312
Subtitle F, Part 1
1395dd(e)(5)) is amended by striking ‘‘1861(mm)(1))’’
and inserting ‘‘1861(mm)(1)) and a rural emergency ac-
cess care hospital (as defined in section 1861(oo)(1))’’.
(c) REFERENCE TO PAYMENT PROVISIONS UNDER
PART B.—For provisions relating to payment for rural
emergency access care hospital services under part B, see
section 15607.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to fiscal years beginning on or
after October 1, 1995.
SEC. 15514. CLASSIFICATION OF RURAL REFERRAL CEN-
TERS.
(a) PROHIBITING DENIAL OF REQUEST FOR RECLAS-
SIFICATION ON BASIS OF COMPARABILITY OF WAGES.—
(1) IN GENERAL.—Section 1886(d)(10)(D) (42
U.S.C. 1395ww(d)(10)(D)) is amended—
(A) by redesignating clause (iii) as clause
(iv); and
(B) by inserting after clause (ii) the follow-
ing new clause:
‘‘(iii) Under the guidelines published by the Secretary
under clause (i), in the case of a hospital which is classi-
fied by the Secretary as a rural referral center under para-
graph (5)(C), the Board may not reject the application
of the hospital under this paragraph on the basis of any
313
Subtitle F, Part 1
comparison between the average hourly wage of the hos-
pital and the average hourly wage of hospitals in the area
in which it is located.’’.
(2) EFFECTIVE
DATE.—Notwithstanding sec-
tion 1886(d)(10)(C)(ii) of the Social Security Act, a
hospital may submit an application to the Medicare
Geographic Classification Review Board during the
30-day period beginning on the date of the enact-
ment of this Act requesting a change in its classi-
fication for purposes of determining the area wage
index applicable to the hospital under section
1886(d)(3)(D) of such Act for fiscal year 1997, if
the hospital would be eligible for such a change in
its classification under the standards described in
section 1886(d)(10)(D) (as amended by paragraph
(1)) but for its failure to meet the deadline for appli-
cations under section 1886(d)(10)(C)(ii).
(b) CONTINUING TREATMENT OF PREVIOUSLY DES-
IGNATED CENTERS.—Any hospital classified as a rural re-
ferral center by the Secretary of Health and Human Serv-
ices under section 1886(d)(5)(C) of the Social Security
Act for fiscal year 1994 shall be classified as such a rural
referral center for fiscal year 1996 and each subsequent
fiscal year.
314
Subtitle F, Part 2
SEC. 15515. FLOOR ON AREA WAGE INDEX.
(a) 
IN
GENERAL.—For 
purposes 
of 
section
1886(d)(3)(E) of the Social Security Act for discharges
occurring on or after October 1, 1995, the area wage index
applicable under such section to any hospital which is not
located in a rural area (as defined in section
1886(d)(2)(D) of such Act) may not be less than the aver-
age of the area wage indices applicable under such section
to hospitals located in rural areas in the State in which
the hospital is located.
(b) BUDGET-NEUTRALITY
IN IMPLEMENTATION.—
The Secretary of Health and Human Services shall adjust
the area wage indices referred to in subsection (a) for hos-
pitals not described in such subsection in a manner which
assures that the aggregate payments made under section
1886(d) of the Social Security Act in a fiscal year for the
operating costs of inpatient hospital services are not great-
er or less than those which would have been made in the
year if this section did not apply.
PART 2—PAYMENTS TO SKILLED NURSING
FACILITIES
SEC. 15521. PAYMENTS FOR ROUTINE SERVICE COSTS.
(a) CLARIFICATION
OF DEFINITION
OF ROUTINE
SERVICE COSTS.—Section 1888 (42 U.S.C. 1395yy) is
amended by adding at the end the following new sub-
section:
315
Subtitle F, Part 2
‘‘(e) For purposes of this section, the ‘routine service
costs’ of a skilled nursing facility are all costs which are
attributable to nursing services, room and board, adminis-
trative costs, other overhead costs, and all other ancillary
services (including supplies and equipment), excluding
costs attributable to covered non-routine services subject
to payment limits under section 1888A.’’.
(b) CONFORMING AMENDMENT.—Section 1888 (42
U.S.C. 1395yy) is amended in the heading by inserting
‘‘AND CERTAIN ANCILLARY’’ after ‘‘SERVICE’’.
SEC. 15522. INCENTIVES FOR COST EFFECTIVE MANAGE-
MENT OF COVERED NON-ROUTINE SERVICES.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1888 the following new section:
‘‘INCENTIVES
FOR
COST-EFFECTIVE
MANAGEMENT
OF
COVERED
NON-ROUTINE
SERVICES
OF
SKILLED
NURSING FACILITIES
‘‘SEC. 1888A. (a) DEFINITIONS.—For purposes of
this section:
‘‘(1) COVERED NON-ROUTINE SERVICES.—The
term ‘covered non-routine services’ means post-hos-
pital extended care services consisting of any of the
following:
‘‘(A) Physical or occupational therapy or
speech-language pathology services, or res-
316
Subtitle F, Part 2
piratory therapy, including supplies and support
services incident to such services and therapy.
‘‘(B) Prescription drugs.
‘‘(C) Complex medical equipment.
‘‘(D) Intravenous therapy and solutions
(including enteral and parenteral nutrients,
supplies, and equipment).
‘‘(E) Radiation therapy.
‘‘(F) Diagnostic services, including labora-
tory, radiology (including computerized tomog-
raphy services and imaging services), and pul-
monary services.
‘‘(2) SNF MARKET BASKET PERCENTAGE IN-
CREASE.—The term ‘SNF market basket percentage
increase’ for a fiscal year means a percentage equal
to the percentage increase in routine service cost
limits for the year under section 1888(a).
‘‘(3) STAY.—The term ‘stay’ means, with re-
spect to an individual who is a resident of a skilled
nursing facility, a period of continuous days during
which the facility provides extended care services for
which payment may be made under this title with
respect to the individual during the individual’s spell
of illness.
317
Subtitle F, Part 2
‘‘(b) NEW PAYMENT METHOD FOR COVERED NON-
ROUTINE SERVICES.—
‘‘(1) IN GENERAL.—Subject to subsection (c), a
skilled nursing facility shall receive interim pay-
ments under this title for covered non-routine serv-
ices furnished to an individual during a cost report-
ing period beginning during a fiscal year (after fiscal
year 1996) in an amount equal to the reasonable
cost of providing such services in accordance with
section 1861(v). The Secretary may adjust such pay-
ments if the Secretary determines (on the basis of
such estimated information as the Secretary consid-
ers appropriate) that payments to the facility under
this paragraph for a cost reporting period would
substantially exceed the cost reporting period limit
determined under subsection (c)(1)(B).
‘‘(2) RESPONSIBILITY
OF
SKILLED
NURSING
FACILITY TO MANAGE BILLINGS.—
‘‘(A) CLARIFICATION RELATING TO PART A
BILLING.—In the case of a covered non-routine
service furnished to an individual who (at the
time the service is furnished) is a resident of a
skilled nursing facility who is entitled to cov-
erage under section 1812(a)(2) for such service,
the skilled nursing facility shall submit a claim
325
Subtitle F, Part 2
to all residents of the facility to whom the facility
provided extended care services for which payment
was made under part A during the period (without
regard to whether or not the services were furnished
by the facility, by others under arrangement with
them made by the facility, under any other contract-
ing or consulting arrangement, or otherwise), as es-
timated by the Secretary.
