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logical that is used in cancer therapy, in-
cluding 
(but 
not 
limited 
to) 
a
chemotherapeutic 
agent, 
antiemetic,
hematopoietic growth factor, colony stimu-
lating factor, a biological response modi-
fier, 
and 
a 
bisphosponate, 
or
brachytherapy, if payment for such drug,
biological, or device as an outpatient hos-
pital service under this part was being
made on such first date.
‘‘(iii) NEW MEDICAL DEVICES, DRUGS,
AND
BIOLOGICALS.—A medical device,
drug, or biological not described in clause
(i) or (ii) if—
‘‘(I) payment for the device,
drug, or biological as an outpatient
hospital service under this part was
not being made as of December 31,
1996; and
‘‘(II) the cost of the device, drug,
or biological is not insignificant in re-
lation to the OPD fee schedule
amount (as calculated under para-
graph (3)(D)) payable for the service
(or group of services) involved.
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‘‘(B) LIMITED PERIOD OF PAYMENT.—The
payment under this paragraph with respect to
a medical device, drug, or biological shall only
apply during a period of at least 2 years, but
not more than 3 years, that begins—
‘‘(i) on the first date this subsection is
implemented in the case of a drug or bio-
logical described in clause (i) or (ii) of sub-
paragraph (A) and in the case of a device,
drug, or biological described in subpara-
graph (A)(iii) for which payment under
this part is made as an outpatient hospital
service before such first date; or
‘‘(ii) in the case of a device, drug, or
biological 
described 
in 
subparagraph
(A)(iii) not described in clause (i), on the
first date on which payment is made under
this part for the device, drug, or biological
as an outpatient hospital service.
‘‘(C) 
AMOUNT
OF
ADDITIONAL
PAY-
MENT.—Subject to subparagraph (D)(iii), the
amount of the payment under this paragraph
with respect to a device, drug, or biological pro-
vided as part of a covered OPD service is—
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‘‘(i) in the case of a drug or biological,
the amount by which the amount deter-
mined under section 1842(o) for the drug
or biological exceeds the portion of the oth-
erwise applicable Medicare OPD fee sched-
ule that the Secretary determines is associ-
ated with the drug or biological; or
‘‘(ii) in the case of a medical device,
the amount by which the hospital’s charges
for the device, adjusted to cost, exceeds the
portion of the otherwise applicable Medi-
care OPD fee schedule that the Secretary
determines is associated with the device.
‘‘(D) LIMIT ON AGGREGATE ANNUAL AD-
JUSTMENT.—
‘‘(i) IN GENERAL.—The total of the
additional payments made under this para-
graph for covered OPD services furnished
in a year (as projected or estimated by the
Secretary before the beginning of the year)
may not exceed the applicable percentage
(specified in clause (ii)) of the total pro-
gram payments projected or estimated to
be made under this subsection for all cov-
ered OPD services furnished in that year.
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If this paragraph is first applied to less
than a full year, the previous sentence
shall apply only to the portion of such
year.
‘‘(ii) APPLICABLE PERCENTAGE.—For
purposes of clause (i), the term ‘applicable
percentage’ means—
‘‘(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
‘‘(II) for 2004 and thereafter, a
percentage specified by the Secretary
up to (but not to exceed) 2.0 percent.
‘‘(iii) UNIFORM PROSPECTIVE REDUC-
TION IF AGGREGATE LIMIT PROJECTED TO
BE EXCEEDED.—If the Secretary projects
or estimates before the beginning of a year
that the amount of the additional pay-
ments under this paragraph for the year
(or portion thereof) as determined under
clause (i) without regard to this clause)
will exceed the limit established under such
clause, the Secretary shall reduce pro rata
the amount of each of the additional pay-
ments under this paragraph for that year
(or portion thereof) in order to ensure that
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the aggregate additional payments under
this paragraph (as so projected or esti-
mated) do not exceed such limit.’’.
(c) APPLICATION
OF NEW ADJUSTMENTS
ON
A
BUDGET NEUTRAL BASIS.—Section 1833(t)(2)(E) (42
U.S.C. 1395l(t)(2)(E)) is amended by striking ‘‘other ad-
justments, in a budget neutral manner, as determined to
be necessary to ensure equitable payments, such a outlier
adjustments or’’ and inserting ‘‘, in a budget neutral man-
ner, outlier adjustments under paragraph (5) and transi-
tional pass-through payments under paragraph (6) and
other adjustments as determined to be necessary to ensure
equitable payments, such as’’.
(d) LIMITATION ON JUDICIAL REVIEW FOR NEW AD-
JUSTMENTS.—Section 1833(t)(11), as redesignated by
subsection (a)(1), is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C);
(2) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(E) the determination of the fixed mul-
tiple, or a fixed dollar cutoff amount, the mar-
ginal cost of care, or applicable percentage
under paragraph (5) or the determination of in-
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significance of cost, the duration of the addi-
tional payments (consistent with paragraph
(6)(B)), the portion of the Medicare OPD fee
schedule amount associated with particular de-
vices, drugs, or biologicals, and the application
of any pro rata reduction under paragraph
(6).’’.
(e) INCLUSION OF MEDICAL DEVICES UNDER SYS-
TEM.—Section 1833(t) (42 U.S.C. 1395l(t)) is amended—
(1) in paragraph (1)(B)(ii), by striking ‘‘clause
(iii)’’ and inserting ‘‘clause (iv)’’ and by striking
‘‘but’’;
(2) by redesignating clause (iii) of paragraph
(1)(B) as clause (iv) and inserting after clause (ii)
of such paragraph the following new clause:
‘‘(iii) includes medical devices (such
as implantable medical devices); but’’; and
(3) in paragraph (2)(B), by inserting after ‘‘re-
sources’’ the following: ‘‘and so that a device is clas-
sified to the group that includes the service to which
the device relates’’.
(f) AUTHORIZING PAYMENT WEIGHTS BASED
ON
MEAN
HOSPITAL
COSTS.—Section 1833(t)(2)(C) (42
U.S.C. 1395l(t)(2)(C)) is amended by inserting ‘‘(or, at
the election of the Secretary, mean)’’ after ‘‘median’’.
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(g) LIMITING VARIATION OF COSTS OF SERVICES
CLASSIFIED WITH
A GROUP.—Section 1833(t)(2) (42
U.S.C. 1395l(t)(2)) is amended by adding at the end the
following new flush sentence:
‘‘For purposes of subparagraph (B), items and serv-
ices within a group shall not be treated as ‘com-
parable with respect to the use of resources’ if the
highest median cost (or mean cost, if elected by the
Secretary under subparagraph (C)) for an item or
service within the group is more than two times
greater than the lowest median cost (or mean cost,
if so elected) for an item or service within the group;
except that the Secretary may make exceptions in
unusual cases, such as low volume items and serv-
ices, but may not make such an exception in the
case of a drug or biological has been designated as
an orphan drug under section 526 of the Federal
Food, Drug and Cosmetic Act.’’.
(h) ANNUAL REVIEW OF OPD PPS COMPONENTS.—
(1) IN
GENERAL.—Section 1833(t)(8)(A) (42
U.S.C. 1395l(t)(8)(A)), as redesignated by sub-
section (a), is amended—
(A) by striking ‘‘may periodically review’’
and inserting ‘‘shall review not less often than
annually’’; and
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(B) by adding at the end the following:
‘‘The Secretary shall consult with an expert
outside advisory panel composed of an appro-
priate selection of representatives of providers
to review (and advise the Secretary concerning)
the clinical integrity of the groups and weights.
Such panel may use data collected or developed
by entities and organizations (other than the
Department of Health and Human Services) in
conducting such review.’’.
(2) EFFECTIVE
DATES.—The Secretary of
Health and Human Services shall first conduct the
annual review under the amendment made by para-
graph (1)(A) in 2001 for application in 2002 and
the amendment made by paragraph (1)(B) takes ef-
fect on the date of the enactment of this Act.
(i) NO IMPACT ON COPAYMENT.—Section 1833(t)(7)
(42 U.S.C. 1395l(t)(7)), as redesignated by subsection (a),
is amended by adding at the end the following new sub-
paragraph:
‘‘(D) COMPUTATION
IGNORING
OUTLIER
AND
PASS-THROUGH
ADJUSTMENTS.—The co-
payment amount shall be computed under sub-
paragraph (A) as if the adjustments under
paragraphs (5) and (6) (and any adjustment
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made under paragraph (2)(E) in relation to
such adjustments) had not occurred.’’.
(j) TECHNICAL CORRECTION IN REFERENCE RELAT-
ING TO HOSPITAL-BASED AMBULANCE SERVICES.—Sec-
tion 1833(t)(9) (42 U.S.C. 1395l(t)(9)), as redesignated
by subsection (a), is amended by striking ‘‘the matter in
subsection (a)(1) preceding subparagraph (A)’’ and insert-
ing ‘‘section 1861(v)(1)(U)’’.
(k) EFFECTIVE DATE.—Except as provided in this
section, the amendments made by this section shall be ef-
fective as if included in the enactment of BBA.
(l) STUDY OF DELIVERY OF INTRAVENOUS IMMUNE
GLOBULIN (IVIG) OUTSIDE HOSPITALS AND PHYSICIANS’
OFFICES.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the extent
to which intravenous immune globulin (IVIG) could
be delivered and reimbursed under the Medicare pro-
gram outside of a hospital or physician’s office. In
conducting the study, the Secretary shall—
(A) consider the sites of service that other
payors, including Medicare+Choice plans, use
for these drugs and biologicals;
(B) determine whether covering the deliv-
ery of these drugs and biologicals in a Medicare
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patient’s home raises any additional safety and
health concerns for the patient;
(C) determine whether covering the deliv-
ery of these drugs and biologicals in a patient’s
home can reduce overall spending under the
Medicare program; and
(D) determine whether changing the site of
setting for these services would affect bene-
ficiary access to care.
(2) REPORT.—The Secretary shall submit a re-
port on such study to the Committees on Way and
Means and Commerce of the House of Representa-
tives and the Committee on Finance of the Senate
within 1 year after the date of the enactment of this
Act. The Secretary shall include in the report rec-
ommendations regarding on the appropriate manner
and settings under which the Medicare program
should pay for these drugs and biologicals delivered
outside of a hospital or physician’s office.
SEC. 212. ESTABLISHING A TRANSITIONAL CORRIDOR FOR
APPLICATION OF OPD PPS.
(a) IN
GENERAL.—Section 1833(t) (42 U.S.C.
1395l(t)), as amended by section 211(a), is further
amended—
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(1) in paragraph (4), in the matter before sub-
paragraph (A), by inserting ‘‘, subject to paragraph
(7),’’ after ‘‘is determined’’; and
(2) by redesignating paragraphs (7) through
(11) as paragraphs (8) through (12), respectively;
and
(3) by inserting after paragraph (6), as inserted
by section 211(b), the following new paragraph:
‘‘(7) TRANSITIONAL ADJUSTMENT TO LIMIT DE-
CLINE IN PAYMENT.—
‘‘(A) BEFORE 2002.—Subject to subpara-
graph (D), for covered OPD services furnished
before January 1, 2002, for which the PPS
amount (as defined in subparagraph (E)) is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount (as
defined in subparagraph (F)), the amount
of payment under this subsection shall be
increased by 80 percent of the amount of
such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the amount by which
(I) the product of 0.71 and the pre-BBA
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amount, exceeds (II) the product of 0.70
and the PPS amount;
‘‘(iii) at least 70 percent, but less
than 80 percent, of the pre-BBA amount,
the amount of payment under this sub-
section shall be increased by the amount
by which (I) the product of 0.63 and the
pre-BBA amount, exceeds (II) the product
of 0.60 and the PPS amount;
‘‘(iv) less than 70 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
21 percent of the pre-BBA amount.
‘‘(B) 2002.—Subject to subparagraph (D),
for covered OPD services furnished during
2002, for which the PPS amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 70 percent of the
amount of such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the amount by which
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(I) the product of 0.61 and the pre-BBA
amount, exceeds (II) the product of 0.60
and the PPS amount;
‘‘(iii) less than 80 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
13 percent of the pre-BBA amount.
‘‘(C) 2003.—Subject to subparagraph (D),
for covered OPD services furnished during
2003, for which the PPS amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 60 percent of the
amount of such difference; or
‘‘(ii) less than 90 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
6 percent of the pre-BBA amount.
‘‘(D) SPECIAL
RULE
FOR
SMALL
RURAL
HOSPITALS.—In the case of a hospital located
in a rural area and that has not more than 100
beds, for covered OPD services furnished before
January 1, 2004, for which the PPS amount is
less than the pre-BBA amount, the amount of
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payment under this subsection shall be in-
creased by 100 percent of the amount of such
difference.
‘‘(E) PPS AMOUNT
DEFINED.—In this
paragraph, the term ‘PPS amount’ means, with
respect to covered OPD services, the amount
payable under this title for such services (deter-
mined without regard to this paragraph), in-
cluding amounts payable as copayment under
paragraph 
(5), 
coinsurance 
under 
section
1866(a)(2)(A)(ii), and the deductible under sec-
tion 1833(b).
‘‘(F) PRE-BBA AMOUNT DEFINED.—
‘‘(i) IN GENERAL.—In this paragraph,
the ‘pre-BBA amount’ means, with respect
to covered OPD services furnished by a
hospital in a year, an amount equal to the
product of the reasonable cost of the hos-
pital for such services for the portions of
the hospital’s cost reporting period (or pe-
riods) occurring in the year and the base
OPD payment-to-cost ratio for the hospital
(as defined in clause (ii)).
‘‘(ii) BASE
PAYMENT-TO-COST-RATIO
DEFINED.—For purposes of this subpara-
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graph, the ‘base payment-to-cost ratio’ for
a hospital means the ratio of—
‘‘(I) the hospital’s reimbursement
under this part for covered OPD serv-
ices furnished during the cost report-
ing period ending in 1996, including
any reimbursement for such services
through cost-sharing described in sub-
paragraph (D), to
‘‘(II) the reasonable cost of such
services for such period.
‘‘(G) NO
EFFECT
ON
COPAYMENTS.—
Nothing in this paragraph shall be construed to
affect the unadjusted copayment amount de-
scribed in paragraph (3)(B) or the copayment
amount under paragraph (8).
‘‘(H) APPLICATION WITHOUT REGARD TO
BUDGET
NEUTRALITY.—The additional pay-
ments made under this paragraph—
‘‘(i) shall not be considered an adjust-
ment under paragraph (2)(E); and
‘‘(ii) shall not be implemented in a
budget neutral manner.’’.
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(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall be effective as if included in the enact-
ment of BBA.
(c) REPORT ON RURAL HOSPITALS.—Not later than
July 1, 2002, the Secretary of Health and Human Serv-
ices shall submit to Congress a report and recommenda-
tions on whether the prospective payment system for cov-
ered outpatient services furnished under title XVIII of the
Social Security Act should apply to the following providers
of services furnishing outpatient items and services for
which payment is made under such title:
(1) Medicare-dependent, small rural hospitals
(as defined in section 1886(d)(5)(G)(iv) of such Act
(42 U.S.C. 1395ww(d)(5)(G)(iv))).
(2) Sole community hospitals (as defined in sec-
tion 1886(d)(5)(D)(iii) of such Act (42 U.S.C.
1395ww(d)(5)(D)(iii)).
(3) Rural health clinics (as defined in section
1861(aa)(2) of such Act (42 U.S.C. 1395x(aa)(2)).
(4) Rural referral centers (as so classified
under section 1886(d)(5)(C) of such Act (42 U.S.C.
1395ww(d)(5)(C)).
(5) Any other rural hospital with not more than
100 beds.
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(6) Any other rural hospital that the Secretary
determines appropriate.
SEC. 213. DELAY IN APPLICATION OF PROSPECTIVE PAY-
MENT SYSTEM TO CANCER CENTER HOS-
PITALS.
Section 1833(t)(11)(A) (42 U.S.C. 1395l(t)(11)(A)),
as redesignated by section 212(a), is amended by striking
‘‘January 1, 2000’’ and inserting ‘‘the first day of the first
year that begins 2 years after the date the prospective pay-
ment system under this section is first implemented’’.
SEC. 214. LIMITATION ON OUTPATIENT HOSPITAL COPAY-
MENT FOR A PROCEDURE TO THE HOSPITAL
DEDUCTIBLE AMOUNT.
(a) IN GENERAL.—Section 1833(t)(8) (42 U.S.C.
1395l(t)(8)), as redesignated by sections 212(a)(1) and
212(a)(2), is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and
(C)’’;
(2) by redesignating subparagraphs (C) and
(D) as subparagraphs (D) and (E), respectively; and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) LIMITING
COPAYMENT
AMOUNT
TO
INPATIENT HOSPITAL DEDUCTIBLE AMOUNT.—
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In no case shall the copayment amount for a
procedure performed in a year exceed the
amount of the inpatient hospital deductible es-
tablished under section 1813(b) for that year.’’.
(b) INCREASE IN PAYMENT TO REFLECT REDUCTION
IN
COPAYMENT.—Section 1833(t)(4)(C) (42 U.S.C.
1395l(t)(4)(C)) is amended by inserting ‘‘, plus the
amount of any reduction in the copayment amount attrib-
utable to paragraph (5)(C)’’ before the period at the end.
(c) EFFECTIVE DATE.—The amendments made by
this section apply as if included in the enactment of BBA
and shall only apply to procedures performed for which
payment is made on the basis of the prospective payment
system under section 1833(t) of the Social Security Act.
Subtitle C—Other
SEC. 221. APPLICATION OF SEPARATE CAPS TO PHYSICAL
AND SPEECH THERAPY SERVICES.
(a) IN
GENERAL.—Section 1833(g) (42 U.S.C.
1395l(g)) is amended—
(1) in paragraph (1)—
(A) by inserting ‘‘(A)’’ after ‘‘(g)(1)’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(B) Subparagraph (A) shall be applied separately
for speech-language pathology services described in the
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fourth sentence of section 1861(p) and for other out-
patient physical therapy services.’’; and
(2) by adding at the end the following new
paragraph:
‘‘(4) The limitations of this subsection apply to the
services involved on a per beneficiary, per facility (or pro-
vider) basis.’’.
(b) TECHNICAL AMENDMENT RELATING TO BEING
UNDER THE CARE OF A PHYSICIAN.—Section 1861 (42
U.S.C. 1395x) is amended—
(1) in subsection (p)(1), by striking ‘‘or (3)’’
and inserting ‘‘, (3), or (4)’’; and
(2) in subsection (r)(4), by inserting ‘‘for pur-
poses of subsection (p)(1) and’’ after ‘‘but only’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after Janu-
ary 1, 2000.
SEC. 222. TRANSITIONAL OUTLIER PAYMENTS FOR THER-
APY SERVICES FOR CERTAIN HIGH ACUITY
PATIENTS.
Section 1833(g) (42 U.S.C. 1395l(g)), as amended
by section 221, is further amended by adding at the end
the following new paragraph:
‘‘(5)(A) The Secretary shall establish a process under
which a facility or provider that is providing therapy serv-
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ices to which the limitation of this subsection applies to
a beneficiary may apply to the Secretary for an increase
in such limitation under this paragraph for services fur-
nished in 2000 or in 2001.
‘‘(B) Such process shall take into account the clinical
diagnosis and shall provide that the aggregate amount of
additional payments resulting from the application of this
paragraph—
‘‘(i) during fiscal year 2000 may not exceed
$40,000,000;
‘‘(ii) during fiscal year 2001 may not exceed
$60,000,000; and
‘‘(iii) during fiscal year 2002 may not exceed
$20,000,000.’’.
SEC. 223. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) IN GENERAL.—Section 1881(b)(7) (42 U.S.C.
1395rr(b)(7)) is amended by adding at the end the fol-
lowing new flush sentence:
‘‘The Secretary shall increase the amount of each com-
posite rate payment for dialysis services furnished on or
after January 1, 2000, and on or before December 31,
2000, by 1.2 percent above such composite rate payment
amounts for such services furnished on December 31,
1999, and for such services furnished on or after January
1, 2001, by 1.2 percent above such composite rate pay-
HR 3075 RFS1S
ment amounts for such services furnished on December
31, 2000.’’.
(b) CONFORMING AMENDMENT.—
(1) IN GENERAL.—Section 9335(a) of the Om-
nibus Budget Reconciliation Act of 1986 (42 U.S.C.
1395rr note) is amended by striking paragraph (1).
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on January 1,
2000.
(c) STUDY ON PAYMENT LEVEL FOR HOME HEMO-
DIALYSIS.—The Medicare Payment Advisory Commission
shall conduct a study on the appropriateness of the dif-
ferential in payment under the Medicare program for
hemodialysis services furnished in a facility and such serv-
ices furnished in a home. Not later than 18 months after
the date of the enactment of this Act, the Commission
shall submit to Congress a report on such study and shall
include recommendations regarding changes in Medicare
payment policy in response to the study.
SEC. 224. TEMPORARY UPDATE IN DURABLE MEDICAL
EQUIPMENT AND OXYGEN RATES.
(a) DURABLE MEDICAL EQUIPMENT AND OXYGEN.—
Section 1834(a)(14) (42 U.S.C. 1395m(a)(14)), as
amended by section 4551(a)(1) of BBA, is amended—
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(1) by redesignating subparagraph (D) as sub-
paragraph (E); and
(2) by striking subparagraph (C) and inserting
the following:
‘‘(C) for each of the years 1998 through
2000, 0 percentage points;
‘‘(D) for each of the years 2001 and 2002,
the percentage increase in the consumer price
index for all urban consumers (United States
city average) for the 12-month period ending
with June of the previous year minus 2 percent-
age points; and’’.
