[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 85 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                 S. 85

 To provide for home and community-based services for individuals with 
                 disabilities, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 4, 1995

Mr. Feingold (for himself and Mr. Simon) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide for home and community-based services for individuals with 
                 disabilities, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Long-Term Care 
Reform and Deficit Reduction Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
    TITLE I--HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH 
                              DISABILITIES

Sec. 101. State programs for home and community-based services for 
                            individuals with disabilities.
Sec. 102. State plans.
Sec. 103. Individuals with disabilities defined.
Sec. 104. Home and community-based services covered under State plan.
Sec. 105. Cost sharing.
Sec. 106. Quality assurance and safeguards.
Sec. 107. Advisory groups.
Sec. 108. Payments to States.
Sec. 109. Appropriations; allotments to States.
Sec. 110. Federal evaluations.
Sec. 111. Information and technical assistance grants relating to 
                            development of hospital linkage programs.
               TITLE II--PROVISIONS RELATING TO MEDICARE

Sec. 201. Recapture of certain health care subsidies received by high-
                            income individuals.
Sec. 202. Imposition of 10 percent copayment on home health services 
                            under medicare.
Sec. 203. Reduction in payments for capital-related costs for inpatient 
                            hospital services.
Sec. 204. Elimination of formula-driven overpayments for certain 
                            outpatient hospital services.
Sec. 205. Reduction in routine cost limits for home health services.

    TITLE I--HOME AND COMMUNITY-BASED SERVICES FOR INDIVIDUALS WITH 
                              DISABILITIES

SEC. 101. STATE PROGRAMS FOR HOME AND COMMUNITY-BASED SERVICES FOR 
              INDIVIDUALS WITH DISABILITIES.

    (a) In General.--Each State that has a plan for home and community-
based services for individuals with disabilities submitted to and 
approved by the Secretary under section 102(b) may receive payment in 
accordance with section 108.
    (b) Entitlement to Services.--Nothing in this title shall be 
construed to create a right to services for individuals or a 
requirement that a State with an approved plan expend the entire amount 
of funds to which it is entitled under this title.
    (c) Designation of Agency.--Not later than 6 months after the date 
of enactment of this Act, the Secretary shall designate an agency 
responsible for program administration under this title.

SEC. 102. STATE PLANS.

    (a) Plan Requirements.--In order to be approved under subsection 
(b), a State plan for home and community-based services for individuals 
with disabilities must meet the following requirements:
            (1) State maintenance of effort.--
                    (A) In general.--A State plan under this title 
                shall provide that the State will, during any fiscal 
                year that the State is furnishing services under this 
                title, make expenditures of State funds in an amount 
                equal to the State maintenance of effort amount for the 
                year determined under subparagraph (B) for furnishing 
                the services described in subparagraph (C) under the 
                State plan under this title or the State plan under 
                title XIX of the Social Security Act (42 U.S.C. 1396 et 
                seq.).
                    (B) State maintenance of effort amount.--
                            (i) In general.--The maintenance of effort 
                        amount for a State for a fiscal year is an 
                        amount equal to--
                                    (I) for fiscal year 1997, the base 
                                amount for the State (as determined 
                                under clause (ii)) updated through the 
                                midpoint of fiscal year 1997 by the 
                                estimated percentage change in the 
                                index described in clause (iii) during 
                                the period beginning on October 1, 
                                1995, and ending at that midpoint; and
                                    (II) for succeeding fiscal years, 
                                an amount equal to the amount 
                                determined under this clause for the 
                                previous fiscal year updated through 
                                the midpoint of the year by the 
                                estimated percentage change in the 
                                index described in clause (iii) during 
                                the 12-month period ending at that 
                                midpoint, with appropriate adjustments 
                                to reflect previous underestimations or 
                                overestimations under this clause in 
                                the projected percentage change in such 
                                index.
                            (ii) State base amount.--The base amount 
                        for a State is an amount equal to the total 
                        expenditures from State funds made under the 
                        State plan under title XIX of the Social 
                        Security Act (42 U.S.C. 1396 et seq.) during 
                        fiscal year 1995 with respect to medical 
                        assistance consisting of the services described 
                        in subparagraph (C).
                            (iii) Index described.--For purposes of 
                        clause (i), the Secretary shall develop an 
                        index that reflects the projected increases in 
                        spending for services under subparagraph (C), 
                        adjusted for differences among the States.
                    (C) Medicaid services described.--The services 
                described in this subparagraph are the following:
                            (i) Personal care services (as described in 
                        section 1905(a)(24) of the Social Security Act 
                        (42 U.S.C. 1396d(a)(24))).
                            (ii) Home or community-based services 
                        furnished under a waiver granted under 
                        subsection (c), (d), or (e) of section 1915 of 
                        such Act (42 U.S.C. 1396n).
                            (iii) Home and community care furnished to 
                        functionally disabled elderly individuals under 
                        section 1929 of such Act (42 U.S.C. 1396t).
                            (iv) Community supported living 
                        arrangements services under section 1930 of 
                        such Act (42 U.S.C. 1396u).
                            (v) Services furnished in a hospital, 
                        nursing facility, intermediate care facility 
                        for the mentally retarded, or other 
                        institutional setting specified by the 
                        Secretary.
            (2) Eligibility.--
                    (A) In general.--Within the amounts provided by the 
                State and under section 108 for such plan, the plan 
                shall provide that services under the plan will be 
                available to individuals with disabilities (as defined 
                in section 103(a)) in the State.
                    (B) Initial screening.--The plan shall provide a 
                process for the initial screening of an individual who 
                appears to have some reasonable likelihood of being an 
                individual with disabilities. Any such process shall 
                require the provision of assistance to individuals who 
                wish to apply but whose disability limits their ability 
                to apply. The initial screening and the determination 
                of disability (as defined under section 103(b)(1)) 
                shall be conducted by a public agency.
                    (C) Restrictions.--
                            (i) In general.--The plan may not limit the 
                        eligibility of individuals with disabilities 
                        based on--
                                    (I) income;
                                    (II) age;
                                    (III) residential setting (other 
                                than with respect to an institutional 
                                setting, in accordance with clause 
                                (ii)); or
                                    (IV) other grounds specified by the 
                                Secretary;
                        except that through fiscal year 2005, the 
                        Secretary may permit a State to limit 
                        eligibility based on level of disability or 
                        geography (if the State ensures a balance 
                        between urban and rural areas).
                            (ii) Institutional setting.--The plan may 
                        limit the eligibility of individuals with 
disabilities based on the definition of the term ``institutional 
setting'', as determined by the State.
                    (D) Continuation of services.--The plan must 
                provide assurances that, in the case of an individual 
                receiving medical assistance for home and community-
                based services under the State medicaid plan under 
                title XIX of the Social Security Act (42 U.S.C. 1396 et 
                seq.) as of the date a State's plan is approved under 
                this title, the State will continue to make available 
                (either under this plan, under the State medicaid plan, 
                or otherwise) to such individual an appropriate level 
                of assistance for home and community-based services, 
                taking into account the level of assistance provided as 
                of such date and the individual's need for home and 
                community-based services.
            (3) Services.--
                    (A) Needs assessment.--Not later than the end of 
                the second year of implementation, the plan or its 
                amendments shall include the results of a statewide 
                assessment of the needs of individuals with 
                disabilities in a format required by the Secretary. The 
                needs assessment shall include demographic data 
                concerning the number of individuals within each 
                category of disability described in this title, and the 
                services available to meet the needs of such 
                individuals.
                    (B) Specification.--Consistent with section 104, 
                the plan shall specify--
                            (i) the services made available under the 
                        plan;
                            (ii) the extent and manner in which such 
                        services are allocated and made available to 
                        individuals with disabilities; and
                            (iii) the manner in which services under 
                        the plan are coordinated with each other and 
                        with health and long-term care services 
                        available outside the plan for individuals with 
                        disabilities.
                    (C) Taking into account informal care.--A State 
                plan may take into account, in determining the amount 
                and array of services made available to covered 
                individuals with disabilities, the availability of 
                informal care. Any individual plan of care developed 
                under section 104(b)(1)(B) that includes informal care 
                shall be required to verify the availability of such 
                care.
                    (D) Allocation.--The State plan--
                            (i) shall specify how services under the 
                        plan will be allocated among covered 
                        individuals with disabilities;
                            (ii) shall attempt to meet the needs of 
                        individuals with a variety of disabilities 
                        within the limits of available funding;
                            (iii) shall include services that assist 
                        all categories of individuals with 
                        disabilities, regardless of their age or the 
                        nature of their disabling conditions;
                            (iv) shall demonstrate that services are 
                        allocated equitably, in accordance with the 
                        needs assessment required under subparagraph 
                        (A); and
                            (v) shall ensure that--
                                    (I) the proportion of the 
                                population of low-income individuals 
                                with disabilities in the State that 
                                represents individuals with 
                                disabilities who are provided home and 
                                community-based services either under 
                                the plan, under the State medicaid 
                                plan, or under both, is not less than
                                    (II) the proportion of the 
                                population of the State that represents 
                                individuals who are low-income 
                                individuals.
                    (E) Limitation on licensure or certification.--The 
                State may not subject consumer-directed providers of 
                personal assistance services to licensure, 
                certification, or other requirements that the Secretary 
                finds not to be necessary for the health and safety of 
                individuals with disabilities.
                    (F) Consumer choice.--To the extent feasible, the 
                State shall follow the choice of an individual with 
                disabilities (or that individual's designated 
                representative who may be a family member) regarding 
                which covered services to receive and the providers who 
                will provide such services.
            (4) Cost sharing.--The plan shall impose cost sharing with 
        respect to covered services in accordance with section 105.
            (5) Types of providers and requirements for 
        participation.--The plan shall specify--
                    (A) the types of service providers eligible to 
                participate in the program under the plan, which shall 
include consumer-directed providers of personal assistance services, 
except that the plan--
                            (i) may not limit benefits to services 
                        provided by registered nurses or licensed 
                        practical nurses; and
                            (ii) may not limit benefits to services 
                        provided by agencies or providers certified 
                        under title XVIII of the Social Security Act 
                        (42 U.S.C. 1395 et seq.); and
                    (B) any requirements for participation applicable 
                to each type of service provider.
            (6) Provider reimbursement.--
                    (A) Payment methods.--The plan shall specify the 
                payment methods to be used to reimburse providers for 
                services furnished under the plan. Such methods may 
                include retrospective reimbursement on a fee-for-
                service basis, prepayment on a capitation basis, 
                payment by cash or vouchers to individuals with 
                disabilities, or any combination of these methods. In 
                the case of payment to consumer-directed providers of 
                personal assistance services, including payment through 
                the use of cash or vouchers, the plan shall specify how 
                the plan will assure compliance with applicable 
                employment tax and health care coverage provisions.
                    (B) Payment rates.--The plan shall specify the 
                methods and criteria to be used to set payment rates 
                for--
                            (i) agency administered services furnished 
                        under the plan; and
                            (ii) consumer-directed personal assistance 
                        services furnished under the plan, including 
                        cash payments or vouchers to individuals with 
                        disabilities, except that such payments shall 
                        be adequate to cover amounts required under 
                        applicable employment tax and health care 
                        coverage provisions.
                    (C) Plan payment as payment in full.--The plan 
                shall restrict payment under the plan for covered 
                services to those providers that agree to accept the 
                payment under the plan (at the rates established 
                pursuant to subparagraph (B)) and any cost sharing 
                permitted or provided for under section 105 as payment 
                in full for services furnished under the plan.
            (7) Quality assurance and safeguards.--The State plan shall 
        provide for quality assurance and safeguards for applicants and 
        beneficiaries in accordance with section 106.
            (8) Advisory group.--The State plan shall--
                    (A) assure the establishment and maintenance of an 
                advisory group under section 107(b); and
                    (B) include the documentation prepared by the group 
                under section 107(b)(4).
            (9) Administration and access.--
                    (A) State agency.--The plan shall designate a State 
                agency or agencies to administer (or to supervise the 
                administration of) the plan.
                    (B) Coordination.--The plan shall specify how it 
                will--
                            (i) coordinate services provided under the 
                        plan, including eligibility prescreening, 
                        service coordination, and referrals for 
                        individuals with disabilities who are 
                        ineligible for services under this title with 
                        the State medicaid plan under title XIX of the 
                        Social Security Act (42 U.S.C. 1396 et seq.), 
                        titles V and XX of such Act (42 U.S.C. 701 et 
                        seq. and 1397 et seq.), programs under the 
                        Older Americans Act of 1965 (42 U.S.C. 3001 et 
                        seq.), programs under the Developmental 
                        Disabilities Assistance and Bill of Rights Act 
                        (42 U.S.C. 6000 et seq.), programs under the 
                        Individuals with Disabilities Education Act (20 
                        U.S.C. 1400 et seq.), and any other Federal or 
                        State programs that provide services or 
                        assistance targeted to individuals with 
                        disabilities; and
                            (ii) coordinate with health plans.
                    (C) Administrative expenditures.--Effective 
                beginning with fiscal year 2005, the plan shall contain 
                assurances that not more than 10 percent of 
                expenditures under the plan for all quarters in any 
                fiscal year shall be for administrative costs.
                    (D) Information and assistance.--The plan shall 
                provide for a single point of access to apply for 
                services under the State program for individuals with 
                disabilities. Notwithstanding the preceding sentence, 
                the plan may designate separate points of access to the 
                State program for individuals under 22 years of age, 
                for individuals 65 years of age or older, or for other 
                appropriate classes of individuals.
            (10) Reports and information to secretary; audits.--The 
        plan shall provide that the State will furnish to the 
        Secretary--
                    (A) such reports, and will cooperate with such 
                audits, as the Secretary determines are needed 
                concerning the State's administration of its plan under 
                this title, including the processing of claims under 
                the plan; and
                    (B) such data and information as the Secretary may 
                require in a uniform format as specified by the 
                Secretary.
            (11) Use of state funds for matching.--The plan shall 
        provide assurances that Federal funds will not be used to 
        provide for the State share of expenditures under this title.
            (12) Health care worker redeployment.--The plan shall 
        provide for the following:
                    (A) Before initiating the process of implementing 
                the State program under such plan, negotiations will be 
                commenced with labor unions representing the employees 
                of the affected hospitals or other facilities.
                    (B) Negotiations under subparagraph (A) will 
                address the following:
                            (i) The impact of the implementation of the 
                        program upon the workforce.
                            (ii) Methods to redeploy workers to 
                        positions in the proposed system, in the case 
                        of workers affected by the program.
                    (C) The plan will provide evidence that there has 
                been compliance with subparagraphs (A) and (B), 
                including a description of the results of the 
                negotiations.
            (13) Terminology.--The plan shall adhere to uniform 
        definitions of terms, as specified by the Secretary.
    (b) Approval of Plans.--The Secretary shall approve a plan 
submitted by a State if the Secretary determines that the plan--
            (1) was developed by the State after a public comment 
        period of not less than 30 days; and
            (2) meets the requirements of subsection (a).
The approval of such a plan shall take effect as of the first day of 
the first fiscal year beginning after the date of such approval (except 
that any approval made before January 1, 1997, shall be effective as of 
January 1, 1997). In order to budget funds allotted under this title, 
the Secretary shall establish a deadline for the submission of such a 
plan before the beginning of a fiscal year as a condition of its 
approval effective with that fiscal year. Any significant changes to 
the State plan shall be submitted to the Secretary in the form of plan 
amendments and shall be subject to approval by the Secretary.
    (c) Monitoring.--The Secretary shall annually monitor the 
compliance of State plans with the requirements of this title according 
to specified performance standards. In accordance with section 108(e), 
States that fail to comply with such requirements may be subject to a 
reduction in the Federal matching rates available to the State under 
section 108(a) or the withholding of Federal funds for services or 
administration until such time as compliance is achieved.
    (d) Technical Assistance.--The Secretary shall ensure the 
availability of ongoing technical assistance to States under this 
section. Such assistance shall include serving as a clearinghouse for 
information regarding successful practices in providing long-term care 
services.
    (e) Regulations.--The Secretary shall issue such regulations as may 
be appropriate to carry out this title on a timely basis.