‘‘(f) INTENSIVE NURSING OR THERAPY NEEDS.—
‘‘(1) IN GENERAL.—In applying subsection (b)
to covered non-routine services furnished during a
stay beginning during a cost reporting period begin-
ning during a fiscal year to a resident of a skilled
nursing facility who requires intensive nursing or
therapy services, the per stay limit determined for
the fiscal year under the methodology for such resi-
dent shall be the per stay limit developed under
paragraph (2) instead of the per stay limit deter-
mined under subsection (d)(1)(A).
‘‘(2) PER
STAY
LIMIT
FOR
INTENSIVE
NEED
RESIDENTS.—Not later than June 30, 1996, the
Secretary, after consultation with the Medicare Pay-
ment Review Commission and skilled nursing facility
experts, shall develop and publish a methodology for
determining on an annual basis a per stay limit for
326
Subtitle F, Part 2
residents of a skilled nursing facility who require in-
tensive nursing or therapy services.
‘‘(3) BUDGET
NEUTRALITY.—The Secretary
shall adjust payments under subsection (b) in a
manner that ensures that total payments for covered
non-routine services under this section are not great-
er or less than total payments for such services
would have been but for the application of para-
graph (1).
‘‘(g) SPECIAL TREATMENT
FOR MEDICARE LOW
VOLUME SKILLED NURSING FACILITIES.—This section
shall not apply with respect to a skilled nursing facility
for which payment is made for routine service costs during
a cost reporting period on the basis of prospective pay-
ments under section 1888(d).
‘‘(h) EXCEPTIONS AND ADJUSTMENTS TO LIMITS.—
‘‘(1) IN GENERAL.—The Secretary may make
exceptions and adjustments to the cost reporting
limits applicable to a skilled nursing facility under
subsection (c)(1)(B) for a cost reporting period, ex-
cept that the total amount of any additional pay-
ments made under this section for covered non-rou-
tine services during the cost reporting period as a
result of such exceptions and adjustments may not
exceed 5 percent of the aggregate payments made to
327
Subtitle F, Part 2
all skilled nursing facilities for covered non-routine
services during the cost reporting period (determined
without regard to this paragraph).
‘‘(2) BUDGET
NEUTRALITY.—The Secretary
shall adjust payments under subsection (b) in a
manner that ensures that total payments for covered
non-routine services under this section are not great-
er or less than total payments for such services
would have been but for the application of para-
graph (1).
‘‘(i) SPECIAL RULE FOR X-RAY SERVICES.—Before
furnishing a covered non-routine service consisting of an
X-ray service for which payment may be made under part
A or part B to a resident, a skilled nursing facility shall
consider whether furnishing the service through a provider
of portable X-ray service services would be appropriate,
taking into account the cost effectiveness of the service
and the convenience to the resident.’’.
(b) CONFORMING AMENDMENT.—Section 1814(b)
(42 U.S.C. 1395f(b)) is amended in the matter preceding
paragraph (1) by striking ‘‘1813 and 1886’’ and inserting
‘‘1813, 1886, 1888, and 1888A’’.
SEC. 15523. PAYMENTS FOR ROUTINE SERVICE COSTS.
(a) MAINTAINING SAVINGS RESULTING FROM TEM-
PORARY FREEZE ON PAYMENT INCREASES.—
328
Subtitle F, Part 2
(1) BASING UPDATES TO PER DIEM COST LIM-
ITS ON LIMITS FOR FISCAL YEAR 1993.—
(A) IN
GENERAL.—The last sentence of
section 1888(a) (42 U.S.C. 1395yy(a)) is
amended by inserting before the period at the
end the following: ‘‘(except that such updates
may not take into account any changes in the
routine service costs of skilled nursing facilities
occurring during cost reporting periods which
began during fiscal year 1994 or fiscal year
1995)’’.
(B) NO
EXCEPTIONS
PERMITTED
BASED
ON AMENDMENT.—The Secretary of Health and
Human Services shall not consider the amend-
ment made by subparagraph (A) in making any
adjustments pursuant to section 1888(c) of the
Social Security Act.
(2) PAYMENTS DETERMINED ON PROSPECTIVE
BASIS.—Any change made by the Secretary of
Health and Human Services in the amount of any
prospective payment paid to a skilled nursing facility
under section 1888(d) of the Social Security Act for
cost reporting periods beginning on or after October
1, 1995, may not take into account any changes in
the costs of services occurring during cost reporting
329
Subtitle F, Part 2
periods which began during fiscal year 1994 or fiscal
year 1995.
(b) ESTABLISHMENT OF SCHEDULE FOR MAKING
ADJUSTMENTS TO LIMITS.—Section 1888(c) (42 U.S.C.
1395yy(c)) is amended by striking the period at the end
of the second sentence and inserting ‘‘, and may only make
adjustments under this subsection with respect to a facil-
ity which applies for an adjustment during an annual ap-
plication period established by the Secretary.’’.
(c) LIMITATION ON AGGREGATE INCREASE IN PAY-
MENTS RESULTING FROM ADJUSTMENTS TO LIMITS.—
Section 1888(c) (42 U.S.C. 1395yy(c)) is amended—
(1) by striking ‘‘(c) The Secretary’’ and insert-
ing ‘‘(c)(1) Subject to paragraph (2), the Sec-
retary’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) The Secretary may not make any adjustments
under this subsection in the limits set forth in subsection
(a) for a cost reporting period beginning during a fiscal
year to the extent that the total amount of the additional
payments made under this title as a result of such adjust-
ments is greater than an amount equal to—
‘‘(A) for cost reporting periods beginning dur-
ing fiscal year 1997, the total amount of the addi-
330
Subtitle F, Part 2
tional payments made under this title as a result of
adjustments under this subsection for cost reporting
periods beginning during fiscal year 1996 increased
by the SNF market basket percentage increase (as
defined in section 1888A(e)(3)) for fiscal year 1997;
and
‘‘(B) for cost reporting periods beginning dur-
ing a subsequent fiscal year, the amount determined
under this paragraph for the previous fiscal year in-
creased by the SNF market basket percentage in-
crease for such subsequent fiscal year.’’.
(d) IMPOSITION OF LIMITS FOR ALL COST REPORT-
ING PERIODS.—Section 1888(a) (42 U.S.C. 1395yy(a)) is
amended in the matter preceding paragraph (1) by insert-
ing after ‘‘extended care services’’ the following: ‘‘(for any
cost reporting period for which payment is made under
this title to the skilled nursing facility for such services)’’.
SEC. 15524. REDUCTIONS IN PAYMENT FOR CAPITAL-RE-
LATED COSTS.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as
amended by section 15506, is amended by adding at the
end the following new subparagraph:
‘‘(U) Such regulations shall provide that, in deter-
mining the amount of the payments that may be made
under this title with respect to all the capital-related costs
331
Subtitle F, Part 2
of skilled nursing facilities, the Secretary shall reduce the
amounts of such payments otherwise established under
this title by 15 percent for payments attributable to por-
tions of cost reporting periods occurring during fiscal
years 1996 through 2002.’’.
SEC. 15525. TREATMENT OF ITEMS AND SERVICES PAID
FOR UNDER PART B.
(a) REQUIRING PAYMENT
FOR ALL ITEMS
AND
SERVICES TO BE MADE TO FACILITY.—
(1) IN GENERAL.—The first sentence of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended—
(A) by striking ‘‘and (D)’’ and inserting
‘‘(D)’’; and
(B) by striking the period at the end and
inserting the following: ‘‘, and (E) in the case
of an item or service (other than physicians’
services and other than a portable X-ray or
portable electrocardiogram treated as a physi-
cian’s 
service 
for 
purposes 
of 
section
1848(j)(3)) furnished to an individual who (at
the time the item or service is furnished) is a
resident of a skilled nursing facility, payment
shall be made to the facility (without regard to
whether or not the item or service was fur-
nished by the facility, by others under arrange-
332
Subtitle F, Part 2
ment with them made by the facility, or other-
wise).’’.
(2) EXCLUSION FOR ITEMS AND SERVICES NOT
BILLED BY FACILITY.—Section 1862(a) (42 U.S.C.
1395y(a)) is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (14);
(B) by striking the period at the end of
paragraph (15) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (15) the
following new paragraph:
‘‘(16) where such expenses are for covered non-
routine services (as defined in section 1888A(a)(1))
(other than a portable X-ray or portable electro-
cardiogram treated as a physician’s service for pur-
poses of section 1848(j)(3)) furnished to an individ-
ual who is a resident of a skilled nursing facility and
for which the claim for payment under this title is
not submitted by the facility.’’.
(3) 
CONFORMING
AMENDMENT.—Section
1832(a)(1) (42 U.S.C. 1395k(a)(1)) is amended by
striking ‘‘(2);’’ and inserting ‘‘(2) and section
1842(b)(6)(E);’’.
(b) REDUCTION IN PAYMENTS FOR ITEMS AND SERV-
ICES FURNISHED BY OR UNDER ARRANGEMENTS WITH
333
Subtitle F, Part 2
FACILITIES.—Section 
1861(v)(1) 
(42 
U.S.C.
1395x(v)(1)), as amended by sections 15506 and 15524,
is amended by adding at the end the following new sub-
paragraph:
‘‘(V) In the case of an item or service furnished by
a skilled nursing facility (or by others under arrangement
with them made by a skilled nursing facility) for which
payment is made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the Secretary
shall reduce the reasonable cost for such item or service
otherwise determined under clause (i)(I) of such section
by 5.8 percent for payments attributable to portions of
cost reporting periods occurring during fiscal years 1996
through 2002.’’.
SEC. 15526. CERTIFICATION OF FACILITIES MEETING RE-
VISED NURSING HOME REFORM STANDARDS.
(a) IN GENERAL.—Section 1819(a)(3) (42 U.S.C.
1395i–3(a)(3)) is amended to read as follows:
‘‘(3)(A) is certified by the Secretary as meeting
the standards established under subsection (b), or
(B) is a State-certified facility (as defined in sub-
section (d)).’’.
(b) REQUIREMENTS DESCRIBED.—Section 1819 (42
U.S.C. 1395i–3) is amended by striking subsections (b)
through (i) and inserting the following:
334
Subtitle F, Part 2
‘‘(b) STANDARDS FOR AND CERTIFICATION OF FA-
CILITIES.—
‘‘(1) STANDARDS FOR FACILITIES.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for the establishment and maintenance
of standards consistent with the contents de-
scribed in subparagraph (B) for skilled nursing
facilities which furnish services for which pay-
ment may be made under this title.
‘‘(B) CONTENTS
OF
STANDARDS.—The
standards established for facilities under this
paragraph shall contain provisions relating to
the following items:
‘‘(i) The treatment of resident medical
records.
‘‘(ii) Policies, procedures, and bylaws
for operation.
‘‘(iii) Quality assurance systems.
‘‘(iv) Resident assessment procedures,
including care planning and outcome eval-
uation.
‘‘(v) The assurance of a safe and ade-
quate physical plant for the facility.
‘‘(vi) Qualifications for staff sufficient
to provide adequate care.
335
Subtitle F, Part 2
‘‘(vii) Utilization review.
‘‘(viii) The protection and enforce-
ment of resident rights described in sub-
paragraph (C).
‘‘(C) RESIDENT RIGHTS DESCRIBED.—The
resident rights described in this subparagraph
are the rights of residents to the following:
‘‘(i) To exercise the individual’s rights
as a resident of the facility and as a citizen
or resident of the United States.
‘‘(ii) To receive notice of rights and
services.
‘‘(iii) To be protected against the mis-
use of resident funds.
‘‘(iv) To be provided privacy and con-
fidentiality.
‘‘(v) To voice grievances.
‘‘(vi) To examine the results of inspec-
tions under the certification program.
‘‘(vii) To refuse to perform services
for the facility.
‘‘(viii) To be provided privacy in com-
munications and to receive mail.
‘‘(ix) To have the facility provide im-
mediate access to any resident by any rep-
336
Subtitle F, Part 2
resentative of the certification program,
the resident’s individual physician, the
State long term care ombudsman, and any
person the resident has designated as a
visitor.
‘‘(x) To retain and use personal prop-
erty.
‘‘(xi) To be free from abuse, including
verbal, sexual, physical and mental abuse,
corporal punishment, and involuntary se-
clusion.
‘‘(xii) To be provided with prior writ-
ten notice of a pending transfer or dis-
charge.
‘‘(D) 
REQUIRING
NOTICE
AND
COM-
MENT.—The standards established for facilities
under this paragraph may only take effect after
the Secretary has provided the public with no-
tice and an opportunity for comment.
‘‘(2) CERTIFICATION PROGRAM.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for the establishment and operation of
a program consistent with the requirements of
subparagraph (B) for the certification of skilled
nursing facilities which meet the standards es-
337
Subtitle F, Part 2
tablished under paragraph (1) and the decerti-
fication of facilities which fail to meet such
standards.
‘‘(B) REQUIREMENTS FOR PROGRAM.—In
addition to any other requirements the Sec-
retary may impose, in establishing and operat-
ing the certification program under subpara-
graph (A), the Secretary shall ensure the fol-
lowing:
‘‘(i) The Secretary shall ensure public
access (as defined by the Secretary) to the
certification program’s evaluations of par-
ticipating facilities, including compliance
records and enforcement actions and other
reports by the Secretary regarding the
ownership, compliance histories, and serv-
ices provided by certified facilities.
‘‘(ii) Not less often than every 4
years, the Secretary shall audit its expendi-
tures under the program, through an en-
tity designated by the Secretary which is
not affiliated with the program, as des-
ignated by the Secretary.
‘‘(c) INTERMEDIATE SANCTION AUTHORITY.—
338
Subtitle F, Part 2
‘‘(1) AUTHORITY.—In addition to any other au-
thority, where the Secretary determines that a nurs-
ing facility which is certified for participation under
this title (whether certified by the Secretary as
meeting the standards established under subsection
(b) or a State-ceritified facility) no longer or does
not substantially meet the requirements for such a
facility under this title as specified under subsection
(b) and further determines that the facility’s defi-
ciencies—
‘‘(A) immediately jeopardize the health and
safety of its residents, the Secretary shall at
least provide for the termination of the facility’s
certification for participation under this title, or
‘‘(B) do not immediately jeopardize the
health and safety of its residents, the Secretary
may, in lieu of providing for terminating the fa-
cility’s certification for participation under the
plan, provide lesser sanctions including one that
provides that no payment will be made under
this title with respect to any individual admit-
ted to such facility after a date specified by the
Secretary.
‘‘(2) NOTICE.—The Secretary shall not make
such a decision with respect to a facility until the fa-
339
Subtitle F, Part 2
cility has had a reasonable opportunity, following the
initial determination that it no longer or does not
substantially meet the requirements for such a facil-
ity under this title, to correct its deficiencies, and,
following this period, has been given reasonable no-
tice and opportunity for a hearing.
