ment that accurately reflects the patient’s cur-
rent status and that incorporates the Outcome
and Assessment Information Set (OASIS).
(B) OUTCOME AND ASSESSMENT INFORMA-
TION SET.—The term ‘‘Outcome and Assess-
ment Information Set’’ means the standard pro-
vided under the rule relating to data items that
must be used in conducting a comprehensive as-
sessment of patients.
SEC. 302. DELAY IN APPLICATION OF 15 PERCENT REDUC-
TION IN PAYMENT RATES FOR HOME HEALTH
SERVICES UNTIL 1 YEAR AFTER IMPLEMEN-
TATION OF PROSPECTIVE PAYMENT SYSTEM.
(a) CONTINGENCY REDUCTION.—Section 4603(e) of
the Balanced Budget Act of 1997 (42 U.S.C. 1395fff
note) (as amended by section 5101(c)(3) of the Tax and
Trade Relief Extension Act of 1998 (contained in division
J of Public Law 105–277)) is amended by striking ‘‘Sep-
tember 30, 2000’’ and inserting ‘‘on the date that is 12
months after the date the Secretary implements such sys-
tem’’.
(b) 
PROSPECTIVE
PAYMENT
SYSTEM.—Section
1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)) (as
amended by section 5101 of the Tax and Trade Relief Ex-
tension Act of 1998 (contained in division J of Public Law
105–277)) is amended to read as follows:
‘‘(i) IN GENERAL.—Under such sys-
tem the Secretary shall provide for com-
putation of a standard prospective pay-
ment amount (or amounts). Such amount
(or amounts) shall initially 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—
‘‘(I) for the 12-month period be-
ginning on the date the Secretary im-
plements the system, shall be equal to
the total amount that would have
been made if the system had not been
in effect; and
‘‘(II) for periods beginning after
the period described in subclause (I),
shall be equal to the total amount
that would have been made for fiscal
year 2001 if the system had not been
in effect but if the reduction in limits
described in clause (ii) had been in ef-
fect, and updated under subparagraph
(B).
Each such amount shall be standardized in
a manner that eliminates the effect of vari-
ations in relative case mix and wage levels
among different home health agencies in a
budget neutral manner consistent with the
case mix and wage level adjustments pro-
vided under paragraph (4)(A). Under the
system, the Secretary may recognize re-
gional differences or differences based
upon whether or not the services or agency
are in an urbanized area.’’.
(c) REPORT.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall submit to Congress a report
analyzing the need for the 15 percent reduction
under section 1895(b)(3)(A)(ii) of the Social Secu-
rity Act (42 U.S.C. 1395fff(b)(3)(A)(ii)), or for any
reduction, in the computation of the base payment
amounts under the prospective payment system for
home health services under section 1895 of such Act
(42 U.S.C. 1395w–29).
(2) DEADLINE.—The Secretary shall submit to
Congress the report described in paragraph (1) by
not later than the date that is 6 months after the
date the Secretary implements the prospective pay-
ment system for home health services under such
section 1895.
SEC. 303. CLARIFICATION OF SURETY BOND REQUIRE-
MENTS.
(a) HOME HEALTH AGENCIES.—Section 1861(o)(7)
(42 U.S.C. 1395x(o)(7)) is amended to read as follows:
‘‘(7) provides the Secretary with a surety
bond—
‘‘(A) effective for a period of 4 years (as
specified by the Secretary) or in the case of a
change in the ownership or control of the agen-
cy (as determined by the Secretary) during or
after such 4-year period, an additional period of
time that the Secretary determines appropriate,
such additional period not to exceed 4 years
from the date of such change in ownership or
control;
‘‘(B) in a form specified by the Secretary;
and
‘‘(C) for a year in the period described in
subparagraph (A) in an amount that is equal to
the lesser of $50,000 or 10 percent of the ag-
gregate amount of payments to the agency
under this title and title XIX for that year, as
estimated by the Secretary; and’’.
(b) COORDINATION OF SURETY BONDS.—Part A of
title XI is amended by adding at the end the following
new section:
‘‘COORDINATION OF MEDICARE AND MEDICAID SURETY
BOND PROVISIONS
‘‘SEC. 1148. In the case of a home health agency that
is subject to a surety bond under title XVIII and title
XIX, the surety bond provided to satisfy the requirement
under one such title shall satisfy the requirement under
the other such title so long as the bond applies to guar-
antee return of overpayments under both such titles.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act and in applying section 1861(o)(7) of the Social
Security Act, as amended by subsection (a), the Secretary
of Health and Human Services may take into account the
previous period for which a home health agency had a sur-
ety bond in effect under such section before such date.
SEC. 304. TECHNICAL AMENDMENT CLARIFYING APPLICA-
BLE MARKET BASKET INCREASE FOR PPS.
Section 
1895(b)(3)(B)(ii)(I) 
(42 
U.S.C.
1395fff(b)(3)(B)(ii)(I)), as added by section 4603 of BBA
(as amended by section 5101(d)(2) of the Tax and Trade
Relief Extension Act of 1998 (contained in division J of
Public Law 105–277)) is amended by striking ‘‘fiscal year
2002 or 2003’’ and inserting ‘‘each of fiscal years 2002
and 2003’’.
Subtitle B—Direct Graduate
Medical Education
SEC. 311. USE OF NATIONAL AVERAGE PAYMENT METHOD-
OLOGY IN COMPUTING DIRECT GRADUATE
MEDICAL EDUCATION (DGME) PAYMENTS.
Section 
1886(h) 
(42 
U.S.C. 
1395ww(h)) 
is
amended—
(1) by amending clause (i) of paragraph (3)(B)
to read as follows:
‘‘(i)(I) for a cost reporting period be-
ginning before October 1, 2000, the hos-
pital’s approved FTE resident amount (de-
termined under paragraph (2)) for that pe-
riod;
‘‘(II) for a cost reporting period be-
ginning on or after October 1, 2000, and
before October 1, 2004, the national aver-
age per resident amount determined under
paragraph (7) or, if greater, the sum of
the hospital-specific percentage (as defined
in subparagraph (E)) of the hospital’s ap-
proved FTE resident amount (determined
under paragraph (2)) for the period and
the national percentage (as defined in such
subparagraph) of the national average per
resident amount determined under para-
graph (7); and
‘‘(III) for a cost reporting period be-
ginning on or after October 1, 2004, the
national average per resident amount de-
termined under paragraph (7); and’’;
(2) in paragraph (3), by adding at the end the
following new subparagraph:
‘‘(E) TRANSITION TO NATIONAL AVERAGE
PER
RESIDENT
PAYMENT
SYSTEM.—For pur-
poses of subparagraph (B)(i)(II), for the cost
reporting period of a hospital beginning—
‘‘(i) during fiscal year 2001, the hos-
pital-specific percentage is 80 percent and
the national percentage is 20 percent;
‘‘(ii) during fiscal year 2002, the hos-
pital-specific percentage is 60 percent and
the national percentage is 40 percent;
‘‘(iii) during fiscal year 2003, the hos-
pital-specific percentage is 40 percent and
the national percentage is 60 percent; and
‘‘(iv) during fiscal year 2004, the hos-
pital-specific percentage is 20 percent and
the national percentage is 80 percent.’’;
and
(3) by adding at the end the following new
paragraph:
‘‘(7) 
NATIONAL
AVERAGE
PER
RESIDENT
AMOUNT.—The 
national 
average 
per 
resident
amount for a hospital for a cost reporting period be-
ginning in a fiscal year is an amount determined as
follows:
‘‘(A) DETERMINATION OF HOSPITAL SIN-
GLE PER RESIDENT AMOUNT.—The Secretary
shall compute for each hospital operating an
approved graduate medical education program a
single per resident amount equal to the average
(weighted by number of full-time equivalent
residents) of the primary care per resident
amount and the non-primary care per resident
amount computed under paragraph (2) for cost
reporting periods ending during fiscal year
1997.
‘‘(B) DETERMINATION OF WAGE AND NON-
WAGE-RELATED PROPORTION OF THE SINGLE
PER RESIDENT AMOUNT.—The Secretary shall
estimate the average proportion of the single
per resident amounts computed under subpara-
graph (A) that is attributable to wages and
wage-related costs.
‘‘(C) 
STANDARDIZING
PER
RESIDENT
AMOUNTS.—The Secretary shall establish a
standardized per resident amount for each such
hospital—
‘‘(i) by dividing the single per resident
amount computed under subparagraph (A)
into a wage-related portion and a non-
wage-related portion by applying the pro-
portion determined under subparagraph
(B);
‘‘(ii) by dividing the wage-related por-
tion by the factor applied under subsection
(d)(3)(E) for discharges occurring during
fiscal year 1999 for the hospital’s area;
and
‘‘(iii) by adding the non-wage-related
portion to the amount computed under
clause (ii).
