SEC. 2. REVISION OF INTERIM PAYMENT SYSTEM FOR
HOME HEALTH SERVICES.
(a) REVISION OF PER BENEFICIARY LIMIT.—Section
1861(v)(1)(L) of the Social Security Act (42 U.S.C.
1395x(v)(1)(L)) is amended—
(1) in clause (v)(I)—
(A) by inserting ‘‘for a cost reporting pe-
riod beginning during fiscal year 1998,’’ after
‘‘(I)’’, and
(B) by inserting before the semicolon the
following: ‘‘, and for a cost reporting period be-
ginning after fiscal year 1998, the per bene-
ficiary annual limitation as determined under
clause (viii)(II) for such period’’; and
(2) by adding at the end the following:
‘‘(viii)(I) For purposes of this clause, for home health
agencies in a census division, the base regional limit is
equal to the sum of the labor and nonlabor components
of the standardized per-beneficiary limitation by census re-
gion division (as specified in the table entitled ‘Standard-
ized Per-Beneficiary Limitations by Census Region Divi-
sion, Labor/Nonlabor’, prepared by the Health Care Fi-
nancing Administration, and published in the Federal
Register on July 31, 1998, or during August 1998) for
the census division, and the base national limit is equal
to the mean of such base regional limits.
‘‘(II) For home health services furnished during a
cost reporting period that begins after fiscal year 1998
and that is not subject to the prospective payment system
under section 1895, the per beneficiary annual limitation
for a home health agency in a census division is equal to
the sum of 50 percent of the base regional limit (specified
under subclause (I)) for agencies in such division and 50
percent of the base national limit (as specified under such
subclause), updated by the home health market basket
index for each fiscal year (after fiscal year 1998 and
through the fiscal year involved), and adjusted as provided
under subclause (III).
‘‘(III) The Secretary shall adjust the labor-related
portion of the updated sum calculated under subclause
(II) by the area wage index applicable under section
1886(d)(3)(E) and determined in the manner described in
clause (iii) for cost reporting periods beginning during the
fiscal year involved. In applying this subclause for services
furnished during cost reporting periods beginning during
fiscal year 1999, the Secretary shall use the area wage
index specified in the tables entitled ‘Wage Index for
Urban Areas’ and ‘Wage Index for Rural Areas’, prepared
by the Health Care Financing Administration, and pub-
lished in the Federal Register on July 31, 1998, or during
August 1998.’’.
(b) ELIMINATION
OF SPECIAL RULE
FOR NEW
AGENCIES.—Section 1861(v)(1)(L)(vi) of such Act (42
U.S.C. 1395x(v)(1)(L)(vi)) is amended by striking ‘‘the
following rules apply’’ and all that follows through ‘‘For
beneficiaries’’ and inserting ‘‘in the case of beneficiaries’’,
and correcting the indentation of the matter that follows
accordingly.
(c) INCREASE IN PER VISIT COST LIMITS.—Section
1861(v)(1)(L)(i) 
of 
such 
Act 
(42 
U.S.C.
1395x(v)(1)(L)(i)) is amended—
(1) in subclause (III), by striking ‘‘or’’;
(2) in subclause (IV)—
(A) by inserting ‘‘and before October 1,
1998,’’ after ‘‘October 1, 1997,’’; and
(B) by striking the period at the end and
inserting ‘‘, or’’; and
(3) by adding at the end the following new sub-
clause:
‘‘(V) October 1, 1998, 108 percent of such me-
dian.’’.
(d) PROMPT PUBLICATION OF NEW LIMITS.—Sec-
tion 
1861(v)(1)(L)(vii) 
of 
such 
Act 
(42 
U.S.C.
1395x(v)(1)(L)(vii)) is amended—
(1) in subclause (II), by redesignating such
subclause as subclause (III) and by striking ‘‘1998’’
and inserting ‘‘1999’’; and
(2) by inserting after subclause (I) the follow-
ing:
‘‘(II) The Secretary shall establish the per beneficiary
annual limitation under clause (viii)(II) and the per visit
limits applicable under clause (i)(V) for cost reporting pe-
riods beginning during fiscal year 1999 as soon as prac-
ticable after the date of the enactment of such clauses.’’.
