H. R. 2015—195
(b) REDUCTION
IN
PAYMENTS
FOR
OTHER
COSTS.—Section
1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is amended by
striking ‘‘through 1998’’ and inserting ‘‘through 1999 and during
fiscal year 2000 before January 1, 2000’’.
SEC. 4523. PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUT-
PATIENT DEPARTMENT SERVICES.
(a) IN GENERAL.—Section 1833 (42 U.S.C. 1395l) is amended
by adding at the end the following:
‘‘(t) PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.—
‘‘(1) AMOUNT OF PAYMENT.—
‘‘(A) IN GENERAL.—With respect to covered OPD serv-
ices (as defined in subparagraph (B)) furnished during a
year beginning with 1999, the amount of payment under
this part shall be determined under a prospective payment
system established by the Secretary in accordance with
this subsection.
‘‘(B) DEFINITION OF COVERED OPD SERVICES.—For pur-
poses of this subsection, the term ‘covered OPD services’—
‘‘(i) means hospital outpatient services designated
by the Secretary;
‘‘(ii) subject to clause (iii), includes inpatient hos-
pital services designated by the Secretary that are
covered under this part and furnished to a hospital
inpatient who (I) is entitled to benefits under part
A but has exhausted benefits for inpatient hospital
services during a spell of illness, or (II) is not so
entitled; but
‘‘(iii) does not include any therapy services
described in subsection (a)(8) or ambulance services,
for which payment is made under a fee schedule
described in section 1834(k) or section 1834(l).
‘‘(2) SYSTEM REQUIREMENTS.—Under the payment system—
‘‘(A) the Secretary shall develop a classification system
for covered OPD services;
‘‘(B) the Secretary may establish groups of covered
OPD services, within the classification system described
in subparagraph (A), so that services classified within each
group are comparable clinically and with respect to the
use of resources;
‘‘(C) the Secretary shall, using data on claims from
1996 and using data from the most recent available cost
reports, establish relative payment weights for covered
OPD services (and any groups of such services described
in subparagraph (B)) based on median hospital costs and
shall determine projections of the frequency of utilization
of each such service (or group of services) in 1999;
‘‘(D) the Secretary shall determine a wage adjustment
factor to adjust the portion of payment and coinsurance
attributable to labor-related costs for relative differences
in labor and labor-related costs across geographic regions
in a budget neutral manner;
‘‘(E) the Secretary shall establish other adjustments,
in a budget neutral manner, as determined to be necessary
to ensure equitable payments, such as outlier adjustments
or adjustments for certain classes of hospitals; and
H. R. 2015—196
‘‘(F) the Secretary shall develop a method for control-
ling unnecessary increases in the volume of covered OPD
services.
‘‘(3) CALCULATION OF BASE AMOUNTS.—
‘‘(A) AGGREGATE AMOUNTS THAT WOULD BE PAYABLE
IF DEDUCTIBLES WERE DISREGARDED.—The Secretary shall
estimate the sum of—
‘‘(i) the total amounts that would be payable from
the Trust Fund under this part for covered OPD serv-
ices in 1999, determined without regard to this sub-
section, as though the deductible under section 1833(b)
did not apply, and
‘‘(ii) the total amounts of copayments estimated
to be paid under this subsection by beneficiaries to
hospitals for covered OPD services in 1999, as though
the deductible under section 1833(b) did not apply.
‘‘(B) UNADJUSTED COPAYMENT AMOUNT.—
‘‘(i) IN GENERAL.—For purposes of this subsection,
subject to clause (ii), the ‘unadjusted copayment
amount’ applicable to a covered OPD service (or group
of such services) is 20 percent of the national median
of the charges for the service (or services within the
group) furnished during 1996, updated to 1999 using
the Secretary’s estimate of charge growth during the
period.
‘‘(ii) ADJUSTED
TO
BE
PERCENT
WHEN
FULLY
PHASED IN.—If the pre-deductible payment percentage
for a covered OPD service (or group of such services)
furnished in a year would be equal to or exceed 80
percent, then the unadjusted copayment amount shall
be 20 percent of amount determined under subpara-
graph (D).
