I
106TH CONGRESS
2D SESSION
H. R. 5601
To amend titles XVIII, XIX, and XXI of the Social Security Act to provide
benefits improvements and beneficiary protections in the Medicare and
Medicaid programs and the State child health insurance program
(SCHIP), as revised by the Balanced Budget Act of 1997 and the
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 30, 2000
Mr. RANGEL (for himself and Mr. DINGELL) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Commerce, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend titles XVIII, XIX, and XXI of the Social Security
Act to provide benefits improvements and beneficiary
protections in the Medicare and Medicaid programs and
the State child health insurance program (SCHIP), as
revised by the Balanced Budget Act of 1997 and the
Medicare, Medicaid, and SCHIP Balanced Budget Re-
finement Act of 1999, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU-
RITY ACT; REFERENCES TO OTHER ACTS;
TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
Act an amendment is expressed in terms of an amendment
to or repeal of a section or other provision, the reference
shall be considered to be made to that section or other
provision of the Social Security Act.
(c) REFERENCES TO OTHER ACTS.—In this Act:
(1) BALANCED
BUDGET
ACT
OF
1997.—The
term ‘‘BBA’’ means the Balanced Budget Act of
1997 (Public Law 105–33; 111 Stat. 251).
(2) MEDICARE, MEDICAID, AND
SCHIP
BAL-
ANCED
BUDGET
REFINEMENT
ACT
OF
1999.—The
term ‘‘BBRA’’ means the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement Act of 1999
(Appendix F, 113 Stat. 1501A–321), as enacted into
law by section 1000(a)(6) of Public Law 106–113.
(d) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to other Acts;
table of contents.
Sec. 211. Equitable treatment for rural disproportionate share hospitals.
Sec. 212. Option to base eligibility for medicare dependent, small rural hospital
program on discharges during 2 of the 3 most recently audited
cost reporting periods.
Sec. 213. Extension of option to use rebased target amounts to all sole commu-
nity hospitals.
Sec. 214. MedPAC analysis of impact of volume on per unit cost of rural hos-
pitals with psychiatric units.
Subtitle C—Other Rural Provisions
Sec. 221. Assistance for providers of ambulance services in rural areas.
Sec. 222. Payment for certain physician assistant services.
Sec. 223. Revision of medicare reimbursement for telehealth services.
Sec. 224. Expanding access to rural health clinics.
Sec. 225. MedPAC study on low-volume, isolated rural health care providers.
TITLE III—PROVISIONS RELATING TO PART A
Subtitle A—Inpatient Hospital Services
Sec. 301. Eliminating reduction in pps hospital payment update.
Sec. 302. Additional modification in transition for indirect medical education
(IME) percentage adjustment.
Sec. 303. Decrease in reductions for disproportionate share hospital (DSH)
payments.
Sec. 304. Wage index improvements.
Sec. 305. Payment for inpatient services of rehabilitation hospitals.
Sec. 306. Payment for inpatient services of psychiatric hospitals.
Sec. 307. Payment for inpatient services of long-term care hospitals.
Sec. 308. Increase in base payment to Puerto Rico acute care hospitals.
Subtitle B—Adjustments to PPS Payments for Skilled Nursing Facilities
Sec. 311. Elimination of reduction in skilled nursing facility (SNF) market bas-
ket update in 2001.
Sec. 312. Increase in nursing component of PPS Federal rate.
Sec. 313. Application of SNF consolidated billing requirement limited to part
A covered stays.
Sec. 314. Adjustment of rehabilitation RUGs to correct anomaly in payment
rates.
Sec. 315. Establishment of process for geographic reclassification.
Subtitle C—Hospice Care
Sec. 321. Full market basket increase for 2001 and 2002.
Sec. 322. Clarification of physician certification.
Sec. 323. MedPAC report on access to, and use of, hospice benefit.
Subtitle D—Other Provisions
Sec. 331. Relief from medicare part A late enrollment penalty for group buy-
in for State and local retirees.
Sec. 332. Hospital geographic reclassification for labor costs for other PPS sys-
tems.
TITLE IV—PROVISIONS RELATING TO PART B
Subtitle A—Hospital Outpatient Services
Sec. 401. Revision of hospital outpatient PPS payment update.
Sec. 402. Clarifying process and standards for determining eligibility of devices
for pass-through payments under hospital outpatient PPS.
Sec. 403. Application of OPD PPS transitional corridor payments to certain
hospitals that did not submit a 1996 cost report.
Sec. 404. Application of rules for determining provider-based status for certain
entities.
Sec. 405. Treatment of children’s hospitals under prospective payment system.
Sec. 406. Inclusion of temperature monitored cryoablation in transitional pass-
through for certain medical devices, drugs, and biologicals
under OPD PPS.
Subtitle B—Provisions Relating to Physicians’ Services
Sec. 411. GAO studies relating to physicians’ services.
Sec. 412. Physician group practice demonstration.
Sec. 413. Study on enrollment procedures for groups that retain independent
contractor physicians.
Subtitle C—Other Services
Sec. 421. 1-year extension of moratorium on therapy caps; report on standards
for supervision of physical therapy assistants.
Sec. 422. Update in renal dialysis composite rate.
Sec. 423. Payment for ambulance services.
Sec. 424. Ambulatory surgical centers.
Sec. 425. Full update for durable medical equipment.
Sec. 426. Full update for orthotics and prosthetics.
Sec. 427. Establishment of special payment provisions and requirements for
prosthetics and certain custom fabricated orthotic items.
Sec. 428. Replacement of prosthetic devices and parts.
Sec. 429. Revised part B payment for drugs and biologicals and related serv-
ices.
Sec. 430. Contrast enhanced diagnostic procedures under hospital prospective
payment system.
Sec. 431. Qualifications for community mental health centers.
Sec. 432. Modification of medicare billing requirements for certain Indian pro-
viders.
Sec. 433. GAO study on coverage of surgical first assisting services of certified
registered nurse first assistants.
Sec. 434. MedPAC study and report on medicare reimbursement for services
provided by certain providers.
Sec. 435. MedPAC study and report on medicare coverage of services provided
by certain nonphysician providers.
Sec. 436. GAO study and report on the costs of emergency and medical trans-
portation services.
Sec. 437. GAO studies and reports on medicare payments.
Sec. 438. MedPAC study on access to outpatient pain management services.
TITLE V—PROVISIONS RELATING TO PARTS A AND B
Subtitle A—Home Health Services
Sec. 501. 2-year additional delay in application of 15 percent reduction on pay-
ment limits for home health services.
Sec. 502. Restoration of full home health market basket update for home
health services for fiscal year 2001.
Sec. 503. Temporary two-month extension of periodic interim payments.
Sec. 504. Use of telehealth in delivery of home health services.
Sec. 505. Study on costs to home health agencies of purchasing nonroutine
medical supplies.
Sec. 506. Treatment of branch offices; GAO study on supervision of home
health care provided in isolated rural areas.
Sec. 507. Clarification of the homebound definition under the medicare home
health benefit.
Subtitle B—Direct Graduate Medical Education
Sec. 511. Increase in floor for direct graduate medical education payments.
Sec. 512. Change in distribution formula for Medicare+Choice-related nursing
and allied health education costs.
Subtitle C—Changes in Medicare Coverage and Appeals Process
Sec. 521. Revisions to medicare appeals process.
Sec. 522. Revisions to medicare coverage process.
Subtitle D—Improving Access to New Technologies
Sec. 531. Reimbursement improvements for new clinical laboratory tests and
durable medical equipment.
Sec. 532. Retention of HCPCS level III codes.
Sec. 533. Recognition of new medical technologies under inpatient hospital
PPS.
Subtitle E—Other Provisions
Sec. 541. Increase in reimbursement for bad debt.
Sec. 542. Treatment of certain physician pathology services under medicare.
Sec. 543. Extension of advisory opinion authority.
Sec. 544. Change in annual MedPAC reporting.
Sec. 545. Development of patient assessment instruments.
Sec. 546. GAO report on impact of the Emergency Medical Treatment and Ac-
tive Labor Act (EMTALA) on hospital emergency departments.
Sec. 547. Application of Bloodborne Pathogen standard to certain hospitals.
TITLE 
VI—PROVISIONS 
RELATING 
TO 
PART 
C
(MEDICARE+CHOICE PROGRAM) AND OTHER MEDICARE MAN-
AGED CARE PROVISIONS
Subtitle A—Medicare+Choice Payment Reforms
Sec. 601. Increase in minimum payment amount.
Sec. 602. Increase in minimum percentage increase.
Sec. 603. 10-year phase-in of risk adjustment.
Sec. 604. Transition to revised Medicare+Choice payment rates.
Sec. 605. Revision of payment rates for ESRD patients enrolled in
Medicare+Choice plans.
Sec. 606. Permitting premium reductions as additional benefits under
Medicare+Choice plans.
Sec. 607. Full implementation of risk adjustment for congestive heart failure
enrollees for 2001.
Sec. 608. Expansion of application of Medicare+Choice new entry bonus.
Sec. 609. Report on inclusion of certain costs of the Department of Veterans
Affairs 
and 
military 
facility 
services 
in 
calculating
Medicare+Choice payment rates.
Subtitle B—Other Medicare+Choice Reforms
Sec. 611. Payment of additional amounts for new benefits covered during a
contract term.
Sec. 612. Restriction on implementation of significant new regulatory require-
ments mid-year.
Sec. 613. Timely approval of marketing material that follows model marketing
language.
Sec. 614. Avoiding duplicative regulation.
Sec. 615. Election of uniform local coverage policy for Medicare+Choice plan
covering multiple localities.
Sec. 616. Eliminating health disparities in Medicare+Choice program.
Sec. 617. Medicare+Choice program compatibility with employer or union
group health plans.
Sec. 618. Special medigap enrollment antidiscrimination provision for certain
beneficiaries.
Sec. 619. Restoring effective date of elections and changes of elections of
Medicare+Choice plans.
Sec. 620. Permitting ESRD beneficiaries to enroll in another Medicare+Choice
plan if the plan in which they are enrolled is terminated.
Sec. 621. Providing choice for skilled nursing facility services under the
Medicare+Choice program.
Sec. 622. Providing for accountability of Medicare+Choice plans.
Sec. 623. Civil monetary penalties for contract default by a Medicare+Choice
organization.
Subtitle C—Other Managed Care Reforms
Sec. 631. 1-year extension of social health maintenance organization (SHMO)
demonstration project.
Sec. 632. Revised terms and conditions for extension of medicare community
nursing organization (CNO) demonstration project.
Sec. 633. Extension of medicare municipal health services demonstration
projects.
Sec. 634. Service area expansion for medicare cost contracts during transition
period.
TITLE VII—MEDICAID
Sec. 701. DSH payments.
Sec. 702. New prospective payment system for Federally-qualified health cen-
ters and rural health clinics.
Sec. 703. Streamlined approval of continued State-wide section 1115 medicaid
waivers.
Sec. 704. Medicaid county-organized health systems.
Sec. 705. Deadline for issuance of final regulation relating to medicaid upper
payment limits.
Sec. 706. Alaska FMAP.
Sec. 707. Optional coverage of legal immigrants under the medicaid program.
Sec. 708. Additional entities qualified to determine medicaid presumptive eligi-
bility for low-income children.
Sec. 709. Improving welfare-to-work transition.
TITLE VIII—STATE CHILDREN’S HEALTH INSURANCE PROGRAM
Sec. 801. Special rule for redistribution and availability of unused fiscal year
1998 and 1999 SCHIP allotments.
Sec. 802. Authority to pay medicaid expansion SCHIP costs from title XXI ap-
propriation.
TITLE IX—OTHER PROVISIONS
Subtitle A—PACE Program
Sec. 901. Extension of transition for current waivers.
Sec. 902. Continuing of certain operating arrangements permitted.
Sec. 903. Flexibility in exercising waiver authority.
Subtitle B—Outreach to Eligible Low-Income Medicare Beneficiaries
Sec. 911. Outreach on availability of medicare cost-sharing assistance to eligible
low-income medicare beneficiaries.
Subtitle C—Maternal and Child Health Block Grant
Sec. 921. Increase in authorization of appropriations for the maternal and child
health services block grant.
Subtitle D—Diabetes
Sec. 931. Increase in appropriations for special diabetes programs for type I di-
abetes and Indians.
Sec. 932. Appropriations for Ricky Ray Hemophilia Relief Fund.
TITLE I—MEDICARE
BENEFICIARY IMPROVEMENTS
Subtitle A—Improved Preventive
Benefits
SEC. 101. COVERAGE OF BIENNIAL SCREENING PAP SMEAR
AND PELVIC EXAMS.
(a) IN GENERAL.—
(1) BIENNIAL SCREENING PAP SMEAR.—Section
1861(nn)(1) (42 U.S.C. 1395x(nn)(1)) is amended
by striking ‘‘3 years’’ and inserting ‘‘2 years’’.
(2) BIENNIAL SCREENING PELVIC EXAM.—Sec-
tion 1861(nn)(2) (42 U.S.C. 1395x(nn)(2)) is
coma which is furnished by or under the direct supervision
of an optometrist or ophthalmologist who is legally author-
ized to furnish such services under State law (or the State
regulatory mechanism provided by State law) of the State
in which the services are furnished, as would otherwise
be covered if furnished by a physician or as an incident
to a physician’s professional service, if the individual in-
volved has not had such an examination in the preceding
year.’’.
(c) 
CONFORMING
AMENDMENT.—Section
1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is amended—
(1) by striking ‘‘and,’’; and
(2) by adding at the end the following: ‘‘and, in
the case of screening for glaucoma, which is per-
formed more frequently than is provided under sec-
tion 1861(uu),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 2002.
SEC. 103. COVERAGE OF SCREENING COLONOSCOPY FOR
AVERAGE RISK INDIVIDUALS.
(a) IN GENERAL.—Section 1861(pp) (42 U.S.C.
1395x(pp)) is amended—
(1) in paragraph (1)(C), by striking ‘‘In the
case of an individual at high risk for colorectal can-
cer, screening colonoscopy’’ and inserting ‘‘Screening
colonoscopy’’; and
(2) in paragraph (2), by striking ‘‘In paragraph
(1)(C), an’’ and inserting ‘‘An’’.
(b) 
FREQUENCY
LIMITS
FOR
SCREENING
COLONOSCOPY.—Section 1834(d) (42 U.S.C. 1395m(d))
is amended—
(1) in paragraph (2)(E)(ii), by inserting before
the period at the end the following: ‘‘or, in the case
of an individual who is not at high risk for colorectal
cancer, if the procedure is performed within the 119
months after a previous screening colonoscopy’’;
(2) in paragraph (3)—
(A) in the heading by striking ‘‘FOR INDI-
VIDUALS AT HIGH RISK FOR COLORECTAL CAN-
CER’’;
(B) in subparagraph (A), by striking ‘‘for
individuals at high risk for colorectal cancer (as
defined in section 1861(pp)(2))’’;
(C) in subparagraph (E), by inserting be-
fore the period at the end the following: ‘‘or for
other individuals if the procedure is performed
within the 119 months after a previous screen-
ing colonoscopy or within 47 months after a
previous screening flexible sigmoidoscopy’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to colorectal cancer screening services
provided on or after July 1, 2001.
SEC. 104. MODERNIZATION OF SCREENING MAMMOGRAPHY
BENEFIT.
(a) INCLUSION IN PHYSICIAN FEE SCHEDULE.—Sec-
tion 1848(j)(3) (42 U.S.C. 1395w–4(j)(3)) is amended by
inserting ‘‘(13),’’ after ‘‘(4),’’.
(b) CONFORMING AMENDMENT.—Section 1834(c)
(42 U.S.C. 1395m(c)) is amended to read as follows:
‘‘(c) PAYMENT
AND STANDARDS
FOR SCREENING
MAMMOGRAPHY.—
‘‘(1) IN GENERAL.—With respect to expenses
incurred for screening mammography (as defined in
section 1861(jj)), payment may be made only—
‘‘(A) for screening mammography con-
ducted consistent with the frequency permitted
under paragraph (2); and
‘‘(B) if the screening mammography is
conducted by a facility that has a certificate (or
provisional certificate) issued under section 354
of the Public Health Service Act.
‘‘(2) FREQUENCY COVERED.—
‘‘(A) IN GENERAL.—Subject to revision by
the Secretary under subparagraph (B)—
‘‘(i) no payment may be made under
this part for screening mammography per-
formed on a woman under 35 years of age;
‘‘(ii) payment may be made under this
part for only one screening mammography
performed on a woman over 34 years of
age, but under 40 years of age; and
‘‘(iii) in the case of a woman over 39
years of age, payment may not be made
under this part for screening mammog-
raphy performed within 11 months fol-
lowing the month in which a previous
screening mammography was performed.