‘‘(3) EFFECTIVENESS.—The Secretary’s deci-
sion to deny payment may be made effective only
after such notice to the public and to the facility as
may be provided for by the Secretary, and its effec-
tiveness shall terminate (A) when the Secretary
finds that the facility is in substantial compliance
(or is making good faith efforts to achieve substan-
tial compliance) with the requirements for such a fa-
cility under this title, or (B) in the case described
in paragraph (1)(B), with the end of the eleventh
month following the month such decision is made ef-
fective, whichever occurs first. If a facility to which
clause (B) of the previous sentence applies still fails
to substantially meet the provisions of the respective
section on the date specified in such clause, the Sec-
retary shall terminate such facility’s certification for
participation under this title effective with the first
day of the first month following the month specified
in such clause.
340
Subtitle F, Part 2
‘‘(d) STATE-CERTIFIED
FACILITY
DEFINED.—In
subsection (a), a ‘State-certified facility’ means a facility
licensed or certified as a skilled nursing facility by the
State in which it is located, or a facility which otherwise
meets the requirements applicable to providers of nursing
facility services under the State plan under title XIX or
the MediGrant program under title XXI.’’.
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section
1861(v)(1)(E) (42 U.S.C. 1395x(v)(1)(E)) is amended by
striking the second sentence.
(2) Section 1864 (42 U.S.C. 1395aa) is amended by
striking subsection (d).
(3) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is
amended by striking ‘‘1819(c)(2)(E),’’.
(4) Section 1883(f) (42 U.S.C. 1395tt(f)) is amend-
ed—
(A) in the second sentence, by striking ‘‘such a
hospital’’ and inserting ‘‘a hospital which enters into
an agreement with the Secretary under this section’’;
and
(B) by striking the first sentence.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to cost reporting peri-
ods beginning on or after October 1, 1995.
341
Subtitle F, Part 2
SEC. 15527. MEDICAL REVIEW PROCESS.
In order to ensure that medicare beneficiaries are
furnished appropriate extended care services, the Sec-
retary of Health and Human Services shall establish and
implement a thorough medical review process to examine
the effects of the amendments made by this part on the
quality of extended care services furnished to medicare
beneficiaries. In developing such a medical review process,
the Secretary shall place a particular emphasis on the
quality of non-routine covered services for which payment
is made under section 1888A of the Social Security Act.
SEC. 15528. REPORT BY MEDICARE PAYMENT REVIEW COM-
MISSION.
Not later than October 1, 1997, the Medicare Pay-
ment Review Commission shall submit to Congress a re-
port on the system under which payment is made under
the medicare program for extended care services furnished
by skilled nursing facilities, and shall include in the report
the following:
(1) An analysis of the effect of the methodology
established under section 1888A of the Social Secu-
rity Act (as added by section 15522) on the pay-
ments for, and the quality of, extended care services
under the medicare program.
(2) An analysis of the advisability of determin-
ing the amount of payment for covered non-routine
342
Subtitle F, Part 2
services of facilities (as described in such section) on
the basis of the amounts paid for such services when
furnished by suppliers under part B of the medicare
program.
(3) An analysis of the desirability of maintain-
ing separate limits for hospital-based and freestand-
ing facilities in the costs of extended care services
recognized as reasonable under the medicare pro-
gram.
(4) An analysis of the quality of services fur-
nished by skilled nursing facilities.
(5) An analysis of the adequacy of the process
and standards used to provide exceptions to the lim-
its described in paragraph (3).
SEC. 15529. EFFECTIVE DATE.
Except as otherwise provided in this part, the amend-
ments made by this part shall apply to services furnished
during cost reporting periods (or portions of cost reporting
periods) beginning on or after October 1, 1996.
343
Subtitle G, Part 1
PART 3—CLARIFICATION OF CREDITS TO PART A
TRUST FUND
SEC. 15531. CLARIFICATION OF AMOUNT OF TAXES CRED-
ITED TO FEDERAL HOSPITAL INSURANCE
TRUST FUND.
Section 121(e)(1)(B) of the Social Security Amend-
ments of 1983 (Public Law 98–21) is amended by adding
at the end the following: ‘‘The Secretary of the Treasury
shall carry out this subparagraph without regard to any
amendments to this subsection or to section 86 of the In-
ternal Revenue Code of 1986 which take effect on or
after January 1, 1994.’’.
Subtitle G—Provisions Relating to
Medicare Part B
PART 1—PAYMENT REFORMS
SEC. 15601. PAYMENTS FOR PHYSICIANS’ SERVICES.
(a) REPLACEMENT
OF
VOLUME
PERFORMANCE
STANDARD WITH SUSTAINABLE GROWTH RATE.—Section
1848(f) (42 U.S.C. 1395w–4(f)) is amended to read as
follows:
‘‘(f) SUSTAINABLE GROWTH RATE.—
‘‘(1) SPECIFICATION OF GROWTH RATE.—
‘‘(A) FISCAL YEAR 1996.—The sustainable
growth rate for all physicians’ services for fiscal
year 1996 shall be equal to the product of—
344
Subtitle G, Part 1
‘‘(i) 1 plus the Secretary’s estimate of
the percentage change in the medicare eco-
nomic index for 1996 (described in the
fourth sentence of section 1842(b)(3)) (di-
vided by 100),
‘‘(ii) 1 plus the Secretary’s estimate of
the percentage change (divided by 100) in
the average number of individuals enrolled
under this part (other than private plan
enrollees) from fiscal year 1995 to fiscal
year 1996,
‘‘(iii) 1 plus the Secretary’s estimate
of the projected percentage growth in real
gross domestic product per capita (divided
by 100) from fiscal year 1995 to fiscal
year 1996, plus 2 percentage points, and
‘‘(iv) 1 plus the Secretary’s estimate
of the percentage change (divided by 100)
in expenditures for all physicians’ services
in fiscal year 1996 (compared with fiscal
year 1995) which will result from changes
in law, determined without taking into ac-
count estimated changes in expenditures
due to changes in the volume and intensity
of physicians’ services or changes in ex-
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Subtitle G, Part 1
‘‘(iv) 1 plus the Secretary’s estimate
of the percentage change (divided by 100)
in expenditures for all physicians’ services
in the fiscal year (compared with the pre-
vious fiscal year) which will result from
changes in law (including changes made by
the Secretary in response to section 1895),
determined without taking into account es-
timated changes in expenditures due to
changes in the volume and intensity of
physicians’ services or changes in expendi-
tures resulting from changes in the update
to the conversion factor under subsection
(d)(3),
minus 1 and multiplied by 100.
‘‘(2) EXCLUSION OF SERVICES FURNISHED TO
PRIVATE PLAN ENROLLEES.—In this subsection, the
term ‘physicians’ services’ with respect to a fiscal
year does not include services furnished to an indi-
vidual enrolled under this part who has elected to re-
ceive benefits under this title for the fiscal year
through a MedicarePlus product offered under part
C or through enrollment with an eligible organiza-
tion with a risk-sharing contract under section
1876.’’.
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Subtitle G, Part 1
(b) ESTABLISHING UPDATE TO CONVERSION FAC-
TOR
TO
MATCH
SPENDING
UNDER
SUSTAINABLE
GROWTH RATE.—
(1) IN GENERAL.—Section 1848(d) (42 U.S.C.