(b) 
CONFORMING
AMENDMENTS.—Section
1834(a)(9)(B) (42 U.S.C. 1395m(a)(9)(B)), as amended
by section 4552(a) of BBA, is amended—
(1) by striking ‘‘and’’ at the end of clause (v);
(2) in clause (vi), by striking ‘‘and each subse-
quent year’’ and inserting ‘‘and 2000’’ and by strik-
ing the period at the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new
clause:
‘‘(vii) for 2001 and each subsequent
year, the amount determined under this
subparagraph for the preceding year in-
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creased by the covered item update for
such subsequent year.’’.
SEC. 225. REQUIREMENT FOR NEW PROPOSED RULE-
MAKING FOR IMPLEMENTATION OF INHER-
ENT REASONABLENESS POLICY.
The Secretary of Health and Human Services shall
not exercise inherent reasonableness authority provided
under section 1842(b)(8) of the Social Security Act (42
U.S.C. 1395u(b)(8)) before such time as—
(1) the Secretary has published in the Federal
Register a new notice of proposed rulemaking to im-
plement subparagraph (A) of such section;
(2) has provided for a period of not less than
60 days for public comment on such proposed rule;
and
(3) the Secretary has published in the Federal
Register a final rule which takes into account com-
ments received during such period.
SEC. 226. INCREASE IN REIMBURSEMENT FOR PAP SMEARS.
(a) PAP
SMEAR
PAYMENT
INCREASE.—Section
1833(h) (42 U.S.C. 1395l(h)) is amended by adding at
the end the following new paragraph:
‘‘(7) Notwithstanding paragraphs (1) and (4), the
Secretary shall establish a minimum payment amount
under this subsection for all areas for a diagnostic or
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screening pap smear laboratory test (including all cervical
cancer screening technologies that have been approved by
the Food and Drug Administration) of not less than
$14.60.’’.
(b) SENSE OF THE CONGRESS.—It is the sense of
the Congress that—
(1) the Health Care Financing Administration
has been slow to incorporate or provide incentives
for providers to use new screening diagnostic health
care technologies in the area of cervical cancer;
(2) some new technologies have been developed
which optimize the effectiveness of pap smear
screening; and
(3) the Health Care Financing Administration
should institute an appropriate increase in the pay-
ment rate for new cervical cancer screening tech-
nologies that have been approved by the Food and
Drug Administration as significantly more effective
than a conventional pap smear.
(c) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to services items and furnished on
or after January 1, 2000.
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SEC. 227. REFINEMENT OF AMBULANCE SERVICES DEM-
ONSTRATION PROJECT.
Effective as if included in the enactment of BBA, sec-
tion 4532 of BBA is amended—
(1) in subsection (a), by adding at the end the
following: ‘‘The Secretary shall publish by not later
than July 1, 2000, a request for proposals for such
projects.’’; and
(2) by amending paragraph (2) of subsection
(b) to read as follows:
‘‘(2) CAPITATED PAYMENT RATE DEFINED.—In
this subsection, the ‘capitated payment rate’ means,
with respect to a demonstration project—
‘‘(A) in its first year, a rate established for
the project by the Secretary, using the most
current available data, in a manner that en-
sures that aggregate payments under the
project will not exceed the aggregate payment
that would have been made for ambulance serv-
ices under part B of title XVIII of the Social
Security Act in the local area of government’s
jurisdiction; and
‘‘(B) in a subsequent year, the capitated
payment rate established for the previous year
increased by an appropriate inflation adjust-
ment factor.’’.
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SEC. 228. PHASE-IN OF PPS FOR AMBULATORY SURGICAL
CENTERS.
If the Secretary of Health and Human Services im-
plements a revised prospective payment system for serv-
ices of ambulatory surgical facilities under part B of title
XVIII of the Social Security Act, prior to incorporating
data from the 1999 Medicare cost survey, such system
shall be implemented in a manner so that—
(1) in the first year of its implementation, only
a proportion (specified by the Secretary and not to
exceed 1⁄3) of the payment for such services shall be
made in accordance with such system and the re-
mainder shall be made in accordance with current
regulations; and
(2) in the following year a proportion (specified
by the Secretary and not to exceed 2⁄3) of the pay-
ment for such services shall be made under such sys-
tem and the remainder shall be made in accordance
with current regulations.
SEC. 229. EXTENSION OF MEDICARE BENEFITS FOR IM-
MUNOSUPPRESSIVE DRUGS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall provide under this section for an
extension of the period of coverage of immunosuppressive
drugs under section 1861(s)(2)(J) of the Social Security
Act (42 U.S.C. 1395x(s)(2)(J)) to individuals described
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in such section under terms and conditions specified by
the Secretary consistent with subsection (c) and the
objectives—
(1) of improving health outcomes by decreasing
transplant rejection rates that are attributable to
failure to comply with immunosuppressive drug regi-
mens; and
(2) of achieving cost saving to the Medicare
program by decreasing the need for secondary trans-
plants and other care relating to post-transplant
complications.
(b) AUTHORITY.—In carrying out this section—
(1) the Secretary shall provide priority in eligi-
bility to those Medicare beneficiaries who, because of
income or other factors, would be less likely to main-
tain an immunosuppressive drug regimen in the ab-
sence of such an extension; and
(2) the Secretary is authorized to vary the ben-
eficiary cost-sharing otherwise applicable in order to
promote the objectives described in subsection (a).
(c) LIMITATIONS.—The total amount expended by
the Secretary under title XVIII of the Social Security Act
to carry out this section shall not exceed $200,000,000,
and with respect to expenditures in fiscal year 2000 shall
not exceed $40,000,000. The Secretary shall not provide
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an extension of coverage under this section for immuno-
suppressive drugs furnished after September 30, 2004.
(d) REPORT.—Not later than 36 months after the
first month in which the Secretary provides for extended
benefits under this section, the Secretary shall submit to
Congress a report on the operation of this section. The
report shall include—
(1) an analysis of the impact of this section on
meeting the objectives described in subsection (a);
and
(2) recommendations regarding an appropriate
cost-effective method for extending coverage of im-
munosuppressive drugs under the Medicare program
on a permanent basis.
SEC. 230. ADDITIONAL STUDIES.
(a) MEDPAC STUDY ON POSTSURGICAL RECOVERY
CARE CENTER SERVICES.—
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission shall conduct a study on the cost-
effectiveness and efficacy of covering under the
Medicare program services of a post-surgical recov-
ery care center (that provides an intermediate level
of recovery care following surgery). In conducting
such study, the Commission shall consider data on
these centers gathered in demonstration projects.
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(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commission
shall submit to Congress a report on such study and
shall include in the report recommendations on the
feasibility, costs, and savings of covering such serv-
ices under the Medicare program.
(b) ACHPR STUDY ON EFFECT OF CREDENTIALING
OF TECHNOLOGISTS AND SONOGRAPHERS ON QUALITY OF
ULTRASOUND AND IMAGING SERVICES.—
(1) STUDY.—The Administrator for Health
Care Policy and Research shall provide for a study
that 
compares 
the 
differences 
in 
quality 
of
ultrasound and other imaging services (including
error rates and resulting complications) furnished
under the Medicare and Medicaid programs between
such services furnished by individuals who are
credentialed by private entities or organizations and
by those who are not so credentialed. Such study
shall examine and evaluate differences in error rates
and patient outcomes as a result of the differences
in credentialing. In designing the study, the Admin-
istrator shall consult with organizations nationally
recognized for their expertise in ultrasound proce-
dures.
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(2) REPORT.—By not later than 2 years after
the date of the enactment of this Act, the Adminis-
trator shall submit a report to Congress on the
study conducted under paragraph (1).
(c) MEDPAC STUDY ON THE COMPLEXITY OF THE
MEDICARE PROGRAM AND THE LEVELS OF BURDENS
PLACED ON PROVIDERS THROUGH FEDERAL REGULA-
TIONS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall undertake a comprehensive study
to review the regulatory burdens placed on all class-
es of health care providers under parts A and B of
the Medicare program under title XVIII of the So-
cial Security Act and to determine the costs these
burdens impose on the nation’s health care system.
The study shall also examine the complexity of the
current regulatory system and its impact on pro-
viders.
(2) REPORT.—not later than December 31,
2001, the Commission shall submit to Congress a re-
port on the study conducted under paragraph (1).
The 
report 
shall 
include 
recommendations
regarding—
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(A) how the Health Care Financing Ad-
ministration can reduce the regulatory burdens
placed on patients and providers; and
(B) legislation that may be appropriate to
reduce the complexity of the Medicare program,
including improvement of the rules regarding
billing, compliance, and fraud and abuse.
(d) GAO CONTINUED MONITORING OF DEPARTMENT
OF JUSTICE APPLICATION OF GUIDELINES ON USE OF
FALSE CLAIMS ACT IN CIVIL HEALTH CARE MATTERS.—
The Comptroller General of the United States shall—
(1) continue the monitoring, begun under sec-
tion 118 of the Department of Justice Appropria-
tions Act, 1999 (included in Public Law 105–277)
of the compliance of the Department of Justice and
all United States Attorneys with the ‘‘Guidance on
the Use of the False Claims Act in Civil Health
Care Matters’’ issued by the Department of Justice
on June 3, 1998, including any revisions to that
guidance; and
(2) not later than April 1, 2000, and of each
of the two succeeding years, submit a report on such
compliance to the appropriate committees of Con-
gress.
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TITLE III—PROVISIONS
RELATING TO PARTS A AND B
Subtitle A—Home Health Services
SEC. 301. ADJUSTMENT TO REFLECT ADMINISTRATIVE
COSTS NOT INCLUDED IN THE INTERIM PAY-
MENT SYSTEM; GAO REPORT ON COSTS OF
COMPLIANCE WITH OASIS DATA COLLECTION
REQUIREMENTS.
(a) ADJUSTMENT
TO REFLECT ADMINISTRATIVE
COSTS.—
(1) IN GENERAL.—In the case of a home health
agency that furnishes home health services to a
Medicare beneficiary, for each such beneficiary to
whom the agency furnished such services during the
agency’s cost reporting period beginning in fiscal
year 2000, the Secretary of Health Services shall
pay the agency, in addition to any amount of pay-
ment made under subsection (v)(1)(L) of such sec-
tion for the beneficiary and only for such cost re-
porting period, an aggregate amount of $10 to de-
fray costs incurred by the agency attributable to
data collection and reporting requirements under the
Outcome and Assessment Information Set (OASIS)
required by reason of section 4602(e) of the Bal-
anced Budget Act of 1997 (42 U.S.C. 1395fff note).
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(2) PAYMENT SCHEDULE.—
(A) MIDYEAR
PAYMENT.—By not later
than April 1, 2000, the Secretary shall pay to
a home health agency an amount that the Sec-
retary estimates to be 50 percent of the aggre-
gate amount payable to the agency by reason of
this subsection.
