I
106TH CONGRESS
1ST SESSION
H. R. 3146
To amend titles XVIII, XIX, and XXI of the Social Security Act to adjust
the Medicare, Medicaid, and children’s health insurance programs, as
revised by the Balanced Budget Act of 1997.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 26, 1999
Mr. BLILEY (for himself, Mr. BILIRAKIS, Mr. TAUZIN, Mr. PICKERING, Mr.
BLUNT, Mr. BURR of North Carolina, Mr. GREENWOOD, Mr. UPTON, Mr.
SHADEGG, Mr. OXLEY, Mr. ROGAN, Mr. WHITFIELD, Mr. DEAL of Geor-
gia, Mr. LAZIO, and Mr. BRYANT) introduced the following bill; which
was referred to the Committee on Commerce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
A BILL
To amend titles XVIII, XIX, and XXI of the Social Security
Act to adjust the Medicare, Medicaid, and children’s
health insurance programs, as revised by the Balanced
Budget Act of 1997.
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 BBA; TABLE OF
CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Care Restoration Act of 1999’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
title an amendment is expressed in terms of an amend-
ment to or repeal of a section or other provision, the ref-
erence shall be considered to be made to that section or
other provision of the Social Security Act.
(c) REFERENCES TO BALANCED BUDGET ACT OF
1997.—In this Act, the term ‘‘BBA’’ means the Balanced
Budget Act of 1997 (Public Law 105–33).
(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 BBA;
table of contents.
TITLE II—PROVISIONS RELATING TO PART B
Subtitle A—Payment for Physician Services
Sec. 201. Modification of update adjustment factor provisions to reduce update
oscillations and require estimate revisions.
Sec. 202. Use of data collected by organizations and entities in determining
practice expense relative values.
Sec. 203. Study and report to Congress on resources required to provide safe
and effective outpatient cancer therapy.
Sec. 204. Limitation on application of practice expense site-of-service differen-
tial; reversion to 1997 practice expense RVU’s for certain serv-
ices.
Subtitle B—Hospital Outpatient Services
Sec. 211. Outlier adjustment and transitional pass-through for certain medical
devices, drugs, and biologicals.
Sec. 212. Establishing a transitional corridor for application of OPD PPS.
Sec. 213. Hold-harmless for cancer hospitals and small rural hospitals.
Sec. 214. Annual review process for development of HOPD PPS.
Subtitle C—Other
Sec. 221. 2-year moratorium on therapy caps.
Sec. 222. Phase-in of PPS for ambulatory surgical centers.
Sec. 223. Expanding coverage to direct services under telehealth program for
medicare beneficiaries participating in certain demonstration
projects.
Sec. 224. Provision for part B add-ons for facilities participating in the
NHCMQ demonstration project.
Sec. 225. Study on effect of credentialing of technologists and sonographers on
quality of ultrasound and imaging services.
Sec. 226. MedPAC study on the complexity of the medicare program and the
levels of burdens placed on providers through Federal regula-
tions.
Sec. 227. Elimination of time limitation on medicare benefits for immuno-
suppressive drugs.
TITLE III—PROVISIONS RELATING TO PARTS A AND B
Subtitle A—Home Health Services
Sec. 301. Report on costs of compliance with OASIS data collection require-
ments.
Sec. 302. Limitation of OASIS data collection requirements to medicare and
medicaid patients.
Sec. 303. Phase-in and partial elimination of the 15 percent reduction in pay-
ments under the PPS for home health services.
Sec. 304. Refinement of home health agency consolidated billing for durable
medical equipment.
Sec. 305. Use of payments under PPS for home health services for costs associ-
ated with the use of telecommunications systems.
Subtitle B—Other
Sec. 311. Permitting reclassification of certain urban hospitals as rural hos-
pitals.
Sec. 312. MedPAC study on medicare payment for non-physician health profes-
sional clinical training in hospitals.
TITLE V—PROVISIONS RELATING TO PART C
(MEDICARE+CHOICE PROGRAM)
Subtitle A—Medicare+Choice
Sec. 501. Phase-in of new risk adjustment methodology.
Sec. 502. Continued computation and publication of AAPCC data.
Sec. 503. Changes in Medicare+Choice and medigap enrollment rules.
Sec. 504. Allowing variation in premium waivers within a service area if
Medicare+Choice payment rates vary within the area.
Sec. 505. Delay in deadline for submission of adjusted community rates and re-
lated information.
Sec. 506. Deeming of Medicare+Choice organization to meet requirements.
Sec. 507. Reduction in adjustment in national per capita Medicare+Choice
growth percentage for 2001 and 2002.
Sec. 508. 3 year extension of medicare cost contracts.
Sec. 509. Reducing to 2 years the re-entry period after contract termination.
Sec. 510. MedPAC studies relating to risk adjustment.
Sec. 511. MedPAC report on medicare MSA (medical savings account) plans.
Sec. 512. Miscellaneous changes.
Subtitle B—Other Managed Care Provisions
Sec. 521. Medicare competitive pricing demonstration project.
Sec. 512. Inapplicability of OASIS to PACE.
TITLE VI—MEDICAID
Sec. 601. Making medicaid DSH transition rule permanent.
Sec. 602. Increase in DSH allotment for certain States and the District of Co-
lumbia.
Sec. 603. New prospective payment system for Federally-qualified health cen-
ters and rural health clinics.
Sec. 604. Parity in reimbursement for certain utilization and quality control
services.
TITLE VII—STATE CHILDREN’S HEALTH INSURANCE PROGRAM
(SCHIP)
Sec. 701. Stabilizing the SCHIP allotment formula.
Sec. 702. Increased allotments for territories under the State children’s health
insurance program.
TITLE II—PROVISIONS
RELATING TO PART B
Subtitle A—Payment for Physician
Services
SEC. 201. MODIFICATION OF UPDATE ADJUSTMENT FAC-
TOR PROVISIONS TO REDUCE UPDATE OSCIL-
LATIONS 
AND 
REQUIRE 
ESTIMATE 
REVI-
SIONS.
(a) UPDATE ADJUSTMENT FACTOR.—
(1) IN GENERAL.—Section 1848(d) (42 U.S.C.
1395w–4(d)) is amended—
(A) in paragraph (3)—
(i) in the heading, by inserting ‘‘FOR
1999 AND 2000’’ after ‘‘UPDATE’’;
(ii) in subparagraph (A), by striking
‘‘a year beginning with 1999’’ and insert-
ing ‘‘1999 and 2000’’; and
(iii) in subparagraph (C), by inserting
‘‘and paragraph (4)’’ after ‘‘For purposes
of this paragraph’’; and
(B) by adding at the end the following new
paragraph:
‘‘(4) UPDATE
FOR
YEARS
BEGINNING
WITH
2001.—
‘‘(A) IN GENERAL.—Unless otherwise pro-
vided by law, subject to the budget-neutrality
factor determined by the Secretary under sub-
section (c)(2)(B)(ii) and subject to adjustment
under subparagraph (F), the update to the sin-
gle conversion factor established in paragraph
(1)(C) for a year beginning with 2001 is equal
to the product of—
‘‘(i) 1 plus the Secretary’s estimate of
the percentage increase in the MEI (as de-
fined in section 1842(i)(3)) for the year
(divided by 100), and
‘‘(ii) 1 plus the Secretary’s estimate of
the update adjustment factor under sub-
paragraph (B) for the year.
‘‘(B) UPDATE ADJUSTMENT FACTOR.—For
purposes of subparagraph (A)(ii), subject to
subparagraph (D), the ‘update adjustment fac-
tor’ for a year is equal (as estimated by the
Secretary) to the sum of the following:
‘‘(i) PRIOR YEAR ADJUSTMENT COM-
PONENT.—An amount determined by—
‘‘(I) computing the difference
(which may be positive or negative)
between the amount of the allowed ex-
penditures for physicians’ services for
the prior year (as determined under
subparagraph (C)) and the amount of
the actual expenditures for such serv-
ices for that year;
‘‘(II) dividing that difference by
the amount of the actual expenditures
for such services for that year; and
‘‘(III) multiplying that quotient
by 0.75.
‘‘(ii) CUMULATIVE ADJUSTMENT COM-
PONENT.—An amount determined by—
‘‘(I) computing the difference
(which may be positive or negative)
between the amount of the allowed ex-
penditures for physicians’ services (as
determined under subparagraph (C))
from April 1, 1996, through the end
of the prior year and the amount of
the actual expenditures for such serv-
ices during that period;
‘‘(II) dividing that difference by
actual expenditures for such services
for the prior year as increased by the
sustainable growth rate under sub-
section (f) for the year for which the
update adjustment factor is to be de-
termined; and
‘‘(III) multiplying that quotient
by 0.33.
‘‘(C) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—For 
purposes 
of 
this
paragraph—
‘‘(i) PERIOD UP TO APRIL 1, 1999.—
The allowed expenditures for physicians’
services for a period before April 1, 1999,
shall be the amount of the allowed expendi-
tures for such period as determined under
paragraph (3)(C).
‘‘(ii) TRANSITION TO CALENDAR YEAR
ALLOWED
EXPENDITURES.—Subject 
to
subparagraph (E), the allowed expendi-
tures for—
‘‘(I) the 9-month period begin-
ning April 1, 1999, shall be the Sec-
retary’s estimate of the amount of the
allowed expenditures that would be
permitted under paragraph (3)(C) for
such period; and
‘‘(II) the year of 1999, shall be
the 
Secretary’s 
estimate 
of 
the
amount of the allowed expenditures
that would be permitted under para-
graph (3)(C) for such year.
‘‘(iii) YEARS BEGINNING WITH 2000.—
The allowed expenditures for a year (be-
ginning with 2000) is equal to the allowed
expenditures for physicians’ services for
the previous year, increased by the sustain-
able growth rate under subsection (f) for
the year involved.
‘‘(D) RESTRICTION ON UPDATE ADJUST-
MENT FACTOR.—The update adjustment factor
determined under subparagraph (B) for a year
may not be less than -0.07 or greater than
0.03.
