293
Subtitle F, Part 1
would meet the requirements if any reference in such
subparagraph to a ‘nurse practitioner’ or to ‘nurse
practitioners’ were deemed to be a reference to a
‘nurse practitioner or nurse’ or to ‘nurse practitioners
or nurses’); except that in determining whether a fa-
cility meets the requirements of this subparagraph,
subparagraphs (E) and (F) of that paragraph shall
be applied as if any reference to a ‘physician’ is a
reference to a physician as defined in section
1861(r)(1).
‘‘(2) The term ‘rural emergency access care hospital
services’ means the following services provided by a rural
emergency access care hospital and furnished to an individ-
ual over a continuous period not to exceed 24 hours (except
that such services may be furnished over a longer period
in the case of an individual who is unable to leave the hos-
pital because of inclement weather):
‘‘(A) An appropriate medical screening examina-
tion (as described in section 1867(a)).
‘‘(B) Necessary stabilizing examination and
treatment services for an emergency medical condition
and labor (as described in section 1867(b)).’’.
(b) REQUIRING RURAL EMERGENCY ACCESS CARE
HOSPITALS TO MEET HOSPITAL ANTI-DUMPING REQUIRE-
MENTS.—Section 1867(e)(5) (42 U.S.C. 1395dd(e)(5)) is
294
Subtitle F, Part 1
amended by striking ‘‘1861(mm)(1))’’ and inserting
‘‘1861(mm)(1)) and a rural emergency access care hospital
(as defined in section 1861(oo)(1))’’.
(c) REFERENCE
TO PAYMENT PROVISIONS UNDER
PART B.—For provisions relating to payment for rural
emergency access care hospital services under part B, see
section 15607.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to fiscal years beginning on or after Oc-
tober 1, 1995.
SEC. 15514. CLASSIFICATION OF RURAL REFERRAL CEN-
TERS.
(a) PROHIBITING DENIAL OF REQUEST FOR RECLAS-
SIFICATION ON BASIS OF COMPARABILITY OF WAGES.—
(1) IN
GENERAL.—Section 1886(d)(10)(D) (42
U.S.C. 1395ww(d)(10)(D)) is amended—
(A) by redesignating clause (iii) as clause
(iv); and
(B) by inserting after clause (ii) the follow-
ing new clause:
‘‘(iii) Under the guidelines published by the Secretary
under clause (i), in the case of a hospital which is classified
by the Secretary as a rural referral center under paragraph
(5)(C), the Board may not reject the application of the hos-
pital under this paragraph on the basis of any comparison
295
Subtitle F, Part 1
between the average hourly wage of the hospital and the
average hourly wage of hospitals in the area in which it
is located.’’.
(2) EFFECTIVE DATE.—Notwithstanding section
1886(d)(10)(C)(ii) of the Social Security Act, a hos-
pital may submit an application to the Medicare Ge-
ographic Classification Review Board during the 30-
day period beginning on the date of the enactment of
this Act requesting a change in its classification for
purposes of determining the area wage index applica-
ble to the hospital under section 1886(d)(3)(D) of such
Act for fiscal year 1997, if the hospital would be eligi-
ble for such a change in its classification under the
standards described in section 1886(d)(10)(D) (as
amended by paragraph (1)) but for its failure to meet
the 
deadline 
for 
applications 
under 
section
1886(d)(10)(C)(ii).
(b) CONTINUING TREATMENT OF PREVIOUSLY DES-
IGNATED CENTERS.—Any hospital classified as a rural re-
ferral center by the Secretary of Health and Human Serv-
ices under section 1886(d)(5)(C) of the Social Security Act
for fiscal year 1994 shall be classified as such a rural refer-
ral center for fiscal year 1996 and each subsequent fiscal
year.
296
Subtitle F, Part 2
SEC. 15515. FLOOR ON AREA WAGE INDEX.
(a) 
IN
GENERAL.—For 
purposes 
of 
section
1886(d)(3)(E) of the Social Security Act for discharges oc-
curring on or after October 1, 1995, the area wage index
applicable under such section to any hospital which is not
located in a rural area (as defined in section 1886(d)(2)(D)
of such Act) may not be less than the average of the area
wage indices applicable under such section to hospitals lo-
cated in rural areas in the State in which the hospital is
located.
(b) BUDGET-NEUTRALITY IN IMPLEMENTATION.—The
Secretary of Health and Human Services shall adjust the
area wage indices referred to in subsection (a) for hospitals
not described in such subsection in a manner which assures
that the aggregate payments made under section 1886(d)
of the Social Security Act in a fiscal year for the operating
costs of inpatient hospital services are not greater or less
than those which would have been made in the year if this
section did not apply.
PART 2—PAYMENTS TO SKILLED NURSING
FACILITIES
SEC. 15521. PAYMENTS FOR ROUTINE SERVICE COSTS.
(a) CLARIFICATION OF DEFINITION OF ROUTINE SERV-
ICE COSTS.—Section 1888 (42 U.S.C. 1395yy) is amended
by adding at the end the following new subsection:
297
Subtitle F, Part 2
‘‘(e) For purposes of this section, the ‘routine service
costs’ of a skilled nursing facility are all costs which are
attributable to nursing services, room and board, adminis-
trative costs, other overhead costs, and all other ancillary
services (including supplies and equipment), excluding costs
attributable to covered non-routine services subject to pay-
ment limits under section 1888A.’’.
(b) CONFORMING AMENDMENT.—Section 1888 (42
U.S.C. 1395yy) is amended in the heading by inserting
‘‘AND CERTAIN ANCILLARY’’ after ‘‘SERVICE’’.
SEC. 15522. INCENTIVES FOR COST EFFECTIVE MANAGE-
MENT OF COVERED NON-ROUTINE SERVICES.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1888 the following new section:
‘‘INCENTIVES FOR COST-EFFECTIVE MANAGEMENT OF COV-
ERED NON-ROUTINE SERVICES OF SKILLED NURSING
FACILITIES
‘‘SEC. 1888A. (a) DEFINITIONS.—For purposes of this
section:
‘‘(1) COVERED
NON-ROUTINE
SERVICES.—The
term ‘covered non-routine services’ means post-hos-
pital extended care services consisting of any of the
following:
‘‘(A) Physical or occupational therapy or
speech-language 
pathology 
services, 
or 
res-
piratory therapy, including supplies and sup-
298
Subtitle F, Part 2
port services incident to such services and ther-
apy.
‘‘(B) Prescription drugs.
‘‘(C) Complex medical equipment.
‘‘(D) Intravenous therapy and solutions (in-
cluding enteral and parenteral nutrients, sup-
plies, and equipment).
‘‘(E) Radiation therapy.
‘‘(F) Diagnostic services, including labora-
tory, radiology (including computerized tomog-
raphy services and imaging services), and pul-
monary services.
‘‘(2) SNF MARKET
BASKET
PERCENTAGE
IN-
CREASE.—The term ‘SNF market basket percentage
increase’ for a fiscal year means a percentage equal
to the percentage increase in routine service cost lim-
its for the year under section 1888(a).
‘‘(3) STAY.—The term ‘stay’ means, with respect
to an individual who is a resident of a skilled nurs-
ing facility, a period of continuous days during
which the facility provides extended care services for
which payment may be made under this title with re-
spect to the individual during the individual’s spell
of illness.
299
Subtitle F, Part 2
‘‘(b) NEW PAYMENT METHOD FOR COVERED NON-
ROUTINE SERVICES.—
‘‘(1) IN GENERAL.—Subject to subsection (c), a
skilled nursing facility shall receive interim payments
under this title for covered non-routine services fur-
nished to an individual during a cost reporting pe-
riod beginning during a fiscal year (after fiscal year
1996) in an amount equal to the reasonable cost of
providing such services in accordance with section
1861(v). The Secretary may adjust such payments if
the Secretary determines (on the basis of such esti-
mated information as the Secretary considers appro-
priate) that payments to the facility under this para-
graph for a cost reporting period would substantially
exceed the cost reporting period limit determined
under subsection (c)(1)(B).
‘‘(2) RESPONSIBILITY OF SKILLED NURSING FA-
CILITY TO MANAGE BILLINGS.—
‘‘(A) CLARIFICATION RELATING TO PART A
BILLING.—In the case of a covered non-routine
service furnished to an individual who (at the
time the service is furnished) is a resident of a
skilled nursing facility who is entitled to cov-
erage under section 1812(a)(2) for such service,
the skilled nursing facility shall submit a claim
300
Subtitle F, Part 2
for payment under this title for such service
under part A (without regard to whether or not
the item or service was furnished by the facility,
by others under arrangement with them made by
the facility, under any other contracting or con-
sulting arrangement, or otherwise).
‘‘(B) PART B BILLING.—In the case of a
covered non-routine service (other than a port-
able X-ray or portable electrocardiogram treated
as a physician’s service for purposes of section
1848(j)(3)) furnished to an individual who (at
the time the service is furnished) is a resident of
a skilled nursing facility who is not entitled to
coverage under section 1812(a)(2) for such serv-
ice but is entitled to coverage under part B for
such service, the skilled nursing facility shall
submit a claim for payment under this title for
such service under part B (without regard to
whether or not the item or service was furnished
by the facility, by others under arrangement
with them made by the facility, under any other
contracting or consulting arrangement, or other-
wise).
‘‘(C) MAINTAINING RECORDS ON SERVICES
FURNISHED TO RESIDENTS.—Each skilled nurs-
301
Subtitle F, Part 2
ing facility receiving payments for extended care
services under this title shall document on the fa-
cility’s cost report all covered non-routine serv-
ices furnished to all residents of the facility to
whom the facility provided extended care services
for which payment was made under part A dur-
ing a fiscal year (beginning with fiscal year
1996) (without regard to whether or not the serv-
ices were furnished by the facility, by others
under arrangement with them made by the facil-
ity, under any other contracting or consulting
arrangement, or otherwise).
‘‘(c) RECONCILIATION OF AMOUNTS.—
‘‘(1) LIMIT BASED ON PER STAY LIMIT AND NUM-
BER OF STAYS.—
‘‘(A) IN GENERAL.—If a skilled nursing fa-
cility has received aggregate payments under
subsection (b) for covered non-routine services
during a cost reporting period beginning during
a fiscal year in excess of an amount equal to the
cost reporting period limit determined under
subparagraph (B), the Secretary shall reduce the
payments made to the facility with respect to
such services for cost reporting periods beginning
during the following fiscal year in an amount
302
Subtitle F, Part 2
equal to such excess. The Secretary shall reduce
payments under this subparagraph at such times
and in such manner during a fiscal year as the
Secretary finds necessary to meet the require-
ment of this subparagraph.
‘‘(B) COST REPORTING PERIOD LIMIT.—The
cost reporting period limit determined under this
subparagraph is an amount equal to the product
of—
‘‘(i) the per stay limit applicable to the
facility under subsection (d) for the period;
and
‘‘(ii) the number of stays beginning
during the period for which payment was
made to the facility for such services.
‘‘(C) PROSPECTIVE
REDUCTION
IN
PAY-
MENTS.—In addition to the process for reducing
payments described in subparagraph (A), the
Secretary may reduce payments made to a facil-
ity under this section during a cost reporting pe-
riod if the Secretary determines (on the basis of
such estimated information as the Secretary con-
siders appropriate) that payments to the facility
under this section for the period will substan-
303
Subtitle F, Part 2
tially exceed the cost reporting period limit for
the period determined under this paragraph.
‘‘(2) INCENTIVE PAYMENTS.—
‘‘(A) IN GENERAL.—If a skilled nursing fa-
cility has received aggregate payments under
subsection (b) for covered non-routine services
during a cost reporting period beginning during
a fiscal year in an amount that is less than the
amount determined under paragraph (1)(B), the
Secretary shall pay the skilled nursing facility
in the following fiscal year an incentive payment
equal to 50 percent of the difference between such
amounts, except that the incentive payment may
not exceed 5 percent of the aggregate payments
made to the facility under subsection (b) for the
previous fiscal year (without regard to subpara-
graph (B)).
‘‘(B) 
INSTALLMENT
INCENTIVE
PAY-
MENTS.—The Secretary may make installment
payments during a fiscal year to a skilled nurs-
ing facility based on the estimated incentive
payment that the facility would be eligible to re-
ceive with respect to such fiscal year.
‘‘(d) DETERMINATION
OF
FACILITY
PER
STAY
LIMIT.—
304
Subtitle F, Part 2
‘‘(1) LIMIT FOR FISCAL YEAR 1997.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the Secretary shall establish
separate per stay limits for hospital-based and
freestanding skilled nursing facilities for the 12-
month cost reporting period beginning during
fiscal year 1997 that are equal to the sum of—
‘‘(i) 50 percent of the facility-specific
stay amount for the facility (as determined
under subsection (e)) for the last 12-month
cost reporting period ending on or before
September 30, 1994, increased (in a
compounded manner) by the SNF market
basket percentage increase for fiscal years
1995 through 1997; and
‘‘(ii) 50 percent of the average of all
facility-specific stay amounts for all hos-
pital-based facilities or all freestanding fa-
cilities (whichever is applicable) during the
cost reporting period described in clause (i),
increased (in a compounded manner) by the
SNF market basket percentage increase for
fiscal years 1995 through 1997.
‘‘(B) FACILITIES NOT HAVING 1994 COST
REPORTING
PERIOD.—In the case of a skilled
305
Subtitle F, Part 2
nursing facility for which payments were not
made under this title for covered non-routine
services for the last 12-month cost reporting pe-
riod ending on or before September 30, 1994, the
per stay limit for the 12-month cost reporting
period beginning during fiscal year 1997 shall be
twice the amount determined under subpara-
graph (A)(ii).
‘‘(2) LIMIT FOR SUBSEQUENT FISCAL YEARS.—
The per stay limit for a skilled nursing facility for
a 12-month cost reporting period beginning during a
fiscal year after fiscal year 1997 is equal to the per
stay limit established under this subsection for the 12-
month cost reporting period beginning during the
previous fiscal year, increased by the SNF market
basket percentage increase for such subsequent fiscal
year minus 2 percentage points.
‘‘(3) REBASING OF AMOUNTS.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for an update to the facility-specific
amounts used to determine the per stay limits
under this subsection for cost reporting periods
beginning on or after October 1, 1999, and every
2 years thereafter.
306
Subtitle F, Part 2
‘‘(B) TREATMENT OF FACILITIES NOT HAV-
ING
REBASED
COST
REPORTING
PERIODS.—
Paragraph (1)(B) shall apply with respect to a
skilled nursing facility for which payments were
not made under this title for covered non-routine
services for the 12-month cost reporting period
used by the Secretary to update facility-specific
amounts under subparagraph (A) in the same
manner as such paragraph applies with respect
to a facility for which payments were not made
under this title for covered non-routine services
for the last 12-month cost reporting period end-
ing on or before September 30, 1994.
‘‘(e) DETERMINATION
OF FACILITY-SPECIFIC STAY
AMOUNTS.—The ‘facility-specific stay amount’ for a skilled
nursing facility for a cost reporting period is the sum of—
‘‘(1) the average amount of payments made to
the facility under part A during the period which are
attributable to covered non-routine services furnished
during a stay; and
‘‘(2) the Secretary’s best estimate of the average
amount of payments made under part B during the
period for covered non-routine services furnished to
all residents of the facility to whom the facility pro-
vided extended care services for which payment was
307
Subtitle F, Part 2
made under part A during the period (without regard
to whether or not the services were furnished by the
facility, by others under arrangement with them
made by the facility, under any other contracting or
consulting arrangement, or otherwise), as estimated
by the Secretary.
‘‘(f) INTENSIVE NURSING OR THERAPY NEEDS.—
‘‘(1) IN GENERAL.—In applying subsection (b) to
covered non-routine services furnished during a stay
beginning during a cost reporting period beginning
during a fiscal year to a resident of a skilled nursing
facility who requires intensive nursing or therapy
services, the per stay limit determined for the fiscal
year under the methodology for such resident shall be
the per stay limit developed under paragraph (2) in-
stead of the per stay limit determined under sub-
section (d)(1)(A).
‘‘(2) PER
STAY
LIMIT
FOR
INTENSIVE
NEED
RESIDENTS.—Not later than June 30, 1996, the Sec-
retary, after consultation with the Medicare Payment
Review Commission and skilled nursing facility ex-
perts, shall develop and publish a methodology for de-
termining on an annual basis a per stay limit for
residents of a skilled nursing facility who require in-
tensive nursing or therapy services.
308
Subtitle F, Part 2
‘‘(3) BUDGET NEUTRALITY.—The Secretary shall
adjust payments under subsection (b) in a manner
that ensures that total payments for covered non-rou-
tine services under this section are not greater or less
than total payments for such services would have been
but for the application of paragraph (1).
‘‘(g) SPECIAL TREATMENT FOR MEDICARE LOW VOL-
UME SKILLED NURSING FACILITIES.—This section shall
not apply with respect to a skilled nursing facility for
which payment is made for routine service costs during a
cost reporting period on the basis of prospective payments
under section 1888(d).
‘‘(h) EXCEPTIONS AND ADJUSTMENTS TO LIMITS.—
‘‘(1) IN GENERAL.—The Secretary may make ex-
ceptions and adjustments to the cost reporting limits
applicable to a skilled nursing facility under sub-
section (c)(1)(B) for a cost reporting period, except
that the total amount of any additional payments
made under this section for covered non-routine serv-
ices during the cost reporting period as a result of
such exceptions and adjustments may not exceed 5
percent of the aggregate payments made to all skilled
nursing facilities for covered non-routine services dur-
ing the cost reporting period (determined without re-
gard to this paragraph).
309
Subtitle F, Part 2
‘‘(2) BUDGET NEUTRALITY.—The Secretary shall
adjust payments under subsection (b) in a manner
that ensures that total payments for covered non-rou-
tine services under this section are not greater or less
than total payments for such services would have been
but for the application of paragraph (1).
‘‘(i) SPECIAL RULE FOR X-RAY SERVICES.—Before
furnishing a covered non-routine service consisting of an
X-ray service for which payment may be made under part
A or part B to a resident, a skilled nursing facility shall
consider whether furnishing the service through a provider
of portable X-ray services would be appropriate, taking into
account the cost effectiveness of the service and the conven-
ience to the resident.’’.
(b) CONFORMING AMENDMENT.—Section 1814(b) (42
U.S.C. 1395f(b)) is amended in the matter preceding para-
graph (1) by striking ‘‘1813 and 1886’’ and inserting
‘‘1813, 1886, 1888, and 1888A’’.
SEC. 15523. PAYMENTS FOR ROUTINE SERVICE COSTS.
(a) MAINTAINING SAVINGS RESULTING FROM TEM-
PORARY FREEZE ON PAYMENT INCREASES.—
(1) BASING UPDATES TO PER DIEM COST LIMITS
ON LIMITS FOR FISCAL YEAR 1993.—
(A) IN GENERAL.—The last sentence of sec-
tion 1888(a) (42 U.S.C. 1395yy(a)) is amended
310
Subtitle F, Part 2
by inserting before the period at the end the fol-
lowing: ‘‘(except that such updates may not take
into account any changes in the routine service
costs of skilled nursing facilities occurring dur-
ing cost reporting periods which began during
fiscal year 1994 or fiscal year 1995)’’.
(B) NO EXCEPTIONS PERMITTED BASED ON
AMENDMENT.—The Secretary of Health and
Human Services shall not consider the amend-
ment made by subparagraph (A) in making any
adjustments pursuant to section 1888(c) of the
Social Security Act.
(2) PAYMENTS
DETERMINED
ON
PROSPECTIVE
BASIS.—Any change made by the Secretary of Health
and Human Services in the amount of any prospec-
tive payment paid to a skilled nursing facility under
section 1888(d) of the Social Security Act for cost re-
porting periods beginning on or after October 1, 1995,
may not take into account any changes in the costs
of services occurring during cost reporting periods
which began during fiscal year 1994 or fiscal year
1995.
(b) ESTABLISHMENT OF SCHEDULE FOR MAKING AD-
JUSTMENTS
TO
LIMITS.—Section 1888(c) (42 U.S.C.
1395yy(c)) is amended by striking the period at the end
311
Subtitle F, Part 2
of the second sentence and inserting ‘‘, and may only make
adjustments under this subsection with respect to a facility
which applies for an adjustment during an annual applica-
tion period established by the Secretary.’’.
(c) LIMITATION ON AGGREGATE INCREASE IN PAY-
MENTS RESULTING FROM ADJUSTMENTS TO LIMITS.—Sec-
tion 1888(c) (42 U.S.C. 1395yy(c)) is amended—
(1) by striking ‘‘(c) The Secretary’’ and inserting
‘‘(c)(1) Subject to paragraph (2), the Secretary’’; and
(2) by adding at the end the following new para-
graph:
‘‘(2) The Secretary may not make any adjustments
under this subsection in the limits set forth in subsection
(a) for a cost reporting period beginning during a fiscal
year to the extent that the total amount of the additional
payments made under this title as a result of such adjust-
ments is greater than an amount equal to—
‘‘(A) for cost reporting periods beginning during
fiscal year 1997, the total amount of the additional
payments made under this title as a result of adjust-
ments under this subsection for cost reporting periods
beginning during fiscal year 1996 increased by the
SNF market basket percentage increase (as defined in
section 1888A(e)(3)) for fiscal year 1997; and
312
Subtitle F, Part 2
‘‘(B) for cost reporting periods beginning during
a subsequent fiscal year, the amount determined
under this paragraph for the previous fiscal year in-
creased by the SNF market basket percentage increase
for such subsequent fiscal year.’’.
(d) IMPOSITION OF LIMITS FOR ALL COST REPORTING
PERIODS.—Section 1888(a) (42 U.S.C. 1395yy(a)) is
amended in the matter preceding paragraph (1) by insert-
ing after ‘‘extended care services’’ the following: ‘‘(for any
cost reporting period for which payment is made under this
title to the skilled nursing facility for such services)’’.
SEC. 15524. REDUCTIONS IN PAYMENT FOR CAPITAL-RELAT-
ED COSTS.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as amend-
ed by section 15506, is amended by adding at the end the
following new subparagraph:
‘‘(U) Such regulations shall provide that, in determin-
ing the amount of the payments that may be made under
this title with respect to all the capital-related costs of
skilled nursing facilities, the Secretary shall reduce the
amounts of such payments otherwise established under this
title by 15 percent for payments attributable to portions
of cost reporting periods occurring during fiscal years 1996
through 2002.’’.
313
Subtitle F, Part 2
SEC. 15525. TREATMENT OF ITEMS AND SERVICES PAID FOR
UNDER PART B.
(a) REQUIRING PAYMENT FOR ALL ITEMS AND SERV-
ICES TO BE MADE TO FACILITY.—
(1) IN GENERAL.—The first sentence of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended—
(A) by striking ‘‘and (D)’’ and inserting
‘‘(D)’’; and
(B) by striking the period at the end and
inserting the following: ‘‘, and (E) in the case of
an item or service (other than physicians’ serv-
ices and other than a portable X-ray or portable
electrocardiogram treated as a physician’s serv-
ice for purposes of section 1848(j)(3)) furnished
to an individual who (at the time the item or
service is furnished) is a resident of a skilled
nursing facility, payment shall be made to the
facility (without regard to whether or not the
item or service was furnished by the facility, by
others under arrangement with them made by
the facility, or otherwise).’’.
(2) EXCLUSION FOR ITEMS AND SERVICES NOT
BILLED
BY
FACILITY.—Section 1862(a) (42 U.S.C.
1395y(a)) is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (14);
314
Subtitle F, Part 2
(B) by striking the period at the end of
paragraph (15) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (15) the
following new paragraph:
‘‘(16) where such expenses are for covered non-
routine services (as defined in section 1888A(a)(1))
(other than a portable X-ray or portable electrocardio-
gram treated as a physician’s service for purposes of
section 1848(j)(3)) furnished to an individual who is
a resident of a skilled nursing facility and for which
the claim for payment under this title is not submit-
ted by the facility.’’.
(3) 
CONFORMING
AMENDMENT.—Section
1832(a)(1) (42 U.S.C. 1395k(a)(1)) is amended by
striking ‘‘(2);’’ and inserting ‘‘(2) and section
1842(b)(6)(E);’’.
(b) REDUCTION IN PAYMENTS FOR ITEMS AND SERV-
ICES FURNISHED BY OR UNDER ARRANGEMENTS WITH FA-
CILITIES.—Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as
amended by sections 15506 and 15524, is amended by add-
ing at the end the following new subparagraph:
‘‘(V) In the case of an item or service furnished by
a skilled nursing facility (or by others under arrangement
with them made by a skilled nursing facility) for which
payment is made under part B in an amount determined
315
Subtitle F, Part 2
in accordance with section 1833(a)(2)(B), the Secretary
shall reduce the reasonable cost for such item or service oth-
erwise determined under clause (i)(I) of such section by 5.8
percent for payments attributable to portions of cost report-
ing periods occurring during fiscal years 1996 through
2002.’’.
SEC. 15526. CERTIFICATION OF FACILITIES MEETING RE-
VISED NURSING HOME REFORM STANDARDS.
(a) IN GENERAL.—Section 1819(a)(3) (42 U.S.C.
1395i@3(a)(3)) is amended to read as follows:
‘‘(3)(A) is certified by the Secretary as meeting
the standards established under subsection (b), or (B)
is a State-certified facility (as defined in subsection
(d)).’’.
(b) REQUIREMENTS DESCRIBED.—Section 1819 (42
U.S.C. 1395i@3) is amended by striking subsections (b)
through (i) and inserting the following:
‘‘(b) STANDARDS FOR AND CERTIFICATION OF FACILI-
TIES.—
‘‘(1) STANDARDS FOR FACILITIES.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for the establishment and maintenance of
standards consistent with the contents described
in subparagraph (B) for skilled nursing facilities
316
Subtitle F, Part 2
which furnish services for which payment may
be made under this title.
‘‘(B) 
CONTENTS
OF
STANDARDS.—The
standards established for facilities under this
paragraph shall contain provisions relating to
the following items:
‘‘(i) The treatment of resident medical
records.
‘‘(ii) Policies, procedures, and bylaws
for operation.
‘‘(iii) Quality assurance systems.
‘‘(iv) Resident assessment procedures,
including care planning and outcome eval-
uation.
‘‘(v) The assurance of a safe and ade-
quate physical plant for the facility.
‘‘(vi) Qualifications for staff sufficient
to provide adequate care.
‘‘(vii) Utilization review.
‘‘(viii) The protection and enforcement
of resident rights described in subparagraph
(C).
‘‘(C) RESIDENT RIGHTS DESCRIBED.—The
resident rights described in this subparagraph
are the rights of residents to the following:
317
Subtitle F, Part 2
‘‘(i) To exercise the individual’s rights
as a resident of the facility and as a citizen
or resident of the United States.
‘‘(ii) To receive notice of rights and
services.
‘‘(iii) To be protected against the mis-
use of resident funds.
‘‘(iv) To be provided privacy and con-
fidentiality.
‘‘(v) To voice grievances.
‘‘(vi) To examine the results of inspec-
tions under the certification program.
‘‘(vii) To refuse to perform services for
the facility.
‘‘(viii) To be provided privacy in com-
munications and to receive mail.
‘‘(ix) To have the facility provide im-
mediate access to any resident by any rep-
resentative of the certification program, the
resident’s individual physician, the State
long term care ombudsman, and any person
the resident has designated as a visitor.
‘‘(x) To retain and use personal prop-
erty.
318
Subtitle F, Part 2
‘‘(xi) To be free from abuse, including
verbal, sexual, physical and mental abuse,
corporal punishment, and involuntary se-
clusion.
‘‘(xii) To be provided with prior writ-
ten notice of a pending transfer or dis-
charge.
‘‘(D) REQUIRING NOTICE AND COMMENT.—
The standards established for facilities under this
paragraph may only take effect after the Sec-
retary has provided the public with notice and
an opportunity for comment.
‘‘(2) CERTIFICATION PROGRAM.—
‘‘(A) IN
GENERAL.—The Secretary shall
provide for the establishment and operation of a
program consistent with the requirements of sub-
paragraph (B) for the certification of skilled
nursing facilities which meet the standards es-
tablished under paragraph (1) and the decerti-
fication of facilities which fail to meet such
standards.
‘‘(B) REQUIREMENTS
FOR
PROGRAM.—In
addition to any other requirements the Secretary
may impose, in establishing and operating the
319
Subtitle F, Part 2
certification program under subparagraph (A),
the Secretary shall ensure the following:
‘‘(i) The Secretary shall ensure public
access (as defined by the Secretary) to the
certification program’s evaluations of par-
ticipating facilities, including compliance
records and enforcement actions and other
reports by the Secretary regarding the own-
ership, compliance histories, and services
provided by certified facilities.
‘‘(ii) Not less often than every 4 years,
the Secretary shall audit its expenditures
under the program, through an entity des-
ignated by the Secretary which is not affili-
ated with the program, as designated by the
Secretary.
‘‘(c) INTERMEDIATE SANCTION AUTHORITY.—
‘‘(1) AUTHORITY.—In addition to any other au-
thority, where the Secretary determines that a nurs-
ing facility which is certified for participation under
this title (whether certified by the Secretary as meet-
ing the standards established under subsection (b) or
a State-ceritified facility) no longer or does not sub-
stantially meet the requirements for such a facility
320
Subtitle F, Part 2
under this title as specified under subsection (b) and
further determines that the facility’s deficiencies—
‘‘(A) immediately jeopardize the health and
safety of its residents, the Secretary shall at least
provide for the termination of the facility’s cer-
tification for participation under this title, or
‘‘(B) do not immediately jeopardize the
health and safety of its residents, the Secretary
may, in lieu of providing for terminating the fa-
cility’s certification for participation under the
plan, provide lesser sanctions including one that
provides that no payment will be made under
this title with respect to any individual admitted
to such facility after a date specified by the Sec-
retary.
‘‘(2) NOTICE.—The Secretary shall not make
such a decision with respect to a facility until the fa-
cility has had a reasonable opportunity, following the
initial determination that it no longer or does not
substantially meet the requirements for such a facility
under this title, to correct its deficiencies, and, follow-
ing this period, has been given reasonable notice and
opportunity for a hearing.
‘‘(3) EFFECTIVENESS.—The Secretary’s decision
to deny payment may be made effective only after
321
Subtitle F, Part 2
such notice to the public and to the facility as may
be provided for by the Secretary, and its effectiveness
shall terminate (A) when the Secretary finds that the
facility is in substantial compliance (or is making
good faith efforts to achieve substantial compliance)
with the requirements for such a facility under this
title, or (B) in the case described in paragraph
(1)(B), with the end of the eleventh month following
the month such decision is made effective, whichever
occurs first. If a facility to which clause (B) of the
previous sentence applies still fails to substantially
meet the provisions of the respective section on the
date specified in such clause, the Secretary shall ter-
minate such facility’s certification for participation
under this title effective with the first day of the first
month following the month specified in such clause.
‘‘(d) STATE-CERTIFIED FACILITY DEFINED.—In sub-
section (a), a ‘State-certified facility’ means a facility li-
censed or certified as a skilled nursing facility by the State
in which it is located, or a facility which otherwise meets
the requirements applicable to providers of nursing facility
services under the State plan under title XIX or the
MediGrant program under title XXI.’’.
322
Subtitle F, Part 2
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section
1861(v)(1)(E) (42 U.S.C. 1395x(v)(1)(E)) is amended by
striking the second sentence.
(2) Section 1864 (42 U.S.C. 1395aa) is amended by
striking subsection (d).
(3) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is
amended by striking ‘‘1819(c)(2)(E),’’.
(4) Section 1883(f) (42 U.S.C. 1395tt(f)) is amended—
(A) in the second sentence, by striking ‘‘such a
hospital’’ and inserting ‘‘a hospital which enters into
an agreement with the Secretary under this section’’;
and
(B) by striking the first sentence.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply with respect to cost reporting periods
beginning on or after October 1, 1995.
SEC. 15527. MEDICAL REVIEW PROCESS.
In order to ensure that medicare beneficiaries are fur-
nished appropriate extended care services, the Secretary of
Health and Human Services shall establish and implement
a thorough medical review process to examine the effects of
the amendments made by this part on the quality of ex-
tended care services furnished to medicare beneficiaries. In
developing such a medical review process, the Secretary
shall place a particular emphasis on the quality of non-
323
Subtitle F, Part 2
routine covered services for which payment is made under
section 1888A of the Social Security Act.
SEC. 15528. REPORT BY MEDICARE PAYMENT REVIEW COM-
MISSION.
Not later than October 1, 1997, the Medicare Payment
Review Commission shall submit to Congress a report on
the system under which payment is made under the medi-
care program for extended care services furnished by skilled
nursing facilities, and shall include in the report the follow-
ing:
(1) An analysis of the effect of the methodology
established under section 1888A of the Social Security
Act (as added by section 15522) on the payments for,
and the quality of, extended care services under the
medicare program.
(2) An analysis of the advisability of determin-
ing the amount of payment for covered non-routine
services of facilities (as described in such section) on
the basis of the amounts paid for such services when
furnished by suppliers under part B of the medicare
program.
(3) An analysis of the desirability of maintain-
ing separate limits for hospital-based and freestand-
ing facilities in the costs of extended care services rec-
ognized as reasonable under the medicare program.
324
Subtitle G, Part 1
(4) An analysis of the quality of services fur-
nished by skilled nursing facilities.
(5) An analysis of the adequacy of the process
and standards used to provide exceptions to the limits
described in paragraph (3).
SEC. 15529. EFFECTIVE DATE.
Except as otherwise provided in this part, the amend-
ments made by this part shall apply to services furnished
during cost reporting periods (or portions of cost reporting
periods) beginning on or after October 1, 1996.
Subtitle G—Provisions Relating to
Medicare Part B
PART 1—PAYMENT REFORMS
SEC. 15601. PAYMENTS FOR PHYSICIANS’ SERVICES.
(a) REPLACEMENT OF VOLUME PERFORMANCE STAND-
ARD WITH SUSTAINABLE GROWTH RATE.—Section 1848(f)
(42 U.S.C. 1395w–4(f)) is amended to read as follows:
‘‘(f) SUSTAINABLE GROWTH RATE.—
‘‘(1) SPECIFICATION OF GROWTH RATE.—
‘‘(A) FISCAL YEAR 1996.—The sustainable
growth rate for all physicians’ services for fiscal
year 1996 shall be equal to the product of—
‘‘(i) 1 plus the Secretary’s estimate of
the percentage change in the medicare eco-
nomic index for 1996 (described in the
325
Subtitle G, Part 1
fourth sentence of section 1842(b)(3)) (di-
vided by 100),
‘‘(ii) 1 plus the Secretary’s estimate of
the percentage change (divided by 100) in
the average number of individuals enrolled
under this part (other than private plan en-
rollees) from fiscal year 1995 to fiscal year
1996,
‘‘(iii) 1 plus the Secretary’s estimate of
the projected percentage growth in real gross
domestic product per capita (divided by
100) from fiscal year 1995 to fiscal year
1996, plus 2 percentage points, and
‘‘(iv) 1 plus the Secretary’s estimate of
the percentage change (divided by 100) in
expenditures for all physicians’ services in
fiscal year 1996 (compared with fiscal year
1995) which will result from changes in
law, determined without taking into ac-
count estimated changes in expenditures due
to changes in the volume and intensity of
physicians’ services or changes in expendi-
tures resulting from changes in the update
to the conversion factor under subsection
(d),
326
Subtitle G, Part 1
minus 1 and multiplied by 100.
‘‘(B) SUBSEQUENT
FISCAL
YEARS.—The
sustainable growth rate for all physicians’ serv-
ices for fiscal year 1997 and each subsequent fis-
cal year shall be equal to the product of—
‘‘(i) 1 plus the Secretary’s estimate of
the percentage change in the medicare eco-
nomic index for the fiscal year involved (de-
scribed in the fourth sentence of section
1842(b)(3)) (divided by 100),
‘‘(ii) 1 plus the Secretary’s estimate of
the percentage change (divided by 100) in
the average number of individuals enrolled
under this part (other than private plan en-
rollees) from the previous fiscal year to the
fiscal year involved,
‘‘(iii) 1 plus the Secretary’s estimate of
the projected percentage growth in real gross
domestic product per capita (divided by
100) from the previous fiscal year to the fis-
cal year involved, plus 2 percentage points,
and
‘‘(iv) 1 plus the Secretary’s estimate of
the percentage change (divided by 100) in
expenditures for all physicians’ services in
327
Subtitle G, Part 1
the fiscal year (compared with the previous
fiscal year) which will result from changes
in law (including changes made by the Sec-
retary in response to section 1895), deter-
mined without taking into account esti-
mated changes in expenditures due to
changes in the volume and intensity of phy-
sicians’ services or changes in expenditures
resulting from changes in the update to the
conversion factor under subsection (d)(3),
minus 1 and multiplied by 100.
‘‘(2) EXCLUSION
OF
SERVICES
FURNISHED
TO
PRIVATE PLAN ENROLLEES.—In this subsection, the
term ‘physicians’ services’ with respect to a fiscal
year does not include services furnished to an individ-
ual enrolled under this part who has elected to receive
benefits under this title for the fiscal year through a
MedicarePlus product offered under part C or through
enrollment with an eligible organization with a risk-
sharing contract under section 1876.’’.
(b) ESTABLISHING UPDATE TO CONVERSION FACTOR
TO MATCH SPENDING UNDER SUSTAINABLE GROWTH
RATE.—
(1) IN GENERAL.—Section 1848(d) (42 U.S.C.
1395w–4(d)) is amended—
328
Subtitle G, Part 1
(A) by striking paragraph (2);
(B) by amending paragraph (3) to read as
follows:
‘‘(3) UPDATE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (E), for purposes of this section the update
for a year (beginning with 1997) is equal to the
product of—
‘‘(i) 1 plus the Secretary’s estimate of
the percentage increase in the medicare eco-
nomic index (described in the fourth sen-
tence of section 1842(b)(3)) for the year (di-
vided by 100), and
‘‘(ii) 1 plus the Secretary’s estimate of
the update adjustment factor for the year
(divided by 100),
minus 1 and multiplied by 100.
‘‘(B) UPDATE ADJUSTMENT FACTOR.—The
‘update adjustment factor’ for a year is equal to
the quotient of—
‘‘(i) the difference between (I) the sum
of the allowed expenditures for physicians’
services furnished during each of the years
1995 through the year involved and (II) the
sum of the amount of actual expenditures
329
Subtitle G, Part 1
for physicians’ services furnished during
each of the years 1995 through the previous
year; divided by
‘‘(ii) the Secretary’s estimate of al-
lowed expenditures for physicians’ services
furnished during the year.