‘‘(B) REVISION OF FREQUENCY.—
‘‘(i) REVIEW.—The Secretary, in con-
sultation with the Director of the National
Cancer Institute, shall review periodically
the appropriate frequency for performing
screening mammography, based on age
and such other factors as the Secretary be-
lieves to be pertinent.
‘‘(ii) REVISION OF FREQUENCY.—The
Secretary, taking into consideration the re-
view made under clause (i), may revise
from time to time the frequency with
which screening mammography may be
paid for under this subsection.’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) apply with respect to screening
mammographies furnished on or after January 1, 2002.
(d) PAYMENT FOR NEW TECHNOLOGIES.—
(1) TESTS FURNISHED IN 2001.—
(A) SCREENING.—For a screening mam-
mography (as defined in section 1861(jj) of the
Social Security Act (42 U.S.C. 1395(jj))) fur-
nished during the period beginning on April 1,
2001, and ending on December 31, 2001, that
uses a new technology, payment for such
screening mammography shall be made as fol-
lows:
(i) In the case of a technology which
directly takes a digital image (without in-
volving film) and subsequently analyzes
such resulting image with software to iden-
tify possible problem areas, in an amount
equal to 150 percent of the amount of pay-
ment under section 1848 of such Act (42
U.S.C. 1395w–4) for a bilateral diagnostic
mammography 
(under 
HCPCS 
code
76091) for such year.
new HCPCS code is appropriate for screening mam-
mography that uses a new technology. If the Sec-
retary determines that a new code is appropriate for
such screening mammography, the Secretary shall
provide for such new code for such tests furnished
after 2001.
(3) NEW TECHNOLOGY DESCRIBED.—For pur-
poses of this subsection, a new technology with re-
spect to a screening mammography is an advance in
technology with respect to the test or equipment
that results in the following:
(A) A significant increase or decrease in
the resources used in the test or in the manu-
facture of the equipment.
(B) A significant improvement in the per-
formance of the test or equipment.
(C) A significant advance in medical tech-
nology that is expected to significantly improve
the treatment of medicare beneficiaries.
(4) 
HCPCS 
CODE
DEFINED.—The 
term
‘‘HCPCS code’’ means an alphanumeric code under
the Health Care Financing Administration Common
Procedure Coding System (HCPCS).
SEC. 105. COVERAGE OF MEDICAL NUTRITION THERAPY
SERVICES FOR BENEFICIARIES WITH DIABE-
TES OR A RENAL DISEASE.
(a) COVERAGE.—Section 1861(s)(2) (42 U.S.C.
1395x(s)(2)), as amended by section 102(a), is amended—
(1) in subparagraph (T), by striking ‘‘and’’ at
the end;
(2) in subparagraph (U), by inserting ‘‘and’’ at
the end; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(V) medical nutrition therapy services (as de-
fined in subsection (vv)(1)) in the case of a bene-
ficiary with diabetes or a renal disease who—
‘‘(i) has not received diabetes outpatient
self-management training services within a time
period determined by the Secretary; and
‘‘(ii) meets such other criteria determined
by the Secretary after consideration of protocols
established by dietitian or nutrition professional
organizations;’’.
(b) SERVICES DESCRIBED.—Section 1861 (42 U.S.C.
1395x), as amended by section 102(b), is amended by add-
ing at the end the following:
‘‘Medical Nutrition Therapy Services; Registered
Dietitian or Nutrition Professional
‘‘(vv)(1) The term ‘medical nutrition therapy serv-
ices’ means nutritional diagnostic, therapy, and counseling
services for the purpose of disease management which are
furnished by a registered dietitian or nutrition profes-
sional (as defined in paragraph (2)) pursuant to a referral
by a physician (as defined in subsection (r)(1)).
‘‘(2) Subject to paragraph (3), the term ‘registered
dietitian or nutrition professional’ means an individual
who—
‘‘(A) holds a baccalaureate or higher degree
granted by a regionally accredited college or univer-
sity in the United States (or an equivalent foreign
degree) with completion of the academic require-
ments of a program in nutrition or dietetics, as ac-
credited by an appropriate national accreditation or-
ganization recognized by the Secretary for this pur-
pose;
‘‘(B) has completed at least 900 hours of super-
vised dietetics practice under the supervision of a
registered dietitian or nutrition professional; and
‘‘(C)(i) is licensed or certified as a dietitian or
nutrition professional by the State in which the serv-
ices are performed; or
‘‘(ii) in the case of an individual in a State that
does not provide for such licensure or certification,
meets such other criteria as the Secretary estab-
lishes.
‘‘(3) Subparagraphs (A) and (B) of paragraph (2)
shall not apply in the case of an individual who, as of the
date of the enactment of this subsection, is licensed or cer-
tified as a dietitian or nutrition professional by the State
in which medical nutrition therapy services are per-
formed.’’.
(c) PAYMENT.—Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended—
(1) by striking ‘‘and’’ before ‘‘(S)’’; and
(2) by inserting before the semicolon at the end
the following: ‘‘, and (T) with respect to medical nu-
trition therapy services (as defined in section
1861(vv)), the amount paid shall be 80 percent of
the lesser of the actual charge for the services or 85
percent of the amount determined under the fee
schedule established under section 1848(b) for the
same services if furnished by a physician’’.
(d) APPLICATION OF LIMITS ON BILLING.—Section
1842(b)(18)(C) (42 U.S.C. 1395u(b)(18)(C)) is amended
by adding at the end the following new clause:
‘‘(vi) A registered dietitian or nutrition profes-
sional.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after Janu-
ary 1, 2002.
(f) STUDY.—Not later than July 1, 2003, the Sec-
retary of Health and Human Services shall submit to Con-
gress a report that contains recommendations with respect
to the expansion to other medicare beneficiary populations
of the medical nutrition therapy services benefit (furnished
under the amendments made by this section).
SEC. 106. EXTENSION OF PART A COVERAGE FOR WORKERS
WITH DISABILITIES.
(a) CONTINUATION OF COVERAGE.—
(1) IN GENERAL.—Section 226 (42 U.S.C. 426)
is amended—
(A) in the third sentence of subsection (b),
by inserting ‘‘, except as provided in subsection
(j)’’ after ‘‘but not in excess of 24 such
months’’; and
(B) by adding at the end the following:
‘‘(j) The 24-month limitation on deemed entitlement
under the third sentence of subsection (b) shall not
apply—
‘‘(1) for months occurring during the 10-year
period beginning with the first month that begins
after the date of enactment of this subsection; and
‘‘(2) for subsequent months, in the case of an
individual who was entitled to benefits under sub-
section (b) as of the last month of such 10-year pe-
riod and would continue (but for such 24-month lim-
itation) to be so entitled.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1818A(a)(2)(C) (42 U.S.C. 1395i–2a(a)(2)(C)) is
amended—
(A) by striking ‘‘solely’’; and
(B) by inserting ‘‘or the expiration of the
last month of the 10-year period described in
section 226(j)’’ before the semicolon.
(b) GAO REPORT.—Not later than 8 years after the
date of the enactment of this section, the Comptroller
General of the United States shall submit a report to the
Congress that—
(1) examines the effectiveness and cost of sub-
section (j) of section 226 (42 U.S.C. 426); and
(2) recommends whether such subsection (j)
should continue to be applied beyond the 10-year pe-
riod described in the subsection.
(c) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to months beginning with the first
month that begins after the date of enactment of this sec-
tion.
(d) TREATMENT OF CERTAIN INDIVIDUALS.—An in-
dividual enrolled under section 1818A (42 U.S.C.
1395i2a) shall be treated with respect to premium pay-
ment obligations under such section as though the indi-
vidual had continued to be entitled to benefits under sec-
tion 226(b) for—
(1) months described in section 226(j)(1) (42
U.S.C. 426(j)(1)) (as added by subsection (a)); and
(2) subsequent months, in the case of an indi-
vidual who was so enrolled as of the last month de-
scribed in section 226(j)(2) (42 U.S.C. 426(j)(2))
(as so added).
(e) REPEAL OF PARTIAL EXTENSION PROVISION AND
STUDY REQUIREMENT.—Section 202 of Public Law 106–
170 is repealed.
SEC. 107. MEDICAID RECOGNITION FOR SERVICES OF PHY-
SICIAN ASSISTANTS.
(a) IN
GENERAL.—Section 1905(a) (42 U.S.C.
1396d(a)) is amended—
(1) by redesignating paragraphs (22) through
(27) as paragraphs (23) through (28), respectively;
and
(2) by inserting after paragraph (21) the fol-
lowing new paragraph:
‘‘(22) services furnished by a physician assist-
ant (as defined in section 1861(aa)(5)) which the as-
sistant is legally authorized to perform under State
law and with the supervision of a physician;’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is
amended by striking ‘‘(24)’’ and inserting ‘‘(25)’’.
(2) 
Section 
1929(e)(2)(A) 
(42 
U.S.C.
1396t(e)(2)(A)) is amended by striking ‘‘1905(a)(23)’’
and inserting ‘‘1905(a)(24)’’.
(3) 
Section 
1917(c)(1)(C)(ii) 
(42 
U.S.C.
1396(p)(c)(1)(C)(ii)) is amended by striking ‘‘(22), or
(24)’’ and inserting ‘‘(23), or (25)’’.
Subtitle B—Other Beneficiary
Improvements
SEC. 111. ACCELERATION OF REDUCTION OF BENEFICIARY
COPAYMENT FOR HOSPITAL OUTPATIENT DE-
PARTMENT SERVICES.
(a) REDUCING THE UPPER LIMIT ON BENEFICIARY
COPAYMENT.—
(1) IN
GENERAL.—Section 1833(t)(8)(C) (42
U.S.C. 1395l(t)(8)(C)) is amended to read as fol-
lows:
‘‘(C) 
LIMITATION
ON
COPAYMENT
AMOUNT.—
‘‘(i) TO
INPATIENT
HOSPITAL
DE-
DUCTIBLE AMOUNT.—In no case shall the
copayment amount for a procedure per-
formed in a year exceed the amount of the
inpatient hospital deductible established
under section 1813(b) for that year.
‘‘(ii) TO
SPECIFIED
PERCENTAGE.—
The Secretary shall reduce the national
unadjusted copayment amount for a cov-
ered OPD service (or group of such serv-
ices) furnished in a year in a manner so
that the effective copayment rate (deter-
mined on a national unadjusted basis) for
that service in the year does not exceed the
following percentage:
‘‘(I) For procedures performed in
2001, 60 percent.
‘‘(II) For procedures performed
in 2002 or 2003, 55 percent.
‘‘(III) For procedures performed
in 2004, 50 percent.
‘‘(IV) For procedures performed
in 2005, 45 percent.
‘‘(V) For procedures performed
in 2006 and thereafter, 40 percent.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies with respect to services
furnished on or after January 1, 2001.
(b) CONSTRUCTION
REGARDING
LIMITING
IN-
CREASES IN COST-SHARING.—Nothing in this Act or the
Social Security Act shall be construed as preventing a hos-
pital from waiving the amount of any coinsurance for out-
patient hospital services under the medicare program
under title XVIII of the Social Security Act that may have
been increased as a result of the implementation of the
prospective payment system under section 1833(t) of the
Social Security Act (42 U.S.C. 1395l(t)).
(c) GAO STUDY OF REDUCTION IN MEDIGAP PRE-
MIUM LEVELS RESULTING FROM REDUCTIONS IN COIN-
SURANCE.—The Comptroller General of the United States
shall work, in concert with the National Association of In-
surance Commissioners, to evaluate the extent to which
the premium levels for medicare supplemental policies re-
flect the reductions in coinsurance resulting from the
amendment made by subsection (a). Not later than April
1, 2004, the Comptroller General shall submit to Congress
a report on such evaluation and the extent to which the
reductions in beneficiary coinsurance effected by such
amendment have resulted in actual savings to medicare
beneficiaries.
SEC. 112. PRESERVATION OF COVERAGE OF DRUGS AND
BIOLOGICALS UNDER PART B OF THE MEDI-
CARE PROGRAM.
(a) IN GENERAL.—Section 1861(s)(2) (42 U.S.C.
1395x(s)(2)) is amended, in each of subparagraphs (A)
and (B), by striking ‘‘(including drugs and biologicals
which cannot, as determined in accordance with regula-
tions, be self-administered)’’ and inserting ‘‘(including
drugs and biologicals which are not usually self-adminis-
tered by the patient)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to drugs and biologicals adminis-
tered on or after the date of the enactment of this Act.
SEC. 113. ELIMINATION OF TIME LIMITATION ON MEDI-
CARE BENEFITS FOR IMMUNOSUPPRESSIVE
DRUGS.
(a) IN GENERAL.—Section 1861(s)(2)(J) (42 U.S.C.
1395x(s)(2)(J)) is amended by striking ‘‘, but only’’ and
all that follows up to the semicolon at the end.
(b) CONFORMING AMENDMENTS.—
(1) EXTENDED COVERAGE.—Section 1832 (42
U.S.C. 1395k) is amended—
(A) by striking subsection (b); and
(B) by redesignating subsection (c) as sub-
section (b).
(2) PASS-THROUGH; REPORT.—Section 227 of
BBRA is amended by striking subsection (d).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to drugs furnished on or after
the date of the enactment of this Act.
SEC. 114. IMPOSITION OF BILLING LIMITS ON DRUGS.
(a) IN
GENERAL.—Section 1842(o) (42 U.S.C.
1395u(o)) is amended by adding at the end the following
new paragraph:
‘‘(3)(A) Payment for a charge for any drug or biologi-
cal for which payment may be made under this part may
be made under this part only on an assignment-related
basis.
‘‘(B) The provisions of subsection (b)(18)(B) shall
apply to charges for such drugs or biologicals in the same
manner as they apply to services furnished by a practi-
tioner described in subsection (b)(18)(C).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items furnished on or after
January 1, 2001.
SEC. 115. IMPROVING AVAILABILITY OF QMB/SLMB APPLI-
CATION FORMS.
(a) THROUGH LOCAL SOCIAL SECURITY OFFICES.—
(1) IN
GENERAL.—Section 1804 (42 U.S.C.
1395b–2) is amended by adding at the end the fol-
lowing new subsection:
‘‘(d) AVAILABILITY
OF APPLICATION FORMS
FOR
MEDICAL ASSISTANCE FOR MEDICARE COST-SHARING.—
The Secretary shall make available to the Commissioner
of Social Security appropriate forms for applying for med-
ical assistance for medicare cost-sharing under a State
plan under title XIX. Such Commissioner, through local
offices of the Social Security Administration shall—
‘‘(1) notify applicants and beneficiaries who
present at a local office orally of the availability of
such forms and make such forms available to such
individuals upon request; and
‘‘(2) provide assistance to such individuals in
completing such forms and, upon request, in submit-
ting such forms to the appropriate State agency.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1902(a)(8) (42 U.S.C. 1396a(a)(8)) is amended by
inserting before the semicolon at the end the fol-
lowing: ‘‘and provide application forms for medical
assistance for medicare cost-sharing under the plan
to the Secretary in order to make them available
through Federal offices under section 1804(d) within
the State’’.
(b) STREAMLINING APPLICATION PROCESS.—
(1) REQUIREMENT.—Section 1902(a)(8) (42
U.S.C. 1396a(a)(8)) is amended by striking ‘‘, and
that’’ and inserting ‘‘permit individuals to apply for
and obtain medical assistance for medicare cost-
sharing using the simplified uniform application
form developed under section 1905(p)(5), make
available such forms to such individuals, permit such
individuals to apply for such assistance by mail
(and, at the State option, by telephone or other elec-
tronic means) and not require them to apply in per-
son, and provide that’’.
(2) SIMPLIFIED
APPLICATION
FORM.—Section
1905(p) (42 U.S.C. 1396d(p)) is amended by adding
at the end the following new paragraph:
‘‘(5)(A) The Secretary shall develop a simplified ap-
plication form for use by individuals (including both quali-
fied medicare beneficiaries and specified low-income medi-
care beneficiaries) in applying for medical assistance for
medicare cost-sharing under this title. Such form shall be
easily readable by applicants and uniform nationally.
‘‘(B) In developing such form, the Secretary shall
consult with beneficiary groups and the States.
‘‘(C) The Secretary shall make such application
forms available—
‘‘(i) to the Commissioner of Social Security for
distribution through local social security offices;
‘‘(ii) at such other sites at the Secretary deter-
mines appropriate; and
‘‘(iii) to persons upon request.’’.
(c) EFFECTIVE DATES.—
(1) The amendments made by subsection (a)
take effect on January 1, 2004.
(2) EFFECTIVE DATE.—The amendments made
by subsection (b) take effect 1 year after the date
of the enactment of this Act, regardless of whether
regulations have been promulgated to carry out such
amendments by such date. Secretary of Health and
Human Services shall develop the uniform applica-
tion form under the amendment made by subsection
(b)(2) by not later than 9 months after the date of
the enactment of this Act.
Subtitle C—Demonstration
Projects and Studies
SEC. 121. DEMONSTRATION PROJECT FOR DISEASE MAN-
AGEMENT FOR SEVERELY CHRONICALLY ILL
MEDICARE BENEFICIARIES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a demonstration project
under this section (in this section referred to as the
‘‘project’’) to demonstrate the impact on costs and health
outcomes of applying disease management to medicare
beneficiaries with diagnosed, advanced-stage congestive
heart failure, diabetes, or coronary heart disease. In no
case may the number of participants in the project exceed
30,000 at any time.
(b) VOLUNTARY PARTICIPATION.—
(1) ELIGIBILITY.—Medicare beneficiaries are
eligible to participate in the project only if—
(A) they meet specific medical criteria
demonstrating the appropriate diagnosis and
the advanced nature of their disease;
(B) their physicians approve of participa-
tion in the project; and
(C) 
they 
are 
not 
enrolled 
in 
a
Medicare+Choice plan.
(2) BENEFITS.—A beneficiary who is enrolled
in the project shall be eligible—
(A) for disease management services re-
lated to their chronic health condition; and
(B) for payment for all costs for prescrip-
tion drugs without regard to whether or not
they relate to the chronic health condition, ex-
cept that the project may provide for modest
cost-sharing with respect to prescription drug
coverage.
(c) CONTRACTS WITH DISEASE MANAGEMENT ORGA-
NIZATIONS.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall carry out the project through
contracts with up to three disease management orga-
nizations. The Secretary shall not enter into such a
contract with an organization unless the organiza-
tion demonstrates that it can produce improved
health outcomes and reduce aggregate medicare ex-
penditures consistent with paragraph (2).
(2) 
CONTRACT
PROVISIONS.—Under 
such
contracts—
(A) such an organization shall be required
to provide for prescription drug coverage de-
scribed in subsection (b)(2)(B);
(B) such an organization shall be paid a
fee negotiated and established by the Secretary
in a manner so that (taking into account sav-
ings in expenditures under parts A and B of
the medicare program under title XVIII of the
Social Security Act) there will be a net reduc-
tion in expenditures under the medicare pro-
gram as a result of the project; and
(C) such an organization shall guarantee,
through an appropriate arrangement with a re-
insurance company or otherwise, the net reduc-
tion in expenditures described in subparagraph
(B).
(3) PAYMENTS.—Payments to such organiza-
tions shall be made in appropriate proportion from
the Trust Funds established under title XVIII of the
Social Security Act.
(d) APPLICATION
OF MEDIGAP PROTECTIONS
TO
DEMONSTRATION PROJECT ENROLLEES.—(1) Subject to
paragraph (2), the provisions of section 1882(s)(3) (other
than clauses (i) through (iv) of subparagraph (B)) and
1882(s)(4) of the Social Security Act shall apply to enroll-
ment (and termination of enrollment) in the demonstra-
tion project under this section, in the same manner as they
apply to enrollment (and termination of enrollment) with
a Medicare+Choice organization in a Medicare+Choice
plan.
(2) In applying paragraph (1)—
(A) any reference in clause (v) or (vi) of section
1882(s)(3)(B) of such Act to 12 months is deemed
a reference to the period of the demonstration
project; and
(B) the notification required under section
1882(s)(3)(D) of such Act shall be provided in a
manner specified by the Secretary of Health and
Human Services.
(e) DURATION.—The project shall last for not longer
than 3 years.
(f) WAIVER.—The Secretary of Health and Human
Services shall waive such provisions of title XVIII of the
Social Security Act as may be necessary to provide for
payment for services under the project in accordance with
subsection (c)(3).
(g) REPORT.—The Secretary of Health and Human
Services shall submit to Congress an interim report on the
project not later than 2 years after the date it is first im-
plemented and a final report on the project not later than
6 months after the date of its completion. Such reports
shall include information on the impact of the project on
costs and health outcomes and recommendations on the
cost-effectiveness of extending or expanding the project.
SEC. 122. CANCER PREVENTION AND TREATMENT DEM-
ONSTRATION FOR ETHNIC AND RACIAL MI-
NORITIES.
(a) DEMONSTRATION.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the
‘‘Secretary’’) shall conduct demonstration projects
(in this section referred to as ‘‘demonstration
projects’’) for the purpose of developing models and
evaluating methods that—
(A) improve the quality of items and serv-
ices provided to target individuals in order to
facilitate reduced disparities in early detection
and treatment of cancer;
(B) improve clinical outcomes, satisfaction,
quality of life, and appropriate use of medicare-
covered services and referral patterns among
those target individuals with cancer;
(C) eliminate disparities in the rate of pre-
ventive cancer screening measures, such as pap
smears and prostate cancer screenings, among
target individuals; and
(D) promote collaboration with community-
based organizations to ensure cultural com-
petency of health care professionals and lin-
guistic access for persons with limited English
proficiency.
(2) TARGET
INDIVIDUAL
DEFINED.—In this
section, the term ‘‘target individual’’ means an indi-
vidual of a racial and ethnic minority group, as de-
fined by section 1707 of the Public Health Service
Act, who is entitled to benefits under part A, and
enrolled under part B, of title XVIII of the Social
Security Act.
(b) PROGRAM DESIGN.—
(1) INITIAL DESIGN.—Not later than 1 year
after the date of the enactment of this Act, the Sec-
retary shall evaluate best practices in the private
sector, community programs, and academic research
of methods that reduce disparities among individuals
of racial and ethnic minority groups in the preven-
tion and treatment of cancer and shall design the
demonstration projects based on such evaluation.
(2) NUMBER AND PROJECT AREAS.—Not later
than 2 years after the date of the enactment of this
Act, the Secretary shall implement at least 9 dem-
onstration projects, including the following:
(A) 2 projects for each of the 4 major ra-
cial and ethnic minority groups (American Indi-
ans (including Alaska Natives, Eskimos, and
Aleuts); Asian Americans and Pacific Islanders;
Blacks; and Hispanics. The 2 projects must
target different ethnic subpopulations.
(B) 1 project within the Pacific Islands.
(C) At least 1 project each in a rural area
and inner-city area.
(3) EXPANSION
OF
PROJECTS; IMPLEMENTA-
TION
OF
DEMONSTRATION
PROJECT
RESULTS.—If
the initial report under subsection (c) contains an
evaluation that demonstration projects—
(A) reduce expenditures under the medi-
care program under title XVIII of the Social
Security Act; or
(B) do not increase expenditures under the
medicare program and reduce racial and ethnic
health disparities in the quality of health care
services provided to target individuals and in-
crease satisfaction of beneficiaries and health
care providers;
the Secretary shall continue the existing demonstra-
tion projects and may expand the number of dem-
onstration projects.
(c) REPORT TO CONGRESS.—
(1) IN GENERAL.—Not later than 2 years after
the date the Secretary implements the initial dem-
onstration projects, and biannually thereafter, the
Secretary shall submit to Congress a report regard-
ing the demonstration projects.
(2) CONTENTS OF REPORT.—Each report under
paragraph (1) shall include the following:
(A) A description of the demonstration
projects.
(B) An evaluation of—
(i) the cost-effectiveness of the dem-
onstration projects;
(ii) the quality of the health care serv-
ices provided to target individuals under
the demonstration projects; and
(iii) beneficiary and health care pro-
vider satisfaction under the demonstration
projects.
(C) Any other information regarding the
demonstration projects that the Secretary de-
termines to be appropriate.
(d) WAIVER AUTHORITY.—The Secretary shall waive
compliance with the requirements of title XVIII of the So-
cial Security Act to such extent and for such period as
the Secretary determines is necessary to conduct dem-
onstration projects.
(e) FUNDING.—
(1) DEMONSTRATION PROJECTS.—
(A) STATE PROJECTS.—Except as provided
in subparagraph (B), the Secretary shall pro-
vide for the transfer from the Federal Hospital
Insurance Trust Fund and the Federal Supple-
mentary Insurance Trust Fund under title
XVIII of the Social Security Act, in such pro-
portions as the Secretary determines to be ap-
propriate, of such funds as are necessary for
the costs of carrying out the demonstration
projects.
(B) TERRITORY PROJECTS.—In the case of
a demonstration project described in subsection
(b)(2)(B), amounts shall be available only as
provided in any Federal law making appropria-
tions for the territories.
(2) LIMITATION.—In conducting demonstration
projects, the Secretary shall ensure that the aggre-
gate payments made by the Secretary do not exceed
the sum of the amount which the Secretary would
have paid under the program for the prevention and
treatment of cancer if the demonstration projects
were not implemented, plus $25,000,000.
SEC. 123. STUDY ON MEDICARE COVERAGE OF ROUTINE
THYROID SCREENING.
(a) STUDY.—The Secretary of Health and Human
Services shall request the National Academy of Sciences,
and as appropriate in conjunction with the United States
Preventive Services Task Force, to conduct a study on the
addition of coverage of routine thyroid screening using a
thyroid stimulating hormone test as a preventive benefit
provided to medicare beneficiaries under title XVIII of the
Social Security Act for some or all medicare beneficiaries.
In conducting the study, the Academy shall consider the
short-term and long-term benefits, and costs to the medi-
care program, of such addition.
(b) REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Secretary of Health and
Human Services shall submit a report on the findings of
the study conducted under subsection (a) to the Com-
mittee on Ways and Means and the Committee on Com-
merce of the House of Representatives and the Committee
on Finance of the Senate.
SEC. 124. MEDPAC STUDY ON CONSUMER COALITIONS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study that examines the use of
consumer coalitions in the marketing of Medicare+Choice
plans under the medicare program under title XVIII of
the Social Security Act. The study shall examine—
(1) the potential for increased efficiency in the
medicare 
program 
through 
greater 
beneficiary
knowledge of their health care options, decreased
marketing costs of Medicare+Choice organizations,
and creation of a group market;
(2) the implications of Medicare+Choice plans
and medicare supplemental policies (under section
1882 of the Social Security Act (42 U.S.C. 1395ss))
offering medicare beneficiaries in the same geo-
graphic location different benefits and premiums
based on their affiliation with a consumer coalition;
(3) how coalitions should be governed, how they
should be accountable to the Secretary of Health
and Human Services, and how potential conflicts of
interest in the activities of consumer coalitions
should be avoided; and
(4) how such coalitions should be funded.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Commission shall submit
to Congress a report on the study conducted under sub-
section (a). The report shall include a recommendation on
whether and how a demonstration project might be con-
ducted for the operation of consumer coalitions under the
medicare program.
(c) CONSUMER COALITION DEFINED.—For purposes
of this section, the term ‘‘consumer coalition’’ means a
nonprofit, community-based group of organizations that—
(1) provides information to medicare bene-
ficiaries about their health care options under the
medicare program; and
(2) negotiates benefits and premiums for medi-
care beneficiaries who are members or otherwise af-
filiated with the group of organizations with
Medicare+Choice 
organizations 
offering
Medicare+Choice plans, issuers of medicare supple-
mental policies, issuers of long-term care coverage,
and pharmacy benefit managers.
SEC. 125. STUDY ON LIMITATION ON STATE PAYMENT FOR
MEDICARE COST-SHARING AFFECTING AC-
CESS TO SERVICES FOR QUALIFIED MEDI-
CARE BENEFICIARIES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a study to determine if ac-
cess to certain services (including mental health services)
for qualified medicare beneficiaries has been affected by
limitations on a State’s payment for medicare cost-sharing
for such beneficiaries under section 1902(n) of the Social
Security Act (42 U.S.C. 1396a(n)). As part of such study,
the Secretary shall analyze the effect of such payment lim-
itation on providers who serve a disproportionate share of
such beneficiaries.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Secretary shall submit
to Congress a report on the study under subsection (a).
The report shall include recommendations regarding any
changes that should be made to the State payment limits
under section 1902(n) for qualified medicare beneficiaries
to ensure appropriate access to services.
SEC. 126. WAIVER OF 24-MONTH WAITING PERIOD FOR
MEDICARE COVERAGE OF INDIVIDUALS DIS-
ABLED WITH AMYOTROPHIC LATERAL SCLE-
ROSIS (ALS).
(a) IN GENERAL.—Section 226 (42 U.S.C. 426) is
amended—
(1) by redesignating subsection (h) as sub-
section (j) and by moving such subsection to the end
of the section, and
(2) by inserting after subsection (g) the fol-
lowing new subsection:
‘‘(h) For purposes of applying this section in the case
of an individual medically determined to have amyotrophic
lateral sclerosis (ALS), the following special rules apply:
‘‘(1) Subsection (b) shall be applied as if there
were no requirement for any entitlement to benefits,
or status, for a period longer than 1 month.
‘‘(2) The entitlement under such subsection
shall begin with the first month (rather than twenty-
fifth month) of entitlement or status.
‘‘(3) Subsection (f) shall not be applied.’’.
(b) CONFORMING AMENDMENT.—Section 1837 (42
U.S.C. 1395p) is amended by adding at the end the fol-
lowing new subsection:
‘‘(j) In applying this section in the case of an indi-
vidual who is entitled to benefits under part A pursuant
to the operation of section 226(h), the following special
rules apply:
‘‘(1) The initial enrollment period under sub-
section (d) shall begin on the first day of the first
month in which the individual satisfies the require-
ment of section 1836(1).
‘‘(2) In applying subsection (g)(1), the initial
enrollment period shall begin on the first day of the
first month of entitlement to disability insurance
benefits referred to in such subsection.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to benefits for months beginning after
the date of the enactment of this Act.
SEC. 127. STUDIES ON PREVENTIVE INTERVENTIONS IN
PRIMARY CARE FOR OLDER AMERICANS.
(a) STUDIES.—The Secretary of Health and Human
Services, acting through the United States Preventive
Services Task Force, shall conduct a series of studies de-
signed to identify preventive interventions that can be de-
livered in the primary care setting and that are most valu-
able to older Americans.
(b) MISSION STATEMENT.—The mission statement of
the United States Preventive Services Task Force is
amended to include the evaluation of services that are of
particular relevance to older Americans.
(c) REPORT.—Not later than 1 year after the date
of the enactment of this Act, and annually thereafter, the
Secretary of Health and Human Services shall submit to
Congress a report on the conclusions of the studies con-
ducted under subsection (a), together with recommenda-
tions for such legislation and administrative actions as the
Secretary considers appropriate.
SEC. 128. MEDPAC STUDY AND REPORT ON MEDICARE COV-
ERAGE OF CARDIAC AND PULMONARY REHA-
BILITATION THERAPY SERVICES.
(a) STUDY.—
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission shall conduct a study on coverage
of cardiac and pulmonary rehabilitation therapy
services under the medicare program under title
XVIII of the Social Security Act.
(2) FOCUS.—In conducting the study under
paragraph (1), the Commission shall focus on the
appropriate—
(A) qualifying diagnoses required for cov-
erage of cardiac and pulmonary rehabilitation
therapy services;
(B) level of physician direct involvement
and supervision in furnishing such services; and
(C) level of reimbursement for such serv-
ices.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a) together with such recommendations for
legislation and administrative action as the Commission
determines appropriate.
TITLE II—RURAL HEALTH CARE
IMPROVEMENTS
Subtitle A—Critical Access
Hospital Provisions
SEC. 201. CLARIFICATION OF NO BENEFICIARY COST-SHAR-
ING FOR CLINICAL DIAGNOSTIC LABORA-
TORY TESTS FURNISHED BY CRITICAL AC-
CESS HOSPITALS.
(a) PAYMENT CLARIFICATION.—Section 1834(g) (42
U.S.C. 1395m(g)) is amended by adding at the end the
following new paragraph:
‘‘(4) NO
BENEFICIARY
COST-SHARING
FOR
CLINICAL DIAGNOSTIC LABORATORY SERVICES.—No
coinsurance, deductible, copayment, or other cost-
sharing otherwise applicable under this part shall
apply with respect to clinical diagnostic laboratory
services furnished as an outpatient critical access
hospital service. Nothing in this title shall be con-
strued as providing for payment for clinical diag-
nostic laboratory services furnished as part of out-
patient critical access hospital services, other than
on the basis described in this subsection.’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Paragraphs (1)(D)(i) and (2)(D)(i) of sec-
tion 1833(a) (42 U.S.C. 1395l(a)) are each amended
by striking ‘‘or which are furnished on an outpatient
basis by a critical access hospital’’.
(2) Section 403(d)(2) of BBRA (113 Stat.