‘‘(iii) RULES
FOR
NEW
SERVICES.—The Secretary
shall establish rules for establishment of an unadjusted
copayment amount for a covered OPD service not fur-
nished during 1996, based upon its classification within
a group of such services.
‘‘(C) CALCULATION OF CONVERSION FACTORS.—
‘‘(i) FOR 1999.—
‘‘(I) IN GENERAL.—The Secretary shall estab-
lish a 1999 conversion factor for determining the
medicare OPD fee schedule amounts for each cov-
ered OPD service (or group of such services) fur-
nished in 1999. Such conversion factor shall be
established on the basis of the weights and fre-
quencies described in paragraph (2)(C) and in such
a manner that the sum for all services and groups
of the products (described in subclause (II) for
each such service or group) equals the total pro-
jected amount described in subparagraph (A).
‘‘(II) PRODUCT
DESCRIBED.—The Secretary
shall determine for each service or group the prod-
uct of the medicare OPD fee schedule amounts
(taking into account appropriate adjustments
described in paragraphs (2)(D) and (2)(E)) and the
estimated frequencies for such service or group.
H. R. 2015—197
‘‘(ii) SUBSEQUENT
YEARS.—Subject to paragraph
(8)(B), the Secretary shall establish a conversion factor
for covered OPD services furnished in subsequent years
in an amount equal to the conversion factor established
under this subparagraph and applicable to such serv-
ices furnished in the previous year increased by the
OPD fee schedule increase factor specified under clause
(iii) for the year involved.
‘‘(iii) OPD FEE SCHEDULE INCREASE FACTOR.—For
purposes of this subparagraph, the ‘OPD fee schedule
increase factor’ for services furnished in a year is equal
to the market basket percentage increase applicable
under section 1886(b)(3)(B)(iii) to hospital discharges
occurring during the fiscal year ending in such year,
reduced by 1 percentage point for such factor for serv-
ices furnished in each of 2000, 2001, and 2002. In
applying the previous sentence for years beginning
with 2000, the Secretary may substitute for the market
basket percentage increase an annual percentage
increase that is computed and applied with respect
to covered OPD services furnished in a year in the
same manner as the market basket percentage increase
is determined and applied to inpatient hospital services
for discharges occurring in a fiscal year.
‘‘(D) CALCULATION OF MEDICARE OPD FEE SCHEDULE
AMOUNTS.—The Secretary shall compute a medicare OPD
fee schedule amount for each covered OPD service (or group
of such services) furnished in a year, in an amount equal
to the product of—
‘‘(i) the conversion factor computed under subpara-
graph (C) for the year, and
‘‘(ii) the relative payment weight (determined
under paragraph (2)(C)) for the service or group.
‘‘(E) PRE-DEDUCTIBLE PAYMENT PERCENTAGE.—The pre-
deductible payment percentage for a covered OPD service
(or group of such services) furnished in a year is equal
to the ratio of—
‘‘(i) the medicare OPD fee schedule amount estab-
lished under subparagraph (D) for the year, minus
the unadjusted copayment amount determined under
subparagraph (B) for the service or group, to
‘‘(ii) the medicare OPD fee schedule amount deter-
mined under subparagraph (D) for the year for such
service or group.
‘‘(4) MEDICARE PAYMENT AMOUNT.—The amount of payment
made from the Trust Fund under this part for a covered OPD
service (and such services classified within a group) furnished
in a year is determined as follows:
‘‘(A) FEE SCHEDULE ADJUSTMENTS.—The medicare OPD
fee schedule amount (computed under paragraph (3)(D))
for the service or group and year is adjusted for relative
differences in the cost of labor and other factors determined
by the Secretary, as computed under paragraphs (2)(D)
and (2)(E).
‘‘(B) SUBTRACT APPLICABLE DEDUCTIBLE.—Reduce the
adjusted amount determined under subparagraph (A) by
H. R. 2015—198
the amount of the deductible under section 1833(b), to
the extent applicable.