‘‘(D) DETERMINATION OF NATIONAL AV-
ERAGE.—The Secretary shall compute a na-
tional average per resident amount equal to the
average of the standardized per resident
amounts computed under subparagraph (C) for
such hospitals, with the amount for each hos-
pital weighted by the average number of full-
time equivalent residents at such hospital.
‘‘(E) APPLICATION
TO
INDIVIDUAL
HOS-
PITALS.—The Secretary shall compute for each
such hospital a per resident amount—
‘‘(i) by dividing the national average
per resident amount computed under sub-
paragraph (D) into a wage-related portion
and a non-wage-related portion by applying
the proportion determined under subpara-
graph (B);
‘‘(ii) by multiplying the wage-related
portion by the factor described in subpara-
graph (C)(ii) for the hospital’s area; and
‘‘(iii) by adding the non-wage-related
portion to the amount computed under
clause (ii).
In applying clause (ii) for a cost reporting pe-
riod beginning before October 1, 2004, the fac-
tor described in such clause shall be deemed to
be 1 for a hospital if the national average per
resident amount computed under subparagraph
(D) is less than the hospital’s approved FTE
resident amount (determined under paragraph
(2)) for the period involved and the factor de-
scribed in subparagraph (C)(ii) for the hos-
pital’s area is less than 1.
‘‘(F) INITIAL UPDATING RATE.—The Sec-
retary shall update such per resident amount
for the hospital’s cost reporting period that be-
gins during fiscal year 2001 for each such hos-
pital by the estimated percentage increase in
the consumer price index for all urban con-
sumers during the period beginning October
1997 and ending with the midpoint of the hos-
pital’s cost reporting period that begins during
fiscal year 2001.
‘‘(G) SUBSEQUENT UPDATING.—For each
subsequent cost reporting period, subject to
subparagraph (H), the national average per
resident amount for a hospital is equal to the
amount determined under this paragraph for
the previous cost reporting period updated,
through the midpoint of the period, by pro-
jecting the estimated percentage change in the
consumer price index during the 12-month pe-
riod ending at that midpoint, with appropriate
adjustments to reflect previous under-or over-
estimations under this subparagraph in the pro-
jected percentage change in the consumer price
index.
‘‘(H) TRANSITIONAL BUDGET NEUTRALITY
ADJUSTMENT.—
‘‘(i) IN
GENERAL.—If the Secretary
estimates that, as a result of the amend-
ments made by section 311 of the Medi-
care, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999, the post-
MBBRA expenditures for fiscal year 2005
will be greater or less than the pre-
MBBRA 
expenditures 
for 
that 
fiscal
year—
‘‘(I) the Secretary shall adjust
the update applied under subpara-
graph (G) in determining the national
average per resident amount for cost
reporting periods beginning during
fiscal year 2005 so that the amount of
the post-MBBRA expenditures for
those cost reporting periods is equal
to the amount of the pre-MBBRA ex-
penditures for such periods; and
‘‘(II) the Secretary shall, taking
into account the adjustment made
under subclause (I), adjust the na-
tional average per resident amount, as
applied for the portion of a cost re-
porting period beginning during fiscal
year 2004 that occur in fiscal year
2005, so that the amount of the post-
MBBRA expenditures made during
fiscal year 2005 is equal to the
amount of the pre-MBBRA expendi-
tures during such fiscal year.
‘‘(ii) DEFINITIONS.—In this subpara-
graph:
‘‘(I) 
AGGREGATE
SUBSECTION
(h)-RELATED
EXPENDITURES.—The
term ‘aggregate subsection (h)-related
expenditures’ means, with respect to
cost reporting periods beginning dur-
ing a fiscal year or with respect to a
fiscal year, the aggregate expenditures
under this title for such periods or fis-
cal year, respectively, which are at-
tributable to the operation of this sub-
section.
‘‘(II) 
PRE-MBBRA
EXPENDI-
TURES.—The term ‘pre-MBBRA ex-
penditures’ means aggregate sub-
section (h)-related expenditures deter-
mined as if the amendments made by
section 311 of the Medicare, Medicaid,
and SCHIP Balanced Budget Refine-
ment Act of 1999 had not been en-
acted.
‘‘(III) 
POST-MBBRA
EXPENDI-
TURES.—The term ‘post-MBBRA ex-
penditures’ means aggregate sub-
section (h)-related expenditures deter-
mined taking into account the amend-
ments made by section 311 of the
Medicare, Medicaid, and SCHIP Bal-
anced Budget Refinement Act of
1999.’’.
SEC. 312. INITIAL RESIDENCY PERIOD FOR CHILD NEU-
ROLOGY RESIDENCY TRAINING PROGRAMS.
(a) IN GENERAL.—Section 1886(h)(5)(F) (42 U.S.C.
1395ww(h)(5)(F)) is amended—
(1) in clause (i) by striking ‘‘clause (ii)’’ and in-
serting ‘‘clause (ii) or (iii)’’;
(2) in clause (i), by striking ‘‘and’’ at the end;
(3) in clause (ii), by striking the period at the
end and inserting ‘‘, and’’; and
(4) by inserting after clause (ii), the following
new clause:
‘‘(iii) a period, of not more than three
years, during which an individual is in a
child neurology residency program, shall be
treated as part of the initial residency pe-
riod, but shall not be counted against any
limitation on the initial residency period.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply on and after July 1, 2000, to resi-
dency programs that began before, on, or after the date
of the enactment of this Act.
(c) MEDPAC REPORT.—The Medicare Payment Ad-
visory Commission shall include in its report submitted to
Congress in March of 2001 recommendations on whether
there should be an extension of the initial residency period
under section 1886(h)(5)(F) of the Social Security Act
(42 U.S.C. 1395ww(h)(5)(F)) for other residency training
programs in a specialty requiring preliminary years of
study in another specialty.
Subtitle C—Other
SEC. 321. GAO STUDY ON GEOGRAPHIC RECLASSIFICATION.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study of the current laws
and regulations for geographic reclassification of hospitals
to determine whether such reclassification is appropriate
for purposes of applying wage indices under the Medicare
program and whether it results in more accurate payments
for all hospitals. Such study shall examine data on the
number of hospitals that are reclassified and their special
designation status in determining payments under the
Medicare program. The study shall evaluate—
(1) the magnitude of the effect of geographic
reclassification on rural hospitals that do not reclas-
sify;
(2) whether the current thresholds used in geo-
graphic reclassification reclassify hospitals to the ap-
propriate labor markets;
(3) the effect of eliminating geographic reclassi-
fication through use of the occupational mix data;
(4) the group reclassification policy;
(5) changes in the number of reclassifications
and the compositions of the groups;
(6) the effect of State-specific budget neutrality
compared to national budget neutrality; and
(7) whether there are sufficient controls over
the intermediary evaluation of the wage data re-
ported by hospitals.
(b) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Comptroller General
of the United States shall submit to Congress a report
on the study conducted under subsection (a).
SEC. 322. MEDPAC STUDY ON MEDICARE PAYMENT FOR
NON-PHYSICIAN 
HEALTH 
PROFESSIONAL
CLINICAL TRAINING IN HOSPITALS.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission shall conduct a study on Medicare payment
policy with respect to professional clinical training of dif-
ferent classes of non-physician health care professionals
(such as nurses,nurse practitioners, allied health profes-
sionals, physician assistants, and psychologists) and the
basis for any differences in treatment among such classes.
(b) REPORT.—The Commission shall submit a report
to Congress on the study conducted under subsection (a)
not later than 18 months after the date of the enactment
of this Act.
100
TITLE IV—RURAL PROVIDER
PROVISIONS
SEC. 401. PERMITTING RECLASSIFICATION OF CERTAIN
URBAN HOSPITALS AS RURAL HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8) (42 U.S.C.
1395ww(d)(8)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E)(i) For purposes of this subsection, not later
than 60 days after the receipt of an application from a
subsection (d) hospital described in clause (ii), the Sec-
retary shall treat the hospital as being located in the rural
area (as defined in such paragraph (2)(D)) of the State
in which the hospital is located.
‘‘(ii) For purposes of clause (i), a subsection (d) hos-
pital described in this clause is a subsection (d) hospital
that is located in an urban area (as defined in paragraph
(2)(D)) and satisfies any of the following criteria:
‘‘(I) The hospital is located in a rural census
tract of a metropolitan statistical area (as deter-
mined under the Goldsmith Modification, as pub-
lished in the Federal Register on February 27, 1992
(57 Fed. Reg. 6725)).
‘‘(II) The hospital is located in an area des-
ignated by any law or regulation of such State as a
101
rural area (or is designated by such State as a rural
hospital).
‘‘(III) The hospital would qualify as a rural or
regional or national referral center under paragraph
(5)(C) or as a sole community hospital under para-
graph (5)(D) if the hospital were located in a rural
area.
‘‘(IV) The hospital meets such other criteria as
the Secretary may specify.’’.
(b) CONFORMING CHANGES.—(1) Section 1833(t)
(42 U.S.C. 1395l(t)), as amended by sections 211 and
212, is further amended by adding at the end the following
new paragraph:
‘‘(13) MISCELLANEOUS PROVISIONS.—
‘‘(A) APPLICATION OF RECLASSIFICATION
OF CERTAIN HOSPITALS.—If a hospital is being
treated as being located a rural under section
1886(d)(8)(E), that hospital shall be treated
under this subsection as being located in that
rural area.’’.
(2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–
4(c)(2)(B)(i)) is amended by inserting ‘‘or is treated as
being located in a rural area pursuant to section
1886(d)(8)(E)’’ after ‘‘section 1886(d)(2)(D))’’.
102
(c) EFFECTIVE DATE.—The amendments made by
this section shall become effective on January 1, 2000.
SEC. 402. UPDATE OF STANDARDS APPLIED FOR GEO-
GRAPHIC RECLASSIFICATION FOR CERTAIN
HOSPITALS.
(a) IN GENERAL.—Section 1886(d)(8)(B) (42 U.S.C.
1395ww(d)(8)(B)) is amended—
(1) by inserting ‘‘(i)’’ after ‘‘(B)’’;
(2) by striking ‘‘published in the Federal Reg-
ister on January 3, 1980’’ and inserting ‘‘described
in clause (ii)’’; and
(3) by adding at the end the following new
clause:
‘‘(ii) The standards described in this clause for cost
reporting periods beginning in a fiscal year—
‘‘(I) before fiscal year 2003, are the standards
published in the Federal Register on January 3,
1980, or, at the election of the hospital with respect
to fiscal years 2001 and 2002, standards so pub-
lished on March 30, 1990; and
‘‘(II) after fiscal year 2002, are the standards
published in the Federal Register by the Director of
the Office of Management and Budget based on the
most recent available decennial population data.
103
Subparagraphs (C) and (D) shall not apply with respect
to the application of subclause (I).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply with respect to discharges occurring
during cost reporting periods beginning on or after Octo-
ber 1, 1999.
SEC. 403. IMPROVEMENTS IN THE CRITICAL ACCESS HOS-
PITAL (CAH) PROGRAM.
(a) APPLYING 96-HOUR LIMIT ON A AVERAGE AN-
NUAL BASIS.—
(1) IN
GENERAL.—Section 1820(c)(2)(B)(iii)
(42 U.S.C. 1395i–4(c)(2)(B)(iii)), as added by sec-
tion 4201(a) of BBA, is amended by striking ‘‘for
a period not to exceed 96 hours’’ and all that follows
and inserting ‘‘for a period that does not exceed, as
determined on an annual, average basis, 96 hours
per patient;’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) takes effect on the date of the en-
actment of this Act.
(b) PERMITTING FOR-PROFIT HOSPITALS TO QUAL-
IFY
FOR DESIGNATION
AS
A CRITICAL ACCESS HOS-
PITAL.—Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i–
4(c)(2)(B)(i)), as added by section 4201(a) of BBA, is
104
amended in the matter preceding subclause (I), by striking
‘‘nonprofit or public hospital’’ and inserting ‘‘hospital’’.
(c) ALLOWING CLOSED OR DOWNSIZED HOSPITALS
TO CONVERT TO CRITICAL ACCESS HOSPITALS.—Section
1820(c)(2) (42 U.S.C. 1395i–4(c)(2)), as added by section
4201(a) of BBA, is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B), (C),
and (D)’’; and
(2) by adding at the end the following new sub-
paragraphs:
‘‘(C) RECENTLY
CLOSED
FACILITIES.—A
State may designate a facility as a critical ac-
cess hospital if the facility—
‘‘(i) was a hospital that ceased oper-
ations on or after the date that is 10 years
before the date of the enactment of this
subparagraph; and
‘‘(ii) as of the effective date of such
designation, meets the criteria for designa-
tion under subparagraph (B).
‘‘(D) DOWNSIZED
FACILITIES.—A State
may designate a health clinic or a health center
(as defined by the State) as a critical access
hospital if such clinic or center—
105
‘‘(i) is licensed by the State as a
health clinic or a health center;
‘‘(ii) 
was 
a 
hospital 
that 
was
downsized to a health clinic or health cen-
ter; and
‘‘(iii) as of the effective date of such
designation, meets the criteria for designa-
tion under subparagraph (B).’’.
(d) ALL-INCLUSIVE PAYMENT OPTION
FOR OUT-
PATIENT CRITICAL ACCESS HOSPITAL SERVICES.—
(1) IN GENERAL.—Section 1834(g) (42 U.S.C.
1395m(g)), as added by section 4201(c)(5) of BBA,
is amended to read as follows:
‘‘(g) PAYMENT FOR OUTPATIENT CRITICAL ACCESS
HOSPITAL SERVICES.—
‘‘(1) ELECTION OF CAH.—At the election of a
critical access hospital, the amount of payment for
outpatient critical access hospital services under this
part shall be determined under paragraph (2) or (3),
such amount determined under either paragraph
without regard to the amount of the customary or
other charge.
‘‘(2) COST-BASED HOSPITAL OUTPATIENT SERV-
ICE PAYMENT PLUS FEE SCHEDULE FOR PROFES-
SIONAL SERVICES.—If a hospital elects this para-
106
graph to apply, there shall be paid amounts equal to
the sum of the following, less the amount that such
hospital may charge as described in section
1866(a)(2)(A):
‘‘(A) FACILITY FEE.—With respect to fa-
cility services, not including any services for
which payment may be made under subpara-
graph (B), the reasonable costs of the critical
access hospital in providing such services.
‘‘(B) FEE SCHEDULE FOR PROFESSIONAL
SERVICES.—With respect to professional serv-
ices otherwise included within outpatient critical
access hospital services, such amounts as would
otherwise be paid under this part if such serv-
ices were not included in outpatient critical ac-
cess hospital services.
‘‘(3) ALL-INCLUSIVE RATE.—If a hospital elects
this paragraph to apply, with respect to both facility
services and professional services, there shall be paid
amounts equal to the reasonable costs of the critical
access hospital in providing such services, less the
amount that such hospital may charge as described
in section 1866(a)(2)(A).’’.
107
(2) EFFECTIVE DATE.—The amendment made
by subsection (a) shall apply for cost reporting peri-
ods beginning on or after October 1, 1999.
(e) ELIMINATION OF COINSURANCE FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS FURNISHED BY A CRIT-
ICAL ACCESS HOSPITAL ON AN OUTPATIENT BASIS.—
(1) IN GENERAL.—Section 1833(a)(1)(D) (42
U.S.C. 1395l(a)(1)(D)) is amended by inserting ‘‘or
which are furnished on an outpatient basis by a crit-
ical access hospital’’ after ‘‘on an assignment-related
basis’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after the date of the enactment of this Act.
(f) PARTICIPATION IN SWING BED PROGRAM.—Sec-
tion 1883 (42 U.S.C. 1395tt) is amended—
(1) in subsection (a)(1), by striking ‘‘(other
than a hospital which has in effect a waiver under
subparagraph (A) of the last sentence of section
1861(e))’’; and
(2) in subsection (c), by striking ‘‘, or during
which there is in effect for the hospital a waiver
under subparagraph (A) of the last sentence of sec-
tion 1861(e)’’.
108
SEC. 404. FIVE-YEAR EXTENSION OF MEDICARE DEPEND-
ENT HOSPITAL (MDH) PROGRAM.
(a) EXTENSION OF PAYMENT METHODOLOGY.—Sec-
tion 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)), as
amended by section 4204(a)(1) of BBA, is amended—
(1) in clause (i), by striking ‘‘and before Octo-
ber 1, 2001,’’ and inserting ‘‘and before October 1,
2006’’; and
(2) in clause (ii)(II), by striking ‘‘and before
October 1, 2001,’’ and inserting ‘‘and before Octo-
ber 1, 2006’’.
(b) CONFORMING AMENDMENTS.—
(1) EXTENSION OF TARGET AMOUNT.—Section
1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)), as
amended by section 4204(a)(2) of BBA, is
amended—
(A) in the matter preceding clause (i), by
striking ‘‘and before October 1, 2001,’’ and in-
serting ‘‘and before October 1, 2006’’; and
(B) in clause (iv), by striking ‘‘during fis-
cal year 1998 through fiscal year 2000’’ and in-
serting ‘‘during fiscal year 1998 through fiscal
year 2005’’.
(2) PERMITTING HOSPITALS TO DECLINE RE-
CLASSIFICATION.—Section 13501(e)(2) of Omnibus
Budget Reconciliation Act of 1993 (42 U.S.C.