‘‘(E) RECALCULATION
OF
ALLOWED
EX-
PENDITURES FOR UPDATES BEGINNING WITH
2001.—For purposes of determining the update
adjustment factor for a year beginning with
2001, the Secretary shall recompute the allowed
expenditures for previous periods beginning on
or after April 1, 1999, consistent with sub-
section (f)(3).
‘‘(F) TRANSITIONAL
ADJUSTMENT
DE-
SIGNED
TO
PROVIDE
FOR
BUDGET
NEU-
TRALITY.—Under this subparagraph the Sec-
retary shall provide for an adjustment to the
update under subparagraph (A)—
‘‘(i) for each of 2001, 2002, 2003,
and 2004, of -0.2 percent; and
‘‘(ii) for 2005 of +0.8 percent.’’.
(2) PUBLICATION CHANGE.—
(A) IN GENERAL.—Section 1848(d)(1)(E)
(42 U.S.C. 1395w–4(d)(1)(E)) is amended to
read as follows:
‘‘(E) PUBLICATION
AND
DISSEMINATION
OF INFORMATION.—The Secretary shall—
‘‘(i) cause to have published in the
Federal Register not later than November
1 of each year (beginning with 2000) the
conversion factor which will apply to physi-
cians’ services for the succeeding year, the
update determined under paragraph (4)
for such succeeding year, and the allowed
expenditures under such paragraph for
such succeeding year; and
‘‘(ii) make available to the Medicare
Payment Advisory Commission and the
public by March 1 of each year (beginning
with 2000) an estimate of the conversion
factor which will apply to physicians’ serv-
ices for the succeeding year and data used
in making such estimate.’’.
(B) MEDPAC REVIEW
OF
CONVERSION
FACTOR
ESTIMATES.—Section 1805(b)(1)(D)
(42 U.S.C. 1395b–6(b)(1)(D)) is amended by
inserting ‘‘and including a review of the esti-
mate of the conversion factor submitted under
section 1848(d)(1)(E)(ii)’’ before the period at
the end.
(C) 1-TIME
PUBLICATION
OF
INFORMA-
TION
ON
TRANSITION.—The 
Secretary 
of
Health and Human Services shall cause to have
published in the Federal Register, not later
than 90 days after the date of the enactment of
this section, the Secretary’s determination,
based upon the best available data, of—
(i) the allowed expenditures under
subclauses 
(I) 
and 
(II) 
of 
section
1848(d)(4)(C)(ii) of the Social Security
Act, as added by subsection (a)(1)(B), for
the 9-month period beginning on April 1,
1999, and for 1999;
(ii) the estimated actual expenditures
described in section 1848(d) of such Act
for 1999; and
(iii) the sustainable growth rate under
section 1848(f) of such Act (42 U.S.C.
1395w–4(f)) for 2000.
(3) CONFORMING AMENDMENTS.—
(A) Section 1848 (42 U.S.C. 1395w–4) is
amended—
(i) in subsection (d)(1)(A), by insert-
ing ‘‘(for years before 2001) and, for years
beginning with 2001, multiplied by the up-
date (established under paragraph (4)) for
the year involved’’ after ‘‘for the year in-
volved’’; and
(ii) in subsection (f)(2)(D), by insert-
ing ‘‘or (d)(4)(B), as the case may be’’
after ‘‘(d)(3)(B)’’.
(B) 
Section 
1833(l)(4)(A)(i)(VII) 
(42
U.S.C. 1395l(l)(4)(A)(i)(VII)) is amended by
striking ‘‘1848(d)(3)’’ and inserting ‘‘1848(d)’’.
(b) SUSTAINABLE GROWTH RATES.—Section 1848(f)
(42 U.S.C. 1395w–4(f)) is amended—
(1) by amending paragraph (1) to read as fol-
lows:
‘‘(1) PUBLICATION.—The Secretary shall cause
to have published in the Federal Register not later
than—
‘‘(A) November 1, 2000, the sustainable
growth rate for 2000 and 2001; and
‘‘(B) November 1 of each succeeding year
the sustainable growth rate for such succeeding
year and each of the preceding 2 years.’’;
(2) in paragraph (2)—
(A) in the matter before subparagraph (A),
by striking ‘‘fiscal year 1998)’’ and inserting
‘‘fiscal year 1998 and ending with fiscal year
2000) and a year beginning with 2000’’; and
(B) in subparagraphs (A) through (D), by
striking ‘‘fiscal year’’ and inserting ‘‘applicable
period’’ each place it appears;
(3) in paragraph (3), by adding at the end the
following new subparagraph:
‘‘(C) APPLICABLE PERIOD.—The term ‘ap-
plicable period’ means—
‘‘(i) a fiscal year, in the case of fiscal
year 1998, fiscal year 1999, and fiscal year
2000; or
‘‘(ii) a calendar year with respect to a
year beginning with 2000;
as the case may be.’’;
(4) by redesignating paragraph (3) as para-
graph (4); and
(5) by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) DATA TO BE USED.—For purposes of de-
termining the update adjustment factor under sub-
section (d)(4)(B) for a year beginning with 2001,
the sustainable growth rates taken into consideration
in the determination under paragraph (2) shall be
determined as follows:
‘‘(A) FOR 2001.—For purposes of such cal-
culations for 2001, the sustainable growth rates
for fiscal year 2000 and the years 2000 and
2001 shall be determined on the basis of the
best data available to the Secretary as of Sep-
tember 1, 2000.
‘‘(B) FOR 2002.—For purposes of such cal-
culations for 2002, the sustainable growth rates
for fiscal year 2000 and for years 2000, 2001,
and 2002 shall be determined on the basis of
the best data available to the Secretary as of
September 1, 2001.
‘‘(C) FOR 2003 AND SUCCEEDING YEARS.—
For purposes of such calculations for a year
after 2002—
‘‘(i) the sustainable growth rates for
that year and the preceding 2 years shall
be determined on the basis of the best data
available to the Secretary as of September
1 of the year preceding the year for which
the calculation is made; and
‘‘(ii) the sustainable growth rate for
any year before a year described in clause
(i) shall be the rate as most recently deter-
mined for that year under this subsection.
Nothing in this paragraph shall be construed as af-
fecting the sustainable growth rates established for
fiscal year 1998 or fiscal year 1999.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall be effective in determining the conversion
factor under section 1848(d) of the Social Security Act
(42 U.S.C. 1395w–4(d)) for years beginning with 2001
and shall not apply to or affect any update (or any update
adjustment factor) for any year before 2001.
SEC. 202. USE OF DATA COLLECTED BY ORGANIZATIONS
AND ENTITIES IN DETERMINING PRACTICE
EXPENSE RELATIVE VALUES.
(a) USE.—The Secretary of Health and Human Serv-
ices shall use, to the maximum extent practicable and con-
sistent with sound data practices, data collected or devel-
oped by entities and organizations (other than the Depart-
ment of Health and Human Services) to supplement the
data normally collected by that Department in deter-
mining the practice expense component under section
1848(c)(2)(C)(ii) of the Social Security Act (42 U.S.C.
1395w–4(c)(2)(C)(ii)) for purposes of determining relative
values for payment for physicians’ services under the fee
schedule under section 1848 of such Act (42 U.S.C.
1395w–4).
(b) REPORT.—The Secretary shall submit to Con-
gress, in connection with the publication of the update
under section 1848(c) of such Act for 2001, a report on
the extent to which the Secretary has used data described
in subsection (a) in making adjustments in relative values
to be applied under such section in 2001 and the reasons
(if any) why the Secretary has not used such data, par-
ticularly in cases in which the data otherwise used are in-
adequate because they are not based upon a large enough
sample size to be statistically reliable.
SEC. 203. STUDY AND REPORT TO CONGRESS ON RE-
SOURCES REQUIRED TO PROVIDE SAFE AND
EFFECTIVE OUTPATIENT CANCER THERAPY.
(a) STUDY.—The Administrator of the Health Care
Financing Administration shall conduct a nationwide
study to determine the physician and non-physician clin-
ical resources necessary to provide safe outpatient cancer
therapy services and the appropriate payment rates for
such services under the medicare program. In making
such determination, the Secretary shall—
(1) shall determine the adequacy of practice ex-
penses associated with the utilization of those clin-
ical resources;
(2) shall determine the adequacy of work units
in the practice expense formula; and
(3) assess various standards to assure the pro-
vision of safe outpatient cancer therapy services.
(b) REPORT
TO CONGRESS.—The Administrator,
after consultation with the Medicare Payment Advisory
Commission, shall submit to Congress a report on the
study conducted under subsection (a). The report shall in-
clude recommendations for practice expense adjustments
to the payment methodology under part B of the medicare
program, including the development and inclusion of ade-
quate work units to assure the adequacy of payment
amounts for safe outpatient cancer therapy services. The
study shall also include an estimate of the cost of imple-
menting such recommendations.
SEC. 204. LIMITATION ON APPLICATION OF PRACTICE EX-
PENSE SITE-OF-SERVICE DIFFERENTIAL; RE-
VERSION TO 1997 PRACTICE EXPENSE RVU’S
FOR CERTAIN SERVICES.
(a) IN GENERAL.—Section 1848(c)(2)(C) (42 U.S.C.
1395w–4(c)(2)(C)) is amended by adding at the end the
following new clauses:
‘‘(iv) LIMITATION ON APPLICATION OF
PRACTICE EXPENSE SITE-OF-SERVICE DIF-
FERENTIAL.—No site-of-service differential
shall be applied to relative value units for
services which are provided 10 percent or
less in an office setting.
‘‘(v) REVERSION
TO
1997
RELATIVE
VALUE
UNITS.—The schedule established
under this section shall, as of January 1,
2001, revert to reflect only one profes-
sional fee for each CPT-coded service
which is provided 10 percent or less in an
office setting. The Secretary shall utilize
the practice expense relative value units for
those services that were published on No-
vember 22, 1996, and implemented begin-
ning on January 1, 1997.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) is effective for services furnished on or after
January 1, 2001.
Subtitle B—Hospital Outpatient
Services
SEC. 211. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS-
THROUGH FOR CERTAIN MEDICAL DEVICES,
DRUGS, AND BIOLOGICALS.
