509
section 1861(s)(2)(K) (relating to a physician assist-
ants and nurse practitioners)’’ and inserting ‘‘sec-
tion 1861(s)(2)(K)(i) (relating to physician assist-
ants)’’.
(c) DIRECT PAYMENT FOR NURSE PRACTITIONERS
AND CLINICAL NURSE SPECIALISTS.—
(1) IN
GENERAL.—Section 1832(a)(2)(B)(iv)
(42 U.S.C. 1395k(a)(2)(B)(iv)) is amended by strik-
ing ‘‘provided in a rural area (as defined in section
1886(d)(2)(D))’’ and inserting ‘‘but only if no facil-
ity or other provider charges or is paid any amounts
with respect to the furnishing of such services’’.
(2) 
CONFORMING
AMENDMENT.—Section
1842(b)(6)(C) 
(42 
U.S.C. 
1395u(b)(6)(C)) 
is
amended—
(A) by striking ‘‘clauses (i), (ii), or (iv)’’
and inserting ‘‘clause (i)’’; and
(B) by striking ‘‘or nurse practitioner’’.
(d) DEFINITION OF CLINICAL NURSE SPECIALIST
CLARIFIED.—Section 
1861(aa)(5) 
(42 
U.S.C.
1395x(aa)(5)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(5)’’;
(2) by striking ‘‘The term ‘physician assist-
ant’ ’’ and all that follows through ‘‘who performs’’
and inserting ‘‘The term ‘physician assistant’ and
510
the term ‘nurse practitioner’ mean, for purposes of
this title, a physician assistant or nurse practitioner
who performs’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) The term ‘clinical nurse specialist’ means, for
purposes of this title, an individual who—
‘‘(i) is a registered nurse and is licensed to
practice nursing in the State in which the clinical
nurse specialist services are performed; and
‘‘(ii) holds a master’s degree in a defined clini-
cal area of nursing from an accredited educational
institution.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to services furnished
and supplies provided on and after January 1, 1998.
SEC. 4620. INCREASED MEDICARE REIMBURSEMENT FOR
PHYSICIAN ASSISTANTS.
(a) REMOVAL OF RESTRICTION ON SETTINGS.—Sec-
tion 1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i)) is
amended—
(1) by striking ‘‘(I) in a hospital’’ and all that
follows through ‘‘shortage area,’’, and
(2) by adding at the end the following: ‘‘but
only if no facility or other provider charges or is
511
paid any amounts with respect to the furnishing of
such services,’’.
(b) INCREASED PAYMENT.—Paragraph (12) of sec-
tion 1842(b) (42 U.S.C. 1395u(b)), as amended by section
4619(b)(2)(B), is amended to read as follows:
‘‘(12) With respect to services described in section
1861(s)(2)(K)(i)—
‘‘(A) payment under this part may only be
made on an assignment-related basis; and
‘‘(B) the amounts paid under this part shall be
equal to 80 percent of (i) the lesser of the actual
charge or 85 percent of the fee schedule amount
provided under section 1848 for the same service
provided by a physician who is not a specialist; or
(ii) in the case of services as an assistant at surgery,
the lesser of the actual charge or 85 percent of the
amount that would otherwise be recognized if per-
formed by a physician who is serving as an assistant
at surgery.’’.
(c) REMOVAL
OF RESTRICTION
ON EMPLOYMENT
RELATIONSHIP.—Section 
1842(b)(6) 
(42 
U.S.C.
1395u(b)(6)) is amended by adding at the end the follow-
ing new sentence: ‘‘For purposes of clause (C) of the first
sentence of this paragraph, an employment relationship
may include any independent contractor arrangement, and
512
employer status shall be determined in accordance with
the law of the State in which the services described in such
clause are performed.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to services furnished
and supplies provided on and after January 1, 1998.
SEC. 4621. RENAL DIALYSIS-RELATED SERVICES.
(a) AUDITING OF COST REPORTS.—The Secretary
shall audit a sample of cost reports of renal dialysis pro-
viders for 1995 and for each third year thereafter.
(b) IMPLEMENTATION OF QUALITY STANDARDS.—
The Secretary of Health and Human Services shall de-
velop and implement, by not later than January 1, 1999,
a method to measure and report quality of renal dialysis
services provided under the medicare program under title
XVIII of the Social Security Act in order to reduce pay-
ments for inappropriate or low quality care.
SEC. 4622. PAYMENT FOR COCHLEAR IMPLANTS AS CUS-
TOMIZED DURABLE MEDICAL EQUIPMENT.
(a) IN GENERAL.—Section 1834(h)(1)(E) (42 U.S.C.
1395m(h)(1)(E)) is amended by adding at the end the fol-
lowing: ‘‘Payment for cochlear implants shall be made in
accordance with subsection (a)(4), and, in applying such
subsection to cochlear implants, carriers shall take into
consideration technological innovations and data on
513
charges to the extent that such charges reflect such inno-
vations.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to implants implanted on or after
January 1, 1998.
CHAPTER 3—PART B PREMIUM
SEC. 4631. PART B PREMIUM.
(a) IN GENERAL.—The first, second and third sen-
tences of section 1839(a)(3) (42 U.S.C. 1395r(a)(3)) are
amended to read as follows: ‘‘The Secretary, during Sep-
tember of each year, shall determine and promulgate a
monthly premium rate for the succeeding calendar year.
That monthly premium rate shall be equal to 50 percent
of the monthly actuarial rate for enrollees age 65 and over,
determined according to paragraph (1), for that succeed-
ing calendar year.’’.
(b) CONFORMING AND TECHNICAL AMENDMENTS.—
(1) SECTION 1839.—Section 1839 (42 U.S.C.
1395r) is amended—
(A) in subsection (a)(2), by striking ‘‘(b)
and (e)’’ and inserting ‘‘(b), (c), and (f)’’,
(B) in the last sentence of subsection
(a)(3)—
(i) by inserting ‘‘rate’’ after ‘‘pre-
mium’’, and
514
(ii) by striking ‘‘and the derivation of
the dollar amounts specified in this para-
graph’’,
(C) by striking subsection (e), and
(D) by redesignating subsection (g) as sub-
section (e) and inserting that subsection after
subsection (d).
(2) SECTION 1844.—Subparagraphs (A)(i) and
(B)(i) 
of 
section 
1844(a)(1) 
(42 
U.S.C.
1395w(a)(1)) are each amended by striking ‘‘or
1839(e), as the case may be’’.
Subtitle H—Provisions Relating to
Parts A and B
CHAPTER 1—PROVISIONS RELATING TO
MEDICARE SECONDARY PAYER
SEC. 4701. PERMANENT EXTENSION AND REVISION OF CER-
TAIN SECONDARY PAYER PROVISIONS.
(a) APPLICATION
TO DISABLED INDIVIDUALS
IN
LARGE GROUP HEALTH PLANS.—
(1) IN GENERAL.—Section 1862(b)(1)(B) (42
U.S.C. 1395y(b)(1)(B)) is amended—
(A) in clause (i), by striking ‘‘clause (iv)’’
and inserting ‘‘clause (iii)’’,
(B) by striking clause (iii), and
515
(C) by redesignating clause (iv) as clause
(iii).
(2) CONFORMING
AMENDMENTS.—Paragraphs
(1) through (3) of section 1837(i) (42 U.S.C.
1395p(i)) and the second sentence of section
1839(b) (42 U.S.C. 1395r(b)) are each amended by
striking ‘‘1862(b)(1)(B)(iv)’’ each place it appears
and inserting ‘‘1862(b)(1)(B)(iii)’’.
(b) INDIVIDUALS WITH END STAGE RENAL DIS-
EASE.—
(1) IN GENERAL.—Section 1862(b)(1)(C) (42
U.S.C. 1395y(b)(1)(C)) is amended—
(A) in the first sentence, by striking ‘‘12-
month’’ each place it appears and inserting
‘‘30-month’’, and
(B) by striking the second sentence.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall apply to items and services
furnished on or after the date of the enactment of
this Act and with respect to periods beginning on or
after the date that is 18 months prior to such date.
(c) IRS-SSA-HCFA DATA MATCH.—
(1) 
SOCIAL
SECURITY
ACT.—Section
1862(b)(5)(C) 
(42 
U.S.C. 
1395y(b)(5)(C)) 
is
amended by striking clause (iii).
516
(2) 
INTERNAL
REVENUE
CODE.—Section
6103(l)(12) of the Internal Revenue Code of 1986 is
amended by striking subparagraph (F).
SEC. 4702. CLARIFICATION OF TIME AND FILING LIMITA-
TIONS.
(a) EXTENSION OF CLAIMS FILING PERIOD.—Sec-
tion 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) is amend-
ed by adding at the end the following new clause:
‘‘(v) CLAIMS-FILING
PERIOD.—Not-
withstanding any other time limits that
may exist for filing a claim under an em-
ployer group health plan, the United
States may seek to recover conditional pay-
ments in accordance with this subpara-
graph where the request for payment is
submitted to the entity required or respon-
sible under this subsection to pay with re-
spect to the item or service (or any portion
thereof) under a primary plan within the
3-year period beginning on the date on
which the item or service was furnished.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to items and services furnished after
1990. The previous sentence shall not be construed as per-
mitting any waiver of the 3-year-period requirement (im-
517
posed by such amendment) in the case of items and serv-
ices furnished more than 3 years before the date of the
enactment of this Act.
SEC. 4703. PERMITTING RECOVERY AGAINST THIRD PARTY
ADMINISTRATORS.
(a) PERMITTING RECOVERY AGAINST THIRD PARTY
ADMINISTRATORS
OF
PRIMARY
PLANS.—Section
1862(b)(2)(B)(ii) (42 U.S.C. 1395y(b)(2)(B)(ii)) is
amended—
(1) by striking ‘‘under this subsection to pay’’
and inserting ‘‘(directly, as a third-party adminis-
trator, or otherwise) to make payment’’, and
(2) by adding at the end the following: ‘‘The
United States may not recover from a third-party
administrator under this clause in cases where the
third-party administrator would not be able to re-
cover the amount at issue from the employer or
group health plan for whom it provides administra-
tive services due to the insolvency or bankruptcy of
the employer or plan.’’.
(b) CLARIFICATION OF BENEFICIARY LIABILITY.—
Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended
by adding at the end the following new subparagraph:
‘‘(F) LIMITATION ON BENEFICIARY LIABIL-
ITY.—An individual who is entitled to benefits
518
under this title and is furnished an item or
service for which such benefits are incorrectly
paid is not liable for repayment of such benefits
under this paragraph unless payment of such
benefits was made to the individual.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to items and services furnished on or
after the date of the enactment of this Act.