SEC. 103. INDIVIDUALS WITH DISABILITIES DEFINED.

    (a) In General.--For purposes of this title, the term ``individual 
with disabilities'' means any individual within one or more of the 
following categories of individuals:
            (1) Individuals requiring help with activities of daily 
        living.--An individual of any age who--
                    (A) requires hands-on or standby assistance, 
                supervision, or cueing (as defined in regulations) to 
                perform three or more activities of daily living (as 
                defined in subsection (d)); and
                    (B) is expected to require such assistance, 
                supervision, or cueing over a period of at least 90 
                days.
            (2) Individuals with severe cognitive or mental 
        impairment.--An individual of any age--
                    (A) whose score, on a standard mental status 
                protocol (or protocols) appropriate for measuring the 
                individual's particular condition specified by the 
                Secretary, indicates either severe cognitive impairment 
                or severe mental impairment, or both;
                    (B) who--
                            (i) requires hands-on or standby 
                        assistance, supervision, or cueing with one or 
                        more activities of daily living;
                            (ii) requires hands-on or standby 
                        assistance, supervision, or cueing with at 
                        least such instrumental activity (or 
                        activities) of daily living related to 
                        cognitive or mental impairment as the Secretary 
                        specifies; or
                            (iii) displays symptoms of one or more 
                        serious behavioral problems (that is on a list 
                        of such problems specified by the Secretary) 
                        that create a need for supervision to prevent 
                        harm to self or others; and
                    (C) who is expected to meet the requirements of 
                subparagraphs (A) and (B) over a period of at least 90 
                days.
        Not later than 2 years after the date of enactment of this Act, 
        the Secretary shall make recommendations regarding the most 
        appropriate duration of disability under this paragraph.
            (3) Individuals with severe or profound mental 
        retardation.--An individual of any age who has severe or 
        profound mental retardation (as determined according to a 
        protocol specified by the Secretary).
            (4) Young children with severe disabilities.--An individual 
        under 6 years of age who--
                    (A) has a severe disability or chronic medical 
                condition that limits functioning in a manner that is 
                comparable in severity to the standards established 
                under paragraphs (1), (2), or (3); and
                    (B) is expected to have such a disability or 
                condition and require such services over a period of at 
                least 90 days.
            (5) State option with respect to individuals with 
        comparable disabilities.--Not more than 2 percent of a State's 
        allotment for services under this title may be expended for the 
        provision of services to individuals with severe disabilities 
        that are comparable in severity to the criteria described in 
        paragraphs (1) through (4), but who fail to meet the criteria 
        in any single category under such paragraphs.
    (b) Determination.--
            (1) In general.--In formulating eligibility criteria under 
        subsection (a), the Secretary shall establish criteria for 
        assessing the functional level of disability among all 
        categories of individuals with disabilities that are comparable 
        in severity, regardless of the age or the nature of the 
        disabling condition of the individual. The determination of 
        whether an individual is an individual with disabilities shall 
        be made by a public or nonprofit agency that is specified under 
        the State plan and that is not a provider of home and 
        community-based services under this title and by using a 
        uniform protocol consisting of an initial screening and a 
        determination of disability specified by the Secretary. A State 
        may not impose cost sharing with respect to a determination of 
        disability. A State may collect additional information, at the 
        time of obtaining information to make such determination, in 
        order to provide for the assessment and plan described in 
        section 104(b) or for other purposes.
            (2) Periodic reassessment.--The determination that an 
        individual is an individual with disabilities shall be 
        considered to be effective under the State plan for a period of 
        not more than 6 months (or for such longer period in such cases 
        as a significant change in an individual's condition that may 
        affect such determination is unlikely). A reassessment shall be 
        made if there is a significant change in an individual's 
        condition that may affect such determination.
    (c) Eligibility Criteria.--The Secretary shall reassess the 
validity of the eligibility criteria described in subsection (a) as new 
knowledge regarding the assessments of functional disabilities becomes 
available. The Secretary shall report to the Congress on its findings 
under the preceding sentence as determined appropriate by the 
Secretary.
    (d) Activity of Daily Living Defined.--For purposes of this title, 
the term ``activity of daily living'' means any of the following: 
eating, toileting, dressing, bathing, and transferring.

SEC. 104. HOME AND COMMUNITY-BASED SERVICES COVERED UNDER STATE PLAN.

    (a) Specification.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, the State plan under this title shall specify--
                    (A) the home and community-based services available 
                under the plan to individuals with disabilities (or to 
                such categories of such individuals); and
                    (B) any limits with respect to such services.
            (2) Flexibility in meeting individual needs.--Subject to 
        subsection (e)(2), such services may be delivered in an 
        individual's home, a range of community residential 
        arrangements, or outside the home.
    (b) Requirement for Needs Assessment and Plan of Care.--
            (1) In general.--The State plan shall provide for home and 
        community-based services to an individual with disabilities 
        only if the following requirements are met:
                    (A) Comprehensive assessment.--
                            (i) In general.--A comprehensive assessment 
                        of an individual's need for home and community-
                        based services (regardless of whether all 
                        needed services are available under the plan) 
                        shall be made in accordance with a uniform, 
                        comprehensive assessment tool that shall be 
                        used by a State under this paragraph with the 
                        approval of the Secretary. The comprehensive 
                        assessment shall be made by a public or 
                        nonprofit agency that is specified under the 
                        State plan and that is not a provider of home 
                        and community-based services under this title.
                            (ii) Exception.--The State may elect to 
                        waive the provisions of clause (i) if--
                                    (I) with respect to any area of the 
                                State, the State has determined that 
                                there is an insufficient pool of 
                                entities willing to perform 
                                comprehensive assessments in such area 
                                due to a low population of individuals 
                                eligible for home and community-based 
                                services under this title residing in 
                                the area; and
                                    (II) the State plan specifies 
                                procedures that the State will 
                                implement in order to avoid conflicts 
                                of interest.
                    (B) Individualized plan of care.--
                            (i) In general.--An individualized plan of 
                        care based on the assessment made under 
                        subparagraph (A) shall be developed by a public 
                        or nonprofit agency that is specified under the 
                        State plan and that is not a provider of home 
                        and community-based services under this title, 
                        except that the State may elect to waive the 
                        provisions of this sentence if, with respect to 
                        any area of the State, the State has determined 
                        there is an insufficient pool of entities 
                        willing to develop individualized plans of care 
                        in such area due to a low population of 
                        individuals eligible for home and community-
                        based services under this title residing in the 
                        area, and the State plan specifies procedures 
                        that the State will implement in order to avoid 
                        conflicts of interest.
                            (ii) Requirements with respect to plan of 
                        care.--A plan of care under this subparagraph 
                        shall--
                                    (I) specify which services included 
                                under the individual plan will be 
                                provided under the State plan under 
                                this title;
                                    (II) identify (to the extent 
                                possible) how the individual will be 
                                provided any services specified under 
                                the plan of care and not provided under 
                                the State plan;
                                    (III) specify how the provision of 
                                services to the individual under the 
                                plan will be coordinated with the 
                                provision of other health care services 
                                to the individual; and
                                    (IV) be reviewed and updated every 
                                6 months (or more frequently if there 
                                is a change in the individual's 
                                condition).
                        The State shall make reasonable efforts to 
                        identify and arrange for services described in 
                        subclause (II). Nothing in this subsection 
                        shall be construed as requiring a State (under 
                        the State plan or otherwise) to provide all the 
                        services specified in such a plan.
                    (C) Involvement of individuals.--The individualized 
                plan of care under subparagraph (B) for an individual 
                with disabilities shall--
                            (i) be developed by qualified individuals 
                        (specified in subparagraph (B));
                            (ii) be developed and implemented in close 
                        consultation with the individual (or the 
                        individual's designated representative); and
                            (iii) be approved by the individual (or the 
                        individual's designated representative).
    (c) Requirement for Care Management.--
            (1) In general.--The State shall make available to each 
        category of individuals with disabilities care management 
        services that at a minimum include--
                    (A) arrangements for the provision of such 
                services; and
                    (B) monitoring of the delivery of services.
            (2) Care management services.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the care management services described in 
                paragraph (1) shall be provided by a public or private 
                entity that is not providing home and community-based 
                services under this title.
                    (B) Exception.--A person who provides home and 
                community-based services under this title may provide 
                care management services if--
                            (i) the State determines that there is an 
                        insufficient pool of entities willing to 
                        provide such services in an area due to a low 
                        population of individuals eligible for home and 
                        community-based services under this title 
                        residing in such area; and
                            (ii) the State plan specifies procedures 
                        that the State will implement in order to avoid 
                        conflicts of interest.
    (d) Mandatory Coverage of Personal Assistance Services.--The State 
plan shall include, in the array of services made available to each 
category of individuals with disabilities, both agency-administered and 
consumer-directed personal assistance services (as defined in 
subsection (h)).
    (e) Additional Services.--
            (1) Types of services.--Subject to subsection (f), services 
        available under a State plan under this title may include any 
        (or all) of the following:
                    (A) Homemaker and chore assistance.
                    (B) Home modifications.
                    (C) Respite services.
                    (D) Assistive technology devices, as defined in 
                section 3(2) of the Technology-Related Assistance for 
                Individuals With Disabilities Act of 1988 (29 U.S.C. 
                2202(2)).
                    (E) Adult day services.
                    (F) Habilitation and rehabilitation.
                    (G) Supported employment.
                    (H) Home health services.
                    (I) Transportation.
                    (J) Any other care or assistive services specified 
                by the State and approved by the Secretary that will 
                help individuals with disabilities to remain in their 
                homes and communities.
            (2) Criteria for selection of services.--The State electing 
        services under paragraph (1) shall specify in the State plan--
                    (A) the methods and standards used to select the 
                types, and the amount, duration, and scope, of services 
                to be covered under the plan and to be available to 
                each category of individuals with disabilities; and
                    (B) how the types, and the amount, duration, and 
                scope, of services specified, within the limits of 
                available funding, provide substantial assistance in 
                living independently to individuals within each of the 
                categories of individuals with disabilities.
    (f) Exclusions and Limitations.--A State plan may not provide for 
coverage of--
            (1) room and board;
            (2) services furnished in a hospital, nursing facility, 
        intermediate care facility for the mentally retarded, or other 
        institutional setting specified by the Secretary; or
            (3) items and services to the extent coverage is provided 
        for the individual under a health plan or the medicare program.
    (g) Payment for Services.--In order to pay for covered services, a 
State plan may provide for the use of--
            (1) vouchers;
            (2) cash payments directly to individuals with 
        disabilities;
            (3) capitation payments to health plans; and
            (4) payment to providers.
    (h) Personal Assistance Services.--
            (1) In general.--For purposes of this title, the term 
        ``personal assistance services'' means those services specified 
        under the State plan as personal assistance services and shall 
        include at least hands-on and standby assistance, supervision, 
        cueing with activities of daily living, and such instrumental 
        activities of daily living as deemed necessary or appropriate, 
        whether agency-administered or consumer-directed (as defined in 
        paragraph (2)). Such services shall include services that are 
        determined to be necessary to help all categories of 
        individuals with disabilities, regardless of the age of such 
        individuals or the nature of the disabling conditions of such 
        individuals.
            (2) Consumer-directed.--For purposes of this title:
                    (A) In general.--The term ``consumer-directed'' 
                means, with reference to personal assistance services 
                or the provider of such services, services that are 
                provided by an individual who is selected and managed 
                (and, at the option of the service recipient, trained) 
                by the individual receiving the services.
                    (B) State responsibilities.--A State plan shall 
                ensure that where services are provided in a consumer-
                directed manner, the State shall create or contract 
                with an entity, other than the consumer or the 
                individual provider, to--
                            (i) inform both recipients and providers of 
                        rights and responsibilities under all 
                        applicable Federal labor and tax law; and
                            (ii) assume responsibility for providing 
                        effective billing, payments for services, tax 
                        withholding, unemployment insurance, and 
                        workers' compensation coverage, and act as the 
                        employer of the home care provider.
                    (C) Right of consumers.--Notwithstanding the State 
                responsibilities described in subparagraph (B), service 
                recipients, and, where appropriate, their designated 
                representative, shall retain the right to independently 
                select, hire, terminate, and direct (including manage, 
                train, schedule, and verify services provided) the work 
                of a home care provider.
            (3) Agency administered.--For purposes of this title, the 
        term ``agency-administered'' means, with respect to such 
        services, services that are not consumer-directed.

SEC. 105. COST SHARING.

    (a) No Cost Sharing for Poorest.--
            (1) In general.--The State plan may not impose any cost 
        sharing for individuals with income (as determined under 
        subsection (d)) less than 150 percent of the official poverty 
        level applicable to a family of the size involved (referred to 
        in paragraph (2)).
            (2) Official poverty level.--For purposes of paragraph (1), 
        the term ``official poverty level applicable to a family of the 
        size involved'' means, for a family for a year, the official 
        poverty line (as defined by the Office of Management and 
        Budget, and revised annually in accordance with section 673(2) 
        of the Community Services Block Grant Act (42 U.S.C. 9902(2)) 
        applicable to a family of the size involved.
    (b) Sliding Scale for Remainder.--
            (1) Required coinsurance.--The State plan shall impose cost 
        sharing in the form of coinsurance (based on the amount paid 
        under the State plan for a service)--
                    (A) at a rate of 10 percent for individuals with 
                disabilities with income not less than 150 percent, and 
                less than 175 percent, of such official poverty line 
                (as so applied);
                    (B) at a rate of 15 percent for such individuals 
                with income not less than 175 percent, and less than 
                225 percent, of such official poverty line (as so 
                applied);
                    (C) at a rate of 25 percent for such individuals 
                with income not less than 225 percent, and less than 
                275 percent, of such official poverty line (as so 
                applied);
                    (D) at a rate of 30 percent for such individuals 
                with income not less than 275 percent, and less than 
                325 percent, of such official poverty line (as so 
                applied);
                    (E) at a rate of 35 percent for such individuals 
                with income not less than 325 percent, and less than 
                400 percent, of such official poverty line (as so 
                applied); and
                    (F) at a rate of 40 percent for such individuals 
                with income equal to at least 400 percent of such 
                official poverty line (as so applied).
            (2) Required annual deductible.--The State plan shall 
        impose cost sharing in the form of an annual deductible--
                    (A) of $100 for individuals with disabilities with 
                income not less than 150 percent, and less than 175 
                percent, of such official poverty line (as so applied);
                    (B) of $200 for such individuals with income not 
                less than 175 percent, and less than 225 percent, of 
                such official poverty line (as so applied);
                    (C) of $300 for such individuals with income not 
                less than 225 percent, and less than 275 percent, of 
                such official poverty line (as so applied);
                    (D) of $400 for such individuals with income not 
                less than 275 percent, and less than 325 percent, of 
                such official poverty line (as so applied);
                    (E) of $500 for such individuals with income not 
                less than 325 percent, and less than 400 percent, of 
                such official poverty line (as so applied); and
                    (F) of $600 for such individuals with income equal 
                to at least 400 percent of such official poverty line 
                (as so applied).
    (c) Recommendation of the Secretary.--The Secretary shall make 
recommendations to the States as to how to reduce cost-sharing for 
individuals with extraordinary out-of-pocket costs for whom the cost-
sharing provisions of this section could jeopardize their ability to 
take advantage of the services offered under this title. The Secretary 
shall establish a methodology for reducing the cost-sharing burden for 
individuals with exceptionally high out-of-pocket costs under this 
title.
    (d) Determination of Income for Purposes of Cost Sharing.--The 
State plan shall specify the process to be used to determine the income 
of an individual with disabilities for purposes of this section. Such 
standards shall include a uniform Federal definition of income and any 
allowable deductions from income.

SEC. 106. QUALITY ASSURANCE AND SAFEGUARDS.

    (a) Quality Assurance.--
            (1) In general.--The State plan shall specify how the State 
        will ensure and monitor the quality of services, including--
                    (A) safeguarding the health and safety of 
                individuals with disabilities;
                    (B) setting the minimum standards for agency 
                providers and how such standards will be enforced;
                    (C) setting the minimum competency requirements for 
                agency provider employees who provide direct services 
                under this title and how the competency of such 
                employees will be enforced;
                    (D) obtaining meaningful consumer input, including 
                consumer surveys that measure the extent to which 
                participants receive the services described in the plan 
                of care and participant satisfaction with such 
                services;
                    (E) establishing a process to receive, investigate, 
                and resolve allegations of neglect or abuse;
                    (F) establishing optional training programs for 
                individuals with disabilities in the use and direction 
                of consumer directed providers of personal assistance 
                services;
                    (G) establishing an appeals procedure for 
                eligibility denials and a grievance procedure for 
                disagreements with the terms of an individualized plan 
                of care;
                    (H) providing for participation in quality 
                assurance activities; and
                    (I) specifying the role of the Long-Term Care 
                Ombudsman (under the Older Americans Act of 1965 (42 
                U.S.C. 3001 et seq.)) and the protection and advocacy 
                system (established under section 142 of the the 
                Developmental Disabilities Assistance and Bill of 
                Rights Act (42 U.S.C. 6042)) in assuring quality of 
                services and protecting the rights of individuals with 
                disabilities.
            (2) Issuance of regulations.--Not later than 1 year after 
        the date of enactment of this Act, the Secretary shall issue 
        regulations implementing the quality provisions of this 
        subsection.
    (b) Federal Standards.--The State plan shall adhere to Federal 
quality standards in the following areas:
            (1) Case review of a specified sample of client records.
            (2) The mandatory reporting of abuse, neglect, or 
        exploitation.
            (3) The development of a registry of provider agencies or 
        home care workers and consumer directed providers of personal 
        assistance services against whom any complaints have been 
        sustained, which shall be available to the public.
            (4) Sanctions to be imposed on States or providers, 
        including disqualification from the program, if minimum 
        standards are not met.
            (5) Surveys of client satisfaction.
            (6) State optional training programs for informal 
        caregivers.
    (c) Client Advocacy.--
            (1) In general.--The State plan shall provide that the 
        State will expend the amount allocated under section 109(b)(2) 
        for client advocacy activities. The State may use such funds to 
        augment the budgets of the Long-Term Care Ombudsman (under the 
        Older Americans Act of 1965 (42 U.S.C. 3001 et seq.) and the 
        protection and advocacy system (established under section 142 
        of the the Developmental Disabilities Assistance and Bill of 
        Rights Act (42 U.S.C. 6042)) or may establish a separate and 
        independent client advocacy office in accordance with paragraph 
        (2) to administer a new program designed to advocate for client 
        rights.
            (2) Client advocacy office.--
                    (A) In general.--A client advocacy office 
                established under this paragraph shall--
                            (i) identify, investigate, and resolve 
                        complaints that--
                                    (I) are made by, or on behalf of, 
                                clients; and
                                    (II) relate to action, inaction, or 
                                decisions, that may adversely affect 
                                the health, safety, welfare, or rights 
                                of the clients (including the welfare 
                                and rights of the clients with respect 
                                to the appointment and activities of 
                                guardians and representative payees), 
                                of--
                                            (aa) providers, or 
                                        representatives of providers, 
                                        of long-term care services;
                                            (bb) public agencies; or
                                            (cc) health and social 
                                        service agencies;
                            (ii) provide services to assist the clients 
                        in protecting the health, safety, welfare, and 
                        rights of the clients;
                            (iii) inform the clients about means of 
                        obtaining services provided by providers or 
                        agencies described in clause (i)(II) or 
                        services described in clause (ii);
                            (iv) ensure that the clients have regular 
                        and timely access to the services provided 
                        through the office and that the clients and 
                        complainants receive timely responses from 
                        representatives of the office to complaints; 
                        and
                            (v) represent the interests of the clients 
                        before governmental agencies and seek 
                        administrative, legal, and other remedies to 
                        protect the health, safety, welfare, and rights 
                        of the clients with regard to the provisions of 
                        this title.
                    (B) Contracts and arrangements.--
                            (i) In general.--Except as provided in 
                        clause (ii), the State agency may establish and 
                        operate the office, and carry out the program, 
                        directly, or by contract or other arrangement 
                        with any public agency or nonprofit private 
                        organization.
                            (ii) Licensing and certification 
                        organizations; associations.--The State agency 
                        may not enter into the contract or other 
                        arrangement described in clause (i) with an 
                        agency or organization that is responsible for 
                        licensing, certifying, or providing long-term 
                        care services in the State.
    (d) Safeguards.--
            (1) Confidentiality.--The State plan shall provide 
        safeguards that restrict the use or disclosure of information 
        concerning applicants and beneficiaries to purposes directly 
        connected with the administration of the plan.
            (2) Safeguards against abuse.--The State plans shall 
        provide safeguards against physical, emotional, or financial 
        abuse or exploitation (specifically including appropriate 
        safeguards in cases where payment for program benefits is made 
        by cash payments or vouchers given directly to individuals with 
        disabilities). All providers of services shall be required to 
        register with the State agency.
            (3) Regulations.--Not later than January 1, 1997, the 
        Secretary shall promulgate regulations with respect to the 
        requirements on States under this subsection.
    (e) Specified Rights.--The State plan shall provide that in 
furnishing home and community-based services under the plan the 
following individual rights are protected:
            (1) The right to be fully informed in advance, orally and 
        in writing, of the care to be provided, to be fully informed in 
        advance of any changes in care to be provided, and (except with 
        respect to an individual determined incompetent) to participate 
        in planning care or changes in care.
            (2) The right to--
                    (A) voice grievances with respect to services that 
                are (or fail to be) furnished without discrimination or 
                reprisal for voicing grievances;
                    (B) be told how to complain to State and local 
                authorities; and
                    (C) prompt resolution of any grievances or 
                complaints.
            (3) The right to confidentiality of personal and clinical 
        records and the right to have access to such records.
            (4) The right to privacy and to have one's property treated 
        with respect.
            (5) The right to refuse all or part of any care and to be 
        informed of the likely consequences of such refusal.
            (6) The right to education or training for oneself and for 
        members of one's family or household on the management of care.
            (7) The right to be free from physical or mental abuse, 
        corporal punishment, and any physical or chemical restraints 
        imposed for purposes of discipline or convenience and not 
        included in an individual's plan of care.
            (8) The right to be fully informed orally and in writing of 
        the individual's rights.
            (9) The right to a free choice of providers.
            (10) The right to direct provider activities when an 
        individual is competent and willing to direct such activities.