(a) OUTLIER ADJUSTMENT.—Section 1833(t) (42
U.S.C. 1395l(t)), as added by section 4523(a) of BBA,
is amended—
(1) by redesignating paragraphs (5) through
(9) as paragraphs (7) through (11), respectively;
and
(2) by inserting after paragraph (4) the fol-
lowing new paragraph:
‘‘(5) OUTLIER ADJUSTMENT.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for an additional payment for each cov-
ered OPD service (or group of services) for
which a hospital’s charges, adjusted to cost,
exceed—
‘‘(i) a fixed multiple of the sum of—
‘‘(I) 
the 
applicable 
Medicare
OPD fee schedule amount determined
under paragraph (3)(D), as adjusted
under paragraph (4)(A) (other than
for adjustments under this paragraph
or paragraph (6)); and
‘‘(II) 
any 
transitional 
pass-
through payment under paragraph
(6); and
‘‘(ii) at the option of the Secretary,
such fixed dollar amount as the Secretary
may establish.
‘‘(B) AMOUNT
OF
ADJUSTMENT.—The
amount of the additional payment under sub-
paragraph (A) shall be determined by the Sec-
retary and shall approximate the marginal cost
of care beyond the applicable cutoff point under
such subparagraph.
‘‘(C) LIMIT ON AGGREGATE OUTLIER AD-
JUSTMENTS.—
‘‘(i) IN GENERAL.—The total of the
additional payments made under this para-
graph for covered OPD services furnished
in a year (as projected or estimated by the
Secretary before the beginning of the year)
may not exceed the applicable percentage
(specified in clause (ii)) of the total pro-
gram payments projected or estimated to
be made under this subsection for all cov-
ered OPD services furnished in that year.
If this paragraph is first applied to less
than a full year, the previous sentence
shall apply only to the portion of such
year.
‘‘(ii) APPLICABLE PERCENTAGE.—For
purposes of clause (i), the term ‘applicable
percentage’ means a percentage specified
by the Secretary up to (but not to ex-
ceed)—
‘‘(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
‘‘(II) for 2004 and thereafter,
3.0 percent.’’.
(b) TRANSITIONAL PASS-THROUGH FOR ADDITIONAL
COSTS OF INNOVATIVE MEDICAL DEVICES, DRUGS, AND
BIOLOGICALS.—Such section is further amended by in-
serting after paragraph (5) the following new paragraph:
‘‘(6) TRANSITIONAL PASS-THROUGH FOR ADDI-
TIONAL COSTS OF INNOVATIVE MEDICAL DEVICES,
DRUGS, AND BIOLOGICALS.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for an additional payment under this
paragraph for any of the following that are pro-
vided as part of a covered OPD service (or
group of services):
‘‘(i) CURRENT
ORPHAN
DRUGS.—A
drug or biological that is used for a rare
disease or condition with respect to which
the drug or biological has been designated
as an orphan drug under section 526 of
the Federal Food, Drug and Cosmetic Act
if payment for the drug or biological as an
outpatient hospital service under this part
was being made on the first date that the
system under this subsection is imple-
mented.
‘‘(ii) CURRENT
CANCER
THERAPY
DRUGS AND BIOLOGICALS.—A drug or bio-
logical that is used in cancer therapy, if
payment for the drug or biological as an
outpatient hospital service under this part
was being made on such first date.
‘‘(iii) NEW MEDICAL DEVICES, DRUGS,
AND
BIOLOGICALS.—A medical device,
drug, or biological not described in clause
(i) or (ii) if—
‘‘(I) payment for the device,
drug, or biological as an outpatient
hospital service under this part was
not being made as of December 31,
1996; and
‘‘(II) the cost of the device, drug,
or biological is not insignificant in re-
lation to the OPD fee schedule
amount (as calculated under para-
graph (3)(D)) payable for the service
(or group of services) involved.
‘‘(B) LIMITED PERIOD OF PAYMENT.—The
payment under this paragraph with respect to
a medical device, drug, or biological shall only
apply during a period of at least 2 years, but
not more than 3 years, that begins—
‘‘(i) on the first date this subsection is
implemented in the case of a drug or bio-
logical described in clause (i) or (ii) of sub-
paragraph (A) and in the case of a device,
drug, or biological described in subpara-
graph (A)(iii) for which payment under
this part is made as an outpatient hospital
service before such first date; or
‘‘(ii) in the case of a device, drug, or
biological 
described 
in 
subparagraph
(A)(iii) not described in clause (i), on the
first date on which payment is made under
this part for the device, drug, or biological
as an outpatient hospital service.
‘‘(C) 
AMOUNT
OF
ADDITIONAL
PAY-
MENT.—Subject to subparagraph (D)(iii), the
amount of the payment under this paragraph
with respect to a device, drug, or biological pro-
vided as part of a covered OPD service is—
‘‘(i) in the case of a drug or biological,
the amount by which the amount deter-
mined under section 1842(o) for the drug
or biological exceeds the portion of the oth-
erwise applicable medicare OPD fee sched-
ule that the Secretary determines is associ-
ated with the drug or biological; or
‘‘(ii) in the case of a medical device,
the amount by which the hospital’s charges
for the device, adjusted to cost, exceeds the
portion of the otherwise applicable medi-
care OPD fee schedule that the Secretary
determines is associated with the device.
‘‘(D) LIMIT ON AGGREGATE ANNUAL AD-
JUSTMENT.—
‘‘(i) IN GENERAL.—The total of the
additional payments made under this para-
graph for covered OPD services furnished
in a year (as projected or estimated by the
Secretary before the beginning of the year)
may not exceed the applicable percentage
(specified in clause (ii)) of the total pro-
gram payments projected or estimated to
be made under this subsection for all cov-
ered OPD services furnished in that year.
If this paragraph is first applied to less
than a full year, the previous sentence
shall apply only to the portion of such
year.
‘‘(ii) APPLICABLE PERCENTAGE.—For
purposes of clause (i), the term ‘applicable
percentage’ means—
‘‘(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
‘‘(II) for 2004 and thereafter, a
percentage specified by the Secretary
up to (but not to exceed) 2.0 percent.
‘‘(iii) UNIFORM PROSPECTIVE REDUC-
TION IF AGGREGATE LIMIT PROJECTED TO
BE EXCEEDED.—If the Secretary projects
or estimates before the beginning of a year
that the amount of the additional pay-
ments under this paragraph for the year
(or portion thereof) as determined under
clause (i) without regard to this clause)
will exceed the limit established under such
clause, the Secretary shall reduce pro rata
the amount of each of the additional pay-
ments under this paragraph for that year
(or portion thereof) in order to ensure that
the aggregate additional payments under
this paragraph (as so projected or esti-
mated) do not exceed such limit.’’.
(c) APPLICATION
OF NEW ADJUSTMENTS
ON
A
BUDGET NEUTRAL BASIS.—Section 1833(t)(2)(E) (42
U.S.C. 1395l(t)(2)(E)) is amended by striking ‘‘other ad-
justments, in a budget neutral manner, as determined to
be necessary to ensure equitable payments, such a outlier
adjustments or’’ and inserting ‘‘, in a budget neutral man-
ner, outlier adjustments under paragraph (5) and transi-
tional pass-through payments under paragraph (6) and
other adjustments as determined to be necessary to ensure
equitable payments, such as’’.
(d) LIMITATION ON JUDICIAL REVIEW FOR NEW AD-
JUSTMENTS.—Section 1833(t)(11), as redesignated by
subsection (a)(1), is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C);
(2) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(E) the determination of the fixed mul-
tiple, or a fixed dollar cutoff amount, the mar-
ginal cost of care, or applicable percentage
under paragraph (5) or the determination of in-
significance of cost, the duration of the addi-
tional payments (consistent with paragraph
(6)(B)), the portion of the Medicare OPD fee
schedule amount associated with particular de-
vices, drugs, or biologicals, and the application
of any pro rata reduction under paragraph
(6).’’.
(e) INCLUSION OF MEDICAL DEVICES UNDER SYS-
TEM.—Section 1833(t) (42 U.S.C. 1395l(t)) is amended—
(1) in paragraph (1)(B)(ii), by striking ‘‘clause
(iii)’’ and inserting ‘‘clause (iv)’’ and by striking
‘‘but’’;
(2) by redesignating clause (iii) of paragraph
(1)(B) as clause (iv) and inserting after clause (ii)
of such paragraph the following new clause:
‘‘(iii) includes medical devices (such
as implantable medical devices); but’’; and
(3) in paragraph (2)(B), by inserting after ‘‘re-
sources’’ the following: ‘‘and so that a device is clas-
sified to the group that includes the service to which
the device relates’’.
(f) AUTHORIZING PAYMENT WEIGHTS BASED
ON
MEAN
HOSPITAL
COSTS.—Section 1833(t)(2)(C) (42
U.S.C. 1395l(t)(2)(C)) is amended by inserting ‘‘(or, at
the election of the Secretary, mean)’’ after ‘‘median’’.
(g) LIMITING VARIATION OF COSTS OF SERVICES
CLASSIFIED WITH
A GROUP.—Section 1833(t)(2) (42
U.S.C. 1395l(t)(2)) is amended by adding at the end the
following: ‘‘For purposes of subparagraph (B), items and
services within a group shall not be treated as ‘comparable
with respect to the use of resources’ if the highest median
cost (or mean cost, if elected by the Secretary under sub-
paragraph (C)) for an item or service within the group
is more than 2 times greater than the lowest median cost
(or mean cost, if so elected) for an item or service within
the group; except that the Secretary may make exceptions
in unusual cases, such as low volume items and services.’’.
(h) NO IMPACT ON COPAYMENT.—Section 1833(t)(7)
(42 U.S.C. 1395l(t)(7)), as redesignated by subsection (a),
is amended by adding at the end the following new sub-
paragraph:
‘‘(D) COMPUTATION
IGNORING
OUTLIER
AND
PASS-THROUGH
ADJUSTMENTS.—The co-
payment amount shall be computed under sub-
paragraph (A) as if the adjustments under
paragraphs (5) and (6) (and any adjustment
made under paragraph (2)(E) in relation to
such adjustments) had not occurred.’’.