‘‘(C) DETERMINATION
OF
ALLOWED
EX-
PENDITURES.—For purposes of subparagraph
(B), allowed expenditures for physicians’ services
shall be determined as follows (as estimated by
the Secretary):
‘‘(i) In the case of allowed expenditures
for 1995, such expenditures shall be equal to
actual expenditures for services furnished
during the 12-month period ending with
June of 1995.
‘‘(ii) In the case of allowed expendi-
tures for 1996 and each subsequent year,
such expenditures shall be equal to allowed
expenditures for the previous year, in-
creased by the sustainable growth rate
under subsection (f) for the fiscal year
which begins during the year.
‘‘(D) DETERMINATION OF ACTUAL EXPENDI-
TURES.—For purposes of subparagraph (B), the
330
Subtitle G, Part 1
amount of actual expenditures for physicians’
services furnished during a year shall be equal to
the amount of expenditures for such services dur-
ing the 12-month period ending with June of the
previous year.
‘‘(E) RESTRICTION
ON
VARIATION
FROM
MEDICARE
ECONOMIC
INDEX.—Notwithstanding
the amount of the update adjustment factor de-
termined under subparagraph (B) for a year, the
update in the conversion factor under this para-
graph for the year may not be—
‘‘(i) greater than 103 percent of 1 plus
the Secretary’s estimate of the percentage
increase in the medicare economic index
(described in the fourth sentence of section
1842(b)(3)) for the year (divided by 100); or
‘‘(ii) except as required to carry out
section 1895, less than 93 percent of 1 plus
the Secretary’s estimate of the percentage
increase in the medicare economic index
(described in the fourth sentence of section
1842(b)(3)) for the year (divided by 100).’’;
and
(C) by adding at the end the following new
paragraph:
331
Subtitle G, Part 1
‘‘(4) REPORTING REQUIREMENTS.—
‘‘(A) IN GENERAL.—Not later than Novem-
ber 1 of each year (beginning with 1996), the
Secretary shall transmit to the Congress a report
that describes the update in the conversion factor
for physicians’ services (as defined in subsection
(f)(3)(A)) in the following year.
‘‘(B) COMMISSION REVIEW.—The Medicare
Payment Review Commission shall review the
report submitted under subparagraph (A) for a
year and shall submit to the Congress, by not
later than December 1 of the year, a report con-
taining its analysis of the conversion factor for
the following year.’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to physicians’ services
furnished on or after January 1, 1997.
(c) ESTABLISHMENT OF SINGLE CONVERSION FACTOR
FOR 1996.—
(1) IN GENERAL.—Section 1848(d)(1) (42 U.S.C.
1395w–4(d)(1)) is amended—
(A) by redesignating subparagraph (C) as
subparagraph (D); and
(B) by inserting after subparagraph (B) the
following new subparagraph:
332
Subtitle G, Part 1
‘‘(C) SPECIAL RULE FOR 1996.—For 1996,
the conversion factor under this subsection shall
be $34.60 for all physicians’ services.’’.
(2) CONFORMING
AMENDMENTS.—Section 1848
(42 U.S.C. 1395w–4), as amended by paragraph (1),
is amended—
(A) by striking ‘‘(or factors)’’ each place it
appears 
in 
subsection 
(d)(1)(A) 
and
(d)(1)(D)(ii);
(B) in subsection (d)(1)(A), by striking ‘‘or
updates’’;
(C) in subsection (d)(1)(D)(ii), by striking
‘‘(or updates)’’; and
(D) in subsection (i)(1)(C), by striking
‘‘conversion factors’’ and inserting ‘‘the conver-
sion factor’’.
SEC. 15602. ELIMINATION OF FORMULA-DRIVEN OVERPAY-
MENTS FOR CERTAIN OUTPATIENT HOSPITAL
SERVICES.
(a) AMBULATORY SURGICAL CENTER PROCEDURES.—
Section 
1833(i)(3)(B)(i)(II) 
(42 
U.S.C.
1395l(i)(3)(B)(i)(II)) is amended—
(1) by striking ‘‘of 80 percent’’; and
(2) by striking the period at the end and insert-
ing the following: ‘‘, less the amount a provider may
333
Subtitle G, Part 1
charge as described in clause (ii) of section
1866(a)(2)(A).’’.
(b) RADIOLOGY SERVICES AND DIAGNOSTIC PROCE-
DURES.—Section 
1833(n)(1)(B)(i)(II) 
(42 
U.S.C.
1395l(n)(1)(B)(i)(II)) is amended—
(1) by striking ‘‘of 80 percent’’; and
(2) by striking the period at the end and insert-
ing the following: ‘‘, less the amount a provider may
charge as described in clause (ii) of section
1866(a)(2)(A).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to services furnished during portions of
cost reporting periods occurring on or after October 1, 1995.
SEC. 
15603. 
REDUCTION 
IN 
UPDATES 
TO 
PAYMENT
AMOUNTS FOR DURABLE MEDICAL EQUIP-
MENT.
(a) IN GENERAL.—
(1) FREEZE IN UPDATE FOR COVERED ITEMS.—
Section 1834(a)(14) (42 U.S.C. 1395m(a)(14)) is
amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A);
(B) in subparagraph (B)—
(i) by striking ‘‘a subsequent year’’
and inserting ‘‘1993, 1994, and 1995’’, and
334
Subtitle G, Part 1
(ii) by striking the period at the end
and inserting a semicolon; and
(C) by adding at the end the following:
‘‘(C) for each of the years 1996 through
2002, 0 percentage points; and
‘‘(D) for a subsequent year, the percentage
increase in the consumer price index for all
urban consumers (U.S. urban average) for the
12-month period ending with June of the pre-
vious year.’’.
(2) UPDATE
FOR
ORTHOTICS
AND
PROSTHET-
ICS.—Section 
1834(h)(4)(A) 
(42 
U.S.C.
1395m(h)(4)(A)) is amended—
(A) by striking ‘‘and’’ at the end of clause
(iii);
(B) by redesignating clause (iv) as clause
(v); and
(C) by inserting after clause (iii) the follow-
ing new clause:
‘‘(iv) for each of the years 1996
through 2002, 1 percent, and’’.
(b) OXYGEN
AND
OXYGEN
EQUIPMENT.—Section
1834(a)(9)(C) (42 U.S.C. 1395m(a)(9)(C)) is amended—
(1) by striking ‘‘and’’ at the end of clause (iii);
(2) in clause (iv)—
335
Subtitle G, Part 1
(A) by striking ‘‘a subsequent year’’ and in-
serting ‘‘1993, 1994, and 1995’’, and
(B) by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following new
clauses:
‘‘(v) in 1996, is 80 percent of the na-
tional limited monthly payment rate com-
puted under subparagraph (B) for the item
for the year; and
‘‘(vi) in a subsequent year, is the na-
tional limited monthly payment rate com-
puted under subparagraph (B) for the item
for the year.’’.
SEC. 
15604. 
REDUCTION 
IN 
UPDATES 
TO 
PAYMENT
AMOUNTS FOR CLINICAL DIAGNOSTIC LAB-
ORATORY TESTS.
(a) 
CHANGE
IN
UPDATE.—Section
1833(h)(2)(A)(ii)(IV) (42 U.S.C. 1395l(h)(2)(A)(ii)(IV)) is
amended by striking ‘‘1994 and 1995’’ and inserting ‘‘1994
through 2002’’.
(b) LOWERING CAP ON PAYMENT AMOUNTS.—Section
1833(h)(4)(B) (42 U.S.C. 1395l(h)(4)(B)) is amended—
(1) in clause (vi), by striking ‘‘and’’ at the end;
(2) in clause (vii)—
336
Subtitle G, Part 1
(A) by inserting ‘‘and before January 1,
1997,’’ after ‘‘1995,’’, and
(B) by striking the period at the end and
inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(viii) after December 31, 1996, is equal to 65
percent of such median.’’.
SEC. 15605. EXTENSION OF REDUCTIONS IN PAYMENTS FOR
COSTS OF HOSPITAL OUTPATIENT SERVICES.
(a) REDUCTION IN PAYMENTS FOR CAPITAL-RELATED
COSTS.—Section 
1861(v)(1)(S)(ii)(I) 
(42 
U.S.C.
1395x(v)(1)(S)(ii)(I)) is amended by striking ‘‘through
1998’’ and inserting ‘‘through 2002’’.
(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 2002’’.
SEC. 15606. FREEZE IN PAYMENTS FOR AMBULATORY SUR-
GICAL CENTER SERVICES.
The Secretary of Health and Human Services shall not
provide for any inflation update in the payment amounts
under subparagraphs (A) and (B) of section 1833(i)(2) of
the Social Security Act for any of the fiscal years 1996
through 2002.
337
Subtitle G, Part 1
SEC. 15607. RURAL EMERGENCY ACCESS CARE HOSPITALS.
(a) COVERAGE UNDER PART B.—Section 1832(a)(2)
(42 U.S.C. 1395k(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I);
(2) by striking the period at the end of subpara-
graph (J) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(K) rural emergency access care hospital
services (as defined in section 1861(oo)(2)).’’.
(b) PAYMENT BASED ON PAYMENT FOR OUTPATIENT
RURAL PRIMARY CARE HOSPITAL SERVICES.—
(1) IN GENERAL.—Section 1833(a)(6) (42 U.S.C.
1395l(a)(6)) is amended by striking ‘‘services,’’ and
inserting ‘‘services and rural emergency access care
hospital services,’’.
(2) PAYMENT METHODOLOGY DESCRIBED.—Sec-
tion 1834(g) (42 U.S.C. 1395m(g)) is amended—
(A) in the heading, by striking ‘‘SERVICES’’
and inserting ‘‘SERVICES
AND RURAL EMER-
GENCY ACCESS CARE HOSPITAL SERVICES’’; and
(B) by adding at the end the following new
sentence: ‘‘The amount of payment for rural
emergency access care hospital services provided
during a year shall be determined using the ap-
338
Subtitle G, Part 2
plicable method provided under this subsection
for determining payment for outpatient rural
primary care hospital services during the year.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to services furnished on or after October
1, 1995.
PART 2—PART B PREMIUM
SEC. 15611. EXTENSION OF PART B PREMIUM.
(a) IN GENERAL.—Section 1839(e)(1) (42 U.S.C.
1395r(e)(1)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘and prior to January
1999’’, and
(B) by inserting ‘‘(or, if higher, the percent
described in subparagraph (C))’’ after ‘‘50 per-
cent’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) For purposes of subparagraph (A), the percent
described in this subparagraph is the ratio (expressed as
a percentage) of the monthly premium established under
this section for months in 1995 to the monthly actuarial
rate for enrollees age 65 and over applicable to such months
(as specified in the most recent report of the Board of Trust-
ees of the Federal Supplementary Medical Insurance Trust
339
Subtitle G, Part 2
Fund published prior to the date of the enactment of the
Medicare Preservation Act of 1995).’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) apply to premiums for months beginning with
January 1996.
SEC. 15612. INCOME-RELATED REDUCTION IN MEDICARE
SUBSIDY.
(a) IN GENERAL.—Section 1839 (42 U.S.C. 1395r) is
amended by adding at the end the following:
‘‘(h)(1) Notwithstanding the previous subsections of
this section, in the case of an individual whose modified
adjusted gross income for a taxable year ending with or
within a calendar year (as initially determined by the Sec-
retary in accordance with paragraph (3)) exceeds the
threshold amount described in paragraph (4), the Secretary
shall increase the amount of the monthly premium for
months in the calendar year by an amount equal to the
difference between—
‘‘(A) 200 percent of the monthly actuarial rate
for enrollees age 65 and over as determined under
subsection (a)(1) for that calendar year; and
‘‘(B) the total of the monthly premiums paid by
the individual under this section (determined without
regard to subsection (b)) during such calendar year.
340
Subtitle G, Part 2
‘‘(2) In the case of an individual described in para-
graph (1) whose modified adjusted gross exceeds the thresh-
old amount by less than $25,000, the amount of the increase
in the monthly premium applicable under paragraph (1)
shall be an amount which bears the same ratio to the
amount of the increase described in paragraph (1) (deter-
mined without regard to this paragraph) as such excess
bears to $25,000. In the case of a joint return filed under
section 6013 of the Internal Revenue Code of 1986 by
spouses both of whom are enrolled under this part, the pre-
vious sentence shall be applied by substituting ‘$50,000’ for
‘$25,000’. The preceding provisions of this paragraph shall
not apply to any individual whose threshold amount is zero.
‘‘(3) The Secretary shall make an initial determina-
tion of the amount of an individual’s adjusted gross income
for a taxable year ending with or within a calendar year
for purposes of this subsection as follows:
‘‘(A) Not later than October 1 of the year preced-
ing the year, the Secretary shall provide notice to
each individual whom the Secretary finds (on the
basis of the individual’s actual adjusted gross income
for the most recent taxable year for which such infor-
mation is available or other information provided to
the Secretary by the Secretary of the Treasury) will
be subject to an increase under this subsection that
341
Subtitle G, Part 2
the individual will be subject to such an increase, and
shall include in such notice the Secretary’s estimate
of the individual’s adjusted gross income for the year.
‘‘(B) If, during the 30-day period beginning on
the date notice is provided to an individual under
subparagraph (A), the individual provides the Sec-
retary with information on the individual’s antici-
pated adjusted gross income for the year, the amount
initially determined by the Secretary under this
paragraph with respect to the individual shall be
based on the information provided by the individual.
‘‘(C) If an individual does not provide the Sec-
retary with information under subparagraph (B), the
amount initially determined by the Secretary under
this paragraph with respect to the individual shall be
the amount included in the notice provided to the in-
dividual under subparagraph (A).
‘‘(4)(A) If the Secretary determines (on the basis of
final information provided by the Secretary of the Treas-
ury) that the amount of an individual’s actual adjusted
gross income for a taxable year ending with or within a
calendar year is less than or greater than the amount ini-
tially determined by the Secretary under paragraph (3), the
Secretary shall increase or decrease the amount of the indi-
vidual’s monthly premium under this section (as the case
342
Subtitle G, Part 2
may be) for months during the following calendar year by
an amount equal to 1⁄12 of the difference between—
‘‘(i) the total amount of all monthly premiums
paid by the individual under this section during the
previous calendar year; and
‘‘(ii) the total amount of all such premiums
which would have been paid by the individual during
the previous calendar year if the amount of the indi-
vidual’s adjusted gross income initially determined
under paragraph (3) were equal to the actual amount
of the individual’s adjusted gross income determined
under this paragraph.
‘‘(B) In the case of an individual who is not enrolled
under this part for any calendar year for which the individ-
ual’s monthly premium under this section for months dur-
ing the year would be increased pursuant to subparagraph
(A) if the individual were enrolled under this part for the
year, the Secretary may take such steps as the Secretary
considers appropriate to recover from the individual the
total amount by which the individual’s monthly premium
for months during the year would have been increased
under subparagraph (A) if the individual were enrolled
under this part for the year.
‘‘(C) In the case of a deceased individual for whom
the amount of the monthly premium under this section for
343
Subtitle G, Part 2
months in a year would have been decreased pursuant to
subparagraph (A) if the individual were not deceased, the
Secretary shall make a payment to the individual’s surviv-
ing spouse (or, in the case of an individual who does not
have a surviving spouse, to the individual’s estate) in an
amount equal to the difference between—
‘‘(i) the total amount by which the individual’s
premium would have been decreased for all months
during the year pursuant to subparagraph (A); and
‘‘(ii) the amount (if any) by which the individ-
ual’s premium was decreased for months during the
year pursuant to subparagraph (A).