CHAPTER 2—HOME HEALTH SERVICES
SEC. 4711. RECAPTURING SAVINGS RESULTING FROM TEM-
PORARY FREEZE ON PAYMENT INCREASES
FOR HOME HEALTH SERVICES.
(a) BASING UPDATES TO PER VISIT COST LIMITS ON
LIMITS FOR FISCAL YEAR 1993.—Section 1861(v)(1)(L)
(42 U.S.C. 1395x(v)(1)(L)) is amended by adding at the
end the following:
‘‘(iv) In establishing limits under this subparagraph
for cost reporting periods beginning after September 30,
1997, the Secretary shall not take into account any
changes in the home health market basket, as determined
by the Secretary, with respect to cost reporting periods
which began on or after July 1, 1994, and before July
1, 1996.’’.
(b) NO EXCEPTIONS PERMITTED BASED ON AMEND-
MENT.—The Secretary of Health and Human Services
519
shall not consider the amendment made by subsection (a)
in making any exemptions and exceptions pursuant to sec-
tion 1861(v)(1)(L)(ii) of the Social Security Act (42
U.S.C. 1395x(v)(1)(L)(ii)).
SEC. 4712. INTERIM PAYMENTS FOR HOME HEALTH SERV-
ICES.
(a) 
REDUCTIONS
IN
COST
LIMITS.—Section
1861(v)(1)(L)(i) (42 U.S.C. 1395x(v)(1)(L)(i)) is amend-
ed—
(1) by moving the indentation of subclauses (I)
through (III) 2-ems to the left;
(2) in subclause (I), by inserting ‘‘of the mean
of the labor-related and nonlabor per visit costs for
freestanding home health agencies’’ before the
comma at the end;
(3) in subclause (II), by striking ‘‘, or’’ and in-
serting ‘‘of such mean,’’;
(4) in subclause (III)—
(A) by inserting ‘‘and before October 1,
1997,’’ after ‘‘July 1, 1987,’’, and
(B) by striking the comma at the end and
inserting ‘‘of such mean, or’’; and
(5) by striking the matter following subclause
(III) and inserting the following:
520
‘‘(IV) October 1, 1997, 105 percent of the me-
dian of the labor-related and nonlabor per visit costs
for freestanding home health agencies.’’.
(b) DELAY IN UPDATES.—Section 1861(v)(1)(L)(iii)
(42 U.S.C. 1395x(v)(1)(L)(iii)) is amended by inserting
‘‘, or on or after July 1, 1997, and before October 1,
1997’’ after ‘‘July 1, 1996’’.
(c) 
ADDITIONS
TO
COST
LIMITS.—Section
1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)), as amended by
section 4711(a), is amended by inserting adding at the
end the following new clauses:
‘‘(v) For services furnished by home health agencies
for cost reporting periods beginning on or after October
1, 1997, the Secretary shall provide for an interim system
of limits. Payment shall not exceed the costs determined
under the preceding provisions of this subparagraph or,
if lower, the product of—
‘‘(I) an agency-specific per beneficiary annual
limitation calculated based 75 percent on the reason-
able costs (including nonroutine medical supplies)
for the agency’s 12-month cost reporting period end-
ing during 1994, and based 25 percent on the stand-
ardized regional average of such costs for the agen-
cy’s region for cost reporting periods ending during
521
1994, such costs updated by the home health market
basket index; and
‘‘(II) the agency’s unduplicated census count of
patients (entitled to benefits under this title) for the
cost reporting period subject to the limitation.
‘‘(vi) For services furnished by home health agencies
for cost reporting periods beginning on or after October
1, 1997, the following rules apply:
‘‘(I) For new providers and those providers
without a 12-month cost reporting period ending in
calendar year 1994, the per beneficiary limitation
shall be equal to the median of these limits (or the
Secretary’s best estimates thereof) applied to other
home health agencies as determined by the Sec-
retary. A home health agency that has altered its
corporate structure or name shall not be considered
a new provider for this purpose.
‘‘(II) For beneficiaries who use services fur-
nished by more than one home health agency, the
per beneficiary limitations shall be prorated among
the agencies.’’.
(d) DEVELOPMENT
OF CASE MIX SYSTEM.—The
Secretary of Health and Human Services shall expand re-
search on a prospective payment system for home health
agencies under the medicare program that ties prospective
522
payments to a unit of service, including an intensive effort
to develop a reliable case mix adjuster that explains a sig-
nificant amount of the variances in costs.
(e) SUBMISSION OF DATA FOR CASE MIX SYSTEM.—
Effective for cost reporting periods beginning on or after
October 1, 1997, the Secretary of Health and Human
Services may require all home health agencies to submit
additional information that the Secretary considers nec-
essary for the development of a reliable case mix system.
SEC. 4713. CLARIFICATION OF PART-TIME OR INTERMIT-
TENT NURSING CARE.
(a) IN GENERAL.—Section 1861(m) (42 U.S.C.
1395x(m)) is amended by adding at the end the following:
‘‘For purposes of paragraphs (1) and (4), the term ‘part-
time or intermittent services’ means skilled nursing and
home health aide services furnished any number of days
per week as long as they are furnished (combined) less
than 8 hours each day and 28 or fewer hours each week
(or, subject to review on a case-by-case basis as to the
need for care, less than 8 hours each day and 35 or fewer
hours per week). For purposes of sections 1814(a)(2)(C)
and 1835(a)(2)(A), ‘intermittent’ means skilled nursing
care that is either provided or needed on fewer than 7
days each week, or less than 8 hours of each day for peri-
ods of 21 days or less (with extensions in exceptional cir-
523
cumstances when the need for additional care is finite and
predictable).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to services furnished on or after Oc-
tober 1, 1997.
