I
106TH CONGRESS
2D SESSION
H. R. 4937
To amend title XVIII of the Social Security Act to provide relief to providers
of services under the Medicare Program by correcting reductions in
payment rates instituted under the Balanced Budget Act of 1997.
IN THE HOUSE OF REPRESENTATIVES
JULY 24, 2000
Mr. SMITH of Washington introduced the following bill; which was referred to
the Committee on Ways and Means, and in addition to the Committee
on Commerce, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
relief to providers of services under the Medicare Pro-
gram by correcting reductions in payment rates insti-
tuted under the Balanced Budget Act of 1997.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Protection and Fairness Act of 2000’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—INCREASE IN PAYMENTS FOR INPATIENT HOSPITAL
SERVICES
Sec. 101. Elimination of reduction to market basket percentage increase in fis-
cal years 2001 and 2002.
Sec. 102. Increase in payments for disproportionate share hospitals (DSH) in
fiscal years 2001 and 2002.
Sec. 103. Elimination of reduction in payments for indirect costs of graduate
medical education (IME).
TITLE II—INCREASE IN PAYMENTS FOR HOME HEALTH
SERVICES
Sec. 201. Elimination of 15 percent reduction under the prospective payment
system.
TITLE III—INCREASE IN PAYMENTS TO MEDICARE+CHOICE
ORGANIZATIONS
Subtitle A—Modifications to Risk Adjustment Methodology
Sec. 301. Application 
of 
budget 
neutrality 
principle 
to 
the 
new
Medicare+Choice risk adjustment methodology.
Sec. 302. 10-year phase in for risk adjustment.
Subtitle B—Modifications to the Blended Capitation Rate
Sec. 311. Election of application in 2001 and 2002 of 50:50 area-specific and
national percentages.
Sec. 312. Increase in national per capita Medicare+Choice growth percentage
in 2001 and 2002.
Subtitle C—Reporting Requirements for Medicare Health Care Services
Furnished in Military Treatment Facilities
Sec. 321. Reporting costs incurred under Medicare Subvention Demonstration
Project for military retirees.
TITLE 
I—INCREASE 
IN 
PAY-
MENTS FOR INPATIENT HOS-
PITAL SERVICES
SEC. 101. ELIMINATION OF REDUCTION TO MARKET BAS-
KET 
PERCENTAGE 
INCREASE 
IN 
FISCAL
YEARS 2001 AND 2002.
Section 1886(b)(3)(B)(i) of the Social Security Act
(42 U.S.C. 1395ww(b)(3)(B)(i)) is amended—
(1) by striking subclauses (XVI) and (XVII);
(2) by inserting ‘‘and’’ at the end of subclause
(XV);
(3) by redesignating subclause (XVIII) as sub-
clause (XVI); and
(4) in subclause (XVI), as so redesignated, by
striking ‘‘2003’’ and inserting ‘‘2001’’.
SEC. 102. INCREASE IN PAYMENTS FOR DISPROPOR-
TIONATE SHARE HOSPITALS (DSH) IN FISCAL
YEARS 2001 AND 2002.
Section 1886(d)(5)(F)(ix) of the Social Security Act
(42 U.S.C. 1395ww(d)(5)(F)(ix)) is amended—
(1) in subclause (III), by striking ‘‘each of fis-
cal years 2000 and 2001,’’ and inserting ‘‘fiscal year
2000,’’; and
(2) in subclause (IV)—
(A) by striking ‘‘fiscal year 2002,’’ and in-
serting ‘‘each of fiscal years 2001 and 2002,’’;
and
(B) by striking ‘‘reduced by 4 percent’’
and inserting ‘‘reduced by 2 percent’’.
SEC. 103. ELIMINATION OF REDUCTION IN PAYMENTS FOR
INDIRECT COSTS OF GRADUATE MEDICAL
EDUCATION (IME).
Section 1886(d)(5)(B) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(B)) is amended—
(1) by striking subclauses (V), and (VI);
(2) by adding ‘‘and’’ at the end of subclause
(III); and
(3) in subclause (IV)—
(A) by striking ‘‘during fiscal year 2000,’’
and inserting ‘‘on or after October 1, 1999,’’;
and
(B) by striking the semicolon at the end
and inserting a period.
TITLE 
II—INCREASE 
IN 
PAY-
MENTS FOR HOME HEALTH
SERVICES
SEC. 201. ELIMINATION OF 15 PERCENT REDUCTION
UNDER THE PROSPECTIVE PAYMENT SYS-
TEM.