1501A–371) is amended by striking ‘‘The amend-
ment made by subsection (a) shall apply’’ and in-
serting ‘‘Paragraphs (1) through (3) of section
1834(g) of the Social Security Act (as amended by
paragraph (1)) apply’’.
(c) EFFECTIVE DATES.—The amendment made—
(1) by subsection (a) applies to services fur-
nished on or after the date of the enactment of
BBRA;
(2) by subsection (b)(1) applies as if included
in the enactment of section 403(e)(1) of BBRA (113
Stat. 1501A–371); and
(3) by subsection (b)(2) applies as if included
in the enactment of section 403(d)(2) of BBRA
(113 Stat. 1501A–371).
SEC. 202. ASSISTANCE WITH FEE SCHEDULE PAYMENT FOR
PROFESSIONAL SERVICES UNDER ALL-INCLU-
SIVE RATE.
(a) IN GENERAL.—Section 1834(g)(2)(B) (42 U.S.C.
1395m(g)(2)(B)) is amended by inserting ‘‘115 percent
of’’ before ‘‘such amounts’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies with respect to items and services
furnished on or after April 1, 2001.
SEC. 203. EXEMPTION OF CRITICAL ACCESS HOSPITAL
SWING BEDS FROM SNF PPS.
(a) IN GENERAL.—Section 1888(e)(7) (42 U.S.C.
1395yy(e)(7)) is amended—
(1) in the heading, by striking ‘‘TRANSITION
FOR’’ and inserting ‘‘TREATMENT OF’’;
(2) in subparagraph (A), by striking ‘‘IN GEN-
ERAL.—The’’ and inserting ‘‘TRANSITION.—Subject
to subparagraph (C), the’’;
(3) in subparagraph (A), by inserting ‘‘(other
than critical access hospitals)’’ after ‘‘facilities de-
scribed in subparagraph (B)’’;
(4) in subparagraph (B), by striking ‘‘, for
which payment’’ and all that follows before the pe-
riod; and
(5) by adding at the end the following new sub-
paragraph:
‘‘(C) EXEMPTION
FROM
PPS
OF
SWING-
BED SERVICES FURNISHED IN CRITICAL ACCESS
HOSPITALS.—The prospective payment system
established under this subsection shall not
apply to services furnished by a critical access
hospital pursuant to an agreement under sec-
tion 1883.’’.
(b) PAYMENT ON A REASONABLE COST BASIS FOR
SWING BED SERVICES FURNISHED BY CRITICAL ACCESS
HOSPITALS.—Section 1883(a) (42 U.S.C. 1395tt(a)) is
amended—
(1) in paragraph (2)(A), by inserting ‘‘(other
than a critical access hospital)’’ after ‘‘any hospital’’;
and
(2) by adding at the end the following new
paragraph:
‘‘(3) Notwithstanding any other provision of this title,
a critical access hospital shall be paid for covered skilled
nursing facility services furnished under an agreement en-
tered into under this section on the basis of the reasonable
costs of such services (as determined under section
1861(v)).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to cost reporting periods beginning
on or after the date of the enactment of this Act.
SEC. 204. PAYMENT IN CRITICAL ACCESS HOSPITALS FOR
EMERGENCY ROOM ON-CALL PHYSICIANS.
(a) IN
GENERAL.—Section 1834(g) (42 U.S.C.
1395m(g)), as amended by section 201(a), is further
amended by adding at the end the following new para-
graph:
‘‘(5) COVERAGE
OF
COSTS
FOR
EMERGENCY
ROOM
ON-CALL
PHYSICIANS.—In determining the
reasonable costs of outpatient critical access hospital
services under paragraphs (1) and (2)(A), the Sec-
retary shall recognize as allowable costs, amounts
(as defined by the Secretary) for reasonable com-
pensation and related costs for emergency room phy-
sicians who are on-call (as defined by the Secretary)
but who are not present on the premises of the crit-
ical access hospital involved, and are not otherwise
furnishing physicians’ services and are not on-call at
any other provider or facility.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to cost reporting periods beginning
on or after October 1, 2001.
SEC. 205. TREATMENT OF AMBULANCE SERVICES FUR-
NISHED BY CERTAIN CRITICAL ACCESS HOS-
PITALS.
(a) IN
GENERAL.—Section 1834(l) (42 U.S.C.
1395m(l)) is amended by adding at the end the following
new paragraph:
‘‘(8) SERVICES
FURNISHED
BY
CRITICAL
AC-
CESS HOSPITALS.—Notwithstanding any other provi-
sion of this subsection, the Secretary shall pay the
reasonable costs incurred in furnishing ambulance
services if such services are furnished—
‘‘(A) by a critical access hospital (as de-
fined in section 1861(mm)(1)), or
‘‘(B) by an entity that is owned and oper-
ated by a critical access hospital,
but only if the critical access hospital or entity is the
only provider or supplier of ambulance services that
is located within a 35-mile drive of such critical ac-
cess hospital.’’.
(b) 
CONFORMING
AMENDMENT.—Section
1833(a)(1)(R) (42 U.S.C. 1395l(a)(1)(R)) is amended—
(1) by striking ‘‘ambulance service,’’ and insert-
ing ‘‘ambulance services, (i)’’; and
(2) by inserting before the comma at the end
the following: ‘‘and (ii) with respect to ambulance
services described in section 1834(l)(8), the amounts
paid shall be the amounts determined under section
1834(g) for outpatient critical access hospital serv-
ices’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after the date
of the enactment of this Act.
SEC. 206. GAO STUDY ON CERTAIN ELIGIBILITY REQUIRE-
MENTS FOR CRITICAL ACCESS HOSPITALS.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study on the eligibility requirements
for critical access hospitals under section 1820(c) of the
Social Security Act (42 U.S.C. 1395i–4(c)) with respect
to limitations on average length of stay and number of
beds in such a hospital, including an analysis of—
(1) the feasibility of having a distinct part unit
as part of a critical access hospital for purposes of
the medicare program under title XVIII of such Act,
and
(2) the effect of seasonal variations in patient
admissions on critical access hospital eligibility re-
quirements with respect to limitations on average
annual length of stay and number of beds.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Comptroller General shall
submit to Congress a report on the study conducted under
subsection 
(a) 
together 
with 
recommendations
regarding—
(1) whether distinct part units should be per-
mitted as part of a critical access hospital under the
medicare program;
(2) if so permitted, the payment methodologies
that should apply with respect to services provided
by such units;
(3) whether, and to what extent, such units
should be included in or excluded from the bed limits
applicable to critical access hospitals under the
medicare program; and
(4) any adjustments to such eligibility require-
ments to account for seasonal variations in patient
admissions.
Subtitle B—Other Rural Hospitals
Provisions
SEC. 211. EQUITABLE TREATMENT FOR RURAL DISPROPOR-
TIONATE SHARE HOSPITALS.
(a) APPLICATION OF UNIFORM THRESHOLD.—Sec-
tion 1886(d)(5)(F)(v) (42 U.S.C. 1395ww(d)(5)(F)(v)) is
amended—
(1) in subclause (II), by inserting ‘‘(or 15 per-
cent, for discharges occurring on or after October 1,
2001)’’ after ‘‘30 percent’’;
(2) in subclause (III), by inserting ‘‘(or 15 per-
cent, for discharges occurring on or after October 1,
2001)’’ after ‘‘40 percent’’; and
(3) in subclause (IV), by inserting ‘‘(or 15 per-
cent, for discharges occurring on or after October 1,
2001)’’ after ‘‘45 percent’’.
(b) ADJUSTMENT OF PAYMENT FORMULAS.—
(1) SOLE
COMMUNITY
HOSPITALS.—Section
1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is
amended—
(A) in clause (iv)(VI), by inserting after
‘‘10 percent’’ the following: ‘‘or, for discharges
occurring on or after October 1, 2001, is equal
to the percent determined in accordance with
clause (x)’’; and
(B) by adding at the end the following new
clause:
‘‘(x) For purposes of clause (iv)(VI),
in the case of a hospital for a cost report-
ing period with a disproportionate patient
percentage (as defined in clause (vi))
that—
‘‘(I) is less than 19.3, the dis-
proportionate share adjustment per-
centage is determined in accordance
with 
the 
following 
formula: 
(P–
15)(.65)–2.5;
‘‘(II) is equal to or exceeds 19.3,
but is less than 30.0, such adjustment
percentage is equal to 5.25 percent; or
‘‘(III) is equal to or exceeds 30,
such adjustment percentage is equal
to 10 percent, where P is the hos-
pital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
(2) RURAL REFERRAL CENTERS.—Such section
is further amended—
(A) in clause (iv)(V), by inserting after
clause (viii) the following: or, for discharges oc-
curring on or after October 1, 2001, is equal to
the percent determined in accordance with
clause (xi); and
(B) by adding at the end the following new
clause:
‘‘(xi) For purposes of clause (iv)(V),
in the case of a hospital for a cost report-
ing period with a disproportionate patient
percentage (as defined in clause (vi))
that—
‘‘(I) is less than 19.3, the dis-
proportionate share adjustment per-
centage is determined in accordance
with 
the 
following 
formula: 
(P–
15)(.65)–2.5;
‘‘(II) is equal to or exceeds 19.3,
but is less than 30.0, such adjustment
percentage is equal to 5.25 percent; or
‘‘(III) is equal to or exceeds 30,
such adjustment percentage is deter-
mined in accordance with the fol-
lowing 
formula: 
(P–30)(.6)–5.25,
where P is the hospital’s dispropor-
tionate patient percentage (as defined
in clause (vi)).’’.
(3) SMALL
RURAL
HOSPITALS
GENERALLY.—
Such section is further amended—
(A) in clause (iv)(III), by inserting after
‘‘4 percent’’ the following: ‘‘or, for discharges
occurring on or after October 1, 2001, is equal
to the percent determined in accordance with
clause (xii)’’; and
(B) by adding at the end the following new
clause:
‘‘(xii) For purposes of clause (iv)(III),
in the case of a hospital for a cost report-
ing period with a disproportionate patient
percentage (as defined in clause (vi))
that—
‘‘(I) is less than 19.3, the dis-
proportionate share adjustment per-
centage is determined in accordance
with 
the 
following 
formula: 
(P–
15)(.65)–2.5;
‘‘(II) is equal to or exceeds 19.3,
such adjustment percentage is equal
to 5.25 percent, where P is the hos-
pital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
(4) HOSPITALS THAT ARE BOTH SOLE COMMU-
NITY HOSPITALS AND RURAL REFERRAL CENTERS.—
Such section is further amended, in clause (iv)(IV),
by inserting after clause (viii) the following: ‘‘or, for
discharges occurring on or after October 1, 2001,
the greater of the percentages determined under
clause (x) or (xi)’’.
(5) URBAN HOSPITALS WITH LESS THAN 100
BEDS.—Such section is further amended—
(A) in clause (iv)(II), by inserting after 5
percent the following: ‘‘or, for discharges occur-
ring on or after October 1, 2001, is equal to the
percent determined in accordance with clause
(xiii); and
(B) by adding at the end the following new
clause:
‘‘(xiii) For purposes of clause (iv)(II),
in the case of a hospital for a cost report-
ing period with a disproportionate patient
percentage (as defined in clause (vi))
that—
‘‘(I) is less than 19.3, the dis-
proportionate share adjustment per-
centage is determined in accordance
with 
the 
following 
formula: 
(P–
15)(.65)–2.5;
‘‘(II) is equal to or exceeds 19.3,
such adjustment percentage is equal
to 5.25 percent; where P is the hos-
pital’s disproportionate patient per-
centage (as defined in clause (vi)).’’.
SEC. 212. OPTION TO BASE ELIGIBILITY FOR MEDICARE DE-
PENDENT, SMALL RURAL HOSPITAL PRO-
GRAM ON DISCHARGES DURING 2 OF THE 3
MOST RECENTLY AUDITED COST REPORTING
PERIODS.
(a) IN
GENERAL.—Section 1886(d)(5)(G)(iv)(IV)
(42 U.S.C. 1395ww(d)(5)(G)(iv)(IV)) is amended by in-
serting ‘‘, or 2 of the 3 most recently audited cost report-
ing periods for which the Secretary has a settled cost re-
port,’’ after ‘‘1987’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply with respect to cost reporting peri-
ods beginning on or after April 1, 2001.
SEC. 213. EXTENSION OF OPTION TO USE REBASED TARGET
AMOUNTS TO ALL SOLE COMMUNITY HOS-
PITALS.
(a) IN
GENERAL.—Section 1886(b)(3)(I)(i) (42
U.S.C. 1395ww(b)(3)(I)(i)) is amended—
(1) in the matter preceding subclause (I), by
striking ‘‘that for its cost reporting period beginning
during 1999’’ and all that follows through ‘‘for such
target amount’’ and inserting ‘‘there shall be sub-
stituted for the amount otherwise determined under
subsection (d)(5)(D)(i), if such substitution results
in a greater amount of payment under this section
for the hospital’’;
(2) in subclause (I), by striking ‘‘target amount
otherwise applicable’’ and all that follows through
‘‘target amount’)’’ and inserting ‘‘the amount other-
wise applicable to the hospital under subsection
(d)(5)(D)(i) (referred to in this clause as the ‘sub-
section (d)(5)(D)(i) amount’)’’; and
(3) in each of subclauses (II) and (III), by
striking ‘‘subparagraph (C) target amount’’ and in-
serting ‘‘subsection (d)(5)(D)(i) amount’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of section 405 of BBRA (113 Stat. 1501A–372).
SEC. 214. MEDPAC ANALYSIS OF IMPACT OF VOLUME ON
PER UNIT COST OF RURAL HOSPITALS WITH
PSYCHIATRIC UNITS.
The Medicare Payment Advisory Commission, in its
study conducted pursuant to subsection (a) of section 411
of BBRA (113 Stat. 1501A–377), shall include—
(1) in such study an analysis of the impact of
volume on the per unit cost of rural hospitals with
psychiatric units; and
(2) in its report under subsection (b) of such
section a recommendation on whether special treat-
ment for such hospitals may be warranted.
Subtitle C—Other Rural Provisions
SEC. 221. ASSISTANCE FOR PROVIDERS OF AMBULANCE
SERVICES IN RURAL AREAS.
(a) TRANSITIONAL ASSISTANCE IN CERTAIN MILE-
AGE RATES.—Section 1834(l) (42 U.S.C. 1395m(l)) is
amended by adding at the end the following new para-
graph:
‘‘(8) TRANSITIONAL
ASSISTANCE
FOR
RURAL
PROVIDERS.—In the case of ground ambulance serv-
ices furnished on or after the date on which the Sec-
retary implements the fee schedule under this sub-
section and before January 1, 2004, for which the
transportation originates in a rural area (as defined
in section 1886(d)(2)(D)) or in a rural census tract
of a metropolitan statistical area (as determined
under the most recent modification of the Goldsmith
Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg.
6725)), the fee schedule established under this sub-
section shall provide that, with respect to the pay-
ment rate for mileage for a trip above 17 miles, and
up to 50 miles, the rate otherwise established shall
be increased by not less than 1⁄2 of the additional
payment per mile established for the first 17 miles
of such a trip originating in a rural area.’’.
(b) GAO STUDIES ON THE COSTS OF AMBULANCE
SERVICES FURNISHED IN RURAL AREAS.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on each of the
matters described in paragraph (2).
(2) MATTERS
DESCRIBED.—The matters re-
ferred to in paragraph (1) are the following:
(A) The cost of efficiently providing ambu-
lance services for trips originating in rural
areas, with special emphasis on collection of
cost data from rural providers.
(B) The means by which rural areas with
low population densities can be identified for
the purpose of designating areas in which the
cost of providing ambulance services would be
expected to be higher than similar services pro-
vided in more heavily populated areas because
of low usage. Such study shall also include an
analysis of the additional costs of providing am-
bulance services in areas designated under the
previous sentence.
(3) REPORT.—Not later than June 30, 2002,
the Comptroller General shall submit to Congress a
report on the results of the studies conducted under
paragraph (1) and shall include recommendations on
steps that should be taken to assure access to ambu-
lance services in rural areas.
(c) ADJUSTMENT IN RURAL RATES.—In providing
for adjustments under subparagraph (D) of section
1834(l)(2) of the Social Security Act (42 U.S.C.
1395m(l)(2)) for years beginning with 2004, the Secretary
of Health and Human Services shall take into consider-
ation the recommendations contained in the report under
subsection (b)(2) and shall adjust the fee schedule pay-
ment rates under such section for ambulance services pro-
vided in low density rural areas based on the increased
cost (if any) of providing such services in such areas.
(d) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to services furnished on or after the
date the Secretary implements the fee schedule under sec-
tion 1834(l) of the Social Security Act (42 U.S.C.