SEC. 4714. STUDY ON DEFINITION OF HOMEBOUND.
(a) STUDY.—The Secretary of Health and Human
Services shall conduct a study of the criteria that should
be applied, and the method of applying such criteria, in
the determination of whether an individual is homebound
for purposes of qualifying for receipt of benefits for home
health services under the medicare program. Such criteria
shall include the extent and circumstances under which
a person may be absent from the home but nonetheless
qualify.
(b) REPORT.—Not later than October 1, 1998, the
Secretary shall submit a report to the Congress on the
study conducted under subsection (a). The report shall in-
clude specific recommendations on such criteria and meth-
ods.
SEC. 4715. PAYMENT BASED ON LOCATION WHERE HOME
HEALTH SERVICE IS FURNISHED.
(a) CONDITIONS OF PARTICIPATION.—Section 1891
(42 U.S.C. 1395bbb) is amended by adding at the end
the following:
524
‘‘(g) PAYMENT ON BASIS OF LOCATION OF SERV-
ICE.—A home health agency shall submit claims for pay-
ment for home health services under this title only on the
basis of the geographic location at which the service is fur-
nished, as determined by the Secretary.’’.
(b) WAGE ADJUSTMENT.—Section 1861(v)(1)(L)(iii)
(42 U.S.C. 1395x(v)(1)(L)(iii)) is amended by striking
‘‘agency is located’’ and inserting ‘‘service is furnished’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to cost reporting periods beginning on
or after October 1, 1997.
SEC. 4716. NORMATIVE STANDARDS FOR HOME HEALTH
CLAIMS DENIALS,
(a) IN GENERAL.—Section 1862(a)(1) (42 U.S.C.
1395y(a)(1)), as amended by section 4103(c), is amend-
ed—
(1) by striking ‘‘and’’ at the end of subpara-
graph (G),
(2) by striking the semicolon at the end of sub-
paragraph (H) and inserting ‘‘, and’’, and
(3) by inserting after subparagraph (H) the fol-
lowing new subparagraph:
‘‘(I) the frequency and duration of home health
services which are in excess of normative guidelines
that the Secretary shall establish by regulation;’’.
525
(b) NOTIFICATION.—The Secretary of Health and
Human Services may establish a process for notifying a
physician in cases in which the number of home health
service visits furnished under the medicare program pur-
suant to a prescription or certification of the physician sig-
nificantly exceeds such threshold (or thresholds) as the
Secretary specifies. The Secretary may adjust such thresh-
old to reflect demonstrated differences in the need for
home health services among different beneficiaries.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after October
1, 1997.
SEC. 4717. NO HOME HEALTH BENEFITS BASED SOLELY ON
DRAWING BLOOD.
(a) IN
GENERAL.—Sections 1814(a)(2)(C) and
1835(a)(2)(A) 
(42 
U.S.C. 
1395f(a)(2)(C),
1395n(a)(2)(A)) are each amended by inserting ‘‘(other
than solely venipuncture for the purpose of obtaining a
blood sample)’’ after ‘‘skilled nursing care’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to home health services furnished
after the 6–month period beginning after the date of en-
actment of this Act.
526
SEC. 4718. MAKING PART B PRIMARY PAYOR FOR CERTAIN
HOME HEALTH SERVICES.
(a) IN
GENERAL.—Section 1833(d) (42 U.S.C.
1395l(d)) is amended—
(1) by striking ‘‘(d) No’’ and inserting ‘‘(d)(1)
Subject to paragraph (2), no’’, and
(2) by adding at the end the following new
paragraph:
‘‘(2) Payment shall be made under this part (rather
than under part A), for an individual entitled to benefits
under part A, for home health services, other than the first
100 visits of post-hospital home health services furnished
to an individual.’’.
(b) POST-HOSPITAL HOME HEALTH SERVICES.—
Section 1861 (42 U.S.C. 1395x) is amended by adding
at the end the following:
‘‘(ss) POST-HOSPITAL HOME HEALTH SERVICES.—
The term ‘post-hospital home health services’ means home
health services furnished to an individual under a plan of
treatment established when the individual was an inpa-
tient of a hospital or rural primary care hospital for not
less than 3 consecutive days before discharge, or during
a covered post-hospital extended care stay, if home health
services are initiated for the individual within 30 days
after discharge from the hospital, rural primary care hos-
pital or extended care facility.’’.
527
(c) PAYMENTS UNDER PART B.—Subparagraph (A)
of section 1833(a)(2) (42 U.S.C. 1395l(a)(2)) is amended
to read as follows:
‘‘(A) with respect to home health services
(other than a covered osteoporosis drug (as de-
fined in section 1861(kk)), and to items and
services described in section 1861(s)(10)(A),
the 
amounts 
determined 
under 
section
1861(v)(1)(L) or section 1893, or, if the serv-
ices are furnished by a public provider of serv-
ices, or by another provider which demonstrates
to the satisfaction of the Secretary that a sig-
nificant portion of its patients are low-income
(and requests that payment be made under this
provision), free of charge, or at nominal charges
to the public, the amount determined in accord-
ance with section 1814(b)(2);’’.