‘‘(5) In this subsection, the following definitions apply:
‘‘(A) The term ‘modified adjusted gross income’
means, with respect to an individual for a taxable
year, the individual’s adjusted gross income under the
Internal Revenue Code of 1986—
‘‘(i) determined without regard to sections
135, 911, 931, and 933 of such Code, and
‘‘(ii) increased by the amount of interest re-
ceived or accrued by the individual during the
taxable year which is exempt from tax under
such Code.
‘‘(B) The term ‘threshold amount’ means—
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Subtitle G, Part 2
‘‘(i) except as otherwise provided in this
paragraph, $75,000,
‘‘(ii) $125,000, in the case of a joint return,
and
‘‘(iii) zero in the case of a taxpayer who—
‘‘(I) is married at the close of the tax-
able year but does not file a joint return for
such year, and
‘‘(II) does not live apart from his
spouse at all times during the taxable
year.’’.
(b) CONFORMING AMENDMENT.—Section 1839(f) (42
U.S.C. 1395r(f)) is amended by striking ‘‘if an individual’’
and inserting the following: ‘‘if an individual (other than
an individual subject to an increase in the monthly pre-
mium under this section pursuant to subsection (h))’’.
(c) REPORTING REQUIREMENTS FOR SECRETARY OF
THE TREASURY.—Notwithstanding section 6103 of the In-
ternal Revenue Code of 1986, the Secretary of the Treasury
shall provide, at the request of the Secretary of Health and
Human Services, such information (at such times and in
such form as the Secretary of Health and Human Services
may require) as is necessary for the Secretary of Health
and Human Services to carry out section 1839(h) of the
Social Security Act (as added by subsection (a)).
345
Subtitle G, Part 3
(d) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply to the monthly premium
under section 1839 of the Social Security Act for months
beginning with January 1997.
PART 3—ADMINISTRATIVE SIMPLIFICATION FOR
LABORATORY SERVICES
SEC. 15621. ADMINISTRATIVE SIMPLIFICATION FOR LAB-
ORATORY SERVICES.
(a) IN GENERAL.—Not later than 1 year after the date
of the enactment of this Act, the Secretary of Health and
Human Services (in accordance with the process described
in subsection (b)) shall adopt uniform coverage, adminis-
tration, and payment policies for clinical diagnostic labora-
tory tests under part B of the medicare program.
(b) PROCESS FOR ADOPTION OF POLICIES.—The Sec-
retary shall adopt uniform policies under subsection (a) in
accordance with the following process:
(1) The Secretary shall select from carriers with
whom the Secretary has a contract under part B dur-
ing 1995 15 medical directors, who will meet and de-
velop recommendations for such uniform policies. The
medical directors selected shall represent various geo-
graphic areas and have a varied range of experience
in relevant medical fields, including pathology and
clinical laboratory practice.
346
Subtitle G, Part 3
(2) The medical directors selected under para-
graph (1) shall consult with independent experts in
each major discipline of clinical laboratory medicine,
including clinical laboratory personnel, bioanalysts,
pathologists, and practicing physicians. The medical
directors shall also solicit comments from other indi-
viduals and groups who wish to participate, includ-
ing consumers and other affected parties. This process
shall be conducted as a negotiated rulemaking under
title 5, United States Code.
(3) Under the negotiated rulemaking, the rec-
ommendations for uniform policies shall be designed
to simplify and reduce unnecessary administrative
burdens in connection with the following:
(A) Beneficiary information required to be
submitted with each claim.
(B) Physicians’ obligations regarding docu-
mentation requirements and recordkeeping.
(C) Procedures for filing claims and for
providing remittances by electronic media.
(D) The performance of post-payment re-
view of test claims.
(E) The prohibition of the documentation of
medical necessity except when determined to be
347
Subtitle G, Part 3
appropriate after identification of aberrant utili-
zation pattern through focused medical review.
(F) Beneficiary responsibility for payment.
(4) During the pendency of the adoption by the
Secretary 
of 
the 
uniform 
policies, 
fiscal
intermediaries and carriers under the medicare pro-
gram may not implement any new requirement relat-
ing to the submission of a claim for clinical diag-
nostic laboratory tests retroactive to January 1, 1995,
and carriers may not initiate any new coverage, ad-
ministrative, or payment policy unless the policy pro-
motes the goal of administrative simplification of re-
quirements imposed on clinical laboratories in ac-
cordance with the Secretary’s promulgation of the ne-
gotiated rulemaking.
(5) Not later than 6 months after the date of the
enactment of this Act, the medical directors shall sub-
mit their recommendations to the Secretary, and the
Secretary shall publish the recommendations and so-
licit public comment using negotiated rulemaking in
accordance with title 5, United States Code. The Sec-
retary shall publish final uniform policies for cov-
erage, administration, and payment of claims for
clinical diagnostic laboratory tests, effective after the
348
Subtitle G, Part 3
expiration of the 180-day period which begins on the
date of publication.
(6) After the publication of the final uniform
policies, the Secretary shall implement identical uni-
form documentation and processing policies for all
clinical diagnostic laboratory tests paid under the
medicare program through fiscal intermediaries or
carriers.
(c) OPTIONAL SELECTION OF SINGLE CARRIER.—Ef-
fective for claims submitted after the expiration of the 90-
day period which begins on the date of the enactment of
this Act, an independent laboratory may select a single car-
rier for the processing of all of its claims for payment under
part B of the medicare program, without regard to the loca-
tion where the laboratory or the patient or provider in-
volved resides or conducts business. Such election of a single
carrier shall be made by the clinical laboratory and an
agreement made between the carrier and the laboratory
shall be forwarded to the Secretary of Health and Human
Services. Nothing in this subsection shall be construed to
require a laboratory to select a single carrier under this
subsection.
349
Subtitle G, Part 4
PART 4—COVERAGE OF CERTAIN ANTI-NAUSEA
DRUGS
SEC. 15631. COVERAGE OF ORAL ANTI-NAUSEA DRUGS
UNDER CHEMOTHERAPEUTIC REGIMEN.
Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is amend-
ed—
(1) by striking ‘‘and’’ at the end of subpara-
graphs (N) and (O);
(2) in subparagraph (Q), by adding ‘‘and’’ at
the end; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(R) an oral drug (which is approved by the
Federal Food and Drug Administration) prescribed
for use as an anti-emetic used as part of an
anticancer chemotherapeutic regimen, if the drug is
prescribed or dispensed—
‘‘(i) for use not later than 12 hours after the
administration 
of 
the 
anticancer
chemotherapeutic agent; and
‘‘(ii) as a substitute for any other anti-
emetic therapy which would otherwise be admin-
istered intravenously.’’.
SEC. 15632. EFFECTIVE DATE.
The amendments made by this part shall apply to
items and services furnished on or after January 1, 1996.
356
Subtitle H, Part 1
fiscal year for which the determination
is being made.
‘‘(ii) CASE
MIX
ADJUSTMENT
FAC-
TOR.—For purposes of clause (i), the case-
mix adjustment factor for a year is the fac-
tor determined by the Secretary to assure
that aggregate payments for home health
services under this section during the year
will not exceed the payment for such serv-
ices during the previous year as a result of
changes in the number and type of home
health visits within case-mix categories over
the previous year.
‘‘(iii) REBASING
OF
PER
EPISODE
AMOUNTS.—Beginning 
with 
fiscal 
year
1999 and every 2 years thereafter, the Sec-
retary shall revise the mean number of
home health visits determined under clause
(i)(I) for each type of home health service
visit described in subsection (a)(2) fur-
nished during an episode in a case-mix cat-
egory to reflect the most recently available
data on the number of visits.
‘‘(iv) DETERMINATION OF APPLICABLE
AREA.—For purposes of determining per