SEC. 107. ADVISORY GROUPS.

    (a) Federal Advisory Group.--
            (1) Establishment.--The Secretary shall establish an 
        advisory group, to advise the Secretary and States on all 
        aspects of the program under this title.
            (2) Composition.--The group shall be composed of 
        individuals with disabilities and their representatives, 
        providers, Federal and State officials, and local community 
        implementing agencies. A majority of its members shall be 
        individuals with disabilities and their representatives.
    (b) State Advisory Groups.--
            (1) In general.--Each State plan shall provide for the 
        establishment and maintenance of an advisory group to advise 
        the State on all aspects of the State plan under this title.
            (2) Composition.--Members of each advisory group shall be 
        appointed by the Governor (or other chief executive officer of 
        the State) and shall include individuals with disabilities and 
        their representatives, providers, State officials, and local 
        community implementing agencies. A majority of its members 
        shall be individuals with disabilities and their 
        representatives. The members of the advisory group shall be 
        selected from those nominated as described in paragraph (3).
            (3) Selection of members.--Each State shall establish a 
        process whereby all residents of the State, including 
        individuals with disabilities and their representatives, shall 
        be given the opportunity to nominate members to the advisory 
        group.
            (4) Particular concerns.--Each advisory group shall--
                    (A) before the State plan is developed, advise the 
                State on guiding principles and values, policy 
                directions, and specific components of the plan;
                    (B) meet regularly with State officials involved in 
                developing the plan, during the development phase, to 
                review and comment on all aspects of the plan;
                    (C) participate in the public hearings to help 
                assure that public comments are addressed to the extent 
                practicable;
                    (D) report to the Governor and make available to 
                the public any differences between the group's 
                recommendations and the plan;
                    (E) report to the Governor and make available to 
                the public specifically the degree to which the plan is 
                consumer-directed; and
                    (F) meet regularly with officials of the designated 
                State agency (or agencies) to provide advice on all 
                aspects of implementation and evaluation of the plan.

SEC. 108. PAYMENTS TO STATES.

    (a) In General.--Subject to section 102(a)(9)(C) (relating to 
limitation on payment for administrative costs), the Secretary, in 
accordance with the Cash Management Improvement Act, shall authorize 
payment to each State with a plan approved under this title, for each 
quarter (beginning on or after January 1, 1997), from its allotment 
under section 109(b), an amount equal to--
            (1)(A) with respect to the amount demonstrated by State 
        claims to have been expended during the year for home and 
        community-based services under the plan for individuals with 
        disabilities that does not exceed 20 percent of the amount 
        allotted to the State under section 109(b), 100 percent of such 
        amount; and
            (B) with respect to the amount demonstrated by State claims 
        to have been expended during the year for home and community-
        based services under the plan for individuals with disabilities 
        that exceeds 20 percent of the amount allotted to the State 
        under section 109(b), the Federal home and community-based 
        services matching percentage (as defined in subsection (b)) of 
        such amount; plus
            (2) an amount equal to 90 percent of the amount 
        demonstrated by the State to have been expended during the 
        quarter for quality assurance activities under the plan; plus
            (3) an amount equal to 90 percent of amount expended during 
        the quarter under the plan for activities (including 
        preliminary screening) relating to determination of eligibility 
        and performance of needs assessment; plus
            (4) an amount equal to 90 percent (or, beginning with 
        quarters in fiscal year 2005, 75 percent) of the amount 
        expended during the quarter for the design, development, and 
        installation of mechanical claims processing systems and for 
        information retrieval; plus
            (5) an amount equal to 50 percent of the remainder of the 
        amounts expended during the quarter as found necessary by the 
        Secretary for the proper and efficient administration of the 
        State plan.
    (b) Federal Home and Community-Based Services Matching 
Percentage.--In subsection (a), the term ``Federal home and community-
based services matching percentage'' means, with respect to a State, 
the State's Federal medical assistance percentage (as defined in 
section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b))) 
increased by 15 percentage points, except that the Federal home and 
community-based services matching percentage shall in no case be more 
than 95 percent.
    (c) Payments on Estimates With Retrospective Adjustments.--The 
method of computing and making payments under this section shall be as 
follows:
            (1) The Secretary shall, prior to the beginning of each 
        quarter, estimate the amount to be paid to the State under 
        subsection (a) for such quarter, based on a report filed by the 
        State containing its estimate of the total sum to be expended 
        in such quarter, and such other information as the Secretary 
        may find necessary.
            (2) From the allotment available therefore, the Secretary 
        shall provide for payment of the amount so estimated, reduced 
        or increased, as the case may be, by any sum (not previously 
        adjusted under this section) by which the Secretary finds that 
        the estimate of the amount to be paid the State for any prior 
        period under this section was greater or less than the amount 
        that should have been paid.
    (d) Application of Rules Regarding Limitations on Provider-Related 
Donations and Health Care-Related Taxes.--The provisions of section 
1903(w) of the Social Security Act (42 U.S.C. 1396b(w)) shall apply to 
payments to States under this section in the same manner as they apply 
to payments to States under section 1903(a) of such Act (42 U.S.C. 
1396b(a)).
    (e) Failure To Comply With State Plan.--If a State furnishing home 
and community-based services under this title fails to comply with the 
State plan approved under this title, the Secretary may either reduce 
the Federal matching rates available to the State under subsection (a) 
or withhold an amount of funds determined appropriate by the Secretary 
from any payment to the State under this section.

SEC. 109. APPROPRIATIONS; ALLOTMENTS TO STATES.

    (a) Appropriations.--
            (1) Fiscal years 1997 through 2005.--Subject to paragraph 
        (5)(C), for purposes of this title, the appropriation 
        authorized under this title for each of fiscal years 1997 
        through 2005 is the following:
                    (A) For fiscal year 1997, $1,800,000,000.
                    (B) For fiscal year 1998, $3,500,000,000.
                    (C) For fiscal year 1999, $5,800,000,000.
                    (D) For fiscal year 2000, $7,300,000,000.
                    (E) For fiscal year 2001, $10,000,000,000.
                    (F) For fiscal year 2002, $15,700,000,000.
                    (G) For fiscal year 2003, $22,800,000,000.
                    (H) For fiscal year 2004, $30,700,000,000.
                    (I) For fiscal year 2005, $34,600,000,000.
            (2) Subsequent fiscal years.--For purposes of this title, 
        the appropriation authorized for State plans under this title 
        for each fiscal year after fiscal year 2005 is the 
        appropriation authorized under this subsection for the 
        preceding fiscal year multiplied by--
                    (A) a factor (described in paragraph (3)) 
                reflecting the change in the consumer price index for 
                the fiscal year; and
                    (B) a factor (described in paragraph (4)) 
                reflecting the change in the number of individuals with 
                disabilities for the fiscal year.
            (3) CPI increase factor.--For purposes of paragraph (2)(A), 
        the factor described in this paragraph for a fiscal year is the 
        ratio of--
                    (A) the annual average index of the consumer price 
                index for the preceding fiscal year, to--
                    (B) such index, as so measured, for the second 
                preceding fiscal year.
            (4) Disabled population factor.--For purposes of paragraph 
        (2)(B), the factor described in this paragraph for a fiscal 
        year is 100 percent plus (or minus) the percentage increase (or 
        decrease) change in the disabled population of the United 
        States (as determined for purposes of the most recent update 
        under subsection (b)(3)(D)).
            (5) Additional funds due to medicaid offsets.--
                    (A) In general.--Each participating State must 
                provide the Secretary with information concerning 
                offsets and reductions in the medicaid program 
                resulting from home and community-based services 
                provided disabled individuals under this title, that 
                would have been paid for such individuals under the 
                State medicaid plan. At the time a State first submits 
                its plan under this title and before each subsequent 
                fiscal year (through fiscal year 2005), the State also 
                must provide the Secretary with such budgetary 
                information (for each fiscal year through fiscal year 
                2005), as the Secretary determines to be necessary to 
                carry out this paragraph.
                    (B) Reports.--Each State with a program under this 
                title shall submit such reports to the Secretary as the 
                Secretary may require in order to monitor compliance 
                with subparagraph (A). The Secretary shall specify the 
                format of such reports and establish uniform data 
                reporting elements.
                    (C) Adjustments to appropriation.--
                            (i) In general.--For each fiscal year 
                        (beginning with fiscal year 1997 and ending 
                        with fiscal year 2005) and based on a review of 
                        information submitted under subparagraph (A), 
                        the Secretary shall determine the amount by 
                        which the appropriation authorized under 
                        subsection (a) will increase. The amount of 
                        such increase for a fiscal year shall be 
                        limited to the reduction in Federal 
                        expenditures of medical assistance (as 
                        determined by Secretary) that would have been 
                        made under title XIX of the Social Security Act 
                        (42 U.S.C. 1396 et seq.) but for the provision 
                        of home and community-based services under the 
                        program under this title.
                            (ii) Annual publication.--The Secretary 
                        shall publish before the beginning of such 
                        fiscal year, the revised appropriation 
                        authorized under this subsection for such 
                        fiscal year.
                    (D) Construction.--Nothing in this subsection shall 
                be construed as requiring States to determine 
                eligibility for medical assistance under the State 
                medicaid plan on behalf of individuals receiving 
                assistance under this title.
    (b) Allotments to States.--
            (1) In general.--The Secretary shall allot the amounts 
        available under the appropriation authorized for the fiscal 
        year under paragraph (1) of subsection (a) (without regard to 
        any adjustment to such amount under paragraph (5) of such 
        subsection), to the States with plans approved under this title 
        in accordance with an allocation formula developed by the 
        Secretary that takes into account--
                    (A) the percentage of the total number of 
                individuals with disabilities in all States that reside 
                in a particular State;
                    (B) the per capita costs of furnishing home and 
                community-based services to individuals with 
                disabilities in the State; and
                    (C) the percentage of all individuals with incomes 
                at or below 150 percent of the official poverty line 
                (as described in section 105(a)(2)) in all States that 
                reside in a particular State.
            (2) Allocation for client advocacy activities.--Each State 
        with a plan approved under this title shall allocate one-half 
        of one percent of the State's total allotment under paragraph 
        (1) for client advocacy activities as described in section 
        106(c).
            (3) No duplicate payment.--No payment may be made to a 
        State under this section for any services provided to an 
        individual to the extent that the State received payment for 
        such services under section 1903(a) of the Social Security Act 
        (42 U.S.C. 1396b(a)).
            (4) Reallocations.--Any amounts allotted to States under 
        this subsection for a year that are not expended in such year 
        shall remain available for State programs under this title and 
        may be reallocated to States as the Secretary determines 
        appropriate.
            (5) Savings due to medicaid offsets.--
                    (A) In general.--Except as provided in subparagraph 
                (B), from the total amount of the increase in the 
                amount available for a fiscal year under paragraph (1) 
                of subsection (a) resulting from the application of 
                paragraph (5) of such subsection, the Secretary shall 
                allot to each State with a plan approved under this 
                title, an amount equal to the Federal offsets and 
                reductions in the State's medicaid plan for such fiscal 
                year that was reported to the Secretary under 
                subsection (a)(5), reduced or increased, as the case 
                may be, by any amount by which the Secretary determines 
                that any estimated Federal offsets and reductions in 
                such State's medicaid plan reported to the Secretary 
                under subsection (a)(5) for the previous fiscal year 
                were greater or less than the actual Federal offsets 
                and reductions in such State's medicaid plan.
                    (B) Cap on state savings allotment.--In no case 
                shall the allotment made under this paragraph to any 
                State for a fiscal year exceed the product of--
                            (i) the Federal medical assistance 
                        percentage for such State (as defined under 
                        section 1905(b) of the Social Security Act (42 
                        U.S.C. 1396d(b))); multiplied by
                            (ii)(I) for fiscal year 1997, the base 
                        medical assistance amount for the State (as 
                        determined under subparagraph (C)) updated 
                        through the midpoint of fiscal year 1997 by the 
                        estimated percentage change in the index 
                        described in section 102(a)(1)(B)(iii) during 
                        the period beginning on October 1, 1995, and 
                        ending at that midpoint; and
                            (II) for succeeding fiscal years, an amount 
                        equal to the amount determined under this 
                        clause for the previous fiscal year updated 
                        through the midpoint of the year by the 
                        estimated percentage change in such index 
                        during the 12-month period ending at that 
                        midpoint, with appropriate adjustments to 
                        reflect previous underestimations or 
                        overestimations under this clause in the 
                        projected percentage change in such index.
                    (C) Base medical assistance amount.--The base 
                medical assistance amount for a State is an amount 
                equal to the total expenditures from Federal and State 
                funds made under the State plan under title XIX of the 
                Social Security Act (42 U.S.C 1396 et seq.) during 
                fiscal year 1995 with respect to medical assistance 
                consisting of the services described in section 
                102(a)(1)(C).
    (c) State Entitlement.--This title constitutes budget authority in 
advance of appropriations Acts, and represents the obligation of the 
Federal Government to provide for the payment to States of amounts 
described in subsection (a).

SEC. 110. FEDERAL EVALUATIONS.

    (a) In General.--Not later than December 31, 2002, December 31, 
2005, and each December 31 thereafter, the Secretary shall provide to 
Congress analytical reports that evaluate--
            (1) the extent to which individuals with low incomes and 
        disabilities are equitably served;
            (2) the adequacy and equity of service plans to individuals 
        with similar levels of disability across States;
            (3) the comparability of program participation across 
        States, described by level and type of disability; and
            (4) the ability of service providers to sufficiently meet 
        the demand for services.
    (b) Geriatric Assessments.--Not later than 18 months after the date 
of enactment of this Act, the Secretary shall report to Congress 
concerning the feasibility of providing reimbursement under health 
plans and other payers of health services for full geriatric 
assessment, when recommended by a physician.

SEC. 111. INFORMATION AND TECHNICAL ASSISTANCE GRANTS RELATING TO 
              DEVELOPMENT OF HOSPITAL LINKAGE PROGRAMS.

    (a) Findings.--Congress finds that--
            (1) demonstration programs and projects have been developed 
        to offer care management to hospitalized individuals awaiting 
        discharge who are in need of long-term health care services 
        that meet individual needs and preferences in home and 
        community-based settings as an alternative to long-term nursing 
        home care or institutional placement; and
            (2) there is a need to disseminate information and 
        technical assistance to hospitals and State and local community 
        organizations regarding such programs and projects and to 
        provide incentive grants to State and local public and private 
        agencies, including area agencies on aging, to establish and 
        expand programs that offer care management to individuals 
        awaiting discharge from acute care hospitals who are in need of 
        long-term care so that services to meet individual needs and 
        preferences can be arranged in home and community-based 
        settings as an alternative to long-term placement in nursing 
        homes or other institutional settings.
    (b) Dissemination of Information, Technical Assistance, and 
Incentive Grants to Assist in the Development of Hospital Linkage 
Programs.--Part C of title III of the Public Health Service Act (42 
U.S.C. 248 et seq.) is amended by adding at the end thereof the 
following new section:

``SEC. 327B. DISSEMINATION OF INFORMATION, TECHNICAL ASSISTANCE AND 
              INCENTIVE GRANTS TO ASSIST IN THE DEVELOPMENT OF HOSPITAL 
              LINKAGE PROGRAMS.

    ``(a) Dissemination of Information.--The Secretary shall compile, 
evaluate, publish and disseminate to appropriate State and local 
officials and to private organizations and agencies that provide 
services to individuals in need of long-term health care services, such 
information and materials as may assist such entities in replicating 
successful programs that are aimed at offering care management to 
hospitalized individuals who are in need of long-term care so that 
services to meet individual needs and preferences can be arranged in 
home and community-based settings as an alternative to long-term 
nursing home placement. The Secretary may provide technical assistance 
to entities seeking to replicate such programs.
    ``(b) Incentive Grants To Assist in the Development of Hospital 
Linkage Programs.--The Secretary shall establish a program under which 
incentive grants may be awarded to assist private and public agencies, 
including area agencies on aging, and organizations in developing and 
expanding programs and projects that facilitate the discharge of 
individuals in hospitals or other acute care facilities who are in need 
of long-term care services and placement of such individuals into home 
and community-based settings.
    ``(c) Administrative Provisions.--
            ``(1) Eligible entities.--To be eligible to receive a grant 
        under subsection (b) an entity shall be--
                    ``(A)(i) a State agency as defined in section 
                102(43) of the Older Americans Act of 1965 (42 U.S.C. 
                3002(43)); or
                    ``(ii) a State agency responsible for administering 
                home and community care programs under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.); or
                    ``(B) if no State agency described in subparagraph 
                (A) applies with respect to a particular State, a 
                public or nonprofit private entity.
            ``(2) Applications.--To be eligible to receive an incentive 
        grant under subsection (b), an entity shall prepare and submit 
        to the Secretary an application at such time, in such manner 
        and containing such information as the Secretary may require, 
        including--
                    ``(A) an assessment of the need within the 
                community to be served for the establishment or 
                expansion of a program to facilitate the discharge of 
                individuals in need of long-term care who are in 
                hospitals or other acute care facilities into home and 
                community-care programs that provide individually 
                planned, flexible services that reflect individual 
                choice or preference rather than nursing home or 
                institutional settings;
                    ``(B) a plan for establishing or expanding a 
                program for identifying individuals in hospital or 
                acute care facilities who are in need of individualized 
                long-term care provided in home and community-based 
                settings rather than nursing homes or other 
                institutional settings and undertaking the planning and 
                management of individualized care plans to facilitate 
                discharge into such settings;
                    ``(C) assurances that nongovernmental case 
                management agencies funded under grants awarded under 
                this section are not direct providers of home and 
                community-based services;
                    ``(D) satisfactory assurances that adequate home 
                and community-based long term care services are 
                available, or will be made available, within the 
                community to be served so that individuals being 
                discharged from hospitals or acute care facilities 
                under the proposed program can be served in such home 
                and community-based settings, with flexible, 
                individualized care that reflects individual choice and 
                preference;
                    ``(E) a description of the manner in which the 
                program to be administered with amounts received under 
                the grant will be continued after the termination of 
                the grant for which such application is submitted; and
                    ``(F) a description of any waivers or approvals 
                necessary to expand the number of individuals served in 
                federally funded home and community-based long term 
                care programs in order to provide satisfactory 
                assurances that adequate home and community-based long 
                term care services are available in the community to be 
                served.
            ``(3) Awarding of grants.--
                    ``(A) Preferences.--In awarding grants under 
                subsection (b), the Secretary shall give preference to 
                entities submitting applications that--
                            ``(i) demonstrate an ability to coordinate 
                        activities funded using amounts received under 
                        the grant with programs providing 
                        individualized home and community-based case 
                        management and services to individuals in need 
                        of long term care with hospital discharge 
                        planning programs; and
                            ``(ii) demonstrate that adequate home and 
                        community-based long term care management and 
                        services are available, or will be made 
                        available to individuals being served under the 
                        program funded with amounts received under 
                        subsection (b).
                    ``(B) Distribution.--In awarding grants under 
                subsection (b), the Secretary shall ensure that such 
                grants--
                            ``(i) are equitably distributed on a 
                        geographic basis;
                            ``(ii) include projects operating in urban 
                        areas and projects operating in rural areas; 
                        and
                            ``(iii) are awarded for the expansion of 
                        existing hospital linkage programs as well as 
                        the establishment of new programs.
                    ``(C) Expedited consideration.--The Secretary shall 
                provide for the expedited consideration of any waiver 
                application that is necessary under title XIX of the 
                Social Security Act (42 U.S.C. 1396 et seq.) to enable 
                an applicant for a grant under subsection (b) to 
                satisfy the assurance required under paragraph (1)(D).
            ``(4) Use of grants.--An entity that receives amounts under 
        a grant under subsection (b) may use such amounts for planning, 
        development and evaluation services and to provide 
        reimbursements for the costs of one or more case mangers to be 
        located in or assigned to selected hospitals who would--
                    ``(A) identify patients in need of individualized 
                care in home and community-based long-term care;
                    ``(B) assess and develop care plans in cooperation 
                with the hospital discharge planning staff; and
                    ``(C) arrange for the provision of community care 
                either immediately upon discharge from the hospital or 
                after any short term nursing-home stay that is needed 
                for recuperation or rehabilitation;
            ``(5) Direct services subject to reimbursements.--None of 
        the amounts provided under a grant under this section may be 
        used to provide direct services, other than case management, 
        for which reimbursements are otherwise available under title 
        XVIII or XIX of the Social Security Act (42 U.S.C. 1395 et seq. 
        and 1396 et seq.).
            ``(6) Limitations.--
                    ``(A) Term.--Grants awarded under this section 
                shall be for terms of less than 3 years.
                    ``(B) Amount.--Grants awarded to an entity under 
                this section shall not exceed $300,000 per year. The 
                Secretary may waive the limitation under this 
                subparagraph where an applicant demonstrates that the 
                number of hospitals or individuals to be served under 
                the grant justifies such increased amounts.
                    ``(C) Supplanting of funds.--Amounts awarded under 
                a grant under this section may not be used to supplant 
                existing State funds that are provided to support 
                hospital link programs.
    ``(d) Evaluation and Reports.--
            ``(1) By grantees.--An entity that receives a grant under 
        this section shall evaluate the effectiveness of the services 
        provided under the grant in facilitating the placement of 
        individuals being discharged from hospitals or acute care 
        facilities into home and community-based long term care 
        settings rather than nursing homes. Such entity shall prepare 
        and submit to the Secretary a report containing such 
        information and data concerning the activities funded under the 
        grant as the Secretary determines appropriate.
            ``(2) By secretary.--Not later than the end of the third 
        fiscal year for which funds are appropriated under subsection 
        (e), the Secretary shall prepare and submit to the appropriate 
        committees of Congress, a report concerning the results of the 
        evaluations and reports conducted and prepared under paragraph 
        (1).
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section, $5,000,000 for each of the 
fiscal years 1996 through 1998.''.

               TITLE II--PROVISIONS RELATING TO MEDICARE

SEC. 201. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY HIGH-
              INCOME INDIVIDUALS.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

  ``PART VIII--CERTAIN HEALTH CARE SUBSIDIES RECEIVED BY HIGH-INCOME 
                              INDIVIDUALS

                              ``Sec. 59B. Recapture of certain health 
                                        care subsidies.

``SEC. 59B. RECAPTURE OF CERTAIN HEALTH CARE SUBSIDIES.

    ``(a) Imposition of Recapture Amount.--In the case of an 
individual, if the modified adjusted gross income of the taxpayer for 
the taxable year exceeds the threshold amount, such taxpayer shall pay 
(in addition to any other amount imposed by this subtitle) a recapture 
amount for such taxable year equal to the aggregate of the Medicare 
part B recapture amounts (if any) for months during such year that a 
premium is paid under part B of title XVIII of the Social Security Act 
for the coverage of the individual under such part.
    ``(b) Medicare Part B Premium Recapture Amount for Month.--For 
purposes of this section, the Medicare part B premium recapture amount 
for any month is the amount equal to the excess of--
            ``(1) 200 percent of the monthly actuarial rate for 
        enrollees age 65 and over determined for that calendar year 
        under section 1839(a)(1) of the Social Security Act, over
            ``(2) the total monthly premium under section 1839 of the 
        Social Security Act (determined without regard to subsections 
        (b) and (f) of section 1839 of such Act).
    ``(c) Phase-in of Recapture Amount.--
            ``(1) In general.--If the modified adjusted gross income of 
        the taxpayer for any taxable year exceeds the threshold amount 
        by less than $25,000, the recapture amount imposed by this 
        section for such taxable year shall be an amount that bears the 
        same ratio to the recapture amount that would (but for this 
        subsection) be imposed by this section for such taxable year as 
        such excess bears to $25,000.
            ``(2) Joint returns.--If a recapture amount is determined 
        separately for each spouse filing a joint return, paragraph (1) 
        shall be applied by substituting `$50,000' for `$25,000' each 
        place it appears.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section:
            ``(1) Threshold amount.--The term `threshold amount' 
        means--
                    ``(A) except as otherwise provided in this 
                paragraph, $100,000;
                    ``(B) $125,000 in the case of a joint return; and
                    ``(C) zero in the case of a taxpayer who--
                            ``(i) is married (as determined under 
                        section 7703) but does not file a joint return 
                        for such year; and
                            ``(ii) does not live apart from his spouse 
                        at all times during the taxable year.
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income--
                    ``(A) determined without regard to sections 135, 
                911, 931, and 933; and
                    ``(B) increased by the amount of interest received 
                or accrued by the taxpayer during the taxable year that 
                is exempt from tax.
            ``(3) Joint returns.--In the case of a joint return--
                    ``(A) the recapture amount under subsection (a) 
                shall be the sum of the recapture amounts determined 
                separately for each spouse; and
                    ``(B) subsections (a) and (c) shall be applied by 
                taking into account the combined modified adjusted 
                gross income of the spouses.
            ``(4) Coordination with other provisions.--
                    ``(A) Treated as tax for subtitle f.--For purposes 
                of subtitle F, the recapture amount imposed by this 
                section shall be treated as if it were a tax imposed by 
                section 1.
                    ``(B) Not treated as tax for certain purposes.--The 
                recapture amount imposed by this section shall not be 
                treated as a tax imposed by this chapter for purposes 
                of determining--
                            ``(i) the amount of any credit allowable 
                        under this chapter; or
                            ``(ii) the amount of the minimum tax under 
                        section 55.
                    ``(C) Treated as payment for medical insurance.--
                The recapture amount imposed by this section shall be 
                treated as an amount paid for insurance covering 
                medical care, within the meaning of section 213(d).''.
    (b) Transfers to Federal Supplementary Medical Insurance Trust 
Fund.--
            (1) In general.--There are hereby appropriated to the 
        Federal Supplementary Medical Insurance Trust Fund amounts 
        equivalent to the aggregate increase in liabilities under 
        chapter 1 of the Internal Revenue Code of 1986 that is 
        attributable to the application of section 59B(a) of such Code, 
        as added by this section.
            (2) Transfers.--The amounts appropriated by paragraph (1) 
        to the Federal Supplementary Medical Insurance Trust Fund shall 
        be transferred from time to time (but not less frequently than 
        quarterly) from the general fund of the Treasury on the basis 
        of estimates made by the Secretary of the Treasury of the 
        amounts referred to in paragraph (1). Any quarterly payment 
        shall be made on the first day of such quarter and shall take 
        into account the recapture amounts referred to in such section 
        59B(a) for such quarter. Proper adjustments shall be made in 
        the amounts subsequently transferred to the extent prior 
        estimates were in excess of or less than the amounts required 
        to be transferred.
    (c) Reporting Requirements.--
            (1) Paragraph (1) of section 6050F(a) of the Internal 
        Revenue Code of 1986 (relating to returns relating to social 
        security benefits) is amended by striking ``and'' at the end of 
        subparagraph (B) and by inserting after subparagraph (C) the 
        following new subparagraph:
                    ``(D) the number of months during the calendar year 
                for which a premium was paid under part B of title 
                XVIII of the Social Security Act for the coverage of 
                such individual under such part, and''.
            (2) Paragraph (2) of section 6050F(b) of such Code is 
        amended to read as follows:
            ``(2) the information required to be shown on such return 
        with respect to such individual.''.
            (3) Subparagraph (A) of section 6050F(c)(1) of such Code is 
        amended by inserting before the comma ``and in the case of the 
        information specified in subsection (a)(1)(D)''.
            (4) The heading for section 6050F of such Code is amended 
        by inserting ``and medicare part b coverage'' before the 
        period.
            (5) The item relating to section 6050F in the table of 
        sections for subpart B of part III of subchapter A of chapter 
        61 of such Code is amended by inserting ``and Medicare part B 
        coverage'' before the period.
    (d) Waiver of Certain Estimated Tax Penalties.--No addition to tax 
shall be imposed under section 6654 of the Internal Revenue Code of 
1986 (relating to failure to pay estimated income tax) for any period 
before April 16, 1998, with respect to any underpayment to the extent 
that such underpayment resulted from section 59B(a) of the Internal 
Revenue Code of 1986, as added by this section.
    (e) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at 
the end thereof the following new item:

                              ``Part VIII. Certain health care 
                                        subsidies received by high-
                                        income individuals.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

SEC. 202. IMPOSITION OF 10 PERCENT COPAYMENT ON HOME HEALTH SERVICES 
              UNDER MEDICARE.

    (a) In General.--
            (1) Part a.--Section 1813(a) of the Social Security Act (42 
        U.S.C. 1395e(a)) is amended by adding at the end the following 
        new paragraph:
    ``(5)(A) The amount payable for a home health service furnished to 
an individual under this part shall be reduced by a copayment amount 
equal to 10 percent of the average nationwide per visit cost for such a 
service furnished under this title (as determined by the Secretary on a 
prospective basis for services furnished during a calendar year).
    ``(B) Subparagraph (A) shall not apply to individuals whose family 
income does not exceed 150 percent of the official poverty line 
(referred to in section 1905(p)(2)) for a family of the size 
involved.''.
            (2) Part b.--
                    (A) In general.--Section 1833(b) of the Social 
                Security Act (42 U.S.C. 1395l(b)) is amended by adding 
                at the end the following new sentence: ``If the total 
                amount of the expenses incurred by an individual as 
                determined under the preceding provisions of this 
                subsection include expenses for a home health service, 
                such expenses shall be further reduced by a copayment 
                amount equal to 10 percent of the average nationwide 
                per visit cost for such a service furnished under this 
                title (as determined by the Secretary on a prospective 
                basis for services furnished during a calendar year). 
                The preceding sentence shall not apply to individuals 
                whose family income does not exceed 150 percent of the 
                official poverty line (referred to in section 
                1905(p)(2)) for a family of the size involved.''.
                    (B) Conforming amendment.--Section 1833(a)(2) of 
                the Social Security Act (42 U.S.C. 1395l(a)(2)), as 
                amended by sections 147(f)(6)(C) and 156(a)(2)(B)(iii) 
                of the Social Security Act Amendments of 1994 (Public 
                Law 103-432; 108 Stat. 4432, 4440), is further 
                amended--
                            (i) in subparagraph (A), by striking ``to 
                        home health services (other than a covered 
                        osteoporosis drug (as defined in section 
                        1861(kk))) and'';
                            (ii) in subparagraph (E), by striking 
                        ``and'' at the end;
                            (iii) in subparagraph (F), by striking the 
                        semicolon at the end and inserting ``; and''; 
                        and
                            (iv) by adding at the end the following new 
                        subparagraph:
                    ``(G) with respect to any home health service 
                (other than a covered osteoporosis drug (as defined in 
                section 1861(kk)))--
                            ``(i) the lesser of --
                                    ``(I) the reasonable cost of such 
                                service, as determined under section 
                                1861(v); or
                                    ``(II) the customary charges with 
                                respect to such service;
                        less the amount a provider may charge as 
                        described in clause (ii) of section 
                        1866(a)(2)(A); or
                            ``(ii) if such service is furnished by a 
                        public provider of services, or by another 
                        provider that demonstrates to the satisfaction 
                        of the Secretary that a significant portion of 
                        its patients are low-income (and requests that 
                        payment be made under this clause), free of 
                        charge or at nominal charges to the public, the 
                        amount determined in accordance with section 
                        1814(b)(2).''.
            (3) Provider charges.--Section 1866(a)(2)(A)(i) of the 
        Social Security Act (42 U.S.C. 1395cc(a)(2)(A)(i)) is amended--
                    (A) by striking ``deduction or coinsurance'' and 
                inserting ``deduction, coinsurance, or copayment''; and
                    (B) by striking ``or (a)(4)'' and inserting 
                ``(a)(4), or (a)(5)''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to home health services furnished on or after January 1, 1996.

SEC. 203. REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS FOR INPATIENT 
              HOSPITAL SERVICES.

    (a) PPS Hospitals.--
            (1) Reduction in base payment rates for pps hospitals.--
        Section 1886(g)(1)(A) of the Social Security Act (42 U.S.C. 
        1395ww(g)(1)(A)) is amended by adding at the end the following 
        new sentence: ``In addition to the reduction described in the 
        preceding sentence, for discharges occurring after September 
        30, 1995, the Secretary shall reduce by 7.31 percent the 
        unadjusted standard Federal capital payment rate (as described 
        in section 412.308(c) of title 42, Code of Federal Regulations, 
        as in effect on the date of enactment of the Long-Term Care 
        Reform and Deficit Reduction Act of 1995) and shall reduce by 
        10.41 percent the unadjusted hospital-specific rate (as 
        described in section 412.328(e)(1) of title 42, Code of Federal 
        Regulations, as in effect on the date of enactment of the Long-
        Term Care Reform and Deficit Reduction Act of 1995).''.
            (2) Reduction in update.--Section 1886(g)(1) of the Social 
        Security Act (42 U.S.C. 1395ww(g)(1)) is amended--
                    (A) in subparagraph (B)(i)--
                            (i) by striking ``and (II)'' and inserting 
                        ``(II)''; and
                            (ii) by striking the semicolon at the end 
                        and inserting the following: ``, and (III) an 
                        annual update factor established for the 
                        prospective payment rates applicable to 
                        discharges in a fiscal year that (subject to 
                        reduction under subparagraph (C)) will be based 
                        upon such factor as the Secretary determines 
                        appropriate to take into account amounts 
                        necessary for the efficient and effective 
                        delivery of medically appropriate and necessary 
                        care of high quality;'';
                    (B) by redesignating subparagraph (C) as 
                subparagraph (D); and
                    (C) by inserting after subparagraph (B) the 
                following new subparagraph:
            ``(C)(i) With respect to payments attributable to portions 
        of cost reporting periods or discharges occurring during each 
        of the fiscal years 1996 through 2003, the Secretary shall 
        include a reduction in the annual update factor established 
        under subparagraph (B)(i)(III) for discharges in the year equal 
        to the applicable update reduction described in clause (ii) to 
        adjust for excessive increases in capital costs per discharge 
        for fiscal years prior to fiscal year 1992 (but in no event may 
        such reduction result in an annual update factor less than 
        zero).
            ``(ii) In clause (i), the term `applicable update 
        reduction' means, with respect to the update factor for a 
        fiscal year--
                    ``(I) 4.9 percentage points; or
                    ``(II) if the annual update factor for the previous 
                fiscal year was less than the applicable update 
                reduction for the previous year, the sum of 4.9 
                percentage points and the difference between the annual 
                update factor for the previous year and the applicable 
                update reduction for the previous year.''.
    (b) PPS-Exempt Hospitals.--Section 1861(v)(1) of the Social 
Security Act (42 U.S.C. 1395x(v)(1)) is further amended by adding at 
the end the following new subparagraph:
    ``(T) Such regulations shall provide that, in determining the 
amount of the payments that may be made under this title with respect 
to the capital-related costs of inpatient hospital services furnished 
by a hospital that is not a subsection (d) hospital (as defined in 
section 1886(d)(1)(B)) or a subsection (d) Puerto Rico hospital (as 
defined in section 1886(d)(9)(A)), the Secretary shall reduce the 
amounts of such payments otherwise established under this title by 15 
percent for payments attributable to portions of cost reporting periods 
occurring during each of the fiscal years 1996 through 2003.''.

SEC. 204. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR CERTAIN 
              OUTPATIENT HOSPITAL SERVICES.

    (a) Ambulatory Surgical Center Procedures.--Section 
1833(i)(3)(B)(i)(II) of the Social Security Act (42 U.S.C. 
1395l(i)(3)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (b) Radiology Services and Diagnostic Procedures.--Section 
1833(n)(1)(B)(i)(II) of the Social Security Act (42 U.S.C. 
1395l(n)(1)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished during portions of cost reporting periods 
occurring on or after July 1, 1995.

SEC. 205. REDUCTION IN ROUTINE COST LIMITS FOR HOME HEALTH SERVICES.

    (a) Reduction in Update To Maintain Freeze in 1996.--
            (1) In general.--Section 1861(v)(1)(L)(i) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
                    (A) in subclause (II), by striking ``or'' at the 
                end;
                    (B) in subclause (III), by striking ``112 
                percent,'' and inserting ``and before July 1, 1996, 112 
                percent, or''; and
                    (C) by inserting after subclause (III) the 
                following new subclause:
            ``(IV) July 1, 1996, 100 percent (adjusted by such amount 
        as the Secretary determines to be necessary to preserve the 
        savings resulting from the enactment of section 13564(a)(1) of 
        the Omnibus Budget Reconciliation Act of 1993),''.
            (2) Adjustment to limits.--Section 1861(v)(1)(L)(ii) of the 
        Social Security Act (42 U.S.C. 1395x(v)(1)(L)(ii)) is amended 
        by adding at the end the following new sentence: ``The effect 
        of the amendments made by section 205(a)(1) of the Long-Term 
        Care Reform and Deficit Reduction Act of 1995 shall not be 
        considered by the Secretary in making adjustments pursuant to 
        this clause.''.
    (b) Basing Limits in Subsequent Years on Median of Costs.--
            (1) In general.--Section 1861(v)(1)(L)(i) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)(i)), as amended by 
        subsection (a), is amended in the matter following subclause 
        (IV) by striking ``the mean'' and inserting ``the median''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to cost reporting periods beginning on or after 
        July 1, 1997.
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