(i) TECHNICAL CORRECTION IN REFERENCE RELAT-
ING TO HOSPITAL-BASED AMBULANCE SERVICES.—Sec-
tion 1833(t)(9) (42 U.S.C. 1395l(t)(9)), as redesignated
by subsection (a), is amended by striking ‘‘the matter in
subsection (a)(1) preceding subparagraph (A)’’ and insert-
ing ‘‘section 1861(v)(1)(U)’’.
(j) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of BBA.
SEC. 212. ESTABLISHING A TRANSITIONAL CORRIDOR FOR
APPLICATION OF OPD PPS.
(a) IN
GENERAL.—Section 1833(t) (42 U.S.C.
1395l(t)), as amended by section 211(a), is further
amended—
(1) in paragraph (4), in the matter before sub-
paragraph (A), by inserting ‘‘, subject to paragraph
(7),’’ after ‘‘is determined’’; and
(2) by redesignating paragraphs (7) through
(11) as paragraphs (8) through (12), respectively;
and
(3) by inserting after paragraph (6), as inserted
by section 211(b), the following new paragraph:
‘‘(7) TRANSITIONAL ADJUSTMENT TO LIMIT DE-
CLINE IN PAYMENT.—
‘‘(A) BEFORE
2002.—For covered OPD
services furnished before January 1, 2002, for
which the PPS amount (as defined in subpara-
graph (D)(i)) is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount (as
defined in subparagraph (D)(ii)), the
amount of payment under this subsection
shall be increased by 80 percent of the
amount of such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the amount by which
(I) the product of 0.71 and the pre-BBA
amount, exceeds (II) the product of 0.70
and the PPS amount;
‘‘(iii) at least 70 percent, but less
than 80 percent, of the pre-BBA amount,
the amount of payment under this sub-
section shall be increased by the amount
by which (I) the product of 0.63 and the
pre-BBA amount, exceeds (II) the product
of 0.60 and the PPS amount;
‘‘(iv) less than 70 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
21 percent of the pre-BBA amount.
‘‘(B) 2002.—For covered OPD services
furnished during 2002, for which the PPS
amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 70 percent of the
amount of such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the amount by which
(I) the product of 0.61 and the pre-BBA
amount, exceeds (II) the product of 0.60
and the PPS amount;
‘‘(iii) less than 80 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
13 percent of the pre-BBA amount.
‘‘(C) 2003.—For covered OPD services
furnished during 2003, for which the PPS
amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 60 percent of the
amount of such difference; or
‘‘(ii) less than 90 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
6 percent of the pre-BBA amount.
‘‘(D) DEFINITIONS.—For purposes of this
subparagraph:
‘‘(i) PPS AMOUNT.—The term ‘PPS
amount’ means, with respect to a covered
OPD service, the amount of payment
under this title for such service (deter-
mined without regard to this paragraph).
‘‘(ii) PRE-BBA
AMOUNT.—The term
‘pre-BBA amount’ means, with respect to
a covered OPD service, the amount that
would have been paid under this title for
such service if this subsection did not
apply.
‘‘(E) CONSTRUCTION.—Nothing in this
paragraph shall be construed to affect the co-
payment amount under paragraph (5).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection shall be effective as if included in the enact-
ment of BBA.
(c) REPORT ON RURAL AND CANCER HOSPITALS.—
Not later than July 1, 2002, the Secretary of Health and
Human Services shall submit to Congress a report and
recommendations on whether the prospective payment sys-
tem for covered outpatient services furnished under title
XVIII of the Social Security Act should apply to the fol-
lowing providers of services furnishing outpatient items
and services for which payment is made under such title:
(1) Medicare-dependent, small rural hospitals
(as defined in section 1886(d)(5)(G)(iv) of such Act
(42 U.S.C. 1395ww(d)(5)(G)(iv))).
(2) Sole community hospitals (as defined in sec-
tion 1886(d)(5)(D)(iii) of such Act (42 U.S.C.
1395ww(d)(5)(D)(iii)).
(3) Rural health clinics (as defined in section
1861(aa)(2) of such Act (42 U.S.C. 1395x(aa)(2)).
(4) Rural referral centers (as so classified
under section 1886(d)(5)(C) of such Act (42 U.S.C.
1395ww(d)(5)(C)).
(5) Any other rural hospital that the Secretary
determines appropriate.
(6) 
Hospitals 
described 
in 
section
1886(d)(1)(B)(v) 
of 
such 
Act 
(42 
U.S.C.
1395ww(d)(1)(B)(v)).
SEC. 213. HOLD-HARMLESS FOR CANCER HOSPITALS AND
SMALL RURAL HOSPITALS.
(a) IN GENERAL.—Section 1833(t)(10), as so redes-
ignated by section 201(a)(1), is amended—
(1) 
by 
striking 
‘‘ 
described 
in 
section
1886(d)(1)(B)(v)’’ in the matter before subpara-
graph (A);
(2) in subparagraphs (A) and (B), by inserting
‘‘described in section 1886(d)(1)(B)(v)’’ after ‘‘(A)’’
and ‘‘(B)’’, respectively;
(3) by striking ‘‘and’’ at the end of subpara-
graph (A);
(4) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘; and’’; and
(5) by adding at the end the following new sub-
paragraph:
‘‘(C) notwithstanding paragraph (1), hos-
pitals described in section 1886(d)(1)(B)(v) and
hospitals located in a rural area with less than
100 beds, the amount of payment under the
system under this subsection for covered OPD
services furnished before January 1, 2005, may
not be less than the amount of payment under
this part for such services that would have been
payable under this part under the law as in ef-
fect immediately before the implementation of
this subsection (but applying for purposes of
such law, the copayment amount otherwise ap-
plicable under paragraph (7)).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) are effective as if included in the enactment
of the BBA.
SEC. 214. ANNUAL REVIEW PROCESS FOR DEVELOPMENT
OF HOPD PPS.
(a) IN GENERAL.—Section 1833(t)(8)(A) (42 U.S.C.
1395l(t)(8)(A)), as redesignated by section 211(a)(1), is
amended—
(1) by striking ‘‘may periodically review’’ and
inserting ‘‘shall review not less often than annually’’;
and
(2) by adding at the end the following: ‘‘The
Secretary shall accept and use, to the maximum ex-
tent practicable and consistent with sound data
practice, data (particularly including data relating to
drugs, devices, and biologicals) collected or developed
by entities and organizations (other than the De-
partment of Health and Human Services) to supple-
ment the data collected by the Secretary in such re-
view and revisions and shall collect new data with
respect to new technologies. The Secretary shall con-
sult with an expert outside panel composed of an ap-
propriate selection of representatives of providers to
review revisions proposed to be made by the Sec-
retary.’’.
(b) EFFECTIVE DATES.—The Secretary of Health
and Human Services shall first conduct the annual review
under the amendment made by subsection (a)(1) in 2001
for application in 2002 and the amendment made by sub-
section (a)(2) takes effect on the date of the enactment
of this Act.
Subtitle C—Other
SEC. 221. 2-YEAR MORATORIUM ON THERAPY CAPS.
(a) MORATORIUM.—
(1) IN GENERAL.—Section 1833(g) (42 U.S.C.
1395l(g)) is amended—
(A) in paragraphs (1) and (3), by striking
‘‘In the case’’ each place it appears and insert-
ing ‘‘Subject to paragraph (4), in the case’’;
and
(B) by adding at the end the following:
‘‘(4) This subsection shall not apply to expenses in-
curred in 2000 and 2001.’’.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall apply to expenses incurred on
or after January 1, 2000.
(b) REVISION OF REPORT.—
(1) IN GENERAL.—Section 4541(d)(2) of the
Balanced Budget Act of 1997 (42 U.S.C. 1395l
note) is amended to read as follows:
‘‘(2) REPORT.—By not later than January 1,
2001, the Secretary of Health and Human Services
shall submit to Congress a report that includes rec-
ommendations on—
‘‘(A) the establishment of a mechanism for
assuring appropriate utilization of outpatient
physical therapy services, outpatient occupa-
tional therapy services, and speech-language pa-
thology services that are covered under the
medicare program under title XVIII of the So-
cial Security Act (42 U.S.C. 1395); and
‘‘(B) the establishment of an alternative
payment policy for such services based on clas-
sification of individuals by diagnostic category,
functional status, prior use of services (in both
inpatient and outpatient settings), and such
other criteria as the Secretary determines ap-
propriate, in place of the uniform dollar limita-
tions specified in section 1833(g) of such Act,
as amended by paragraph (1).
The recommendations shall include how such a
mechanism or policy might be implemented in a
budget-neutral manner.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect as if included in
the enactment of section 4541 of the Balanced
Budget Act of 1997 (Public Law 105–33; 111 Stat.
454).
(c) STUDY AND REPORT ON UTILIZATION.—
(1) STUDY.—
(A) 
IN
GENERAL.—The 
Secretary 
of
Health and Human Services shall conduct a
study which compares—
(i) utilization patterns (including na-
tionwide patterns, and patterns by region,
types of settings, and diagnosis or condi-
tion) of outpatient physical therapy serv-
ices, outpatient occupational therapy serv-
ices, and speech-language pathology serv-
ices that are covered under the medicare
program under title XVIII of the Social
Security Act (42 U.S.C. 1395) and pro-
vided on or after January 1, 2000; with
(ii) such patterns for such services
that were provided in 1998 and 1999.
(B) REVIEW
OF
CLAIMS.—In conducting
the study under this subsection the Secretary of
Health and Human Services shall review a sta-
tistically significant number of claims for reim-
bursement for the services described in sub-
paragraph (A).
(2) REPORT.—Not later than March 31, 2001,
the Secretary of Health and Human Services shall
submit a report to Congress on the study conducted
under paragraph (1), together with any rec-
ommendations for legislation that the Secretary de-
termines to be appropriate as a result of such study.
SEC. 222. PHASE-IN OF PPS FOR AMBULATORY SURGICAL
CENTERS.