109
1395ww note), as amended by section 4204(a)(3) of
BBA, is amended by striking ‘‘or fiscal year 2000’’
and inserting ‘‘or fiscal year 2000 through fiscal
year 2005’’.
SEC. 405. REBASING FOR CERTAIN SOLE COMMUNITY HOS-
PITALS.
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as
amended by sections 4413 and 4414 of BBA, is
amended—
(1) in subparagraph (C), by inserting ‘‘subject
to subparagraph (I)’’ before ‘‘the term ‘target
amount’ means’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(I)(i) For cost reporting periods beginning on or
after October 1, 2000, in the case of a sole community
hospital that for its cost reporting period beginning during
1999 is paid on the basis of the target amount applicable
to the hospital under subparagraph (C) and that elects
(in a form and manner determined by the Secretary) this
subparagraph to apply to the hospital, there shall be sub-
stituted for the base cost reporting period described in
subparagraph (C) the rebased target amount determined
under this subparagraph.
110
‘‘(ii) For purposes of clause (i), the rebased target
amount applicable to a hospital making an election under
this subparagraph is equal to the sum of the following:
‘‘(I) With respect to discharges occurring in fis-
cal year 2001, 75 percent of the target amount ap-
plicable to the hospital under subparagraph (C)
(hereinafter in this subparagraph referred to as the
‘subparagraph (C) target amount’) and 25 percent
of the amount of the allowable operating costs of in-
patient hospital services (as defined in subsection
(a)(4)) recognized under this title for the hospital
for the 12-month cost reporting period beginning
during fiscal year 1996 (hereinafter in this subpara-
graph referred to as the ‘rebased target amount’),
increased by the applicable percentage increase
under subparagraph (B)(iv).
‘‘(II) With respect to discharges occurring in
fiscal year 2002, 50 percent of the subparagraph (C)
target amount and 50 percent of the rebased target
amount, increased by the applicable percentage in-
crease under subparagraph (B)(iv).
‘‘(III) With respect to discharges occurring in
fiscal year 2003, 25 percent of the subparagraph (C)
target amount and 75 percent of the rebased target
111
amount, increased by the applicable percentage in-
crease under subparagraph (B)(iv).
‘‘(IV) With respect to discharges occurring in
fiscal year 2003 or any subsequent fiscal year, 100
percent of the rebased target amount, increased by
the applicable percentage increase under subpara-
graph (B)(iv).’’.
SEC. 406. INCREASED FLEXIBILITY IN PROVIDING GRAD-
UATE PHYSICIAN TRAINING IN RURAL AREAS.
(a) PERMITTING 30 PERCENT EXPANSION IN CUR-
RENT GME TRAINING PROGRAMS FOR HOSPITALS LO-
CATED IN RURAL AREAS.—
(1) PAYMENT FOR DIRECT GRADUATE MEDICAL
EDUCATION
COSTS.—Section 1886(h)(4)(F) (42
U.S.C. 1395ww(h)(4)(F)), as added by section 4623
of BBA, is amended by inserting ‘‘(or, 130 percent
of such number in the case of a hospital located in
a rural area)’’ after ‘‘may not exceed the number’’.
(2) PAYMENT FOR INDIRECT GRADUATE MED-
ICAL EDUCATION COSTS.—Section 1886(d)(5)(B)(v)
(42 U.S.C. 1395ww(d)(5)(B)(v)), as added by sec-
tion 4621(b)(1) of BBA, is amended by inserting
‘‘(or, 130 percent of such number in the case of a
hospital located in a rural area)’’ after ‘‘may not ex-
ceed the number’’.
112
(3) EFFECTIVE DATES.—(A) The amendment
made by paragraph (1) applies to cost reporting pe-
riods beginning on or after October 1, 1999.
(B) The amendment made by paragraph (2) ap-
plies to discharges occurring on or after October 1,
1999.
(b) SPECIAL RULE
FOR NON-RURAL FACILITIES
SERVING RURAL AREAS.—
(1) IN GENERAL.—Section 1886(h)(4)(H) (42
U.S.C. 1395ww(h)(4)(H)), as added by section 4623
of BBA, is amended by adding at the end the fol-
lowing new clause:
‘‘(iv) NON-RURAL
HOSPITALS
OPER-
ATING
TRAINING
PROGRAMS
IN
UNDER-
SERVED RURAL AREAS.—In the case of a
hospital that is not located in a rural area
but establishes separately accredited ap-
proved medical residency training pro-
grams (or rural tracks) in an underserved
rural area or has an accredited training
program with an integrated rural track,
the Secretary shall adjust the limitation
under subparagraph (F) in an appropriate
manner insofar as it applies to such pro-
grams in such underserved rural areas in
113
order to encourage the training of physi-
cians in underserved rural areas.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) applies with respect to—
(A) payments to hospitals under section
1886(h) of the Social Security Act (42 U.S.C.
1395ww(h)) for cost reporting periods begin-
ning on or after October 1, 1999; and
(B) payments to hospitals under section
1886(d)(5)(B)(v) of such Act (42 U.S.C.
1395ww(d)(5)(B)(v)) for discharges occurring
on or after October 1, 1999.
SEC. 407. ELIMINATION OF CERTAIN RESTRICTIONS WITH
RESPECT TO HOSPITAL SWING BED PRO-
GRAM.
(a) ELIMINATION
OF REQUIREMENT
FOR STATE
CERTIFICATE
OF NEED.—Section 1883(b) (42 U.S.C.
1395tt(b)) is amended to read as follows:
‘‘(b) The Secretary may not enter into an agreement
under this section with any hospital unless, except as pro-
vided under subsection (g), the hospital is located in a
rural area and has less than 100 beds.’’.
(b) ELIMINATION OF SWING BED RESTRICTIONS ON
CERTAIN HOSPITALS WITH MORE THAN 49 BEDS.—Sec-
tion 1883(d) (42 U.S.C. 1395tt(d)) is amended—
114
(1) by striking paragraphs (2) and (3); and
(2) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date that is the first day
after the expiration of the transition period under section
1888(e)(2)(E) of the Social Security Act (42 U.S.C.
1395yy(e)(2)(E)), as added by section 4432(a) of BBA,
for payments for covered skilled nursing facility services
under the Medicare program.
SEC. 408. GRANT PROGRAM FOR RURAL HOSPITAL TRANSI-
TION TO PROSPECTIVE PAYMENT.
Section 1820(g) (42 U.S.C. 1395i–4(g)), as added by
section 4201(a) of BBA, is amended by adding at the end
the following new paragraph:
‘‘(3) UPGRADING DATA SYSTEMS.—
‘‘(A) GRANTS
TO
HOSPITALS.—The Sec-
retary may award grants to hospitals that have
submitted applications in accordance with sub-
paragraph (C) to assist eligible small rural hos-
pitals in meeting the costs of implementing data
systems required to meet requirements estab-
lished under the Medicare program pursuant to
amendments made by the Balanced Budget Act
of 1997.
115
‘‘(B) ELIGIBLE
SMALL
RURAL
HOSPITAL
DEFINED.—For purposes of this paragraph, the
term ‘eligible small rural hospital’ means a non-
Federal, short-term general acute care hospital
that—
‘‘(i) is located in a rural area (as de-
fined for purposes of section 1886(d)); and
‘‘(ii) has less than 50 beds.
‘‘(C) APPLICATION.—A hospital seeking a
grant under this paragraph shall submit an ap-
plication to the Secretary on or before such
date and in such form and manner as the Sec-
retary specifies.
‘‘(D) AMOUNT OF GRANT.—A grant to a
hospital under this paragraph may not exceed
$50,000.
‘‘(E) USE OF FUNDS.—A hospital receiving
a grant under this paragraph may use the
funds for the purchase of computer software
and hardware and for the education and train-
ing of hospital staff on computer information
systems and costs related to the implementation
of prospective payment systems.
‘‘(F) REPORT.—
116
‘‘(i) INFORMATION.—A hospital re-
ceiving a grant under this section shall fur-
nish the Secretary with such information
as the Secretary may require to evaluate
the project for which the grant is made
and to ensure that the grant is expended
for the purposes for which it is made.
‘‘(ii) REPORTING.—
‘‘(I) 
INTERIM
REPORTS.—The
Secretary shall report to the Com-
mittee on Ways and Means of the
House of Representatives and the
Committee on Finance of the Senate
at least annually on the grant pro-
gram established under this section,
including in such report information
on the number of grants made, the
nature of the projects involved, the ge-
ographic distribution of grant recipi-
ents, and such other matters as the
Secretary deems appropriate.
‘‘(II) FINAL REPORT.—The Sec-
retary shall submit a final report to
such committees not later than 180
days after the completion of all of the
117
projects for which a grant is made
under this section.’’.
SEC. 409. MEDPAC STUDY OF RURAL PROVIDERS.
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on rural providers fur-
nishing items and services for which payment is made
under title XVIII of the Social Security Act. Such study
shall examine and evaluate the adequacy and appropriate-
ness of the categories of special payments (and payment
methodologies) established for rural hospitals under the
Medicare program, and their impact on beneficiary access
and quality of health care services.
(b) REPORT.—By not later than 18 months after the
date of the enactment of this Act, the Medicare Payment
Advisory Commission shall submit to Congress a report
on the study conducted under subsection (a).
SEC. 410. EXPANSION OF ACCESS TO PARAMEDIC INTER-
CEPT SERVICES IN RURAL AREAS.
(a) EXPANSION
OF
PAYMENT
AREAS.—Section
4531(c) of BBA (42 U.S.C. 1395x(s)(7) note; 111 Stat.
452) is amended by adding at the end the following flush
sentence:
‘‘For purposes of this subsection, an area shall be treated
as a rural area if it is designated as a rural area by any
law or regulation of the State or if it is located in a rural
118
census tract of a metropolitan statistical area (as deter-
mined under the Goldsmith Modification, as published in
the Federal Register on February 27, 1992 (57 Fed. Reg.
6725)).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on January 1, 2000, and ap-
plies to paramedic intercept services furnished on or after
such date.
TITLE 
V—PROVISIONS 
RELAT-
ING 
TO 
PART 
C
(MEDICARE+CHOICE 
PRO-
GRAM)
Subtitle A—Medicare+Choice
SEC. 501. PHASE-IN OF NEW RISK ADJUSTMENT METHOD-
OLOGY.
Section 
1853(a)(3)(C) 
(42 
U.S.C. 
1395w–
23(a)(3)(C)) is amended—
(1) by redesignating the first sentence as clause
(i) with the heading ‘‘IN GENERAL.—’’ and appro-
priate indentation; and
(2) by adding at the end the following new
clause:
‘‘(ii) PHASE-IN.—Such risk adjust-
ment methodology shall be implemented in
a phased-in manner so that the method-
119
ology insofar as it makes adjustments for
health status based on clinical data applies
to—
‘‘(I) not more than 10 percent of
the payment amount in 2000 and
2001;
‘‘(II) not more than 20 percent
of such amount in 2002;
‘‘(III) not more than 30 percent
of such amount in 2003; and
‘‘(IV) 
100 
percent 
of 
such
amount in any subsequent year (at
which time the risk adjustment meth-
odology should reflect data from mul-
tiple settings).’’.
SEC. 502. ENCOURAGING OFFERING OF MEDICARE+CHOICE
PLANS IN AREAS WITHOUT PLANS.
Section 1853 (42 U.S.C. 1395w–23) is amended—
(1) in subsection (a)(1), by striking ‘‘sub-
sections (e) and (f)’’ and inserting ‘‘subsections (e),
(g), and (i)’’;
(2) in subsection (c)(5), by inserting ‘‘(other
than those attributable to subsection (i))’’ after
‘‘payments under this part’’; and
120
(3) by adding at the end the following new sub-
section:
‘‘(i) NEW ENTRY BONUS.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2)
and (3), in the case of Medicare+Choice payment
area in which a Medicare+Choice plan has not been
offered since 1997 (or in which all organizations
that offered a plan since such date have filed notice
with the Secretary, as of October 13, 1999, that
they will not be offering such a plan as of January
1, 2000), the amount of the monthly payment other-
wise made under this subsection shall be increased—
‘‘(A) only for the first 12 months in which
any Medicare+Choice plan is offered in the
area, by 5 percent of the total monthly payment
otherwise computed for such payment area; and
‘‘(B) only for the subsequent 12 months,
by 3 percent of the total monthly payment oth-
erwise computed for such payment area.
‘‘(2) PERIOD OF APPLICATION.—Paragraph (1)
shall only apply to payment for Medicare+Choice
plans which are first offered in a Medicare+Choice
payment area during the 2-year period beginning
with January 1, 2000.
121
‘‘(3) LIMITATION TO ORGANIZATION OFFERING
FIRST PLAN IN AN AREA.—Paragraph (1) shall only
apply to payment to the first Medicare+Choice orga-
nization that offers a Medicare+Choice plan in each
Medicare+Choice payment area, except that if more
than one such organization first offers such a plan
in an area on the same date, paragraph (1) shall
apply to payment for such organizations.
‘‘(4) CONSTRUCTION.—Nothing in paragraph
(1) shall be construed as affecting the calculation of
the annual Medicare+Choice capitation rate for any
payment area under subsection (c) or as applying to
payment for any period not described in such para-
graph.
‘‘(5) OFFERED DEFINED.—In this subsection,
the term ‘offered’ means, with respect to a
Medicare+Choice plan as of a date, that a
Medicare+Choice eligible individual may enroll with
the plan on that date, regardless of when the enroll-
ment takes effect or the individual obtain benefits
under the plan.’’.
SEC. 503. MODIFICATION OF 5-YEAR RE-ENTRY RULE FOR
CONTRACT TERMINATIONS.
(a) IN GENERAL.—Section 1857(c)(4) (42 U.S.C.
1395w–27(c)(4)) is amended—
122
(1) by inserting ‘‘as provided in paragraph (2)
and except’’ after ‘‘except’’;
(2) by redesignating the first sentence as a sub-
paragraph (A) with an appropriate indentation and
the heading ‘‘IN GENERAL.—’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) 
EARLIER
RE-ENTRY
PERMITTED
WHERE CHANGE IN PAYMENT POLICY AND NO
MORE THAN ONE OTHER PLAN AVAILABLE.—
Subparagraph (A) shall not apply with respect
to the offering by a Medicare+Choice organiza-
tion 
of 
a 
Medicare+Choice 
plan 
in 
a
Medicare+Choice payment area if—
‘‘(i) during the 6-month period begin-
ning on the date the organization notified
the Secretary of the intention to terminate
the most recent previous contract, there
was a legislative change enacted (or a reg-
ulatory change adopted) that has the effect
of increasing payment rates under section
1853 for that Medicare+Choice payment
area; and
‘‘(ii) at the time the organization noti-
fies the Secretary of its intent to enter into
123
a contract to offer such a plan in the area,
there 
is 
no 
more 
than 
one
Medicare+Choice plan offered in the
area.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to contract terminations occur-
ring before, on, or after the date of the enactment of this
Act.
SEC. 504. CONTINUED COMPUTATION AND PUBLICATION
OF AAPCC DATA.
(a) IN
GENERAL.—Section 1853(b) (42 U.S.C.
1395w–23(b)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) CONTINUED COMPUTATION AND PUBLICA-
TION
OF
COUNTY-SPECIFIC
PER
CAPITA
FEE-FOR-
SERVICE
EXPENDITURE
INFORMATION.—The Sec-
retary, through the Chief Actuary of the Health
Care Financing Administration, shall provide for the
computation and publication, on an annual basis at
the 
time 
of 
publication 
of 
the 
annual
Medicare+Choice capitation rates, of information on
the level of the average annual per capita costs (de-
scribed 
in 
section 
1876(a)(4)) 
for 
each
Medicare+Choice payment area.’’.
124
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act and apply to publications of the annual
Medicare+Choice capitation rates made on or after such
date.
SEC. 505. CHANGES IN MEDICARE+CHOICE ENROLLMENT
RULES.
(a) PERMITTING ENROLLMENT
IN ALTERNATIVE
MEDICARE+CHOICE PLANS AND MEDIGAP COVERAGE IN
CASE
OF
INVOLUNTARY
TERMINATION
OF
MEDICARE+CHOICE ENROLLMENT.—
(1) IN
GENERAL.—Section 1851(e)(4) (42
U.S.C. 1395w–21(e)(4)) is amended by striking sub-
paragraph (A) and inserting the following:
‘‘(A)(i) the certification of the organization
or plan under this part has been terminated, or
the organization or plan has notified the indi-
vidual or the Secretary of an impending termi-
nation of such certification; or
‘‘(ii) the organization has terminated or
otherwise discontinued providing the plan in the
area in which the individual resides, or has no-
tified the individual or Secretary of an impend-
ing termination or discontinuation of such
plan;’’.
125
(2) CONFORMING MEDIGAP AMENDMENT.—Sec-
tion 
1882(s)(3) 
(42 
U.S.C. 
1395ss(s)(3)) 
is
amended—
(A) in subparagraph (A), by inserting ‘‘,
subject to subparagraph (E),’’ after ‘‘in the
case of an individual described in subparagraph
(B) who’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(E)(i) An individual described in subparagraph
(B)(ii) may elect to apply subparagraph (A) by sub-
stituting, for the date of termination of enrollment, the
date on which the individual or Secretary was notified by
the Medicare+Choice organization of the impending ter-
mination or discontinuance of the Medicare+Choice plan
in the area in which the individual resides, but only if the
individual disenrolls from the plan as a result of such noti-
fication.