(B) UPON SETTLED COST REPORT.—The
Secretary shall pay the balance of amounts pay-
able to an agency under this subsection on the
date that the cost report submitted by the agen-
cy for the cost reporting period beginning in fis-
cal year 2000 is settled.
(3) PAYMENT FROM TRUST FUNDS.—Payments
under this subsection shall be made, in appropriate
part as specified by the Secretary, from the Federal
Hospital Insurance Trust Fund and from the Fed-
eral Supplementary Medical Insurance Trust Fund.
(4) DEFINITIONS.—in this subsection:
(A) HOME
HEALTH
AGENCY.—The term
‘‘home health agency’’ has the meaning given
that term under section 1861(o) of the Social
Security Act (42 U.S.C. 1395x(o)).
(B) HOME HEALTH SERVICES.—The term
‘‘home health services’’ has the meaning given
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that term under section 1861(m) of such Act
(42 U.S.C. 1395x(m)).
(C) MEDICARE
BENEFICIARY.—The term
‘‘Medicare beneficiary’’ means a beneficiary de-
scribed in section 1861(v)(1)(L)(vi)(II) of the
Social 
Security 
Act 
(42 
U.S.C.
1395x(v)(1)(L)(vi)(II)).
(b) GAO REPORT ON COSTS OF COMPLIANCE WITH
OASIS DATA COLLECTION REQUIREMENTS.—
(1) REPORT TO CONGRESS.—
(A) IN
GENERAL.—Not later than 180
days after the date of the enactment of this
Act, the Comptroller General of the United
States shall submit a report to Congress on
matters described in subparagraph (B) with re-
spect to the data collection requirement of pa-
tients of such agencies under the Outcome and
Assessment Information Set (OASIS) standard
as part of the comprehensive assessment of pa-
tients.
(B) MATTERS STUDIED.—For purposes of
subparagraph (A), the matters described in this
subparagraph include the following:
(i) An assessment of the costs in-
curred by Medicare home health agencies
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in complying with such data collection re-
quirement.
(ii) An analysis of the effect of such
data collection requirement on the privacy
interests of patients from whom data is
collected.
(C) AUDIT.—The Comptroller General
shall conduct an independent audit of the costs
described in subparagraph (B)(i). Not later
than 180 days after receipt of the report under
subparagraph (A), the Comptroller General
shall submit to Congress a report describing the
Comptroller General’s findings with respect to
such audit, and shall include comments on the
report submitted to Congress by the Secretary
of Health and Human Services under subpara-
graph (A).
(2) DEFINITIONS.—In this subsection:
(A) COMPREHENSIVE ASSESSMENT OF PA-
TIENTS.—The term ‘‘comprehensive assessment
of patients’’ means the rule published by the
Health Care Financing Administration that re-
quires, as a condition of participation in the
Medicare program, a home health agency to
provide a patient-specific comprehensive assess-
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ment that accurately reflects the patient’s cur-
rent status and that incorporates the Outcome
and Assessment Information Set (OASIS).
(B) OUTCOME AND ASSESSMENT INFORMA-
TION SET.—The term ‘‘Outcome and Assess-
ment Information Set’’ means the standard pro-
vided under the rule relating to data items that
must be used in conducting a comprehensive as-
sessment of patients.
SEC. 302. DELAY IN APPLICATION OF 15 PERCENT REDUC-
TION IN PAYMENT RATES FOR HOME HEALTH
SERVICES UNTIL 1 YEAR AFTER IMPLEMEN-
TATION OF PROSPECTIVE PAYMENT SYSTEM.
(a) CONTINGENCY REDUCTION.—Section 4603(e) of
the Balanced Budget Act of 1997 (42 U.S.C. 1395fff
note) (as amended by section 5101(c)(3) of the Tax and
Trade Relief Extension Act of 1998 (contained in division
J of Public Law 105–277)) is amended by striking ‘‘Sep-
tember 30, 2000’’ and inserting ‘‘on the date that is 12
months after the date the Secretary implements such sys-
tem’’.
(b) 
PROSPECTIVE
PAYMENT
SYSTEM.—Section
1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)) (as
amended by section 5101 of the Tax and Trade Relief Ex-
HR 3075 RFS1S
tension Act of 1998 (contained in division J of Public Law
105–277)) is amended to read as follows:
‘‘(i) IN GENERAL.—Under such sys-
tem the Secretary shall provide for com-
putation of a standard prospective pay-
ment amount (or amounts). Such amount
(or amounts) shall initially be based on the
most current audited cost report data
available to the Secretary and shall be
computed in a manner so that the total
amounts payable under the system—
‘‘(I) for the 12-month period be-
ginning on the date the Secretary im-
plements the system, shall be equal to
the total amount that would have
been made if the system had not been
in effect; and
‘‘(II) for periods beginning after
the period described in subclause (I),
shall be equal to the total amount
that would have been made for fiscal
year 2001 if the system had not been
in effect but if the reduction in limits
described in clause (ii) had been in ef-
HR 3075 RFS1S
fect, and updated under subparagraph
(B).
Each such amount shall be standardized in
a manner that eliminates the effect of vari-
ations in relative case mix and wage levels
among different home health agencies in a
budget neutral manner consistent with the
case mix and wage level adjustments pro-
vided under paragraph (4)(A). Under the
system, the Secretary may recognize re-
gional differences or differences based
upon whether or not the services or agency
are in an urbanized area.’’.
(c) REPORT.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall submit to Congress a report
analyzing the need for the 15 percent reduction
under section 1895(b)(3)(A)(ii) of the Social Secu-
rity Act (42 U.S.C. 1395fff(b)(3)(A)(ii)), or for any
reduction, in the computation of the base payment
amounts under the prospective payment system for
home health services under section 1895 of such Act
(42 U.S.C. 1395w–29).
(2) DEADLINE.—The Secretary shall submit to
Congress the report described in paragraph (1) by
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not later than the date that is 6 months after the
date the Secretary implements the prospective pay-
ment system for home health services under such
section 1895.
SEC. 303. CLARIFICATION OF SURETY BOND REQUIRE-
MENTS.
(a) HOME HEALTH AGENCIES.—Section 1861(o)(7)
(42 U.S.C. 1395x(o)(7)) is amended to read as follows:
‘‘(7) provides the Secretary with a surety
bond—
‘‘(A) effective for a period of 4 years (as
specified by the Secretary) or in the case of a
change in the ownership or control of the agen-
cy (as determined by the Secretary) during or
after such 4-year period, an additional period of
time that the Secretary determines appropriate,
such additional period not to exceed 4 years
from the date of such change in ownership or
control;
‘‘(B) in a form specified by the Secretary;
and
‘‘(C) for a year in the period described in
subparagraph (A) in an amount that is equal to
the lesser of $50,000 or 10 percent of the ag-
gregate amount of payments to the agency
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under this title and title XIX for that year, as
estimated by the Secretary; and’’.
(b) COORDINATION OF SURETY BONDS.—Part A of
title XI is amended by adding at the end the following
new section:
‘‘COORDINATION OF MEDICARE AND MEDICAID SURETY
BOND PROVISIONS
‘‘SEC. 1148. In the case of a home health agency that
is subject to a surety bond under title XVIII and title
XIX, the surety bond provided to satisfy the requirement
under one such title shall satisfy the requirement under
the other such title so long as the bond applies to guar-
antee return of overpayments under both such titles.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act and in applying section 1861(o)(7) of the Social
Security Act, as amended by subsection (a), the Secretary
of Health and Human Services may take into account the
previous period for which a home health agency had a sur-
ety bond in effect under such section before such date.
SEC. 304. TECHNICAL AMENDMENT CLARIFYING APPLICA-
BLE MARKET BASKET INCREASE FOR PPS.
Section 
1895(b)(3)(B)(ii)(I) 
(42 
U.S.C.
1395fff(b)(3)(B)(ii)(I)), as added by section 4603 of BBA
(as amended by section 5101(d)(2) of the Tax and Trade
Relief Extension Act of 1998 (contained in division J of
HR 3075 RFS1S
Public Law 105–277)) is amended by striking ‘‘fiscal year
2002 or 2003’’ and inserting ‘‘each of fiscal years 2002
and 2003’’.
Subtitle B—Direct Graduate
Medical Education
SEC. 311. USE OF NATIONAL AVERAGE PAYMENT METHOD-
OLOGY IN COMPUTING DIRECT GRADUATE
MEDICAL EDUCATION (DGME) PAYMENTS.
Section 
1886(h) 
(42 
U.S.C. 
1395ww(h)) 
is
amended—
(1) by amending clause (i) of paragraph (3)(B)
to read as follows:
‘‘(i)(I) for a cost reporting period be-
ginning before October 1, 2000, the hos-
pital’s approved FTE resident amount (de-
termined under paragraph (2)) for that pe-
riod;
‘‘(II) for a cost reporting period be-
ginning on or after October 1, 2000, and
before October 1, 2004, the national aver-
age per resident amount determined under
paragraph (7) or, if greater, the sum of
the hospital-specific percentage (as defined
in subparagraph (E)) of the hospital’s ap-
proved FTE resident amount (determined
HR 3075 RFS1S
under paragraph (2)) for the period and
the national percentage (as defined in such
subparagraph) of the national average per
resident amount determined under para-
graph (7); and
‘‘(III) for a cost reporting period be-
ginning on or after October 1, 2004, the
national average per resident amount de-
termined under paragraph (7); and’’;
(2) in paragraph (3), by adding at the end the
following new subparagraph:
‘‘(E) TRANSITION TO NATIONAL AVERAGE
PER
RESIDENT
PAYMENT
SYSTEM.—For pur-
poses of subparagraph (B)(i)(II), for the cost
reporting period of a hospital beginning—
‘‘(i) during fiscal year 2001, the hos-
pital-specific percentage is 80 percent and
the national percentage is 20 percent;
‘‘(ii) during fiscal year 2002, the hos-
pital-specific percentage is 60 percent and
the national percentage is 40 percent;
‘‘(iii) during fiscal year 2003, the hos-
pital-specific percentage is 40 percent and
the national percentage is 60 percent; and
HR 3075 RFS1S
‘‘(iv) during fiscal year 2004, the hos-
pital-specific percentage is 20 percent and
the national percentage is 80 percent.’’;
and
(3) by adding at the end the following new
paragraph:
‘‘(7) 
NATIONAL
AVERAGE
PER
RESIDENT
AMOUNT.—The 
national 
average 
per 
resident
amount for a hospital for a cost reporting period be-
ginning in a fiscal year is an amount determined as
follows:
‘‘(A) DETERMINATION OF HOSPITAL SIN-
GLE PER RESIDENT AMOUNT.—The Secretary
shall compute for each hospital operating an
approved graduate medical education program a
single per resident amount equal to the average
(weighted by number of full-time equivalent
residents) of the primary care per resident
amount and the non-primary care per resident
amount computed under paragraph (2) for cost
reporting periods ending during fiscal year
1997.
