chiatric hospital described in clause (i) of section
1886(d)(1)(B) of the Social Security Act (42 U.S.C.
1395ww(d)(1)(B)) and psychiatric units described in
the matter following clause (v) of such section.
(b) REPORT.—Not later than October 1, 2001, the
Secretary shall submit to the appropriate committees of
Congress a report that includes a description of the system
developed under subsection (a)(1).
(c) IMPLEMENTATION
OF PROSPECTIVE PAYMENT
SYSTEM.—Notwithstanding section 1886(b)(3) of the So-
cial Security Act (42 U.S.C. 1395ww(b)(3)), the Secretary
shall provide, for cost reporting periods beginning on or
after October 1, 2002, for payments for inpatient hospital
services furnished by psychiatric hospitals and units under
title XVIII of the Social Security Act (42 U.S.C. 1395
et seq.) in accordance with the prospective payment sys-
tem established by the Secretary under this section in a
budget neutral manner.
SEC. 115. REFINEMENT OF PROSPECTIVE PAYMENT SYS-
TEM FOR INPATIENT REHABILITATION SERV-
ICES.
(a) ELECTION TO APPLY FULL PROSPECTIVE PAY-
MENT RATE WITHOUT PHASE-IN.—
(1) IN
GENERAL.—Paragraph (1) of section
1886(j) (42 U.S.C. 1395ww(j)), as added by section
4421(a) of BBA, is amended—
(A) in subparagraph (C), by inserting
‘‘subject to subparagraph (E),’’ after ‘‘subpara-
graph (A),’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(E) ELECTION TO APPLY FULL PROSPEC-
TIVE PAYMENT SYSTEM.—A rehabilitation facil-
ity may elect for either or both cost reporting
periods described in subparagraph (C) to have
the TEFRA percentage and prospective pay-
ment percentage set at 0 percent and 100 per-
cent, respectively, for the facility.’’.
(2) BUDGET NEUTRALITY IN APPLICATION.—
Paragraph (3)(B) of such section is amended by in-
serting ‘‘and taking into account the election per-
mitted under paragraph (1)(E)’’ after ‘‘in the Sec-
retary’s estimation’’.
(3) CASE
MIX
CREEP
ADJUSTMENT.—Paragraph
(2)(C) of such section is amended by adding at the end
the following new clauses:
‘‘(iii) EXAMINATION OF CHANGES IN
CASE MIX.—The Secretary, upon obtaining
substantially complete data from fiscal
year 2001, shall analyze the extent to
which the changes in case mix during that
fiscal year are attributable to changes in
coding and classification and do not reflect
real changes in case mix.
‘‘(iv) INITIAL ADJUSTMENT OF RATES
IN FISCAL YEAR 2004.—Based on the anal-
ysis performed under clause (iii) in deter-
mining the amount of case mix change due
merely to changes in coding or classifica-
tion, the Secretary shall adjust the pro-
spective payment amounts for fiscal year
2004 by 150 percent of the Secretary’s es-
timate of the percentage adjustment to the
prospective payment rate under this para-
graph that would have achieved budget
neutrality in fiscal year 2001 if it had ap-
plied in setting the rates for that fiscal
year.
‘‘(v) FINAL ADJUSTMENT OF RATES
IN FISCAL YEAR 2005.—In the case that
the adjustment under clause (iv) resulted
in—
‘‘(I) a percentage decrease in
rates, the Secretary shall increase the
prospective payment amounts for fis-
cal year 2005 by a percentage equal
to 1⁄3 of such percentage decrease; or
‘‘(II) a percentage increase in
rates, the Secretary shall decrease the
prospective payment amounts for fis-
cal year 2005 by a percentage equal
to 1⁄3 of such percentage increase.’’.
(b) USE OF DISCHARGE AS PAYMENT UNIT.—
(1) IN GENERAL.—Paragraph (1)(D) of such
section is amended by striking ‘‘, day of inpatient
hospital services, or other unit of payment defined
by the Secretary’’.
(2) CONFORMING AMENDMENT TO CLASSIFICA-
TION.—Paragraph (2)(A) of such section is amended
by amending clause (i) of to read as follows:
‘‘(i) classes of patient discharges of
rehabilitation facilities by functional-re-
lated groups (each in this subsection re-
ferred to as a ‘case mix group’), based on
impairment, age, comorbidities, and func-
tional capability of the patient and such
other factors as the Secretary deems ap-
propriate to improve the explanatory power
of functional independence measure-func-
tion related groups; and’’.
(3) CONSTRUCTION
RELATING
TO
TRANSFER
AUTHORITY.—Paragraph (1) of such section, as
amended by subsection (a)(1), is further amended by
adding at the end the following new subparagraph:
‘‘(F) CONSTRUCTION RELATING TO TRANS-
FER AUTHORITY.—Nothing in this subsection
shall be construed as preventing the Secretary
from providing for an adjustment to payments
to take into account the early transfer of a pa-
tient from a rehabilitation facility to another
site of care.’’.
(c) STUDY ON IMPACT OF IMPLEMENTATION OF PRO-
SPECTIVE PAYMENT SYSTEM.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the impact
on utilization and beneficiary access to services of
the implementation of the Medicare prospective pay-
ment system for inpatient hospital services or reha-
bilitation facilities under section 1886(j) of the So-
cial Security Act (as added by section 4421(a) of
BBA).
(2) REPORT.—Not later than 3 years after the
date such system is first implemented, the Secretary
shall submit to Congress a report on such study.
(d) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) are effective as if included in the
enactment of section 4421(a) of BBA.
Subtitle C—Adjustments to PPS
Payments for Skilled Nursing
Facilities
SEC. 121. TEMPORARY INCREASE IN PAYMENT FOR CER-
TAIN HIGH COST PATIENTS.
(a) ADJUSTMENT
FOR MEDICALLY COMPLEX PA-
TIENTS UNTIL ESTABLISHMENT OF REFINED CASE-MIX
ADJUSTMENT.—For purposes of computing payments for
covered skilled nursing facility services under paragraph
(1) of section 1888(e) of the Social Security Act (42
U.S.C. 1395yy(e)), as added by section 4432(a) of BBA,
for such services furnished on or after April 1, 2000, and
before October 1, 2000, the Secretary of Health and
Human Services shall increase by 10 percent the adjusted
Federal per diem rate otherwise determined under para-
graph (4) of such section (but for this section) for covered
skilled nursing facility services for RUG–III groups de-
scribed in subsection (b) furnished to an individual during
the period in which such individual is classified in such
a RUG–III category.
(b) GROUPS DESCRIBED.—The RUG–III groups for
which the adjustment described in subsection (a) applies
are SE3, SE2, SE1, SSC, SSB, SSA, CC2, CC1, CB2,
CB1, CA2, and CA1, as specified in Tables 3 and 4 of
the final rule published in the Federal Register by the
Health Care Financing Administration on July 30, 1999
(64 Fed. Reg. 41684).
SEC. 122. MARKET BASKET INCREASE.
Section 
1888(e)(4)(E)(ii) 
(42 
U.S.C.
1395yy(e)(4)(E)(ii)) is amended—
(1) by redesignating subclause (III) as sub-
clause (IV); and
(2) by striking subclause (II) and inserting
after subclause (I) the following:
‘‘(II) for fiscal year 2001, the
rate computed for fiscal year 2000
(determined without regard to section
121 of the Medicare, Medicaid, and
SCHIP Balanced Budget Refinement
Act of 1999) increased by the skilled
nursing facility market basket per-
centage change for the fiscal year in-
volved plus 0.8 percentage point;
‘‘(III) for fiscal year 2002, the
rate computed for the previous fiscal
year increased by the skilled nursing
facility 
market 
basket 
percentage
change for the fiscal year involved
minus 1 percentage point; and’’.
SEC. 123. AUTHORIZING FACILITIES TO ELECT IMMEDIATE
TRANSITION TO FEDERAL RATE.
(a) IN
GENERAL.—Section 1888(e) (42 U.S.C.
1395yy(e)), as added by section 4432(a) of BBA, is
amended—
(1) in paragraph (1), in the matter preceding
subparagraph (A), by striking ‘‘paragraph (7)’’ and
inserting ‘‘paragraphs (7) and (11)’’; and
(2) by adding at the end the following new
paragraph:
‘‘(11) PERMITTING
FACILITIES
TO
WAIVE
3-
YEAR
TRANSITION.—Notwithstanding 
paragraph
(1)(A), a facility may elect to have the amount of
the payment for all costs of covered skilled nursing
facility services for each day of such services fur-
nished in cost reporting periods beginning after the
date of such election determined pursuant to sub-
paragraph (B) of paragraph (1).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to elections made more than 60
days after the date of the enactment of this Act.
SEC. 124. PART A PASS-THROUGH PAYMENT FOR CERTAIN
AMBULANCE SERVICES, PROSTHESES, AND
CHEMOTHERAPY DRUGS.
(a) IN
GENERAL.—Section 1888(e) (42 U.S.C.
1395yy(e)), as added by section 4432(a) of BBA, is
amended—
(1) in paragraph (2)(A)(i)(II), by striking
‘‘services described in clause (ii)’’ and inserting
‘‘items and services described in clauses (ii) and
(iii)’’;
(2) by adding at the end of paragraph (2)(A)
the following new clause:
‘‘(iii) EXCLUSION OF CERTAIN ADDI-
TIONAL
ITEMS.—Items described in this
clause are the following:
‘‘(I) Ambulance services fur-
nished to an individual in conjunction
with renal dialysis services described
in section 1861(s)(2)(F).
‘‘(II) Chemotherapy items (iden-
tified as of July 1, 1999, by HCPCS
codes J9000–J9020; J9040–J9151;
J9170–J9185; J9200–J9201; J9206–
J9208; J9211; J9230–J9245; and
J9265–J9600 (and as subsequently
modified by the Secretary)).
‘‘(III) Chemotherapy administra-
tion services (identified as of July 1,
1999, by HCPCS codes 36260–
36262; 36489; 36530–36535; 36640;
36823; and 96405–96542 (and as
subsequently modified by the Sec-
retary)).
‘‘(IV) 
Radioisotope 
services
(identified as of July 1, 1999, by
HCPCS codes 79030–79440 (and as
subsequently modified by the Sec-
retary)).
‘‘(V) Customized prosthetic de-
vices (commonly known as artificial
limbs or components or artifical
limbs) under the following HCPCS
codes (as of July 1, 1999 (and as sub-
sequently modified by the Secretary))
if delivered to an inpatient for use
during the stay in the skilled nursing
facility and intended to be used by the
individual after discharge from the fa-
cility: L5050–L5340; L5500–L5610;
L5613–L5986; 
L5988; 
L6050–
L6370; 
L6400–L6880; 
L6920–
L7274; and L7362–7366.’’; and
(3) by adding at the end of paragraph (9) the
following: ‘‘In the case of an item or service de-
scribed in clause (iii) of paragraph (2)(A) that would
be payable under part A but for the exclusion of
such item or service under such clause, payment
shall be made for the item or service, in an amount
otherwise determined under part B of this title for
such item or service, from the Federal Hospital In-
surance Trust Fund under section 1817 (rather
than from the Federal Supplementary Medical In-
surance Trust Fund under section 1841).’’.
(b) CONFORMING FOR BUDGET NEUTRALITY BEGIN-
NING WITH FISCAL YEAR 2001.—Section 1888(e)(4)(G)
(42 U.S.C. 1395yy(e)(4)(G)) is amended by adding at the
end the following new clause:
‘‘(iii) ADJUSTMENT
FOR
EXCLUSION
OF
CERTAIN
ADDITIONAL
ITEMS.—The
Secretary shall provide for an appropriate
proportional reduction in payments so that
beginning with fiscal year 2001, the aggre-
gate amount of such reductions is equal to
the aggregate increase in payments attrib-
utable to the exclusion effected under
clause (iii) of paragraph (2)(A).’’.
(c) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to payments made for items fur-
nished on or after April 1, 2000.
SEC. 125. 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 non-settled 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)’’; and
(2) by amending 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. 126. SPECIAL CONSIDERATION FOR FACILITIES SERV-
ING SPECIALIZED PATIENT POPULATIONS.
(a) IN
GENERAL.—Section 1888(e) (42 U.S.C.
1395yy(e)), as amended by section 123(a)(1), is further
amended—
(1) in paragraph (1), by striking ‘‘subject to
paragraphs (7) and (11)’’ and inserting ‘‘subject to
paragraphs (7), (11), and (12)’’; and
(2) by adding at the end the following new
paragraph:
‘‘(12) PAYMENT
RULE
FOR
CERTAIN
FACILI-
TIES.—
‘‘(A) IN GENERAL.—In the case of a quali-
fied acute skilled nursing facility described in
subparagraph (B), the per diem amount of pay-
ment shall be determined by applying the non-
Federal percentage and Federal percentage
specified in paragraph (2)(C)(ii).
‘‘(B) FACILITY DESCRIBED.—For purposes
of subparagraph (A), a qualified acute skilled
nursing facility is a facility that—
‘‘(i) was certified by the Secretary as
a skilled nursing facility eligible to furnish
services under this title before July 1,
1992;
‘‘(ii) is a hospital-based facility; and
‘‘(iii) for the cost reporting period be-
ginning in fiscal year 1998, the facility had
more than 60 percent of total patient days
comprised of patients who are described in
subparagraph (C).
‘‘(C) DESCRIPTION
OF
PATIENTS.—For
purposes of subparagraph (B), a patient de-
scribed in this subparagraph is an individual
who—
‘‘(i) is entitled to benefits under part
A; and
‘‘(ii) is immuno-compromised sec-
ondary to an infectious disease, with spe-
cific diagnoses as specified by the Sec-
retary.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply for the period beginning on the
date on which after the date of the enactment of this Act
the first cost reporting period of the facility begins and
ending on September 30, 2001, and applies to skilled
nursing facilities furnishing covered skilled nursing facility
services on the date of the enactment of this Act for which
payment is made under title XVIII of the Social Security
Act.
(c) REPORT TO CONGRESS.—By not later than 1 year
after the date of the enactment of this Act, the Secretary
of Health and Human Services shall assess the resource
use of patients of skilled nursing facilities furnishing serv-
ices under the Medicare program who are immuno-com-
promised secondary to an infectious disease, with specific
diagnoses as specified by the Secretary (under paragraph
(12)(C), as added by subsection (a), of section 1888(e)
of the Social Security Act (42 U.S.C. 1395yy(e))) to deter-
mine whether any permanent adjustments are needed to
the RUGs to take into account the resource uses and costs
of these patients.
SEC. 127. MEDPAC STUDY ON SPECIAL PAYMENT FOR FA-
CILITIES LOCATED IN HAWAII AND ALASKA.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission shall conduct a study on skilled nursing facili-
ties furnishing covered skilled nursing facility services (as
defined in section 1888(e)(2)(A) of the Social Security Act
(42 U.S.C. 1395yy(e)(2)(A)) to determine the need for an
additional payment amount under section 1888(e)(4)(G)
of such Act (42 U.S.C. 1395yy(e)(4)(G)) to take into ac-
count the unique circumstances of skilled nursing facilities
located in Alaska and Hawaii.
(b) REPORT.—By not later than 18 months after the
date of the enactment of this Act, the Medicare Payment
Advisory Commission shall submit a report to Congress
on the study conducted under subsection (a).
Subtitle D—Other
SEC. 131. PART A BBA TECHNICAL CORRECTIONS.
(a) SECTION 4201.—Section 1820(c)(2)(B)(i) (42
U.S.C. 1395i–4(c)(2)(B)(i)), as amended by section
4201(a) of BBA, is amended by striking ‘‘and is located
in a county (or equivalent unit of local government) in a
rural area (as defined in section 1886(d)(2)(D)) that’’ and
inserting ‘‘that is located in a county (or equivalent unit
of local government) in a rural area (as defined in section
1886(d)(2)(D)), and that’’.
(b) SECTION 4204.—(1) Section 1886(d)(5)(G) (42
U.S.C. 1395ww(d)(5)(G)), as amended by section
4204(a)(1) of BBA, is amended—
(A) in clause (i), by striking ‘‘or beginning on
or after October 1, 1997, and before October 1,
2001,’’ and inserting ‘‘or discharges on or after Oc-
tober 1, 1997, and before October 1, 2001,’’; and
(B) in clause (ii)(II), by striking ‘‘or beginning
on or after October 1, 1997, and before October 1,
2001,’’ and inserting ‘‘or discharges on or after Oc-
tober 1, 1997, and before October 1, 2001,’’.
(2) 
Section 
1886(b)(3)(D) 
(42 
U.S.C.
1395ww(b)(3)(D)), as amended by section 4204(a)(2) of
BBA, is amended in the matter preceding clause (i) by
striking ‘‘and for cost reporting periods beginning on or
after October 1, 1997, and before October 1, 2001,’’ and
inserting ‘‘and for discharges beginning on or after Octo-
ber 1, 1997, and before October 1, 2001,’’.
(c) SECTION 4319.—Section 1847(b)(2) (42 U.S.C.
1395w–3(b)(2)), as added by section 4319 of BBA, is
amended by inserting ‘‘and’’ after ‘‘specified by the Sec-
retary’’.
(d) SECTION 4401.—Section 4401(b)(1)(B) of BBA
(42 U.S.C. 1395ww note) is amended by striking ‘‘section
1886(b)(3)(B)(i)(XIII) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)(i)(XIII))’’ and inserting ‘‘section
1886(b)(3)(B)(i)(XIV) of the Social Security Act (42
U.S.C. 1395ww(b)(3)(B)(i)(XIV))’’.
(e) SECTION 4402.—The last sentence of section
1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)), as added by
section 4402 of BBA, is amended by striking ‘‘September
30, 2002,’’ and inserting ‘‘October 1, 2002,’’.
(f) SECTION 4419.—The first sentence of section
1886(b)(4)(A)(i) (42 U.S.C. 1395ww(b)(4)(A)(i)), as
amended by section 4419(a)(1) of BBA, by striking ‘‘or
unit’’.
(g) SECTION 4442.—Section 4442(b) of BBA (42
U.S.C. 1395f note) is amended by striking ‘‘applies to cost
reporting periods beginning’’ and inserting ‘‘applies to
items and services furnished’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of BBA.
TITLE II—PROVISIONS
RELATING TO PART B
Subtitle A—Adjustments to
Physician Payment Updates
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 sustainable
growth rate and of the conversion factor
which will apply to physicians’ services for
the succeeding year and data used in mak-
ing 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) ONE-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) IN GENERAL.—The Secretary of Health and
Human Services shall establish by regulation (after notice
and opportunity for public comment) a process (including
data collection standards) under which the Secretary will
accept for use and will use, to the maximum extent prac-
ticable consistent with sound data practices, data collected
or developed by entities and organizations (other than the
Department of Health and Human Services) to supple-
ment the data normally collected by that department in
determining 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). The Secretary shall first promulgate such regu-
lation on an interim final basis in a manner that permits
the submission and use of data in the computation of prac-
tice expense relative value units for payment rates for
2001.