‘‘(C) APPLY PAYMENT PROPORTION TO REMAINDER.—The
amount of payment is the amount so determined under
subparagraph (B) multiplied by the pre-deductible payment
percentage (as determined under paragraph (3)(E)) for the
service or group and year involved.
‘‘(5) COPAYMENT AMOUNT.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), the copayment amount under this subsection is the
amount by which the amount described in paragraph (4)(B)
exceeds the amount of payment determined under para-
graph (4)(C).
‘‘(B) 
ELECTION
TO
OFFER
REDUCED
COPAYMENT
AMOUNT.—The Secretary shall establish a procedure under
which a hospital, before the beginning of a year (beginning
with 1999), may elect to reduce the copayment amount
otherwise established under subparagraph (A) for some
or all covered OPD services to an amount that is not
less than 20 percent of the medicare OPD fee schedule
amount (computed under paragraph (3)(D)) for the service
involved. Under such procedures, such reduced copayment
amount may not be further reduced or increased during
the year involved and the hospital may disseminate
information on the reduction of copayment amount effected
under this subparagraph.
‘‘(C) NO
IMPACT
ON
DEDUCTIBLES.—Nothing in this
paragraph shall be construed as affecting a hospital’s
authority to waive the charging of a deductible under sec-
tion 1833(b).
‘‘(6) PERIODIC REVIEW AND ADJUSTMENTS COMPONENTS OF
PROSPECTIVE PAYMENT SYSTEM.—
‘‘(A) PERIODIC REVIEW.—The Secretary may periodically
review and revise the groups, the relative payment weights,
and the wage and other adjustments described in para-
graph (2) to take into account changes in medical practice,
changes in technology, the addition of new services, new
cost data, and other relevant information and factors.
‘‘(B) BUDGET
NEUTRALITY
ADJUSTMENT.—If the Sec-
retary makes adjustments under subparagraph (A), then
the adjustments for a year may not cause the estimated
amount of expenditures under this part for the year to
increase or decrease from the estimated amount of expendi-
tures under this part that would have been made if the
adjustments had not been made.
‘‘(C) UPDATE
FACTOR.—If the Secretary determines
under methodologies described in paragraph (2)(F) that
the volume of services paid for under this subsection
increased beyond amounts established through those meth-
odologies, the Secretary may appropriately adjust the
update to the conversion factor otherwise applicable in
a subsequent year.
‘‘(7) SPECIAL RULE FOR AMBULANCE SERVICES.—The Sec-
retary shall pay for hospital outpatient services that are ambu-
lance services on the basis described in the matter in subsection
(a)(1) preceding subparagraph (A), or, if applicable, the fee
schedule established under section 1834(l).
H. R. 2015—199
‘‘(8) SPECIAL RULES FOR CERTAIN HOSPITALS.—In the case
of hospitals described in section 1886(d)(1)(B)(v)—
‘‘(A) the system under this subsection shall not apply
to covered OPD services furnished before January 1, 2000;
and
‘‘(B) the Secretary may establish a separate conversion
factor for such services in a manner that specifically takes
into account the unique costs incurred by such hospitals
by virtue of their patient population and service intensity.
‘‘(9) LIMITATION ON REVIEW.—There shall be no administra-
tive or judicial review under section 1869, 1878, or otherwise
of—
‘‘(A) the development of the classification system under
paragraph (2), including the establishment of groups and
relative payment weights for covered OPD services, of wage
adjustment factors, other adjustments, and methods
described in paragraph (2)(F);
‘‘(B) the calculation of base amounts under paragraph
(3);
‘‘(C) periodic adjustments made under paragraph (6);
and
‘‘(D) the establishment of a separate conversion factor
under paragraph (8)(B).’’.
(b) 
COINSURANCE.—Section 
1866(a)(2)(A)(ii) 
(42 
U.S.C.
