(ii)Basepayment-to-cost-ratio defined.For purposesof this subparagraph, the base payment-to-cost ratio for a hospital means the ratio of(I)the hospitalsreimbursement under this part for covered OPD services furnished duringthe cost reporting period ending in 1996 (or in the case of a hospitalthat did not submit a cost report for such period, during the firstsubsequent cost reporting period ending before 2001 for which thehospital submitted a cost report), including any reimbursement forsuch services through cost-sharing described in subparagraph (E),to (II) the reasonable cost of such services for such period.The Secretary shall determine such ratios as if the amendmentsmade by section 4521 of the Balanced Budget Act of 1997[125]werein effect in 1996.(G)Interim payments.The Secretary shallmake payments under this paragraph to hospitals on an interim basis,subject to retrospective adjustments based on settled cost reports.(H)No effect on copayments.Nothing inthis paragraph shall be construed to affect the unadjusted copaymentamount described in paragraph (3)(B) or the copayment amount underparagraph (8).(I)Application without regard to budget neutrality.The additional payments made under this paragraph(i)shall not beconsidered an adjustment under paragraph (2)(E); and(ii)shall not beimplemented in a budget neutral manner.(8)Copaymentamount.(A)In general.Except as provided in subparagraphs(B) and (C), the copayment amount under this subsection is the amountby which the amount described in paragraph (4)(B) exceeds the amountof payment determined under paragraph (4)(C).(B)Election to offer reduced copayment amount.The Secretary shall establish a procedure under which a hospital,before the beginning of a year (beginning with 1999), may elect toreduce the copayment amount otherwise established under subparagraph(A) for some or all covered OPD services to an amount that is notless than 20 percent of the medicare OPD fee schedule amount (computedunder paragraph (3)(D)) for the service involved. Under such procedures,such reduced copayment amount may not be further reduced or increasedduring the year involved and the hospital may disseminate informationon the reduction of copayment amount effected under this subparagraph.(C)Limitation on copayment amount.(i)Toinpatient hospital deductible amount.In no case shall the copayment amount for a procedure performed ina year exceed the amount of the inpatient hospital deductible establishedunder section 1813(b) for that year.(ii)Tospecified percentage.The Secretary shallreduce the national unadjusted copayment amount for a covered OPDservice (or group of such services) furnished in a year in a mannerso that the effective copayment rate (determined on a national unadjustedbasis) for that service in the year does not exceed the followingpercentage:(I)For proceduresperformed in 2001, on or after April 1, 2001, 57 percent.(II)For proceduresperformed in 2002 or 2003, 55 percent.(III)Forprocedures performed in 2004, 50 percent.(IV)For proceduresperformed in 2005, 45 percent.(V)For proceduresperformed in 2006 and thereafter, 40 percent.(D)No impact on deductibles.Nothing inthis paragraph shall be construed as affecting a hospitalsauthority to waive the charging of a deductible under section 1833(b).(E)Computation ignoring outlier and pass-through adjustments.The copayment amount shall be computed under subparagraph (A)as if the adjustments under paragraphs (5) and (6) (and any adjustmentmade under paragraph (2)(E) in relation to such adjustments) had notoccurred.(9)Periodicreview and adjustments components of prospective payment system.(A)Periodic review.The Secretary shallreview not less often than annually and revise the groups, the relativepayment weights, and the wage and other adjustments described in paragraph(2) to take into account changes in medical practice, changes in technology,the addition of new services, new cost data, and other relevant informationand factors. The Secretary shall consult with an expert outside advisorypanel composed of an appropriate selection of representatives of providersto review (and advise the Secretary concerning) the clinical integrityof the groups and weights. Such panel may use data collected or developedby entities and organizations (other than the Department of Healthand Human Services) in conducting such review.(B)Budget neutrality adjustment.If theSecretary makes adjustments under subparagraph (A), then the adjustmentsfor a year may not cause the estimated amount of expenditures underthis part for the year to increase or decrease from the estimatedamount of expenditures under this part that would have been made ifthe adjustments had not been made. In determining adjustments underthe preceding sentence for 2004 and 2005, the Secretary shall nottake into account under this subparagraph or paragraph (2)(E) anyexpenditures that would not have been made but for the applicationof paragraph (14).(C)Update factor.If the Secretary determinesunder methodologies described in paragraph (2)(F) that the volumeof services paid for under this subsection increased beyond amountsestablished through those methodologies, the Secretary may appropriatelyadjust the update to the conversion factor otherwise applicable ina subsequent year.(10)Specialrule for ambulance services.The Secretaryshall pay for hospital outpatient services that are ambulance serviceson the basis described in section 1861(v)(1)(U), or, if applicable,the fee schedule established under section 1834(l).(11)Specialrules for certain hospitals.In the caseof hospitals described in clause (iii) or (v) of section 1886(d)(1)(B)(A)the systemunder this subsection shall not apply to covered OPD services furnishedbefore January 1, 2000; and(B)the Secretarymay establish a separate conversion factor for such services in amanner that specifically takes into account the unique costs incurredby such hospitals by virtue of their patient population and serviceintensity.(12)Limitationon review.There shall be no administrativeor judicial review under section 1869, 1878, or otherwise of(A)the developmentof the classification system under paragraph (2), including the establishmentof groups and relative payment weights for covered OPD services, ofwage adjustment factors, other adjustments, and methods describedin paragraph (2)(F);(B)the calculationof base amounts under paragraph (3);(C)periodicadjustments made under paragraph (6);(D)the establishmentof a separate conversion factor under paragraph (8)(B); and(E)the determinationof the fixed multiple, or a fixed dollar cutoff amount, the marginalcost of care, or applicable percentage under paragraph (5) or thedetermination of insignificance of cost, the duration of the additionalpayments, the determination and deletion of initial and new categories(consistent with subparagraphs (B) and (C) of paragraph (6)), theportion of the medicare OPD fee schedule amount associated with particulardevices, drugs, or biologicals, and the application of any pro ratareduction under paragraph (6).(13)Authorizationof adjustment for rural hospitals.(A)Study.The Secretary shall conducta study to determine if, under the system under this subsection, costsincurred by hospitals located in rural areas by ambulatory paymentclassification groups (APCs) exceed those costs incurred by hospitalslocated in urban areas.(B)Authorization of adjustment.Insofaras the Secretary determines under subparagraph (A) that costs incurredby hospitals located in rural areas exceed those costs incurred byhospitals located in urban areas, the Secretary shall provide foran appropriate adjustment under paragraph (2)(E) to reflect thosehigher costs by January 1, 2006.(14)Drugapc payment rates.(A)In general.The amount of payment underthis subsection for a specified covered outpatient drug (defined insubparagraph (B)) that is furnished as part of a covered OPD service(or group of services)(i)in 2004, inthe case of(I)a solesource drug shall in no case be less than 88 percent, or exceed 95percent, of the reference average wholesale price for the drug;(II)an innovatormultiple source drug shall in no case exceed 68 percent of the referenceaverage wholesale price for the drug; or(III)a noninnovatormultiple source drug shall in no case exceed 46 percent of the referenceaverage wholesale price for the drug;(ii)in 2005, inthe case of(I)a solesource drug shall in no case be less than 83 percent, or exceed 95percent, of the reference average wholesale price for the drug;(II)an innovatormultiple source drug shall in no case exceed 68 percent of the referenceaverage wholesale price for the drug; or(III)anoninnovator multiple source drug shall in no case exceed 46 percentof the reference average wholesale price for the drug; or(iii)in a subsequentyear, shall be equal, subject to subparagraph (E)(I)to theaverage acquisition cost for the drug for that year (which, at theoption of the Secretary, may vary by hospital group (as defined bythe Secretary based on volume of covered OPD services or other relevantcharacteristics)), as determined by the Secretary taking into accountthe hospital acquisition cost survey data under subparagraph (D);or(II)ifhospital acquisition cost data are not available, the average pricefor the drug in the year established under section 1842(o), section 1847A, or section 1847B, as the casemay be, as calculated and adjusted by the Secretary as necessary forpurposes of this paragraph.(B)Specified covered outpatient drug defined.(i)Ingeneral.In this paragraph, the term specified covered outpatient drug means, subject to clause(ii), a covered outpatient drug (as defined in section 1927(k)(2)) forwhich a separate ambulatory payment classification group (APC) hasbeen established and that is(I)a radiopharmaceutical;or(II)a drugor biological for which payment was made under paragraph (6) (relatingto pass-through payments) on or before December 31, 2002.(ii)Exception.Such term does not include(I)a drugor biological for which payment is first made on or after January1, 2003, under paragraph (6);(II)a drugor biological for which a temporary HCPCS code has not been assigned;or(III)during2004 and 2005, an orphan drug (as designated by the Secretary).(C)Payment for designated orphan drugs during 2004 and 2005.The amount of payment under this subsection for an orphan drugdesignated by the Secretary under subparagraph (B)(ii)(III) that isfurnished as part of a covered OPD service (or group of services)during 2004 and 2005 shall equal such amount as the Secretary mayspecify.(D)Acquisition cost survey for hospital outpatient drugs.(i)AnnualGAO surveys in 2004 and 2005.(I)In general.The Comptroller Generalof the United States shall conduct a survey in each of 2004 and 2005to determine the hospital acquisition cost for each specified coveredoutpatient drug. Not later than April 1, 2005, the Comptroller Generalshall furnish data from such surveys to the Secretary for use in settingthe payment rates under subparagraph (A) for 2006.(II)Recommendations.Upon the completionof such surveys, the Comptroller General shall recommend to the Secretarythe frequency and methodology of subsequent surveys to be conductedby the Secretary under clause (ii).(ii)Subsequentsecretarial surveys.The Secretary, takinginto account such recommendations, shall conduct periodic subsequentsurveys to determine the hospital acquisition cost for each specifiedcovered outpatient drug for use in setting the payment rates undersubparagraph (A).(iii)Survey requirements.The surveys conductedunder clauses (i) and (ii) shall have a large sample of hospitalsthat is sufficient to generate a statistically significant estimateof the average hospital acquisition cost for each specified coveredoutpatient drug. With respect to the surveys conducted under clause(i), the Comptroller General shall report to Congress on the justificationfor the size of the sample used in order to assure the validity ofsuch estimates.(iv)Differentiationin cost.In conducting surveys underclause (i), the Comptroller General shall determine and report toCongress if there is (and the extent of any) variation in hospitalacquisition costs for drugs among hospitals based on the volume ofcovered OPD services performed by such hospitals or other relevantcharacteristics of such hospitals (as defined by the Comptroller General).(v)