(b) PUBLICATION OF INFORMATION.—The Secretary
shall include, in the publication of the estimated and final
updates under section 1848(c) of such Act (42 U.S.C.
1395w–4(c)) for payments for 2001 and for 2002, a de-
scription of the process established under subsection (a)
for the use of external data in making adjustments in rel-
ative value units and the extent to which the Secretary
has used such external data in making such adjustments
for each such year, particularly in cases in which the data
otherwise used are inadequate because they are not based
upon a large enough sample size to be statistically reliable.
SEC. 203. GAO STUDY ON RESOURCES REQUIRED TO PRO-
VIDE SAFE AND EFFECTIVE OUTPATIENT
CANCER THERAPY.
(a) STUDY .—The Comptroller General of the United
States shall conduct a nationwide study to determine the
physician and non-physician clinical resources necessary to
provide safe outpatient cancer therapy services and the ap-
propriate payment rates for such services under the Medi-
care program. In making such determination, the Comp-
troller General shall—
(1) determine the adequacy of practice expense
relative value units associated with the utilization of
those clinical resources;
(2) 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 Comptroller Gen-
eral shall submit to Congress a report on the study con-
ducted under subsection (a). The report shall include rec-
ommendations regarding 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.
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, in-
cluding 
(but 
not 
limited 
to) 
a
chemotherapeutic 
agent, 
antiemetic,
hematopoietic growth factor, colony stimu-
lating factor, a biological response modi-
fier, 
and 
a 
bisphosponate, 
or
brachytherapy, if payment for such drug,
biological, or device as an outpatient hos-
pital service under this part was being
made on such first date.
‘‘(iii) NEW MEDICAL DEVICES, DRUGS,
AND
BIOLOGICALS.—A medical device,
drug, or biological not described in clause
(i) or (ii) if—
‘‘(I) payment for the device,
drug, or biological as an outpatient
hospital service under this part was
not being made as of December 31,
1996; and
‘‘(II) the cost of the device, drug,
or biological is not insignificant in re-
lation to the OPD fee schedule
amount (as calculated under para-
graph (3)(D)) payable for the service
(or group of services) involved.
‘‘(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 new flush sentence:
‘‘For purposes of subparagraph (B), items and serv-
ices within a group shall not be treated as ‘com-
parable with respect to the use of resources’ if the
highest median cost (or mean cost, if elected by the
Secretary under subparagraph (C)) for an item or
service within the group is more than two times
greater than the lowest median cost (or mean cost,
if so elected) for an item or service within the group;
except that the Secretary may make exceptions in
unusual cases, such as low volume items and serv-
ices, but may not make such an exception in the
case of a drug or biological has been designated as
an orphan drug under section 526 of the Federal
Food, Drug and Cosmetic Act.’’.
(h) ANNUAL REVIEW OF OPD PPS COMPONENTS.—
(1) IN
GENERAL.—Section 1833(t)(8)(A) (42
U.S.C. 1395l(t)(8)(A)), as redesignated by sub-
section (a), is amended—
(A) by striking ‘‘may periodically review’’
and inserting ‘‘shall review not less often than
annually’’; and
(B) by adding at the end the following:
‘‘The Secretary shall consult with an expert
outside advisory panel composed of an appro-
priate selection of representatives of providers
to review (and advise the Secretary concerning)
the clinical integrity of the groups and weights.
Such panel may use data collected or developed
by entities and organizations (other than the
Department of Health and Human Services) in
conducting such review.’’.
(2) EFFECTIVE
DATES.—The Secretary of
Health and Human Services shall first conduct the
annual review under the amendment made by para-
graph (1)(A) in 2001 for application in 2002 and
the amendment made by paragraph (1)(B) takes ef-
fect on the date of the enactment of this Act.
(i) NO IMPACT ON COPAYMENT.—Section 1833(t)(7)
(42 U.S.C. 1395l(t)(7)), as redesignated by subsection (a),
is amended by adding at the end the following new sub-
paragraph:
‘‘(D) COMPUTATION
IGNORING
OUTLIER
AND
PASS-THROUGH
ADJUSTMENTS.—The co-
payment amount shall be computed under sub-
paragraph (A) as if the adjustments under
paragraphs (5) and (6) (and any adjustment
made under paragraph (2)(E) in relation to
such adjustments) had not occurred.’’.
(j) TECHNICAL CORRECTION IN REFERENCE RELAT-
ING TO HOSPITAL-BASED AMBULANCE SERVICES.—Sec-
tion 1833(t)(9) (42 U.S.C. 1395l(t)(9)), as redesignated
by subsection (a), is amended by striking ‘‘the matter in
subsection (a)(1) preceding subparagraph (A)’’ and insert-
ing ‘‘section 1861(v)(1)(U)’’.
(k) EFFECTIVE DATE.—Except as provided in this
section, the amendments made by this section shall be ef-
fective as if included in the enactment of BBA.
(l) STUDY OF DELIVERY OF INTRAVENOUS IMMUNE
GLOBULIN (IVIG) OUTSIDE HOSPITALS AND PHYSICIANS’
OFFICES.—
(1) STUDY.—The Secretary of Health and
Human Services shall conduct a study of the extent
to which intravenous immune globulin (IVIG) could
be delivered and reimbursed under the Medicare pro-
gram outside of a hospital or physician’s office. In
conducting the study, the Secretary shall—
(A) consider the sites of service that other
payors, including Medicare+Choice plans, use
for these drugs and biologicals;
(B) determine whether covering the deliv-
ery of these drugs and biologicals in a Medicare
patient’s home raises any additional safety and
health concerns for the patient;
(C) determine whether covering the deliv-
ery of these drugs and biologicals in a patient’s
home can reduce overall spending under the
Medicare program; and
(D) determine whether changing the site of
setting for these services would affect bene-
ficiary access to care.
(2) REPORT.—The Secretary shall submit a re-
port on such study to the Committees on Way and
Means and Commerce of the House of Representa-
tives and the Committee on Finance of the Senate
within 1 year after the date of the enactment of this
Act. The Secretary shall include in the report rec-
ommendations regarding on the appropriate manner
and settings under which the Medicare program
should pay for these drugs and biologicals delivered
outside of a hospital or physician’s office.
SEC. 212. ESTABLISHING A TRANSITIONAL CORRIDOR FOR
APPLICATION OF OPD PPS.
(a) IN
GENERAL.—Section 1833(t) (42 U.S.C.
1395l(t)), as amended by section 211(a), is further
amended—
(1) in paragraph (4), in the matter before sub-
paragraph (A), by inserting ‘‘, subject to paragraph
(7),’’ after ‘‘is determined’’; and
(2) by redesignating paragraphs (7) through
(11) as paragraphs (8) through (12), respectively;
and
(3) by inserting after paragraph (6), as inserted
by section 211(b), the following new paragraph:
‘‘(7) TRANSITIONAL ADJUSTMENT TO LIMIT DE-
CLINE IN PAYMENT.—
‘‘(A) BEFORE 2002.—Subject to subpara-
graph (D), for covered OPD services furnished
before January 1, 2002, for which the PPS
amount (as defined in subparagraph (E)) is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount (as
defined in subparagraph (F)), the amount
of payment under this subsection shall be
increased by 80 percent of the amount of
such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the amount by which
(I) the product of 0.71 and the pre-BBA
amount, exceeds (II) the product of 0.70
and the PPS amount;
‘‘(iii) at least 70 percent, but less
than 80 percent, of the pre-BBA amount,
the amount of payment under this sub-
section shall be increased by the amount
by which (I) the product of 0.63 and the
pre-BBA amount, exceeds (II) the product
of 0.60 and the PPS amount;
‘‘(iv) less than 70 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
21 percent of the pre-BBA amount.
‘‘(B) 2002.—Subject to subparagraph (D),
for covered OPD services furnished during
2002, for which the PPS amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 70 percent of the
amount of such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the amount by which
(I) the product of 0.61 and the pre-BBA
amount, exceeds (II) the product of 0.60
and the PPS amount;
‘‘(iii) less than 80 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
13 percent of the pre-BBA amount.
‘‘(C) 2003.—Subject to subparagraph (D),
for covered OPD services furnished during
2003, for which the PPS amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 60 percent of the
amount of such difference; or
‘‘(ii) less than 90 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
6 percent of the pre-BBA amount.
‘‘(D) SPECIAL
RULE
FOR
SMALL
RURAL
HOSPITALS.—In the case of a hospital located
in a rural area and that has not more than 100
beds, for covered OPD services furnished before
January 1, 2004, for which the PPS amount is
less than the pre-BBA amount, the amount of
payment under this subsection shall be in-
creased by 100 percent of the amount of such
difference.
‘‘(E) PPS AMOUNT
DEFINED.—In this
paragraph, the term ‘PPS amount’ means, with
respect to covered OPD services, the amount
payable under this title for such services (deter-
mined without regard to this paragraph), in-
cluding amounts payable as copayment under
paragraph 
(5), 
coinsurance 
under 
section
1866(a)(2)(A)(ii), and the deductible under sec-
tion 1833(b).
‘‘(F) PRE-BBA AMOUNT DEFINED.—
‘‘(i) IN GENERAL.—In this paragraph,
the ‘pre-BBA amount’ means, with respect
to covered OPD services furnished by a
hospital in a year, an amount equal to the
product of the reasonable cost of the hos-
pital for such services for the portions of
the hospital’s cost reporting period (or pe-
riods) occurring in the year and the base
OPD payment-to-cost ratio for the hospital
(as defined in clause (ii)).
‘‘(ii) BASE
PAYMENT-TO-COST-RATIO
DEFINED.—For purposes of this subpara-
graph, the ‘base payment-to-cost ratio’ for
a hospital means the ratio of—
‘‘(I) the hospital’s reimbursement
under this part for covered OPD serv-
ices furnished during the cost report-
ing period ending in 1996, including
any reimbursement for such services
through cost-sharing described in sub-
paragraph (D), to
‘‘(II) the reasonable cost of such
services for such period.
‘‘(G) NO
EFFECT
ON
COPAYMENTS.—
Nothing in this paragraph shall be construed to
affect the unadjusted copayment amount de-
scribed in paragraph (3)(B) or the copayment
amount under paragraph (8).
‘‘(H) APPLICATION WITHOUT REGARD TO
BUDGET
NEUTRALITY.—The additional pay-
ments made under this paragraph—
‘‘(i) shall not be considered an adjust-
ment under paragraph (2)(E); and
‘‘(ii) shall not be implemented in a
budget neutral manner.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall be effective as if included in the enact-
ment of BBA.
(c) REPORT ON RURAL HOSPITALS.—Not later than
July 1, 2002, the Secretary of Health and Human Serv-
ices shall submit to Congress a report and recommenda-
tions on whether the prospective payment system for cov-
ered outpatient services furnished under title XVIII of the
Social Security Act should apply to the following providers
of services furnishing outpatient items and services for
which payment is made under such title:
(1) Medicare-dependent, small rural hospitals
(as defined in section 1886(d)(5)(G)(iv) of such Act
(42 U.S.C. 1395ww(d)(5)(G)(iv))).
(2) Sole community hospitals (as defined in sec-
tion 1886(d)(5)(D)(iii) of such Act (42 U.S.C.
1395ww(d)(5)(D)(iii)).
(3) Rural health clinics (as defined in section
1861(aa)(2) of such Act (42 U.S.C. 1395x(aa)(2)).
(4) Rural referral centers (as so classified
under section 1886(d)(5)(C) of such Act (42 U.S.C.
1395ww(d)(5)(C)).
(5) Any other rural hospital with not more than
100 beds.
(6) Any other rural hospital that the Secretary
determines appropriate.
SEC. 213. DELAY IN APPLICATION OF PROSPECTIVE PAY-
MENT SYSTEM TO CANCER CENTER HOS-
PITALS.
Section 1833(t)(11)(A) (42 U.S.C. 1395l(t)(11)(A)),
as redesignated by section 212(a), is amended by striking
‘‘January 1, 2000’’ and inserting ‘‘the first day of the first
year that begins 2 years after the date the prospective pay-
ment system under this section is first implemented’’.
SEC. 214. LIMITATION ON OUTPATIENT HOSPITAL COPAY-
MENT FOR A PROCEDURE TO THE HOSPITAL
DEDUCTIBLE AMOUNT.
(a) IN GENERAL.—Section 1833(t)(8) (42 U.S.C.