(e) EFFECTIVE DATES.—(1) Except as provided in
paragraph (2), the amendments made by this section take
effect on the date of the enactment of this Act.
(2) The amendment made by subsection (b) applies
to services furnished in cost reporting periods beginning
after fiscal year 1998.
(3) There shall be no administrative or judicial review
under section 1869 or 1878 of the Social Security Act,
or under any other provision of law, of any action taken
by the Secretary of Health and Human Services to imple-
ment the amendments made by this section.
SEC. 3. GRANT PROGRAM TO PROVIDE FOR ADJUSTMENT
FOR OUTLIERS TO ASSIST TRANSITION TO
PROSPECTIVE PAYMENT SYSTEM.
Section 1895 of the Social Security Act (42 U.S.C.
1395fff) is amended by adding at the end the following
new subsection:
‘‘(e) GRANT PROGRAM TO PROVIDE FOR ADJUST-
MENT FOR OUTLIERS TO ASSIST TRANSITION TO PRO-
SPECTIVE PAYMENT SYSTEM.—
‘‘(1) APPROPRIATIONS; TOTAL
ALLOTMENT.—
For the purpose of making payments to States
under allotments under paragraph (2), there is ap-
propriated, out of any money in the Treasury not
otherwise appropriated—
‘‘(A) for fiscal year 1999, $250,000,000;
‘‘(B) for fiscal year 2000, $250,000,000;
‘‘(C) for fiscal year 2001, $250,000,000;
and
‘‘(D) for fiscal year 2002, $250,000,000.
Such amounts shall be available for allotment under
paragraph (2) for the respective fiscal years.
‘‘(2) ALLOTMENTS TO STATES.—
‘‘(A) IN GENERAL.—Of the amount avail-
able for allotment under paragraph (1) for a
fiscal year, the Secretary shall allot to each
State the same proportion as the sum of the
following (as determined by the Secretary based
upon data for the most recent fiscal year ending
before the fiscal year involved) for the State
bears to the total of all such sums for all the
States:
‘‘(i) 40 PERCENT BASED ON NUMBER
OF
MEDICARE
BENEFICIARIES.—40 per-
cent multiplied by a fraction (expressed as
a percentage)—
‘‘(I) the numerator of which is
the number of individuals entitled to
benefits under part A or enrolled
under part B, or both, residing in the
State; and
‘‘(II) the denominator of which is
the total of the numbers computed
under subclause (I) for all the States.
‘‘(ii) 60 PERCENT BASED ON NUMBER
OF MEDICARE BENEFICIARIES RECEIVING
HOME
HEALTH
SERVICES.—60 percent
multiplied by a fraction (expressed as a
percentage)—
‘‘(I) the numerator of which is
the number of individuals described in
clause (i)(I) in the State with respect
to whom a claim for benefits for home
health services under this title has
been received; and
‘‘(II) the denominator of which is
the total of the numbers computed
under subclause (I) for all the States.
‘‘(B) 1-YEAR AVAILABILITY OF AMOUNTS
ALLOTTED.—Amounts allotted to a State pur-
suant to this paragraph for a fiscal year shall
remain available for obligation by the State
through the end of the fiscal year (or, in the
case of an allotment for fiscal year 1999
through the end of fiscal year 2000). Amounts
reallotted to a State under subparagraph (C)
shall be available for obligation by the State
through the end of the fiscal year in which they
are reallotted.
‘‘(C) PROCEDURE
FOR
REDISTRIBUTION
OF UNUSED ALLOTMENTS.—The Secretary shall
determine an appropriate procedure for redis-
tribution of allotments from States that were
provided allotments under this paragraph for a
fiscal year but that do not obligate all of the
amount of such allotments during the period in
which such allotments are available for obliga-
tion under subparagraph (B), to States that
have fully obligated the amount of their allot-
ments under this paragraph.