1395cc(a)(2)(A)(ii)) is amended by adding at the end the following:
‘‘In the case of items and services for which payment is made
under part B under the prospective payment system established
under section 1833(t), clause (ii) of the first sentence shall be
applied by substituting for 20 percent of the reasonable charge,
the applicable copayment amount established under section
1833(t)(5).’’.
(c) TREATMENT OF REDUCTION IN COPAYMENT AMOUNT.—Section
1128A(i)(6) (42 U.S.C. 1320a–7a(i)(6)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph (B),
(2) by striking the period at the end of subparagraph (C)
and inserting ‘‘; or’’, and
(3) by adding at the end the following new subparagraph:
‘‘(D) a reduction in the copayment amount for covered
OPD services under section 1833(t)(5)(B).’’.
(d) CONFORMING AMENDMENTS.—
(1) APPROVED ASC PROCEDURES PERFORMED IN HOSPITAL
OUTPATIENT DEPARTMENTS.—
(A)(i) Section 1833(i)(3)(A) (42 U.S.C. 1395l(i)(3)(A)) is
amended—
(I) by inserting ‘‘before January 1, 1999,’’ after
‘‘furnished’’, and
(II) by striking ‘‘in a cost reporting period’’.
(ii) The amendment made by clause (i) shall apply
to services furnished on or after January 1, 1999.
(B) Section 1833(a)(4) (42 U.S.C. 1395l(a)(4)) is amend-
ed by inserting ‘‘or subsection (t)’’ before the semicolon.
(2) RADIOLOGY AND OTHER DIAGNOSTIC PROCEDURES.—
(A) Section 1833(n)(1)(A) (42 U.S.C. 1395l(n)(1)(A)) is
amended by inserting ‘‘and before January 1, 1999,’’ after
‘‘October 1, 1988,’’ and after ‘‘October 1, 1989,’’.
H. R. 2015—201
(1) PAYMENT IN ACCORDANCE WITH FEE SCHEDULE.—Section
1833(a)(1) (42 U.S.C. 1395l(a)(1)), as amended by section
4315(b), is amended—
(A) by striking ‘‘and (Q)’’ and inserting ‘‘(Q)’’; and
(B) by striking the semicolon at the end and inserting
the following: ‘‘, and (R) with respect to ambulance service,
the amounts paid shall be 80 percent of the lesser of
the actual charge for the services or the amount determined
by a fee schedule established by the Secretary under section
1834(l);’’.
(2) ESTABLISHMENT OF SCHEDULE.—Section 1834 (42 U.S.C.
1395m), as amended by section 4541, is amended by adding
at the end the following new subsection:
‘‘(l) ESTABLISHMENT OF FEE SCHEDULE FOR AMBULANCE SERV-
ICES.—
‘‘(1) IN GENERAL.—The Secretary shall establish a fee sched-
ule for payment for ambulance services whether provided
directly by a supplier or provider or under arrangement with
a provider under this part through a negotiated rulemaking
process described in title 5, United States Code, and in accord-
ance with the requirements of this subsection.
‘‘(2) CONSIDERATIONS.—In establishing such fee schedule,
the Secretary shall—
‘‘(A) establish mechanisms to control increases in
expenditures for ambulance services under this part;
‘‘(B) establish definitions for ambulance services which
link payments to the type of services provided;
‘‘(C) consider appropriate regional and operational dif-
ferences;
‘‘(D) consider adjustments to payment rates to account
for inflation and other relevant factors; and
‘‘(E) phase in the application of the payment rates
under the fee schedule in an efficient and fair manner.