If the Secretary of Health and Human Services im-
plements a revised prospective payment system for serv-
ices of ambulatory surgical facilities under part B of title
XVIII of the Social Security Act, prior to incorporating
data from the 1999 Medicare cost survey, such system
shall be implemented consistent with the following prin-
ciples:
(1) PHASE-IN.—The system shall provide that,
in the first year (or similar period) of its implemen-
tation, only a proportion (specified by the Secretary
and not to exceed 1⁄3) of the payment for such serv-
ices shall be made in accordance with such system
and the remainder shall be made in accordance with
current regulations, and in the following year a pro-
portion (specified by the Secretary and not to exceed
2⁄3) of the payment for such services shall be made
under such system.
(2) BUDGET NEUTRALITY.—The system shall
be designed so that aggregate payments under such
part for such services after the system is imple-
mented shall approximate the aggregate payments
that would have been made under such part for such
services if the system had not been implemented.
SEC. 223. EXPANDING COVERAGE TO DIRECT SERVICES
UNDER TELEHEALTH PROGRAM FOR MEDI-
CARE 
BENEFICIARIES 
PARTICIPATING 
IN
CERTAIN DEMONSTRATION PROJECTS.
Section 4206 of BBA (42 U.S.C. 1395l note) is
amended by adding at the end the following new sub-
section:
‘‘(e) EXPANDING COVERAGE TO DIRECT SERVICES
FOR MEDICARE BENEFICIARIES PARTICIPATING IN CER-
TAIN DEMONSTRATION PROJECTS.—
‘‘(1) IN GENERAL.—Not later than January 1,
2000, the Secretary shall make payments from the
Federal Supplementary Medical Insurance Trust
Fund under part B of such title in accordance with
a payment methodology specified by the Secretary
for direct professional services furnished before Jan-
uary 1, 2005, by a physician or practitioner de-
scribed in subsection (a) via telecommunications sys-
tems if—
‘‘(A) payment may be made under such
part if the service were provided in person, and
‘‘(B) the beneficiary is participating in a
demonstration project receiving funds from the
Health Care Financing Administration or the
Health Resources and Services Administration.
Such services shall include the broadest possible
range of billing codes as determined appropriate by
the Secretary.
‘‘(2) STUDY.—The Secretary shall conduct a
study of the effectiveness of the use of telemedicine
services in delivering health care to beneficiaries.
The study also shall examine the desirability of per-
mitting billing for direct services across all settings.
Not later than 3 years after the date of the enact-
ment of this subsection, the Secretary shall submit
to Congress a report on such study.’’.
SEC. 224. PROVISION FOR PART B ADD-ONS FOR FACILI-
TIES PARTICIPATING IN THE NHCMQ DEM-
ONSTRATION PROJECT.
(a) IN GENERAL.—Section 1888(e)(3) (42 U.S.C.
1395yy(e)(3)), as added by section 4432(a) of BBA, is
amended—
(1) in subparagraph (A)—
(A) in clause (i), by inserting ‘‘or, in the
case of a facility participating in the Nursing
Home Case-Mix and Quality Demonstration
(RUGS–III), the RUGS–III rate received by
the facility during the cost reporting period be-
ginning in 1997’’ after ‘‘to nonsettled cost re-
ports’’; and
(B) in clause (ii), by striking ‘‘furnished
during such period’’ and inserting ‘‘furnished
during the applicable cost reporting period de-
scribed in clause (i)’’.
(2) in subparagraph (B), to read as follows:
‘‘(B) UPDATE TO FIRST COST REPORTING
PERIOD.—The Secretary shall update the
amount determined under subparagraph (A),
for each cost reporting period after the applica-
ble cost reporting period described in subpara-
graph (A)(i) and up to the first cost reporting
period by a factor equal to the skilled nursing
facility market basket percentage increase
minus 1 percentage point (except that for the
cost reporting period beginning in fiscal year
2001, the factor shall be equal to such market
basket percentage plus 0.8 percentage point).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall be effective as if included in the enact-
ment of section 4432(a) of BBA.
SEC. 225. STUDY ON EFFECT OF CREDENTIALING OF TECH-
NOLOGISTS AND SONOGRAPHERS ON QUAL-
ITY OF ULTRASOUND AND IMAGING SERV-
ICES.
(a) STUDY.—The Administrator for Health Care Pol-
icy and Research shall provide for a study that compares
the differences in quality of ultrasound and other imaging
services (including error rates and resulting complications)
furnished under the medicare and medicaid programs be-
tween such services furnished by individuals who are
credentialed by private entities or organizations and by
those who are not so credentialed. Such study shall exam-
ine and evaluate differences in error rates and patient out-
comes as a result of the differences in credentialing.
(b) REPORT.—By not later than two years after the
date of the enactment of this Act, the Administrator shall
submit a report to Congress on the study conducted under
subsection (a).
SEC. 226. MEDPAC STUDY ON THE COMPLEXITY OF THE
MEDICARE PROGRAM AND THE LEVELS OF
BURDENS PLACED ON PROVIDERS THROUGH
FEDERAL REGULATIONS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall undertake a comprehensive study to review
the regulatory burdens placed on all classes of health care
providers under parts A and B of the medicare program
under title XVIII of the Social Security Act and to deter-
mine the costs these burdens impose on the nation’s health
care system. The study shall also examine the complexity
of the current regulatory system and its impact on pro-
viders.
(b) REPORT.—Not later than December 31, 2001,
the Commission shall submit to Congress a report on the
study conducted under subsection (a). The report shall in-
clude recommendations regarding—
(1) how the Health Care Financing Administra-
tion can reduce the regulatory burdens placed on pa-
tients and providers; and
(2) legislation that may be appropriate to re-
duce the complexity of the medicare program, in-
cluding improvement of the rules regarding billing,
compliance, and fraud and abuse.
SEC. 227. ELIMINATION OF TIME LIMITATION ON MEDI-
CARE BENEFITS FOR IMMUNOSUPPRESSIVE
DRUGS.
(a) IN GENERAL.—Section 1861(s)(2)(J) of the So-
cial Security Act (42 U.S.C. 1395x(s)(2)(J)) is amended
by striking ‘‘, but only’’ and all that follows up to the semi-
colon at the end.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to drugs furnished on or after
October 1, 2000.
TITLE III—PROVISIONS
RELATING TO PARTS A AND B
Subtitle A—Home Health Services
SEC. 301. REPORT ON COSTS OF COMPLIANCE WITH OASIS
DATA COLLECTION REQUIREMENTS.
(a) REPORT TO CONGRESS.—
(1) IN GENERAL.—Not later than 90 days after
the date of the enactment of this Act, the Secretary
of Health and Human Services shall submit to Con-
gress and the Comptroller General of the United
States a report on matters described in paragraph
(2) with respect to the data collection requirement of
patients of such agencies under the Outcome and
Assessment Information Set (OASIS) standard as
part of the comprehensive assessment of patients.
(2) MATTERS STUDIED.—For purposes of para-
graph (1), the matters described in this paragraph
include the following:
(A) An assessment of the costs incurred by
medicare home health agencies in complying
with such data collection requirement.
(B) An analysis of the effect of such data
collection requirement on the privacy interests
of patients from whom data is collected.
(3) GAO AUDIT.—The Comptroller General of
the United States shall conduct an independent
audit of the costs described in paragraph (2)(A).
Not later than 180 days after receipt of the report
under paragraph (1), the Comptroller General shall
submit to Congress a report describing the Comp-
troller General’s findings with respect to such audit,
and shall include comments on the report submitted
to Congress by the Secretary of Health and Human
Services under paragraph (1).
(b) DEFINITIONS.—In this section:
(1) COMPREHENSIVE
ASSESSMENT
OF
PA-
TIENTS.—The term ‘‘comprehensive assessment of
patients’’ means the rule published by the Health
Care Financing Administration that requires, as a
condition of participation in the medicare program,
a home health agency to provide a patient-specific
comprehensive assessment that accurately reflects
the patient’s current status and that incorporates
the Outcome and Assessment Information Set
(OASIS).
(2) OUTCOME AND ASSESSMENT INFORMATION
SET.—The term ‘‘Outcome and Assessment Infor-
mation Set’’ means the standard provided under the
rule relating to data items that must be used in con-
ducting a comprehensive assessment of patients.
SEC. 302. LIMITATION OF OASIS DATA COLLECTION RE-
QUIREMENTS TO MEDICARE AND MEDICAID
PATIENTS.
Effective as if included in the enactment of the Bal-
anced Budget Act of 1997 (Public Law 105–33), section
4602(e) of such Act (42 U.S.C. 1395fff note) is amended
by adding at the end the following new sentence: ‘‘Not-
withstanding any provision of section 1891 of the Social
Security Act (42 U.S.C. 1395bbb) to the contrary, the
Secretary may only require the submission of additional
information under this subsection with respect to individ-
uals who are entitled to benefits under parts A, B, or C
of title XVIII of such Act, or an individual eligible for
medical assistance under the State plan under title XIX
of such Act.’’.
SEC. 303. PHASE-IN AND PARTIAL ELIMINATION OF THE 15
PERCENT REDUCTION IN PAYMENTS UNDER
THE PPS FOR HOME HEALTH SERVICES.
Section 1895(b)(3)(A) (42 U.S.C. 1395fff(b)(3)(A))
(as amended by section 5101 of the Tax and Trade Relief
Extension Act of 1998 (contained in division J of Public
Law 105–277)) is amended—
(1) in clause (i)—
(A) by striking the period at the end of the
first sentence and the second sentence and in-
serting the following: ‘‘as follows:
‘‘(I) Such amount (or amounts)
shall initially be based on the most
current audited cost report data avail-
able to the Secretary and shall be
computed in a manner so that the
total amounts payable under the sys-
tem for fiscal year 2001 shall be equal
to the total amount that would have
been made if the system had not been
in effect, but if the reduction in limits
described in clause (ii) (applied by
substituting ‘5’ for ‘12.5’) had been in
effect.