1395w–4(d)) is amended—
(A) by striking paragraph (2);
(B) by amending paragraph (3) to read as
follows:
‘‘(3) UPDATE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (E), for purposes of this section the up-
date for a year (beginning with 1997) is equal
to the product of—
‘‘(i) 1 plus the Secretary’s estimate of
the percentage increase in the medicare
economic index (described in the fourth
sentence of section 1842(b)(3)) for the
year (divided by 100), and
‘‘(ii) 1 plus the Secretary’s estimate of
the update adjustment factor for the year
(divided by 100),
minus 1 and multiplied by 100.
‘‘(B) UPDATE ADJUSTMENT FACTOR.—The
‘update adjustment factor’ for a year is equal to
the quotient of—
348
Subtitle G, Part 1
‘‘(i) the difference between (I) the
sum of the allowed expenditures for physi-
cians’ services furnished during each of the
years 1995 through the year involved and
(II) the sum of the amount of actual ex-
penditures for physicians’ services fur-
nished during each of the years 1995
through the previous year; divided by
‘‘(ii) the Secretary’s estimate of al-
lowed expenditures for physicians’ services
furnished during the year.
‘‘(C) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—For purposes of subparagraph
(B), allowed expenditures for physicians’ serv-
ices shall be determined as follows (as esti-
mated by the Secretary):
‘‘(i) In the case of allowed expendi-
tures for 1995, such expenditures shall be
equal to actual expenditures for services
furnished during the 12-month period end-
ing with June of 1995.
‘‘(ii) In the case of allowed expendi-
tures for 1996 and each subsequent year,
such expenditures shall be equal to allowed
expenditures for the previous year, in-
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Subtitle G, Part 1
creased by the sustainable growth rate
under subsection (f) for the fiscal year
which begins during the year.
‘‘(D) DETERMINATION
OF
ACTUAL
EX-
PENDITURES.—For purposes of subparagraph
(B), the amount of actual expenditures for phy-
sicians’ services furnished during a year shall
be equal to the amount of expenditures for such
services during the 12-month period ending
with June of the previous year.
‘‘(E) RESTRICTION
ON
VARIATION
FROM
MEDICARE ECONOMIC INDEX.—
‘‘(i) IN
GENERAL.—Notwithstanding
the amount of the update adjustment fac-
tor determined under subparagraph (B)
for a year, the update in the conversion
factor under this paragraph for the year
may not be—
‘‘(I) greater than 103 percent of
1 plus the Secretary’s estimate of the
percentage increase in the medicare
economic index (described in the
fourth sentence of section 1842(b)(3))
for the year (divided by 100); or
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Subtitle G, Part 1
‘‘(II) less than the applicable per-
centage limit of 1 plus the Secretary’s
estimate of the percentage increase in
the medicare economic index (de-
scribed in the fourth sentence of sec-
tion 1842(b)(3)) for the year (divided
by 100).
‘‘(ii) 
APPLICABLE
PERCENTAGE
LIMIT.—In clause (i)(II), the ‘applicable
percentage limit’ for a year is—
‘‘(I) for 1997, 93 percent;
‘‘(II) for 1998, 92.25 percent;
and
‘‘(III) for 1999 and each suc-
ceeding year, 92 percent.’’; and
(C) by adding at the end the following new
paragraph:
‘‘(4) REPORTING REQUIREMENTS.—
‘‘(A) IN
GENERAL.—Not later than No-
vember 1 of each year (beginning with 1996),
the Secretary shall transmit to the Congress a
report that describes the update in the conver-
sion factor for physicians’ services (as defined
in subsection (f)(3)(A)) in the following year.
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Subtitle G, Part 1
‘‘(B) COMMISSION REVIEW.—The Medicare
Payment Review Commission shall review the
report submitted under subparagraph (A) for a
year and shall submit to the Congress, by not
later than December 1 of the year, a report
containing its analysis of the conversion factor
for the following year.’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to physicians’ services
furnished on or after January 1, 1996.
(c) ESTABLISHMENT OF SINGLE CONVERSION FAC-
TOR FOR 1996.—
(1) IN
GENERAL.—Section 1848(d)(1) (42
U.S.C. 1395w–4(d)(1)) is amended—
(A) by redesignating subparagraph (C) as
subparagraph (D); and
(B) by inserting after subparagraph (B)
the following new subparagraph:
‘‘(C) SPECIAL
RULE
FOR
1996.—For
1996, the conversion factor under this sub-
section shall be $35.42 for all physicians’ serv-
ices.’’.
(2) CONFORMING AMENDMENTS.—Section 1848
(42 U.S.C. 1395w–4), as amended by paragraph (1),
is amended—
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Subtitle G, Part 1
(2) by striking the period at the end and insert-
ing the following: ‘‘, less the amount a provider may
charge as described in clause (ii) of section
1866(a)(2)(A).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished during por-
tions of cost reporting periods occurring on or after Octo-
ber 1, 1995.
SEC. 15603. PAYMENTS FOR DURABLE MEDICAL EQUIP-
MENT.
(a) REDUCTION IN PAYMENT AMOUNTS FOR ITEMS
OF DURABLE MEDICAL EQUIPMENT.—
(1) 
FREEZE
IN
UPDATE
FOR
COVERED
ITEMS.—Section 
1834(a)(14) 
(42 
U.S.C.
1395m(a)(14)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A);
(B) in subparagraph (B)—
(i) by striking ‘‘a subsequent year’’
and inserting ‘‘1993, 1994, and 1995’’,
and
(ii) by striking the period at the end
and inserting a semicolon; and
(C) by adding at the end the following:
354
Subtitle G, Part 1
‘‘(C) for each of the years 1996 through
2002, 0 percentage points; and
‘‘(D) for a subsequent year, the percentage
increase in the consumer price index for all
urban consumers (U.S. urban average) for the
12-month period ending with June of the pre-
vious year.’’.
(2) UPDATE FOR ORTHOTICS AND PROSTHET-
ICS.—Section 
1834(h)(4)(A) 
(42 
U.S.C.
1395m(h)(4)(A)) is amended—
(A) by striking ‘‘and’’ at the end of clause
(iii);
(B) by redesignating clause (iv) as clause
(v); and
(C) by inserting after clause (iii) the fol-
lowing new clause:
‘‘(iv) for each of the years 1996
through 2002, 1 percent, and’’.
(b) OXYGEN
AND OXYGEN EQUIPMENT.—Section
1834(a)(9)(C) (42 U.S.C. 1395m(a)(9)(C)) is amended—
(1) by striking ‘‘and’’ at the end of clause (iii);
(2) in clause (iv)—
(A) by striking ‘‘a subsequent year’’ and
inserting ‘‘1993, 1994, and 1995’’, and
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Subtitle G, Part 1
(B) by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following new
clauses:
‘‘(v) in 1996, is 80 percent of the na-
tional limited monthly payment rate com-
puted under subparagraph (B) for the item
for the year; and
‘‘(vi) in a subsequent year, is the na-
tional limited monthly payment rate com-
puted under subparagraph (B) for the item
for the year.’’.
(c) PAYMENT FOR UPGRADED DURABLE MEDICAL
EQUIPMENT.—Section 1834(a) (42 U.S.C. 1395m(a)) is
amended by inserting after paragraph (15) the following
new paragraph:
‘‘(16) PAYMENT
FOR
CERTAIN
UPGRADED
ITEMS.—
‘‘(A) INDIVIDUAL’S RIGHT TO CHOOSE UP-
GRADED
ITEM.—Notwithstanding any other
provision of this title, effective on the date on
which the Secretary issues regulations under
subparagraph (C), payment may be made under
this part for an upgraded item of durable medi-
cal equipment in the same manner as payment
356
Subtitle G, Part 1
may be made for a standard item of durable
medical equipment.