‘‘(3) SAVINGS.—In establishing such fee schedule, the Sec-
retary shall—
‘‘(A) ensure that the aggregate amount of payments
made for ambulance services under this part during 2000
does not exceed the aggregate amount of payments which
would have been made for such services under this part
during such year if the amendments made by section
4531(a) of the Balanced Budget Act of 1997 continued
in effect, except that in making such determination the
Secretary shall assume an update in such payments for
2002 equal to percentage increase in the consumer price
index for all urban consumers (U.S. city average) for the
12-month period ending with June of the previous year
reduced in the case of 2001 and 2002 by 1.0 percentage
points; and
‘‘(B) set the payment amounts provided under the fee
schedule for services furnished in 2001 and each subse-
quent year at amounts equal to the payment amounts
under the fee schedule for services furnished during the
previous year, increased by the percentage increase in the
consumer price index for all urban consumers (U.S. city
average) for the 12-month period ending with June of the
previous year reduced in the case of 2001 and 2002 by
1.0 percentage points.
H. R. 2015—202
‘‘(4) CONSULTATION.—In establishing the fee schedule for
ambulance services under this subsection, the Secretary shall
consult with various national organizations representing
individuals and entities who furnish and regulate ambulance
services and share with such organizations relevant data in
establishing such schedule.
‘‘(5) LIMITATION ON REVIEW.—There shall be no administra-
tive or judicial review under section 1869 or otherwise of the
amounts established under the fee schedule for ambulance serv-
ices under this subsection, including matters described in para-
graph (2).
‘‘(6) RESTRAINT ON BILLING.—The provisions of subpara-
graphs (A) and (B) of section 1842(b)(18) shall apply to ambu-
lance services for which payment is made under this subsection
in the same manner as they apply to services provided by
a practitioner described in section 1842(b)(18)(C).
‘‘(7) CODING SYSTEM.—The Secretary may require the claim
for any services for which the amount of payment is determined
under this subsection to include a code (or codes) under a
uniform coding system specified by the Secretary that identifies
the services furnished.’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to services furnished on or after January
1, 2000.
(c) AUTHORIZING PAYMENT FOR PARAMEDIC INTERCEPT SERVICE
PROVIDERS IN RURAL COMMUNITIES.—In promulgating regulations
to carry out section 1861(s)(7) of the Social Security Act (42 U.S.C.
1395x(s)(7)) with respect to the coverage of ambulance service,
the Secretary of Health and Human Services may include coverage
of advanced life support services (in this subsection referred to
as ‘‘ALS intercept services’’) provided by a paramedic intercept
service provider in a rural area if the following conditions are
met:
(1) The ALS intercept services are provided under a con-
tract with one or more volunteer ambulance services and are
medically necessary based on the health condition of the
individual being transported.
(2) The volunteer ambulance service involved—
(A) is certified as qualified to provide ambulance serv-
ice for purposes of such section,
(B) provides only basic life support services at the
time of the intercept, and
(C) is prohibited by State law from billing for any
services.
(3) The entity supplying the ALS intercept services—
(A) is certified as qualified to provide such services
under the medicare program under title XVIII of the Social
Security Act, and
(B) bills all recipients who receive ALS intercept serv-
ices from the entity, regardless of whether or not such
recipients are medicare beneficiaries.
H. R. 2015—203
SEC. 4532. DEMONSTRATION OF COVERAGE OF AMBULANCE SERVICES
UNDER MEDICARE THROUGH CONTRACTS WITH UNITS
OF LOCAL GOVERNMENT.
(a) DEMONSTRATION PROJECT CONTRACTS WITH LOCAL GOVERN-
MENTS.—The Secretary of Health and Human Services shall estab-
lish up to 3 demonstration projects under which, at the request
of a unit of local government, the Secretary enters into a contract
with the unit of local government under which—
(1) the unit of local government furnishes (or arranges
for the furnishing of) ambulance services for which payment
may be made under part B of title XVIII of the Social Security
Act for individuals residing in the unit of local government
who are enrolled under such part, except that the unit of
local government may not enter into the contract unless the
contract covers at least 80 percent of the individuals residing
in the unit of local government who are enrolled under such
part but not in a Medicare+Choice plan;
(2) any individual or entity furnishing ambulance services
under the contract meets the requirements otherwise applicable
to individuals and entities furnishing such services under such
part; and
(3) for each month during which the contract is in effect,
the Secretary makes a capitated payment to the unit of local
government in accordance with subsection (b).