1395m(l)). In applying such amendment to services fur-
nished on or after such date and before January 1, 2002,
the amount of the rate increase provided under such
amendment shall be equal to $1.25 per mile.
SEC. 222. PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT
SERVICES.
(a) PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT
SERVICES.—Section 
1842(b)(6)(C) 
(42 
U.S.C.
1395u(b)(6)(C)) is amended—
(1) by striking ‘‘for such services provided be-
fore January 1, 2003,’’; and
(2) by striking the semicolon at the end and in-
serting a comma.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 223. REVISION OF MEDICARE REIMBURSEMENT FOR
TELEHEALTH SERVICES.
(a) TIME LIMIT
FOR BBA PROVISION.—Section
4206(a) of BBA (42 U.S.C. 1395l note) is amended by
striking ‘‘Not later than January 1, 1999’’ and inserting
‘‘For services furnished on and after January 1, 1999, and
before July 1, 2001’’.
(b) EXPANSION OF MEDICARE PAYMENT FOR TELE-
HEALTH SERVICES.—Section 1834 (42 U.S.C. 1395m) is
amended by adding at the end the following new sub-
section:
‘‘(m) PAYMENT FOR TELEHEALTH SERVICES.—
‘‘(1) IN GENERAL.—The Secretary shall pay for
telehealth services that are furnished via a tele-
communications system by a physician (as defined in
section 1861(r)) or a practitioner (described in sec-
tion 1842(b)(18)(C)) to an eligible telehealth indi-
vidual enrolled under this part notwithstanding that
the individual physician or practitioner providing the
telehealth service is not at the same location as the
beneficiary. For purposes of the preceding sentence,
in the case of any Federal telemedicine demonstra-
tion program conducted in Alaska or Hawaii, the
term ‘telecommunications system’ includes store-
and-forward technologies that provide for the asyn-
chronous transmission of health care information in
single or multimedia formats.
‘‘(2) PAYMENT AMOUNT.—
‘‘(A) DISTANT SITE.—The Secretary shall
pay to a physician or practitioner located at a
distant site that furnishes a telehealth service
to an eligible telehealth individual an amount
equal to the amount that such physician or
practitioner would have been paid under this
title had such service been furnished without
the use of a telecommunications system.
‘‘(B) FACILITY
FEE
FOR
ORIGINATING
SITE.—With respect to a telehealth service, sub-
ject to section 1833(a)(1)(U), there shall be
paid to the originating site a facility fee equal
to—
‘‘(i) for the period beginning on July
1, 2001, and ending on December 31,
2001, and for 2002, $20; and
‘‘(ii) for a subsequent year, the facil-
ity fee specified in clause (i) or this clause
for the preceding year increased by the
percentage increase in the MEI (as defined
in section 1842(i)(3)) for such subsequent
year.
‘‘(C) TELEPRESENTER NOT REQUIRED.—
Nothing in this subsection shall be construed as
requiring an eligible telehealth individual to be
presented by a physician or practitioner at the
originating site for the furnishing of a service
via a telecommunications system, unless it is
medically necessary (as determined by the phy-
sician or practitioner at the distant site).
‘‘(3) LIMITATION ON BENEFICIARY CHARGES.—
‘‘(A) PHYSICIAN
AND
PRACTITIONER.—
The provisions of section 1848(g) and subpara-
graphs (A) and (B) of section 1842(b)(18) shall
apply to a physician or practitioner receiving
payment under this subsection in the same
manner as they apply to physicians or practi-
tioners under such sections.
‘‘(B) ORIGINATING SITE.—The provisions
of section 1842(b)(18) shall apply to originating
sites receiving a facility fee in the same manner
as they apply to practitioners under such sec-
tion.
‘‘(4) DEFINITIONS.—For purposes of this sub-
section:
‘‘(A) DISTANT
SITE.—The term ‘distant
site’ means the site at which the physician or
practitioner is located at the time the service is
provided via a telecommunications system.
‘‘(B) 
ELIGIBLE
TELEHEALTH
INDI-
VIDUAL.—The term ‘eligible telehealth indi-
vidual’ means an individual enrolled under this
part who receives a telehealth service furnished
at an originating site.
‘‘(C) ORIGINATING SITE.—
‘‘(i) IN GENERAL.—The term ‘origi-
nating site’ means only those sites de-
scribed in clause (ii) at which the eligible
telehealth individual is located at the time
the service is furnished via a telecommuni-
cations system and only if such site is
located—
‘‘(I) in an area that is designated
as a rural health professional shortage
area under section 332(a)(1)(A) of
the Public Health Service Act (42
U.S.C. 254e(a)(1)(A));
‘‘(II) in a county that is not in-
cluded in a Metropolitan Statistical
Area; or
‘‘(III) from an entity that partici-
pates in a Federal telemedicine dem-
onstration project that has been ap-
proved by (or receives funding from)
the Secretary of Health and Human
Services as of December 31, 2000.
‘‘(ii) SITES
DESCRIBED.—The sites
referred to in clause (i) are the following
sites:
‘‘(I) The office of a physician or
practitioner.
‘‘(II) A critical access hospital
(as defined in section 1861(mm)(1)).
‘‘(III) A rural health clinic (as
defined in section 1861(aa)(s)).
‘‘(IV) 
A 
Federally 
qualified
health center (as defined in section
1861(aa)(4)).
‘‘(V) A hospital (as defined in
section 1861(e)).
‘‘(D) PHYSICIAN.—The term ‘physi-
cian’ has the meaning given that term in
section 1861(r).
‘‘(E) 
PRACTITIONER.—The 
term
‘practitioner’ has the meaning given that
term in section 1842(b)(18)(C).
‘‘(F) TELEHEALTH SERVICE.—
‘‘(i) IN
GENERAL.—The term ‘tele-
health service’ means professional con-
sultations, office visits, and office psychi-
atry services (identified as of July 1, 2000,
by HCPCS codes 99241–99275, 99201–
99215, 90804–90809, and 90862 (and as
subsequently modified by the Secretary)),
and any additional service specified by the
Secretary.
‘‘(ii) YEARLY
UPDATE.—The Sec-
retary shall establish a process that pro-
vides, on an annual basis, for the addition
or deletion of services (and HCPCS codes),
as appropriate, to those specified in clause
(i) for authorized payment under para-
graph (1).’’.
(c) CONFORMING AMENDMENT.—Section 1833(a)(1)
(42 U.S.C. 1395l(1)), as amended by section 105(c), is
further amended—
(1) by striking ‘‘and (T)’’ and inserting ‘‘(T)’’;
and
(2) by inserting before the semicolon at the end
the following: ‘‘, and (U) with respect to facility fees
described in section 1834(m)(2)(B), the amounts
paid shall be 80 percent of the lesser of the actual
charge or the amounts specified in such section’’.
(d) STUDY
AND REPORT
ON ADDITIONAL COV-
ERAGE.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study to identify—
(A) settings and sites for the provision of
telehealth services that are in addition to those
permitted under section 1834(m) of the Social
Security Act, as added by subsection (b);
(B) practitioners that may be reimbursed
under such section for furnishing telehealth
services that are in addition to the practitioners
that may be reimbursed for such services under
such section; and
(C) geographic areas in which telehealth
services may be reimbursed that are in addition
to the geographic areas where such services
may be reimbursed under such section.
(2) REPORT.—Not later than 2 years after the
date of the enactment of this Act, the Secretary
shall submit to Congress a report on the study con-
ducted under paragraph (1) together with such rec-
ommendations for legislation that the Secretary de-
termines are appropriate.
(e) EFFECTIVE DATE.—The amendments made by
subsections (b) and (c) shall be effective for services fur-
nished on or after July 1, 2001.
SEC. 224. EXPANDING ACCESS TO RURAL HEALTH CLINICS.
(a) IN GENERAL.—The matter in section 1833(f) (42
U.S.C. 1395l(f)) preceding paragraph (1) is amended by
striking ‘‘rural hospitals’’ and inserting ‘‘hospitals’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
July 1, 2001.
SEC. 225. MEDPAC STUDY ON LOW-VOLUME, ISOLATED
RURAL HEALTH CARE PROVIDERS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on the effect of low patient
and procedure volume on the financial status of low-vol-
ume, isolated rural health care providers participating in
the medicare program under title XVIII of the Social Se-
curity Act.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a) indicating—
(1) whether low-volume, isolated rural health
care providers are having, or may have, significantly
decreased medicare margins or other financial dif-
ficulties resulting from any of the payment meth-
odologies described in subsection (c);
(2) whether the status as a low-volume, isolated
rural health care provider should be designated
under the medicare program and any criteria that
should be used to qualify for such a status; and
(3) any changes in the payment methodologies
described in subsection (c) that are necessary to pro-
vide appropriate reimbursement under the medicare
program to low-volume, isolated rural health care
providers (as designated pursuant to paragraph (2)).
(c) PAYMENT METHODOLOGIES DESCRIBED.—The
payment methodologies described in this subsection are
the following:
(1) The prospective payment system for hos-
pital outpatient department services under section
1833(t) of the Social Security Act (42 U.S.C.
1395l(t)).
(2) The fee schedule for ambulance services
under section 1834(l) of such Act (42 U.S.C.
1395m(l)).
(3) The prospective payment system for inpa-
tient hospital services under section 1886 of such
Act (42 U.S.C. 1395ww).
(4) The prospective payment system for routine
service costs of skilled nursing facilities under sec-
tion 1888(e) of such Act (42 U.S.C. 1395yy(e)).
(5) The prospective payment system for home
health services under section 1895 of such Act (42
U.S.C. 1395fff).
TITLE III—PROVISIONS
RELATING TO PART A
Subtitle A—Inpatient Hospital
Services
SEC. 301. ELIMINATING REDUCTION IN PPS HOSPITAL PAY-
MENT UPDATE.
(a) IN
GENERAL.—Section 1886(b)(3)(B)(i) (42
U.S.C. 1395ww(b)(3)(B)(i)) is amended—
(1) in subclause (XVI), by striking ‘‘minus 1.1
percentage points for hospitals (other than sole com-
munity hospitals) in all areas, and the market bas-
ket percentage increase for sole community hos-
pitals,’’ and inserting ‘‘for hospitals in all areas,’’;
(2) in subclause (XVII)—
(A) by striking ‘‘minus 1.1 percentage
points’’; and
(B) by striking ‘‘and’’ at the end;
(3) by redesignating subclause (XVIII) as sub-
clause (XIX);
(4) in subclause (XIX), as so redesignated, by
striking ‘‘fiscal year 2003’’ and inserting ‘‘fiscal year
2004’’; and
(5) by inserting after subclause (XVII) the fol-
lowing new subclause:
‘‘(XVIII) for fiscal year 2003, the market bas-
ket percentage increase minus 0.55 percentage
points for hospitals in all areas, and’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding the amendment made by sub-
section (a), for purposes of making payments for fiscal
year 2001 for inpatient hospital services furnished by sub-
section (d) hospitals (as defined in section 1886(d)(1)(B)
of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)),
the ‘‘applicable percentage increase’’ referred to in section
1886(b)(3)(B)(i) 
of 
such 
Act 
(42 
U.S.C.
1395ww(b)(3)(B)(i))—
(1) for discharges occurring on or after October
1, 2000, and before April 1, 2001, shall be deter-
mined in accordance with subclause (XVI) of such
section as in effect on the day before the date of the
enactment of this Act; and
(2) for discharges occurring on or after April 1,
2001, and before October 1, 2001, shall be equal
to—
(A) the market basket percentage increase
plus 1.1 percentage points for hospitals (other
than sole community hospitals) in all areas; and
(B) the market basket percentage increase
for sole community hospitals.
(c) CONSIDERATION
OF PRICE
OF BLOOD
AND
BLOOD PRODUCTS
IN MARKET BASKET INDEX.—The
Secretary of Health and Human Services shall, when next
(after the date of the enactment of this Act) rebasing and
revising the hospital market basket index (as defined in
section 1886(b)(3)(B)(iii) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)(iii))), consider the prices of
blood and blood products purchased by hospitals and de-
termine whether those prices are adequately reflected in
such index.
(d) MEDPAC STUDY AND REPORT REGARDING CER-
TAIN HOSPITAL COSTS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall conduct a study on—
(A) any increased costs incurred by sub-
section (d) hospitals (as defined in paragraph
(1)(B) of section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d))) in providing inpa-
tient hospital services to medicare beneficiaries
under title XVIII of such Act during the period
beginning on October 1, 1983, and ending on
September 30, 1999, that were attributable
to—
(i) complying with new blood safety
measure requirements; and
(ii) providing such services using new
technologies;
(B) the extent to which the prospective
payment system for such services under such
section provides adequate and timely recogni-
tion of such increased costs;
(C) the prospects for (and to the extent
practicable, the magnitude of) cost increases
that hospitals will incur in providing such serv-
ices that are attributable to complying with new
blood safety measure requirements and pro-
viding such services using new technologies dur-
ing the 10 years after the date of the enact-
ment of this Act; and
(D) the feasibility and advisability of es-
tablishing mechanisms under such payment sys-
tem to provide for more timely and accurate
recognition of such cost increases in the future.
(2) CONSULTATION.—In conducting the study
under this subsection, the Commission shall consult
with representatives of the blood community,
including—
(A) hospitals;
(B) organizations involved in the collection,
processing, and delivery of blood; and
(C) organizations involved in the develop-
ment of new blood safety technologies.
(3) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commission
shall submit to Congress a report on the study con-
ducted under paragraph (1) together with such rec-
ommendations for legislation and administrative ac-
tion as the Commission determines appropriate.
(e) ADJUSTMENT
FOR
INPATIENT
CASE
MIX
CHANGES.—
(1) IN GENERAL.—Section 1886(d)(3)(A) (42
U.S.C. 1395ww(d)(3)(A)) is amended by adding at
the end the following new clause:
‘‘(vi) Insofar as the Secretary determines that
the adjustments under paragraph (4)(C)(i) for a
previous fiscal year (or estimates that such adjust-
ments for a future fiscal year) did (or are likely to)
result in a change in aggregate payments under this
subsection during the fiscal year that are a result of
changes in the coding or classification of discharges
that do not reflect real changes in case mix, the Sec-
retary may adjust the average standardized amounts
computed under this paragraph for subsequent fiscal
years so as to eliminate the effect of such coding or
classification changes.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies to discharges occurring on
or after October 1, 2001.
SEC. 302. ADDITIONAL MODIFICATION IN TRANSITION FOR
INDIRECT MEDICAL EDUCATION (IME) PER-
CENTAGE ADJUSTMENT.
(a) IN GENERAL.—Section 1886(d)(5)(B)(ii) (42
U.S.C. 1395ww(d)(5)(B)(ii)) is amended—
(1) in subclause (V) by striking ‘‘and’’ at the
end;
(2) by redesignating subclause (VI) as sub-
clause (VII);
(3) in subclause (VII) as so redesignated, by
striking ‘‘2001’’ and inserting ‘‘2002’’; and
(4) by inserting after subclause (V) the fol-
lowing new subclause:
‘‘(VI) during fiscal year 2002, ‘c’ is equal
to 1.6; and’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding paragraph (5)(B)(ii)(V) of sec-
tion 1886(d) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(B)(ii)(V)), for purposes of making pay-
ments for subsection (d) hospitals (as defined in para-
graph (1)(B) of such section) with indirect costs of med-
ical education, the indirect teaching adjustment factor re-
ferred to in paragraph (5)(B)(ii) of such section shall be
determined, for discharges occurring on or after April 1,
2001, and before October 1, 2001, as if ‘‘c’’ in paragraph
(5)(B)(ii)(V) of such section equalled 1.66 rather than
1.54.
(c) CONFORMING AMENDMENT RELATING TO DE-
TERMINATION
OF
STANDARDIZED
AMOUNT.—Section
1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is
amended by inserting ‘‘or of section 302 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protec-
tion Act of 2000’’ after ‘‘Balanced Budget Refinement Act
of 1999’’.
(d) 
CLERICAL
AMENDMENTS.—Section
1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B)), as amended
by subsection (a), is further amended by moving the in-
dentation of each of the following 2 ems to the left:
(1) Clauses (ii), (v), and (vi).
(2) Subclauses (I) (II), (III), (IV), (V), and
(VII) of clause (ii).
(3) Subclauses (I) and (II) of clause (vi) and
the flush sentence at the end of such clause.
SEC. 303. DECREASE IN REDUCTIONS FOR DISPROPOR-
TIONATE SHARE HOSPITAL (DSH) PAYMENTS.
(a) IN GENERAL.—Section 1886(d)(5)(F)(ix) (42
U.S.C. 1395ww(d)(5)(F)(ix)) is amended—
(1) in subclause (III), by striking ‘‘each of’’ and
by inserting ‘‘and 2 percent, respectively’’ after ‘‘3
percent’’; and
(2) in subclause (IV), by striking ‘‘4 percent’’
and inserting ‘‘3 percent’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding the amendment made by sub-
section (a)(1), for purposes of making disproportionate
share payments for subsection (d) hospitals (as defined
in section 1886(d)(1)(B) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)) for fiscal year 2001, the addi-
tional payment amount otherwise determined under clause
(ii) of section 1886(d)(5)(F) of the Social Security Act
(42 U.S.C. 1395ww(d)(5)(F))—
(1) for discharges occurring on or after October
1, 2000, and before April 1, 2001, shall be adjusted
as provided by clause (ix)(III) of such section as in
effect on the day before the date of the enactment
of this Act; and
(2) for discharges occurring on or after April 1,
2001, and before October 1, 2001, shall, instead of
being reduced by 3 percent as provided by clause
(ix)(III) of such section as in effect after the date
of the enactment of this Act, be reduced by 1 per-
cent.
(c) CONFORMING AMENDMENTS RELATING TO DE-
TERMINATION
OF
STANDARDIZED
AMOUNT.—Section
1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)), is
amended—
(1) by striking ‘‘1989 or’’ and inserting
‘‘1989,’’; and
(2) by inserting ‘‘, or the enactment of section
303 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000’’ after
‘‘Omnibus Budget Reconciliation Act of 1990’’.
(d) TECHNICAL AMENDMENT.—
(1) IN GENERAL.—Section 1886(d)(5)(F)(i) (42
U.S.C. 1395ww(d)(5)(F)(i)) is amended by striking
‘‘and before October 1, 1997,’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) is effective as if included in the en-
actment of BBA.
(e) REFERENCE TO CHANGES IN DSH FOR RURAL
HOSPITALS.—For additional changes in the DSH pro-
gram for rural hospitals, see section 211.
SEC. 304. WAGE INDEX IMPROVEMENTS.
(a) DURATION OF WAGE INDEX RECLASSIFICATION;
USE OF 3-YEAR WAGE DATA.—Section 1886(d)(10)(D)
(42 U.S.C. 1395ww(d)(10)(D)) is amended by adding at
the end the following new clauses:
‘‘(v) Any decision of the Board to reclassify a sub-
section (d) hospital for purposes of the adjustment factor
described in subparagraph (C)(i)(II) for fiscal year 2001
or any fiscal year thereafter shall be effective for a period
of 3 fiscal years, except that the Secretary shall establish
procedures under which a subsection (d) hospital may
elect to terminate such reclassification before the end of
such period.
‘‘(vi) Such guidelines shall provide that, in making
decisions on applications for reclassification for the pur-
poses described in clause (v) for fiscal year 2003 and any
succeeding fiscal year, the Board shall base any compari-
son of the average hourly wage for the hospital with the
average hourly wage for hospitals in an area on—
‘‘(I) an average of the average hourly wage
amount for the hospital from the most recently pub-
lished hospital wage survey data of the Secretary (as
of the date on which the hospital applies for reclassi-
fication) and such amount from each of the two im-
mediately preceding surveys; and
‘‘(II) an average of the average hourly wage
amount for hospitals in such area from the most re-
cently published hospital wage survey data of the
Secretary (as of the date on which the hospital ap-
plies for reclassification) and such amount from each
of the two immediately preceding surveys.’’.
(b) PROCESS TO PERMIT STATEWIDE WAGE INDEX
CALCULATION AND APPLICATION.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall establish a process (based on
the voluntary process utilized by the Secretary of
Health and Human Services under section 1848 of
the Social Security Act (42 U.S.C. 1395w–4) for
purposes of computing and applying a statewide geo-
graphic wage index) under which an appropriate
statewide entity may apply to have all the geo-
graphic areas in a State treated as a single geo-
graphic area for purposes of computing and applying
the area wage index under section 1886(d)(3)(E) of
such Act (42 U.S.C. 1395ww(d)(3)(E)). Such proc-
ess shall be established by October 1, 2001, for re-
classifications beginning in fiscal year 2003.
(2) PROHIBITION ON INDIVIDUAL HOSPITAL RE-
CLASSIFICATION.—Notwithstanding any other provi-
sion of law, if the Secretary applies a statewide geo-
graphic wage index under paragraph (1) with re-
spect to a State, any application submitted by a hos-
pital in that State under section 1886(d)(10) of the
Social Security Act (42 U.S.C. 1395ww(d)(10)) for
geographic reclassification shall not be considered.
(c) COLLECTION
OF INFORMATION
ON OCCUPA-
TIONAL MIX.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall provide for the collection of
data every 3 years on occupational mix for employ-
ees of each subsection (d) hospital (as defined in
section 1886(d)(1)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(D))) in the provision of inpa-
tient hospital services, in order to construct an occu-
pational mix adjustment in the hospital area wage
index applied under section 1886(d)(3)(E) of such
Act (42 U.S.C. 1395ww(d)(3)(E)).
(2) APPLICATION.—The third sentence of sec-
tion 1886(d)(3)(E) (42 U.S.C. 1395ww(d)(3)(E)) is
amended by striking ‘‘To the extent determined fea-
sible by the Secretary, such survey shall measure’’
and inserting ‘‘Not less often than once every 3
years the Secretary (through such survey or other-
wise) shall measure’’.
(3) EFFECTIVE DATE.—By not later than Sep-
tember 30, 2003, for application beginning October
1, 2004, the Secretary shall first complete—
(A) the collection of data under paragraph
(1); and
(B) the measurement under the third sen-
tence of section 1886(d)(3)(E), as amended by
paragraph (2).
SEC. 305. PAYMENT FOR INPATIENT SERVICES OF REHA-
BILITATION HOSPITALS.
(a) ASSISTANCE WITH ADMINISTRATIVE COSTS AS-
SOCIATED WITH COMPLETION
OF PATIENT ASSESS-
MENT.—Section 
1886(j)(3)(B) 
(42 
U.S.C.
1395ww(j)(3)(B)) is amended by striking ‘‘98 percent’’
and inserting ‘‘98 percent for fiscal year 2001 and 100
percent for fiscal year 2002’’.
(b) ELECTION TO APPLY FULL PROSPECTIVE PAY-
MENT RATE WITHOUT PHASE-IN.—
(1) IN
GENERAL.—Paragraph (1) of section
1886(j) (42 U.S.C. 1395ww(j)) is amended—
(A) in subparagraph (A), by inserting
‘‘other than a facility making an election under
subparagraph (F)’’ before ‘‘in a cost reporting
period’’;
(B) in subparagraph (B), by inserting ‘‘or,
in the case of a facility making an election
under subparagraph (F), for any cost reporting
period described in such subparagraph,’’ after
‘‘2002,’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(F) ELECTION TO APPLY FULL PROSPEC-
TIVE PAYMENT SYSTEM.—A rehabilitation facil-
ity may elect, not later than 30 days before its
first cost reporting period for which the pay-
ment methodology under this subsection applies
to the facility, to have payment made to the fa-
cility under this subsection under the provisions
of subparagraph (B) (rather than subparagraph
(A)) for each cost reporting period to which
such payment methodology applies.’’.
(2) CLARIFICATION.—Paragraph (3)(B) of such
section is amended by inserting ‘‘but not taking into
account any payment adjustment resulting from an
election permitted under paragraph (1)(F)’’ after
‘‘paragraphs (4) and (6)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect as if included in the enactment of
BBA.
SEC. 306. PAYMENT FOR INPATIENT SERVICES OF PSY-
CHIATRIC HOSPITALS.
With respect to hospitals described in clause (i) of
section 1886(d)(1)(B) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)) and psychiatric units described
in the matter following clause (v) of such section, in mak-
ing incentive payments to such hospitals under section
1886(b)(1)(A) of such Act (42 U.S.C. 1395ww(b)(1)(A))
for cost reporting periods beginning on or after October
1, 2000, and before October 1, 2001, the Secretary of
Health and Human Services, in clause (ii) of such section,
shall substitute ‘‘3 percent’’ for ‘‘2 percent’’.
SEC. 307. PAYMENT FOR INPATIENT SERVICES OF LONG-
TERM CARE HOSPITALS.
(a) INCREASED TARGET AMOUNTS AND CAPS FOR
LONG-TERM CARE HOSPITALS BEFORE IMPLEMENTA-
TION OF THE PROSPECTIVE PAYMENT SYSTEM.—
(1) IN
GENERAL.—Section 1886(b)(3) (42
U.S.C. 1395ww(b)(3)) is amended—
(A) in subparagraph (H)(ii)(III), by insert-
ing ‘‘subject to subparagraph (J),’’ after
‘‘2002,’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(J) For cost reporting periods beginning during fis-
cal year 2001, for a hospital described in subsection
(d)(1)(B)(iv)—
‘‘(i) the limiting or cap amount otherwise deter-
mined under subparagraph (H) shall be increased by
2 percent; and
‘‘(ii) the target amount otherwise determined
under subparagraph (A) shall be increased by 25
percent (subject to the limiting or cap amount deter-
mined under subparagraph (H), as increased by
clause (i)).’’.
(2) APPLICATION.—The amendments made by
subsection (a) and by section 122 of BBRA (113
Stat. 1501A–331) shall not be taken into account in
the development and implementation of the prospec-
tive payment system under section 123 of BBRA
(113 Stat. 1501A–331).
(b) IMPLEMENTATION OF PROSPECTIVE PAYMENT
SYSTEM FOR LONG-TERM CARE HOSPITALS.—
(1) MODIFICATION OF REQUIREMENT.—In de-
veloping the prospective payment system for pay-
ment for inpatient hospital services provided in long-
term 
care 
hospitals 
described 
in 
section
1886(d)(1)(B)(iv) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)(iv)) under the medicare
program under title XVIII of such Act required
under section 123 of BBRA, the Secretary of Health
and Human Services shall examine the feasibility
and the impact of basing payment under such a sys-
tem on the use of existing (or refined) hospital diag-
nosis-related groups (DRGs) that have been modi-
fied to account for different resource use of long-
term care hospital patients as well as the use of the
most recently available hospital discharge data. The
Secretary shall examine and may provide for appro-
priate adjustments to the long-term hospital pay-
ment system, including adjustments to DRG
weights, area wage adjustments, geographic reclassi-
fication, outliers, updates, and a disproportionate
share 
adjustment 
consistent 
with 
section
1886(d)(5)(F) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(F)).
(2) DEFAULT
IMPLEMENTATION
OF
SYSTEM
BASED ON EXISTING DRG METHODOLOGY.—If the
Secretary is unable to implement the prospective
payment system under section 123 of the BBRA by
October 1, 2002, the Secretary shall implement a
prospective payment system for such hospitals that
bases payment under such a system using existing
hospital diagnosis-related groups (DRGs), modified
where feasible to account for resource use of long-
term care hospital patients using the most recently
available hospital discharge data for such services
furnished on or after that date.
SEC. 308. INCREASE IN BASE PAYMENT TO PUERTO RICO
ACUTE CARE HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(9)(A) (42 U.S.C.
1395ww(d)(9)(A)) is amended—
(1) in clause (i), by striking ‘‘on or after Octo-
ber 1, 1997, 50 percent (’’ and inserting ‘‘on or
after October 1, 2000, 25 percent (and for dis-
charges between October 1, 1997, and September
30, 2000, 50 percent’’; and
(2) in clause (ii), in the matter preceding sub-
clause (I), by striking ‘‘on or after October 1, 1997,
50 percent (’’ and inserting ‘‘on or after October 1,
2000, 75 percent (and for discharges between Octo-
ber 1, 1997, and September 30, 2000, 50 percent’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—
(1) IN GENERAL.—Notwithstanding the amend-
ment made by subsection (a), for purposes of mak-
ing payments for the operating costs of inpatient
hospital services of a Puerto Rico hospital for fiscal
year 2001, the amount referred to in the matter pre-
ceding clause (i) of section 1886(d)(9)(A) of the So-
cial Security Act (42 U.S.C. 1395ww(d)(9)(A))—
(A) for discharges occurring on or after
October 1, 2000, and before April 1, 2001,
shall be determined in accordance with such
section as in effect on the day before the date
of enactment of this Act; and
(B) for discharges occurring on or after
April 1, 2001, and before October 1, 2001,
shall be determined—
(i) using 0 percent of the Puerto Rico
adjusted DRG prospective payment rate
referred to in clause (i) of such section;
and
(ii) using 100 percent of the dis-
charge-weighted average referred to in
clause (ii) of such section.
(2) PUERTO RICO HOSPITAL.—For purposes of
this subsection, the term ‘‘Puerto Rico hospital’’
means a subsection (d) Puerto Rico hospital as de-
fined in the last sentence of section 1886(d)(9)(A)
of 
the 
Social 
Security 
Act 
(42 
U.S.C.
1395ww(d)(9)(A)).
Subtitle B—Adjustments to PPS
Payments for Skilled Nursing
Facilities
SEC. 311. ELIMINATION OF REDUCTION IN SKILLED NURS-
ING FACILITY (SNF) MARKET BASKET UP-
DATE IN 2001.
(a) IN GENERAL.—Section 1888(e)(4)(E)(ii) (42
U.S.C. 1395yy(e)(4)(E)(ii)) is amended—
(1) by redesignating subclauses (II) and (III)
as subclauses (III) and (IV), respectively;
(2) in subclause (III), as so redesignated—
(A) by striking ‘‘each of fiscal years 2001
and 2002’’ and inserting ‘‘each of fiscal years
2002 and 2003’’; and
(B) by striking ‘‘minus 1 percentage
point’’ and inserting ‘‘minus 0.5 percentage
points’’; and
(3) by inserting after subclause (I) the fol-
lowing new subclause:
‘‘(II) for fiscal year 2001, the
rate computed for the previous fiscal
year increased by the skilled nursing
facility 
market 
basket 
percentage
change for the fiscal year;’’.
(b) SPECIAL RULE FOR PAYMENT FOR FISCAL YEAR
2001.—Notwithstanding the amendments made by sub-
section (a), for purposes of making payments for covered
skilled nursing facility services under section 1888(e) of
the Social Security Act (42 U.S.C. 1395yy(e)) for fiscal
year 2001, the Federal per diem rate referred to in para-
graph (4)(E)(ii) of such section—
(1) for the period beginning on October 1,
2000, and ending on March 31, 2001, shall be the
rate determined in accordance with the law as in ef-
fect on the day before the date of the enactment of
this Act; and
(2) for the period beginning on April 1, 2001,
and ending on September 30, 2001, shall be the rate
that would have been determined under such section
if ‘‘plus 1 percentage point’’ had been substituted
for ‘‘minus 1 percentage point’’ under subclause (II)
of such paragraph (as in effect on the day before the
date of the enactment of this Act).
(c) 
RELATION
TO
TEMPORARY
INCREASE
IN
BBRA.—The increases provided under section 101 of
BBRA (113 Stat. 1501A–325) shall be in addition to any
increase resulting from the amendments made by sub-
section (a).
(d) GAO REPORT ON ADEQUACY OF SNF PAYMENT
RATES.—Not later than July 1, 2002, the Comptroller
General of the United States shall submit to Congress a
report on the adequacy of medicare payment rates to
skilled nursing facilities and the extent to which medicare
contributes to the financial viability of such facilities. Such
report shall take into account the role of private payors,
medicaid, and case mix on the financial performance of
these facilities, and shall include an analysis (by specific
RUG classification) of the number and characteristics of
such facilities.
(e) HCFA STUDY OF CLASSIFICATION SYSTEMS FOR
SNF RESIDENTS.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the dif-
ferent systems for categorizing patients in medicare
skilled nursing facilities in a manner that accounts
for the relative resource utilization of different pa-
tient types.
(2) REPORT.—Not later than January 1, 2005,
the Secretary shall submit to Congress a report on
the study conducted under subsection (a). Such re-
port shall include such recommendations regarding
changes in law as may be appropriate.
SEC. 312. INCREASE IN NURSING COMPONENT OF PPS FED-
ERAL RATE.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall increase by 16.66 percent the nurs-
ing component of the case-mix adjusted Federal prospec-
tive payment rate specified in Tables 3 and 4 of the final
rule published in the Federal Register by the Health Care
Financing Administration on July 31, 2000 (65 Fed. Reg.
46770), effective for services furnished on or after April
1, 2001, and before October 1, 2002.
(b) GAO AUDIT OF NURSING STAFF RATIOS.—
(1) AUDIT.—The Comptroller General of the
United States shall conduct an audit of nursing
staffing ratios in a representative sample of medi-
care skilled nursing facilities. Such sample shall
cover selected States and shall include broad rep-
resentation with respect to size, ownership, location,
and medicare volume. Such audit shall include an
examination of payroll records and medicaid cost re-
ports of individual facilities.