1395l(t)(8)), as redesignated by sections 212(a)(1) and
212(a)(2), is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and
(C)’’;
(2) by redesignating subparagraphs (C) and
(D) as subparagraphs (D) and (E), respectively; and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) LIMITING
COPAYMENT
AMOUNT
TO
INPATIENT HOSPITAL DEDUCTIBLE AMOUNT.—
In no case shall the copayment amount for a
procedure performed in a year exceed the
amount of the inpatient hospital deductible es-
tablished under section 1813(b) for that year.’’.
(b) INCREASE IN PAYMENT TO REFLECT REDUCTION
IN
COPAYMENT.—Section 1833(t)(4)(C) (42 U.S.C.
1395l(t)(4)(C)) is amended by inserting ‘‘, plus the
amount of any reduction in the copayment amount attrib-
utable to paragraph (5)(C)’’ before the period at the end.
(c) EFFECTIVE DATE.—The amendments made by
this section apply as if included in the enactment of BBA
and shall only apply to procedures performed for which
payment is made on the basis of the prospective payment
system under section 1833(t) of the Social Security Act.
Subtitle C—Other
SEC. 221. APPLICATION OF SEPARATE CAPS TO PHYSICAL
AND SPEECH THERAPY SERVICES.
(a) IN
GENERAL.—Section 1833(g) (42 U.S.C.
1395l(g)) is amended—
(1) in paragraph (1)—
(A) by inserting ‘‘(A)’’ after ‘‘(g)(1)’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(B) Subparagraph (A) shall be applied separately
for speech-language pathology services described in the
fourth sentence of section 1861(p) and for other out-
patient physical therapy services.’’; and
(2) by adding at the end the following new
paragraph:
‘‘(4) The limitations of this subsection apply to the
services involved on a per beneficiary, per facility (or pro-
vider) basis.’’.
(b) TECHNICAL AMENDMENT RELATING TO BEING
UNDER THE CARE OF A PHYSICIAN.—Section 1861 (42
U.S.C. 1395x) is amended—
(1) in subsection (p)(1), by striking ‘‘or (3)’’
and inserting ‘‘, (3), or (4)’’; and
(2) in subsection (r)(4), by inserting ‘‘for pur-
poses of subsection (p)(1) and’’ after ‘‘but only’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after Janu-
ary 1, 2000.
SEC. 222. TRANSITIONAL OUTLIER PAYMENTS FOR THER-
APY SERVICES FOR CERTAIN HIGH ACUITY
PATIENTS.
Section 1833(g) (42 U.S.C. 1395l(g)), as amended
by section 221, is further amended by adding at the end
the following new paragraph:
‘‘(5)(A) The Secretary shall establish a process under
which a facility or provider that is providing therapy serv-
ices to which the limitation of this subsection applies to
a beneficiary may apply to the Secretary for an increase
in such limitation under this paragraph for services fur-
nished in 2000 or in 2001.
‘‘(B) Such process shall take into account the clinical
diagnosis and shall provide that the aggregate amount of
additional payments resulting from the application of this
paragraph—
‘‘(i) during fiscal year 2000 may not exceed
$40,000,000;
‘‘(ii) during fiscal year 2001 may not exceed
$60,000,000; and
‘‘(iii) during fiscal year 2002 may not exceed
$20,000,000.’’.
SEC. 223. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) IN GENERAL.—Section 1881(b)(7) (42 U.S.C.
1395rr(b)(7)) is amended by adding at the end the fol-
lowing new flush sentence:
‘‘The Secretary shall increase the amount of each com-
posite rate payment for dialysis services furnished on or
after January 1, 2000, and on or before December 31,
2000, by 1.2 percent above such composite rate payment
amounts for such services furnished on December 31,
1999, and for such services furnished on or after January
1, 2001, by 1.2 percent above such composite rate pay-
ment amounts for such services furnished on December
31, 2000.’’.
(b) CONFORMING AMENDMENT.—
(1) IN GENERAL.—Section 9335(a) of the Om-
nibus Budget Reconciliation Act of 1986 (42 U.S.C.
1395rr note) is amended by striking paragraph (1).
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on January 1,
2000.
(c) STUDY ON PAYMENT LEVEL FOR HOME HEMO-
DIALYSIS.—The Medicare Payment Advisory Commission
shall conduct a study on the appropriateness of the dif-
ferential in payment under the Medicare program for
hemodialysis services furnished in a facility and such serv-
ices furnished in a home. Not later than 18 months after
the date of the enactment of this Act, the Commission
shall submit to Congress a report on such study and shall
include recommendations regarding changes in Medicare
payment policy in response to the study.
SEC. 224. TEMPORARY UPDATE IN DURABLE MEDICAL
EQUIPMENT AND OXYGEN RATES.
(a) DURABLE MEDICAL EQUIPMENT AND OXYGEN.—
Section 1834(a)(14) (42 U.S.C. 1395m(a)(14)), as
amended by section 4551(a)(1) of BBA, is amended—
(1) by redesignating subparagraph (D) as sub-
paragraph (E); and
(2) by striking subparagraph (C) and inserting
the following:
‘‘(C) for each of the years 1998 through
2000, 0 percentage points;
‘‘(D) for each of the years 2001 and 2002,
the percentage increase in the consumer price
index for all urban consumers (United States
city average) for the 12-month period ending
with June of the previous year minus 2 percent-
age points; and’’.
(b) 
CONFORMING
AMENDMENTS.—Section
1834(a)(9)(B) (42 U.S.C. 1395m(a)(9)(B)), as amended
by section 4552(a) of BBA, is amended—
(1) by striking ‘‘and’’ at the end of clause (v);
(2) in clause (vi), by striking ‘‘and each subse-
quent year’’ and inserting ‘‘and 2000’’ and by strik-
ing the period at the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new
clause:
‘‘(vii) for 2001 and each subsequent
year, the amount determined under this
subparagraph for the preceding year in-
creased by the covered item update for
such subsequent year.’’.
SEC. 225. REQUIREMENT FOR NEW PROPOSED RULE-
MAKING FOR IMPLEMENTATION OF INHER-
ENT REASONABLENESS POLICY.
The Secretary of Health and Human Services shall
not exercise inherent reasonableness authority provided
under section 1842(b)(8) of the Social Security Act (42
U.S.C. 1395u(b)(8)) before such time as—
(1) the Secretary has published in the Federal
Register a new notice of proposed rulemaking to im-
plement subparagraph (A) of such section;
(2) has provided for a period of not less than
60 days for public comment on such proposed rule;
and
(3) the Secretary has published in the Federal
Register a final rule which takes into account com-
ments received during such period.
SEC. 226. INCREASE IN REIMBURSEMENT FOR PAP SMEARS.
(a) PAP
SMEAR
PAYMENT
INCREASE.—Section
1833(h) (42 U.S.C. 1395l(h)) is amended by adding at
the end the following new paragraph:
‘‘(7) Notwithstanding paragraphs (1) and (4), the
Secretary shall establish a minimum payment amount
under this subsection for all areas for a diagnostic or
screening pap smear laboratory test (including all cervical
cancer screening technologies that have been approved by
the Food and Drug Administration) of not less than
$14.60.’’.
(b) SENSE OF THE CONGRESS.—It is the sense of
the Congress that—
(1) the Health Care Financing Administration
has been slow to incorporate or provide incentives
for providers to use new screening diagnostic health
care technologies in the area of cervical cancer;
(2) some new technologies have been developed
which optimize the effectiveness of pap smear
screening; and
(3) the Health Care Financing Administration
should institute an appropriate increase in the pay-
ment rate for new cervical cancer screening tech-
nologies that have been approved by the Food and
Drug Administration as significantly more effective
than a conventional pap smear.
(c) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to services items and furnished on
or after January 1, 2000.
SEC. 227. REFINEMENT OF AMBULANCE SERVICES DEM-
ONSTRATION PROJECT.
Effective as if included in the enactment of BBA, sec-
tion 4532 of BBA is amended—
(1) in subsection (a), by adding at the end the
following: ‘‘The Secretary shall publish by not later
than July 1, 2000, a request for proposals for such
projects.’’; and
(2) by amending paragraph (2) of subsection
(b) to read as follows:
‘‘(2) CAPITATED PAYMENT RATE DEFINED.—In
this subsection, the ‘capitated payment rate’ means,
with respect to a demonstration project—
‘‘(A) in its first year, a rate established for
the project by the Secretary, using the most
current available data, in a manner that en-
sures that aggregate payments under the
project will not exceed the aggregate payment
that would have been made for ambulance serv-
ices under part B of title XVIII of the Social
Security Act in the local area of government’s
jurisdiction; and
‘‘(B) in a subsequent year, the capitated
payment rate established for the previous year
increased by an appropriate inflation adjust-
ment factor.’’.
SEC. 228. PHASE-IN OF PPS FOR AMBULATORY SURGICAL
CENTERS.
If the Secretary of Health and Human Services im-
plements a revised prospective payment system for serv-
ices of ambulatory surgical facilities under part B of title
XVIII of the Social Security Act, prior to incorporating
data from the 1999 Medicare cost survey, such system
shall be implemented in a manner so that—
(1) in the first year of its implementation, only
a proportion (specified by the Secretary and not to
exceed 1⁄3) of the payment for such services shall be
made in accordance with such system and the re-
mainder shall be made in accordance with current
regulations; and
(2) in the following year a proportion (specified
by the Secretary and not to exceed 2⁄3) of the pay-
ment for such services shall be made under such sys-
tem and the remainder shall be made in accordance
with current regulations.
SEC. 229. EXTENSION OF MEDICARE BENEFITS FOR IM-
MUNOSUPPRESSIVE DRUGS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall provide under this section for an
extension of the period of coverage of immunosuppressive
drugs under section 1861(s)(2)(J) of the Social Security
Act (42 U.S.C. 1395x(s)(2)(J)) to individuals described
in such section under terms and conditions specified by
the Secretary consistent with subsection (c) and the
objectives—
(1) of improving health outcomes by decreasing
transplant rejection rates that are attributable to
failure to comply with immunosuppressive drug regi-
mens; and
(2) of achieving cost saving to the Medicare
program by decreasing the need for secondary trans-
plants and other care relating to post-transplant
complications.
(b) AUTHORITY.—In carrying out this section—
(1) the Secretary shall provide priority in eligi-
bility to those Medicare beneficiaries who, because of
income or other factors, would be less likely to main-
tain an immunosuppressive drug regimen in the ab-
sence of such an extension; and
(2) the Secretary is authorized to vary the ben-
eficiary cost-sharing otherwise applicable in order to
promote the objectives described in subsection (a).
(c) LIMITATIONS.—The total amount expended by
the Secretary under title XVIII of the Social Security Act
to carry out this section shall not exceed $200,000,000,
and with respect to expenditures in fiscal year 2000 shall
not exceed $40,000,000. The Secretary shall not provide
an extension of coverage under this section for immuno-
suppressive drugs furnished after September 30, 2004.
(d) REPORT.—Not later than 36 months after the
first month in which the Secretary provides for extended
benefits under this section, the Secretary shall submit to
Congress a report on the operation of this section. The
report shall include—
(1) an analysis of the impact of this section on
meeting the objectives described in subsection (a);
and
(2) recommendations regarding an appropriate
cost-effective method for extending coverage of im-
munosuppressive drugs under the Medicare program
on a permanent basis.
SEC. 230. ADDITIONAL STUDIES.
(a) MEDPAC STUDY ON POSTSURGICAL RECOVERY
CARE CENTER SERVICES.—
(1) IN GENERAL.—The Medicare Payment Ad-
visory Commission shall conduct a study on the cost-
effectiveness and efficacy of covering under the
Medicare program services of a post-surgical recov-
ery care center (that provides an intermediate level
of recovery care following surgery). In conducting
such study, the Commission shall consider data on
these centers gathered in demonstration projects.
(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Commission
shall submit to Congress a report on such study and
shall include in the report recommendations on the
feasibility, costs, and savings of covering such serv-
ices under the Medicare program.
(b) ACHPR STUDY ON EFFECT OF CREDENTIALING
OF TECHNOLOGISTS AND SONOGRAPHERS ON QUALITY OF
ULTRASOUND AND IMAGING SERVICES.—
(1) STUDY.—The Administrator for Health
Care Policy and Research shall provide for a study
that 
compares 
the 
differences 
in 
quality 
of
ultrasound and other imaging services (including
error rates and resulting complications) furnished
under the Medicare and Medicaid programs between
such services furnished by individuals who are
credentialed by private entities or organizations and
by those who are not so credentialed. Such study
shall examine and evaluate differences in error rates
and patient outcomes as a result of the differences
in credentialing. In designing the study, the Admin-
istrator shall consult with organizations nationally
recognized for their expertise in ultrasound proce-
dures.
(2) REPORT.—By not later than 2 years after
the date of the enactment of this Act, the Adminis-
trator shall submit a report to Congress on the
study conducted under paragraph (1).
(c) MEDPAC STUDY ON THE COMPLEXITY OF THE
MEDICARE PROGRAM AND THE LEVELS OF BURDENS
PLACED ON PROVIDERS THROUGH FEDERAL REGULA-
TIONS.—
(1) STUDY.—The Medicare Payment Advisory
Commission shall undertake a comprehensive study
to review the regulatory burdens placed on all class-
es of health care providers under parts A and B of
the Medicare program under title XVIII of the So-
cial Security Act and to determine the costs these
burdens impose on the nation’s health care system.
The study shall also examine the complexity of the
current regulatory system and its impact on pro-
viders.
(2) REPORT.—not later than December 31,
2001, the Commission shall submit to Congress a re-
port on the study conducted under paragraph (1).
The 
report 
shall 
include 
recommendations
regarding—
(A) how the Health Care Financing Ad-
ministration can reduce the regulatory burdens
placed on patients and providers; and
(B) legislation that may be appropriate to
reduce the complexity of the Medicare program,
including improvement of the rules regarding
billing, compliance, and fraud and abuse.
(d) GAO CONTINUED MONITORING OF DEPARTMENT
OF JUSTICE APPLICATION OF GUIDELINES ON USE OF
FALSE CLAIMS ACT IN CIVIL HEALTH CARE MATTERS.—
The Comptroller General of the United States shall—
(1) continue the monitoring, begun under sec-
tion 118 of the Department of Justice Appropria-
tions Act, 1999 (included in Public Law 105–277)
of the compliance of the Department of Justice and
all United States Attorneys with the ‘‘Guidance on
the Use of the False Claims Act in Civil Health
Care Matters’’ issued by the Department of Justice
on June 3, 1998, including any revisions to that
guidance; and
(2) not later than April 1, 2000, and of each
of the two succeeding years, submit a report on such
compliance to the appropriate committees of Con-
gress.
TITLE III—PROVISIONS
RELATING TO PARTS A AND B
Subtitle A—Home Health Services
SEC. 301. ADJUSTMENT TO REFLECT ADMINISTRATIVE
COSTS NOT INCLUDED IN THE INTERIM PAY-
MENT SYSTEM; GAO REPORT ON COSTS OF
COMPLIANCE WITH OASIS DATA COLLECTION
REQUIREMENTS.
(a) ADJUSTMENT
TO REFLECT ADMINISTRATIVE
COSTS.—
(1) IN GENERAL.—In the case of a home health
agency that furnishes home health services to a
Medicare beneficiary, for each such beneficiary to
whom the agency furnished such services during the
agency’s cost reporting period beginning in fiscal
year 2000, the Secretary of Health Services shall
pay the agency, in addition to any amount of pay-
ment made under subsection (v)(1)(L) of such sec-
tion for the beneficiary and only for such cost re-
porting period, an aggregate amount of $10 to de-
fray costs incurred by the agency attributable to
data collection and reporting requirements under the
Outcome and Assessment Information Set (OASIS)
required by reason of section 4602(e) of the Bal-
anced Budget Act of 1997 (42 U.S.C. 1395fff note).
(2) PAYMENT SCHEDULE.—
(A) MIDYEAR
PAYMENT.—By not later
than April 1, 2000, the Secretary shall pay to
a home health agency an amount that the Sec-
retary estimates to be 50 percent of the aggre-
gate amount payable to the agency by reason of
this subsection.
(B) UPON SETTLED COST REPORT.—The
Secretary shall pay the balance of amounts pay-
able to an agency under this subsection on the
date that the cost report submitted by the agen-
cy for the cost reporting period beginning in fis-
cal year 2000 is settled.
(3) PAYMENT FROM TRUST FUNDS.—Payments
under this subsection shall be made, in appropriate
part as specified by the Secretary, from the Federal
Hospital Insurance Trust Fund and from the Fed-
eral Supplementary Medical Insurance Trust Fund.
(4) DEFINITIONS.—in this subsection:
(A) HOME
HEALTH
AGENCY.—The term
‘‘home health agency’’ has the meaning given
that term under section 1861(o) of the Social
Security Act (42 U.S.C. 1395x(o)).
(B) HOME HEALTH SERVICES.—The term
‘‘home health services’’ has the meaning given
that term under section 1861(m) of such Act
(42 U.S.C. 1395x(m)).
(C) MEDICARE
BENEFICIARY.—The term
‘‘Medicare beneficiary’’ means a beneficiary de-
scribed in section 1861(v)(1)(L)(vi)(II) of the
Social 
Security 
Act 
(42 
U.S.C.
1395x(v)(1)(L)(vi)(II)).
(b) GAO REPORT ON COSTS OF COMPLIANCE WITH
OASIS DATA COLLECTION REQUIREMENTS.—
(1) REPORT TO CONGRESS.—
(A) IN
GENERAL.—Not later than 180
days after the date of the enactment of this
Act, the Comptroller General of the United
States shall submit a report to Congress on
matters described in subparagraph (B) with re-
spect to the data collection requirement of pa-
tients of such agencies under the Outcome and
Assessment Information Set (OASIS) standard
as part of the comprehensive assessment of pa-
tients.
(B) MATTERS STUDIED.—For purposes of
subparagraph (A), the matters described in this
subparagraph include the following:
(i) An assessment of the costs in-
curred by Medicare home health agencies
in complying with such data collection re-
quirement.
(ii) An analysis of the effect of such
data collection requirement on the privacy
interests of patients from whom data is
collected.
(C) AUDIT.—The Comptroller General
shall conduct an independent audit of the costs
described in subparagraph (B)(i). Not later
than 180 days after receipt of the report under
subparagraph (A), the Comptroller General
shall submit to Congress a report describing the
Comptroller General’s findings with respect to
such audit, and shall include comments on the
report submitted to Congress by the Secretary
of Health and Human Services under subpara-
graph (A).
(2) DEFINITIONS.—In this subsection:
(A) COMPREHENSIVE ASSESSMENT OF PA-
TIENTS.—The term ‘‘comprehensive assessment
of patients’’ means the rule published by the
Health Care Financing Administration that re-
quires, as a condition of participation in the
Medicare program, a home health agency to
provide a patient-specific comprehensive assess-
145
(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’’;