SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children's Hospitals Education and 
Research Act of 1999''.

SEC. 2. PROGRAM OF PAYMENTS TO CHILDREN'S HOSPITALS THAT OPERATE 
              GRADUATE MEDICAL EDUCATION PROGRAMS.

    (a) Payments.--
            (1) In general.--The Secretary shall make payments under 
        this section to each children's hospital for each hospital cost 
        reporting period under the medicare program beginning in or 
        after fiscal year 2000 and before fiscal year 2004 for the--
                    (A) direct expenses associated with operating 
                approved medical residency training programs; and
                    (B) indirect expenses associated with the treatment 
                of more severely ill patients and the additional costs 
                related to the teaching of residents.
            (2) Payment amounts.--Subject to paragraph (3), the 
        following amounts shall be payable under this section to a 
        children's hospital for a cost reporting period described in 
        paragraph (1):
                    (A) Direct expenses.--The amount determined under 
                subsection (b) for direct expenses described in 
                paragraph (1)(A).
                    (B) Indirect expenses.--The amount determined under 
                subsection (c) for indirect expenses described in 
                paragraph (1)(B)
            (3) Capped amount.--
                    (A) In general.--The payments to children's 
                hospitals established in this subsection for cost 
                reporting periods ending in any fiscal year shall not 
                exceed the funds appropriated under subsection (e) for 
                that fiscal year.
                    (B) Pro rata reductions of payments for direct 
                expenses.--If the Secretary determines that the amount 
                of funds appropriated under subsection (e)(1) for cost 
                reporting periods ending in any fiscal year is 
                insufficient to provide the total amount of payments 
                otherwise due for such periods, the Secretary shall 
                reduce each of the amounts payable under this section 
                pursuant to paragraph (2)(A) for such period on a pro 
                rata basis to reflect such shortfall.
    (b) Amount of Payment for Direct Medical Education.--
            (1) In general.--The amount determined under this 
        subsection for payments to a children's hospital for direct 
        expenses relating to approved medical residency training 
        programs for a cost reporting period beginning in or after 
        fiscal year 2000 and before fiscal year 2004 is equal to the 
        product of--
                    (A) the updated per resident amount for direct 
                medical education, as determined under paragraph (2), 
                for the cost reporting period; and
                    (B) the number of full-time equivalent residents in 
                the hospital's approved medical residency training 
                programs (as determined under section 1886(h)(4) of the 
                Social Security Act (42 U.S.C. 1395ww(h)(4))) for the 
                cost reporting period.
            (2) Updated per resident amount for direct medical 
        education.--The updated per resident amount for direct medical 
        education for a hospital for a cost reporting period ending in 
        a fiscal year is an amount equal to the per resident amount for 
        cost reporting periods ending during fiscal year 1999 for the 
        hospital involved (as determined by the Secretary using the 
        methodology described in section 1886(h)(2)(E)) of such Act (42 
        U.S.C. 1395ww(h)(2)(E))) increased by the percentage increase 
        in the Consumer Price Index for All Urban Consumers (United 
        States city average) from fiscal year 1999 through the fiscal 
        year involved.
    (c) Amount of Payment for Indirect Medical Education.--
            (1) In general.--The amount determined under this 
        subsection for payments to a children's hospital for indirect 
expenses associated with the treatment of more severely ill patients 
and the additional costs related to the teaching of residents for a 
cost reporting period beginning in or after fiscal year 2000 and before 
fiscal year 2004 is equal to an amount determined appropriate by the 
Secretary.
            (2) Factors.--In determining the amount under paragraph 
        (1), the Secretary shall--
                    (A) take into account variations in case mix among 
                children's hospitals and the number of full-time 
                equivalent residents in the hospitals' approved medical 
                residency training programs for the cost reporting 
                period; and
                    (B) assure that the aggregate of the payments for 
                indirect expenses associated with the treatment of more 
                severely ill patients and the additional costs related 
                to the teaching of residents under this section in a 
                fiscal year are equal to the amount appropriated for 
                such expenses in such year under subsection (e)(2).
    (d) Making of Payments.--
            (1) Interim payments.--The Secretary shall estimate, before 
        the beginning of each cost reporting period for a hospital for 
        which the payments may be made under this section, the amounts 
        of the payments for such period and shall (subject to paragraph 
        (2)) make the payments of such amounts in 26 equal interim 
        installments during such period.
