‘‘(iii) for a fiscal year beginning after fiscal
year 2001, for hospitals located in all areas, to
the product of—
‘‘(I) the applicable average standard-
ized amount (computed under subpara-
graph (A)), reduced under subparagraph
(B), and adjusted or reduced under sub-
paragraph (C) for the fiscal year; and
‘‘(II) the weighting factor (determined
under paragraph (4)(B)) for that diag-
nosis-related group.’’.
(B) TECHNICAL CONFORMING SUNSET.—
Section 1886(d)(3) of such Act (42 U.S.C.
1395ww(d)(3)) is amended in the matter pre-
ceding subparagraph (A) by inserting ‘‘for fiscal
years before fiscal year 1997’’ before ‘‘a re-
gional DRG prospective payment rate’’.
SEC. 103. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR
LABOR COSTS FOR ALL ITEMS AND SERVICES
REIMBURSED 
UNDER 
PROSPECTIVE 
PAY-
MENT SYSTEMS.
Section 1886(d)(10)(D) of the Social Security Act
(42 U.S.C. 1395ww(d)(10)(D)), as amended by section
304(a) of BIPA (114 Stat. 2763A–494), is amended by
adding at the end the following new clause:
‘‘(vii)(I) Any decision of the Board to reclassify a
subsection (d) hospital for purposes of the adjustment fac-
tor described in subparagraph (C)(i)(II) for fiscal year
2001 or any fiscal year thereafter shall apply for purposes
of adjusting payments for variations in costs that are at-
tributable to wages and wage-related costs for PPS-reim-
bursed items and services.
‘‘(II) For purposes of subclause (I), the term ‘PPS-
reimbursed items and services’ means, for the fiscal year
for which the Board has made a decision described in such
subclause, each item and service for which payment is
made under this title on a prospective basis and adjusted
for variations in costs that are attributable to wages or
wage-related costs that is furnished by the hospital to
which such decision applies, or by a provider-based entity
or department of that hospital (as determined by the Sec-
retary).’’.
SEC. 104. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY
SERVICES.
(a) IN GENERAL.—Section 1848(i) of the Social Se-
curity Act (42 U.S.C. 1395w–4(i)) is amended by adding
at the end the following new paragraph:
‘‘(4) TREATMENT OF CERTAIN PHYSICIAN PA-
THOLOGY SERVICES.—
‘‘(A) IN GENERAL.—With respect to serv-
ices furnished on or after January 1, 2001, if
an independent laboratory furnishes the tech-
nical component of a physician pathology serv-
ice to a fee-for-service medicare beneficiary who
is an inpatient or outpatient of a covered hos-
pital, the Secretary shall treat such component
as a service for which payment shall be made
to the laboratory under this section and not as
an inpatient hospital service for which payment
is made to the hospital under section 1886(d)
or as a hospital outpatient service for which
payment is made to the hospital under section
1834(t).
‘‘(B) DEFINITIONS.—In this paragraph:
‘‘(i) COVERED HOSPITAL.—
‘‘(I) IN
GENERAL.—The term
‘covered hospital’ means, with respect
to an inpatient or outpatient, a hos-
pital that had an arrangement with
an independent laboratory that was in
effect as of July 22, 1999, under
which a laboratory furnished the tech-
nical component of physician pathol-
ogy services to fee-for-service medi-
care beneficiaries who were hospital
inpatients or outpatients, respectively,
and submitted claims for payment for
such component to a carrier with a
contract under section 1842 and not
to the hospital.
‘‘(II) CHANGE
IN
OWNERSHIP
DOES
NOT
AFFECT
DETERMINA-
TION.—A change in ownership with
respect to a hospital on or after the
date referred to in subclause (I) shall
not affect the determination of wheth-
er such hospital is a covered hospital
for purposes of such subclause.
‘‘(ii) 
FEE-FOR-SERVICE
MEDICARE
BENEFICIARY.—The term ‘fee-for-service
medicare beneficiary’ means an individual
who is entitled to benefits under part A, or
enrolled under this part, or both, but who
is not enrolled in any of the following:
‘‘(I) A Medicare+Choice plan
under part C.
‘‘(II) A plan offered by an eligi-
ble organization under section 1876.
‘‘(III) A program of all-inclusive
care for the elderly (PACE) under
section 1894.
‘‘(IV) A social health mainte-
nance organization (SHMO) dem-
onstration project established under
section 4018(b) of the Omnibus
Budget Reconciliation Act of 1987
(Public Law 100–203).’’.
(b) CONFORMING
AMENDMENT.—Section 542 of
BIPA (114 Stat. 2763A–550) is repealed.
(c) EFFECTIVE DATES.—The amendments made by
this section shall take effect as if included in the enact-
ment of BIPA.
Subtitle B—Rural Home Health
Improvements
SEC. 111. ELIMINATION OF 15 PERCENT REDUCTION IN
PAYMENT RATES UNDER THE PROSPECTIVE
PAYMENT SYSTEM FOR HOME HEALTH SERV-
ICES.
(a) IN GENERAL.—Section 1895(b)(3)(A) of the So-
cial Security Act (42 U.S.C. 1395fff(b)(3)(A)), as amend-
ed by section 501(a) of BIPA (114 Stat. 2763A–529) is
amended to read as follows: