drug, or biological not described in clause
(i) or (ii) if—
‘‘(I) payment for the device,
drug, or biological as an outpatient
hospital services under this part was
not being made as of December 31,
1996; and
‘‘(II) the cost of the device, drug,
or biological is not insignificant in re-
lation to the OPD fee schedule
amount (as calculated under para-
graph (3)(D)) payable for the service
(or group of services) involved.
‘‘(B) LIMITED PERIOD OF PAYMENT.—The
payment under this paragraph with respect to
a medical device, drug, or biological shall only
apply during a period of at least 2 years, but
not more than 3 years, that begins—
‘‘(i) on the first date this subsection is
implemented in the case of a drug or bio-
logical described in clause (i) or (ii) of sub-
paragraph (A) and in the case of a device,
drug, or biological described in subpara-
graph (A)(iii) for which payment under
this part is made as an outpatient hospital
service before such first date; or
‘‘(ii) in the case of a device, drug, or
biological 
described 
in 
subparagraph
(A)(iii) not described in clause (i), on the
first date on which payment is made under
this part for the device, drug, or biological
as an outpatient hospital service.
‘‘(C) 
AMOUNT
OF
ADDITIONAL
PAY-
MENT.—Subject to subparagraph (D)(iii), the
amount of the payment under this paragraph
with respect to a device, drug, or biological pro-
vided as part of a covered OPD service is—
‘‘(i) in the case of a drug or biological,
the amount by which the amount deter-
mined under section 1842(o) for the drug
or biological exceeds the portion of the oth-
erwise applicable medicare OPD fee sched-
ule that the Secretary determines is associ-
ated with the drug or biological; or
‘‘(ii) in the case of a medical device,
the amount by which the hospital’s charges
for the device, adjusted to cost, exceeds the
portion (described in clause (i)) associated
with the device.
‘‘(D) LIMIT ON AGGREGATE ANNUAL AD-
JUSTMENT.—
‘‘(i) IN GENERAL.—The total of the
additional payments made under this para-
graph for covered OPD services furnished
in a year (as projected or estimated by the
Secretary before the beginning of the year)
may not exceed the applicable percentage
(specified in clause (ii)) of the total pro-
gram payments projected or estimated to
be made under this subsection for all cov-
ered OPD services furnished in that year.
If this paragraph is first applied to less
than a full year, the previous sentence
shall apply only to the portion of such
year.
‘‘(ii) APPLICABLE PERCENTAGE.—For
purposes of clause (i), the term ‘applicable
percentage’ means—
‘‘(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
‘‘(II) for 2004 and thereafter, a
percentage specified by the Secretary
up to (but not to exceed) 2.0 percent.
‘‘(iii) UNIFORM PROSPECTIVE REDUC-
TION IF AGGREGATE LIMIT PROJECTED TO
BE EXCEEDED.—If the Secretary projects
or estimates before the beginning of a year
that the amount of the additional pay-
ments under this paragraph for the year
(or portion thereof) as determined under
clause (i) without regard to this clause)
will exceed the limit established under such
clause, the Secretary shall reduce pro rata
the amount of each of the additional pay-
ments under this paragraph for that year
(or portion thereof) in order to ensure that
the aggregate additional payments under
this paragraph (as so projected or esti-
mated) do not exceed such limit.’’.
(c) APPLICATION
OF NEW ADJUSTMENTS
ON
A
BUDGET NEUTRAL BASIS.—Section 1833(t)(2)(E) (42
U.S.C. 1395l(t)(2)(E)) is amended by striking ‘‘other ad-
justments, in a budget neutral manner, as determined to
be necessary to ensure equitable payments, such a outlier
adjustments or’’ and inserting ‘‘, in a budget neutral man-
ner, outlier adjustments under paragraph (5) and transi-
tional pass-through payments under paragraph (6) and
other adjustments as determined to be necessary to ensure
equitable payments, such as’’.
(d) LIMITATION ON JUDICIAL REVIEW FOR NEW AD-
JUSTMENTS.—Section 1833(t)(11), as redesignated by
subsection (a)(1), is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C);
(2) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(E) the determination of the fixed mul-
tiple, or a fixed dollar cutoff amount, the mar-
ginal cost of care, or applicable percentage
under paragraph (5) or the determination of in-
significance of cost, the duration of the addi-
tional payments (consistent with paragraph
(6)(B)), the portion of the Medicare OPD fee
schedule amount associated with particular de-
vices, drugs, or biologicals, and the application
of any pro rata reduction under paragraph
(6).’’.
