
112
shall be treated as a device with respect to which an
initial category is required to be established under
subparagraph (B)(i) of such paragraph (as amended
by subsection (a)(2)).
SEC. 403. APPLICATION OF OPD PPS TRANSITIONAL COR-
RIDOR PAYMENTS TO CERTAIN HOSPITALS
THAT DID NOT SUBMIT A 1996 COST REPORT.
(a) IN GENERAL.—Section 1833(t)(7)(F)(ii)(I) (42
U.S.C. 1395l(t)(7)(F)(ii)(I)) is amended by inserting ‘‘(or
in the case of a hospital that did not submit a cost report
for such period, during the first subsequent cost reporting
period ending before 2001 for which the hospital sub-
mitted a cost report)’’ after ‘‘1996’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the enact-
ment of BBRA.
SEC. 404. APPLICATION OF RULES FOR DETERMINING PRO-
VIDER-BASED STATUS FOR CERTAIN ENTI-
TIES.
(a) GRANDFATHER.—Notwithstanding any other pro-
vision of law, effective October 1, 2000, for purposes of
provider-based status under title XVIII of the Social Secu-
rity Act—
(1) any facility or organization that is treated
as provider-based in relation to a hospital or critical
114
(2) The facility or organization shall be treated
as satisfying any of the requirements and standards
for geographic location in relation to a hospital or a
critical access hospital if the facility or organization
is owned and operated by a hospital or critical ac-
cess hospital that—
(A) is owned or operated by a unit of State
or local government, is a public or private non-
profit corporation that is formally granted gov-
ernmental powers by a unit of State or local
government, or is a private hospital that has a
contract with a State or local government that
includes the operation of clinics located off the
main campus of the hospital to assure access in
a well-defined service area to health care serv-
ices for low-income individuals who are not enti-
tled to benefits under title XVIII (or medical
assistance under a State plan under title XIX)
of the Social Security Act; and
(B) has a disproportionate share adjust-
ment percentage (as determined under section
1886(d)(5)(F) 
of 
such 
Act 
(42 
U.S.C.
1395ww(d)(5)(F))) greater than 11.75 percent
or is described in clause (i)(II) of such section.
115
(c) TEMPORARY CRITERIA.—For purposes of title
XVIII of the Social Security Act, a facility or organization
for which a determination of provider-based status in rela-
tion to a hospital or critical access hospital is requested
on or after October 1, 2000, and before October 1, 2002,
shall be treated as having provider-based status in relation
to such a hospital or a critical access hospital for any pe-
riod before a determination is made with respect to such
status pursuant to such request.
(d) DEFINITIONS.—For purposes of this section, the
terms ‘‘hospital’’ and ‘‘critical access hospital’’ have the
meanings given such terms in subsections (e) and
(mm)(1), respectively, of section 1861 of the Social Secu-
rity Act (42 U.S.C. 1395x).
SEC. 405. TREATMENT OF CHILDREN’S HOSPITALS UNDER
PROSPECTIVE PAYMENT SYSTEM.
(a) IN
GENERAL.—Section 1833(t) (42 U.S.C.
1395l(t)) is amended—
(1) in the heading of paragraph (7)(D)(ii), by
inserting ‘‘AND CHILDREN’S HOSPITALS’’ after ‘‘CAN-
CER HOSPITALS’’; and
(2) in paragraphs (7)(D)(ii) and (11), by strik-
ing 
‘‘section 
1886(d)(1)(B)(v)’’ 
and 
inserting
‘‘clause (iii) or (v) of section 1886(d)(1)(B)’’.
116
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply as if included in the enactment
of section 202 of BBRA (113 Stat. 1501A–342).
SEC. 
406. 
INCLUSION 
OF 
TEMPERATURE 
MONITORED
CRYOABLATION 
IN 
TRANSITIONAL 
PASS-
THROUGH FOR CERTAIN MEDICAL DEVICES,
DRUGS, AND BIOLOGICALS UNDER OPD PPS.
(a) IN GENERAL.—Section 1833(t)(6)(A)(ii) (42
U.S.C. 1395l(t)(6)(A)(ii)) is amended by inserting ‘‘or
temperature monitored cryoablation’’ after ‘‘device of
brachytherapy’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to devices furnished on or after
April 1, 2001.
Subtitle B—Provisions Relating to
Physicians’ Services
SEC. 411. GAO STUDIES RELATING TO PHYSICIANS’ SERV-
ICES.
(a) STUDY OF SPECIALIST PHYSICIANS’ SERVICES
FURNISHED
IN PHYSICIANS’ OFFICES
AND HOSPITAL
OUTPATIENT DEPARTMENT SERVICES.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study to examine the
appropriateness of furnishing in physicians’ offices
specialist physicians’ services (such as gastro-
117
intestinal endoscopic physicians’ services) which are
ordinarily furnished in hospital outpatient depart-
ments. In conducting this study, the Comptroller
General shall—
(A) review available scientific and clinical
evidence about the safety of performing proce-
dures in physicians’ offices and hospital out-
patient departments;
(B) assess whether resource-based practice
expense relative values established by the Sec-
retary of Health and Human Services under the
medicare physician fee schedule under section
1848 of the Social Security Act (42 U.S.C.
1395w–4) for such specialist physicians’ serv-
ices furnished in physicians’ offices and hospital
outpatient departments create an incentive to
furnish such services in physicians’ offices in-
stead of hospital outpatient departments; and
(C) assess the implications for access to
care for medicare beneficiaries if the medicare
program were not to cover such services in phy-
sicians’ offices.
(2) REPORT.—Not later than July 1, 2001, the
Comptroller General shall submit to Congress a re-
port on such study and include such recommenda-
118
tions as the Comptroller General determines to be
appropriate.
(b) STUDY OF THE RESOURCE-BASED PRACTICE EX-
PENSE SYSTEM.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on the refine-
ments to the practice expense relative value units
during the transition to a resource-based practice ex-
pense system for physician payments under the
medicare program under title XVIII of the Social
Security Act. Such study shall examine how the Sec-
retary of Health and Human Services has accepted
and used the practice expense data submitted under
section 212 of BBRA (113 Stat. 1501A–350).
(2) REPORT.—Not later than July 1, 2001, the
Comptroller General shall submit to Congress a re-
port on the study conducted under paragraph (1) to-
gether with recommendations regarding—
(A) improvements in the process for ac-
ceptance and use of practice expense data
under section 212 of BBRA;
(B) any change or adjustment that is ap-
propriate to ensure full access to a spectrum of
care for beneficiaries under the medicare pro-
gram; and
119
(C) the appropriateness of payments to
physicians.
SEC. 412. PHYSICIAN GROUP PRACTICE DEMONSTRATION.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1866 the following new sections:
‘‘DEMONSTRATION OF APPLICATION OF PHYSICIAN
VOLUME INCREASES TO GROUP PRACTICES
‘‘SEC. 1866A. (a) DEMONSTRATION PROGRAM AU-
THORIZED.—
‘‘(1) IN GENERAL.—The Secretary shall con-
duct demonstration projects to test and, if proven ef-
fective, expand the use of incentives to health care
groups participating in the program under this title
that—
‘‘(A) encourage coordination of the care
furnished to individuals under the programs
under parts A and B by institutional and other
providers, practitioners, and suppliers of health
care items and services;
‘‘(B) encourage investment in administra-
tive structures and processes to ensure efficient
service delivery; and
‘‘(C) reward physicians for improving
health outcomes.
Such projects shall focus on the efficiencies of fur-
nishing health care in a group-practice setting as
120
compared to the efficiencies of furnishing health care
in other health care delivery systems.
‘‘(2) ADMINISTRATION BY CONTRACT.—Except
as otherwise specifically provided, the Secretary may
administer the program under this section in accord-
ance with section 1866B.
‘‘(3) DEFINITIONS.—For purposes of this sec-
tion, terms have the following meanings:
‘‘(A) PHYSICIAN.—Except as the Secretary
may otherwise provide, the term ‘physician’
means any individual who furnishes services
which may be paid for as physicians’ services
under this title.
‘‘(B) HEALTH
CARE
GROUP.—The term
‘health care group’ means a group of physicians
(as defined in subparagraph (A)) organized at
least in part for the purpose of providing physi-
cians’ services under this title. As the Secretary
finds appropriate, a health care group may in-
clude a hospital and any other individual or en-
tity furnishing items or services for which pay-
ment may be made under this title that is affili-
ated with the health care group under an ar-
rangement structured so that such individual or
entity participates in a demonstration under
121
this section and will share in any bonus earned
under subsection (d).
‘‘(b) ELIGIBILITY CRITERIA.—
‘‘(1) IN GENERAL.—The Secretary is authorized
to establish criteria for health care groups eligible to
participate in a demonstration under this section, in-
cluding criteria relating to numbers of health care
professionals in, and of patients served by, the
group, scope of services provided, and quality of
care.
‘‘(2) PAYMENT METHOD.—A health care group
participating in the demonstration under this section
shall agree with respect to services furnished to
beneficiaries within the scope of the demonstration
(as determined under subsection (c))—
‘‘(A) to be paid on a fee-for-service basis;
and
‘‘(B) that payment with respect to all such
services furnished by members of the health
care group to such beneficiaries shall (where de-
termined appropriate by the Secretary) be made
to a single entity.