(2) REPORT.—Not later than August 1, 2002,
the Comptroller General shall submit to Congress a
report on the audits conducted under paragraph (1).
Such report shall include an assessment of the im-
pact of the increased payments under this subtitle
on increased nursing staff ratios and shall make rec-
ommendations as to whether increased payments
under subsection (a) should be continued.
SEC. 313. APPLICATION OF SNF CONSOLIDATED BILLING
REQUIREMENT LIMITED TO PART A COV-
ERED STAYS.
(a) IN GENERAL.—Section 1862(a)(18) (42 U.S.C.
1395y(a)(18)) is amended by striking ‘‘or of a part of a
facility that includes a skilled nursing facility (as deter-
mined under regulations),’’ and inserting ‘‘during a period
in which the resident is provided covered post-hospital ex-
tended care services (or, for services described in section
1861(s)(2)(D), which are furnished to such an individual
without regard to such period),’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1842(b)(6)(E) (42 U.S.C. 1395u(b)(6)(E)) is amended—
(A) by inserting ‘‘by, or under arrangements
made by, a skilled nursing facility’’ after ‘‘fur-
nished’’;
(B) by striking ‘‘or of a part of a facility that
includes a skilled nursing facility (as determined
under regulations)’’; and
(C) by striking ‘‘(without regard to whether or
not the item or service was furnished by the facility,
by others under arrangement with them made by the
facility, under any other contracting or consulting
arrangement, or otherwise)’’.
(2) Section 1842(t) (42 U.S.C. 1395u(t)) is amended
by striking ‘‘by a physician’’ and ‘‘or of a part of a facility
that includes a skilled nursing facility (as determined
under regulations),’’.
(3) 
Section 
1866(a)(1)(H)(ii)(I) 
(42 
U.S.C.
1395cc(a)(1)(H)(ii)(I)) is amended by inserting after
‘‘who is a resident of the skilled nursing facility’’ the fol-
lowing: ‘‘during a period in which the resident is provided
covered post-hospital extended care services (or, for serv-
ices described in section 1861(s)(2)(D), that are furnished
to such an individual without regard to such period)’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) apply to services furnished on or
after January 1, 2001.
(d) OVERSIGHT.—The Secretary of Health and
Human Services, through the Office of the Inspector Gen-
eral in the Department of Health and Human Services
or otherwise, shall monitor payments made under part B
of the title XVIII of the Social Security Act for items and
services furnished to residents of skilled nursing facilities
during a time in which the residents are not being pro-
vided medicare covered post-hospital extended care serv-
100
ices to ensure that there is not duplicate billing for serv-
ices or excessive services provided.
SEC. 314. ADJUSTMENT OF REHABILITATION RUGS TO COR-
RECT ANOMALY IN PAYMENT RATES.
(a) ADJUSTMENT FOR REHABILITATION RUGS.—
(1) IN GENERAL.—For purposes of computing
payments for covered skilled nursing facility services
under paragraph (1) of section 1888(e) of the Social
Security Act (42 U.S.C. 1395yy(e)) for such services
furnished on or after April 1, 2001, and before the
date described in section 101(c)(2) of BBRA (113
Stat. 1501A–324), the Secretary of Health and
Human Services shall increase by 6.7 percent the
adjusted Federal per diem rate otherwise determined
under paragraph (4) of such section (but for this
section) for covered skilled nursing facility services
for RUG–III rehabilitation groups described in para-
graph (2) furnished to an individual during the pe-
riod in which such individual is classified in such a
RUG–III category.
(2) REHABILITATION
GROUPS
DESCRIBED.—
The RUG–III rehabilitation groups for which the
adjustment described in paragraph (1) applies are
RUC, RUB, RUA, RVC, RVB, RVA, RHC, RHB,
RHA, RMC, RMB, RMA, RLB, and RLA, as speci-
101
fied in Tables 3 and 4 of the final rule published in
the Federal Register by the Health Care Financing
Administration on July 31, 2000 (65 Fed. Reg.
46770).
(b) CORRECTION WITH RESPECT TO REHABILITA-
TION RUGS.—
(1) IN
GENERAL.—Section 101(b) of BBRA
(113 Stat. 1501A–324) is amended by striking
‘‘CA1, RHC, RMC, and RMB’’ and inserting ‘‘and
CA1’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies to services furnished on or
after April 1, 2001.
(c) REVIEW BY OFFICE OF INSPECTOR GENERAL.—
The Inspector General of the Department of Health and
Human Services shall review the medicare payment struc-
ture for services classified within rehabilitation resource
utilization groups (RUGs) (as in effect after the date of
the enactment of the BBRA) to assess whether payment
incentives exist for the delivery of inadequate care. Not
later than October 1, 2001, the Inspector General shall
submit to Congress a report on such review.
102
SEC. 315. ESTABLISHMENT OF PROCESS FOR GEOGRAPHIC
RECLASSIFICATION.
(a) IN GENERAL.—The Secretary of Health and
Human Services may establish a procedure for the geo-
graphic reclassification of a skilled nursing facility for pur-
poses of payment for covered skilled nursing facility serv-
ices under the prospective payment system established
under section 1888(e) of the Social Security Act (42
U.S.C. 1395yy(e)). Such procedure may be based upon the
method for geographic reclassifications for inpatient hos-
pitals established under section 1886(d)(10) of the Social
Security Act (42 U.S.C. 1395ww(d)(10)).
(b) REQUIREMENT FOR SKILLED NURSING FACILITY
WAGE DATA.—In no case may the Secretary implement
the procedure under subsection (a) before such time as
the Secretary has collected data necessary to establish an
area wage index for skilled nursing facilities based on
wage data from such facilities.
Subtitle C—Hospice Care
SEC. 321. FULL MARKET BASKET INCREASE FOR 2001 AND
2002.
(a) IN
GENERAL.—Section 1814(i)(1)(C)(ii) (42
U.S.C. 1395f(i)(1)(C)(ii)) is amended—
(1) by redesignating subclause (VII) as sub-
clause (VIII);
(2) in subclause (VI)—
103
(A) by striking ‘‘through 2002’’ and insert-
ing ‘‘through 2000’’; and
(B) by striking ‘‘and’’ at the end; and
(3) by inserting after subclause (VI) the fol-
lowing new subclause:
‘‘(VII) for each of fiscal years 2001 and 2002,
the market basket percentage increase for the fiscal
year; and’’.
(b) TRANSITION DURING FISCAL YEAR 2001.—Not-
withstanding the amendments made by subsection (a), for
purposes of making payments for hospice care under sec-
tion 1814(i) of the Social Security Act (42 U.S.C.
1395f(i)) for fiscal year 2001, the payment rates referred
to in paragraph (1)(C) of such section—
(1) for the period beginning on October 1,
2000, and ending on March 31, 2001, shall be the
rate determined in accordance with the law as in ef-
fect on the day before the date of the enactment of
this Act; and
(2) for the period beginning on April 1, 2001,
and ending on September 30, 2001, shall be the rate
that would have been determined under paragraph
(1) if ‘‘plus 1.0 percentage points’’ were substituted
for ‘‘minus 1.0 percentage points’’ under paragraph
(1)(C)(ii)(VI) of such section for fiscal year 2001.
104
(c) CONFORMING AMENDMENTS TO BBRA.—
(1) IN GENERAL.—Section 131 of BBRA (113
Stat. 1501A–333) is repealed.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect as if included in
the enactment of BBRA.
(d) 
TECHNICAL
AMENDMENT.—Section
1814(a)(7)(A)(ii) 
(42 
U.S.C. 
1395f(a)(7)(A)(ii)) 
is
amended by striking the period at the end and inserting
a semicolon.
SEC. 322. CLARIFICATION OF PHYSICIAN CERTIFICATION.
(a) CERTIFICATION BASED ON NORMAL COURSE OF
ILLNESS.—
(1) IN GENERAL.—Section 1814(a) (42 U.S.C.
1395f(a)) is amended by adding at the end the fol-
lowing new sentence: ‘‘The certification regarding
terminal illness of an individual under paragraph (7)
shall be based on the physician’s or medical direc-
tor’s clinical judgment regarding the normal course
of the individual’s illness.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies to certifications made on or
after the date of the enactment of this Act.
(b) STUDY AND REPORT ON PHYSICIAN CERTIFI-
CATION REQUIREMENT FOR HOSPICE BENEFITS.—
105
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study to examine
the appropriateness of the certification regarding
terminal illness of an individual under section
1814(a)(7) of the Social Security Act (42 U.S.C.
1395f(a)(7)) that is required in order for such indi-
vidual to receive hospice benefits under the medicare
program under title XVIII of such Act. In con-
ducting such study, the Secretary shall take into ac-
count the effect of the amendment made by sub-
section (a).
(2) REPORT.—Not later than 2 years after the
date of the enactment of this Act, the Secretary of
Health and Human Services shall submit to Con-
gress a report on the study conducted under para-
graph (1), together with any recommendations for
legislation that the Secretary deems appropriate.
SEC. 323. MEDPAC REPORT ON ACCESS TO, AND USE OF,
HOSPICE BENEFIT.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission shall conduct a study to examine the factors
affecting the use of hospice benefits under the medicare
program under title XVIII of the Social Security Act, in-
cluding a delay in the time (relative to death) of entry
into a hospice program, and differences in such use be-
106
tween urban and rural hospice programs and based upon
the presenting condition of the patient.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Commission shall
submit to Congress a report on the study conducted under
subsection (a), together with any recommendations for leg-
islation that the Commission deems appropriate.
Subtitle D—Other Provisions
SEC. 331. RELIEF FROM MEDICARE PART A LATE ENROLL-
MENT PENALTY FOR GROUP BUY-IN FOR
STATE AND LOCAL RETIREES.
(a) IN GENERAL.—Section 1818 (42 U.S.C. 1395i–
2) is amended—
(1) in subsection (c)(6), by inserting before the
semicolon at the end the following: ‘‘and shall be
subject to reduction in accordance with subsection
(d)(6)’’; and
(2) by adding at the end of subsection (d) the
following new paragraph:
‘‘(6)(A) In the case where a State, a political subdivi-
sion of a State, or an agency or instrumentality of a State
or political subdivision thereof determines to pay, for the
life of each individual, the monthly premiums due under
paragraph (1) on behalf of each of the individuals in a
qualified State or local government retiree group who
107
meets the conditions of subsection (a), the amount of any
increase otherwise applicable under section 1839(b) (as
applied and modified by subsection (c)(6) of this section)
with respect to the monthly premium for benefits under
this part for an individual who is a member of such group
shall be reduced by the total amount of taxes paid under
section 3101(b) of the Internal Revenue Code of 1986 by
such individual and under section 3111(b) by the employ-
ers of such individual on behalf of such individual with
respect to employment (as defined in section 3121(b) of
such Code).
‘‘(B) For purposes of this paragraph, the term ‘quali-
fied State or local government retiree group’ means all of
the individuals who retire prior to a specified date that
is before January 1, 2002, from employment in 1 or more
occupations or other broad classes of employees of—
‘‘(i) the State;
‘‘(ii) a political subdivision of the State; or
‘‘(iii) an agency or instrumentality of the State
or political subdivision of the State.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to premiums for months beginning
with July 1, 2001.
108
SEC. 332. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR
LABOR COSTS FOR OTHER PPS SYSTEMS.
(a) HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR
LABOR COSTS APPLICABLE TO OTHER PPS SYSTEMS.—
(1) IN
GENERAL.—Notwithstanding the geo-
graphic adjustment factor otherwise established
under title XVIII of the Social Security Act for
items and services paid under a prospective payment
system described in paragraph (2), in the case of a
hospital with an application that has been approved
by the Medicare Geographic Classification Review
Board under section 1886(d)(10)(C) of such Act (42
U.S.C. 1395ww(d)(10)(C)) to change the hospital’s
geographic classification for a fiscal year for pur-
poses of the factor used to adjust the prospective
payment rate for area differences in hospital wage
levels that applies to such hospital under section
1886(d)(3)(E) of such Act, the Secretary shall sub-
stitute such change in the hospital’s geographic ad-
justment that would otherwise be applied to an enti-
ty or department of the hospital that is provider
based to account for variations in costs which are at-
tributable to wages and wage-related costs for items
and services paid under the prospective payment sys-
tems described in paragraph (2).
109
(2) PROSPECTIVE
PAYMENT
SYSTEMS
COV-
ERED.—For purposes of this section, items and serv-
ices furnished under the following prospective pay-
ment systems are covered:
(A) SNF PROSPECTIVE
PAYMENT
SYS-
TEM.—The prospective payment system for cov-
ered skilled nursing facility services under sec-
tion 1888(e) of the Social Security Act (42
U.S.C. 1395yy(e)).
(B) HOME
HEALTH
SERVICES
PROSPEC-
TIVE PAYMENT SYSTEM.—The prospective pay-
ment system for home health services under
section 1895(b) of such Act (42 U.S.C.
1395fff(b)).
(C) INPATIENT REHABILITATION HOSPITAL
SERVICES.—The prospective payment system
for inpatient rehabilitation services under sec-
tion 
1888(j) 
of 
such 
Act 
(42 
U.S.C.
1395ww(j)).
(D) INPATIENT
LONG-TERM
CARE
HOS-
PITAL
SERVICES.—The prospective payment
system for inpatient hospital services of long-
term care hospitals under section 123 of the
BBRA.
110
(E) INPATIENT
PSYCHIATRIC
HOSPITAL
SERVICES.—The prospective payment system
for inpatient hospital services of psychiatric
hospitals and units under section 124 of the
BBRA.
(b) EFFECTIVE DATE.—Subsection (a) applies to fis-
cal years beginning with fiscal year 2002.
TITLE IV—PROVISIONS
RELATING TO PART B
Subtitle A—Hospital Outpatient
Services
SEC. 401. REVISION OF HOSPITAL OUTPATIENT PPS PAY-
MENT UPDATE.
(a) IN GENERAL.—Section 1833(t)(3)(C)(iii) (42
U.S.C. 1395l(t)(3)(C)(iii)) is amended by striking ‘‘in
each of 2000, 2001, and 2002’’ and inserting ‘‘in each
of 2000 and 2002’’.
(b) ADJUSTMENT FOR CASE MIX CHANGES.—
(1) IN
GENERAL.—Section 1833(t)(3)(C) (42
U.S.C. 1395l(t)(3)(C)) is amended—
(A) by redesignating clause (iii) as clause
(iv); and
(B) by inserting after clause (ii) the fol-
lowing new clause:
111
‘‘(iii) ADJUSTMENT FOR SERVICE MIX
CHANGES.—Insofar as the Secretary deter-
mines that the adjustments for service mix
under paragraph (2) for a previous year
(or estimates that such adjustments for a
future year) did (or are likely to) result in
a change in aggregate payments under this
subsection during the year that are a re-
sult of changes in the coding or classifica-
tion of covered OPD services that do not
reflect real changes in service mix, the Sec-
retary may adjust the conversion factor
computed under this subparagraph for
subsequent years so as to eliminate the ef-
fect of such coding or classification
changes.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall take effect as if included in
the enactment of BBA.
SEC. 402. CLARIFYING PROCESS AND STANDARDS FOR DE-
TERMINING ELIGIBILITY OF DEVICES FOR
PASS-THROUGH PAYMENTS UNDER HOSPITAL
OUTPATIENT PPS.
(a) IN GENERAL.—Section 1833(t)(6) (42 U.S.C.
1395l(t)(6)) is amended—
112
(1) by redesignating subparagraphs (C) and
(D) as subparagraphs (D) and (E), respectively; and
(2) by striking subparagraph (B) and inserting
the following new subparagraphs:
‘‘(B) USE
OF
CATEGORIES
IN
DETER-
MINING ELIGIBILITY OF A DEVICE FOR PASS-
THROUGH
PAYMENTS.—The following provi-
sions apply for purposes of determining whether
a medical device qualifies for additional pay-
ments under clause (ii) or (iv) of subparagraph
(A):
‘‘(i) ESTABLISHMENT OF INITIAL CAT-
EGORIES.—The Secretary shall initially es-
tablish under this clause categories of med-
ical devices based on type of device by
April 1, 2001. Such categories shall be es-
tablished in a manner such that each med-
ical device that meets the requirements of
clause (ii) or (iv) of subparagraph (A) as
of January 1, 2001, is included in such a
category and no such device is included in
more than one category. For purposes of
the preceding sentence, whether a medical
device meets such requirements as of such
date shall be determined on the basis of
113
the program memoranda issued before
such date or if the Secretary determines
the medical device would have been in-
cluded in the program memoranda but for
the 
requirement 
of 
subparagraph
(A)(iv)(I). The categories may be estab-
lished under this clause by program memo-
randum or otherwise, after consultation
with groups representing hospitals, manu-
facturers of medical devices, and other af-
fected parties.