‘‘(B) PAYMENTS
TO
SUPPLIER.—In the
case of the purchase or rental of an upgraded
item under subparagraph (A)—
‘‘(i) the supplier shall receive payment
under this subsection with respect to such
item as if such item were a standard item;
and
‘‘(ii) the individual purchasing or
renting the item shall pay the supplier an
amount equal to the difference between the
supplier’s charge and the amount under
clause (i).
In no event may the supplier’s charge for an
upgraded item exceed the applicable fee sched-
ule amount (if any) for such item.
‘‘(C) 
CONSUMER
PROTECTION
SAFE-
GUARDS.—The Secretary shall issue regulations
providing for consumer protection standards
with respect to the furnishing of upgraded
equipment under subparagraph (A). Such regu-
lations shall provide for—
‘‘(i) full disclosure by the supplier of
the availability and price of standard items
357
Subtitle G, Part 1
and proof of receipt of such disclosure in-
formation by the beneficiary before the fur-
nishing of the upgraded item;
‘‘(ii) conditions of participation for
suppliers of upgraded items, including con-
ditions relating to billing procedures;
‘‘(iii) sanctions (including exclusion)
of suppliers who are determined to have
engaged in coercive or abusive practices;
and
‘‘(iv) such other safeguards as the
Secretary determines are necessary.’’.
(d) PAYMENT FREEZE FOR PARENTERAL AND EN-
TERAL NUTRIENTS, SUPPLIES, AND EQUIPMENT.—In de-
termining the amount of payment under part B of title
XVIII of the Social Security Act with respect to parenteral
and enteral nutrients, supplies, and equipment during
each of the years 1996 through 2002, the charges deter-
mined to be reasonable with respect to such nutrients,
supplies, and equipment may not exceed the charges deter-
mined to be reasonable with respect to such nutrients,
supplies, and equipment during 1993.
358
Subtitle G, Part 1
SEC. 
15604. 
REDUCTION 
IN 
UPDATES 
TO 
PAYMENT
AMOUNTS FOR CLINICAL DIAGNOSTIC LAB-
ORATORY TESTS.
(a) 
CHANGE
IN
UPDATE.—Section
1833(h)(2)(A)(ii)(IV) (42 U.S.C. 1395l(h)(2)(A)(ii)(IV))
is amended by striking ‘‘1994 and 1995’’ and inserting
‘‘1994 through 2002’’.
(b) LOWERING CAP ON PAYMENT AMOUNTS.—Sec-
tion 1833(h)(4)(B) (42 U.S.C. 1395l(h)(4)(B)) is amend-
ed—
(1) in clause (vi), by striking ‘‘and’’ at the end;
(2) in clause (vii)—
(A) by inserting ‘‘and before January 1,
1997,’’ after ‘‘1995,’’, and
(B) by striking the period at the end and
inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(viii) after December 31, 1996, is equal to 65
percent of such median.’’.
SEC. 15605. EXTENSION OF REDUCTIONS IN PAYMENTS FOR
COSTS OF HOSPITAL OUTPATIENT SERVICES.
(a) REDUCTION IN PAYMENTS FOR CAPITAL-RELAT-
ED
COSTS.—Section 1861(v)(1)(S)(ii)(I) (42 U.S.C.
1395x(v)(1)(S)(ii)(I)) is amended by striking ‘‘through
1998’’ and inserting ‘‘through 2002’’.
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Subtitle G, Part 1
(b) REDUCTION IN PAYMENTS FOR OTHER COSTS.—
Section 
1861(v)(1)(S)(ii)(II) 
(42 
U.S.C.
1395x(v)(1)(S)(ii)(II)) is amended by striking ‘‘through
1998’’ and inserting ‘‘through 2002’’.
SEC. 15606. FREEZE IN PAYMENTS FOR AMBULATORY SUR-
GICAL CENTER SERVICES.
The Secretary of Health and Human Services shall
not provide for any inflation update in the payment
amounts under subparagraphs (A) and (B) of section
1833(i)(2) of the Social Security Act for any of the fiscal
years 1996 through 2002.
SEC. 15607. RURAL EMERGENCY ACCESS CARE HOSPITALS.
(a) COVERAGE UNDER PART B.—Section 1832(a)(2)
(42 U.S.C. 1395k(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I);
(2) by striking the period at the end of sub-
paragraph (J) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(K) rural emergency access care hospital
services (as defined in section 1861(oo)(2)).’’.
(b) PAYMENT BASED ON PAYMENT FOR OUTPATIENT
RURAL PRIMARY CARE HOSPITAL SERVICES.—
360
Subtitle G, Part 1
(1) IN
GENERAL.—Section 1833(a)(6) (42
U.S.C. 1395l(a)(6)) is amended by striking ‘‘serv-
ices,’’ and inserting ‘‘services and rural emergency
access care hospital services,’’.
(2) PAYMENT
METHODOLOGY
DESCRIBED.—
Section 1834(g) (42 U.S.C. 1395m(g)) is amend-
ed—
(A) in the heading, by striking ‘‘SERV-
ICES’’ and inserting ‘‘SERVICES
AND RURAL
EMERGENCY ACCESS CARE HOSPITAL SERV-
ICES’’; and
(B) by adding at the end the following new
sentence: ‘‘The amount of payment for rural
emergency access care hospital services provided
during a year shall be determined using the ap-
plicable method provided under this subsection
for determining payment for outpatient rural
primary care hospital services during the
year.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
October 1, 1995.
361
Subtitle G, Part 1
SEC. 15608. ENSURING PAYMENT FOR PHYSICIAN AND
NURSE FOR JOINTLY FURNISHED ANESTHE-
SIA SERVICES.
(a) PAYMENT
FOR JOINTLY FURNISHED SINGLE
CASE.—
(1) 
PAYMENT
TO
PHYSICIAN.—Section
1848(a)(4) (42 U.S.C. 1395w–4(a)(4)) is amended
by adding at the end the following new subpara-
graph:
‘‘(C) PAYMENT FOR SINGLE CASE.—Not-
withstanding section 1862(a)(1)(A), with re-
spect to physicians’ services consisting of the
furnishing of anesthesia services for a single
case that are furnished jointly with a certified
registered nurse anesthetist, if the carrier de-
termines that the use of both the physician and
the nurse anesthetist to furnish the anesthesia
service was not medically necessary, the fee
schedule amount for the physicians’ services
shall be equal to 50 percent (or 55 percent, in
the case of services furnished during 1996 or
1997) of the fee schedule amount applicable
under this section for anesthesia services per-
sonally performed by the physician alone (with-
out regard to this subparagraph). Nothing in
this subparagraph may be construed to affect
362
Subtitle G, Part 1
the application of any provision of law regard-
ing balance billing.’’.
(2) PAYMENT TO CRNA.—Section 1833(l)(4)(B)
(42 U.S.C. 1395l(l)(4)(B)) is amended by adding at
the end the following new clause:
‘‘(iv) Notwithstanding section 1862(a)(1)(A), in the
case of services of a certified registered nurse anesthetist
consisting of the furnishing of anesthesia services for a
single case that are furnished jointly with a physician, if
the carrier determines that the use of both the physician
and the nurse anesthetist to furnish the anesthesia service
was not medically necessary, the fee schedule amount for
the services furnished by the certified registered nurse an-
esthetist shall be equal to 50 percent (or 40 percent, in
the case of services furnished during 1996 or 1997) of
the fee schedule amount applicable under section 1848 for
anesthesia services personally performed by the physician
alone (without regard to this clause).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsections (a) shall apply to services furnished on or after
July 1, 1996.
SEC. 15609. STATEWIDE FEE SCHEDULE AREA FOR PHYSI-
CIANS’ SERVICES.
(a) 
IN
GENERAL.—Notwithstanding 
section
1848(j)(2) of the Social Security Act, in the case of the
363
Subtitle G, Part 1
State of Wisconsin, the Secretary of Health and Human
Services shall treat the State as a single fee schedule area
for purposes of determining the fee schedule amount (as
referred to in section 1848(a) of such Act) for physicians’
services (as defined in section 1848(j)(3) of such Act)
under part B of the medicare program.
(b) BUDGET-NEUTRALITY.—Notwithstanding any
provision of part B of title XVIII of the Social Security
Act, the Secretary shall carry out subsection (a) in a man-
ner that ensures that total payments for physicians’ serv-
ices (as so defined) furnished by physicians in Wisconsin
during a year are not greater or less than total payments
for such services would have been but for this section.
(c) CONSTRUCTION.—Nothing in this section shall be
construed as limiting the availability (to the Secretary, the
appropriate agency or organization with a contract under
section 1842 of such Act, or physicians in the State of
Wisconsin) of otherwise applicable administrative proce-
dures for modifying the fee schedule area or areas in the
State after implementation of subsection (a).
(d) EFFECTIVE DATE.—This section shall apply with
respect to physicians’ services furnished on or after Janu-
ary 1, 1997.
364
Subtitle G, Part 1
SEC. 15609A. ESTABLISHMENT OF FEE SCHEDULE FOR AM-
BULANCE SERVICES.
(a) PAYMENT IN ACCORDANCE WITH FEE SCHED-
ULE.—Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is
amended—
(1) by striking ‘‘and (P)’’ and inserting ‘‘(P)’’;
and
(2) by striking the semicolon at the end and in-
serting the following: ‘‘, and (Q) with respect to am-
bulance service, the amounts paid shall be 80 per-
cent of the lesser of the actual charge for the serv-
ices or the amount determined by a fee schedule es-
tablished by the Secretary for the purposes of this
subparagraph (in accordance with section 15608(b)
of the Medicare Preservation Act);’’.
(b) REQUIREMENTS FOR ESTABLISHMENT OF FEE
SCHEDULE.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall establish the fee schedule for
ambulance services under section 1833(a)(1)(Q) of
the Social Security Act (as added by subsection (a))
through a negotiated rulemaking process described
in title 5, United States Code, and in accordance
with the requirements of this subsection.
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Subtitle G, Part 1
(2) CONSIDERATIONS.—In establishing the fee
schedule for ambulance services, the Secretary
shall—
(A) establish mechanisms to control in-
creases in expenditures for ambulance services
under part B of the medicare program which
fairly reflect the changing nature of the ambu-
lance service industry;
(B) establish definitions for ambulance
services which promote efficiency and link pay-
ments (including fees for assessment and treat-
ment services) to the type of service provided;
(C) take into account regional differences
which affect cost and productivity, including
differences in the costs of resources and the
costs of uncompensated care;
(D) apply dynamic adjustments to pay-
ment rates to account for inflation, demo-
graphic changes in the population of medicare
beneficiaries, and changes in the number of
providers of ambulance services participating in
the medicare program; and
(E) phase in the application of the pay-
ment rates under the fee schedule in an effi-
cient and fair manner.
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Subtitle G, Part 1
(3) SAVINGS.—In establishing the fee schedule
for ambulance services, the Secretary shall—
(A) ensure that the aggregate amount of
payments made for ambulance services under
part B of the medicare program during 1998
does not exceed the aggregate amount of pay-
ments which would have been made for such
services under part B of the program during
1998 if the amendments made by this section
were not in effect; and
(B) set the payment amounts provided
under the fee schedule for services furnished in
1999 and each subsequent year at amounts
equal to the payment amounts under the fee
schedule for service furnished during the pre-
vious year, increased by 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 of the previous year.
(4) CONSULTATION.—In establishing the fee
schedule for ambulance services, the Secretary shall
consult regularly with the American Ambulance As-
sociation, the National Association of State Medical
Directors, and other national organizations rep-
resenting individuals and entities who furnish or reg-
367
Subtitle G, Part 1
ulate ambulance services, and shall share with such
associations and organizations the data and data
analysis used in establishing the fee schedule, includ-
ing data on variations in payments for ambulance
services under part B of the medicare program for
years prior to 1998 among geographic areas and
types of ambulance service providers.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) and the fee schedule described in subsection
(b) shall apply to ambulance services furnished on or after
January 1, 1998.
SEC. 15609B. STANDARDS FOR PHYSICAL THERAPY SERV-
ICES FURNISHED BY PHYSICIANS.
(a) APPLICATION OF STANDARDS FOR OTHER PRO-
VIDERS OF PHYSICAL THERAPY SERVICES TO SERVICES
FURNISHED
BY
PHYSICIANS.—Section 1862(a) (42
U.S.C. 1395y(a)), as amended by section 15525(a)(2), is
amended
(1) by striking ‘‘or’’ at the end of paragraph
(15);
(2) by striking the period at the end of para-
graph (16) and inserting ‘‘; or’’; and
(3) by inserting after paragraph (16) the fol-
lowing new paragraph:
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Subtitle G, Part 2
‘‘(17) in the case of physicians’ services under
section 1848(j)(3) consisting of outpatient physical
therapy services or outpatient occupational therapy
services, which are furnished by a physician who
does not meet the requirements applicable under sec-
tion 1861(p) to a clinic or rehabilitation agency fur-
nishing such services.’’.
(b) CONFORMING AMENDMENT.—Section 1848(j)(3)
(42 U.S.C. 1395w–4(j)(3)) is amended by inserting ‘‘(sub-
ject to section 1862(a)(17))’’ after ‘‘(2)(D)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 1996.
PART 2—PART B PREMIUM
SEC. 15611. EXTENSION OF PART B PREMIUM.
(a) IN GENERAL.—Section 1839(e)(1) (42 U.S.C.
1395r(e)(1)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘and prior to January
1999’’, and
(B) by inserting ‘‘(or, if higher, the per-
cent described in subparagraph (C))’’ after ‘‘50
percent’’; and
(2) by adding at the end the following new sub-
paragraph:
369
Subtitle G, Part 2
‘‘(C) For purposes of subparagraph (A), the percent
described in this subparagraph is the ratio (expressed as
a percentage) of the monthly premium established under
this section for months in 1995 to the monthly actuarial
rate for enrollees age 65 and over applicable to such
months (as specified in the most recent report of the
Board of Trustees of the Federal Supplementary Medical
Insurance Trust Fund published prior to the date of the
enactment of the Medicare Preservation Act of 1995).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to premiums for months beginning
with January 1996.
SEC. 15612. INCOME-RELATED REDUCTION IN MEDICARE
SUBSIDY.