‘‘(3) DATA REPORTING.—A health care group
participating in a demonstration under this section
shall report to the Secretary such data, at such
122
times and in such format as the Secretary requires,
for purposes of monitoring and evaluation of the
demonstration under this section.
‘‘(c) PATIENTS WITHIN SCOPE
OF DEMONSTRA-
TION.—
‘‘(1) IN GENERAL.—The Secretary shall specify,
in accordance with this subsection, the criteria for
identifying those patients of a health care group who
shall be considered within the scope of the dem-
onstration under this section for purposes of applica-
tion of subsection (d) and for assessment of the ef-
fectiveness of the group in achieving the objectives
of this section.
‘‘(2) OTHER CRITERIA.—The Secretary may es-
tablish additional criteria for inclusion of bene-
ficiaries within a demonstration under this section,
which may include frequency of contact with physi-
cians in the group or other factors or criteria that
the Secretary finds to be appropriate.
‘‘(3) NOTICE REQUIREMENTS.—In the case of
each beneficiary determined to be within the scope
of a demonstration under this section with respect to
a specific health care group, the Secretary shall en-
sure that such beneficiary is notified of the incen-
tives, and of any waivers of coverage or payment
123
rules, applicable to such group under such dem-
onstration.
‘‘(d) INCENTIVES.—
‘‘(1) PERFORMANCE
TARGET.—The Secretary
shall establish for each health care group partici-
pating in a demonstration under this section—
‘‘(A) a base expenditure amount, equal to
the average total payments under parts A and
B for patients served by the health care group
on a fee-for-service basis in a base period deter-
mined by the Secretary; and
‘‘(B) an annual per capita expenditure tar-
get for patients determined to be within the
scope of the demonstration, reflecting the base
expenditure amount adjusted for risk and ex-
pected growth rates.
‘‘(2) INCENTIVE BONUS.—The Secretary shall
pay to each participating health care group (subject
to paragraph (4)) a bonus for each year under the
demonstration equal to a portion of the medicare
savings realized for such year relative to the per-
formance target.
‘‘(3) ADDITIONAL
BONUS
FOR
PROCESS
AND
OUTCOME
IMPROVEMENTS.—At such time as the
Secretary has established appropriate criteria based
124
on evidence the Secretary determines to be suffi-
cient, the Secretary shall also pay to a participating
health care group (subject to paragraph (4)) an ad-
ditional bonus for a year, equal to such portion as
the Secretary may designate of the saving to the
program under this title resulting from process im-
provements made by and patient outcome improve-
ments attributable to activities of the group.
‘‘(4) LIMITATION.—The Secretary shall limit
bonus payments under this section as necessary to
ensure that the aggregate expenditures under this
title (inclusive of bonus payments) with respect to
patients within the scope of the demonstration do
not exceed the amount which the Secretary esti-
mates would be expended if the demonstration
projects under this section were not implemented.
‘‘PROVISIONS FOR ADMINISTRATION OF DEMONSTRATION
PROGRAM
‘‘SEC. 1866B. (a) GENERAL ADMINISTRATIVE AU-
THORITY.—
‘‘(1) BENEFICIARY
ELIGIBILITY.—Except as
otherwise provided by the Secretary, an individual
shall only be eligible to receive benefits under the
program under section 1866A (in this section re-
ferred to as the ‘demonstration program’) if such
individual—
125
‘‘(A) is enrolled under the program under
part B and entitled to benefits under part A;
and
‘‘(B) is not enrolled in a Medicare+Choice
plan under part C, an eligible organization
under a contract under section 1876 (or a simi-
lar organization operating under a demonstra-
tion project authority), an organization with an
agreement under section 1833(a)(1)(A), or a
PACE program under section 1894.
‘‘(2) SECRETARY’S DISCRETION AS TO SCOPE
OF PROGRAM.—The Secretary may limit the imple-
mentation of the demonstration program to—
‘‘(A) a geographic area (or areas) that the
Secretary designates for purposes of the pro-
gram, based upon such criteria as the Secretary
finds appropriate;
‘‘(B) a subgroup (or subgroups) of bene-
ficiaries or individuals and entities furnishing
items or services (otherwise eligible to partici-
pate in the program), selected on the basis of
the number of such participants that the Sec-
retary finds consistent with the effective and ef-
ficient implementation of the program;
126
‘‘(C) an element (or elements) of the pro-
gram that the Secretary determines to be suit-
able for implementation; or
‘‘(D) any combination of any of the limits
described in subparagraphs (A) through (C).
‘‘(3) VOLUNTARY
RECEIPT
OF
ITEMS
AND
SERVICES.—Items and services shall be furnished to
an individual under the demonstration program only
at the individual’s election.
‘‘(4) AGREEMENTS.—The Secretary is author-
ized to enter into agreements with individuals and
entities to furnish health care items and services to
beneficiaries under the demonstration program.
‘‘(5) PROGRAM
STANDARDS
AND
CRITERIA.—
The Secretary shall establish performance standards
for the demonstration program including, as applica-
ble, standards for quality of health care items and
services, cost-effectiveness, beneficiary satisfaction,
and such other factors as the Secretary finds appro-
priate. The eligibility of individuals or entities for
the initial award, continuation, and renewal of
agreements to provide health care items and services
under the program shall be conditioned, at a min-
imum, on performance that meets or exceeds such
standards.
127
‘‘(6) ADMINISTRATIVE REVIEW OF DECISIONS
AFFECTING
INDIVIDUALS
AND
ENTITIES
FUR-
NISHING
SERVICES.—An individual or entity fur-
nishing services under the demonstration program
shall be entitled to a review by the program adminis-
trator (or, if the Secretary has not contracted with
a program administrator, by the Secretary) of a de-
cision not to enter into, or to terminate, or not to
renew, an agreement with the entity to provide
health care items or services under the program.
‘‘(7) SECRETARY’S REVIEW OF MARKETING MA-
TERIALS.—An agreement with an individual or enti-
ty furnishing services under the demonstration pro-
gram shall require the individual or entity to guar-
antee that it will not distribute materials that mar-
ket items or services under the program without the
Secretary’s prior review and approval.
‘‘(8) PAYMENT IN FULL.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an individual or entity re-
ceiving payment from the Secretary under a
contract or agreement under the demonstration
program shall agree to accept such payment as
payment in full, and such payment shall be in
lieu of any payments to which the individual or
128
entity would otherwise be entitled under this
title.
‘‘(B) COLLECTION OF DEDUCTIBLES AND
COINSURANCE.—Such individual or entity may
collect any applicable deductible or coinsurance
amount from a beneficiary.
‘‘(b) CONTRACTS FOR PROGRAM ADMINISTRATION.—
‘‘(1) IN GENERAL.—The Secretary may admin-
ister the demonstration program through a contract
with a program administrator in accordance with the
provisions of this subsection.
‘‘(2) SCOPE OF PROGRAM ADMINISTRATOR CON-
TRACTS.—The Secretary may enter into such con-
tracts for a limited geographic area, or on a regional
or national basis.
‘‘(3) ELIGIBLE CONTRACTORS.—The Secretary
may contract for the administration of the program
with—
‘‘(A) an entity that, under a contract
under section 1816 or 1842, determines the
amount of and makes payments for health care
items and services furnished under this title; or
‘‘(B) any other entity with substantial ex-
perience in managing the type of program con-
cerned.
129
‘‘(4) CONTRACT AWARD, DURATION, AND RE-
NEWAL.—
‘‘(A) IN GENERAL.—A contract under this
subsection shall be for an initial term of up to
three years, renewable for additional terms of
up to three years.
‘‘(B) NONCOMPETITIVE
AWARD
AND
RE-
NEWAL FOR ENTITIES ADMINISTERING PART A
OR
PART
B
PAYMENTS.—The Secretary may
enter or renew a contract under this subsection
with an entity described in paragraph (3)(A)
without regard to the requirements of section 5
of title 41, United States Code.
‘‘(5) APPLICABILITY OF FEDERAL ACQUISITION
REGULATION.—The Federal Acquisition Regulation
shall apply to program administration contracts
under this subsection.
‘‘(6) PERFORMANCE
STANDARDS.—The Sec-
retary shall establish performance standards for the
program administrator including, as applicable,
standards for the quality and cost-effectiveness of
the program administered, and such other factors as
the Secretary finds appropriate. The eligibility of en-
tities for the initial award, continuation, and renewal
of program administration contracts shall be condi-
130
tioned, at a minimum, on performance that meets or
exceeds such standards.
‘‘(7) 
FUNCTIONS
OF
PROGRAM
ADMINIS-
TRATOR.—A program administrator shall perform
any or all of the following functions, as specified by
the Secretary:
‘‘(A) AGREEMENTS WITH ENTITIES FUR-
NISHING
HEALTH
CARE
ITEMS
AND
SERV-
ICES.—Determine the qualifications of entities
seeking to enter or renew agreements to provide
services under the demonstration program, and
as appropriate enter or renew (or refuse to
enter or renew) such agreements on behalf of
the Secretary.
‘‘(B) 
ESTABLISHMENT
OF
PAYMENT
RATES.—Negotiate or otherwise establish, sub-
ject to the Secretary’s approval, payment rates
for covered health care items and services.
‘‘(C) PAYMENT OF CLAIMS OR FEES.—Ad-
minister payments for health care items or serv-
ices furnished under the program.
‘‘(D) PAYMENT OF BONUSES.—Using such
guidelines as the Secretary shall establish, and
subject to the approval of the Secretary, make
bonus payments as described in subsection
131
(c)(2)(A)(ii) to entities furnishing items or serv-
ices for which payment may be made under the
program.
‘‘(E) OVERSIGHT.—Monitor the compli-
ance of individuals and entities with agreements
under the program with the conditions of par-
ticipation.
‘‘(F) ADMINISTRATIVE REVIEW.—Conduct
reviews of adverse determinations specified in
subsection (a)(6).
‘‘(G) REVIEW
OF
MARKETING
MATE-
RIALS.—Conduct a review of marketing mate-
rials proposed by an entity furnishing services
under the program.
‘‘(H) ADDITIONAL
FUNCTIONS.—Perform
such other functions as the Secretary may
specify.
‘‘(8) LIMITATION
OF
LIABILITY.—The provi-
sions of section 1157(b) shall apply with respect to
activities of contractors and their officers, employ-
ees, and agents under a contract under this sub-
section.
‘‘(9) INFORMATION SHARING.—Notwithstanding
section 1106 and section 552a of title 5, United
States Code, the Secretary is authorized to disclose
132
to an entity with a program administration contract
under this subsection such information (including
medical information) on individuals receiving health
care items and services under the program as the
entity may require to carry out its responsibilities
under the contract.
‘‘(c) RULES
APPLICABLE
TO
BOTH
PROGRAM
AGREEMENTS
AND
PROGRAM
ADMINISTRATION
CON-
TRACTS.—
‘‘(1) RECORDS, REPORTS, AND AUDITS.—The
Secretary is authorized to require entities with
agreements to provide health care items or services
under the demonstration program, and entities with
program administration contracts under subsection
(b), to maintain adequate records, to afford the Sec-
retary access to such records (including for audit
purposes), and to furnish such reports and other
materials (including audited financial statements
and performance data) as the Secretary may require
for purposes of implementation, oversight, and eval-
uation of the program and of individuals’ and enti-
ties’ effectiveness in performance of such agreements
or contracts.
‘‘(2) BONUSES.—Notwithstanding any other
provision of law, but subject to subparagraph
133
(B)(ii), the Secretary may make bonus payments
under the demonstration program from the Federal
Health Insurance Trust Fund and the Federal Sup-
plementary Medical Insurance Trust Fund in
amounts that do not exceed the amounts authorized
under the program in accordance with the following:
‘‘(A) PAYMENTS
TO
PROGRAM
ADMINIS-
TRATORS.—The Secretary may make bonus
payments under the program to program ad-
ministrators.
‘‘(B) PAYMENTS TO ENTITIES FURNISHING
SERVICES.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary may make bonus pay-
ments to individuals or entities furnishing
items or services for which payment may
be made under the demonstration pro-
gram, or may authorize the program ad-
ministrator to make such bonus payments
in accordance with such guidelines as the
Secretary shall establish and subject to the
Secretary’s approval.
‘‘(ii) LIMITATIONS.—The Secretary
may condition such payments on the
achievement of such standards related to
134
efficiency, improvement in processes or
outcomes of care, or such other factors as
the Secretary determines to be appropriate.
‘‘(3) ANTIDISCRIMINATION
LIMITATION.—The
Secretary shall not enter into an agreement with an
entity to provide health care items or services under
the demonstration program, or with an entity to ad-
minister the program, unless such entity guarantees
that it will not deny, limit, or condition the coverage
or provision of benefits under the program, for indi-
viduals eligible to be enrolled under such program,
based on any health status-related factor described
in section 2702(a)(1) of the Public Health Service
Act.
‘‘(d) LIMITATIONS ON JUDICIAL REVIEW.—The fol-
lowing actions and determinations with respect to the
demonstration program shall not be subject to review by
a judicial or administrative tribunal:
‘‘(1) Limiting the implementation of the pro-
gram under subsection (a)(2).
‘‘(2) Establishment of program participation
standards under subsection (a)(5) or the denial or
termination of, or refusal to renew, an agreement
with an entity to provide health care items and serv-
ices under the program.
135
‘‘(3) Establishment of program administration
contract performance standards under subsection
(b)(6), the refusal to renew a program administra-
tion contract, or the noncompetitive award or re-
newal of a program administration contract under
subsection (b)(4)(B).
‘‘(4) Establishment of payment rates, through
negotiation or otherwise, under a program agree-
ment or a program administration contract.
‘‘(5) A determination with respect to the pro-
gram (where specifically authorized by the program
authority or by subsection (c)(2))—
‘‘(A) as to whether cost savings have been
achieved, and the amount of savings; or
‘‘(B) as to whether, to whom, and in what
amounts bonuses will be paid.
‘‘(e) APPLICATION LIMITED TO PARTS A AND B.—
None of the provisions of this section or of the demonstra-
tion program shall apply to the programs under part C.
‘‘(f ) REPORTS TO CONGRESS.—Not later than two
years after the date of the enactment of this section, and
biennially thereafter for six years, the Secretary shall re-
port to Congress on the use of authorities under the dem-
onstration program. Each report shall address the impact
136
of the use of those authorities on expenditures, access, and
quality under the programs under this title.’’.
(b) GAO REPORT.—Not later than 2 years after the
date on which the demonstration project under section
1866A of the Social Security Act, as added by subsection
(a), is implemented, the Comptroller General of the United
States shall submit to Congress a report on such dem-
onstration project. The report shall include such rec-
ommendations with respect to changes to the demonstra-
tion project that the Comptroller General determines ap-
propriate.
SEC. 413. STUDY ON ENROLLMENT PROCEDURES FOR
GROUPS THAT RETAIN INDEPENDENT CON-
TRACTOR PHYSICIANS.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study of the current medi-
care enrollment process for groups that retain independent
contractor physicians with particular emphasis on hos-
pital-based physicians, such as emergency department
staffing groups. In conducting the evaluation, the Comp-
troller General shall consult with groups that retain inde-
pendent contractor physicians and shall—
(1) review the issuance of individual medicare
provider numbers and the possible medicare program
integrity vulnerabilities of the current process;
137
(2) review direct and indirect costs associated
with the current process incurred by the medicare
program and groups that retain independent con-
tractor physicians;
(3) assess the effect on program integrity by
the enrollment of groups that retain independent
contractor hospital-based physicians; and
(4) develop suggested procedures for the enroll-
ment of these groups.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Comptroller General shall
submit to Congress a report on the study conducted under
subsection (a).
Subtitle C—Other Services
SEC. 421. ONE-YEAR EXTENSION OF MORATORIUM ON
THERAPY CAPS; REPORT ON STANDARDS FOR
SUPERVISION OF PHYSICAL THERAPY AS-
SISTANTS.
(a) IN GENERAL.—Section 1833(g)(4) (42 U.S.C.
1395l(g)(4)) is amended by striking ‘‘2000 and 2001.’’
and inserting ‘‘2000, 2001, and 2002.’’.
(b) CONFORMING AMENDMENT TO CONTINUE FO-
CUSED MEDICAL REVIEWS OF CLAIMS DURING MORATO-
RIUM PERIOD.—Section 221(a)(2) of BBRA (113 Stat.
138
1501A–351) is amended by striking ‘‘(under the amend-
ment made by paragraph (1)(B))’’.
(c) STUDY ON STANDARDS FOR SUPERVISION OF
PHYSICAL THERAPIST ASSISTANTS.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the
implications—
(A) of eliminating the ‘‘in the room’’ su-
pervision requirement for medicare payment for
services of physical therapy assistants who are
supervised by physical therapists; and
(B) of such requirement on the cap im-
posed under section 1833(g) of the Social Secu-
rity Act (42 U.S.C. 1395l(g)) on physical ther-
apy services.
(2) REPORT.—Not later than 18 months after
the date of the enactment of this Act, the Secretary
shall submit to Congress a report on the study con-
ducted under paragraph (1).
SEC. 422. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) UPDATE.—
(1) IN GENERAL.—The last sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is amended by
striking ‘‘for such services furnished on or after
January 1, 2001, by 1.2 percent’’ and inserting ‘‘for
139
such services furnished on or after January 1, 2001,
by 2.4 percent’’.
(2) PROHIBITION ON EXCEPTIONS.—
(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), the Secretary of Health
and Human Services may not provide for an ex-
ception under section 1881(b)(7) of the Social
Security Act (42 U.S.C. 1395rr(b)(7)) on or
after December 31, 2000.
(B) DEADLINE FOR NEW APPLICATIONS.—
In the case of a facility that during 2000 did
not file for an exception rate under such sec-
tion, the facility may submit an application for
an exception rate by not later than July 1,
2001.
(C) PROTECTION
OF
APPROVED
EXCEP-
TION RATES.—Any exception rate under such
section in effect on December 31, 2000 (or, in
the case of an application under subparagraph
(B), as approved under such application) shall
continue in effect so long as such rate is greater
than the composite rate as updated by the
amendment made by paragraph (1).
(b) DEVELOPMENT OF ESRD MARKET BASKET.—
140
(1) DEVELOPMENT.—The Secretary of Health
and Human Services shall collect data and develop
an ESRD market basket whereby the Secretary can
estimate, before the beginning of a year, the percent-
age by which the costs for the year of the mix of
labor and nonlabor goods and services included in
the ESRD composite rate under section 1881(b)(7)
of the Social Security Act (42 U.S.C. 1395rr(b)(7))
will exceed the costs of such mix of goods and serv-
ices for the preceding year. In developing such index,
the Secretary may take into account measures of
changes in—
(A) technology used in furnishing dialysis
services;
(B) the manner or method of furnishing
dialysis services; and
(C) the amounts by which the payments
under such section for all services billed by a
facility for a year exceed the aggregate allow-
able audited costs of such services for such fa-
cility for such year.
(2) REPORT.—The Secretary of Health and
Human Services shall submit to Congress a report
on the index developed under paragraph (1) no later
than July 1, 2002, and shall include in the report
141
recommendations on the appropriateness of an an-
nual or periodic update mechanism for renal dialysis
services under the medicare program under title
XVIII of the Social Security Act based on such
index.
(c) INCLUSION OF ADDITIONAL SERVICES IN COM-
POSITE RATE.—
(1) DEVELOPMENT.—The Secretary of Health
and Human Services shall develop a system which
includes, to the maximum extent feasible, in the
composite rate used for payment under section
1881(b)(7) of the Social Security Act (42 U.S.C.
1395rr(b)(7)), payment for clinical diagnostic lab-
oratory tests and drugs (including drugs paid under
section 1881(b)(11)(B) of such Act (42 U.S.C.
1395rr(b)(11)(B)) that are routinely used in fur-
nishing dialysis services to medicare beneficiaries but
which are currently separately billable by renal dialy-
sis facilities.
(2) REPORT.—The Secretary shall include, as
part of the report submitted under subsection (b)(2),
a report on the system developed under paragraph
(1) and recommendations on the appropriateness of
incorporating the system into medicare payment for
renal dialysis services.
142
(d) GAO STUDY ON ACCESS TO SERVICES.—
(1) STUDY.—The Comptroller General of the
United States shall study access of medicare bene-
ficiaries to renal dialysis services. Such study shall
include whether there is a sufficient supply of facili-
ties to furnish needed renal dialysis services, whether
medicare payment levels are appropriate, taking into
account audited costs of facilities for all services fur-
nished, to ensure continued access to such services,
and improvements in access (and quality of care)
that may result in the increased use of long nightly
and short daily hemodialysis modalities.
(2) REPORT.—Not later than January 1, 2003,
the Comptroller General shall submit to Congress a
report on the study conducted under paragraph (1).
(e) SPECIAL RULE FOR PAYMENT FOR 2001.—Not-
withstanding the amendment made by subsection (a)(1),
for purposes of making payments under section 1881(b)
of the Social Security Act (42 U.S.C. 1395rr(b)) for dialy-
sis services furnished during 2001, the composite rate pay-
ment under paragraph (7) of such section—
(1) for services furnished on or after January
1, 2001, and before April 1, 2001, shall be the com-
posite rate payment determined under the provisions
143
of law in effect on the day before the date of the en-
actment of this Act; and
(2) for services furnished on or after April 1,
2001, and before January 1, 2002, shall be the com-
posite rate payment (as determined taking into ac-
count the amendment made by subsection (a)(1)) in-
creased by a transitional percentage allowance equal
to 0.39 percent (to account for the timing of imple-
mentation of the CPI update).
SEC. 423. PAYMENT FOR AMBULANCE SERVICES.
(a) RESTORATION
OF FULL CPI INCREASE
FOR
2001.—
(1) IN
GENERAL.—Section 1834(l)(3) (42
U.S.C. 1395m(l)(3)) is amended by striking ‘‘re-
duced in the case of 2001 and 2002’’ each place it
appears and inserting ‘‘reduced in the case of
2002’’.
(2) SPECIAL RULE FOR PAYMENT FOR 2001.—
Notwithstanding the amendment made by paragraph
(1), for purposes of making payments for ambulance
services under part B of title XVIII of the Social Se-
curity Act, for services furnished during 2001, the
‘‘percentage increase in the consumer price index’’
specified in section 1834(l)(3)(B) of such Act (42
U.S.C. 1395m(l)(3)(B))—
144
(A) for services furnished on or after Jan-
uary 1, 2001, and before July 1, 2001, shall be
the percentage increase for 2001 as determined
under the provisions of law in effect on the day
before the date of the enactment of this Act;
and
(B) for services furnished on or after July
1, 2001, and before January 1, 2002, shall be
equal to 4.7 percent.
(b) MILEAGE PAYMENTS.—
(1) IN
GENERAL.—Section 1834(l)(2)(E) (42
U.S.C. 1395m(l)(2)(E)) is amended by inserting be-
fore the period at the end the following: ‘‘, except
that such phase-in shall provide for full payment of
any national mileage rate for ambulance services
provided by suppliers that are paid by carriers in
any of the 50 States where payment by a carrier for
such services for all such suppliers in such State did
not, prior to the implementation of the fee schedule,
include a separate amount for all mileage within the
county from which the beneficiary is transported’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after July 1, 2001.
145
SEC. 424. AMBULATORY SURGICAL CENTERS.
(a) DELAY IN IMPLEMENTATION OF PROSPECTIVE
PAYMENT SYSTEM.—The Secretary of Health and Human
Services may not implement a revised prospective payment
system for services of ambulatory surgical facilities under
section 1833(i) of the Social Security Act (42 U.S.C.
1395l(i)) before January 1, 2002.
(b) EXTENDING PHASE-IN
TO 4 YEARS.—Section
226 of the BBRA (113 Stat. 1501A–354) is amended by
striking paragraphs (1) and (2) and inserting the fol-
lowing:
‘‘(1) in the first year of its implementation,
only a proportion (specified by the Secretary and not
to exceed one-fourth) of the payment for such serv-
ices shall be made in accordance with such system
and the remainder shall be made in accordance with
current regulations; and
‘‘(2) in each of the following 2 years a propor-
tion (specified by the Secretary and not to exceed
one-half and three-fourths, respectively) 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.’’.
(c) DEADLINE FOR USE OF 1999 OR LATER COST
SURVEYS.—Section 226 of BBRA (113 Stat. 1501A–354)
is amended by adding at the end the following:
146
‘‘By not later than January 1, 2003, the Secretary shall
incorporate data from a 1999 medicare cost survey or a
subsequent cost survey for purposes of implementing or
revising such system.’’.
SEC. 425. FULL UPDATE FOR DURABLE MEDICAL EQUIP-
MENT.
(a) IN GENERAL.—Section 1834(a)(14) (42 U.S.C.
1395m(a)(14)) is amended—
(1) by redesignating subparagraph (D) as sub-
paragraph (F);
(2) in subparagraph (C)—
(A) by striking ‘‘through 2002’’ and insert-
ing ‘‘through 2000’’; and
(B) by striking ‘‘and’’ at the end; and
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraphs:
‘‘(D) for 2001, the percentage increase in
the consumer price index for all urban con-
sumers (U.S. city average) for the 12-month
period ending with June 2000;
‘‘(E) for 2002, 0 percentage points; and’’.
(b) SPECIAL RULE FOR PAYMENT FOR 2001.—Not-
withstanding the amendments made by subsection (a), for
purposes of making payments for durable medical equip-
ment under section 1834(a) of the Social Security Act (42
147
U.S.C. 1395m(a)), other than for oxygen and oxygen
equipment specified in paragraph (9) of such section, the
payment basis recognized for 2001 under such section—
(1) for items furnished on or after January 1,
2001, and before July 1, 2001, shall be the payment
basis for 2001 as determined under the provisions of
law in effect on the day before the date of the enact-
ment of this Act (including the application of section
228(a)(1) of BBRA); and
(2) for items furnished on or after July 1,
2001, and before January 1, 2002, shall be the pay-
ment basis that is determined under such section
1834(a) if such section 228(a)(1) did not apply and
taking into account the amendment made by sub-
section (a), increased by a transitional percentage al-
lowance equal to 3.28 percent (to account for the
timing of implementation of the CPI update).
SEC. 426. FULL UPDATE FOR ORTHOTICS AND PROS-
THETICS.
(a) IN GENERAL.—Section 1834(h)(4)(A) (42 U.S.C.
1395m(h)(4)(A)) is amended—
(1) by redesignating clause (vi) as clause (viii);
(2) in clause (v)—
(A) by striking ‘‘through 2002’’ and insert-
ing ‘‘through 2000’’; and
148
(B) by striking ‘‘and’’ at the end; and
(3) by inserting after clause (v) the following
new clause:
‘‘(vi) for 2001, the percentage in-
crease in the consumer price index for all
urban consumers (U.S. city average) for
the 12-month period ending with June
2000;
‘‘(vii) for 2002, 1 percent; and’’.
(b) SPECIAL RULE FOR PAYMENT FOR 2001.—Not-
withstanding the amendments made by subsection (a), for
purposes of making payments for prosthetic devices and
orthotics and prosthetics (as defined in subparagraphs (B)
and (C) of paragraph (4) of section 1834(h) of the Social
Security Act (42 U.S.C. 1395m(h)) under such section,
the payment basis recognized for 2001 under paragraph
(2) of such section—
(1) for items furnished on or after January 1,
2001, and before July 1, 2001, shall be the payment
basis for 2001 as determined under the provisions of
law in effect on the day before the date of the enact-
ment of this Act; and
(2) for items furnished on or after July 1,
2001, and before January 1, 2002, shall be the pay-
ment basis that is determined under such section
149
taking into account the amendments made by sub-
section (a), increased by a transitional percentage al-
lowance equal to 2.6 percent (to account for the tim-
ing of implementation of the CPI update).
SEC. 427. ESTABLISHMENT OF SPECIAL PAYMENT PROVI-
SIONS 
AND 
REQUIREMENTS 
FOR 
PROS-
THETICS AND CERTAIN CUSTOM-FABRICATED
ORTHOTIC ITEMS.
(a) IN GENERAL.—Section 1834(h)(1) (42 U.S.C.
1395m(h)(1)) is amended by adding at the end the fol-
lowing:
‘‘(F) SPECIAL PAYMENT RULES FOR CER-
TAIN PROSTHETICS AND CUSTOM-FABRICATED
ORTHOTICS.—
‘‘(i) IN GENERAL.—No payment shall
be made under this subsection for an item
of custom-fabricated orthotics described in
clause (ii) or for an item of prosthetics un-
less such item is—
‘‘(I) furnished by a qualified
practitioner; and
‘‘(II) fabricated by a qualified
practitioner or a qualified supplier at
a facility that meets such criteria as
the Secretary determines appropriate.
150
‘‘(ii) DESCRIPTION
OF
CUSTOM-FAB-
RICATED ITEM.—
‘‘(I) IN GENERAL.—An item de-
scribed in this clause is an item of
custom-fabricated orthotics that re-
quires education, training, and experi-
ence to custom-fabricate and that is
included in a list established by the
Secretary in subclause (II). Such an
item does not include shoes and shoe
inserts.
‘‘(II) LIST OF ITEMS.—The Sec-
retary, in consultation with appro-
priate experts in orthotics (including
national organizations representing
manufacturers of orthotics), shall es-
tablish and update as appropriate a
list of items to which this subpara-
graph applies. No item may be in-
cluded in such list unless the item is
individually fabricated for the patient
over a positive model of the patient.
‘‘(iii) QUALIFIED PRACTITIONER DE-
FINED.—In this subparagraph, the term
151
‘qualified practitioner’ means a physician
or other individual who—
‘‘(I) is a qualified physical thera-
pist or a qualified occupational thera-
pist;
‘‘(II) in the case of a State that
provides for the licensing of orthotics
and 
prosthetics, 
is 
licensed 
in
orthotics or prosthetics by the State
in which the item is supplied; or
‘‘(III) in the case of a State that
does not provide for the licensing of
orthotics and prosthetics, is specifi-
cally trained and educated to provide
or manage the provision of prosthetics
and custom-designed or -fabricated
orthotics, and is certified by the
American Board for Certification in
Orthotics and Prosthetics, Inc. or by
the Board for Orthotist/Prosthetist
Certification, or is credentialed and
approved by a program that the Sec-
retary determines, in consultation
with appropriate experts in orthotics
and prosthetics, has training and edu-
152
cation standards that are necessary to
provide such prosthetics and orthotics.
‘‘(iv) 
QUALIFIED
SUPPLIER
DE-
FINED.—In this subparagraph, the term
‘qualified supplier’ means any entity that
is accredited by the American Board for
Certification in Orthotics and Prosthetics,
Inc. or by the Board for Orthotist/Pros-
thetist Certification, or accredited and ap-
proved by a program that the Secretary
determines has accreditation and approval
standards that are essentially equivalent to
those of such Board.’’.
(b) EFFECTIVE DATE.—Not later than 1 year after
the date of the enactment of this Act, the Secretary of
Health and Human Services shall promulgate revised reg-
ulations to carry out the amendment made by subsection
(a) using a negotiated rulemaking process under sub-
chapter III of chapter 5 of title 5, United States Code.
(c) GAO STUDY AND REPORT.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on HCFA Rul-
ing 96–1, issued on September 1, 1996, with respect
to distinguishing orthotics from durable medical
equipment under the medicare program under title
153
XVIII of the Social Security Act. The study shall as-
sess the following matters:
(A) The compliance of the Secretary of
Health and Human Services with the Adminis-
trative Procedures Act (under chapter 5 of title
5, United States Code) in making such ruling.
(B) The potential impact of such ruling on
the health care furnished to medicare bene-
ficiaries under the medicare program, especially
those beneficiaries with degenerative musculo-
skeletal conditions.
(C) The potential for fraud and abuse
under the medicare program if payment were
provided for orthotics used as a component of
durable medical equipment only when made
under the special payment provision for certain
prosthetics and custom-fabricated orthotics
under section 1834(h)(1)(F) of the Social Secu-
rity Act, as added by subsection (a) and fur-
nished by qualified practitioners under that sec-
tion.
(D) The impact on payments under titles
XVIII and XIX of the Social Security Act if
such ruling were overturned.
154
(2) REPORT.—Not later than 6 months after
the date of the enactment of this Act, the Comp-
troller General shall submit to Congress a report on
the study conducted under paragraph (1).
SEC. 428. REPLACEMENT OF PROSTHETIC DEVICES AND
PARTS.
(a) IN GENERAL.—Section 1834(h)(1) (42 U.S.C.
1395m(h)(1)), as amended by section 427(a), is further
amended by adding at the end the following new subpara-
graph:
‘‘(G) REPLACEMENT OF PROSTHETIC DE-
VICES AND PARTS.—
‘‘(i) IN GENERAL.—Payment shall be
made for the replacement of prosthetic de-
vices which are artificial limbs, or for the
replacement of any part of such devices,
without regard to continuous use or useful
lifetime restrictions if an ordering physi-
cian determines that the provision of a re-
placement device, or a replacement part of
such a device, is necessary because of any
of the following:
‘‘(I) A change in the physio-
logical condition of the patient.
155
‘‘(II) An irreparable change in
the condition of the device, or in a
part of the device.
‘‘(III) The condition of the de-
vice, or the part of the device, re-
quires repairs and the cost of such re-
pairs would be more than 60 percent
of the cost of a replacement device, or,
as the case may be, of the part being
replaced.
‘‘(ii) CONFIRMATION
MAY
BE
RE-
QUIRED IF DEVICE OR PART BEING RE-
PLACED IS LESS THAN 3 YEARS OLD.—If a
physician determines that a replacement
device, or a replacement part, is necessary
pursuant to clause (i)—
‘‘(I) such determination shall be
controlling; and
‘‘(II) such replacement device or
part shall be deemed to be reasonable
and necessary for purposes of section
1862(a)(1)(A);
except that if the device, or part, being re-
placed is less than 3 years old (calculated
from the date on which the beneficiary
156
began to use the device or part), the Sec-
retary may also require confirmation of ne-
cessity of the replacement device or re-
placement part, as the case may be.’’.
(b) PREEMPTION OF RULE.—The provisions of sec-
tion 1834(h)(1)(G) as added by subsection (a) shall super-
sede any rule that as of the date of the enactment of this
Act may have applied a 5-year replacement rule with re-
gard to prosthetic devices.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items replaced on or after
April 1, 2001.
SEC. 429. REVISED PART B PAYMENT FOR DRUGS AND
BIOLOGICALS AND RELATED SERVICES.
(a) RECOMMENDATIONS
FOR REVISED PAYMENT
METHODOLOGY FOR DRUGS AND BIOLOGICALS.—
(1) STUDY.—
(A) IN GENERAL.—The Comptroller Gen-
eral of the United States shall conduct a study
on the reimbursement for drugs and biologicals
under the current medicare payment method-
ology (provided under section 1842(o) of the
Social Security Act (42 U.S.C. 1395u(o))) and
for related services under part B of title XVIII
157
of such Act. In the study, the Comptroller Gen-
eral shall—
(i) identify the average prices at
which such drugs and biologicals are ac-
quired by physicians and other suppliers;
(ii) quantify the difference between
such average prices and the reimbursement
amount under such section; and
(iii) determine the extent to which (if
any) payment under such part is adequate
to compensate physicians, providers of
services, or other suppliers of such drugs
and biologicals for costs incurred in the ad-
ministration, handling, or storage of such
drugs or biologicals.
(B) CONSULTATION.—In conducting the
study under subparagraph (A), the Comptroller
General shall consult with physicians, providers
of services, and suppliers of drugs and
biologicals under the medicare program under
title XVIII of such Act, as well as other organi-
zations involved in the distribution of such
drugs and biologicals to such physicians, pro-
viders of services, and suppliers.
158
(2) REPORT.—Not later than 9 months after
the date of the enactment of this Act, the Comp-
troller General shall submit to Congress and to the
Secretary of Health and Human Services a report
on the study conducted under this subsection, and
shall include in such report recommendations for re-
vised payment methodologies described in paragraph
(3).
(3) RECOMMENDATIONS
FOR
REVISED
PAY-
MENT METHODOLOGIES.—
(A) IN GENERAL.—The Comptroller Gen-
eral shall provide specific recommendations for
revised payment methodologies for reimburse-
ment for drugs and biologicals and for related
services under the medicare program. The
Comptroller General may include in the
recommendations—
(i) proposals to make adjustments
under subsection (c) of section 1848 of the
Social Security Act (42 U.S.C. 1395w–4)
for the practice expense component of the
physician fee schedule under such section
for the costs incurred in the administra-
tion, handling, or storage of certain cat-
159
egories of such drugs and biologicals, if ap-
propriate; and
(ii) proposals for new payments to
providers of services or suppliers for such
costs, if appropriate.
(B) 
ENSURING
PATIENT
ACCESS
TO
CARE.—In making recommendations under this
paragraph, the Comptroller General shall en-
sure that any proposed revised payment meth-
odology is designed to ensure that medicare
beneficiaries continue to have appropriate ac-
cess to health care services under the medicare
program.
(C) MATTERS
CONSIDERED.—In making
recommendations under this paragraph, the
Comptroller General shall consider—
(i) the method and amount of reim-
bursement for similar drugs and biologicals
made by large group health plans;
(ii) as a result of any revised payment
methodology, the potential for patients to
receive inpatient or outpatient hospital
services in lieu of services in a physician’s
office; and
160
(iii) the effect of any revised payment
methodology on the delivery of drug thera-
pies by hospital outpatient departments.
(D) COORDINATION WITH BBRA STUDY.—
In making recommendations under this para-
graph, the Comptroller General shall conclude
and take into account the results of the study
provided for under section 213(a) of BBRA
(113 Stat. 1501A–350).
(b) IMPLEMENTATION OF NEW PAYMENT METHOD-
OLOGY.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, based on the recommendations con-
tained in the report under subsection (a), the Sec-
retary of Health and Human Services, subject to
paragraph (2), shall revise the payment methodology
under section 1842(o) of the Social Security Act (42
U.S.C. 1395u(o)) for drugs and biologicals furnished
under part B of the medicare program. To the ex-
tent the Secretary determines appropriate, the Sec-
retary may provide for the adjustments to payments
amounts referred to in subsection (a)(3)(A)(i) or ad-
ditional 
payments 
referred 
to 
in 
subsection
(a)(2)(A)(ii).
161
(2) LIMITATION.—In revising the payment
methodology under paragraph (1), in no case may
the estimated aggregate payments for drugs and
biologicals under the revised system (including addi-
tional 
payments 
referred 
to 
in 
subsection
(a)(3)(A)(ii)) exceed the aggregate amount of pay-
ment for such drugs and biologicals, as projected by
the Secretary, that would have been made under the
payment methodology in effect under such section
1842(o).
(c) MORATORIUM
ON
DECREASES
IN
PAYMENT
RATES.—Notwithstanding any other provision of law, ef-
fective for drugs and biologicals furnished on or after Jan-
uary 1, 2001, the Secretary may not directly or indirectly
decrease the rates of reimbursement (in effect as of such
date) for drugs and biologicals under the current medicare
payment methodology (provided under section 1842(o) of
the Social Security Act (42 U.S.C. 1395u(o))) until such
time as the Secretary has reviewed the report submitted
under subsection (a)(2).
SEC. 430. CONTRAST ENHANCED DIAGNOSTIC PROCE-
DURES UNDER HOSPITAL PROSPECTIVE PAY-
MENT SYSTEM.
(a) SEPARATE CLASSIFICATION.—Section 1833(t)(2)
(42 U.S.C. 1395l(t)(2)) is amended—
162
(1) by striking ‘‘and’’ at the end of subpara-
graph (E);
(2) by striking the period at the end of sub-
paragraph (F) and inserting ‘‘; and’’; and
(3) by inserting after subparagraph (F) the fol-
lowing new subparagraph:
‘‘(G) the Secretary shall create additional
groups of covered OPD services that classify
separately those procedures that utilize contrast
agents from those that do not.’’.
(b) CONFORMING AMENDMENT.—Section 1861(t)(1)
(42 U.S.C. 1395x(t)(1)) is amended by inserting ‘‘(includ-
ing contrast agents)’’ after ‘‘only such drugs’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to items and services furnished on or
after July 1, 2001.
SEC. 431. QUALIFICATIONS FOR COMMUNITY MENTAL
HEALTH CENTERS.
(a) MEDICARE PROGRAM.—Section 1861(ff )(3)(B)
(42 U.S.C. 1395x(ff )(3)(B)) is amended by striking ‘‘enti-
ty’’ and all that follows and inserting the following: ‘‘entity
that—
‘‘(i)(I) provides the mental health services de-
scribed in section 1913(c)(1) of the Public Health
Service Act; or
163
‘‘(II) in the case of an entity operating in a
State that by law precludes the entity from pro-
viding itself the service described in subparagraph
(E) of such section, provides for such service by con-
tract with an approved organization or entity (as de-
termined by the Secretary);
‘‘(ii) meets applicable licensing or certification
requirements for community mental health centers
in the State in which it is located; and
‘‘(iii) meets such additional conditions as the
Secretary shall specify to ensure (I) the health and
safety of individuals being furnished such services,
(II) the effective and efficient furnishing of such
services, and (III) the compliance of such entity with
the criteria described in section 1931(c)(1) of the
Public Health Service Act.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to community men-
tal health centers with respect to services furnished on or
after the first day of the third month beginning after the
date of the enactment of this Act.
SEC. 432. PAYMENT OF PHYSICIAN AND NONPHYSICIAN
SERVICES IN CERTAIN INDIAN PROVIDERS.
(a) IN GENERAL.—Section 1880 (42 U.S.C. 1395qq)
is amended—
164
(1) by redesignating subsection (e), as added by
section 3(b)(1) of the Alaska Native and American
Indian Direct Reimbursement Act of 2000 (Public
Law 106–417), as subsection (f ); and
(2) by inserting after subsection (d) the fol-
lowing new subsection:
‘‘(e)(1)(A) Notwithstanding section 1835(d), subject
to subparagraph (B), the Secretary shall make payment
under part B to a hospital or an ambulatory care clinic
(whether provider-based or freestanding) that is operated
by the Indian Health Service or by an Indian tribe or trib-
al organization (as defined for purposes of subsection (a))
for services described in paragraph (2) furnished in or at
the direction of the hospital or clinic under the same situa-
tions, terms, and conditions as would apply if the services
were furnished in or at the direction of such a hospital
or clinic that was not operated by such Service, tribe, or
organization.
‘‘(B) Payment shall not be made for services under
subparagraph (A) to the extent that payment is otherwise
made for such services under this title.
‘‘(2) The services described in this paragraph are the
following:
‘‘(A) Services for which payment is made under
section 1848.
165
‘‘(B) Services furnished by a practitioner de-
scribed in section 1842(b)(18)(C) for which payment
under part B is made under a fee schedule.
‘‘(C) Services furnished by a physical therapist
or occupational therapist as described in section
1861(p) for which payment under part B is made
under a fee schedule.
‘‘(3) Subsection (c) shall not apply to payments made
under this subsection.’’.
(b) CONFORMING AMENDMENTS.—
(1) 
COVERAGE
AMENDMENT.—Section
1862(a)(3) (42 U.S.C. 1395y(a)(3)) is amended—
(A) by striking the second comma after
‘‘1861(aa)(1)’’; and
(B) by inserting ‘‘in the case of services
for which payment may be made under section
1880(e),’’ 
after 
‘‘as 
defined 
in 
section
1861(aa)(3),’’.
(2) DIRECT PAYMENT AMENDMENT.—The first
sentence 
of 
section 
1842(b)(6) 
(42 
U.S.C.
1395u(b)(6)) is amended—
(A) by striking ‘‘and (F)’’ and inserting
‘‘(F)’’; and
(B) by inserting before the period the fol-
lowing: ‘‘, and (G) in the case of services in a
166
hospital or clinic to which section 1880(e) ap-
plies, payment shall be made to such hospital or
clinic’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
July 1, 2001.
SEC. 433. GAO STUDY ON COVERAGE OF SURGICAL FIRST
ASSISTING SERVICES OF CERTIFIED REG-
ISTERED NURSE FIRST ASSISTANTS.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study on the effect on the medicare
program under title XVIII of the Social Security Act and
on medicare beneficiaries of coverage under the program
of surgical first assisting services of certified registered
nurse first assistants. The Comptroller General shall con-
sider the following when conducting the study:
(1) Any impact on the quality of care furnished
to medicare beneficiaries by reason of such coverage.
(2) Appropriate education and training require-
ments for certified registered nurse first assistants
who furnish such first assisting services.
(3) Appropriate rates of payment under the
program to such certified registered nurse first as-
sistants for furnishing such services, taking into ac-
count the costs of compensation, overhead, and su-
167
pervision attributable to certified registered nurse
first assistants.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Comptroller General shall
submit to Congress a report on the study conducted under
subsection (a).
SEC. 434. MEDPAC STUDY AND REPORT ON MEDICARE RE-
IMBURSEMENT FOR SERVICES PROVIDED BY
CERTAIN PROVIDERS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on the appropriateness of
the current payment rates under the medicare program
under title XVIII of the Social Security Act for services
provided by a—
(1) certified nurse-midwife (as defined in sub-
section (gg)(2) of section 1861 of such Act (42
U.S.C. 1395x));
(2) physician assistant (as defined in subsection
(aa)(5)(A) of such section);
(3) nurse practitioner (as defined in such sub-
section); and
(4) clinical nurse specialist (as defined in sub-
section (aa)(5)(B) of such section).
The study shall separately examine the appropriateness of
such payment rates for orthopedic physician assistants,
168
taking into consideration the requirements for accredita-
tion, training, and education.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a), together with any recommendations for leg-
islation that the Commission determines to be appropriate
as a result of such study.
SEC. 435. MEDPAC STUDY AND REPORT ON MEDICARE COV-
ERAGE OF SERVICES PROVIDED BY CERTAIN
NONPHYSICIAN PROVIDERS.
(a) STUDY.—
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission shall conduct a study to deter-
mine the appropriateness of providing coverage
under the medicare program under title XVIII of the
Social Security Act for services provided by a—
(A) surgical technologist;
(B) marriage counselor;
(C) marriage and family therapist;
(D) pastoral care counselor; and
(E) licensed professional counselor of men-
tal health.
(2) COSTS TO PROGRAM.—The study shall con-
sider the short-term and long-term benefits, and
169
costs to the medicare program, of providing the cov-
erage described in paragraph (1).
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a), together with any recommendations for leg-
islation that the Commission determines to be appropriate
as a result of such study.
SEC. 436. GAO STUDY AND REPORT ON THE COSTS OF
EMERGENCY 
AND 
MEDICAL 
TRANSPOR-
TATION SERVICES.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study on the costs of providing
emergency and medical transportation services across the
range of acuity levels of conditions for which such trans-
portation services are provided.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Comptroller General
shall submit to Congress a report on the study conducted
under subsection (a), together with recommendations for
any changes in methodology or payment level necessary
to fairly compensate suppliers of emergency and medical
transportation services and to ensure the access of bene-
ficiaries under the medicare program under title XVIII of
the Social Security Act.
170
SEC. 437. GAO STUDIES AND REPORTS ON MEDICARE PAY-
MENTS.
(a) GAO STUDY ON HCFA POST-PAYMENT AUDIT
PROCESS.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on the post-pay-
ment audit process under the medicare program
under title XVIII of the Social Security Act as such
process applies to physicians, including the proper
level of resources that the Health Care Financing
Administration should devote to educating physi-
cians regarding—
(A) coding and billing;
(B) documentation requirements; and
(C) the calculation of overpayments.
(2) REPORT.—Not later than 18 months after
the date of the enactment of this Act, the Comp-
troller General shall submit to Congress a report on
the study conducted under paragraph (1) together
with specific recommendations for changes or im-
provements in the post-payment audit process de-
scribed in such paragraph.
(b) GAO STUDY ON ADMINISTRATION AND OVER-
SIGHT.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on the aggre-
171
gate effects of regulatory, audit, oversight, and pa-
perwork burdens on physicians and other health care
providers participating in the medicare program
under title XVIII of the Social Security Act.
(2) REPORT.—Not later than 18 months after
the date of the enactment of this Act, the Comp-
troller General shall submit to Congress a report on
the study conducted under paragraph (1) together
with recommendations regarding any area in
which—
(A) a reduction in paperwork, an ease of
administration, or an appropriate change in
oversight and review may be accomplished; or
(B) additional payments or education are
needed to assist physicians and other health
care providers in understanding and complying
with any legal or regulatory requirements.
SEC. 438. MEDPAC STUDY ON ACCESS TO OUTPATIENT PAIN
MANAGEMENT SERVICES.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on the barriers to coverage
and payment for outpatient interventional pain medicine
procedures under the medicare program under title XVIII
of the Social Security Act. Such study shall examine—
172
(1) the specific barriers imposed under the
medicare program on the provision of pain manage-
ment procedures in hospital outpatient departments,
ambulatory surgery centers, and physicians’ offices;
and
(2) the consistency of medicare payment poli-
cies for pain management procedures in those dif-
ferent settings.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Commission shall submit
to Congress a report on the study.
TITLE V—PROVISIONS
RELATING TO PARTS A AND B
Subtitle A—Home Health Services
SEC. 501. ONE-YEAR ADDITIONAL DELAY IN APPLICATION
OF 15 PERCENT REDUCTION ON PAYMENT
LIMITS FOR HOME HEALTH SERVICES.
(a) IN
GENERAL.—Section 1895(b)(3)(A)(i) (42
U.S.C. 1395fff(b)(3)(A)(i)) is amended—
(1) by redesignating subclause (II) as subclause
(III);
(2) in subclause (III), as redesignated, by strik-
ing ‘‘described in subclause (I)’’ and inserting ‘‘de-
scribed in subclause (II)’’; and
173
(3) by inserting after subclause (I) the fol-
lowing new subclause:
‘‘(II) For the 12-month period
beginning after the period described
in subclause (I), such amount (or
amounts) shall be equal to the amount
(or amounts) determined under sub-
clause (I), updated under subpara-
graph (B).’’.
(b) CHANGE IN REPORT.—Section 302(c) of BBRA
(113 Stat. 1501A–360) is amended—
(1) by striking ‘‘Not later than’’ and all that
follows through ‘‘(42 U.S.C. 1395fff )’’ and inserting
‘‘Not later than April 1, 2002’’; and
(2) by striking ‘‘Secretary’’ and inserting
‘‘Comptroller General of the United States’’.
(c) CASE MIX ADJUSTMENT CORRECTIONS.—
(1) IN GENERAL.—Section 1895(b)(3)(B) (42
U.S.C. 1395fff(b)(3)(B)) is amended by adding at
the end the following new clause:
‘‘(iv) ADJUSTMENT
FOR
CASE
MIX
CHANGES.—Insofar as the Secretary deter-
mines that the adjustments under para-
graph (4)(A)(i) for a previous fiscal year
(or estimates that such adjustments for a
174
future fiscal year) did (or are likely to) re-
sult in a change in aggregate payments
under this subsection during the fiscal year
that are a result of changes in the coding
or classification of different units of serv-
ices that do not reflect real changes in case
mix, the Secretary may adjust the stand-
ard 
prospective 
payment 
amount 
(or
amounts) under paragraph (3) for subse-
quent fiscal years so as to eliminate the ef-
fect of such coding or classification
changes.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to episodes concluding
on or after October 1, 2001.
SEC. 502. RESTORATION OF FULL HOME HEALTH MARKET
BASKET UPDATE FOR HOME HEALTH SERV-
ICES FOR FISCAL YEAR 2001.
(a) IN GENERAL.—Section 1861(v)(1)(L)(x) (42
U.S.C. 1395x(v)(1)(L)(x)) is amended—
(1) by striking ‘‘2001,’’; and
(2) by adding at the end the following: ‘‘With
respect to cost reporting periods beginning during
fiscal year 2001, the update to any limit under this
175
subparagraph shall be the home health market bas-
ket index.’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001 BASED
ON ADJUSTED PROSPECTIVE PAYMENT
AMOUNTS.—
(1) IN GENERAL.—Notwithstanding the amend-
ments made by subsection (a), for purposes of mak-
ing payments under section 1895(b) of the Social
Security Act (42 U.S.C. 1395fff(b)) for home health
services furnished during fiscal year 2001, the Sec-
retary of Health and Human Services shall—
(A) with respect to episodes and visits end-
ing on or after October 1, 2000, and before
April 1, 2001, use the final standardized and
budget neutral prospective payment amounts
for 60-day episodes and standardized average
per visit amounts for fiscal year 2001 as pub-
lished by the Secretary in the Federal Register
on July 3, 2000 (65 Fed. Reg. 41128–41214);
and
(B) with respect to episodes and visits end-
ing on or after April 1, 2001, and before Octo-
ber 1, 2001, use such amounts increased by 2.2
percent.
176
(2) NO EFFECT ON OTHER PAYMENTS OR DE-
TERMINATIONS.—The Secretary shall not take the
provisions of paragraph (1) into account for pur-
poses of payments, determinations, or budget neu-
trality adjustments under section 1895 of the Social
Security Act.
SEC. 503. TEMPORARY TWO-MONTH PERIODIC INTERIM
PAYMENT.
(a) IN GENERAL.—Notwithstanding the amendments
made by section 4603(b) of BBA (42 U.S.C. 1395fff
note), in the case of a home health agency that was receiv-
ing periodic interim payments under section 1815(e)(2) of
the Social Security Act (42 U.S.C. 1395g(e)(2)) as of Sep-
tember 30, 2000, and that is not described in subsection
(b), the Secretary of Health and Human Services shall,
as soon as practicable, make a single periodic interim pay-
ment to such agency in an amount equal to four times
the last full fortnightly periodic interim payment made to
such agency under the payment system in effect prior to
the implementation of the prospective payment system
under section 1895(b) of such Act (42 U.S.C. 1395fff(b)).
Such amount of such periodic interim payment shall be
included in the tentative settlement of the last cost report
for the home health agency under the payment system in
effect prior to the implementation of such prospective pay-
177
ment system, regardless of the ending date of such cost
report.
(b) EXCEPTIONS.—The Secretary shall not make an
additional periodic interim payment under subsection (a)
in the case of a home health agency (determined as of
the day that such payment would otherwise be made)
that—
(1) notifies the Secretary that such agency does
not want to receive such payment;
(2) is not receiving payments pursuant to sec-
tion 405.371 of title 42, Code of Federal Regula-
tions;
(3) is excluded from the medicare program
under title XI of the Social Security Act;
(4) no longer has a provider agreement under
section 1866 of such Act (42 U.S.C. 1395cc);
(5) is no longer in business; or
(6) is subject to a court order providing for the
withholding of medicare payments under title XVIII
of such Act.
SEC. 504. USE OF TELEHEALTH IN DELIVERY OF HOME
HEALTH SERVICES.
Section 1895 (42 U.S.C. 1395fff ) is amended by
adding at the end the following new subsection:
178
‘‘(e) CONSTRUCTION RELATED TO HOME HEALTH
SERVICES.—
‘‘(1) TELECOMMUNICATIONS.—Nothing in this
section shall be construed as preventing a home
health agency furnishing a home health unit of serv-
ice for which payment is made under the prospective
payment system established by this section for such
units of service from furnishing services via a tele-
communication system if such services—
‘‘(A) do not substitute for in-person home
health services ordered as part of a plan of care
certified by a physician pursuant to section
1814(a)(2)(C) or 1835(a)(2)(A); and
‘‘(B) are not considered a home health
visit for purposes of eligibility or payment
under this title.
‘‘(2) PHYSICIAN
CERTIFICATION.—Nothing in
this section shall be construed as waiving the re-
quirement for a physician certification under section
1814(a)(2)(C) or 1835(a)(2)(A) of such Act (42
U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) for the pay-
ment for home health services, whether or not fur-
nished via a telecommunications system.’’.
179
SEC. 505. STUDY ON COSTS TO HOME HEALTH AGENCIES
OF 
PURCHASING 
NONROUTINE 
MEDICAL
SUPPLIES.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study on variations in prices paid
by home health agencies furnishing home health services
under the medicare program under title XVIII of the So-
cial Security Act in purchasing nonroutine medical sup-
plies, including ostomy supplies, and volumes of such sup-
plies used, shall determine the effect (if any) of variations
on prices and volumes in the provision of such services.
(b) REPORT.—Not later than August 15, 2001, the
Comptroller General shall submit to Congress a report on
the study conducted under subsection (a), and shall in-
clude in the report recommendations respecting whether
payment for nonroutine medical supplies furnished in con-
nection with home health services should be made sepa-
rately from the prospective payment system for such serv-
ices.
SEC. 506. TREATMENT OF BRANCH OFFICES; GAO STUDY
ON SUPERVISION OF HOME HEALTH CARE
PROVIDED IN ISOLATED RURAL AREAS.
(a) TREATMENT OF BRANCH OFFICES.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, in determining for purposes of title
XVIII of the Social Security Act whether an office
180
of a home health agency constitutes a branch office
or a separate home health agency, neither the time
nor distance between a parent office of the home
health agency and a branch office shall be the sole
determinant of a home health agency’s branch office
status.
(2) CONSIDERATION
OF
FORMS
OF
TECH-
NOLOGY IN DEFINITION OF SUPERVISION.—The Sec-
retary of Health and Human Services may include
forms of technology in determining what constitutes
‘‘supervision’’ for purposes of determining a home
heath agency’s branch office status under paragraph
(1).
(b) GAO STUDY.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study of the provision
of adequate supervision to maintain quality of home
health services delivered under the medicare pro-
gram under title XVIII of the Social Security Act in
isolated rural areas. The study shall evaluate the
methods that home health agency branches and
subunits use to maintain adequate supervision in the
delivery of services to clients residing in those areas,
how these methods of supervision compare to re-
quirements that subunits independently meet medi-
181
care conditions of participation, and the resources
utilized by subunits to meet such conditions.
(2) REPORT.—Not later than January 1, 2002,
the Comptroller General shall submit to Congress a
report on the study conducted under paragraph (1).
The report shall include recommendations on wheth-
er exceptions are needed for subunits and branches
of home health agencies under the medicare program
to maintain access to the home health benefit or
whether alternative policies should be developed to
assure adequate supervision and access and rec-
ommendations on whether a national standard for
supervision is appropriate.
SEC. 507. CLARIFICATION OF THE HOMEBOUND DEFINI-
TION UNDER THE MEDICARE HOME HEALTH
BENEFIT.
(a) CLARIFICATION.—
(1) 
IN
GENERAL.—Sections 
1814(a) 
and
1835(a) (42 U.S.C. 1395f(a) and 1395n(a)) are
each amended—
(A) in the last sentence, by striking ‘‘, and
that absences of the individual from home are
infrequent or of relatively short duration, or are
attributable to the need to receive medical
treatment’’; and
182
(B) by adding at the end the following new
sentences: ‘‘Any absence of an individual from
the home attributable to the need to receive
health care treatment, including regular ab-
sences for the purpose of participating in thera-
peutic, psychosocial, or medical treatment in an
adult day-care program that is licensed or cer-
tified by a State, or accredited, to furnish adult
day-care services in the State shall not dis-
qualify an individual from being considered to
be ‘confined to his home’. Any other absence of
an individual from the home shall not so dis-
qualify an individual if the absence is of infre-
quent or of relatively short duration. For pur-
poses of the preceding sentence, any absence for
the purpose of attending a religious service
shall be deemed to be an absence of infrequent
or short duration.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall apply to home health services
furnished on or after the date of the enactment of
this Act.
(b) STUDY.—
(1) IN GENERAL.—The Comptroller General of
the United States shall conduct an evaluation of the
183
effect of the amendment on the cost of and access
to home health services under the medicare program
under title XVIII of the Social Security Act.
(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Comptroller
General shall submit to Congress a report on the
study conducted under paragraph (1).
SEC. 508. TEMPORARY INCREASE FOR HOME HEALTH
SERVICES FURNISHED IN A RURAL AREA.
(a) 24-MONTH
INCREASE
BEGINNING
APRIL
1,
2001.—In the case of home health services furnished in
a rural area (as defined in section 1886(d)(2)(D) of the
Social Security Act (42 U.S.C. 1395ww(d)(2)(D))) on or
after April 1, 2001, and before April 1, 2003, the Sec-
retary of Health and Human Services shall increase the
payment amount otherwise made under section 1895 of
such Act (42 U.S.C. 1395fff ) for such services by 10 per-
cent.
(b) WAIVING BUDGET NEUTRALITY.—The Secretary
shall not reduce the standard prospective payment amount
(or amounts) under section 1895 of the Social Security
Act (42 U.S.C. 1395fff ) applicable to home health services
furnished during a period to offset the increase in pay-
ments resulting from the application of subsection (a).
184
Subtitle B—Direct Graduate
Medical Education
SEC. 511. INCREASE IN FLOOR FOR DIRECT GRADUATE
MEDICAL EDUCATION PAYMENTS.
Section 
1886(h)(2)(D)(iii) 
(42 
U.S.C.
1395ww(h)(2)(D)(iii)) is amended—
(1) in the heading, by striking ‘‘IN FISCAL YEAR
2001 AT 70 PERCENT OF’’ and inserting ‘‘FOR’’; and
(2) by inserting after ‘‘70 percent’’ the fol-
lowing: ‘‘, and for the cost reporting period begin-
ning during fiscal year 2002 shall not be less than
85 percent,’’.
SEC. 
512. 
CHANGE 
IN 
DISTRIBUTION 
FORMULA 
FOR
MEDICARE+CHOICE-RELATED NURSING AND
ALLIED HEALTH EDUCATION COSTS.
(a) IN GENERAL.—Section 1886(l)(2)(C) (42 U.S.C.
1395ww(l)(2)(C)) is amended by striking all that follows
‘‘multiplied by’’ and inserting the following: ‘‘the ratio
of—
‘‘(i) the product of (I) the Secretary’s
estimate of the ratio of the amount of pay-
ments made under section 1861(v) to the
hospital for nursing and allied health edu-
cation activities for the hospital’s cost re-
porting period ending in the second pre-