‘‘(ii) In the case of an individual making such an elec-
tion, the issuer involved shall accept the application of the
individual submitted before the date of termination of en-
rollment, but the coverage under subparagraph (A) shall
only become effective upon termination of coverage under
the Medicare+Choice plan involved.’’.
127
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) CONTINUATION
OF
ENROLLMENT
PERMITTED WHERE SERVICE CHANGED.—Not-
withstanding 
subparagraph 
(B), 
if 
a
Medicare+Choice organization eliminates from
its service area a geographic area that was pre-
viously within its service area, the organization
may elect to offer individuals residing in all or
portions of the affected geographic area who
would otherwise be ineligible to continue enroll-
ment the option to continue enrollment in a
Medicare+Choice plan it offers so long as—
‘‘(i) the enrollee agrees to receive the
full range of basic benefits (excluding
emergency and urgently needed care) ex-
clusively at facilities designated by the or-
ganization within the plan service area;
and
‘‘(ii) 
there 
is 
no 
other
Medicare+Choice plan offered in the area
in which the enrollee resides at the time of
the organization’s election.’’.
(d) EFFECTIVE DATE.—The amendments made by
subsections (b) and (c) apply as if included in the enact-
128
ment of BBA and the amendments made by subsection
(c) apply to eliminations of geographic areas from a serv-
ice area that occur before, on, or after the date of the
enactment of this Act.
SEC. 506. ALLOWING VARIATION IN PREMIUM WAIVERS
WITHIN 
A 
SERVICE 
AREA 
IF
MEDICARE+CHOICE PAYMENT RATES VARY
WITHIN THE AREA.
(a) IN
GENERAL.—Section 1854(c) (42 U.S.C.
1395w–24(c)) is amended—
(1) by striking ‘‘The’’ and inserting ‘‘Subject to
paragraph (2), the’’;
(2) by redesignating the first sentence as a
paragraph (1) with an appropriate indentation and
the heading ‘‘IN GENERAL.—’’; and
(3) by adding at the end the following new
paragraph:
‘‘(2) VARIATION
IN
PREMIUM
WAIVER
PER-
MITTED.—A Medicare+Choice organization may
waive part or all of a premium described in para-
graph (1) for one or more Medicare+Choice pay-
ment areas within its service area if the annual
Medicare+Choice capitation rates under section
1853(c) vary between such payment area and other
payment areas within such service area.’’.
129
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to premiums for contract years begin-
ning on or after January 1, 2001.
SEC. 507. DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES AND RELATED
INFORMATION.
(a) DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES
AND RELATED INFORMA-
TION.—Section 1854(a)(1) (42 U.S.C. 1395w–24(a)(1)) is
amended by striking ‘‘May 1’’ and inserting ‘‘July 1’’.
(b) ADJUSTMENT
IN INFORMATION DISCLOSURE
PROVISIONS.—Section 
1851(d)(2)(A)(ii) 
(42 
U.S.C.
1395w–21(d)(2)(A)(ii)) is amended by inserting after ‘‘in-
formation described in paragraph (4) concerning such
plans’’ the following: ‘‘, to the extent such information is
available at the time of preparation of the material for
mailing’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply with respect to information submitted
by Medicare+Choice organizations (and provided to bene-
ficiaries) for years beginning with 1999.
130
SEC. 508. TWO-YEAR EXTENSION OF MEDICARE COST CON-
TRACTS.
Section 
1876(h)(5)(B) 
(42 
U.S.C.
1395mm(h)(5)(B)) is amended by striking ‘‘2002’’ and in-
serting ‘‘2004’’.
SEC. 
509. 
MEDICARE+CHOICE 
NURSING 
AND 
ALLIED
HEALTH PROFESSIONAL EDUCATION PAY-
MENTS.
Section 1886(d)(11) (42 U.S.C. 1395ww(d)(11)) is
amended—
(1) in subparagraph (A)—
(A) by designating the portion following
‘‘IN GENERAL.—’’ as a clause (i) with the head-
ing ‘‘GRADUATE
MEDICAL
TRAINING.—’’ and
appropriate indentation; and
(B) by adding at the end the following new
clause:
‘‘(ii) NURSING AND ALLIED HEALTH
TRAINING.—For portions of cost reporting
periods occurring on or after January 1,
2000, the Secretary shall provide for an
additional payment amount for each appli-
cable discharge of any subsection (d) hos-
pital that has direct costs of approved edu-
cation activities for nurse and allied health
professional training.’’;
131
(2) in subparagraph (C)—
(A) designating the portion following ‘‘DE-
TERMINATION OF AMOUNT.—’’ as a clause (i)
with the heading ‘‘GRADUATE MEDICAL TRAIN-
ING.—’’ and appropriate indentation;
(B) by striking ‘‘under this paragraph’’
and inserting ‘‘under subparagraph (A)(i)’’;
(C) by inserting ‘‘the DGME portion (as
defined in clause (iii)) of’’ after ‘‘shall be equal
to’’; and
(D) by adding at the end the following new
clauses:
‘‘(ii) NURSING AND ALLIED HEALTH
TRAINING.—The amount of the payment
under subparagraph (A)(ii) with respect to
any applicable discharge shall be equal to
an amount specified by the Secretary in a
manner consistent with the following:
‘‘(I) The total payments under
such subparagraph in a year shall
bear the same ratio to the Secretary’s
estimate of the total payments under
subparagraph (A)(i) in the year as the
ratio (as estimated by the Secretary)
of the total payments under this title
132
for direct costs described in subpara-
graph (A)(ii) in the year bear to the
total payments under section 1886(h)
in the year; but in no case shall the
total payments under subparagraph
(A)(ii) exceed $60,000,000 in a year.
‘‘(II) The payments to different
hospitals are proportional to the direct
costs of each hospital described in
subparagraph (A)(ii).
‘‘(iii) DGME PORTION
DEFINED.—
For purposes of this subparagraph, the
‘DGME portion’ means, for a year, the
ratio of—
‘‘(I) the amount by which (aa)
the Secretary’s estimate of the total
additional payments that would be
payable under this paragraph for the
year if subparagraph (A)(ii) and
clause (ii) of this subparagraph did
not apply, exceeds (bb) the total pay-
ments in the year under subparagraph
(A)(ii), to
133
‘‘(II) the total additional pay-
ments 
estimated 
under 
subclause
(I)(aa) for the year.’’.
SEC. 510. REDUCTION IN ADJUSTMENT IN NATIONAL PER
CAPITA MEDICARE+CHOICE GROWTH PER-
CENTAGE FOR 2002.
Section 
1853(c)(6)(B)(iv) 
(42 
U.S.C. 
1395w–
23(c)(6)(B)(iv)) is amended by striking ‘‘0.5 percentage
points’’ and inserting ‘‘0.3 percentage points’’.
SEC. 511. DEEMING OF MEDICARE+CHOICE ORGANIZATION
TO MEET REQUIREMENTS.
Section 1852(e)(4) (42 U.S.C. 1395w–22(e)(4)) is
amended to read as follows:
‘‘(4) TREATMENT
OF
ACCREDITATION.—The
Secretary shall provide that a Medicare+Choice or-
ganization is deemed to meet requirements of para-
graphs (1) and (2) of this subsection and subsection
(h) (relating to confidentiality and accuracy of en-
rollee records) if the organization is accredited (and
periodically reaccredited) by a private accrediting or-
ganization under a process that the Secretary has
determined assures that the accrediting organization
applies standards that meet or exceed the standards
established under section 1856 to carry out the re-
spective requirements. The Secretary shall deter-
134
mine, within 210 days after the date the Secretary
receives an application by a private accrediting orga-
nization, whether the process of the private accred-
iting organization meets the requirements of the pre-
ceding sentence using the criteria specified in section
1865(b)(2). The Secretary shall, using the process
described 
in 
section 
1865(b), 
deem 
a
Medicare+Choice organization that is so accredited
as meeting the requirements of paragraphs (1) and
(2) of this subsection and subsection (h).’’
SEC. 512. MISCELLANEOUS CHANGES AND STUDIES.
(a) PERMITTING RELIGIOUS FRATERNAL BENEFIT
SOCIETIES TO OFFER A RANGE OF MEDICARE+CHOICE
PLANS.—Section 1859(e)(2) (42 U.S.C. 1395w–29(e)(2))
is amended in the matter preceding subparagraph (A) by
striking ‘‘section 1851(a)(2)(A)’’ and inserting ‘‘section
1851(a)(2)’’.
