program, and by making health insurance available to
all children.
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
‘‘Health Care Cost Containment and Reform Act of
1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. General definitions.
TITLE I—COST CONTAINMENT
Subtitle A—National Health Budget
Sec. 101. National health expenditure budget.
Sec. 102. Classes of health care services.
Sec. 103. Allocation of health budget by class of service.
Sec. 104. Adjustments for changes in medicare benefits.
Sec. 105. National health expenditures reporting system.
Subtitle B—State Provider Payment Control Systems
Sec. 121. State provider payment rates.
Sec. 122. General conditions for State provider payment control systems.
Sec. 123. Control of aggregate expenditures requirement for State systems.
Sec. 124. Treatment of States failing to control aggregate expenditures.
Sec. 125. Termination of approval of State system.
Subtitle C—Maximum Payment Rates for Services Not Subject to State Pro-
vider Payment Control Systems or Provided by Staff or Group Model
Health Maintenance Organizations
Sec. 140. Exemption for services subject to approved State provider payment
control systems or provided by staff or group model health
maintenance organizations.
PART 1—ESTABLISHMENT AND APPLICATION OF MAXIMUM PAYMENT RATES
(OTHER THAN UNDER MEDICARE PROGRAM)
Sec. 141. Process.
Sec. 142. Payment methodology; relation to budget allocation.
Sec. 143. General application and enforcement of maximum payment rates.
Sec. 144. Limitation on payment rates under medicaid.
PART 2—METHODOLOGIES FOR DETERMINING MAXIMUM RATES (OTHER
THAN UNDER MEDICARE PROGRAM)
Sec. 151. Basis for maximum rates of payment for inpatient hospital services.
Sec. 152. Basis for maximum payment rate for class of physicians’ services and
other professional medical services.
Sec. 153. Basis for other maximum payment rates for services using certain
medicare payment methodologies.
Sec. 154. Other services.
Sec. 155. Development of prospectively-determined payment methodologies.
PART 3—MEDICARE PAYMENT ADJUSTMENTS
Sec. 161. Conforming medicare payment rates to medicare health expenditure
allocations.
Sec. 162. Adjustments to medicare payments for graduate medical education.
TITLE II—MANAGED CARE AND MANAGED COMPETITION
Subtitle A—Managed Care
Sec. 201. Authorization for managed care systems to pay less than maximum
payment rates.
Sec. 202. Staff and group model health maintenance organizations exempt from
maximum payment rates.
Sec. 203. Repeal of sunset of dual choice requirement.
Sec. 204. Multiple choice of health maintenance organizations.
Sec. 205. Federal assistance for establishment and initial operation of staff and
group model HMOs.
Sec. 206. Preemption of ‘‘any willing provider’’ State laws.
Sec. 207. Adjustment in medicare capitation payments to account for regional
variations in application of secondary payor provisions.
Sec. 208. GAO study of expansion of health maintenance organizations.
Subtitle B—Managed Competition
PART 1—ESTABLISHMENT OF NATIONAL HPPC PROGRAM
Sec. 221. Establishment of program; grants to States.
Sec. 222. Establishment of HPPCs; designation of HPPC areas.
Sec. 223. Organization and operation of HPPCs.
Sec. 224. Agreements with employers.
Sec. 225. Agreements with qualified health plans (QHPs).
Sec. 226. Enrolling individuals in qualified health plans through a HPPC.
Sec. 227. Coordination among HPPCs.
Sec. 228. Definitions.
PART 2—REQUIREMENTS FOR QUALIFIED HEALTH PLANS
Sec. 251. Approval process; qualifications.
Sec. 252. Benefit packages.
Subtitle C—National Patient Outcomes and Enrollee Satisfaction Data
Reporting Program
Sec. 271. National patient outcomes program.
Sec. 272. Enrollee health plan satisfaction.
Sec. 273. Research and demonstration.
Subtitle D—Study of Universal Health Insurance Coverage and Cost
Containment
Sec. 291. Study.
TITLE III—HEALTH SYSTEMS REFORM
Subtitle A—Health Insurance Reform
Sec. 301. Excise tax on premiums received on health insurance policies which
do not meet certain requirements.
Sec. 302. Health benefit plan standards.