(a) IN GENERAL.—Section 1895(b)(3)(A) of the So-
cial Security Act (42 U.S.C. 1395fff(b)(3)(A)), as amend-
ed by sections 302(b) and 303(f) of the Medicare, Med-
icaid, and SCHIP Balanced Budget Refinement Act of
1999 (113 Stat. 1501A–359, 361), as enacted into law
by section 1000(a)(6) of Public Law 106–113, is amended
to read as follows:
‘‘(A) INITIAL BASIS.—Under such system
the Secretary shall provide for computation of
a standard prospective payment amount (or
amounts). Such amount (or amounts) shall ini-
tially be based on the most current audited cost
report data available to the Secretary and shall
be computed in a manner so that the total
amounts payable under the system for the 12-
month period beginning on the date the Sec-
retary implements the system shall be equal to
the total amount that would have been made if
the system had not been in effect and if section
1861(v)(1)(L)(ix) had not been enacted. Each
such amount shall be standardized in a manner
that eliminates the effect of variations in rel-
ative case mix and area wage adjustments
among different home health agencies in a
budget neutral manner consistent with the case
mix and wage level adjustments provided under
paragraph (4)(A). Under the system, the Sec-
retary may recognize regional differences or dif-
ferences based upon whether or not the services
or agency are in an urbanized area.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the enact-
ment of the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 (Public Law 106–113).
TITLE 
III—INCREASE 
IN 
PAY-
MENTS 
TO
MEDICARE+CHOICE ORGANI-
ZATIONS
Subtitle A—Modifications to Risk
Adjustment Methodology
SEC. 301. APPLICATION OF BUDGET NEUTRALITY PRIN-
CIPLE TO THE NEW MEDICARE+CHOICE RISK
ADJUSTMENT METHODOLOGY.
(a) IN GENERAL.—Section 1853(a)(3) of the Social
Security Act (42 U.S.C. 1395w–23(a)(3)) is amended by
adding at the end the following new subparagraph:
‘‘(E) IMPLEMENTATION IN A BUDGET NEU-
TRAL
MANNER.—The methodology under this
paragraph shall be designed and implemented
in a manner so that it does not result in any
material change in the aggregate level of ex-
penditures under this title compared to the level
that would have occurred if such methodology
had not been implemented (and if the previous
risk adjustment methodology used in 1998 had
continued to be implemented).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on the date of the enactment
of this Act and applies to payments for months beginning
on or after January 2001.
SEC. 302. 10-YEAR PHASE-IN FOR RISK ADJUSTMENT.
Section 1853(a)(3)(C)(ii) of the Social Security Act
(42 U.S.C. 1395w–23(a)(3)(C)(ii)) is amended to read as
follows:
‘‘(ii) PHASE-IN.—Such risk adjust-
ment methodology shall be implemented in
a phased-in manner so that the method-
ology insofar as it makes adjustments to
capitation rates for health status applies to
percent 
of 
1⁄12
of 
the 
annual
Medicare+Choice capitation rate in each
of 2000 through 2009.
Subtitle B—Modifications to the
Blended Capitation Rate
SEC. 311. ELECTION OF APPLICATION IN 2001 AND 2002 OF
50:50 AREA-SPECIFIC AND NATIONAL PER-
CENTAGES.
Section 1853(c)(2) of the Social Security Act (42
U.S.C. 1395w–23(c)(2)) is amended—
(1) by striking the period at the end of sub-
paragraph (F) and inserting a semicolon; and
(2) by adding after and below subparagraph
(F) the following: ‘‘except that for either or both
2001 and 2002, a Medicare+Choice organization
may elect to apply subparagraph (F) (rather than,
with respect to 2001, subparagraph (D) or, with re-
spect to 2002, subparagraph (E)).’’.
SEC. 
312. 
INCREASE 
IN 
NATIONAL 
PER 
CAPITA
MEDICARE+CHOICE GROWTH PERCENTAGE
IN 2001 AND 2002.
Section 1853(c)(6)(B) of the Social Security Act (42
U.S.C. 1395w–23(c)(6)(B)) is amended—
(1) by adding ‘‘and’’ at the end of clause (iii);
(2) by striking clauses (iv) and (v); and
(3) in clause (vi), by redesignating such clause
as clause (iv) and by striking ‘‘2002’’ and inserting
‘‘2000’’.
Subtitle 
C—Reporting 
Require-
ments for Medicare Health Care
Services Furnished in Military
Treatment Facilities
SEC. 321. REPORTING COSTS INCURRED UNDER MEDICARE
SUBVENTION 
DEMONSTRATION 
PROJECT
FOR MILITARY RETIREES.
(a) IN GENERAL.—Section 1896 of the Social Secu-
rity Act (42 U.S.C. 1395ggg) is amended by adding at
the end the following new subsection:
‘‘(l) REPORTING COSTS INCURRED UNDER
THE
PROJECT
FOR
PURPOSES
OF
CALCULATING
MEDICARE+CHOICE PAYMENT RATES.—
‘‘(1) DETERMINATION OF COSTS.—For a year
in which the project is carried out in a military
treatment facility, the facility shall determine the ag-
gregate costs that are incurred under the project
(and for which payment will be made from the trust
funds) for furnishing medicare health care services
to medicare-eligible military retirees or dependents
under the project in that year.
‘‘(2) REPORT
OF
CALCULATED
COSTS.—For
purposes of including the costs incurred under the
project (as described in paragraph (1)) in the cal-
culation the annual Medicare+Choice capitation
rates in each Medicare+Choice payment area, a
military treatment facility shall submit to the Sec-
retary the determination made under paragraph (1)
by not later than March 31 of the year that follows
the year for which the facility has made such deter-
mination.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to years beginning
on or after January 1, 2000.
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