‘‘(II) For fiscal year 2002, such
amount (or amounts) shall be equal to
the amount (or amounts) that would
have been determined under subclause
(I) if the reduction in limits described
in clause (ii) (applied by substituting
‘10’ for ‘12.5’) had been in effect for
fiscal year 2001, and updated under
subparagraph (B) for fiscal year
2002.
‘‘(II) For fiscal year 2003, such
amount (or amounts) shall be equal to
the amount (or amounts) that would
have been determined under subclause
(I) if the reduction in limits described
in clause (ii) had been in effect for
fiscal year 2001, and updated under
subparagraph (B) for fiscal years
2002 and 2003.’’; and
(B) by striking ‘‘Such amount’’ in the
third sentence and inserting ‘‘Each such
amount’’; and
(2) in clause (ii), by striking ‘‘15 percent’’ and
inserting ‘‘12.5 percent’’.
SEC. 304. REFINEMENT OF HOME HEALTH AGENCY CON-
SOLIDATED BILLING FOR DURABLE MEDICAL
EQUIPMENT.
(a) IN GENERAL.—Section 1842(a)(6)(F) (42 U.S.C.
1395u(a)(6)(F)), as amended by section 4603(c)(2)(B) of
BBA, is amended by inserting ‘‘(including medical sup-
plies but excluding durable medical equipment to the ex-
tent provided for in section 1861(m)(5))’’ after ‘‘home
health services’’.
(b) 
CONFORMING
AMENDMENT.—Section
1862(a)(21) (42 U.S.C. 1395y(a)(21)) is amended by in-
serting ‘‘(including medical supplies but excluding durable
medical equipment to the extent provided for in section
1861(m)(5))’’ after ‘‘home health services’’.
(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. 305. USE OF PAYMENTS UNDER PPS FOR HOME
HEALTH SERVICES FOR COSTS ASSOCIATED
WITH THE USE OF TELECOMMUNICATIONS
SYSTEMS.
(a) IN
GENERAL.—Section 1895(b) (42 U.S.C.
1395fff(b)) (as added by section 4603(a) of the Balanced
Budget Act of 1997 and amended by section 5101 of the
Tax and Trade Relief Extension Act of 1998 (contained
in division J of Public Law 105–277)) is amended by add-
ing at the end the following new paragraph:
‘‘(7) USE
OF
TELECOMMUNICATIONS
SYS-
TEMS.—A home health agency receiving payment
under the system under this subsection shall be per-
mitted by the Secretary to use such payments to
cover the cost of services, training, and supervision
when they are provided to beneficiaries under this
title in that beneficiary’s place of residence via tele-
communication systems. The payment available to
the agency under such system shall be the same as
it would be if the telecommunications systems were
not used. Such telecommunications systems may not
be substituted for services required to establish or
maintain eligibility for home health services under
section 1814(a)(2)(C) or 1835(a)(2)(A).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies with respect to items and services
furnished on or after the date of the enactment of this
Act.
Subtitle B—Other
SEC. 311. PERMITTING RECLASSIFICATION OF CERTAIN
URBAN HOSPITALS AS RURAL HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8) (42 U.S.C.
1395ww(d)(8)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E)(i) For purposes of this subsection
and section 1833(t), not later than 60 days
after the receipt of an application from a sub-
section (d) hospital described in clause (ii), the
Secretary shall treat the hospital as being lo-
cated in the rural area (as defined in such
paragraph (2)(D)) of the State in which the
hospital is located.
‘‘(ii) For purposes of clause (i), a sub-
section (d) hospital described in this clause is a
subsection (d) hospital that is located in an
urban area (as defined in paragraph (2)(D))
and satisfies any of the following criteria:
‘‘(I) The hospital is located in a
rural census tract of a metropolitan
statistical area (as determined under
the Goldsmith Modification, as pub-
lished in the Federal Register on Feb-
ruary 27, 1992 (57 FR 6725)).
‘‘(II) The hospital is located in
an area designated by any law or reg-
ulation of such State as a rural area
(or is designated by such State as a
rural hospital).
‘‘(iii) The hospital would qualify as a
sole community hospital under paragraph
(5)(D) or as a rural or regional or national
referral center under paragraph (5)(C) if
the hospital were located in a rural area.
‘‘(iv) The hospital meets such other
criteria as the Secretary may specify.’’.
(b) 
CONFORMING
CHANGE.—Section
1820(c)(2)(B)(i) (42 U.S.C. 1395i–4(c)(2)(B)(i)) is
amended by inserting ‘‘or is treated as being located in
a rural area pursuant to section 1886(d)(8)(E)’’ after
‘‘section 1886(d)(2)(D)).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall become effective on January 1, 2000.
SEC. 312. MEDPAC STUDY ON MEDICARE PAYMENT FOR
NON-PHYSICIAN 
HEALTH 
PROFESSIONAL
CLINICAL TRAINING IN HOSPITALS.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission shall conduct a study on medicare payment
policy with respect to graduate clinical training of dif-
ferent classes of non-physician health care professionals
(such as nurses, allied health professionals, physician as-
sistants, and psychologists) and the basis for any dif-
ferences in treatment among such classes.
(b) REPORT.—The Commission shall submit a report
to Congress on the study conducted under subsection (a)
not later than 18 months after the date of the enactment
of this Act.
TITLE 
V—PROVISIONS 
RELAT-
ING 
TO 
PART 
C
(MEDICARE+CHOICE 
PRO-
GRAM)
Subtitle A—Medicare+Choice
SEC. 501. PHASE-IN OF NEW RISK ADJUSTMENT METHOD-
OLOGY.
Section 
1853(a)(3)(C) 
(42 
U.S.C. 
1395w–
23(a)(3)(C)) is amended—
(1) by redesignating the first sentence as clause
(i) with the heading ‘‘IN GENERAL.—’’ and appro-
priate indentation; and
(2) by adding at the end the following new
clause:
‘‘(ii) PHASE-IN.—Subject to clause
(iii)(II), such risk adjustment methodology
shall be implemented in a phased-in man-
ner so that the new methodology applies
only to—
‘‘(I) 10 percent of the payment
amount in 2000, 2001, 2002, and
2003;
‘‘(II) 50 percent of such amount
in 2004;
‘‘(III) 75 percent of such amount
in 2005; and
‘‘(IV) 
100 
percent 
of 
such
amount in any subsequent year.
‘‘(iii) REQUIREMENT
AND
CONTIN-
GENCY.—
‘‘(I) REQUIREMENT.—The Sec-
retary shall provide for the application
of data from multiple settings (includ-
ing hospital outpatient settings) in ap-
plying the risk methodology in years
beginning with 2004.
‘‘(II) CONTINGENCY.—The per-
cent applied under clause (ii) shall not
exceed 10 percent in a year after
2003 unless the Secretary is using
data from multiple settings (including
hospital outpatient settings) in apply-
ing the risk methodology in that
year.’’.
SEC. 502. CONTINUED COMPUTATION AND PUBLICATION
OF AAPCC DATA.
(a) IN
GENERAL.—Section 1853(b) (42 U.S.C.
1395w–23(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) CONTINUED COMPUTATION AND PUBLICA-
TION
OF
COUNTY-SPECIFIC
PER
CAPITA
FEE-FOR-
SERVICE
EXPENDITURE
INFORMATION.—The Sec-
retary, through the Chief Actuary of the Health
Care Financing Administration, shall provide for the
computation and publication, on an annual basis at
the 
time 
of 
publication 
of 
the 
annual
Medicare+Choice capitation rates, of information on
the level of the average annual per capita costs (de-
scribed 
in 
section 
1876(a)(4)) 
for 
each
Medicare+Choice payment area.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act and apply to publications of the annual
Medicare+Choice capitation rates made on or after such
date.
SEC. 503. CHANGES IN MEDICARE+CHOICE AND MEDIGAP
ENROLLMENT RULES.
(a) PERMITTING ENROLLMENT
IN ALTERNATIVE
MEDICARE+CHOICE PLANS IN CASE OF INVOLUNTARY
TERMINATION OF MEDICARE+CHOICE ENROLLMENT.—
Section 1851(e)(4) (42 U.S.C. 1395w–21(e)(4)) is amend-
ed by striking subparagraph (A) and inserting the fol-
lowing:
‘‘(A)(i) the certification of the organization
or plan under this part has been terminated, or
the organization or plan has notified the indi-
vidual of an impending termination of such cer-
tification; or
‘‘(ii) the organization has terminated or
otherwise discontinued providing the plan in the
area in which the individual resides, or has no-
tified the individual of an impending termi-
nation or discontinuation of such plan;’’.
(b) CONFORMING MEDIGAP AMENDMENT.—Section
1882(s)(3)(A) (42 U.S.C. 1395ss(s)(3)(A)) is amended, in
the matter following clause (iii)—
(1) by inserting ‘‘(or, if elected by the indi-
vidual, the date of notification of the individual or
the Secretary by the plan or organization of the im-
pending termination or discontinuance of the plan in
the area in which the individual resides)’’ after ‘‘the
date of the termination of enrollment described in
such subparagraph’’; and
(2) by inserting ‘‘(or the date of such notifica-
tion)’’ 
after 
‘‘the 
date 
of 
termination 
or
disenrollment’’.
SEC. 504. ALLOWING VARIATION IN PREMIUM WAIVERS
WITHIN 
A 
SERVICE 
AREA 
IF
MEDICARE+CHOICE PAYMENT RATES VARY
WITHIN THE AREA.
(a) IN
GENERAL.—Section 1854(c) (42 U.S.C.
1395w–24(c)) is amended—
(1) by striking ‘‘The’’ and inserting ‘‘Subject to
paragraph (2), the’’;
(2) by redesignating the first sentence as a
paragraph (1) with an appropriate indentation and
the heading ‘‘IN GENERAL.—’’; and
(3) by adding at the end the following new
paragraph:
‘‘(2) VARIATION
IN
PREMIUM
WAIVER
PER-
MITTED.—A Medicare+Choice organization may
waive part or all of a premium described in para-
graph (1) for one or more Medicare+Choice pay-
ment areas within its service area if the annual
Medicare+Choice capitation rates under section
1853(c) vary between such payment area and other
payment areas within such service area.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to premiums for contract years begin-
ning on or after January 1, 2001.