‘‘(3) USE AND PAYMENT OF FUNDS.—
‘‘(A) IN GENERAL.—From the allotments
made under paragraph (2) to a State for a fis-
cal year, the Secretary shall pay to each State
amounts the State demonstrates were paid by
the State in the fiscal year—
‘‘(i) for qualifying payments to quali-
fied home health agencies; and
‘‘(ii) subject to subparagraph (D), for
administrative expenses incurred by the
State in carrying out this subsection.
In no case shall the payments to a State under
this paragraph in a fiscal year exceed the
amount of the allotments made available for ob-
ligation to the State under paragraph (2) for
the fiscal year.
‘‘(B) QUALIFYING
PAYMENT
DEFINED.—
For purposes of this paragraph, a ‘qualifying
payment’ to a qualified home health agency is
the amount by which—
‘‘(i) the amount of the reasonable
costs of the agency of furnishing home
health services under this title in the State,
incurred for cost reporting periods begin-
ning on or after October 1, 1997, and be-
fore the first cost reporting period for
which payment under this title to the agen-
cy is made under subsection (a), exceeds
‘‘(ii) the amount of the reimbursement
for such services under this title.
The amount of the reasonable costs under
clause (i) may be determined using estimates of
such costs based on non-settled cost reports or
other reliable information.
‘‘(C) QUALIFIED HOME HEALTH AGENCY
DEFINED.—For purposes of this paragraph, the
term ‘qualified home health agency’ means a
home health agency that—
‘‘(i) has a participation agreement in
effect under section 1866(a);
‘‘(ii) demonstrates to the State a se-
vere adverse impact of the payment limita-
tion amendments under section 4602 of
the Balanced Budget Act of 1997 because
of a more costly-than-average type or
amount of services; and
‘‘(iii) demonstrates to the State effi-
cient management of the agency.
‘‘(D) LIMITATION ON PAYMENT FOR AD-
MINISTRATIVE
EXPENSES.—Not more than 5
percent of the amount paid to a State under
subparagraph (A) for expenditures in a fiscal
year may be paid under subparagraph (A)(ii).
‘‘(E) LIMITATION
ON
USE
TO
SATISFY
MATCHING REQUIREMENT.—Amounts paid to a
State under subparagraph (A) may not be used
to satisfy any requirement for the expenditure
of non-Federal funds as a condition for the re-
ceipt of Federal funds.
‘‘(F) CONSTRUCTION.—Nothing in this
paragraph shall be construed as requiring a
State to provide payment under this paragraph
to all qualified home health agencies in the
State or in the full amount of qualifying pay-
ments for any qualified home health agency re-
ceiving such a payment.
‘‘(G) ADVANCE PAYMENT; RETROSPECTIVE
ADJUSTMENT.—The Secretary may make pay-
ments under this subsection for a fiscal year on
the basis of advance estimates of expenditures
submitted by the State and such other inves-
tigation as the Secretary may find necessary,
and may reduce or increase the payments as
necessary to adjust for any overpayment or un-
derpayment for a prior fiscal year.
‘‘(4) STATE
ENTITLEMENT.—This subsection
constitutes budget authority in advance of appro-
priations Acts and represents the obligation of the
Federal Government to provide for the payment to
States of amounts provided under this subsection.’’.
SEC. 4. UPDATE ON IMPLEMENTATION OF PROSPECTIVE
PAYMENT SYSTEM FOR HOME HEALTH AGEN-
CIES.
Not later than 90 days after the date of enactment
of this Act, and every 90 days thereafter until the prospec-
tive payment system for home health agencies (established
by section 1895 of the Social Security Act (42 U.S.C.
1395fff)) is implemented, the Secretary of Health and
Human Services shall meet with the staff of the appro-
priate committees of Congress to provide an informal up-
date regarding the progress of the Secretary in implement-
ing such payment system.
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