(b) STUDY OF ACCOUNTING FOR VA AND DOD EX-
PENDITURES FOR MEDICARE BENEFICIARIES.—The Sec-
retary of Health and Human Services, jointly with the
Secretaries of Defense and of Veterans Affairs, shall sub-
mit to Congress not later than 1 year after the date of
the enactment of this Act a report on the estimated use
of health care services furnished by the Departments of
Defense and of Veterans Affairs to Medicare beneficiaries,
135
including both beneficiaries under the original Medicare
fee-for-service program and under the Medicare+Choice
program. The report shall include an analysis of how best
to properly account for expenditures for such services in
the computation of Medicare+Choice capitation rates.
(c) PROMOTING
PROMPT
IMPLEMENTATION
OF
INFORMATICS, TELEMEDICINE, AND EDUCATION DEM-
ONSTRATION
PROJECT.—Section 4207 of BBA is
amended—
(1) in subsection (a)(1), by adding at the end
the following: ‘‘The Secretary shall make an award
for such project not later than 3 months after the
date of the enactment of the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement Act of
1999. The Secretary shall accept the proposal ad-
judged to be the best technical proposal as of such
date of the enactment without the need for addi-
tional review or resubmission of proposals.’’;
(2) in subsection (a)(2)(A), by inserting before
the period at the end the following: ‘‘that qualify as
Federally designated medically underserved areas or
health professional shortage areas at the time of en-
rollment of beneficiaries under the project’’;
136
(3) in subsection (c)(2), by striking ‘‘and the
source and amount of non-Federal funds used in the
project’’;
(4) in subsection (d)(2)(A), by striking ‘‘at a
rate of 50 percent of the costs that are reasonable
and’’ and inserting ‘‘for the costs that are related’’;
(5) in subsection (d)(2)(B)(i), by striking ‘‘(but
only in the case of patients located in medically un-
derserved areas)’’ and inserting ‘‘or at sites pro-
viding health care to patients located in medically
underserved areas’’;
(6) in subsection (d)(2)(C)(i), by striking ‘‘to
deliver medical informatics services under’’ and in-
serting ‘‘for activities related to’’; and
(7) by amending paragraph (4) of subsection
(d) to read as follows:
‘‘(4) COST-SHARING.—The project may not im-
pose cost sharing on a Medicare beneficiary for the
receipt of services under the project. Project costs
will cover all costs to patients and providers related
to participation in the project.’’.
SEC. 513. MEDPAC REPORT ON MEDICARE MSA (MEDICAL
SAVINGS ACCOUNT) PLANS.
Not later than 1 year after the date of the enactment
of this Act, the Medicare Payment Advisory Commission
137
shall submit to Congress a report on specific legislative
changes that should be made to make MSA plans a viable
option under the Medicare+Choice program.
SEC. 514. CLARIFICATION OF NONAPPLICABILITY OF CER-
TAIN PROVISIONS OF DISCHARGE PLANNING
PROCESS TO MEDICARE+CHOICE PLANS.
(a) IN
GENERAL.—Section 1861(ee)(2)(H) (42
U.S.C. 1395x(ee)(2)(H)), as added by section 4431 of
BBA, is amended—
(1) in clause (i)—
(A) by striking ‘‘not specify’’ and inserting
‘‘subject to clause (iii), not specify’’; and
(B) by striking ‘‘and’’ at the end; and
(2) in clause (ii), by striking the period at the
end and inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(iii) for individuals enrolled under a
Medicare+Choice plan, under a contract with
the Secretary under section 1857, for whom a
hospital furnishes inpatient hospital services,
the hospital may specify with respect to such
individual the provider of post-hospital home
health services or other post-hospital services
under the plan.’’.
138
Subtitle B—Managed Care
Demonstration Projects
SEC. 521. EXTENSION OF SOCIAL HEALTH MAINTENANCE
ORGANIZATION 
DEMONSTRATION 
(SHMO)
PROJECT AUTHORITY.
(a) EXTENSION.—Section 4018(b) of the Omnibus
Budget Reconciliation Act of 1987 (Public Law 100–203),
as amended by section 4014(a)(1) of BBA, is amended—
(1) in paragraph (1), by striking ‘‘December
31, 2000’’ and inserting ‘‘the date that is 18 months
after the date that the Secretary submits to Con-
gress the report described in section 4014(c) of the
Balanced Budget Act of 1997’’; and
(2) by adding at the end of paragraph (4) the
following: ‘‘Not later than 6 months after the date
the Secretary submits such final report, the Medi-
care Payment Advisory Commission shall submit to
Congress a report containing recommendations re-
garding such project.’’.
(b) SUBSTITUTION
OF AGGREGATE CAP.—Section
13567(c) of the Omnibus Budget Reconciliation Act of
1993 (Public Law 103–66), as amended by section
4014(b) of BBA, is amended to read as follows:
‘‘(c) AGGREGATE LIMIT
ON NUMBER
OF MEM-
BERS.—The Secretary of Health and Human Services
139
may not impose a limit on the number of individuals that
may participate in a project conducted under section 2355
of the Deficit Reduction Act of 1984, other than an aggre-
gate limit of not less than 324,000 for all sites.’’.
SEC. 522. EXTENSION OF MEDICARE COMMUNITY NURSING
ORGANIZATION DEMONSTRATION PROJECT.
(a) EXTENSION.—Notwithstanding any other provi-
sion of law, any demonstration project conducted under
section 4079 of the Omnibus Budget Reconciliation Act
of 1987 (Public Law 100–123) and conducted for the ad-
ditional period of 2 years as provided for under section
4019 of BBA, shall be conducted for an additional period
of 2 years.
(b) REPORT.—By not later than July 1, 2001, the
Secretary of Health and Human Services shall submit to
Congress a report describing the results of any demonstra-
tion project conducted under section 4079 of the Omnibus
Budget Reconciliation Act of 1987, and describing the
data collected by the Secretary relevant to the analysis of
the results of such project, including the most recently
available data through the end of 2000.
SEC. 523. MEDICARE+CHOICE COMPETITIVE BIDDING DEM-
ONSTRATION PROJECT.
Section 4011 of BBA is amended—
(1) in subsection (a)—
140
(A) by striking ‘‘The Secretary’’ and in-
serting the following:
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, the Secretary’’; and
(B) by adding at the end the following:
‘‘(2) DELAY IN IMPLEMENTATION.—The Sec-
retary shall not implement the project until January
1, 2002, or, if later, 6 months after the date the
Competitive Pricing Advisory Committee has sub-
mitted to Congress a report on each of the following
topics:
‘‘(A) INCORPORATION OF ORIGINAL FEE-
FOR-SERVICE
MEDICARE
PROGRAM
INTO
PROJECT.—What changes would be required in
the project to feasibly incorporate the original
fee-for-service Medicare program into the
project in the areas in which the project is oper-
ational.
‘‘(B) QUALITY
ACTIVITIES.—The nature
and extent of the quality reporting and moni-
toring activities that should be required of plans
participating in the project, the estimated costs
that plans will incur as a result of these re-
quirements, and the current ability of the
Health Care Financing Administration to col-
141
lect and report comparable data, sufficient to
support comparable quality reporting and moni-
toring activities with respect to beneficiaries en-
rolled in the original fee-for-service Medicare
program generally.
‘‘(C) RURAL PROJECT.—The current via-
bility of initiating a project site in a rural area,
given the site specific budget neutrality require-
ments of the project, and insofar as the Com-
mittee decides that the addition of such a site
is not viable, recommendations on how the
project might best be changed so that such a
site is viable.
‘‘(D) BENEFIT STRUCTURE.—The nature
and extent of the benefit structure that should
be required of plans participating in the project,
the rationale for such benefit structure, the po-
tential implications that any benefit standard-
ization requirement may have on the number of
plan choices available to a beneficiary in an
area designated under the project, the potential
implications of requiring participating plans to
offer variations on any standardized benefit
package the committee might recommend, such
that a beneficiary could elect to pay a higher
142
percentage of out-of-pocket costs in exchange
for a lower premium (or premium rebate as the
case may be), and the potential implications of
expanding the project (in conjunction with the
potential inclusion of the original fee-for-service
Medicare program) to require Medicare supple-
mental insurance plans operating in an area
designated under the project to offer a coordi-
nated and comparable standardized benefit
package.
‘‘(3) CONFORMING
DEADLINES.—Any dates
specified in the succeeding provisions of this section
shall be delayed (as specified by the Secretary) in a
manner consistent with the delay effected under
paragraph (2).’’; and
(2) in subsection (c)(1)(A)—
(A) by striking ‘‘and’’ at the end of clause
(i); and
(B) by adding at the end the following new
clause:
‘‘(iii) establish beneficiary premiums
for plans offered in such area in a manner
such that a beneficiary who enrolls in an
offered plan with a below average price (as
established by the competitive pricing
143
methodology established for such area)
may, at the plan’s election, be offered a re-
bate of some or all of the Medicare part B
premium that such individual must other-
wise pay in order to participate in a
Medicare+Choice 
plan 
under 
the
Medicare+Choice program; and’’.