SEC. 505. DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES AND RELATED
INFORMATION.
(a) DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES
AND RELATED INFORMA-
TION.—Section 1854(a)(1) (42 U.S.C. 1395w–24(a)(1)) is
amended by striking ‘‘May 1’’ and inserting ‘‘July 1’’.
(b) ADJUSTMENT
IN INFORMATION DISCLOSURE
PROVISIONS.—Section 
1851(d)(2)(A)(ii) 
(42 
U.S.C.
1395w–21(d)(2)(A)(ii)) is amended by inserting after ‘‘in-
formation described in paragraph (4) concerning such
plans’’ the following: ‘‘, to the extent such information is
available at the time of preparation of the material for
mailing’’.
SEC. 506. DEEMING OF MEDICARE+CHOICE ORGANIZATION
TO MEET REQUIREMENTS.
Section 1852(e)(4) (42 U.S.C. 1395w–22(e)(4)) is
amended to read as follows:
‘‘(4) TREATMENT
OF
ACCREDITATION.—The
Secretary shall provide that a Medicare+Choice or-
ganization is deemed to meet requirements of para-
graphs (1) and (2) of this subsection and subsection
(h) (relating to confidentiality and accuracy of en-
rollee records) if the organization is accredited (and
periodically reaccredited) by a private accrediting or-
ganization under a process that the Secretary has
determined assures that the accrediting organization
applies standards that meet or exceed the standards
established under section 1856 to carry out the re-
spective requirements. The Secretary shall deter-
mine, within 90 days after the date the Secretary re-
ceives an application by a private accrediting organi-
zation, whether the process of the private accrediting
organization meets the requirements of the pre-
ceding sentence using the criteria specified in section
1865(b)(2). The Secretary shall, using the process
described 
in 
section 
1865(b), 
deem 
a
Medicare+Choice organization that is so accredited
as meeting the requirements of paragraphs (1) and
(2) of this subsection and subsection (h).’’
SEC. 507. REDUCTION IN ADJUSTMENT IN NATIONAL PER
CAPITA MEDICARE+CHOICE GROWTH PER-
CENTAGE FOR 2001 AND 2002.
Section 
1853(c)(6)(B) 
(42 
U.S.C. 
1395w–
23(c)(6)(B)) is amended in clauses (iv) and (v) by striking
‘‘0.5 percentage points’’ and inserting ‘‘0.3 percentage
points’’.
SEC. 508. 3 YEAR EXTENSION OF MEDICARE COST CON-
TRACTS.
Section 
1876(h)(5)(B) 
(42 
U.S.C.
1395mm(h)(5)(B)) is amended by striking ‘‘2002’’ and in-
serting ‘‘2005’’.
SEC. 509. REDUCING TO 2 YEARS THE RE-ENTRY PERIOD
AFTER CONTRACT TERMINATION.
(a) IN GENERAL.—Section 1857(c)(4) (42 U.S.C.
1395w–27(c)(4)) is amended by striking ‘‘5-year period’’
and inserting ‘‘2-year period’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to contract terminations occurring
before, on, or after the date of the enactment of this Act.
SEC. 510. MEDPAC STUDIES RELATING TO RISK ADJUST-
MENT.
(a) STUDY.—The Medicare Payment Advisory Com-
mission established under section 1805 of the Social Secu-
rity Act (42 U.S.C. 1395b–6) (in this section referred to
as ‘‘MedPAC’’) shall conduct a study on the adequacy and
accuracy of health-based risk adjustment methodologies
being developed and used by the Health Care Financing
Administration in the Medicare+Choice program.
(b) REPORT.—The Commission shall submit to Con-
gress by March 1, 2001, a report on the study under sub-
section (a) and shall include recommendations regarding
alternative risk adjustment methodologies that are less on-
erous.
SEC. 511. MEDPAC REPORT ON MEDICARE MSA (MEDICAL
SAVINGS ACCOUNT) PLANS.
Not later than 1 year after the date of the enactment
of this Act, the Medicare Payment Advisory Commission
shall submit to Congress a report on specific legislative
changes that should be made to make MSA plans a viable
option under the Medicare+Choice program.
SEC. 512. MISCELLANEOUS CHANGES.
(a) PERMITTING RELIGIOUS FRATERNAL BENEFIT
SOCIETIES TO OFFER A RANGE OF MEDICARE+CHOICE
PLANS.—Section 1859(e)(2)(A) (42 U.S.C. 1395w–
29(e)(2)(A)) 
is 
amended 
by 
striking 
‘‘section
1851(a)(2)(A)’’ and inserting ‘‘section 1851(a)(2)’’.
Subtitle B—Other Managed Care
Provisions
SEC. 521. MEDICARE+CHOICE COMPETITIVE BIDDING DEM-
ONSTRATION PROJECT.
Section 4011 of BBA is amended—
(1) in subsection (a)—
(A) by striking ‘‘The Secretary’’ and in-
serting the following:
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, the Secretary’’; and
(B) by adding at the end the following:
‘‘(2) DELAY IN IMPLEMENTATION.—The Sec-
retary shall not implement the project until January
1, 2002, or, if later, 6 months after the date the
Competitive Pricing Advisory Committee has sub-
mitted to Congress a report on each of the following
topics:
‘‘(A) INCORPORATION OF ORIGINAL FEE-
FOR-SERVICE
MEDICARE
PROGRAM
INTO
PROJECT.—What changes would be required in
the project to feasibly incorporate the original
fee-for-service 
medicare 
program 
into 
the
project in the areas in which the project is oper-
ational.
‘‘(B) QUALITY
ACTIVITIES.—The nature
and extent of the quality reporting and moni-
toring activities that should be required of plans
participating in the project, the estimated costs
that plans will incur as a result of these re-
quirements, and the current ability of the
Health Care Financing Administration to col-
lect and report comparable data, sufficient to
support comparable quality reporting and moni-
toring activities with respect to beneficiaries en-
rolled in the original fee-for-service medicare
program generally.
‘‘(C) RURAL PROJECT.—The current via-
bility of initiating a project site in a rural area,
given the site specific budget neutrality require-
ments of the project, and insofar as the Com-
mittee decides that the addition of such a site
is not viable, recommendations on how the
project might best be changed so that such a
site is viable.
‘‘(D) BENEFIT STRUCTURE.—The nature
and extent of the benefit structure that should
be required of plans participating in the project,
the rationale for such benefit structure, the po-
tential implications that any benefit standard-
ization requirement may have on the number of
plan choices available to a beneficiary in an
area designated under the project, the potential
implications of requiring participating plans to
offer variations on any standardized benefit
package the committee might recommend, such
that a beneficiary could elect to pay a higher
percentage of out-of-pocket costs in exchange
for a lower premium (or premium rebate as the
case may be), and the potential implications of
expanding the project (in conjunction with the
potential inclusion of the original fee-for-service
medicare program) to require medicare supple-
mental insurance plans operating in an area
designated under the project to offer a coordi-
nated and comparable standardized benefit
package.
‘‘(3) CONFORMING
DEADLINES.—Any dates
specified in the succeeding provisions of this section
shall be delayed (as specified by the Secretary) in a
manner consistent with the delay effected under
paragraph (2).’’; and
(2) in subsection (c)(1)(A)—
(A) by striking ‘‘and’’ at the end of clause
(i); and
(B) by adding at the end the following new
clause:
‘‘(iii) establish beneficiary premiums
for plans offered in such area in a manner
such that a beneficiary who enrolls in an
offered plan with a below average price (as
established by the competitive pricing
methodology established for such area)
may, at the plan’s election, be offered a re-
bate of some or all of the medicare part B
premium that such individual must other-
wise pay in order to participate in a
Medicare+Choice 
plan 
under 
the
Medicare+Choice program; and’’.
SEC. 522. INAPPLICABILITY OF OASIS TO PACE.
Sections 1894(e)(3) and 1934(e)(3) (42 U.S.C.
1395eee(e)(3); 1396u–4(e)(3)) are each amended by add-
ing at the end the following:
‘‘(C) 
INAPPLICABILITY
OF
OASIS
TO
PACE.—Notwithstanding the previous provisions
of this paragraph, with respect to any home
health service provided under a PACE program
under this section, the Secretary shall not apply
the data collection and reporting requirements
under the Outcome and Assessment Informa-
tion Set (OASIS) to such program or to any
enrollee of such program, regardless of whether
such service is provided by a PACE program di-
rectly or through a contract with a home health
agency.’’.
TITLE VI—MEDICAID
SEC. 601. MAKING MEDICAID DSH TRANSITION RULE PER-
MANENT.
(a) IN GENERAL.—Section 4721(e) of the Balanced
Budget Act of 1997 (42 U.S.C. 1396r–4 note) is
amended—
(1) in the matter before paragraph (1), by
striking ‘‘1923(g)(2)(A)’’ and ‘‘1396r–4(g)(2)(A)’’
and inserting ‘‘1923(g)(2)’’ and ‘‘1396r–4(g)(2)’’,
respectively;
(2) in paragraphs (1) and (2)—
(A) by striking ‘‘, and before July 1,
1999’’; and
(B) by striking ‘‘in such section’’ and in-
serting ‘‘in subparagraph (A) of such section’’;
and
(3) by striking ‘‘and’’ at the end of paragraph
(1), by striking the period at the end of paragraph
(2) and inserting ‘‘; and’’, and by adding at the end
the following new paragraph:
‘‘(3) effective for State fiscal years that begin
on or after July 1, 1999, ‘or (b)(1)(B)’ were in-
serted 
in 
section 
1923(g)(2)(B)(ii)(I) 
after
‘(b)(1)(A)’.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect as if included in the enact-
ment of section 4721(e) of the Balanced Budget Act of
1997 (Public Law 105–33; 110 Stat. 514).
SEC. 602. INCREASE IN DSH ALLOTMENT FOR CERTAIN
STATES AND THE DISTRICT OF COLUMBIA.