The projects may extend over a period of not to exceed 3 years
each.
(b) AMOUNT OF PAYMENT.—
(1) IN
GENERAL.—The amount of the monthly payment
made for months occurring during a calendar year to a unit
of local government under a demonstration project contract
under subsection (a) shall be equal to the product of—
(A) the Secretary’s estimate of the number of individ-
uals covered under the contract for the month; and
(B) 1⁄12 of the capitated payment rate for the year
established under paragraph (2).
(2) CAPITATED PAYMENT RATE DEFINED.—In this subsection,
the ‘‘capitated payment rate’’ applicable to a contract under
this subsection for a calendar year is equal to 95 percent
of—
(A) for the first calendar year for which the contract
is in effect, the average annual per capita payment made
under part B of title XVIII of the Social Security Act
with respect to ambulance services furnished to such
individuals during the 3 most recent calendar years for
which data on the amount of such payment is available;
and
(B) for a subsequent year, the amount provided under
this paragraph for the previous year increased by the
percentage increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-month
period ending with June of the previous year.
(c) OTHER TERMS OF CONTRACT.—The Secretary and the unit
of local government may include in a contract under this section
such other terms as the parties consider appropriate, including—
(1) covering individuals residing in additional units of local
government (under arrangements entered into between such
units and the unit of local government involved);
H. R. 2015—204
(2) permitting the unit of local government to transport
individuals to non-hospital providers if such providers are able
to furnish quality services at a lower cost than hospital provid-
ers; or
(3) implementing such other innovations as the unit of
local government may propose to improve the quality of ambu-
lance services and control the costs of such services.
(d) CONTRACT PAYMENTS IN LIEU OF OTHER BENEFITS.—Pay-
ments under a contract to a unit of local government under this
section shall be instead of the amounts which (in the absence
of the contract) would otherwise be payable under part B of title
XVIII of the Social Security Act for the services covered under
the contract which are furnished to individuals who reside in the
unit of local government.
(e) REPORT ON EFFECTS OF CAPITATED CONTRACTS.—
(1) STUDY.—The Secretary shall evaluate the demonstra-
tion projects conducted under this section. Such evaluation
shall include an analysis of the quality and cost-effectiveness
of ambulance services furnished under the projects.
(2) REPORT.—Not later than January 1, 2000, the Secretary
shall submit a report to Congress on the study conducted under
paragraph (1), and shall include in the report such rec-
ommendations as the Secretary considers appropriate, including
recommendations regarding modifications to the methodology
used to determine the amount of payments made under such
contracts and extending or expanding such projects.
CHAPTER 4—PROSPECTIVE PAYMENT FOR OUTPATIENT
REHABILITATION SERVICES
SEC. 4541. PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITA-
TION SERVICES.
(a) PAYMENT BASED ON FEE SCHEDULE.—
(1) SPECIAL PAYMENT RULES.—Section 1833(a) (42 U.S.C.
1395l(a)) is amended—
(A) in paragraph (2) in the matter before subparagraph
(A), by inserting ‘‘(C),’’ before ‘‘(D)’’;
(B) in paragraph (3), by striking ‘‘subparagraphs (D)
and (E) of section 1832(a)(2)’’ and inserting ‘‘section
1832(a)(2)(D)’’;
(C) in paragraph (6), by striking ‘‘and’’ at the end;
(D) in paragraph (7), by striking the period at the
end and inserting a semicolon; and
(E) by adding at the end the following new paragraphs:
‘‘(8) in the case of—
‘‘(A) outpatient physical therapy services (which
includes outpatient speech-language pathology services)
and outpatient occupational therapy services furnished—
‘‘(i) by a rehabilitation agency, public health
agency, clinic, comprehensive outpatient rehabilitation
facility, or skilled nursing facility,
‘‘(ii) by a home health agency to an individual
who is not homebound, or
‘‘(iii) by another entity under an arrangement with
an entity described in clause (i) or (ii); and