            (2) Withholding.--The Secretary shall withhold up to 25 
        percent from each interim installment paid under paragraph (1).
            (3) Reconciliation.--At the end of each such period, the 
        hospital shall submit to the Secretary such information as the 
        Secretary determines to be necessary to determine the percent 
        (if any) of the total amount withheld under paragraph (2) that 
        is due under this section for the hospital for the period. 
        Based on such determination, the Secretary shall recoup any 
        overpayments made, or pay any balance due. The amount so 
        determined shall be considered a final intermediary 
        determination for purposes of applying section 1878 of the 
        Social Security Act (42 U.S.C. 1395oo) and shall be subject to 
        review under that section in the same manner as the amount of 
        payment under section 1886(d) of such Act (42 U.S.C. 1395ww(d)) 
        is subject to review under such section.
    (e) Limitation on Expenditures.--
            (1) Direct medical education.--
                    (A) In general.--Subject to subparagraph (B), there 
                are hereby appropriated, out of any money in the 
                Treasury not otherwise appropriated, for payments under 
                this section for direct expenses relating to approved 
                medical residency training programs for cost reporting 
                periods beginning in--
                            (i) fiscal year 2000, $35,000,000;
                            (ii) fiscal year 2001, $95,000,000;
                            (iii) fiscal year 2002, $95,000,000; and
                            (iv) fiscal year 2003, $95,000,000.
                    (B) Carryover of excess.--If the amount of payments 
                under this section for cost reporting periods beginning 
                in fiscal year 2000, 2001, or 2002 is less than the 
                amount provided under this paragraph for such payments 
                for such periods, then the amount available under this 
                paragraph for cost reporting periods beginning in the 
                following fiscal year shall be increased by the amount 
                of such difference.
            (2) Indirect medical education.--There are hereby 
        appropriated, out of any money in the Treasury not otherwise 
        appropriated, for payments under this section for indirect 
        expenses associated with the treatment of more severely ill 
        patients and the additional costs related to the teaching of 
        residents for cost reporting periods beginning in--
                    (A) fiscal year 2000, $65,000,000;
                    (B) fiscal year 2001, $190,000,000;
                    (C) fiscal year 2002, $190,000,000; and
                    (D) fiscal year 2003, $190,000,000.
    (f) Relation to Medicare and Medicaid Payments.--Notwithstanding 
any other provision of law, payments under this section to a hospital 
for a cost reporting period--
            (1) are in lieu of any amounts otherwise payable to the 
        hospital under section 1886(h) or 1886(d)(5)(B) of the Social 
        Security Act (42 U.S.C. 1395ww(h); 1395ww(d)(5)B)) to the 
        hospital for such cost reporting period, but
            (2) shall not affect the amounts otherwise payable to such 
        hospitals under a State medicaid plan under title XIX of such 
        Act (42 U.S.C. 1396 et seq.).
    (g) Definitions.--In this section:
            (1) Approved medical residency training program.--The term 
        ``approved medical residency training program'' has the meaning 
        given such term in section 1886(h)(5)(A) of the Social Security 
        Act (42 U.S.C. 1395ww(h)(5)(A)).
            (2) Children's hospital.--The term ``children's hospital'' 
        means a hospital described in section 1886(d)(1)(B)(iii) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iii)).
            (3) Direct graduate medical education costs.--The term 
        ``direct graduate medical education costs'' has the meaning 
        given such term in section 1886(h)(5)(C) of the Social Security 
        Act (42 U.S.C. 1395ww(h)(5)(C)).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
Output: Children's Hospitals Education and Research Act of 1999 - Directs the Secretary of Health and Human Services to make payment as specified to each children's hospital for each hospital cost reporting period under Medicare (title XVIII of the Social Security Act (SSA)) from FY 2000 through FY 2003 for the direct and indirect expenses associated with operating approved medical residency training programs. 
Provides that such payments are in lieu of certain Medicare payments to hospitals for inpatient hospital services, but shall not affect the amounts otherwise payable to such hospitals under a State Medicaid (SSA title XIX) plan. 
Makes appropriations.