‘‘(B) DETERMINATION OF WAGE AND NON-
WAGE-RELATED PROPORTION OF THE SINGLE
PER RESIDENT AMOUNT.—The Secretary shall
HR 3075 RFS1S
estimate the average proportion of the single
per resident amounts computed under subpara-
graph (A) that is attributable to wages and
wage-related costs.
‘‘(C) 
STANDARDIZING
PER
RESIDENT
AMOUNTS.—The Secretary shall establish a
standardized per resident amount for each such
hospital—
‘‘(i) by dividing the single per resident
amount computed under subparagraph (A)
into a wage-related portion and a non-
wage-related portion by applying the pro-
portion determined under subparagraph
(B);
‘‘(ii) by dividing the wage-related por-
tion by the factor applied under subsection
(d)(3)(E) for discharges occurring during
fiscal year 1999 for the hospital’s area;
and
‘‘(iii) by adding the non-wage-related
portion to the amount computed under
clause (ii).
‘‘(D) DETERMINATION OF NATIONAL AV-
ERAGE.—The Secretary shall compute a na-
tional average per resident amount equal to the
HR 3075 RFS1S
average of the standardized per resident
amounts computed under subparagraph (C) for
such hospitals, with the amount for each hos-
pital weighted by the average number of full-
time equivalent residents at such hospital.
‘‘(E) APPLICATION
TO
INDIVIDUAL
HOS-
PITALS.—The Secretary shall compute for each
such hospital a per resident amount—
‘‘(i) by dividing the national average
per resident amount computed under sub-
paragraph (D) into a wage-related portion
and a non-wage-related portion by applying
the proportion determined under subpara-
graph (B);
‘‘(ii) by multiplying the wage-related
portion by the factor described in subpara-
graph (C)(ii) for the hospital’s area; and
‘‘(iii) by adding the non-wage-related
portion to the amount computed under
clause (ii).
In applying clause (ii) for a cost reporting pe-
riod beginning before October 1, 2004, the fac-
tor described in such clause shall be deemed to
be 1 for a hospital if the national average per
resident amount computed under subparagraph
HR 3075 RFS1S
(D) is less than the hospital’s approved FTE
resident amount (determined under paragraph
(2)) for the period involved and the factor de-
scribed in subparagraph (C)(ii) for the hos-
pital’s area is less than 1.
‘‘(F) INITIAL UPDATING RATE.—The Sec-
retary shall update such per resident amount
for the hospital’s cost reporting period that be-
gins during fiscal year 2001 for each such hos-
pital by the estimated percentage increase in
the consumer price index for all urban con-
sumers during the period beginning October
1997 and ending with the midpoint of the hos-
pital’s cost reporting period that begins during
fiscal year 2001.
‘‘(G) SUBSEQUENT UPDATING.—For each
subsequent cost reporting period, subject to
subparagraph (H), the national average per
resident amount for a hospital is equal to the
amount determined under this paragraph for
the previous cost reporting period updated,
through the midpoint of the period, by pro-
jecting the estimated percentage change in the
consumer price index during the 12-month pe-
riod ending at that midpoint, with appropriate
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adjustments to reflect previous under-or over-
estimations under this subparagraph in the pro-
jected percentage change in the consumer price
index.
‘‘(H) TRANSITIONAL BUDGET NEUTRALITY
ADJUSTMENT.—
‘‘(i) IN
GENERAL.—If the Secretary
estimates that, as a result of the amend-
ments made by section 311 of the Medi-
care, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999, the post-
MBBRA expenditures for fiscal year 2005
will be greater or less than the pre-
MBBRA 
expenditures 
for 
that 
fiscal
year—
‘‘(I) the Secretary shall adjust
the update applied under subpara-
graph (G) in determining the national
average per resident amount for cost
reporting periods beginning during
fiscal year 2005 so that the amount of
the post-MBBRA expenditures for
those cost reporting periods is equal
to the amount of the pre-MBBRA ex-
penditures for such periods; and
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‘‘(II) the Secretary shall, taking
into account the adjustment made
under subclause (I), adjust the na-
tional average per resident amount, as
applied for the portion of a cost re-
porting period beginning during fiscal
year 2004 that occur in fiscal year
2005, so that the amount of the post-
MBBRA expenditures made during
fiscal year 2005 is equal to the
amount of the pre-MBBRA expendi-
tures during such fiscal year.
‘‘(ii) DEFINITIONS.—In this subpara-
graph:
‘‘(I) 
AGGREGATE
SUBSECTION
(h)-RELATED
EXPENDITURES.—The
term ‘aggregate subsection (h)-related
expenditures’ means, with respect to
cost reporting periods beginning dur-
ing a fiscal year or with respect to a
fiscal year, the aggregate expenditures
under this title for such periods or fis-
cal year, respectively, which are at-
tributable to the operation of this sub-
section.
HR 3075 RFS1S
‘‘(II) 
PRE-MBBRA
EXPENDI-
TURES.—The term ‘pre-MBBRA ex-
penditures’ means aggregate sub-
section (h)-related expenditures deter-
mined as if the amendments made by
section 311 of the Medicare, Medicaid,
and SCHIP Balanced Budget Refine-
ment Act of 1999 had not been en-
acted.
‘‘(III) 
POST-MBBRA
EXPENDI-
TURES.—The term ‘post-MBBRA ex-
penditures’ means aggregate sub-
section (h)-related expenditures deter-
mined taking into account the amend-
ments made by section 311 of the
Medicare, Medicaid, and SCHIP Bal-
anced Budget Refinement Act of
1999.’’.
SEC. 312. INITIAL RESIDENCY PERIOD FOR CHILD NEU-
ROLOGY RESIDENCY TRAINING PROGRAMS.
(a) IN GENERAL.—Section 1886(h)(5)(F) (42 U.S.C.
1395ww(h)(5)(F)) is amended—
(1) in clause (i) by striking ‘‘clause (ii)’’ and in-
serting ‘‘clause (ii) or (iii)’’;
(2) in clause (i), by striking ‘‘and’’ at the end;
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(3) in clause (ii), by striking the period at the
end and inserting ‘‘, and’’; and
(4) by inserting after clause (ii), the following
new clause:
‘‘(iii) a period, of not more than three
years, during which an individual is in a
child neurology residency program, shall be
treated as part of the initial residency pe-
riod, but shall not be counted against any
limitation on the initial residency period.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply on and after July 1, 2000, to resi-
dency programs that began before, on, or after the date
of the enactment of this Act.
(c) MEDPAC REPORT.—The Medicare Payment Ad-
visory Commission shall include in its report submitted to
Congress in March of 2001 recommendations on whether
there should be an extension of the initial residency period
under section 1886(h)(5)(F) of the Social Security Act
(42 U.S.C. 1395ww(h)(5)(F)) for other residency training
programs in a specialty requiring preliminary years of
study in another specialty.
HR 3075 RFS1S
Subtitle C—Other
SEC. 321. GAO STUDY ON GEOGRAPHIC RECLASSIFICATION.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study of the current laws
and regulations for geographic reclassification of hospitals
to determine whether such reclassification is appropriate
for purposes of applying wage indices under the Medicare
program and whether it results in more accurate payments
for all hospitals. Such study shall examine data on the
number of hospitals that are reclassified and their special
designation status in determining payments under the
Medicare program. The study shall evaluate—
(1) the magnitude of the effect of geographic
reclassification on rural hospitals that do not reclas-
sify;
(2) whether the current thresholds used in geo-
graphic reclassification reclassify hospitals to the ap-
propriate labor markets;
(3) the effect of eliminating geographic reclassi-
fication through use of the occupational mix data;
(4) the group reclassification policy;
(5) changes in the number of reclassifications
and the compositions of the groups;
(6) the effect of State-specific budget neutrality
compared to national budget neutrality; and
HR 3075 RFS1S
(7) whether there are sufficient controls over
the intermediary evaluation of the wage data re-
ported by hospitals.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Comptroller General
of the United States shall submit to Congress a report
on the study conducted under subsection (a).
SEC. 322. MEDPAC STUDY ON MEDICARE PAYMENT FOR
NON-PHYSICIAN 
HEALTH 
PROFESSIONAL
CLINICAL TRAINING IN HOSPITALS.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission shall conduct a study on Medicare payment
policy with respect to professional clinical training of dif-
ferent classes of non-physician health care professionals
(such as nurses,nurse practitioners, allied health profes-
sionals, physician assistants, and psychologists) and the
basis for any differences in treatment among such classes.
(b) REPORT.—The Commission shall submit a report
to Congress on the study conducted under subsection (a)
not later than 18 months after the date of the enactment
of this Act.
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TITLE IV—RURAL PROVIDER
PROVISIONS
SEC. 401. PERMITTING RECLASSIFICATION OF CERTAIN
URBAN HOSPITALS AS RURAL HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8) (42 U.S.C.
1395ww(d)(8)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E)(i) For purposes of this subsection, not later
than 60 days after the receipt of an application from a
subsection (d) hospital described in clause (ii), the Sec-
retary shall treat the hospital as being located in the rural
area (as defined in such paragraph (2)(D)) of the State
in which the hospital is located.
‘‘(ii) For purposes of clause (i), a subsection (d) hos-
pital described in this clause is a subsection (d) hospital
that is located in an urban area (as defined in paragraph
(2)(D)) and satisfies any of the following criteria:
‘‘(I) The hospital is located in a rural census
tract of a metropolitan statistical area (as deter-
mined under the Goldsmith Modification, as pub-
lished in the Federal Register on February 27, 1992
(57 Fed. Reg. 6725)).
‘‘(II) The hospital is located in an area des-
ignated by any law or regulation of such State as a
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rural area (or is designated by such State as a rural
hospital).
‘‘(III) The hospital would qualify as a rural or
regional or national referral center under paragraph
(5)(C) or as a sole community hospital under para-
graph (5)(D) if the hospital were located in a rural
area.
‘‘(IV) The hospital meets such other criteria as
the Secretary may specify.’’.
(b) CONFORMING CHANGES.—(1) Section 1833(t)
(42 U.S.C. 1395l(t)), as amended by sections 211 and
212, is further amended by adding at the end the following
new paragraph:
‘‘(13) MISCELLANEOUS PROVISIONS.—
‘‘(A) APPLICATION OF RECLASSIFICATION
OF CERTAIN HOSPITALS.—If a hospital is being
treated as being located a rural under section
1886(d)(8)(E), that hospital shall be treated
under this subsection as being located in that
rural area.’’.
(2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–
4(c)(2)(B)(i)) is amended by inserting ‘‘or is treated as
being located in a rural area pursuant to section
1886(d)(8)(E)’’ after ‘‘section 1886(d)(2)(D))’’.
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(c) EFFECTIVE DATE.—The amendments made by
this section shall become effective on January 1, 2000.
SEC. 402. UPDATE OF STANDARDS APPLIED FOR GEO-
GRAPHIC RECLASSIFICATION FOR CERTAIN
HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8)(B) (42 U.S.C.