(a) IN GENERAL.—The table in section 1923(f)(2)
(42 U.S.C. 1396r–4(f)(2)) is amended under each of the
columns for FY 00, FY 01, and FY 02—
(1) in the entry for the District of Columbia, by
striking ‘‘23’’ and inserting ‘‘32’’;
(2) in the entry for Minnesota, by striking ‘‘16’’
and inserting ‘‘33’’;
(3) in the entry for New Mexico, by striking
‘‘5’’ and inserting ‘‘9’’; and
(4) in the entry for Wyoming, by striking ‘‘0’’
and inserting ‘‘.100’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) take effect on October 1, 1999, and applies
to expenditures made on or after such date.
SEC. 603. NEW PROSPECTIVE PAYMENT SYSTEM FOR FED-
ERALLY-QUALIFIED HEALTH CENTERS AND
RURAL HEALTH CLINICS.
(a) IN GENERAL.—Section 1902(a) of the Social Se-
curity Act (42 U.S.C. 1396a(a)) is amended—
(1) in paragraph (13)—
(A) in subparagraph (A), by adding ‘‘and’’
at the end;
(B) in subparagraph (B), by striking
‘‘and’’ at the end; and
(C) by striking subparagraph (C); and
(2) by inserting after paragraph (14) the fol-
lowing new paragraph:
‘‘(15) for payment for services described in
clause (B) or (C) of section 1905(a)(2) under the
plan in accordance with subsection (aa);’’.
(b) NEW PROSPECTIVE PAYMENT SYSTEM.—Section
1902 of the Social Security Act (42 U.S.C. 1396a) is
amended by adding at the end the following:
‘‘(aa) PAYMENT FOR SERVICES PROVIDED BY FED-
ERALLY-QUALIFIED
HEALTH
CENTERS
AND
RURAL
HEALTH CLINICS.—
‘‘(1) IN GENERAL.—Beginning with fiscal year
2000 and each succeeding fiscal year, the State plan
shall provide for payment for services described in
section 1905(a)(2)(C) furnished by a Federally-
qualified health center and services described in sec-
tion 1905(a)(2)(B) furnished by a rural health clinic
in accordance with the provisions of this subsection.
‘‘(2) FISCAL YEAR 2000.—Subject to paragraph
(4), for services furnished during fiscal year 2000,
the State plan shall provide for payment for such
services in an amount (calculated on a per visit
basis) that is equal to 100 percent of the costs of
the center or clinic of furnishing such services dur-
ing fiscal year 1999 which are reasonable and re-
lated to the cost of furnishing such services, or
based on such other tests of reasonableness as the
Secretary prescribes in regulations under section
1833(a)(3), or, in the case of services to which such
regulations do not apply, the same methodology used
under section 1833(a)(3), adjusted to take into ac-
count any increase in the scope of such services fur-
nished by the center or clinic during fiscal year
2000.
‘‘(3) FISCAL YEAR 2001 AND SUCCEEDING FIS-
CAL YEARS.—Subject to paragraph (4), for services
furnished during fiscal year 2001 or a succeeding
fiscal year, the State plan shall provide for payment
for such services in an amount (calculated on a per
visit basis) that is equal to the amount calculated for
such services under this subsection for the preceding
fiscal year—
‘‘(A) increased by the percentage increase
in the MEI (as defined in section 1842(i)(3))
applicable to primary care services (as defined
in section 1842(i)(4)) for that fiscal year; and
‘‘(B) adjusted to take into account any in-
crease in the scope of such services furnished by
the center or clinic during that fiscal year.
‘‘(4) ESTABLISHMENT OF INITIAL YEAR PAY-
MENT AMOUNT FOR NEW CENTERS OR CLINICS.—In
any case in which an entity first qualifies as a Fed-
erally-qualified health center or rural health clinic
after fiscal year 1999, the State plan shall provide
for payment for services described in section
1905(a)(2)(C) furnished by the center or services
described in section 1905(a)(2)(B) furnished by the
clinic in the first fiscal year in which the center or
clinic so qualifies in an amount (calculated on a per
visit basis) that is equal to 100 percent of the costs
of furnishing such services during such fiscal year in
1905(a)(2)(B) in an amount which is determined
under an alternative payment methodology that—
‘‘(A) is agreed to by the State and the cen-
ter or clinic; and
‘‘(B) results in payment to the center or
clinic of an amount which is at least equal to
the amount otherwise required to be paid to the
center or clinic under this section.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 4712 of the Balanced Budget Act
of 1997 (Public Law 105–33; 111 Stat. 508) is
amended by striking subsection (c).
(2) Section 1915(b) of the Social Security Act
(42 U.S.C. 1396n(b)) is amended by striking
‘‘1902(a)(13)(E)’’ 
and 
inserting 
‘‘1902(a)(15),
1902(aa),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section take effect on October 1, 1999, and apply to
services furnished on or after such date.
SEC. 604. PARITY IN REIMBURSEMENT FOR CERTAIN UTILI-
ZATION AND QUALITY CONTROL SERVICES.
(a) IN
GENERAL.—Section 1903(a)(3)(C)(i) (42
U.S.C. 1396b(a)(3)(C)(i)) is amended—
(1) by inserting ‘‘(other than a review described
in clause (ii))’’ after ‘‘quality review’’; and
(2) by inserting ‘‘(or under a contract with the
State that sets forth standards of performance
equivalent to those under section 1902(d))’’ before
the semicolon.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to expenditures made on and after
the date of the enactment of this Act.
TITLE VII—STATE CHILDREN’S
HEALTH 
INSURANCE 
PRO-
GRAM (SCHIP)
SEC. 701. STABILIZING THE SCHIP ALLOTMENT FORMULA.
(a) IN
GENERAL.—Section 2104(b) (42 U.S.C.
1397dd(b)) is amended—
(1) in paragraph (2)(A)—
(A) in clause (i), by striking ‘‘through
2000’’ and inserting ‘‘and 1999’’; and
(B) in clause (ii), by striking ‘‘2001’’ and
inserting ‘‘2000’’;
(2) by amending paragraph (4) to read as fol-
lows:
‘‘(4) FLOORS AND CEILINGS IN STATE ALLOT-
MENTS.—
‘‘(A) IN GENERAL.—The proportion of the
allotment under this subsection for a subsection
(b) State (as defined in subparagraph (D)) for
fiscal year 2000 and each fiscal year thereafter
shall be subject to the following floors and ceil-
ings:
‘‘(i) FLOOR
OF
$2,000,000.—A floor
equal to $2,000,000 divided by the total of
the amount available under this subsection
for all such allotments for the fiscal year.
‘‘(ii) ANNUAL FLOOR OF 10 PERCENT
BELOW
PRECEDING
FISCAL
YEAR’S
PRO-
PORTION.—A floor of 90 percent of the
proportion for the State for the preceding
fiscal year.
‘‘(iii) CUMULATIVE FLOOR OF 30 PER-
CENT BELOW THE FY 1999 PROPORTION.—
A floor of 70 percent of the proportion for
the State for fiscal year 1999.
‘‘(iv) CUMULATIVE
CEILING
OF
PERCENT ABOVE FY 1999 PROPORTION.—A
ceiling of 145 percent of the proportion for
the State for fiscal year 1999.
‘‘(B) RECONCILIATION.—
‘‘(i) ELIMINATION OF ANY DEFICIT BY
ESTABLISHING
A
PERCENTAGE
INCREASE
CEILING FOR STATES WITH HIGHEST AN-
NUAL
PERCENTAGE
INCREASES.—To the
extent that the application of subpara-
graph (A) would result in the sum of the
proportions of the allotments for all sub-
section (b) States exceeding 1.0, the Sec-
retary shall establish a maximum percent-
age increase in such proportions for all
subsection (b) States for the fiscal year in
a manner so that such sum equals 1.0.
‘‘(ii) 
ALLOCATION
OF
SURPLUS
THROUGH PRO RATA INCREASE.—To the
extent that the application of subpara-
graph (A) would result in the sum of the
proportions of the allotments for all sub-
section (b) States being less than 1.0, the
proportions of such allotments (as com-
puted before the application of floors under
clauses (i), (ii), and (iii) of subparagraph
(A)) for all subsection (b) States shall be
increased in a pro rata manner (but not to
exceed the ceiling established under sub-
paragraph (A)(iv)) so that (after the appli-
cation of such floors and ceiling) such sum
equals 1.0.
‘‘(C) 
CONSTRUCTION.—This 
paragraph
shall not be construed as applying to (or taking
into account) amounts of allotments redistrib-
uted under subsection (f).
‘‘(D) DEFINITIONS.—In this paragraph:
‘‘(i) PROPORTION OF ALLOTMENT.—
The term ‘proportion’ means, with respect
to the allotment of a subsection (b) State
for a fiscal year, the amount of the allot-
ment of such State under this subsection
for the fiscal year divided by the total of
the amount available under this subsection
for all such allotments for the fiscal year.
‘‘(ii) SUBSECTION (b) STATE.—The
term ‘subsection (b) State’ means one of
the 50 States or the District of Colum-
bia.’’;
(3) in paragraph (2)(B), by striking ‘‘the fiscal
year’’ and inserting ‘‘the calendar year in which
such fiscal year begins’’; and
(4) in paragraph (3)(B), by striking ‘‘the fiscal
year involved’’ and inserting ‘‘the calendar year in
which such fiscal year begins’’.
(b) EFFECTIVE DATE.—The amendments made by
this section apply to allotments determined under title
XXI of the Social Security Act (42 U.S.C. 1397aa et seq.)
for fiscal year 2000 and each fiscal year thereafter.
SEC. 702. INCREASED ALLOTMENTS FOR TERRITORIES
UNDER THE STATE CHILDREN’S HEALTH IN-
SURANCE PROGRAM.
Section 2104(c)(4)(B) (42 U.S.C. 1397dd(c)(4)(B))
is amended by inserting ‘‘, $34,200,000 for each of fiscal
years 2000 and 2001, $25,200,000 for each of fiscal years
2002 through 2004, $32,400,000 for each of fiscal years
2005 and 2006, and $40,000,000 for fiscal year 2007’’
before the period.
Æ