(e) INCLUSION OF MEDICAL DEVICES UNDER SYS-
TEM.—Section 1833(t)(1)(B) (42 U.S.C. 1395l(t)(1)(B))
is amended—
(1) in clause (ii), by striking ‘‘clause (iii)’’ and
inserting ‘‘clause (iv)’’ and by striking ‘‘but’’; and
(2) by redesignating clause (iii) as clause (iv)
and inserting after clause (ii) the following new
clause:
‘‘(iii) includes medical devices (such
as implantable medical devices); but’’.
(f) AUTHORIZING PAYMENT WEIGHTS BASED
ON
MEAN
HOSPITAL
COSTS.—Section 1833(t)(2)(C) (42
U.S.C. 1395l(t)(2)(C)) is amended by inserting ‘‘(or, at
the election of the Secretary, mean)’’ after ‘‘median’’.
(g) LIMITING VARIATION OF COSTS OF SERVICES
CLASSIFIED WITH
A GROUP.—Section 1833(t)(2) (42
U.S.C. 1395l(t)(2)) is amended by adding at the end the
following: ‘‘For purposes of subparagraph (B), items and
services within a group shall not be treated as ‘comparable
with respect to the use of resources’ if the highest median
cost (or mean cost, if elected by the Secretary under sub-
paragraph (C)) for an item or service within the group
is more than 2 times greater than the lowest median cost
(or mean cost, if so elected) for an item or service within
the group; except that the Secretary may make exceptions
in unusual cases, such as low volume items and services.’’.
(h) ANNUAL REVIEW OF OPD PPS COMPONENTS.—
‘‘(A) BEFORE
2002.—For covered OPD
services furnished before January 1, 2002, for
which the PPS amount (as defined in subpara-
graph (D)(i)) is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount (as
defined in subparagraph (D)(ii)), the
amount of payment under this subsection
shall be increased by 80 percent of the
amount of such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the sum of—
‘‘(I) 70 percent of the amount by
which 90 percent of the pre-BBA
amount exceeds the PPS amount; and
‘‘(II) 8.0 percent of the pre-BBA
amount;
‘‘(iii) at least 70 percent, but less
than 80 percent, of the pre-BBA amount,
the amount of payment under this sub-
section shall be increased by the sum of—
‘‘(I) 60 percent of the amount by
which 80 percent of the pre-BBA
amount exceeds the PPS amount; and
‘‘(II) 15.0 percent of the pre-
BBA amount; and
‘‘(iv) less than 70 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
21 percent of the pre-BBA amount.
‘‘(B) 2002.—For covered OPD services
furnished during 2002, for which the PPS
amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 70 percent of the
amount of such difference;
‘‘(ii) at least 80 percent, but less than
90 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by the sum of—
‘‘(I) 60 percent of the amount by
which 90 percent of the pre-BBA
amount exceeds the PPS amount; and
‘‘(II) 7.0 percent of the pre-BBA
amount; and
‘‘(iii) less than 80 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
13 percent of the pre-BBA amount.
‘‘(C) 2003.—For covered OPD services
furnished during 2003, for which the PPS
amount is—
‘‘(i) at least 90 percent, but less than
100 percent, of the pre-BBA amount, the
amount of payment under this subsection
shall be increased by 60 percent of the
amount of such difference; or
‘‘(iii) less than 90 percent of the pre-
BBA amount, the amount of payment
under this subsection shall be increased by
6 percent of the pre-BBA amount.
‘‘(D) DEFINITIONS.—For purposes of this
subparagraph:
‘‘(i) PPS AMOUNT.—The term ‘PPS
amount’ means, with respect to a covered
OPD service, the amount of payment
under this title for such service (deter-
mined without regard to this paragraph).
‘‘(ii) PRE-BBA
AMOUNT.—The term
‘pre-BBA amount’ means, with respect to
a covered OPD service, the amount that
would have been paid under this title for
such service if this subsection did not
apply.
‘‘(E) CONSTRUCTION.—Nothing in this
paragraph shall be construed to affect the co-
payment amount under paragraph (5).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection shall be effective as if included in the enact-
ment of BBA.
Subtitle C—Other
SEC. 221. APPLICATION OF SEPARATE CAPS TO PHYSICAL
AND SPEECH THERAPY SERVICES.
(a) IN
GENERAL.—Section 1833(g) (42 U.S.C.
1395l(g)) is amended—
(1) in paragraph (1)—
(A) by inserting ‘‘(A)’’ after ‘‘(g)(1)’’; and
(B) by adding at the end the following new
subparagraph:
‘‘(B) Subparagraph (A) shall be applied separately
for speech-language pathology services described in the
fourth sentence of section 1861(p) and for other out-
patient physical therapy services.’’;
and
(2) by adding at the end the following new
paragraph:
‘‘(4) The limitations of this subsection apply to the
services involved on a per beneficiary, per facility basis.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to services furnished on or after Jan-
uary 1, 2000.
SEC. 222. OPTIONAL EXEMPTION OF CERTAIN HIGH ACUITY
FACILITY PATIENTS.
Section 1833(g) (42 U.S.C. 1395l(g)), as amended
by section 221, is further amended by adding at the end
the following new paragraph:
‘‘(5) The Secretary shall establish a process under
which a facility that is providing therapy services to which
the limitation of this subsection applies may elect, for each
of calendar years 2000 and 2001, to exempt from such
limitation up to 1 percent of its patients who are receiving
such services under this title. The process shall include
a method by which the facility identifies and selects such
patients.’’.
SEC. 223. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) IN GENERAL.—Section 1881(b)(7) (42 U.S.C.
1395rr(b)(7)) is amended by adding at the end the fol-
lowing new flush sentence:
‘‘The Secretary shall increase the amount of each com-
posite rate payment for dialysis services furnished on or
after January 1, 2000, and on or before December 31,
2000, by 1.2 percent above such composite rate payment
amounts for such services furnished on December 31,
1999, and for such services furnished on or after January
1, 2001, by 1.2 percent above such composite rate pay-
ment amounts for such services furnished on December
31, 2000.’’.
(b) CONFORMING AMENDMENT.—
(1) IN GENERAL.—Section 9335(a) of the Om-
nibus Budget Reconciliation Act of 1986 (42 U.S.C.
1395rr note) is amended by striking paragraph (1).
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on January 1,
2000.
SEC. 224. TEMPORARY UPDATE IN DURABLE MEDICAL
EQUIPMENT AND OXYGEN RATES.
(a) DURABLE MEDICAL EQUIPMENT AND OXYGEN.—
Section 1834(a)(14) (42 U.S.C. 1395m(a)(14)), as
amended by section 4551(a)(1) of BBA, is amended—
(1) by redesignating subparagraph (D) as sub-
paragraph (E); and
(2) by striking subparagraph (C) and inserting
the following:
‘‘(C) for each of the years 1998 through
2000, 0 percentage points;
‘‘(D) for each of the years 2001 and 2002,
the percentage increase in the consumer price
index for all urban consumers (U.S. city aver-
age) for the 12-month period ending with June
of the previous year minus 2 percentage points;
and’’.
(c) 
TECHNICAL
CORRECTION.—Section
1834(a)(9)(B) (42 U.S.C. 1395m(a)(9)(B)), as amended
by section 4552(a) of BBA, is amended—
(1) by striking ‘‘and’’ at the end of clause (v);
(2) in clause (vi), by striking ‘‘and each subse-
quent year’’ and inserting ‘‘and 2000’’ and by strik-
ing the period at the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new
clause:
‘‘(vii) for 2001 and each subsequent
year, the amount determined under this
subparagraph for the preceding year in-
creased by the covered item update for
such subsequent year.’’.
TITLE III—PROVISIONS
RELATING TO PARTS A AND B
Subtitle A—Home Health Services
SEC. 301. ADJUSTMENT TO REFLECT ADMINISTRATIVE
COSTS NOT INCLUDED IN THE INTERIM PAY-
MENT SYSTEM.
(a) IN GENERAL.—In the case of a home health agen-
cy that furnishes home health services to a medicare bene-
ficiary, for each such beneficiary to whom the agency fur-
nished such services during the agency’s cost reporting pe-
riod beginning in fiscal year 2000, the Secretary of Health
Services shall pay the agency, in addition to any amount
of payment made under subsection (v)(1)(L) of such sec-
tion for the beneficiary and only for such cost reporting
period, an amount of $10 to defray costs incurred by the
agency attributable to data collection and reporting re-
quirements under the Outcome and Assessment Informa-
tion Set (OASIS) required by reason of section 4602(e)
of the Balanced Budget Act of 1997 (42 U.S.C. 1395fff
note).
(b) PAYMENT UPON SETTLED COST REPORT.—The
Secretary may not make any payment under subsection
(a) to a home health agency until such time as the cost
report submitted by the agency for the cost reporting pe-
riod beginning in fiscal year 2000 is settled.
(c) PAYMENT
FROM
TRUST
FUNDS.—Payments
under this section shall be made, in appropriate part as
specified by the Secretary, from the Federal Hospital In-
surance Trust Fund and from the Federal Supplementary
Medical Insurance Trust Fund.