‘‘(ii) ESTABLISHING
CRITERIA
FOR
ADDITIONAL CATEGORIES.—
‘‘(I) IN
GENERAL.—The Sec-
retary shall establish criteria that will
be used for creation of additional cat-
egories (other than those established
under clause (i)) through rulemaking
(which may include use of an interim
final rule with comment period).
‘‘(II) 
STANDARD.—Such 
cat-
egories shall be established under this
clause in a manner such that no med-
ical device is described by more than
one category. Such criteria shall in-
114
clude a test of whether the average
cost of devices that would be included
in a category and are in use at the
time the category is established is not
insignificant, as described in subpara-
graph (A)(iv)(II).
‘‘(III) DEADLINE.—Criteria shall
first be established under this clause
by July 1, 2001. The Secretary may
establish in compelling circumstances
categories under this clause before the
date such criteria are established.
‘‘(IV) ADDING
CATEGORIES.—
The Secretary shall promptly establish
a new category of medical devices
under this clause for any medical de-
vice that meets the requirements of
subparagraph (A)(iv) and for which
none of the categories in effect (or
that were previously in effect) is ap-
propriate.
‘‘(iii) PERIOD FOR WHICH CATEGORY
IS IN EFFECT.—A category of medical de-
vices established under clause (i) or clause
(ii) shall be in effect for a period of at
115
least 2 years, but not more than 3 years,
that begins—
‘‘(I) in the case of a category es-
tablished under clause (i), on the first
date on which payment was made
under this paragraph for any device
described by such category (including
payments made during the period be-
fore April 1, 2001); and
‘‘(II) in the case of any other
category, on the first date on which
payment is made under this para-
graph for any medical device that is
described by such category.
‘‘(iv) REQUIREMENTS
TREATED
AS
MET.—A medical device shall be treated as
meeting the requirements of subparagraph
(A)(iv) if—
‘‘(I) the device is described by a
category established and in effect
under clause (i); or
‘‘(II) the device is described by a
category established and in effect
under clause (ii) and an application
under section 515 of the Federal
116
Food, Drug, and Cosmetic Act has
been approved with respect to the de-
vice, or the device has been cleared for
market under section 510(k) of such
Act, or the device is exempt from the
requirements of section 510(k) of
such Act pursuant to subsection (l) or
(m) of section 510 of such Act or sec-
tion 520(g) of such Act.
Nothing in this clause shall be construed
as requiring an application or prior ap-
proval (other than that described in sub-
clause (II)) in order for a covered device to
qualify for payment under this paragraph.
‘‘(C) LIMITED PERIOD OF PAYMENT.—
‘‘(i) DRUGS AND BIOLOGICALS.—The
payment under this paragraph with respect
to a drug or biological shall only apply dur-
ing a period of at least 2 years, but not
more than 3 years, that begins—
‘‘(I) on the first date this sub-
section is implemented in the case of
a drug or biological described in
clause (i), (ii), or (iii) of subparagraph
(A) and in the case of a drug or bio-
117
logical described in subparagraph
(A)(iv) and for which payment under
this part is made as an outpatient
hospital service before such first date;
or
‘‘(II) in the case of a drug or bio-
logical described in subparagraph
(A)(iv) not described in subclause (I),
on the first date on which payment is
made under this part for the drug or
biological as an outpatient hospital
service.
‘‘(ii) MEDICAL
DEVICES.—Payment
shall be made under this paragraph with
respect to a medical device only if such
device—
‘‘(I) is described by a category of
medical devices established and in ef-
fect under subparagraph (B); and
‘‘(II) is provided as part of a
service (or group of services) paid for
under this subsection and provided
during the period for which such cat-
egory is in effect under such subpara-
graph.’’.
118
(b) CONFORMING AMENDMENTS.—Section 1833(t)
(42 U.S.C. 1395l(t)) is further amended—
(1) in paragraph (6)(A)(iv)(II), by striking ‘‘the
cost of the device, drug, or biological’’ and inserting
‘‘the cost of the drug or biological or the average
cost of the category of devices’’;
(2) in paragraph (6)(D) (as redesignated by
subsection 
(a)(1)), 
by 
striking 
‘‘subparagraph
(D)(iii)’’ in the matter preceding clause (i) and in-
serting ‘‘subparagraph (E)(iii)’’; and
(3) in paragraph (12)(E), by striking ‘‘addi-
tional payments (consistent with paragraph (6)(B))’’
and inserting ‘‘additional payments, the determina-
tion and deletion of initial and new categories (con-
sistent with subparagraphs (B) and (C) of para-
graph (6))’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act.
(d) TRANSITION.—
(1) IN GENERAL.—In the case of a medical de-
vice provided as part of a service (or group of serv-
ices) furnished during the period before initial cat-
egories are implemented under subparagraph (B)(i)
of section 1833(t)(6) of the Social Security Act (as
119
amended by subsection (a)), payment shall be made
for such device under such section in accordance
with the provisions in effect before the date of the
enactment of this Act, except that, beginning on the
date that is 30 days after the date of the enactment
of this Act, payment shall also be made for such a
device that is not included in a program memo-
randum described in such subparagraph if the Sec-
retary of Health and Human Services determines
that the device is likely to be described by such an
initial category or would have been included in such
program memoranda but for the requirement of sub-
paragraph (A)(iv)(I) of that section.
(2) APPLICATION OF CURRENT PROCESS.—Not-
withstanding any other provision of law, the Sec-
retary shall continue to accept applications with re-
spect to medical devices under the process estab-
lished pursuant to paragraph (6) of section 1833(t)
of the Social Security Act (as in effect on the day
before the date of the enactment of this Act)
through December 1, 2000, and any device—
(A) with respect to which an application
was submitted (pursuant to such process) on or
before such date; and
120
(B) that meets the requirements of clause
(ii) or (iv) of subparagraph (A) of such para-
graph (as determined pursuant to such proc-
ess),
shall be treated as a device with respect to which an
initial category is required to be established under
subparagraph (B)(i) of such paragraph (as amended
by subsection (a)(2)).
SEC. 403. APPLICATION OF OPD PPS TRANSITIONAL COR-
RIDOR PAYMENTS TO CERTAIN HOSPITALS
THAT DID NOT SUBMIT A 1996 COST REPORT.
(a) IN GENERAL.—Section 1833(t)(7)(F)(ii)(I) (42
U.S.C. 1395l(t)(7)(F)(ii)(I)) is amended by inserting ‘‘(or
in the case of a hospital that did not submit a cost report
for such period, during the first subsequent cost reporting
period ending before 2001 for which the hospital sub-
mitted a cost report)’’ after ‘‘1996’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the enact-
ment of BBRA.
SEC. 404. APPLICATION OF RULES FOR DETERMINING PRO-
VIDER-BASED STATUS FOR CERTAIN ENTI-
TIES.
(a) GRANDFATHER.—Notwithstanding any other pro-
vision of law, for purposes of making determinations of
121
provider-based status under title XVIII of the Social Secu-
rity Act on or after October 1, 2000, any facility or organi-
zation that is treated as provider-based in relation to a
hospital or critical access hospital under such title as of
October 1, 2000—
(1) shall continue to be treated as provider-
based in relation to such hospital or critical access
hospital under such title during the 2-year period
beginning on October 1, 2000; and
(2) the requirements, limitations, and exclu-
sions specified in paragraphs (d), (e), (f), and (h) of
section 413.65 of title 42, Code of Federal Regula-
tions shall not apply to such facility or organization
in relation to such hospital or critical access hospital
until after the end of such 2-year period.
(b) TEMPORARY CRITERIA.—For purposes of title
XVIII of the Social Security Act—
(1) a facility or organization for which a deter-
mination of provider-based status in relation to a
hospital or critical access hospital is requested on or
after October 1, 2000, and before October 1, 2002,
may not be treated as not having provider-based sta-
tus in relation to such a hospital for any period be-
fore a determination is made with respect to such
status pursuant to such request; and
122
(2) in making a determination with respect to
such status for any facility or organization in rela-
tionship to such a hospital on or after October 1,
2000, the following rules apply:
(A) The facility or organization shall be
treated as satisfying any requirements and
standards for geographic location in relation to
such a hospital if the facility or organization—
(i) satisfies the requirements of sec-
tion 413.65(d)(7) of title 42, Code of Fed-
eral Regulations; or
(ii) is located not more than 35 miles
from the main campus of the hospital or
critical access hospital.
(B) The facility or organization shall be
treated as satisfying any of the requirements
and standards for geographic location in rela-
tion to such a hospital if the facility or organi-
zation is owned and operated by a hospital or
critical access hospital that—
(i) is owned or operated by a unit of
State or local government, is a public or
private nonprofit corporation that is for-
mally granted governmental powers by a
unit of State or local government, or is a
123
private hospital that has a contract with a
State or local government that includes the
operation of clinics located off the main
campus of the hospital to assure access in
a well-defined service area to health care
services for low-income individuals who are
not entitled to benefits under title XVIII
(or medical assistance under a State plan
under title XIX) of such Act; and
(ii) has a disproportionate share ad-
justment percentage (as determined under
section 1886(d)(5)(F) of such Act (42
U.S.C. 1395ww(d)(5)(F))) greater than
11.75 percent or is described in clause
(i)(II) of such section.
(c) DEFINITIONS.—For purposes of this section, the
terms ‘‘hospital’’ and ‘‘critical access hospital’’ have the
meanings given such terms in subsections (e) and
(mm)(1), respectively, of section 1861 of the Social Secu-
rity Act (42 U.S.C. 1395x).
SEC. 405. TREATMENT OF CHILDREN’S HOSPITALS UNDER
PROSPECTIVE PAYMENT SYSTEM.
(a) IN
GENERAL.—Section 1833(t) (42 U.S.C.
1395l(t)) is amended—
124
(1) in the heading of paragraph (7)(D)(ii), by
inserting ‘‘AND CHILDREN’S HOSPITALS’’ after ‘‘CAN-
CER HOSPITALS’’; and
(2) in paragraphs (7)(D)(ii) and (11), by strik-
ing 
‘‘section 
1886(d)(1)(B)(v)’’ 
and 
inserting
‘‘clause (iii) or (v) of section 1886(d)(1)(B)’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply as if included in the enactment of
section 202 of BBRA (113 Stat. 1501A–342).
SEC. 
406. 
INCLUSION 
OF 
TEMPERATURE 
MONITORED
CRYOABLATION 
IN 
TRANSITIONAL 
PASS-
THROUGH FOR CERTAIN MEDICAL DEVICES,
DRUGS, AND BIOLOGICALS UNDER OPD PPS.
(a) IN GENERAL.—Section 1833(t)(6)(A)(ii) (42
U.S.C. 1395l(t)(6)(A)(ii)) is amended by inserting ‘‘or
temperature monitored cryoablation’’ after ‘‘device of
brachytherapy’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to devices furnished on or after
April 1, 2001.
125
Subtitle B—Provisions Relating to
Physicians’ Services
SEC. 411. GAO STUDIES RELATING TO PHYSICIANS’ SERV-
ICES.
(a) STUDY OF SPECIALIST PHYSICIANS’ SERVICES
FURNISHED
IN PHYSICIANS’ OFFICES
AND HOSPITAL
OUTPATIENT DEPARTMENT SERVICES.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study to examine the
appropriateness of furnishing in physicians’ offices
specialist physicians’ services (such as gastro-
intestinal endoscopic physicians’ services) which are
ordinarily furnished in hospital outpatient depart-
ments. In conducting this study, the Comptroller
General shall—
(A) review available scientific and clinical
evidence about the safety of performing proce-
dures in physicians’ offices and hospital out-
patient departments;
(B) assess whether resource-based practice
expense relative values established by the Sec-
retary of Health and Human Services under the
medicare physician fee schedule under section
1848 of the Social Security Act (42 U.S.C.
1395w–4) for such specialist physicians’ serv-
126
ices furnished in physicians’ offices and hospital
outpatient departments create an incentive to
furnish such services in physicians’ offices in-
stead of hospital outpatient departments; and
(C) assess the implications for access to
care for medicare beneficiaries if the medicare
program were not to cover such services in phy-
sicians’ offices.
(2) REPORT.—Not later than July 1, 2001, the
Comptroller General shall submit to Congress a re-
port on such study and include such recommenda-
tions as the Comptroller General determines to be
appropriate.
(b) STUDY OF THE RESOURCE-BASED PRACTICE EX-
PENSE SYSTEM.—
(1) STUDY.—The Comptroller General of the
United States shall conduct a study on the refine-
ments to the practice expense relative value units
during the transition to a resource-based practice ex-
pense system for physician payments under the
medicare program under title XVIII of the Social
Security Act. Such study shall examine how the Sec-
retary of Health and Human Services has accepted
and used the practice expense data submitted under
section 212 of BBRA (113 Stat. 1501A–350).
127
(2) REPORT.—Not later than July 1, 2001, the
Comptroller General shall submit to Congress a re-
port on the study conducted under paragraph (1) to-
gether with recommendations regarding—
(A) improvements in the process for ac-
ceptance and use of practice expense data
under section 212 of BBRA;
(B) any change or adjustment that is ap-
propriate to ensure full access to a spectrum of
care for beneficiaries under the medicare pro-
gram; and
(C) the appropriateness of payments to
physicians.
SEC. 412. PHYSICIAN GROUP PRACTICE DEMONSTRATION.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1866 the following new sections:
‘‘DEMONSTRATION OF APPLICATION OF PHYSICIAN
VOLUME INCREASES TO GROUP PRACTICES
‘‘SEC. 1866A. (a) DEMONSTRATION PROGRAM AU-
THORIZED.—
‘‘(1) IN GENERAL.—The Secretary shall con-
duct demonstration projects to test and, if proven ef-
fective, expand the use of incentives to health care
groups participating in the program under this title
that—
128
‘‘(A) encourage coordination of the care
furnished to individuals under the programs
under parts A and B by institutional and other
providers, practitioners, and suppliers of health
care items and services;
‘‘(B) encourage investment in administra-
tive structures and processes to ensure efficient
service delivery; and
‘‘(C) reward physicians for improving
health outcomes.
Such projects shall focus on the efficiencies of fur-
nishing health care in a group-practice setting as
compared to the efficiencies of furnishing health care
in other health care delivery systems.
‘‘(2) ADMINISTRATION BY CONTRACT.—Except
as otherwise specifically provided, the Secretary may
administer the program under this section in accord-
ance with section 1866B.
‘‘(3) DEFINITIONS.—For purposes of this sec-
tion, terms have the following meanings:
‘‘(A) PHYSICIAN.—Except as the Secretary
may otherwise provide, the term ‘physician’
means any individual who furnishes services
which may be paid for as physicians’ services
under this title.
129
‘‘(B) HEALTH
CARE
GROUP.—The term
‘health care group’ means a group of physicians
(as defined in subparagraph (A)) organized at
least in part for the purpose of providing physi-
cians’ services under this title. As the Secretary
finds appropriate, a health care group may in-
clude a hospital and any other individual or en-
tity furnishing items or services for which pay-
ment may be made under this title that is affili-
ated with the health care group under an ar-
rangement structured so that such individual or
entity participates in a demonstration under
this section and will share in any bonus earned
under subsection (d).
‘‘(b) ELIGIBILITY CRITERIA.—
‘‘(1) IN GENERAL.—The Secretary is authorized
to establish criteria for health care groups eligible to
participate in a demonstration under this section, in-
cluding criteria relating to numbers of health care
professionals in, and of patients served by, the
group, scope of services provided, and quality of
care.
‘‘(2) PAYMENT METHOD.—A health care group
participating in the demonstration under this section
shall agree with respect to services furnished to
130
beneficiaries within the scope of the demonstration
(as determined under subsection (c))—
‘‘(A) to be paid on a fee-for-service basis;
and
‘‘(B) that payment with respect to all such
services furnished by members of the health
care group to such beneficiaries shall (where de-
termined appropriate by the Secretary) be made
to a single entity.
‘‘(3) DATA REPORTING.—A health care group
participating in a demonstration under this section
shall report to the Secretary such data, at such
times and in such format as the Secretary requires,
for purposes of monitoring and evaluation of the
demonstration under this section.
‘‘(c) PATIENTS WITHIN SCOPE
OF DEMONSTRA-
TION.—
‘‘(1) IN GENERAL.—The Secretary shall specify,
in accordance with this subsection, the criteria for
identifying those patients of a health care group who
shall be considered within the scope of the dem-
onstration under this section for purposes of applica-
tion of subsection (d) and for assessment of the ef-
fectiveness of the group in achieving the objectives
of this section.