1395ww(d)(8)(B)) is amended—
(1) by inserting ‘‘(i)’’ after ‘‘(B)’’;
(2) by striking ‘‘published in the Federal Reg-
ister on January 3, 1980’’ and inserting ‘‘described
in clause (ii)’’; and
(3) by adding at the end the following new
clause:
‘‘(ii) The standards described in this clause for cost
reporting periods beginning in a fiscal year—
‘‘(I) before fiscal year 2003, are the standards
published in the Federal Register on January 3,
1980, or, at the election of the hospital with respect
to fiscal years 2001 and 2002, standards so pub-
lished on March 30, 1990; and
‘‘(II) after fiscal year 2002, are the standards
published in the Federal Register by the Director of
the Office of Management and Budget based on the
most recent available decennial population data.
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Subparagraphs (C) and (D) shall not apply with respect
to the application of subclause (I).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply with respect to discharges occurring
during cost reporting periods beginning on or after Octo-
ber 1, 1999.
SEC. 403. IMPROVEMENTS IN THE CRITICAL ACCESS HOS-
PITAL (CAH) PROGRAM.
(a) APPLYING 96-HOUR LIMIT ON A AVERAGE AN-
NUAL BASIS.—
(1) IN
GENERAL.—Section 1820(c)(2)(B)(iii)
(42 U.S.C. 1395i–4(c)(2)(B)(iii)), as added by sec-
tion 4201(a) of BBA, is amended by striking ‘‘for
a period not to exceed 96 hours’’ and all that follows
and inserting ‘‘for a period that does not exceed, as
determined on an annual, average basis, 96 hours
per patient;’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) takes effect on the date of the en-
actment of this Act.
(b) PERMITTING FOR-PROFIT HOSPITALS TO QUAL-
IFY
FOR DESIGNATION
AS
A CRITICAL ACCESS HOS-
PITAL.—Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–
4(c)(2)(B)(i)), as added by section 4201(a) of BBA, is
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amended in the matter preceding subclause (I), by striking
‘‘nonprofit or public hospital’’ and inserting ‘‘hospital’’.
(c) ALLOWING CLOSED OR DOWNSIZED HOSPITALS
TO CONVERT TO CRITICAL ACCESS HOSPITALS.—Section
1820(c)(2) (42 U.S.C. 1395i–4(c)(2)), as added by section
4201(a) of BBA, is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B), (C),
and (D)’’; and
(2) by adding at the end the following new sub-
paragraphs:
‘‘(C) RECENTLY
CLOSED
FACILITIES.—A
State may designate a facility as a critical ac-
cess hospital if the facility—
‘‘(i) was a hospital that ceased oper-
ations on or after the date that is 10 years
before the date of the enactment of this
subparagraph; and
‘‘(ii) as of the effective date of such
designation, meets the criteria for designa-
tion under subparagraph (B).
‘‘(D) DOWNSIZED
FACILITIES.—A State
may designate a health clinic or a health center
(as defined by the State) as a critical access
hospital if such clinic or center—
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‘‘(i) is licensed by the State as a
health clinic or a health center;
‘‘(ii) 
was 
a 
hospital 
that 
was
downsized to a health clinic or health cen-
ter; and
‘‘(iii) as of the effective date of such
designation, meets the criteria for designa-
tion under subparagraph (B).’’.
(d) ALL-INCLUSIVE PAYMENT OPTION
FOR OUT-
PATIENT CRITICAL ACCESS HOSPITAL SERVICES.—
(1) IN GENERAL.—Section 1834(g) (42 U.S.C.
1395m(g)), as added by section 4201(c)(5) of BBA,
is amended to read as follows:
‘‘(g) PAYMENT FOR OUTPATIENT CRITICAL ACCESS
HOSPITAL SERVICES.—
‘‘(1) ELECTION OF CAH.—At the election of a
critical access hospital, the amount of payment for
outpatient critical access hospital services under this
part shall be determined under paragraph (2) or (3),
such amount determined under either paragraph
without regard to the amount of the customary or
other charge.
‘‘(2) COST-BASED HOSPITAL OUTPATIENT SERV-
ICE PAYMENT PLUS FEE SCHEDULE FOR PROFES-
SIONAL SERVICES.—If a hospital elects this para-
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graph to apply, there shall be paid amounts equal to
the sum of the following, less the amount that such
hospital may charge as described in section
1866(a)(2)(A):
‘‘(A) FACILITY FEE.—With respect to fa-
cility services, not including any services for
which payment may be made under subpara-
graph (B), the reasonable costs of the critical
access hospital in providing such services.
‘‘(B) FEE SCHEDULE FOR PROFESSIONAL
SERVICES.—With respect to professional serv-
ices otherwise included within outpatient critical
access hospital services, such amounts as would
otherwise be paid under this part if such serv-
ices were not included in outpatient critical ac-
cess hospital services.
‘‘(3) ALL-INCLUSIVE RATE.—If a hospital elects
this paragraph to apply, with respect to both facility
services and professional services, there shall be paid
amounts equal to the reasonable costs of the critical
access hospital in providing such services, less the
amount that such hospital may charge as described
in section 1866(a)(2)(A).’’.
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(2) EFFECTIVE DATE.—The amendment made
by subsection (a) shall apply for cost reporting peri-
ods beginning on or after October 1, 1999.
(e) ELIMINATION OF COINSURANCE FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS FURNISHED BY A CRIT-
ICAL ACCESS HOSPITAL ON AN OUTPATIENT BASIS.—
(1) IN GENERAL.—Section 1833(a)(1)(D) (42
U.S.C. 1395l(a)(1)(D)) is amended by inserting ‘‘or
which are furnished on an outpatient basis by a crit-
ical access hospital’’ after ‘‘on an assignment-related
basis’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after the date of the enactment of this Act.
(f) PARTICIPATION IN SWING BED PROGRAM.—Sec-
tion 1883 (42 U.S.C. 1395tt) is amended—
(1) in subsection (a)(1), by striking ‘‘(other
than a hospital which has in effect a waiver under
subparagraph (A) of the last sentence of section
1861(e))’’; and
(2) in subsection (c), by striking ‘‘, or during
which there is in effect for the hospital a waiver
under subparagraph (A) of the last sentence of sec-
tion 1861(e)’’.
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SEC. 404. FIVE-YEAR EXTENSION OF MEDICARE DEPEND-
ENT HOSPITAL (MDH) PROGRAM.
(a) EXTENSION OF PAYMENT METHODOLOGY.—Sec-
tion 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)), as
amended by section 4204(a)(1) of BBA, is amended—
(1) in clause (i), by striking ‘‘and before Octo-
ber 1, 2001,’’ and inserting ‘‘and before October 1,
2006’’; and
(2) in clause (ii)(II), by striking ‘‘and before
October 1, 2001,’’ and inserting ‘‘and before Octo-
ber 1, 2006’’.
(b) CONFORMING AMENDMENTS.—
(1) EXTENSION OF TARGET AMOUNT.—Section
1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)), as
amended by section 4204(a)(2) of BBA, is
amended—
(A) in the matter preceding clause (i), by
striking ‘‘and before October 1, 2001,’’ and in-
serting ‘‘and before October 1, 2006’’; and
(B) in clause (iv), by striking ‘‘during fis-
cal year 1998 through fiscal year 2000’’ and in-
serting ‘‘during fiscal year 1998 through fiscal
year 2005’’.
(2) PERMITTING HOSPITALS TO DECLINE RE-
CLASSIFICATION.—Section 13501(e)(2) of Omnibus
Budget Reconciliation Act of 1993 (42 U.S.C.
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‘‘(ii) For purposes of clause (i), the rebased target
amount applicable to a hospital making an election under
this subparagraph is equal to the sum of the following:
‘‘(I) With respect to discharges occurring in fis-
cal year 2001, 75 percent of the target amount ap-
plicable to the hospital under subparagraph (C)
(hereinafter in this subparagraph referred to as the
‘subparagraph (C) target amount’) and 25 percent
of the amount of the allowable operating costs of in-
patient hospital services (as defined in subsection
(a)(4)) recognized under this title for the hospital
for the 12-month cost reporting period beginning
during fiscal year 1996 (hereinafter in this subpara-
graph referred to as the ‘rebased target amount’),
increased by the applicable percentage increase
under subparagraph (B)(iv).
‘‘(II) With respect to discharges occurring in
fiscal year 2002, 50 percent of the subparagraph (C)
target amount and 50 percent of the rebased target
amount, increased by the applicable percentage in-
crease under subparagraph (B)(iv).
‘‘(III) With respect to discharges occurring in
fiscal year 2003, 25 percent of the subparagraph (C)
target amount and 75 percent of the rebased target
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amount, increased by the applicable percentage in-
crease under subparagraph (B)(iv).
‘‘(IV) With respect to discharges occurring in
fiscal year 2003 or any subsequent fiscal year, 100
percent of the rebased target amount, increased by
the applicable percentage increase under subpara-
graph (B)(iv).’’.
SEC. 406. INCREASED FLEXIBILITY IN PROVIDING GRAD-
UATE PHYSICIAN TRAINING IN RURAL AREAS.
(a) PERMITTING 30 PERCENT EXPANSION IN CUR-
RENT GME TRAINING PROGRAMS FOR HOSPITALS LO-
CATED IN RURAL AREAS.—
(1) PAYMENT FOR DIRECT GRADUATE MEDICAL
EDUCATION
COSTS.—Section 1886(h)(4)(F) (42
U.S.C. 1395ww(h)(4)(F)), as added by section 4623
of BBA, is amended by inserting ‘‘(or, 130 percent
of such number in the case of a hospital located in
a rural area)’’ after ‘‘may not exceed the number’’.
(2) PAYMENT FOR INDIRECT GRADUATE MED-
ICAL EDUCATION COSTS.—Section 1886(d)(5)(B)(v)
(42 U.S.C. 1395ww(d)(5)(B)(v)), as added by sec-
tion 4621(b)(1) of BBA, is amended by inserting
‘‘(or, 130 percent of such number in the case of a
hospital located in a rural area)’’ after ‘‘may not ex-
ceed the number’’.
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(3) EFFECTIVE DATES.—(A) The amendment
made by paragraph (1) applies to cost reporting pe-
riods beginning on or after October 1, 1999.
(B) The amendment made by paragraph (2) ap-
plies to discharges occurring on or after October 1,
1999.
(b) SPECIAL RULE
FOR NON-RURAL FACILITIES
SERVING RURAL AREAS.—
(1) IN GENERAL.—Section 1886(h)(4)(H) (42
U.S.C. 1395ww(h)(4)(H)), as added by section 4623
of BBA, is amended by adding at the end the fol-
lowing new clause:
‘‘(iv) NON-RURAL
HOSPITALS
OPER-
ATING
TRAINING
PROGRAMS
IN
UNDER-
SERVED RURAL AREAS.—In the case of a
hospital that is not located in a rural area
but establishes separately accredited ap-
proved medical residency training pro-
grams (or rural tracks) in an underserved
rural area or has an accredited training
program with an integrated rural track,
the Secretary shall adjust the limitation
under subparagraph (F) in an appropriate
manner insofar as it applies to such pro-
grams in such underserved rural areas in
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order to encourage the training of physi-
cians in underserved rural areas.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies with respect to—
(A) payments to hospitals under section
1886(h) of the Social Security Act (42 U.S.C.
1395ww(h)) for cost reporting periods begin-
ning on or after October 1, 1999; and
(B) payments to hospitals under section
1886(d)(5)(B)(v) of such Act (42 U.S.C.
1395ww(d)(5)(B)(v)) for discharges occurring
on or after October 1, 1999.
SEC. 407. ELIMINATION OF CERTAIN RESTRICTIONS WITH
RESPECT TO HOSPITAL SWING BED PRO-
GRAM.
(a) ELIMINATION
OF REQUIREMENT
FOR STATE
CERTIFICATE
OF NEED.—Section 1883(b) (42 U.S.C.
1395tt(b)) is amended to read as follows:
‘‘(b) The Secretary may not enter into an agreement
under this section with any hospital unless, except as pro-
vided under subsection (g), the hospital is located in a
rural area and has less than 100 beds.’’.
(b) ELIMINATION OF SWING BED RESTRICTIONS ON
CERTAIN HOSPITALS WITH MORE THAN 49 BEDS.—Sec-
tion 1883(d) (42 U.S.C. 1395tt(d)) is amended—
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(1) by striking paragraphs (2) and (3); and
(2) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date that is the first day
after the expiration of the transition period under section
1888(e)(2)(E) of the Social Security Act (42 U.S.C.
1395yy(e)(2)(E)), as added by section 4432(a) of BBA,
for payments for covered skilled nursing facility services
under the Medicare program.
SEC. 408. GRANT PROGRAM FOR RURAL HOSPITAL TRANSI-
TION TO PROSPECTIVE PAYMENT.
Section 1820(g) (42 U.S.C. 1395i–4(g)), as added by
section 4201(a) of BBA, is amended by adding at the end
the following new paragraph:
‘‘(3) UPGRADING DATA SYSTEMS.—
‘‘(A) GRANTS
TO
HOSPITALS.—The Sec-
retary may award grants to hospitals that have
submitted applications in accordance with sub-
paragraph (C) to assist eligible small rural hos-
pitals in meeting the costs of implementing data
systems required to meet requirements estab-
lished under the Medicare program pursuant to
amendments made by the Balanced Budget Act
of 1997.
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‘‘(B) ELIGIBLE
SMALL
RURAL
HOSPITAL
DEFINED.—For purposes of this paragraph, the
term ‘eligible small rural hospital’ means a non-
Federal, short-term general acute care hospital
that—
‘‘(i) is located in a rural area (as de-
fined for purposes of section 1886(d)); and
‘‘(ii) has less than 50 beds.
‘‘(C) APPLICATION.—A hospital seeking a
grant under this paragraph shall submit an ap-
plication to the Secretary on or before such
date and in such form and manner as the Sec-
retary specifies.
‘‘(D) AMOUNT OF GRANT.—A grant to a
hospital under this paragraph may not exceed
$50,000.
‘‘(E) USE OF FUNDS.—A hospital receiving
a grant under this paragraph may use the
funds for the purchase of computer software
and hardware and for the education and train-
ing of hospital staff on computer information
systems and costs related to the implementation
of prospective payment systems.
‘‘(F) REPORT.—
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‘‘(i) INFORMATION.—A hospital re-
ceiving a grant under this section shall fur-
nish the Secretary with such information
as the Secretary may require to evaluate
the project for which the grant is made
and to ensure that the grant is expended
for the purposes for which it is made.
‘‘(ii) REPORTING.—
‘‘(I) 
INTERIM
REPORTS.—The
Secretary shall report to the Com-
mittee on Ways and Means of the
House of Representatives and the
Committee on Finance of the Senate
at least annually on the grant pro-
gram established under this section,
including in such report information
on the number of grants made, the
nature of the projects involved, the ge-
ographic distribution of grant recipi-
ents, and such other matters as the
Secretary deems appropriate.
‘‘(II) FINAL REPORT.—The Sec-
retary shall submit a final report to
such committees not later than 180
days after the completion of all of the
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projects for which a grant is made
under this section.’’.
SEC. 409. MEDPAC STUDY OF RURAL PROVIDERS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on rural providers fur-
nishing items and services for which payment is made
under title XVIII of the Social Security Act. Such study
shall examine and evaluate the adequacy and appropriate-
ness of the categories of special payments (and payment
methodologies) established for rural hospitals under the
Medicare program, and their impact on beneficiary access
and quality of health care services.
(b) REPORT.—By not later than 18 months after the
date of the enactment of this Act, the Medicare Payment
Advisory Commission shall submit to Congress a report
on the study conducted under subsection (a).
SEC. 410. EXPANSION OF ACCESS TO PARAMEDIC INTER-
CEPT SERVICES IN RURAL AREAS.
(a) EXPANSION
OF
PAYMENT
AREAS.—Section
4531(c) of BBA (42 U.S.C. 1395x(s)(7) note; 111 Stat.
452) is amended by adding at the end the following flush
sentence:
‘‘For purposes of this subsection, an area shall be treated
as a rural area if it is designated as a rural area by any
law or regulation of the State or if it is located in a rural
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census tract of a metropolitan statistical area (as deter-
mined under the Goldsmith Modification, as published in
the Federal Register on February 27, 1992 (57 Fed. Reg.
6725)).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on January 1, 2000, and ap-
plies to paramedic intercept services furnished on or after
such date.
TITLE 
V—PROVISIONS 
RELAT-
ING 
TO 
PART 
C
(MEDICARE+CHOICE 
PRO-
GRAM)
Subtitle A—Medicare+Choice
SEC. 501. PHASE-IN OF NEW RISK ADJUSTMENT METHOD-
OLOGY.
Section 
1853(a)(3)(C) 
(42 
U.S.C. 
1395w–
23(a)(3)(C)) is amended—
(1) by redesignating the first sentence as clause
(i) with the heading ‘‘IN GENERAL.—’’ and appro-
priate indentation; and
(2) by adding at the end the following new
clause:
‘‘(ii) PHASE-IN.—Such risk adjust-
ment methodology shall be implemented in
a phased-in manner so that the method-
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ology insofar as it makes adjustments for
health status based on clinical data applies
to—
‘‘(I) not more than 10 percent of
the payment amount in 2000 and
2001;
‘‘(II) not more than 20 percent
of such amount in 2002;
‘‘(III) not more than 30 percent
of such amount in 2003; and
‘‘(IV) 
100 
percent 
of 
such
amount in any subsequent year (at
which time the risk adjustment meth-
odology should reflect data from mul-
tiple settings).’’.
SEC. 502. ENCOURAGING OFFERING OF MEDICARE+CHOICE
PLANS IN AREAS WITHOUT PLANS.
Section 1853 (42 U.S.C. 1395w–23) is amended—
(1) in subsection (a)(1), by striking ‘‘sub-
sections (e) and (f)’’ and inserting ‘‘subsections (e),
(g), and (i)’’;
(2) in subsection (c)(5), by inserting ‘‘(other
than those attributable to subsection (i))’’ after
‘‘payments under this part’’; and
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(3) by adding at the end the following new sub-
section:
‘‘(i) NEW ENTRY BONUS.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2)
and (3), in the case of Medicare+Choice payment
area in which a Medicare+Choice plan has not been
offered since 1997 (or in which all organizations
that offered a plan since such date have filed notice
with the Secretary, as of October 13, 1999, that
they will not be offering such a plan as of January
1, 2000), the amount of the monthly payment other-
wise made under this subsection shall be increased—
‘‘(A) only for the first 12 months in which
any Medicare+Choice plan is offered in the
area, by 5 percent of the total monthly payment
otherwise computed for such payment area; and
‘‘(B) only for the subsequent 12 months,
by 3 percent of the total monthly payment oth-
erwise computed for such payment area.
‘‘(2) PERIOD OF APPLICATION.—Paragraph (1)
shall only apply to payment for Medicare+Choice
plans which are first offered in a Medicare+Choice
payment area during the 2-year period beginning
with January 1, 2000.
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‘‘(3) LIMITATION TO ORGANIZATION OFFERING
FIRST PLAN IN AN AREA.—Paragraph (1) shall only
apply to payment to the first Medicare+Choice orga-
nization that offers a Medicare+Choice plan in each
Medicare+Choice payment area, except that if more
than one such organization first offers such a plan
in an area on the same date, paragraph (1) shall
apply to payment for such organizations.
‘‘(4) CONSTRUCTION.—Nothing in paragraph
(1) shall be construed as affecting the calculation of
the annual Medicare+Choice capitation rate for any
payment area under subsection (c) or as applying to
payment for any period not described in such para-
graph.
‘‘(5) OFFERED DEFINED.—In this subsection,
the term ‘offered’ means, with respect to a
Medicare+Choice plan as of a date, that a
Medicare+Choice eligible individual may enroll with
the plan on that date, regardless of when the enroll-
ment takes effect or the individual obtain benefits
under the plan.’’.
SEC. 503. MODIFICATION OF 5-YEAR RE-ENTRY RULE FOR
CONTRACT TERMINATIONS.
(a) IN GENERAL.—Section 1857(c)(4) (42 U.S.C.
1395w–27(c)(4)) is amended—
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(1) by inserting ‘‘as provided in paragraph (2)
and except’’ after ‘‘except’’;
(2) by redesignating the first sentence as a sub-
paragraph (A) with an appropriate indentation and
the heading ‘‘IN GENERAL.—’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) 
EARLIER
RE-ENTRY
PERMITTED
WHERE CHANGE IN PAYMENT POLICY AND NO
MORE THAN ONE OTHER PLAN AVAILABLE.—
Subparagraph (A) shall not apply with respect
to the offering by a Medicare+Choice organiza-
tion 
of 
a 
Medicare+Choice 
plan 
in 
a
Medicare+Choice payment area if—
‘‘(i) during the 6-month period begin-
ning on the date the organization notified
the Secretary of the intention to terminate
the most recent previous contract, there
was a legislative change enacted (or a reg-
ulatory change adopted) that has the effect
of increasing payment rates under section
1853 for that Medicare+Choice payment
area; and
‘‘(ii) at the time the organization noti-
fies the Secretary of its intent to enter into
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a contract to offer such a plan in the area,
there 
is 
no 
more 
than 
one
Medicare+Choice plan offered in the
area.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to contract terminations occur-
ring before, on, or after the date of the enactment of this
Act.
SEC. 504. CONTINUED COMPUTATION AND PUBLICATION
OF AAPCC DATA.
(a) IN
GENERAL.—Section 1853(b) (42 U.S.C.