‘‘TITLE XXI—HEALTH BENEFIT PLAN STANDARDS
‘‘Sec. 2101. Standards and requirements for health benefit plans.
‘‘Sec. 2102. Establishment of standards.
‘‘Sec. 2103. Requirements applicable to all health benefit plans.
‘‘Sec. 2104. Standards applicable only to insured health benefit plans.
‘‘Sec. 2105. Payment of commissions.
‘‘Sec. 2106. Insurance requirement for multiple employer welfare arrange-
ments.
‘‘Sec. 2107. Nonapplication in Puerto Rico and the territories.
‘‘Sec. 2108. Definitions.
Sec. 303. Assuring continuation of access to college and university health bene-
fit plans by graduating students.
Subtitle B—Administrative Simplification
Sec. 321. Requirement for uniform health claims cards.
Sec. 322. Requirement for entitlement verification system.
Sec. 323. Requirements for uniform claims and electronic claims data set.
Sec. 324. Electronic medical records and reporting.
Sec. 325. Uniform hospital cost reporting.
Sec. 326. Definitions.
Subtitle C—Fraud and Abuse
PART 1—NATIONAL HEALTH CARE FRAUD CONTROL PROGRAM
Sec. 341. All-payer fraud and abuse control program.
Sec. 342. Application of Federal health anti-fraud and abuse sanctions to all
fraud and abuse against any health benefit plan.
Sec. 343. Prohibition against offering inducements to individuals enrolled under
or employed by programs or plans.
Sec. 344. Intermediate sanctions for medicare health maintenance organiza-
tions.
PART 2—BAN ON IMPROPER PHYSICIAN REFERRALS
Sec. 351. Application of medicare ban on self-referrals to all payors.
Sec. 352. Extension of self-referral ban to additional specified services.
Sec. 353. Changes in exceptions and other provisions relating to compensation
arrangements.
Sec. 354. Effective dates.
Subtitle D—Other Provisions
Sec. 361. Malpractice reform.
TITLE IV—EXPANSIONS OF HEALTH BENEFITS AND OTHER
HEALTH INITIATIVES
Subtitle A—Medicaid Benefit Improvements
Sec. 401. Floor on medicaid payment levels for inpatient hospital services and
physicians’ services.
Sec. 402. Medicaid eligibility expansion.
Sec. 403. Full Federal payment for increased costs.
Subtitle B—Expansion of Medicare Benefits
PART 1—PREVENTIVE BENEFITS
Sec. 411. Annual screening mammography.
Sec. 412. Coverage of colorectal screening.
Sec. 413. Coverage of certain immunizations.
Sec. 414. Coverage of well-child care.
Sec. 415. Demonstration projects for coverage of other preventive services.
PART 2—COVERAGE OF PRESCRIPTION DRUGS
Sec. 421. Coverage of outpatient prescription drugs.
Sec. 422. Establishment of Prescription Drug Payment Review Commission.
Sec. 423. Coverage of prescription drugs for qualified medicare beneficiaries
and qualified disabled and working individuals.
PART 3—QUALIFIED MEDICARE BENEFICIARY ENROLLMENT
Sec. 431. Qualified medicare beneficiary enrollment.
Subtitle C—Health Insurance Deduction for the Self-Employed
Sec. 441. Deduction for health insurance costs of self-employed individuals
made permanent and increased.
Subtitle D—Health Insurance Program for Children
Sec. 451. Health insurance for children.
‘‘TITLE XXII—HEALTH INSURANCE FOR CHILDREN
‘‘Sec. 2200. Establishment of program of health insurance for children.
‘‘PART A—ELIGIBILITY AND ENROLLMENT
‘‘Sec. 2201. Eligibility.
‘‘Sec. 2202. Enrollment periods.
‘‘Sec. 2203. Employment-based enrollment.
‘‘Sec. 2204. Coverage period.
‘‘PART B—BENEFITS; PAYMENTS FOR BENEFITS
‘‘Sec. 2211. Scope of benefits.
‘‘Sec. 2212. Exclusions.
‘‘Sec. 2213. Payments for benefits.
‘‘PART C—PREMIUMS; TRUST FUND
‘‘Sec. 2231. Amount of premiums.
‘‘Sec. 2232. Payment of premiums.