(d) PHASE-IN OF ADDITIONAL PART B COSTS IN
DETERMINATION OF PART B MONTHLY PREMIUM.—Sec-
tion 1839(a) (42 U.S.C. 1395r(a)) is amended—
(1) in paragraph (3) in last the sentence in-
serted by section 4631(a) of this title, by inserting
‘‘(except as provided in paragraph (5)(B))’’ before
the period, and
(2) by adding after paragraph (4) the following:
528
‘‘(5)(A) The Secretary shall, at the time of determin-
ing the monthly actuarial rate under paragraph (1) for
1998 through 2003, shall determine a transitional month-
ly actuarial rate for enrollees age 65 and over in the same
manner as such rate is determined under paragraph (1),
except that there shall be excluded from such determina-
tion an estimate of any benefits and administrative costs
attributable to home health services for which payment
would have been made under part A during the year but
for paragraph (2) of section 1833(d).
‘‘(B) The monthly premium for each individual en-
rolled under this part for each month for a year (beginning
with 1998 and ending with 2003) shall be equal to 50
percent of the monthly actuarial rate determined under
subparagraph (A) increased by the following proportion of
the difference between such premium and the monthly pre-
mium otherwise determined under paragraph (3) (without
regard to this paragraph):
‘‘(i) For a month in 1998, 1⁄7.
‘‘(ii) For a month in 1999, 2⁄7.
‘‘(iii) For a month in 2000, 3⁄7.
‘‘(iv) For a month in 2001, 4⁄7.
‘‘(v) For a month in 2002, 5⁄7.
‘‘(vi) For a month in 2003, 6⁄7.’’.
529
(e) MAINTAINING
APPEAL
RIGHTS
FOR
HOME
HEALTH SERVICES.—Section 1869(b)(2)(B) (42 U.S.C.
1395ff(b)(2)(B)) is amended by inserting ‘‘(or $100 in the
case of home health services)’’ after ‘‘$500’’.
(f) REPORT.—Not later than October 1, 1999, the
Secretary of Health and Human Services shall submit a
report to the Committees on Commerce and Ways and
Means of the House of Representatives and the Committee
on Finance of the Senate on the impact on home health
utilization and admissions to hospitals and skilled nursing
facilities of the amendment made by subsection (b). The
Secretary shall further reexamine and submit a report to
such Committees on this impact 1 year after the full im-
plementation of the prospective payment system for home
health services into the medicare program, effected under
the amendments made by section 4441.
(g) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after October
1, 1997.
530
CHAPTER 3—BABY BOOM GENERATION
MEDICARE COMMISSION
SEC. 4721. BIPARTISAN COMMISSION ON THE EFFECT OF
THE BABY BOOM GENERATION ON THE MEDI-
CARE PROGRAM.
(a) ESTABLISHMENT.—There is established a com-
mission to be known as the Bipartisan Commission on the
Effect of the Baby Boom Generation on the Medicare Pro-
gram (in this section referred to as the ‘‘Commission’’).
(b) DUTIES.—
(1) IN GENERAL.—The Commission shall—
(A) examine the financial impact on the
medicare program of the significant increase in
the number of medicare eligible individuals
which will occur beginning approximately dur-
ing 2010 and lasting for approximately 25
years, and
(B) make specific recommendations to the
Congress respecting a comprehensive approach
to preserve the medicare program for the period
during which such individuals are eligible for
medicare.
(2) 
CONSIDERATIONS
IN
MAKING
REC-
OMMENDATIONS.—In making its recommendations,
the Commission shall consider the following:
531
(A) The amount and sources of Federal
funds to finance the medicare program, includ-
ing the potential use of innovative financing
methods.
(B) Methods used by other nations to re-
spond to comparable demographic patterns in
eligibility for health care benefits for elderly
and disabled individuals.
(C) Modifying age-based eligibility to cor-
respond to changes in age-based eligibility
under the OASDI program.
(D) Trends in employment-related health
care for retirees, including the use of medical
savings accounts and similar financing devices.
(E) The role medicare should play in ad-
dressing the needs of persons with chronic ill-
ness.
(c) MEMBERSHIP.—
(1) APPOINTMENT.—The Commission shall be
composed of 15 voting members as follows:
(A) The Majority Leader of the Senate
shall appoint, after consultation with the minor-
ity leader of the Senate, 6 members, of whom
not more than 4 may be of the same political
party.
532
(B) The Speaker of the House of Rep-
resentatives shall appoint, after consultation
with the minority leader of the House of Rep-
resentatives, 6 members, of whom not more
than 4 may be of the same political party.
(C) The 3 ex officio members of the Board
of Trustees of the Federal Hospital Insurance
Trust Fund and of the Federal Supplementary
Medical Insurance Trust Fund who are Cabinet
level officials.
(2) CHAIRMAN AND VICE CHAIRMAN.—As the
first item of business at the Commission’s first
meeting (described in paragraph (5)(B)), the Com-
mission shall elect a Chairman and Vice Chairman
from among its members. The individuals elected as
Chairman and Vice Chairman may not be of the
same political party and may not have been ap-
pointed to the Commission by the same appointing
authority.
(3) VACANCIES.—Any vacancy in the member-
ship of the Commission shall be filled in the manner
in which the original appointment was made and
shall not affect the power of the remaining members
to execute the duties of the Commission.
533
(4) QUORUM.—A quorum shall consist of 8
members of the Commission, except that 4 members
may conduct a hearing under subsection (f).
(5) MEETINGS.—
(A) The Commission shall meet at the call
of its Chairman or a majority of its members.
(B) The Commission shall hold its first
meeting not later than February 1, 1998.
(6) COMPENSATION AND REIMBURSEMENT OF
EXPENSES.—Members of the Commission are not
entitled to receive compensation for service on the
Commission. Members may be reimbursed for travel,
subsistence, and other necessary expenses incurred
in carrying out the duties of the Commission.
(d) ADVISORY PANEL.—
(1) IN GENERAL.—The Chairman, in consulta-
tion with the Vice Chairman, may establish a panel
(in this section referred to as the ‘‘Advisory Panel’’)
consisting of health care experts, consumers, provid-
ers, and others to advise and assist the members of
the Commission in carrying out the duties described
in subsection (b). The panel shall have only those
powers that the Chairman, in consultation with the
Vice Chairman, determines are necessary and appro-
534
priate to assist the Commission in carrying out such
duties.
(2) COMPENSATION.—Members of the Advisory
Panel are not entitled to receive compensation for
service on the Advisory Panel. Subject to the ap-
proval of the chairman of the Commission, members
may be reimbursed for travel, subsistence, and other
necessary expenses incurred in carrying out the du-
ties of the Advisory Panel.
(e) STAFF AND CONSULTANTS.—
(1) STAFF.—The Commission may appoint and
determine the compensation of such staff as may be
necessary to carry out the duties of the Commission.
Such appointments and compensation may be made
without regard to the provisions of title 5, United
States Code, that govern appointments in the com-
petitive services, and the provisions of chapter 51
and subchapter III of chapter 53 of such title that
relate to classifications and the General Schedule
pay rates.
(2) CONSULTANTS.—The Commission may pro-
cure such temporary and intermittent services of
consultants under section 3109(b) of title 5, United
States Code, as the Commission determines to be
necessary to carry out the duties of the Commission.
535
(f) POWERS.—
(1) HEARINGS
AND
OTHER
ACTIVITIES.—For
the purpose of carrying out its duties, the Commis-
sion may hold such hearings and undertake such
other activities as the Commission determines to be
necessary to carry out its duties.
(2) STUDIES BY GAO.—Upon the request of the
Commission, the Comptroller General shall conduct
such studies or investigations as the Commission de-
termines to be necessary to carry out its duties.
(3) COST
ESTIMATES
BY
CONGRESSIONAL
BUDGET OFFICE.—
(A) Upon the request of the Commission,
the Director of the Congressional Budget Office
shall provide to the Commission such cost esti-
mates as the Commission determines to be nec-
essary to carry out its duties.
(B) The Commission shall reimburse the
Director of the Congressional Budget Office for
expenses relating to the employment in the of-
fice of the Director of such additional staff as
may be necessary for the Director to comply
with requests by the Commission under sub-
paragraph (A).
536
(4) DETAIL OF FEDERAL EMPLOYEES.—Upon
the request of the Commission, the head of any Fed-
eral agency is authorized to detail, without reim-
bursement, any of the personnel of such agency to
the Commission to assist the Commission in carry-
ing out its duties. Any such detail shall not interrupt
or otherwise affect the civil service status or privi-
leges of the Federal employee.
(5) TECHNICAL
ASSISTANCE.—Upon the re-
quest of the Commission, the head of a Federal
agency shall provide such technical assistance to the
Commission as the Commission determines to be
necessary to carry out its duties.
(6) USE OF MAILS.—The Commission may use
the United States mails in the same manner and
under the same conditions as Federal agencies and
shall, for purposes of the frank, be considered a
commission of Congress as described in section 3215
of title 39, United States Code.
(7) OBTAINING
INFORMATION.—The Commis-
sion may secure directly from any Federal agency
information necessary to enable it to carry out its
duties, if the information may be disclosed under
section 552 of title 5, United States Code. Upon re-
quest of the Chairman of the Commission, the head
537
of such agency shall furnish such information to the
Commission.
(8) ADMINISTRATIVE
SUPPORT
SERVICES.—
Upon the request of the Commission, the Adminis-
trator of General Services shall provide to the Com-
mission on a reimbursable basis such administrative
support services as the Commission may request.
(9) PRINTING.—For purposes of costs relating
to printing and binding, including the cost of per-
sonnel detailed from the Government Printing Of-
fice, the Commission shall be deemed to be a com-
mittee of the Congress.
(g) REPORT.—Not later than May 1, 1999, the Com-
mission shall submit to Congress a report containing its
findings and recommendations regarding how to protect
and preserve the medicare program in a financially solvent
manner until 2030 (or, if later, throughout the period of
projected solvency of the Federal Old-Age and Survivors
Insurance Trust Fund). The report shall include detailed
recommendations for appropriate legislative initiatives re-
specting how to accomplish this objective.
(h) TERMINATION.—The Commission shall terminate
30 days after the date of submission of the report required
in subsection (g).
538
(i) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $1,500,000 to carry out
this section. 60 percent of such appropriation shall be pay-
able from the Federal Hospital Insurance Trust Fund,
and 40 percent of such appropriation shall be payable
from the Federal Supplementary Medical Insurance Trust
Fund under title XVIII of the Social Security Act (42
U.S.C. 1395i, 1395t).
CHAPTER 4—PROVISIONS RELATING TO
DIRECT GRADUATE MEDICAL EDUCATION
SEC. 4731. LIMITATION ON PAYMENT BASED ON NUMBER
OF RESIDENTS AND IMPLEMENTATION OF
ROLLING AVERAGE FTE COUNT.
Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is
amended by adding after subparagraph (E) the following:
‘‘(F) LIMITATION
ON
NUMBER
OF
RESI-
DENTS
FOR
CERTAIN
FISCAL
YEARS.—Such
rules shall provide that for purposes of a cost
reporting period beginning on or after October
1, 1997, the total number of full-time equiva-
lent residents before application of weighting
factors (as determined under this paragraph)
with respect to a hospital’s approved medical
residency training program may not exceed the
number of full-time equivalent residents with
539
respect to the hospital’s most recent cost re-
porting period ending on or before December
31, 1996.
‘‘(G) COUNTING INTERNS AND RESIDENTS
FOR FY 1998 AND SUBSEQUENT YEARS.—
‘‘(i) FY 1998.—For the hospital’s first
cost reporting period beginning during fis-
cal year 1998, subject to the limit de-
scribed in subparagraph (F), the total
number of full-time equivalent residents,
for determining the hospital’s graduate
medical education payment, shall equal the
average of the full-time equivalent resident
counts for the cost reporting period and
the preceding cost reporting period.
‘‘(ii) SUBSEQUENT YEARS.—For each
subsequent cost reporting period, subject
to the limit described in subparagraph (F),
the total number of full-time equivalent
residents, for determining the hospital’s
graduate medical education payment, shall
equal the average of the actual full-time
equivalent resident counts for the cost re-
porting period and preceding two cost re-
porting periods.
540
‘‘(iii) ADJUSTMENT FOR SHORT PERI-
ODS.—If a hospital’s cost reporting period
beginning on or after October 1, 1997, is
not equal to twelve months, the Secretary
shall make appropriate modifications to en-
sure that the average full-time equivalent
resident counts pursuant to clause (ii) are
based on the equivalent of full 12-month
cost reporting periods.
‘‘(iv) EXCLUSION
OF
RESIDENTS
IN
DENTISTRY.—Residents in an approved
medical residency training program in den-
tistry shall not be counted for purposes of
this 
subparagraph 
and 
subparagraph
(F).’’.
SEC. 4732. PHASED-IN LIMITATION ON HOSPITAL OVER-
HEAD AND SUPERVISORY PHYSICIAN COMPO-
NENT 
OF 
DIRECT 
MEDICAL 
EDUCATION
COSTS.
(a) IN GENERAL.—Section 1886(h)(3) (42 U.S.C.
1395ww(h)(3)) is amended—
(1) in subparagraph (B), by inserting ‘‘subject
to subparagraph (D),’’ after ‘‘subparagraph (A)’’,
and
(2) by adding at the end the following:
541
‘‘(D) PHASED-IN
LIMITATION
ON
HOS-
PITAL OVERHEAD AND SUPERVISORY PHYSICIAN
COMPONENT.—
‘‘(i) IN GENERAL.—In the case of a
hospital for which the overhead GME
amount (as defined in clause (ii)) for the
base period exceeds an amount equal to
the 75th percentile of the overhead GME
amounts in such period for all hospitals
(weighted to reflect the full-time equivalent
resident counts for all approved medical
residency training programs), subject to
clause (iv), the hospital’s approved FTE
resident amount (for periods beginning on
or after October 1, 1997) shall be reduced
from the amount otherwise applicable (as
previously reduced under this subpara-
graph) by an overhead reduction amount.
The overhead reduction amount is equal to
the lesser of—
‘‘(I) 20 percent of the reference
reduction amount (described in clause
(iii)) for the period, or
‘‘(II) 15 percent of the hospital’s
overhead GME amount for the period
542
(as otherwise determined before the
reduction provided under this sub-
paragraph for the period involved).
‘‘(ii) OVERHEAD GME AMOUNT.—For
purposes of this subparagraph, the term
‘overhead GME amount’ means, for a hos-
pital for a period, the product of—
‘‘(I) the percentage of the hos-
pital’s approved FTE resident amount
for the base period that is not attrib-
utable to resident salaries and fringe
benefits, and
‘‘(II) the hospital’s approved
FTE resident amount for the period
involved.
‘‘(iii) 
REFERENCE
REDUCTION
AMOUNT.—
‘‘(I) 
IN
GENERAL.—The 
ref-
erence reduction amount described in
this clause for a hospital for a cost re-
porting period is the base difference
(described in subclause (II)) updated,
in a compounded manner for each pe-
riod from the base period to the pe-
riod involved, by the update applied
543
for such period to the hospital’s ap-
proved FTE resident amount.
‘‘(II) BASE
DIFFERENCE.—The
base difference described in this sub-
clause for a hospital is the amount by
which the hospital’s overhead GME
amount in the base period exceeded
the 75th percentile of such amounts
(as described in clause (i)).
‘‘(iv) MAXIMUM REDUCTION TO 75TH
PERCENTILE.—In no case shall the reduc-
tion under this subparagraph effected for a
hospital for a period (below the amount
that would otherwise apply for the period
if this subparagraph did not apply for any
period) exceed the reference reduction
amount for the hospital for the period.
‘‘(v) BASE PERIOD.—For purposes of
this subparagraph, the term ‘base period’
means the cost reporting period beginning
in fiscal year 1984 or the period used to
establish the hospital’s approved FTE resi-
dent amount for hospitals that did not
have approved residency training programs
in fiscal year 1984.
544
‘‘(vi) RULES FOR HOSPITALS INITIAT-
ING
RESIDENCY
TRAINING
PROGRAMS.—
The Secretary shall establish rules for the
application of this subparagraph in the
case of a hospital that initiates medical
residency training programs during or
after the base period.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to per resident payment
amounts attributable to periods beginning on or after Oc-
tober 1, 1997.
SEC. 4733. PERMITTING PAYMENT TO NON-HOSPITAL PRO-
VIDERS.
(a) IN
GENERAL.— Section 1886 (42 U.S.C.
1395ww) is amended by adding at the end the following:
‘‘(k) PAYMENT TO NON-HOSPITAL PROVIDERS.—
‘‘(1) REPORT.—The Secretary shall submit to
Congress, not later than 18 months after the date
of the enactment of this subsection, a proposal for
payment to qualified non-hospital providers for their
direct costs of medical education, if those costs are
incurred in the operation of an approved medical
residency training program described in subsection
(h). Such proposal shall specify the amounts, form,
and manner in which such payments will be made
545
and the portion of such payments that will be made
from each of the trust funds under this title.
‘‘(2) EFFECTIVENESS.—Except as otherwise
provided in law, the Secretary may implement such
proposal for residency years beginning not earlier
than 6 months after the date of submittal of the re-
port under paragraph (1).
‘‘(3) QUALIFIED NON-HOSPITAL PROVIDERS.—
For purposes of this subsection, the term ‘qualified
non-hospital provider’ means—
‘‘(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
‘‘(B) a rural health clinic, as defined in
section 1861(aa)(2); and
‘‘(C) such other providers (other than hos-
pitals) as the Secretary determines to be appro-
priate.’’.
(b) PROHIBITION ON DOUBLE PAYMENTS; BUDGET
NEUTRALITY ADJUSTMENT.—Section 1886(h)(3)(B) (42
U.S.C. 1395ww(h)(3)(B)) is amended by adding at the
end the following:
‘‘The Secretary shall reduce the aggregate ap-
proved amount to the extent payment is made
under subsection (k) for residents included in
the hospital’s count of full-time equivalent resi-
546
dents and, in the case of residents not included
in any such count, the Secretary shall provide
for such a reduction in aggregate approved
amounts under this subsection as will assure
that the application of subsection (k) does not
result in any increase in expenditures under
this title in excess of those that would have oc-
curred if subsection (k) were not applicable.’’.
SEC. 4734. INCENTIVE PAYMENTS UNDER PLANS FOR VOL-
UNTARY REDUCTION IN NUMBER OF RESI-
DENTS.
Section 1886(h) (42 U.S.C. 1395ww(h)) is further
amended by adding at the end the following new para-
graph:
‘‘(6) INCENTIVE PAYMENT UNDER PLANS FOR
VOLUNTARY
REDUCTION
IN
NUMBER
OF
RESI-
DENTS.—
‘‘(A) IN GENERAL.—In the case of a vol-
untary residency reduction plan for which an
application is approved under subparagraph
(B), the qualifying entity submitting the plan
shall be paid an applicable hold harmless per-
centage (as specified in subparagraph (E)) of
the sum of—
‘‘(i) amount (if any) by which—
547
‘‘(I) the amount of payment
which would have been made under
this subsection if there had been a 5
percent reduction in the number of
full-time equivalent residents in the
approved medical education training
programs of the qualifying entity as of
June 30, 1997, exceeds
‘‘(II) the amount of payment
which is made under this subsection,
taking into account the reduction in
such number effected under the re-
duction plan; and
‘‘(ii) the amount of the reduction in
payment under 1886(d)(5)(B) (for hos-
pitals participating in the qualifying entity)
that is attributable to the reduction in
number of residents effected under the
plan below 95 percent of the number of
full-time equivalent residents in such pro-
grams of such entity as of June 30, 1997.
‘‘(B) 
APPROVAL
OF
PLAN
APPLICA-
TIONS.—The Secretary may not approve the ap-
plication of an qualifying entity unless—
548
‘‘(i) the application is submitted in a
form and manner specified by the Sec-
retary and by not later than March 1,
2000,
‘‘(ii) the application provides for the
operation of a plan for the reduction in the
number of full-time equivalent residents in
the approved medical residency training
programs of the entity consistent with the
requirements of subparagraph (D);
‘‘(iii) the entity elects in the applica-
tion whether such reduction will occur
over—
‘‘(I) a period of not longer than
5 residency training years, or
‘‘(II) a period of 6 residency
training years,
except that a qualifying entity described in
subparagraph (C)(i)(III) may not make the
election described in subclause (II); and
‘‘(iv) the Secretary determines that
the application and the entity and such
plan meet such other requirements as the
Secretary specifies in regulations.
‘‘(C) QUALIFYING ENTITY.—
549
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, any of the following may
be a qualifying entity:
‘‘(I) Individual hospitals operat-
ing one or more approved medical
residency training programs.
‘‘(II) Subject to clause (ii), two
or more hospitals that operate such
programs and apply for treatment
under this paragraph as a single
qualifying entity.
‘‘(III) Subject to clause (iii), a
qualifying consortium (as described in
section 4735 of the Balanced Budget
Act of 1997).
‘‘(ii) ADDITIONAL REQUIREMENT FOR
JOINT PROGRAMS.—In the case of an ap-
plication by a qualifying entity described in
clause (i)(II), the Secretary may not ap-
prove the application unless the application
represents that the qualifying entity ei-
ther—
‘‘(I) in the case of an entity that
meets the requirements of clause (v)
of subparagraph (D) will not reduce