(d) DEFINITIONS.—In this section:
(1) HOME HEALTH AGENCY.—The term ‘‘home
health agency’’ has the meaning given that term
under section 1861(o) of the Social Security Act (42
U.S.C. 1395x(o)).
(2) HOME
HEALTH
SERVICES.—The term
‘‘home health services’’ has the meaning given that
term under section 1861(m) of such Act (42 U.S.C.
1395x(m)).
(3) 
MEDICARE
BENEFICIARY.—The 
term
‘‘medicare beneficiary’’ means an individual entitled
to benefits under part A, B, or C of title XVIII of
the Social Security Act (42 U.S.C. 1395 et seq.).
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 ‘‘September 30, 2001’’.
(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 fiscal year 2001, shall be
equal to the total amount that would
have been made if the system had not
been in effect; and
‘‘(II) for fiscal year 2002, shall
be equal to the total amount that
would have been made for fiscal year
2001 if the system had not been in ef-
fect but if the reduction in limits de-
scribed 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.’’.
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, 2003, the national aver-
age per resident amount determined under
paragraph (9) 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 (9); and
‘‘(III) for a cost reporting period be-
ginning on or after October 1, 2003, the
national average per resident amount de-
termined under paragraph (9); 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 75 percent and
the national percentage is 25 percent;
‘‘(ii) during fiscal year 2002, the hos-
pital-specific percentage is 50 percent and
the national percentage is 50 percent; and
‘‘(iii) during fiscal year 2003, the hos-
pital-specific percentage is 25 percent and
the national percentage is 75 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).
‘‘(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, 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
projecting the estimated percentage change in
the consumer price index during the 12-month
period ending at that midpoint, with appro-
priate adjustments to reflect previous under-or
over-estimations under this subparagraph in the
projected percentage change in the consumer
price index.’’.
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
and section 1833(t), not later than 60 days
after the receipt of an application from a sub-
section (d) hospital described in clause (ii), the
Secretary shall treat the hospital as being lo-
cated 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 sub-
section (d) hospital 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 determined under the Goldsmith
Modification, as published in the Federal
Register on February 27, 1992 (57 FR
6725)).
‘‘(II) The hospital is located in an
area designated by any law or regulation of
such State as a rural area (or is des-
ignated by such State as a rural hospital).
‘‘(III) The hospital would qualify as a
sole community hospital under paragraph
(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
CHANGE.—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)).’’.
(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 ‘‘for designating Metropolitan
Statistical Areas (and for designating New England
County Metropolitan Areas) published in the Federal
Register on January 3, 1980’’ and inserting ‘‘de-
scribed in clause (ii)’’; and
(3) by adding at the end the following new
clause:
‘‘(ii)(I) For fiscal years ending on or before Sep-
tember 30, 2002, standards described in this clause are
standards for designating Metropolitan Statistical Areas
(and for designating New England County Metropolitan
Areas) published in the Federal Register on January 3,
1980.
‘‘(II) For fiscal years beginning on or after October
1, 2002, standards described in this clause are standards
for designating Metropolitan Statistical Areas (and for
designating New England County Metropolitan Areas)
based on the most recent available decennial population
data published by the Bureau of the Census, as revised
by the Director of the Office of Management and
Budget.’’.
(b) TRANSITIONAL
RULE
FOR
CERTAIN
HOS-
PITALS.—
(1) 
IN
GENERAL.—Notwithstanding 
clause
(ii)(I) of section 1886(d)(8)(B) of the Social Secu-
rity Act (42 U.S.C. 1395ww(d)(8)(B)), in the case
of a hospital that would be described in that section
if the standards for designating Metropolitan Statis-
tical Areas (and for designating New England Coun-
ty Metropolitan Areas) applicable to the hospital
under that section were those standards published
on March 30, 1990, such hospital is deemed to be
described in such section for discharges occurring
during cost reporting periods beginning during fiscal
years 2001 and 2002.
(2) WAIVING
BUDGET
NEUTRALITY
ADJUST-
MENT.—Subparagraphs (C) and (D) of section
1886(d)(8) shall not apply in the case of a hospital
deemed to be described in subparagraph (B) of such
section under paragraph (1).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) applies with respect to discharges occurring
during cost reporting periods beginning on or after Octo-
ber 1, 2000.
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)(I) (42 U.S.C. 1395i–
4(c)(2)(B)(i)(I)), as added by section 4201(a) of BBA, is
amended 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 enactment of this sub-
paragraph; 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—
‘‘(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-
graph to apply, there shall be paid amounts equal to
the sum of the following:
‘‘(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, less
the amount that such hospital may charge as
described in section 1866(a)(2)(A).
‘‘(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).
(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)’’.
SEC. 404. 5-YEAR EXTENSION OF MEDICARE DEPENDENT
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.
1395ww note), as amended by section 4204(a)(3) of
BBA, is amended by striking ‘‘or fiscal year 2000’’
and inserting ‘‘or 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 sub-
paragraph (C) the rebased target amount determined
under this subparagraph.
‘‘(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 ‘rebase target amount’), in-
creased 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 rebase 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 rebase target
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 rebase 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’’.
(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 during cost reporting
periods beginning 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, the Secretary shall adjust the
limitation under subparagraph (F) in an
appropriate manner insofar as it applies to
such programs in such underserved rural
areas in order to encourage the training of
physicians in underserved rural areas.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) apply with respect to payments to
hospitals for cost reporting periods beginning 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—
(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.
‘‘(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 hos-
pital 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.—
‘‘(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
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 a report to Congress
on the study conducted under subsection (a).
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 new meth-
odology applies only to—
‘‘(I) 10 percent of the payment
amount in 2000 and 2001;
‘‘(II) 20 percent of such amount
in 2002;
‘‘(III) 30 percent of such amount
in 2003; and
‘‘(IV) 
100 
percent 
of 
such
amount in any subsequent year (in
which the risk adjustment method-
ology should reflect data from all set-
tings).’’.
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
(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 any organization
that offered a plan since such date has announced,
as of October 13, 1999, that it will not be offering
such plan as of January 1, 2000), the amount of the
monthly payment otherwise made under this sub-
section 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 payment rate other-
wise computed; and
‘‘(B) only for the subsequent 12 months,
by 3 percent of the payment rate otherwise
computed.
If such 12 months are not a calendar year, the Sec-
retary shall provide for an appropriate blend of such
percentage increases for the second and third cal-
endar years in which months described in subpara-
graph (B) occur to reflect the proportion of such
months in each such year.
‘‘(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.
‘‘(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
Medicare+Choice capitation rate for any area or as
applying to payment for any period not described in
such paragraph.’’.
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—
(1) by inserting ‘‘as provided in paragraph (2)
and except’’ after ‘‘except as provided’’;
(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
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.’’.
(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. PERMITTING ENROLLMENT IN ALTERNATIVE
MEDICARE+CHOICE 
PLANS 
AND 
MEDIGAP
COVERAGE IN CASE OF INVOLUNTARY TER-
MINATION OF MEDICARE+CHOICE ENROLL-
MENT.
(a) IN GENERAL.—Section 1851(e)(4) (42 U.S.C.
1395w–21(e)(4)) is amended by striking subparagraph
(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;’’.
(b) CONFORMING MEDIGAP AMENDMENT.—Section
1882(s)(3)(A) (42 U.S.C. 1395ss(s)(3)(A)) is amended, in
the matter following clause (iii)—
(1) by inserting ‘‘(or, if elected by the indi-
vidual, the date of notification of the individual or
the Secretary by the plan or organization of the im-
pending termination or discontinuance of the plan in
the area in which the individual resides)’’ after ‘‘the
date of the termination of enrollment described in
such subparagraph’’; and
(2) by inserting ‘‘(or the date of such notifica-
tion)’’ 
after 
‘‘the 
date 
of 
termination 
or
disenrollment’’.
(c) EFFECTIVE DATE.—The amendments made by
this subsection shall apply to notices of impending termi-
nations or discontinuances made before, on, or after the
date of the enactment of this Act, except that, for pur-
poses of applying such amendments with respect to a no-
tice of a termination or discontinuance that was made be-
fore such date and for which the termination or dis-
continuance occurs after such date, such notice shall be
treated as having occurred on 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.’’.
(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’’.
SEC. 508. 2 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. MISCELLANEOUS CHANGES.
(a) PERMITTING RELIGIOUS FRATERNAL BENEFIT
SOCIETIES TO OFFER A RANGE OF MEDICARE+CHOICE
PLANS.—Section 1859(e)(2)(A) (42 U.S.C. 1395w–
29(e)(2)(A)) 
is 
amended 
by 
striking 
‘‘section
1851(a)(2)(A)’’ and inserting ‘‘section 1851(a)(2)’’.
SEC. 510. 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
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.
Subtitle B—Social Health Mainte-
nance Organizations (SHMOs)
SEC. 511. EXTENSION OF SOCIAL HEALTH MAINTENANCE
ORGANIZATION DEMONSTRATION PROJECT
AUTHORITY.
(a) EXTENSION.—Section 4018(b) of the Omnibus
Budget Reconciliation Act of 1987, 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 Secretary submits to Congress
the report described in section 4014(c) of the Bal-
anced 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, 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
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.’’.
Æ