(a) IN GENERAL.—Section 1839 (42 U.S.C. 1395r)
is amended by adding at the end the following:
‘‘(h)(1) Notwithstanding the previous subsections of
this section, in the case of an individual whose modified
adjusted gross income for a taxable year ending with or
within a calendar year (as initially determined by the Sec-
retary in accordance with paragraph (3)) exceeds the
threshold amount described in paragraph (5)(B), the Sec-
retary shall increase the amount of the monthly premium
for months in the calendar year by an amount equal to
the difference between—
370
Subtitle G, Part 2
‘‘(A) 200 percent of the monthly actuarial rate
for enrollees age 65 and over as determined under
subsection (a)(1) for that calendar year; and
‘‘(B) the total of the monthly premiums paid by
the individual under this section (determined without
regard to subsection (b)) during such calendar year.
‘‘(2) In the case of an individual described in para-
graph (1) whose modified adjusted gross income exceeds
the threshold amount by less than $25,000, the amount
of the increase in the monthly premium applicable under
paragraph (1) shall be an amount which bears the same
ratio to the amount of the increase described in paragraph
(1) (determined without regard to this paragraph) as such
excess bears to $25,000. In the case of a joint return filed
under section 6013 of the Internal Revenue Code of 1986
by spouses both of whom are enrolled under this part, the
previous sentence shall be applied by substituting
‘$50,000’ for ‘$25,000’. The preceding provisions of this
paragraph shall not apply to any individual whose thresh-
old amount is zero.
‘‘(3) The Secretary shall make an initial determina-
tion of the amount of an individual’s modified adjusted
gross income for a taxable year ending with or within a
calendar year for purposes of this subsection as follows:
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Subtitle G, Part 2
‘‘(A) Not later than October 1 of the year pre-
ceding the year, the Secretary shall provide notice to
each individual whom the Secretary finds (on the
basis of the individual’s actual modified adjusted
gross income for the most recent taxable year for
which such information is available or other informa-
tion provided to the Secretary by the Secretary of
the Treasury) will be subject to an increase under
this subsection that the individual will be subject to
such an increase, and shall include in such notice
the Secretary’s estimate of the individual’s modified
adjusted gross income for the year.
‘‘(B) If, during the 30-day period beginning on
the date notice is provided to an individual under
subparagraph (A), the individual provides the Sec-
retary with information on the individual’s antici-
pated modified adjusted gross income for the year,
the amount initially determined by the Secretary
under this paragraph with respect to the individual
shall be based on the information provided by the
individual.
‘‘(C) If an individual does not provide the Sec-
retary with information under subparagraph (B), the
amount initially determined by the Secretary under
this paragraph with respect to the individual shall be
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Subtitle G, Part 2
the amount included in the notice provided to the in-
dividual under subparagraph (A).
‘‘(4)(A) If the Secretary determines (on the basis of
final information provided by the Secretary of the Treas-
ury) that the amount of an individual’s actual modified
adjusted gross income for a taxable year ending with or
within a calendar year is less than or greater than the
amount initially determined by the Secretary under para-
graph (3), the Secretary shall increase or decrease the
amount of the individual’s monthly premium under this
section (as the case may be) for months during the follow-
ing calendar year by an amount equal to 1⁄12 of the dif-
ference between—
‘‘(i) the total amount of all monthly premiums
paid by the individual under this section during the
previous calendar year; and
‘‘(ii) the total amount of all such premiums
which would have been paid by the individual during
the previous calendar year if the amount of the indi-
vidual’s modified adjusted gross income initially de-
termined under paragraph (3) were equal to the ac-
tual amount of the individual’s modified adjusted
gross income determined under this paragraph.
‘‘(B) In the case of an individual who is not enrolled
under this part for any calendar year for which the indi-
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Subtitle G, Part 2
vidual’s monthly premium under this section for months
during the year would be increased pursuant to subpara-
graph (A) if the individual were enrolled under this part
for the year, the Secretary may take such steps as the
Secretary considers appropriate to recover from the indi-
vidual the total amount by which the individual’s monthly
premium for months during the year would have been in-
creased under subparagraph (A) if the individual were en-
rolled under this part for the year.
‘‘(C) In the case of a deceased individual for whom
the amount of the monthly premium under this section
for months in a year would have been decreased pursuant
to subparagraph (A) if the individual were not deceased,
the Secretary shall make a payment to the individual’s
surviving spouse (or, in the case of an individual who does
not have a surviving spouse, to the individual’s estate) in
an amount equal to the difference between—
‘‘(i) the total amount by which the individual’s
premium would have been decreased for all months
during the year pursuant to subparagraph (A); and
‘‘(ii) the amount (if any) by which the individ-
ual’s premium was decreased for months during the
year pursuant to subparagraph (A).
‘‘(5) In this subsection, the following definitions
apply:
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Subtitle G, Part 2
‘‘(A) The term ‘modified adjusted gross income’
means adjusted gross income (as defined in section
62 of the Internal Revenue Code of 1986)—
‘‘(i) determined without regard to sections
135, 911, 931, and 933 of such Code, and
‘‘(ii) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax under
such Code.
‘‘(B) The term ‘threshold amount’ means—
‘‘(i) except as otherwise provided in this
paragraph, $75,000,
‘‘(ii) $125,000, in the case of a joint re-
turn (as defined in section 7701(a)(38) of such
Code), and
‘‘(iii) zero in the case of a taxpayer who—
‘‘(I) is married at the close of the tax-
able year but does not file a joint return
(as so defined) for such year, and
‘‘(II) does not live apart from his
spouse at all times during the taxable
year.’’.
(b) CONFORMING
AMENDMENT.—Section 1839(f)
(42 U.S.C. 1395r(f)) is amended by striking ‘‘if an indi-
vidual’’ and inserting the following: ‘‘if an individual
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Subtitle G, Part 2
(other than an individual subject to an increase in the
monthly premium under this section pursuant to sub-
section (h))’’.
(c) REPORTING REQUIREMENTS FOR SECRETARY OF
THE TREASURY.—
(1) IN
GENERAL.—Subsection (l) of section
6103 of the Internal Revenue Code of 1986 (relating
to confidentiality and disclosure of returns and re-
turn information) is amended by adding at the end
the following new paragraph:
‘‘(15) DISCLOSURE OF RETURN INFORMATION
TO
CARRY
OUT
INCOME-RELATED
REDUCTION
IN
MEDICARE PART B PREMIUM.—
‘‘(A) IN
GENERAL.—The Secretary may,
upon written request from the Secretary of
Health and Human Services, disclose to officers
and employees of the Health Care Financing
Administration return information with respect
to a taxpayer who is required to pay a monthly
premium under section 1839 of the Social Secu-
rity Act. Such return information shall be lim-
ited to—
‘‘(i) taxpayer identity information
with respect to such taxpayer,
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Subtitle H, Part 4
any person that violates a requirement or
standard—
‘‘(i) with respect to medicare informa-
tion transactions, data elements of medi-
care information, or security imposed
under subsection (a) or (b); or
‘‘(ii) with respect to health plans im-
posed under subsection (d);
a penalty of not more than $100 for each such
violation of a specific standard or requirement,
but the total amount imposed for all such viola-
tions of a specific standard or requirement dur-
ing the calendar year shall not exceed $25,000.
‘‘(B) PROCEDURES.—The provisions of
section 1128A (other than subsections (a) and
(b) and the second sentence of subsection (f))
shall apply to the imposition of a civil money
penalty under this paragraph in the same man-
ner as such provisions apply to the imposition
of a penalty under such section 1128A.
‘‘(C) DENIAL
OF
PAYMENT.—Except as
provided in paragraph (2), the Secretary may
deny payment under this title for an item or
service furnished by a person if the person fails
to comply with an applicable requirement or