SEC. 2. CHANGES TO INTERIM PAYMENT SYSTEM FOR
HOME HEALTH SERVICES.
(a) PER VISIT COST LIMITS.—
(1) 
BASIS
FOR
LIMITS.—Section
1861(v)(1)(L)(i) of the Social Security Act (42
U.S.C. 1395x(v)(1)(L)(i)), as amended by section
4602(a) of the Balanced Budget Act of 1997, is
amended—
(A) by striking ‘‘or’’ at the end of sub-
clause (III); and
(B) by striking subclause (IV) and insert-
ing the following:
‘‘(IV) October 1, 1997, and before October 1,
1998, 110 percent of such mean, or
‘‘(V) October 1, 1998, 107 percent of such
mean.’’.
(2) ELIMINATION OF TWO-YEAR FREEZE.—Sec-
tion 
1861(v)(1)(L) 
of 
such 
Act 
(42 
U.S.C.
1395x(v)(1)(L)), as amended by section 4601 of the
Balanced Budget Act of 1997, is amended—
(A) by striking clause (iv) and redesignat-
ing clause (v) as clause (iv);
(B) by redesignating clauses (vi) and (vii)
as clauses (viii) and (ix) respectively; and
(C) in clause (ix), as so redesignated, by
striking ‘‘clause (v)(I)’’ and inserting ‘‘clause
(iv)(I)’’.
(b) PER
BENEFICIARY
COST
LIMITS.—Section
1861(v)(1)(L) of such Act (42 U.S.C. 1395x(v)(1)(L)), as
amended by section 4602(c) of the Balanced Budget Act
of 1997, is amended—
(1) by amending clause (iv)(I) (as redesignated
by subsection (a)(2)(A)) to read as follows:
‘‘(I) a per beneficiary annual limitation cal-
culated under clause (v); and’’;
(2) by inserting after clause (iv), as so redesig-
nated, the following new clause:
‘‘(v) For purposes of clause (iv)(I), the per bene-
ficiary annual limitation calculation under this clause is
based—
‘‘(I) 25 percent on the average of the reason-
able costs (including nonroutine medical supplies)
for agencies in the State in which an agency is lo-
cated for cost reporting periods beginning in fiscal
year 1995, such costs updated by the home health
market basket index and adjusted for the wage-re-
lated portion of such costs by an area wage index
that the Secretary determines reflects the relative
hospital wage level in the geographic area of the
agency (determined without regard to whether the
hospitals in such area have been reclassified to a
new 
geographic 
area 
pursuant 
to 
section
1886(d)(8)(B), a decision of the Medicare Geo-
graphic Classification Review Board, or a decision of
the Secretary under section 1886(d)(10)) compared
to the State average hospital wage level; and
‘‘(II) 75 percent on the national average of
such costs for cost reporting periods beginning in
fiscal year 1995, such costs updated by the home
health market basket and adjusted for the wage-re-
lated portion of such costs by the wage index de-
scribed in clause (iii).’’; and
(3) by amending subclause (I) of clause (viii),
as redesignated by subsection (a)(2)(B), to read as
follows:
‘‘(I) For new providers and those providers
without a cost reporting period beginning in fiscal
year 1995, the per beneficiary limitation shall be
equal to the per beneficiary limitation determined
under clause (v).’’.
(c) PER BENEFICIARY EFFICIENCY STANDARD.—
Section 1861(v)(1)(L) of such Act (42 U.S.C. 1395x
(v)(1)(L), as amended by section 4602(c) of the Balanced
Budget Act of 1997, is amended—
(1) in clause (iv) (as redesignated by subsection
(a)(2)(A)), by striking ‘‘Payment’’ and inserting
‘‘Except as provided in clause (vi), payment’’; and
(2) by inserting after clause (v), as added by
subsection (b)(2), the following new clauses:
‘‘(vi) Notwithstanding the limits imposed by clause
(iv), in the case of a home health agency that for any cost
reporting period beginning on or after October 1, 1997,
for which the agency’s reasonable costs (determined with-
out regard to such limits) do not exceed the per bene-
ficiary efficiency standard established under clause (vii),
payment to such home health agency shall equal such rea-
sonable costs or, if lower, the limits determined under
clause (i).
‘‘(vii) For services furnished by home health agencies
for cost reporting periods beginning on or after October
1, 1997, the Secretary shall establish a per beneficiary ef-
ficiency standard equal to the product of—
‘‘(I) the national average per beneficiary rea-
sonable costs (including nonroutine medical supplies)
for all home health agencies for cost reporting peri-
ods beginning in fiscal year 1995, such costs up-
dated by the home health market basket and ad-
justed for the wage-related portion of such costs by
the wage index described in clause (iii); and
‘‘(II) the agency’s unduplicated census count of
patients (entitled to benefits under this title) for the
cost reporting period to which the standard re-
lates.’’.
(d) ELIMINATION OF DEFAULT REDUCTION OF IN-
TERIM LIMITS.—Section 4603(e) of the Balanced Budget
Act of 1997 is amended by striking ‘‘reduction’’ and all
that follows through ‘‘1999’’ and inserting ‘‘reduction of
the cost limits and per beneficiary limits described in sec-
tion 1861(v)(1)(L) of such Act (as those limits would oth-
erwise be in effect on September 30, 1999) by such uni-
form percentage as is necessary to achieve the budgetary
savings attributed by the Congressional Budget Office to
this subsection (or to the 15 percent reduction under the
prospective payment system) for such cost reporting peri-
ods in its final cost estimate of the conference agreement
on this Act’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of the Balanced Budget Act of 1997.
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