‘‘Sec. 2233. Children’s Health Insurance Trust Fund.
‘‘PART D—GENERAL PROVISIONS
‘‘Sec. 2251. Incorporation of certain medicare provisions.
‘‘Sec. 2252. Incorporation of peer review provisions and fraud and abuse
provisions.
SEC. 2. GENERAL DEFINITIONS.
(a) IN GENERAL.—In this Act (except as otherwise
provided):
(1) APPLICABLE COMMISSION.—The term ‘‘ap-
plicable Commission’’ means—
(A) with respect to services included in a
class of services furnished by a hospital, other
institutional provider, or home health provider,
the Prospective Payment Assessment Commis-
sion,
(B) with respect to prescription drugs on
or after January 1, 1995, the Prescription
Drug Payment Review Commission (established
under section 1847 of the Social Security Act,
as added by section 422 of this Act), and
(C) with respect to health care services not
described in subparagraphs (A) and (B), the
Physician Payment Review Commission.
(2) CLASS
OF
SERVICES.—The term ‘‘class’’
means, with respect to health care services, a class
established under section 102.
(3) 
HEALTH
CARE
SERVICES.—The 
term
‘‘health care services’’ means the items and services
described in section 102(a)(2) or included in health
care services under section 102(a)(3), but does not
include items and services described in section
102(a)(4).
(4) MEDICARE
PROGRAM; MEDICARE
BENE-
FICIARY.—(A) The term ‘‘medicare program’’ means
the programs established under parts A and B of
title XVIII of the Social Security Act.
(B) The term ‘‘medicare beneficiary’’ means an
individual entitled to benefits under part A or B, or
both, of the medicare program.
(5) MEDICAID PROGRAM.—The term ‘‘medicaid
program’’ means any State plan approved under title
XIX of the Social Security Act and includes a State
program operating under a waiver under section
1115 of such Act.
(6) NATIONAL
HEALTH
CARE
EXPENDITURE
BUDGET.—The term ‘‘national health care expendi-
ture budget’’ means such a budget established under
section 101.
(7) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(8) STATE.—The term ‘‘State’’ means the 50
States and the District of Columbia.
(9) 
UNITED
STATES.—The 
term 
‘‘United
States’’ means the 50 States and the District of Co-
lumbia.
(b) TERM USED IN TITLES I AND II.—In titles I and
II:
(1) HEALTH
MAINTENANCE
ORGANIZATION.—
The term ‘‘health maintenance organization’’ means
an eligible organization with a contract under sec-
tion 1876 of the Social Security Act or a qualified
health maintenance organization (as defined in sec-
tion 1310(d) of the Public Health Service Act).
(2) STAFF OR GROUP MODEL HEALTH MAINTE-
NANCE ORGANIZATION.—The term ‘‘staff or group
model health maintenance organization’’ means a
health maintenance organization (as defined in para-
graph (1)) for which 90 percent of the services of
physicians are provided through members of the
staff of the organization or through a medical group
(or groups).
TITLE I—COST CONTAINMENT
Subtitle A—National Health Budget
SEC. 101. NATIONAL HEALTH EXPENDITURE BUDGET.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—For each calendar year (be-
ginning with 1995), there is established a national
health expenditure budget equal to the sum of—
(A) the medicare health expenditure budg-
et (under paragraph (2)), and
(B) the nonmedicare health expenditure
budget (under such paragraph).
(2) AMOUNT.—Subject to section 104—
(A) 1995.—The total amount of the medi-
care and nonmedicare health expenditure budg-
ets for 1995 is equal to the respective medicare
and nonmedicare budget baselines (determined
under paragraphs (1) and (2), respectively, of
subsection (b) for 1994) multiplied by the appli-
cable adjustment factor (specified under sub-
section (c)) for 1995.
(B) 
SUBSEQUENT
YEARS.—The 
total
amount of each such budget for each year after
1995 is equal to the respective budget deter-
mined under this paragraph for the previous
year multiplied by the applicable adjustment
factor (specified under subsection (c)) for the
year involved.
(3) PUBLICATION.—The Secretary of Health
and Human Services shall publish in the Federal
Register and report to the Congress, by not later
than April 1 before each year, the amounts of the
national health expenditure budget, of the medicare
health expenditure budget, and of the nonmedicare
health expenditure budget for the year.
(b) BUDGET BASELINES.—
(1) MEDICARE BUDGET BASELINE.—The Sec-
retary shall compute a medicare budget baseline
under this paragraph for 1994 as follows:
(A) 1993 ACTUAL
EXPENDITURES.—The
Secretary shall determine (on the basis of the
best data available) the amount of the aggre-
gate medicare expenditures (as defined in sub-
section (d)(1)) during 1993.
(B) PROJECTION
FOR
1994.—The Sec-
retary shall increase such amount by the Sec-
retary’s estimate of the percentage increase in
the aggregate medicare expenditures between
the midpoint of 1993 and the midpoint of 1994.
(2) NONMEDICARE
BUDGET
BASELINE.—The
Secretary shall compute a nonmedicare budget base-
line under this paragraph for 1994 as follows:
(A) 1993 ACTUAL
EXPENDITURES.—The
Secretary shall determine (on the basis of the
best data available) the amount of the aggre-
gate nonmedicare expenditures (as defined in
subsection (d)(2)) for health care services dur-
ing 1993.
(B) PROJECTION
FOR
1994.—The Sec-
retary shall increase such amount by the Sec-
retary’s estimate of the percentage increase in
the aggregate nonmedicare expenditures for
such services between the midpoint of 1993 and
the midpoint of 1994.
(c) APPLICABLE ADJUSTMENT FACTOR.—The appli-
cable adjustment factor under this subsection for each
year is 1 plus the sum (expressed as a fraction) of—
(1) the average annual percentage increase in
the gross domestic product (in current dollars, as
published by the Secretary of Commerce) during the
5-year period ending with the second previous year;
plus
(2)(A) for 1995, 3.5 percentage points,
(B) for 1996, 2.5 percentage points,
(C) for 1997, 1.5 percentage points,
(D) for 1998, 0.5 percentage point, and
(E) for each year thereafter, 0 percentage
points.
(d) AGGREGATE MEDICARE AND NONMEDICARE EX-
PENDITURES DEFINED.—
(1) AGGREGATE MEDICARE EXPENDITURES.—
In this Act, the term ‘‘aggregate medicare expendi-
tures’’ means, with respect to health care services or
a class of services, expenditures made under the
medicare program with respect to the provision of
such services or class of services, and also includes
receipts of providers with respect to amounts pay-
able as deductibles, coinsurance, or other amounts
for which the beneficiary is liable with respect to
items and services covered under such program pro-
vided to a medicare beneficiary, and including pay-
ments made under a contract under section
1833(a)(1) or section 1876 of the Social Security
Act (other than the portion of such payments that
is attributable to administrative costs).
(2) 
AGGREGATE
NONMEDICARE
EXPENDI-
TURES.—
(A) IN GENERAL.—Subject to the succeed-
ing provisions of this paragraph, in this Act,
the term ‘‘aggregate nonmedicare expenditures’’
means, with respect to health care services or a
class of services, receipts of providers in the
United States with respect to the provision of
such services or class of services, excluding ag-
gregate medicare expenditures with respect to
such services or class of services.
(B) INCLUSION OF ALL PAYORS.—Except
as provided in paragraph (3), the amount of ag-
gregate nonmedicare expenditures shall be de-
termined without regard to the source of pay-
ment and shall include (as specified by the Sec-
retary) direct patient expenditures as well as
payments made by third party payors (includ-
ing Government health programs).
(3) EXCLUSIONS.—In computing aggregate
nonmedicare expenditures, there shall be excluded,
as specified by the Secretary—
(A) nonoperating revenues (such as inter-
est);
(B) receipts attributable to personal com-
fort and convenience items described in section
102(a)(5);
(C) direct payments from the Federal Gov-
ernment, from State government, from units of
local government for research to the extent un-
related (and not attributable) to the provision
of health care services;
(D) receipts attributable to the program
for the provision of hospital care and medical
services by the Department of Veterans’ Affairs
under chapter 17 of title 38, United States
Code;
(E) payments made to health care facilities
and providers of the Department of Defense
and of the Indian Health Service; and
(F) such other receipts unrelated to the
provision of health care services as the Sec-
retary specifies.
SEC. 102. CLASSES OF HEALTH CARE SERVICES.
(a) ESTABLISHMENT OF CLASSES.—
(1) IN GENERAL.—
(A) SPECIFIED SERVICES.—
(i) IN GENERAL.—Subject to subpara-
graph (B)(ii), in the case of items and
services specified in a subparagraph under
paragraph (2), all of the items and services
described in that subparagraph shall be
considered to be a ‘‘separate’’ class of
health care services.
(ii) OVERLAPPING SERVICES.—Except
as the Secretary may provide, items and
services specified in a subparagraph of
paragraph (2) shall be considered to be ex-
cluded from the subsequent subparagraphs
of that paragraph.
(B) OTHER ITEMS AND SERVICES.—
(i) IN GENERAL.—In the case of items
and services included as health care serv-
ices under paragraph (3), the Secretary
shall group such items and services into
such class or classes of health care services
as may be appropriate.
(ii) INCLUSION IN CLASSES OF SPECI-
FIED HEALTH CARE SERVICES.—In carry-
ing out clause (i), the Secretary may in-
clude an item or service described in para-
graph (3) within a class of services estab-
lished under subparagraph (A).
(2) SPECIFIED HEALTH CARE SERVICES.—Sub-
ject to paragraph (4), the items and services speci-
fied in this paragraph are as follows:
(A) Inpatient hospital services, other than
mental health services.
(B) Outpatient hospital services and ambu-
latory facility services (including renal dialysis
facility services), other than mental health serv-
ices.
(C) Diagnostic testing services (including
clinical laboratory services and x-ray services).
(D) Physicians’ services and other profes-
sional medical services, other than mental
health services.
(E) Home health services and hospice care.
(F) Rehabilitation services, such as phys-
ical therapy, occupational and speech therapy.
(G) Durable medical equipment and sup-
plies.
(H) Prescription drugs and biologicals and
insulin.
(I) Nursing facility services, including
skilled nursing facility services and intermediate
care facility services, other than mental health
services.
(J) Mental health services.
(3) ADDITIONAL ITEMS AND SERVICES.—Sub-
ject to paragraph (4), the Secretary shall specify ad-
ditional items and services (not described in para-
graph (2)) for which payment is generally made
under a private or public health plan.
(4) EXCLUSIONS.—The following items and
services shall not be considered to be health care
services and shall not be included in a class of serv-
ices under paragraph (1):
(A) Over-the-counter medications and med-
ical equipment and devices, not provided pursu-
ant to a prescription.
(B) Homemaker and home health aide
services and personal care services, and other
services described in section 1915(c)(4)(B), sec-
tion 1929(a), or section 1930(a) of the Social
Security Act.
(C) Intermediate care facility and other
custodial services for the mentally retarded.
(D) Inpatient mental health services of a
custodial nature.
(5) EXCLUSION
OF
INSTITUTIONAL
CHARGES
FOR
PERSONAL
COMFORT
AND
CONVENIENCE
ITEMS.—Payments received (and amounts charged)
by a facility which are attributable to items (such as
private rooms, telephones, and television rentals)
provided for the personal comfort and convenience of
patients shall not be counted as receipts (nor subject
to limitations on amounts that may be charged) for
purposes of this title.
(b) PUBLICATION.—
(1) IN
GENERAL.—The Secretary shall pub-
lish—
(A) by not later than April 1, 1994, pro-
posed regulations defining the health care serv-
ices and establishing the classes of services
under this section, and
(B) by not later than June 1, 1994, final
regulations defining the health care services and
establishing such classes.
(2) ITEMS
INCLUDED
IN
REGULATIONS.—In
such regulations, the Secretary shall define—
(A) the class or classes to be established
under subsection (a)(1),
(B) the services to be included within each
class, and
(C) the methods and sources of data for
computing, for purposes of this title, aggregate
medicare and nonmedicare expenditures for
services within the class.
(3) CHANGES.—
(A) NO CHANGES AUTHORIZED.—After the
Secretary has established classes of services
under paragraph (1)(B), the Secretary may not
change such classes (or the services included in
such classes), except in the case of services not
previously classified. Any such services not pre-
viously classified shall be classified within one
of the classes previously established.
(B) RECOMMENDED
CHANGES.—If the
Secretary determines that a change in the clas-
sification established under this section may be
appropriate, the Secretary shall submit to the
Congress a report proposing such change. The
Secretary shall include in the report an expla-
nation of—
(i) the rationale for such change, and
(ii) the impact of such change on the
total aggregate medicare and non-medicare
expenditures permitted for classes of serv-
ices that would be affected by the change.
(4) COMMISSION REPORTS.—
(A) INITIAL
REPORTS.—With respect to
the establishment of classes of services under
this section, each applicable Commission (as de-
fined in section 2(a)(1))—
(i) by not later than March 1, 1994,
shall report its recommendations to the
Secretary and Congress concerning such
classes, and
(ii) by not later than May 1, 1994,
shall report to the Secretary and the Con-
gress its comments concerning the classi-
fication proposed by the Secretary under
paragraph (1)(A).
(B) PERIODIC REPORTS.—Each applicable
Commission shall periodically report to Con-
gress on changes in the system of classification
under this section that should be made to pro-
mote the more efficient provision of medically
appropriate health care services.
SEC. 103. ALLOCATION OF HEALTH BUDGET BY CLASS OF
SERVICE.
(a) ALLOCATION.—
(1) IN GENERAL.—The Secretary shall allocate
the medicare and nonmedicare health expenditure
budgets under section 101 for a year among classes
of services specified under section 102.
(2) PROPORTIONAL
ALLOCATION
BASED
ON
HISTORICAL
PROJECTED
EXPENDITURES.—Subject
to section 104—
(A) MEDICARE
HEALTH
EXPENDITURE
BUDGET.—The percent of the medicare health
expenditure budget allocated to each class for a
year shall be equal to the quotient (expressed as
a percentage) of—
(i) the historical projected medicare
expenditures for the class for the year (as
determined under subsection (b)(1)), di-
vided by
(ii) the sum of such historical pro-
jected medicare expenditures for all the
classes for the year.
(B) NONMEDICARE HEALTH EXPENDITURE
BUDGET.—The percent of the nonmedicare
health expenditure budget allocated to each
class for a year shall be equal to the quotient
(expressed as a percentage) of—
(i) 
the 
historical 
projected
nonmedicare expenditures for the class for
the year (as determined under subsection
(b)(2)), divided by
(ii) the sum of such historical pro-
jected nonmedicare expenditures for all the
classes for the year.
(3) PUBLICATION.—
(A) IN GENERAL.—The Secretary shall, in
conjunction with the publication of budgets
under section 101(a)(3) for a year and by not
later than April 1 before the year, publish in
the Federal Register and report to the Congress
the allocation of the budgets among the classes
of services under this subsection.
(B) EXCEPTION
FOR 1995.—For 1995,
the Secretary shall publish and report the allo-
cation of the budgets among the classes of
services under this subsection not later than
August 1, 1994.
(b) HISTORICAL PROJECTED EXPENDITURES.—
(1) MEDICARE.—
(A) DETERMINATION.—For purposes of
subsection (a)—
(i) FOR
1994.—The historical pro-
jected medicare expenditures for a class of
services for 1994 is equal to the portion of
the amount of aggregate medicare expendi-
tures during 1993 (as determined under
section 101(b)(1)(A)) which is attributable
to the class of services, multiplied by the
medicare trend factor (described in sub-
paragraph (B)) for the class for 1994.
(ii) SUBSEQUENT YEARS.—The histor-
ical projected medicare expenditures for a
class of services for a year after 1994 is
equal to the amount of the allocation for
the class under subsection (a)(2)(A) (tak-
ing into account any adjustment under sec-
tion 104) for the preceding year multiplied
by the medicare trend factor (described in
subparagraph (B)) for the class for the
year involved.
(B) MEDICARE TREND FACTOR.—In sub-
paragraph (A), subject to section 104(b)(2), the
‘‘medicare trend factor’’, for a class of services,
is 1 plus the average annual rate of increase in
aggregate medicare expenditures for the class of
services during the 5-year period ending with
1993.
(2) NONMEDICARE.—
(A) DETERMINATION.—For purposes of
subsection (a)—
(i) FOR
1994.—The historical pro-
jected nonmedicare expenditures for a class
of services for 1994 is equal to the portion
of the amount of aggregate nonmedicare
expenditures during 1993 (as determined
under section 101(b)(2)(A)) which is at-
tributable to the class of services, multi-
plied by the nonmedicare trend factor (de-
scribed in subparagraph (B)) for the class
for 1994.
(ii) SUBSEQUENT YEARS.—The histor-
ical projected nonmedicare expenditures for
a class of services for a year after 1994 is
equal to the amount of the allocation for
the class under subsection (a)(2)(B) (tak-
ing into account any adjustment under sec-
tion 104) for the preceding year multiplied
by the medicare trend factor (described in
subparagraph (B)) for the class for the
year involved.
(B) NONMEDICARE
TREND
FACTOR.—In
subparagraph (A), subject to section 104(b)(2),
the ‘‘nonmedicare trend factor’’, for a class of
services, is 1 plus the average annual rate of in-
crease in aggregate nonmedicare expenditures
for the class of services during the 5-year pe-
riod ending with 1993.
(3) PUBLICATION
OF
TREND
FACTORS.—The
Secretary shall publish, by not later than August 1,
1994, the medicare and nonmedicare trend factors
for the different classes of services.
(c) REVIEW AND CHANGES IN ALLOCATION.—
(1) IN GENERAL.—
(A) NO
ADMINISTRATIVE
AUTHORITY
TO
CHANGE.—Except as specifically provided in
section 104 or by law enacted after the enact-
ment of this Act, the Secretary has no authority
to change the allocation or trend factors from
the allocation and trend factors provided under
this section.
(B) RECOMMENDED
CHANGES.—If the
Secretary determines that a change in the allo-
cation of a budget among classes is appropriate,
the Secretary shall submit to the Congress a re-
port proposing such change. The Secretary shall
include in the report an explanation of—
(i) the rationale for such change, and
(ii) the impact of such change on the
total aggregate medicare and nonmedicare
expenditures permitted for classes of serv-
ices that would be affected by the change.
(2) COMMISSION
REVIEW.—Each applicable
Commission shall annually review and report to Con-
gress, in its report submitted under section
102(b)(4), on the effect of the trend factors used in
the allocation of the budgets among classes of serv-
ices. Such report shall include such recommenda-
tions for appropriate adjustments in the trend fac-
tors as the applicable Commission considers appro-
priate to properly take into account at least—
(A) changes in health care technology,
(B) changes in the patterns and practices
relating to health care delivery found to be ap-
propriate,
(C) changes in the distribution of health
care services, and
(D) the special health care needs of under-
served rural and inner city populations.
SEC. 104. ADJUSTMENTS FOR CHANGES IN MEDICARE BEN-
EFITS.
(a) IN GENERAL.—With respect to a change in cov-
erage under the medicare program provided in title IV of
this Act that is effective in a year and results in an in-
crease in expenditures for a class of services under the
medicare program—
(1) the Secretary shall—
(A) increase the medicare health expendi-
ture budget under section 101 in the year by
the amount (estimated by the Secretary) of
such increase in expenditures, and
(B) decrease the nonmedicare health ex-
penditure budget under section 101 in the year
by such amount; and
odology other than on the basis of a diagnosis-
related group.
(d) TERMINATION
OF APPROVAL.—The Secretary
shall terminate approval of a State system in accordance
with section 125 if—
(1) the Secretary determines that the system no
longer meets the requirements of section 122(b)(1)
(relating to all payors), section 122(b)(3)(B) (relat-
ing to limitation on differentials for medicaid serv-
ices), or section 122(e) (relating to certain require-
ments for hospitals); or
(2) the Secretary has reason to believe that the
assurances described in any of the following sections
are not being (or will not be) met:
(A) Section 122(b)(2) (relating to equi-
table treatment of all payors).
(B) Section 122(f) (relating to special re-
quirements for hospital admissions and exclu-
sions).
(C) Section 123 (relating to limiting aggre-
gate expenditures).
SEC. 122. GENERAL CONDITIONS FOR STATE PROVIDER
PAYMENT CONTROL SYSTEMS.
(a) APPLICATION TO CLASSES OF SERVICES.—