1395w–23(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) CONTINUED COMPUTATION AND PUBLICA-
TION
OF
COUNTY-SPECIFIC
PER
CAPITA
FEE-FOR-
SERVICE
EXPENDITURE
INFORMATION.—The Sec-
retary, through the Chief Actuary of the Health
Care Financing Administration, shall provide for the
computation and publication, on an annual basis at
the 
time 
of 
publication 
of 
the 
annual
Medicare+Choice capitation rates, of information on
the level of the average annual per capita costs (de-
scribed 
in 
section 
1876(a)(4)) 
for 
each
Medicare+Choice payment area.’’.
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(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act and apply to publications of the annual
Medicare+Choice capitation rates made on or after such
date.
SEC. 505. CHANGES IN MEDICARE+CHOICE ENROLLMENT
RULES.
(a) PERMITTING ENROLLMENT
IN ALTERNATIVE
MEDICARE+CHOICE PLANS AND MEDIGAP COVERAGE IN
CASE
OF
INVOLUNTARY
TERMINATION
OF
MEDICARE+CHOICE ENROLLMENT.—
(1) IN
GENERAL.—Section 1851(e)(4) (42
U.S.C. 1395w–21(e)(4)) is amended by striking sub-
paragraph (A) and inserting the following:
‘‘(A)(i) the certification of the organization
or plan under this part has been terminated, or
the organization or plan has notified the indi-
vidual or the Secretary of an impending termi-
nation of such certification; or
‘‘(ii) the organization has terminated or
otherwise discontinued providing the plan in the
area in which the individual resides, or has no-
tified the individual or Secretary of an impend-
ing termination or discontinuation of such
plan;’’.
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(2) CONFORMING MEDIGAP AMENDMENT.—Sec-
tion 
1882(s)(3) 
(42 
U.S.C. 
1395ss(s)(3)) 
is
amended—
(A) in subparagraph (A), by inserting ‘‘,
subject to subparagraph (E),’’ after ‘‘in the
case of an individual described in subparagraph
(B) who’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(E)(i) An individual described in subparagraph
(B)(ii) may elect to apply subparagraph (A) by sub-
stituting, for the date of termination of enrollment, the
date on which the individual or Secretary was notified by
the Medicare+Choice organization of the impending ter-
mination or discontinuance of the Medicare+Choice plan
in the area in which the individual resides, but only if the
individual disenrolls from the plan as a result of such noti-
fication.
‘‘(ii) In the case of an individual making such an elec-
tion, the issuer involved shall accept the application of the
individual submitted before the date of termination of en-
rollment, but the coverage under subparagraph (A) shall
only become effective upon termination of coverage under
the Medicare+Choice plan involved.’’.
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(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to notices of impend-
ing terminations or discontinuances made on or
after the date of the enactment of this Act.
(b) CONTINUOUS OPEN ENROLLMENT FOR INSTITU-
TIONALIZED
INDIVIDUALS.—Section 
1851(e)(2) 
(42
U.S.C. 1395w–21(e)(2)) is amended—
(1) in subparagraph (B)(i), by inserting ‘‘and
subparagraph (D)’’ after ‘‘clause (ii)’’;
(2) in subparagraph (C)(i), by inserting ‘‘and
subparagraph (D)’’ after ‘‘clause (ii)’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(D) CONTINUOUS
OPEN
ENROLLMENT
FOR
INSTITUTIONALIZED
INDIVIDUALS.—At
any time after 2001 in the case of a
Medicare+Choice eligible individual who is in-
stitutionalized, the individual may change the
election under subsection (a)(1).’’.
(c) CONTINUING ENROLLMENT FOR CERTAIN EN-
ROLLEES.—Section 1851(b)(1) (42 U.S.C. 1395w–
21(b)(1)) is amended—
(1) in subparagraph (A), by inserting ‘‘and ex-
cept as provided in subparagraph (C)’’ after ‘‘may
otherwise provide’’; and
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(2) by adding at the end the following new sub-
paragraph:
‘‘(C) CONTINUATION
OF
ENROLLMENT
PERMITTED WHERE SERVICE CHANGED.—Not-
withstanding 
subparagraph 
(B), 
if 
a
Medicare+Choice organization eliminates from
its service area a geographic area that was pre-
viously within its service area, the organization
may elect to offer individuals residing in all or
portions of the affected geographic area who
would otherwise be ineligible to continue enroll-
ment the option to continue enrollment in a
Medicare+Choice plan it offers so long as—
‘‘(i) the enrollee agrees to receive the
full range of basic benefits (excluding
emergency and urgently needed care) ex-
clusively at facilities designated by the or-
ganization within the plan service area;
and
‘‘(ii) 
there 
is 
no 
other
Medicare+Choice plan offered in the area
in which the enrollee resides at the time of
the organization’s election.’’.
(d) EFFECTIVE DATE.—The amendments made by
subsections (b) and (c) apply as if included in the enact-
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ment of BBA and the amendments made by subsection
(c) apply to eliminations of geographic areas from a serv-
ice area that occur before, on, or after the date of the
enactment of this Act.
SEC. 506. ALLOWING VARIATION IN PREMIUM WAIVERS
WITHIN 
A 
SERVICE 
AREA 
IF
MEDICARE+CHOICE PAYMENT RATES VARY
WITHIN THE AREA.
(a) IN
GENERAL.—Section 1854(c) (42 U.S.C.
1395w–24(c)) is amended—
(1) by striking ‘‘The’’ and inserting ‘‘Subject to
paragraph (2), the’’;
(2) by redesignating the first sentence as a
paragraph (1) with an appropriate indentation and
the heading ‘‘IN GENERAL.—’’; and
(3) by adding at the end the following new
paragraph:
‘‘(2) VARIATION
IN
PREMIUM
WAIVER
PER-
MITTED.—A Medicare+Choice organization may
waive part or all of a premium described in para-
graph (1) for one or more Medicare+Choice pay-
ment areas within its service area if the annual
Medicare+Choice capitation rates under section
1853(c) vary between such payment area and other
payment areas within such service area.’’.
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(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to premiums for contract years begin-
ning on or after January 1, 2001.
SEC. 507. DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES AND RELATED
INFORMATION.
(a) DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES
AND RELATED INFORMA-
TION.—Section 1854(a)(1) (42 U.S.C. 1395w–24(a)(1)) is
amended by striking ‘‘May 1’’ and inserting ‘‘July 1’’.
(b) ADJUSTMENT
IN INFORMATION DISCLOSURE
PROVISIONS.—Section 
1851(d)(2)(A)(ii) 
(42 
U.S.C.
1395w–21(d)(2)(A)(ii)) is amended by inserting after ‘‘in-
formation described in paragraph (4) concerning such
plans’’ the following: ‘‘, to the extent such information is
available at the time of preparation of the material for
mailing’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply with respect to information submitted
by Medicare+Choice organizations (and provided to bene-
ficiaries) for years beginning with 1999.
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SEC. 508. TWO-YEAR EXTENSION OF MEDICARE COST CON-
TRACTS.
Section 
1876(h)(5)(B) 
(42 
U.S.C.
1395mm(h)(5)(B)) is amended by striking ‘‘2002’’ and in-
serting ‘‘2004’’.
SEC. 
509. 
MEDICARE+CHOICE 
NURSING 
AND 
ALLIED
HEALTH PROFESSIONAL EDUCATION PAY-
MENTS.
Section 1886(d)(11) (42 U.S.C. 1395ww(d)(11)) is
amended—
(1) in subparagraph (A)—
(A) by designating the portion following
‘‘IN GENERAL.—’’ as a clause (i) with the head-
ing ‘‘GRADUATE
MEDICAL
TRAINING.—’’ and
appropriate indentation; and
(B) by adding at the end the following new
clause:
‘‘(ii) NURSING AND ALLIED HEALTH
TRAINING.—For portions of cost reporting
periods occurring on or after January 1,
2000, the Secretary shall provide for an
additional payment amount for each appli-
cable discharge of any subsection (d) hos-
pital that has direct costs of approved edu-
cation activities for nurse and allied health
professional training.’’;
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(2) in subparagraph (C)—
(A) designating the portion following ‘‘DE-
TERMINATION OF AMOUNT.—’’ as a clause (i)
with the heading ‘‘GRADUATE MEDICAL TRAIN-
ING.—’’ and appropriate indentation;
(B) by striking ‘‘under this paragraph’’
and inserting ‘‘under subparagraph (A)(i)’’;
(C) by inserting ‘‘the DGME portion (as
defined in clause (iii)) of’’ after ‘‘shall be equal
to’’; and
(D) by adding at the end the following new
clauses:
‘‘(ii) NURSING AND ALLIED HEALTH
TRAINING.—The amount of the payment
under subparagraph (A)(ii) with respect to
any applicable discharge shall be equal to
an amount specified by the Secretary in a
manner consistent with the following:
‘‘(I) The total payments under
such subparagraph in a year shall
bear the same ratio to the Secretary’s
estimate of the total payments under
subparagraph (A)(i) in the year as the
ratio (as estimated by the Secretary)
of the total payments under this title
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for direct costs described in subpara-
graph (A)(ii) in the year bear to the
total payments under section 1886(h)
in the year; but in no case shall the
total payments under subparagraph
(A)(ii) exceed $60,000,000 in a year.
‘‘(II) The payments to different
hospitals are proportional to the direct
costs of each hospital described in
subparagraph (A)(ii).
‘‘(iii) DGME PORTION
DEFINED.—
For purposes of this subparagraph, the
‘DGME portion’ means, for a year, the
ratio of—
‘‘(I) the amount by which (aa)
the Secretary’s estimate of the total
additional payments that would be
payable under this paragraph for the
year if subparagraph (A)(ii) and
clause (ii) of this subparagraph did
not apply, exceeds (bb) the total pay-
ments in the year under subparagraph
(A)(ii), to
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‘‘(II) the total additional pay-
ments 
estimated 
under 
subclause
(I)(aa) for the year.’’.
SEC. 510. REDUCTION IN ADJUSTMENT IN NATIONAL PER
CAPITA MEDICARE+CHOICE GROWTH PER-
CENTAGE FOR 2002.
Section 
1853(c)(6)(B)(iv) 
(42 
U.S.C. 
1395w–
23(c)(6)(B)(iv)) is amended by striking ‘‘0.5 percentage
points’’ and inserting ‘‘0.3 percentage points’’.
SEC. 511. DEEMING OF MEDICARE+CHOICE ORGANIZATION
TO MEET REQUIREMENTS.
Section 1852(e)(4) (42 U.S.C. 1395w–22(e)(4)) is
amended to read as follows:
‘‘(4) TREATMENT
OF
ACCREDITATION.—The
Secretary shall provide that a Medicare+Choice or-
ganization is deemed to meet requirements of para-
graphs (1) and (2) of this subsection and subsection
(h) (relating to confidentiality and accuracy of en-
rollee records) if the organization is accredited (and
periodically reaccredited) by a private accrediting or-
ganization under a process that the Secretary has
determined assures that the accrediting organization
applies standards that meet or exceed the standards
established under section 1856 to carry out the re-
spective requirements. The Secretary shall deter-