I
106TH CONGRESS
1ST SESSION
H. R. 1579
To provide for payments to children’s hospitals that operate graduate medical
education programs.
IN THE HOUSE OF REPRESENTATIVES
APRIL 27, 1999
Mrs. JOHNSON of Connecticut (for herself, Mr. BROWN of Ohio, Mr. THOMAS,
Mr. GREENWOOD, Mr. BILIRAKIS, Mr. DINGELL, Mr. PORTER, Mr.
YOUNG of Florida, Mr. STARK, Mr. CAMP, Mr. RAMSTAD, Ms. DUNN, Mr.
NEAL of Massachusetts, Mr. PORTMAN, Mr. KLECZKA, Mr. ENGLISH,
Mr. LEWIS of Georgia, Mr. WELLER, Mr. MCINNIS, Mr. BILBRAY, Mr.
WAXMAN, Mr. HALL of Texas, Mr. CALLAHAN, Mr. GREEN of Texas, Mr.
DIXON, Mr. OLVER, Ms. KILPATRICK, Mr. BACHUS, Mr. BAIRD, Mr.
BALADACCI, Mr. BENTSEN, Mr. BLAGOJEVICH, Mr. CAPUANO, Mr. COOK,
Mr. DAVIS of Illinois, Mr. DELAHUNT, Mr. FRANK of Massachusetts, Mr.
GEJDENSON, Mr. HILLIARD, Mr. INSLEE, Ms. EDDIE BERNICE JOHNSON
of Texas, Mrs. JONES of Ohio, Mr. KUCINICH, Mr. LAFALCE, Mr.
LATOURETTE, Mr. LARSON, Mrs. MALONEY of New York, Mr. MALONEY
of Connecticut, Mr. MCGOVERN, Mr. MOAKLEY, Mr. NEY, Mr. OBER-
STAR, Ms. PRYCE of Ohio, Mr. RILEY, Mr. RODRIGUEZ, Mr. RUSH, Mr.
SESSIONS, Ms. SCHAKOWSKY, Mr. TANCREDO, Mr. TRAFICANT, Mr.
SANDLIN, Mr. SHOWS, Mr. VENTO, Mr. WEYGAND, and Mr. BECERRA)
introduced the following bill; which was referred to the Committee on
Commerce, and in addition to the Committee on Ways and Means, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To provide for payments to children’s hospitals that operate
graduate medical education programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Children’s Hospitals
Education and Research Act of 1999’’.
SEC. 2. PROGRAM OF PAYMENTS TO CHILDREN’S HOS-
PITALS THAT OPERATE GRADUATE MEDICAL
EDUCATION PROGRAMS.
(a) PAYMENTS.—The Secretary shall make two pay-
ments under this section to each children’s hospital for
each of fiscal years 2000 and 2001, one for the direct ex-
penses and the other for indirect expenses associated with
operating approved graduate medical residency training
programs.
(b) AMOUNT OF PAYMENTS.—
(1) IN GENERAL.—Subject to paragraph (2),
the amounts payable under this section to a chil-
dren’s hospital for an approved graduate medical
residency training program for a fiscal year are each
of the following amounts:
(A) 
DIRECT
EXPENSE
AMOUNT.—The
amount determined under subsection (c) for di-
rect expenses associated with operating ap-
proved graduate medical residency training pro-
grams.
(B) INDIRECT
EXPENSE
AMOUNT.—The
amount determined under subsection (d) for in-
direct expenses associated with the treatment of
more severely ill patients and the additional
costs relating to teaching residents in such pro-
grams.
(2) CAPPED AMOUNT.—
(A) IN GENERAL.—The total of the pay-
ments made to children’s hospitals under para-
graph (1)(A) or paragraph (1)(B) in a fiscal
year shall not exceed the funds appropriated
under paragraph (1) or (2), respectively, of sub-
section (f) for such payments for that fiscal
year.
(B) PRO RATA REDUCTIONS OF PAYMENTS
FOR DIRECT EXPENSES.—If the Secretary de-
termines that the amount of funds appropriated
under subsection (f)(1) for a fiscal year is in-
sufficient to provide the total amount of pay-
ments otherwise due for such periods under
paragraph (1)(A), the Secretary shall reduce
the amounts so payable on a pro rata basis to
reflect such shortfall.
(c) AMOUNT OF PAYMENT FOR DIRECT GRADUATE
MEDICAL EDUCATION.—
(1) IN
GENERAL.—The amount determined
under this subsection for payments to a children’s
hospital for direct graduate expenses relating to ap-
proved graduate medical residency training pro-
grams for a fiscal year is equal to the product of—
(A) the updated per resident amount for
direct graduate medical education, as deter-
mined under paragraph (2)); and
(B) the average number of full-time equiv-
alent residents in the hospital’s graduate ap-
proved medical residency training programs (as
determined under section 1886(h)(4) of the So-
cial Security Act (42 U.S.C. 1395ww(h)(4)))
during the fiscal year.
(2) UPDATED PER RESIDENT AMOUNT FOR DI-
RECT
GRADUATE
MEDICAL
EDUCATION.—The up-
dated per resident amount for direct graduate med-
ical education for a hospital for a fiscal year is an
amount determined as follows:
(A) DETERMINATION OF HOSPITAL SINGLE
PER RESIDENT AMOUNT.—The Secretary shall
compute for each hospital operating an ap-
proved graduate medical education program (re-
gardless of whether or not it is a children’s hos-
pital) a single per resident amount equal to the
average (weighted by number of full-time equiv-
alent residents) of the primary care per resident
amount and the non-primary care per resident
amount computed under section 1886(h)(2) of
the Social Security Act for cost reporting peri-
ods 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 section
1886(d)(3)(E) of the Social Security Act
(42 U.S.C. 1395ww(d)(3)(E)) for dis-
charges 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 AVER-
AGE.—The Secretary shall compute a national
average per resident amount equal to the aver-
age of the standardized per resident amounts
computed under subparagraph (C) for such hos-
pitals, with the amount for each hospital
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 that is a children’s 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).
(F) UPDATING RATE.—The Secretary shall
update such per resident amount for each such
children’s hospital by the estimated percentage
increase in the consumer price index for all
urban consumers during the period beginning
October 1997 and ending with the midpoint of
the hospital’s cost reporting period that begins
during fiscal year 2000.
(d) AMOUNT OF PAYMENT FOR INDIRECT MEDICAL
EDUCATION.—
(1) IN
GENERAL.—The amount determined
under this subsection for payments to a children’s
hospital for indirect expenses associated with the
treatment of more severely ill patients and the addi-
tional costs related to the teaching of residents for
a fiscal year is equal to an amount determined ap-
propriate by the Secretary.
(2) FACTORS.—In determining the amount
under paragraph (1), the Secretary shall—
(A) take into account variations in case
mix among children’s hospitals and the number
of full-time equivalent residents in the hospitals’
approved graduate medical residency training
programs; and
(B) assure that the aggregate of the pay-
ments for indirect expenses associated with the
treatment of more severely ill patients and the
additional costs related to the teaching of resi-
dents under this section in a fiscal year are
equal to the amount appropriated for such ex-
penses for the fiscal year involved under sub-
section (f)(2).
(e) MAKING OF PAYMENTS.—
(1) INTERIM PAYMENTS.—The Secretary shall
determine, before the beginning of each fiscal year
involved for which payments may be made for a hos-
pital under this section, the amounts of the pay-
ments for direct graduate medical education and in-
direct medical education for such fiscal year and
shall (subject to paragraph (2)) make the payments
of such amounts in 26 equal interim installments
during such period.
(2) WITHHOLDING.—The Secretary shall with-
hold up to 25 percent from each interim installment
for direct graduate medical education paid under
paragraph (1).
(3) RECONCILIATION.—At the end of each fis-
cal year for which payments may be made under this
section, the hospital shall submit to the Secretary
such information as the Secretary determines to be
necessary to determine the percent (if any) of the
total amount withheld under paragraph (2) that is
due under this section for the hospital for the fiscal
year. Based on such determination, the Secretary
shall recoup any overpayments made, or pay any
balance due. The amount so determined shall be
considered a final intermediary determination for
purposes of applying section 1878 of the Social Se-
curity Act (42 U.S.C. 1395oo) and shall be subject
to review under that section in the same manner as
the amount of payment under section 1886(d) of
such Act (42 U.S.C. 1395ww(d)) is subject to review
under such section.
(f) AUTHORIZATION OF APPROPRIATIONS.—
(1) DIRECT GRADUATE MEDICAL EDUCATION.—
(A) IN GENERAL.—There are hereby au-
thorized to be appropriated, out of any money
in the Treasury not otherwise appropriated, for
payments under subsection (b)(1)(A) —
(i) for fiscal year 2000, $90,000,000;
and
(ii) for fiscal year 2001, $95,000,000.
(B) 
CARRYOVER
OF
EXCESS.—The
amounts appropriated under subparagraph (A)
for fiscal year 2000 shall remain available for
obligation through the end of fiscal year 2001.
(2) INDIRECT
MEDICAL
EDUCATION.—There
are hereby authorized to be appropriated, out of any
money in the Treasury not otherwise appropriated,
for payments under subsection (b)(1)(A) —
(A) for fiscal year 2000, $190,000,000;
and
(B) for fiscal year 2001, $190,000,000.
(f) RELATION TO MEDICARE AND MEDICAID PAY-
MENTS.—Notwithstanding any other provision of law,
payments under this section to a hospital for fiscal years
2000 and 2001—
(1) are in lieu of any amounts otherwise pay-
able to the hospital under section 1886(h) or
1886(d)(5)(B) of the Social Security Act (42 U.S.C.
1395ww(h); 1395ww(d)(5)B)) for portions of cost
reporting periods occurring during such fiscal years;
but
(2) shall not affect the amounts otherwise pay-
able to such hospitals under a State medicaid plan
under title XIX of such Act (42 U.S.C. 1396 et
seq.).
(g) DEFINITIONS.—In this section:
(1) APPROVED GRADUATE MEDICAL RESIDENCY
TRAINING PROGRAM.—The term ‘‘approved graduate
medical residency training program’’ has the mean-
ing given the term ‘‘approved medical residency
training program’’ in section 1886(h)(5)(A) of the
Social Security Act (42 U.S.C. 1395ww(h)(5)(A)).
(2) CHILDREN’S
HOSPITAL.—The term ‘‘chil-
dren’s hospital’’ means a hospital described in sec-
tion 1886(d)(1)(B)(iii) of the Social Security Act
(42 U.S.C. 1395ww(d)(1)(B)(iii)).
(3) DIRECT
GRADUATE
MEDICAL
EDUCATION
COSTS.—The term ‘‘direct graduate medical edu-
cation costs’’ has the meaning given such term in
section 1886(h)(5)(C) of the Social Security Act (42
U.S.C. 1395ww(h)(5)(C)).
(4) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
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