SEC. 524. EXTENSION OF MEDICARE MUNICIPAL HEALTH
SERVICES DEMONSTRATION PROJECTS.
Section 9215(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended by section 6135
of the Omnibus Budget Reconciliation Act of 1989, section
13557 of the Omnibus Budget Reconciliation Act of 1993,
and section 4017 of BBA, is amended by striking ‘‘Decem-
ber 31, 2000’’ and inserting ‘‘December 31, 2001’’.
SEC. 525. MEDICARE COORDINATED CARE DEMONSTRA-
TION PROJECT.
Section 4016(e)(1)(A)(ii) of the Balanced Budget Act
of 1997 (42 U.S.C. 1395b–1 note) is amended to read
as follows:
‘‘(ii) CANCER HOSPITAL.—In the case
of the project described in subsection
(b)(2)(C), the Secretary shall provide for
the transfer from the Federal Hospital In-
surance Trust Fund and the Federal Sup-
144
plementary Insurance Trust Fund under
title XVIII of the Social Security Act (42
U.S.C. 1395i, 1395t), in such proportions
as the Secretary determines to be appro-
priate, of such funds as are necessary to
cover costs of the project, including costs
for information infrastructure and recur-
ring costs of case management services,
flexible benefits, and program manage-
ment.’’.
TITLE VI—MEDICAID
SEC. 601. MAKING MEDICAID DSH TRANSITION RULE PER-
MANENT.
(a) IN GENERAL.—Section 4721(e) of the Balanced
Budget Act of 1997 (42 U.S.C. 1396r–4 note) is
amended—
(1) in the matter before paragraph (1), by
striking ‘‘1923(g)(2)(A)’’ and ‘‘1396r–4(g)(2)(A)’’
and inserting ‘‘1923(g)(2)’’ and ‘‘1396r–4(g)(2)’’,
respectively;
(2) in paragraphs (1) and (2)—
(A) by striking ‘‘, and before July 1,
1999’’; and
146
(3) in the entry for New Mexico, by striking
‘‘5’’ and inserting ‘‘9’’; and
(4) in the entry for Wyoming, by striking ‘‘0’’
and inserting ‘‘.100’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) take effect on October 1, 1999, and applies
to expenditures made on or after such date.
SEC. 603. NEW PROSPECTIVE PAYMENT SYSTEM FOR FED-
ERALLY-QUALIFIED HEALTH CENTERS AND
RURAL HEALTH CLINICS.
(a) IN GENERAL.—Section 1902(a) of the Social Se-
curity Act (42 U.S.C. 1396a(a)) is amended—
(1) in paragraph (13)—
(A) in subparagraph (A), by adding ‘‘and’’
at the end;
(B) in subparagraph (B), by striking
‘‘and’’ at the end; and
(C) by striking subparagraph (C); and
(2) by inserting after paragraph (14) the fol-
lowing new paragraph:
‘‘(15) for payment for services described in
clause (B) or (C) of section 1905(a)(2) under the
plan in accordance with subsection (aa);’’.
147
(b) NEW PROSPECTIVE PAYMENT SYSTEM.—Section
1902 of the Social Security Act (42 U.S.C. 1396a) is
amended by adding at the end the following:
‘‘(aa) PAYMENT FOR SERVICES PROVIDED BY FED-
ERALLY-QUALIFIED
HEALTH
CENTERS
AND
RURAL
HEALTH CLINICS.—
‘‘(1) IN GENERAL.—Beginning with fiscal year
2000 and each succeeding fiscal year, the State plan
shall provide for payment for services described in
section 1905(a)(2)(C) furnished by a Federally-
qualified health center and services described in sec-
tion 1905(a)(2)(B) furnished by a rural health clinic
in accordance with the provisions of this subsection.
‘‘(2) FISCAL YEAR 2000.—Subject to paragraph
(4), for services furnished during fiscal year 2000,
the State plan shall provide for payment for such
services in an amount (calculated on a per visit
basis) that is equal to 100 percent of the costs of
the center or clinic of furnishing such services dur-
ing fiscal year 1999 which are reasonable and re-
lated to the cost of furnishing such services, or
based on such other tests of reasonableness as the
Secretary prescribes in regulations under section
1833(a)(3), or, in the case of services to which such
regulations do not apply, the same methodology used
148
under section 1833(a)(3), adjusted to take into ac-
count any increase in the scope of such services fur-
nished by the center or clinic during fiscal year
2000.
‘‘(3) FISCAL YEAR 2001 AND SUCCEEDING FIS-
CAL YEARS.—Subject to paragraph (4), for services
furnished during fiscal year 2001 or a succeeding
fiscal year, the State plan shall provide for payment
for such services in an amount (calculated on a per
visit basis) that is equal to the amount calculated for
such services under this subsection for the preceding
fiscal year—
‘‘(A) increased by the percentage increase
in the MEI (as defined in section 1842(i)(3))
applicable to primary care services (as defined
in section 1842(i)(4)) for that fiscal year; and
‘‘(B) adjusted to take into account any in-
crease in the scope of such services furnished by
the center or clinic during that fiscal year.
‘‘(4) ESTABLISHMENT OF INITIAL YEAR PAY-
MENT AMOUNT FOR NEW CENTERS OR CLINICS.—In
any case in which an entity first qualifies as a Fed-
erally-qualified health center or rural health clinic
after fiscal year 1999, the State plan shall provide
for payment for services described in section
149
1905(a)(2)(C) furnished by the center or services
described in section 1905(a)(2)(B) furnished by the
clinic in the first fiscal year in which the center or
clinic so qualifies in an amount (calculated on a per
visit basis) that is equal to 100 percent of the costs
of furnishing such services during such fiscal year in
accordance with the regulations and methodology re-
ferred to in paragraph (2). For each fiscal year fol-
lowing the fiscal year in which the entity first quali-
fies as a Federally-qualified health center or rural
health clinic, the State plan shall provide for the
payment amount to be calculated in accordance with
paragraph (3).
‘‘(5) ADMINISTRATION IN THE CASE OF MAN-
AGED CARE.—In the case of services furnished by a
Federally-qualified health center or rural health clin-
ic pursuant to a contract between the center or clinic
and a managed care entity (as defined in section
1932(a)(1)(B)), the State plan shall provide for pay-
ment to the center or clinic (at least quarterly) by
the State of a supplemental payment equal to the
amount (if any) by which the amount determined
under paragraphs (2), (3), and (4) of this subsection
exceeds the amount of the payments provided under
the contract.
150
‘‘(6) ALTERNATIVE
PAYMENT
METHODOLO-
GIES.—Notwithstanding any other provision of this
section, the State plan may provide for payment in
any fiscal year to a Federally-qualified health center
for services described in section 1905(a)(2)(C) or to
a rural health clinic for services described in section
1905(a)(2)(B) in an amount which is determined
under an alternative payment methodology that—
‘‘(A) is agreed to by the State and the cen-
ter or clinic; and
‘‘(B) results in payment to the center or
clinic of an amount which is at least equal to
the amount otherwise required to be paid to the
center or clinic under this section.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 4712 of the Balanced Budget Act
of 1997 (Public Law 105–33; 111 Stat. 508) is
amended by striking subsection (c).
(2) Section 1915(b) of the Social Security Act
(42 U.S.C. 1396n(b)) is amended by striking
‘‘1902(a)(13)(E)’’ 
and 
inserting 
‘‘1902(a)(15),
1902(aa),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section take effect on October 1, 1999, and apply to
services furnished on or after such date.
151
SEC. 604. PARITY IN REIMBURSEMENT FOR CERTAIN UTILI-
ZATION AND QUALITY CONTROL SERVICES.
(a) IN
GENERAL.—Section 1903(a)(3)(C)(i) (42
U.S.C. 1396b(a)(3)(C)(i)) is amended—
(1) by inserting ‘‘(other than a review described
in clause (ii))’’ after ‘‘quality review’’; and
(2) by inserting ‘‘(or under a contract with the
State that sets forth standards of performance
equivalent to those under section 1902(d))’’ before
the semicolon.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to expenditures made on and after
the date of the enactment of this Act.
TITLE VII—STATE CHILDREN’S
HEALTH 
INSURANCE 
PRO-
GRAM (SCHIP)
SEC. 701. STABILIZING THE SCHIP ALLOTMENT FORMULA.
(a) IN
GENERAL.—Section 2104(b) (42 U.S.C.
1397dd(b)) is amended—
(1) in paragraph (2)(A)—
(A) in clause (i), by striking ‘‘through
2000’’ and inserting ‘‘and 1999’’; and
(B) in clause (ii), by striking ‘‘2001’’ and
inserting ‘‘2000’’;
(2) by amending paragraph (4) to read as fol-
lows: