[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3075 Engrossed in House (EH)]


  1st Session

                               H. R. 3075

_______________________________________________________________________

                                 AN ACT

To amend titles XVIII, XIX, and XXI of the Social Security Act to make 
   corrections and refinements in the Medicare, Medicaid, and State 
children's health insurance programs, as revised by the Balanced Budget 
                              Act of 1997.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
106th CONGRESS
  1st Session
                                H. R. 3075

_______________________________________________________________________

                                 AN ACT


 
To amend titles XVIII, XIX, and XXI of the Social Security Act to make 
   corrections and refinements in the Medicare, Medicaid, and State 
children's health insurance programs, as revised by the Balanced Budget 
                              Act of 1997.

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

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES 
              TO BBA; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this title an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
    (c) References to Balanced Budget Act of 1997.--In this Act, the 
term ``BBA'' means the Balanced Budget Act of 1997 (Public Law 105-33).
    (d) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; amendments to Social Security Act; references to 
                            BBA; table of contents.
                 TITLE I--PROVISIONS RELATING TO PART A

                       Subtitle A--PPS Hospitals

Sec. 101. One-year delay in transition for indirect medical education 
                            (IME) percentage adjustment.
Sec. 102. Decrease in reductions for disproportionate share hospitals; 
                            data collection requirements.
                    Subtitle B--PPS Exempt Hospitals

Sec. 111. Wage adjustment of percentile cap for PPS-exempt hospitals.
Sec. 112. Enhanced payments for long-term care and psychiatric 
                            hospitals until development of prospective 
                            payment systems for those hospitals.
Sec. 113. Per discharge prospective payment system for long-term care 
                            hospitals.
Sec. 114. Per diem prospective payment system for psychiatric 
                            hospitals.
Sec. 115. Refinement of prospective payment system for inpatient 
                            rehabilitation services.
 Subtitle C--Adjustments to PPS Payments for Skilled Nursing Facilities

Sec. 121. Temporary increase in payment for certain high cost patients.
Sec. 122. Market basket increase.
Sec. 123. Authorizing facilities to elect immediate transition to 
                            Federal rate.
Sec. 124. Part A pass-through payment for certain ambulance services, 
                            prostheses, and chemotherapy drugs.
Sec. 125. Provision for part B add-ons for facilities participating in 
                            the NHCMQ demonstration project.
Sec. 126. Special consideration for facilities serving specialized 
                            patient populations.
Sec. 127. MedPAC study on special payment for facilities located in 
                            Hawaii and Alaska.
                           Subtitle D--Other

Sec. 131. Part A BBA technical corrections.
                TITLE II--PROVISIONS RELATING TO PART B

          Subtitle A--Adjustments to Physician Payment Updates

Sec. 201. Modification of update adjustment factor provisions to reduce 
                            update oscillations and require estimate 
                            revisions.
Sec. 202. Use of data collected by organizations and entities in 
                            determining practice expense relative 
                            values.
Sec. 203. GAO study on resources required to provide safe and effective 
                            outpatient cancer therapy.
                Subtitle B--Hospital Outpatient Services

Sec. 211. Outlier adjustment and transitional pass-through for certain 
                            medical devices, drugs, and biologicals.
Sec. 212. Establishing a transitional corridor for application of OPD 
                            PPS.
Sec. 213. Delay in application of prospective payment system to cancer 
                            center hospitals.
Sec. 214. Limitation on outpatient hospital copayment for a procedure 
                            to the hospital deductible amount.
                           Subtitle C--Other

Sec. 221. Application of separate caps to physical and speech therapy 
                            services.
Sec. 222. Transitional outlier payments for therapy services for 
                            certain high acuity patients.
Sec. 223. Update in renal dialysis composite rate.
Sec. 224. Temporary update in durable medical equipment and oxygen 
                            rates.
Sec. 225. Requirement for new proposed rulemaking for implementation of 
                            inherent reasonableness policy.
Sec. 226. Increase in reimbursement for pap smears.
Sec. 227. Refinement of ambulance services demonstration project.
Sec. 228. Phase-in of PPS for ambulatory surgical centers.
Sec. 229. Extension of Medicare benefits for immunosuppressive drugs.
Sec. 230. Additional studies.
            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 301. Adjustment to reflect administrative costs not included in 
                            the interim payment system.
Sec. 302. Delay in application of 15 percent reduction in payment rates 
                            for home health services until 1 year after 
                            implementation of prospective payment 
                            system.
Sec. 303. Clarification of surety bond requirements.
Sec. 304. Technical amendment clarifying applicable market basket 
                            increase for PPS.
             Subtitle B--Direct Graduate Medical Education

Sec. 311. Use of national average payment methodology in computing 
                            direct graduate medical education (DGME) 
                            payments.
Sec. 312. Initial residency period for child neurology residency 
                            training programs.
                           Subtitle C--Other

Sec. 321. GAO study on geographic reclassification.
Sec. 322. MedPAC study on Medicare payment for non-physician health 
                            professional clinical training in 
                            hospitals.
                  TITLE IV--RURAL PROVIDER PROVISIONS

Sec. 401. Permitting reclassification of certain urban hospitals as 
                            rural hospitals.
Sec. 402. Update of standards applied for geographic reclassification 
                            for certain hospitals.
Sec. 403. Improvements in the critical access hospital (CAH) program.
Sec. 404. Five-year extension of Medicare dependent hospital (MDH) 
                            program.
Sec. 405. Rebasing for certain sole community hospitals.
Sec. 406. Increased flexibility in providing graduate physician 
                            training in rural areas.
Sec. 407. Elimination of certain restrictions with respect to hospital 
                            swing bed program.
Sec. 408. Grant program for rural hospital transition to prospective 
                            payment.
Sec. 409. MedPAC study of rural providers.
Sec. 410. Expansion of access to paramedic intercept services in rural 
                            areas.
    TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM)

                      Subtitle A--Medicare+Choice

Sec. 501. Phase-in of new risk adjustment methodology.
Sec. 502. Encouraging offering of Medicare+Choice plans in areas 
                            without plans.
Sec. 503. Modification of 5-year re-entry rule for contract 
                            terminations.
Sec. 504. Continued computation and publication of AAPCC data.
Sec. 505. Changes in Medicare+Choice enrollment rules.
Sec. 506. Allowing variation in premium waivers within a service area 
                            if Medicare+Choice payment rates vary 
                            within the area.
Sec. 507. Delay in deadline for submission of adjusted community rates 
                            and related information.
Sec. 508. Two-year extension of Medicare cost contracts.
Sec. 509. Medicare+Choice nursing and allied health professional 
                            education payments.
Sec. 510. Reduction in adjustment in national per capita 
                            Medicare+Choice growth percentage for 2002.
Sec. 511. Deeming of Medicare+Choice organization to meet requirements.
Sec. 512. Miscellaneous changes and studies.
Sec. 513. MedPAC report on Medicare MSA (medical savings account) 
                            plans.
Sec. 514. Clarification of nonapplicability of certain provisions of 
                            discharge planning process to 
                            Medicare+Choice plans.
            Subtitle B--Managed Care Demonstration Projects

Sec. 521. Extension of social health maintenance organization 
                            demonstration (SHMO) project authority.
Sec. 522. Extension of Medicare community nursing organization 
                            demonstration project.
Sec. 523. Medicare+Choice competitive bidding demonstration project.
Sec. 524. Extension of Medicare municipal health services demonstration 
                            projects.
Sec. 525. Medicare coordinated care demonstration project.
                           TITLE VI--MEDICAID

Sec. 601. Making Medicaid DSH transition rule permanent.
Sec. 602. Increase in DSH allotment for certain States and the District 
                            of Columbia.
Sec. 603. New prospective payment system for Federally-qualified health 
                            centers and rural health clinics.
Sec. 604. Parity in reimbursement for certain utilization and quality 
                            control services.
      TITLE VII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP)

Sec. 701. Stabilizing the SCHIP allotment formula.
Sec. 702. Increased allotments for territories under the State 
                            children's health insurance program.

                 TITLE I--PROVISIONS RELATING TO PART A

                       Subtitle A--PPS Hospitals

SEC. 101. ONE-YEAR DELAY IN TRANSITION FOR INDIRECT MEDICAL EDUCATION 
              (IME) PERCENTAGE ADJUSTMENT.

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)), as amended by section 4621(a)(1) of BBA, is 
amended--
            (1) in subclause (IV), by inserting ``and 2001'' after 
        ``2000''; and
            (2) by striking ``2000'' in subclause (V) and inserting 
        ``2001''.
    (b) Conforming Amendment Relating to Determination of Standardized 
Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)), as 
amended by section 4621(a)(2) of BBA, is amended by inserting ``or any 
additional payments under such paragraph resulting from the amendment 
made by section 101(a) of Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act of 1999'' after ``Balanced Budget Act of 1997''.

SEC. 102. DECREASE IN REDUCTIONS FOR DISPROPORTIONATE SHARE HOSPITALS; 
              DATA COLLECTION REQUIREMENTS.

    (a) In General.--Section 1886(d)(5)(F)(ix) (42 U.S.C. 
1395ww(d)(5)(F)(ix)), as added by section 4403(a) of BBA, is amended--
            (1) in subclause (III), by striking ``during fiscal year 
        2000'' and inserting ``during each of fiscal years 2000 and 
        2001'';
            (2) by striking subclause (IV);
            (3) by redesignating subclauses (V) and (VI) and subclauses 
        (IV) and (V), respectively; and
            (4) in subclause (IV), as so redesignated, by striking 
        ``reduced by 5 percent'' and inserting ``reduced by 4 
        percent''.
    (b) Data Collection.--
            (1) In general.--The Secretary of Health and Human Services 
        shall require any subsection (d) hospital (as defined in 
        section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
        1395ww(d)(1)(B)) to submit to the Secretary, in the cost 
        reports submitted to the Secretary by such hospital for 
        discharges occurring during a fiscal year, data on the costs 
        incurred by the hospital for providing inpatient and outpatient 
        hospital services for which the hospital is not compensated, 
        including non-Medicare bad debt, charity care, and charges for 
        Medicaid an indigent care.
            (2) Effective date.--The Secretary shall require the 
        submission of the data described in paragraph (1) in cost 
        reports for cost reporting periods beginning on or after the 
        date of the enactment of this Act.

                    Subtitle B--PPS-Exempt Hospitals

SEC. 111. WAGE ADJUSTMENT OF PERCENTILE CAP FOR PPS-EXEMPT HOSPITALS.

    (a) In General.--Section 1886(b)(3)(H) (42 U.S.C. 1395ww(b)(3)(H)), 
as amended by section 4414 of BBA, is amended--
            (1) in clause (i), by inserting ``, as adjusted under 
        clause (iii)'' before the period;
            (2) in clause (ii), by striking ``clause (i)'' and ``such 
        clause'' and inserting ``subclause (I)'' and ``such subclause'' 
        respectively;
            (3) by striking ``(H)(i)'' and inserting ``(ii)(I)'';
            (4) by redesignating clauses (ii) and (iii) as subclauses 
        (II) and (III);
            (5) by inserting after clause (ii), as so redesignated, the 
        following new clause:
    ``(iii) In applying clause (ii)(I) in the case of a hospital or 
unit, the Secretary shall provide for an appropriate adjustment to the 
labor-related portion of the amount determined under such subparagraph 
to take into account differences between average wage-related costs in 
the area of the hospital and the national average of such costs within 
the same class of hospital.''; and
            (6) by inserting before clause (ii), as so redesignated, 
        the following new clause:
    ``(H)(i) In the case of a hospital or unit that is within a class 
of hospital described in clause (iv), for a cost reporting period 
beginning during fiscal years 1998 through 2002, the target amount for 
such a hospital or unit may not exceed the amount as updated up to or 
for such cost reporting period under clause (ii).''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
cost reporting periods beginning on or after October 1, 1999.

SEC. 112. ENHANCED PAYMENTS FOR LONG-TERM CARE AND PSYCHIATRIC 
              HOSPITALS UNTIL DEVELOPMENT OF PROSPECTIVE PAYMENT 
              SYSTEMS FOR THOSE HOSPITALS.

    Section 1886(b)(2) (42 U.S.C. 1395ww(b)(2)), as added by section 
4415(b) of BBA, is amended--
            (1) in subparagraph (A), by striking ``In addition to'' and 
        inserting ``Except as provided in subparagraph (E), in addition 
        to''; and
            (2) by adding at the end the following new subparagraph:
    ``(E)(i) In the case of an eligible hospital that is a hospital or 
unit that is within a class of hospital described in clause (ii) with a 
12-month cost reporting period beginning before the enactment of this 
subparagraph, in determining the amount of the increase under 
subparagraph (A), the Secretary shall substitute for the percentage of 
the target amount applicable under subparagraph (A)(ii)--
            ``(I) for a cost reporting period beginning on or after 
        October 1, 2000, and before September 30, 2001, 1.5 percent; 
        and
            ``(II) for a cost reporting period beginning on or after 
        October 1, 2001, and before September 30, 2002, 2 percent.
            ``(ii) For purposes of clause (i), each of the following 
        shall be treated as a separate class of hospital:
                    ``(I) Hospitals described in clause (i) of 
                subsection (d)(1)(B) and psychiatric units described in 
                the matter following clause (v) of such subsection.
                    ``(II) Hospitals described in clause (iv) of such 
                subsection.''.

SEC. 113. PER DISCHARGE PROSPECTIVE PAYMENT SYSTEM FOR LONG-TERM CARE 
              HOSPITALS.

    (a) Development of System.--
            (1) In general.--The Secretary of Health and Human Services 
        shall develop a per discharge prospective payment system for 
        payment for inpatient hospital services of long-term care 
        hospitals described in section 1886(d)(1)(B)(iv) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(1)(B)(iv)) under the Medicare 
        program. Such system shall include an adequate patient 
        classification system that is based on diagnosis-related groups 
        (DRGs) and that reflects the differences in patient resource 
        use and costs, and shall maintain budget neutrality.
            (2) Collection of data and evaluation.--In developing the 
        system described in paragraph (1), the Secretary may require 
        such long-term care hospitals to submit such information to the 
        Secretary as the Secretary may require to develop the system.
    (b) Report.--Not later than October 1, 2001, the Secretary shall 
submit to the appropriate committees of Congress a report that includes 
a description of the system developed under subsection (a)(1).
    (c) Implementation of Prospective Payment System.--Notwithstanding 
section 1886(b)(3) of the Social Security Act (42 U.S.C. 1395ww(b)(3)), 
the Secretary shall provide, for cost reporting periods beginning on or 
after October 1, 2002, for payments for inpatient hospital services 
furnished by long-term care hospitals under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) in accordance with the system 
described in subsection (a).

SEC. 114. PER DIEM PROSPECTIVE PAYMENT SYSTEM FOR PSYCHIATRIC 
              HOSPITALS.

    (a) Development of System.--
            (1) In general.--The Secretary of Health and Human Services 
        shall develop a per diem prospective payment system for payment 
        for inpatient hospital services of psychiatric hospitals and 
        units (as defined in paragraph (3)) under the Medicare program. 
        Such system shall include an adequate patient classification 
        system that reflects the differences in patient resource use 
        and costs among such hospitals and shall maintain budget 
        neutrality.
            (2) Collection of data and evaluation.--In developing the 
        system described in paragraph (1), the Secretary may require 
        such psychiatric hospitals and units to submit such information 
        to the Secretary as the Secretary may require to develop the 
        system.
            (3) Definition.--In this section, the term ``psychiatric 
        hospitals and units'' means a psychiatric hospital described in 
        clause (i) of section 1886(d)(1)(B) of the Social Security Act 
        (42 U.S.C. 1395ww(d)(1)(B)) and psychiatric units described in 
        the matter following clause (v) of such section.
    (b) Report.--Not later than October 1, 2001, the Secretary shall 
submit to the appropriate committees of Congress a report that includes 
a description of the system developed under subsection (a)(1).
    (c) Implementation of Prospective Payment System.--Notwithstanding 
section 1886(b)(3) of the Social Security Act (42 U.S.C. 1395ww(b)(3)), 
the Secretary shall provide, for cost reporting periods beginning on or 
after October 1, 2002, for payments for inpatient hospital services 
furnished by psychiatric hospitals and units under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.) in accordance with the 
prospective payment system established by the Secretary under this 
section in a budget neutral manner.

SEC. 115. REFINEMENT OF PROSPECTIVE PAYMENT SYSTEM FOR INPATIENT 
              REHABILITATION SERVICES.

    (a) Election to Apply Full Prospective Payment Rate Without Phase-
In.--
            (1) In general.--Paragraph (1) of section 1886(j) (42 
        U.S.C. 1395ww(j)), as added by section 4421(a) of BBA, is 
        amended--
                    (A) in subparagraph (C), by inserting ``subject to 
                subparagraph (E),'' after ``subparagraph (A),''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(E) Election to apply full prospective payment 
                system.--A rehabilitation facility may elect for either 
                or both cost reporting periods described in 
                subparagraph (C) to have the TEFRA percentage and 
                prospective payment percentage set at 0 percent and 100 
                percent, respectively, for the facility.''.
            (2) Budget neutrality in application.--Paragraph (3)(B) of 
        such section is amended by inserting ``and taking into account 
        the election permitted under paragraph (1)(E)'' after ``in the 
        Secretary's estimation''.
    (3) Case mix creep adjustment.--Paragraph (2)(C) of such section is 
amended by adding at the end the following new clauses:
                            ``(iii) Examination of changes in case 
                        mix.--The Secretary, upon obtaining 
                        substantially complete data from fiscal year 
                        2001, shall analyze the extent to which the 
                        changes in case mix during that fiscal year are 
                        attributable to changes in coding and 
                        classification and do not reflect real changes 
                        in case mix.
                            ``(iv) Initial adjustment of rates in 
                        fiscal year 2004.--Based on the analysis 
                        performed under clause (iii) in determining the 
                        amount of case mix change due merely to changes 
                        in coding or classification, the Secretary 
                        shall adjust the prospective payment amounts 
                        for fiscal year 2004 by 150 percent of the 
                        Secretary's estimate of the percentage 
                        adjustment to the prospective payment rate 
                        under this paragraph that would have achieved 
                        budget neutrality in fiscal year 2001 if it had 
                        applied in setting the rates for that fiscal 
                        year.
                            ``(v) Final adjustment of rates in fiscal 
                        year 2005.--In the case that the adjustment 
                        under clause (iv) resulted in--
                                    ``(I) a percentage decrease in 
                                rates, the Secretary shall increase the 
                                prospective payment amounts for fiscal 
                                year 2005 by a percentage equal to \1/
                                3\ of such percentage decrease; or
                                    ``(II) a percentage increase in 
                                rates, the Secretary shall decrease the 
                                prospective payment amounts for fiscal 
                                year 2005 by a percentage equal to \1/
                                3\ of such percentage increase.''.
    (b) Use of Discharge as Payment Unit.--
            (1) In general.--Paragraph (1)(D) of such section is 
        amended by striking ``, day of inpatient hospital services, or 
        other unit of payment defined by the Secretary''.
            (2) Conforming amendment to classification.--Paragraph 
        (2)(A) of such section is amended by amending clause (i) of to 
        read as follows:
                            ``(i) classes of patient discharges of 
                        rehabilitation facilities by functional-related 
                        groups (each in this subsection referred to as 
                        a `case mix group'), based on impairment, age, 
                        comorbidities, and functional capability of the 
                        patient and such other factors as the Secretary 
                        deems appropriate to improve the explanatory 
                        power of functional independence measure-
                        function related groups; and''.
            (3) Construction relating to transfer authority.--Paragraph 
        (1) of such section, as amended by subsection (a)(1), is 
        further amended by adding at the end the following new 
        subparagraph:
                    ``(F) Construction relating to transfer 
                authority.--Nothing in this subsection shall be 
                construed as preventing the Secretary from providing 
                for an adjustment to payments to take into account the 
                early transfer of a patient from a rehabilitation 
                facility to another site of care.''.
    (c) Study on Impact of Implementation of Prospective Payment 
System.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study of the impact on utilization and 
        beneficiary access to services of the implementation of the 
        Medicare prospective payment system for inpatient hospital 
        services or rehabilitation facilities under section 1886(j) of 
        the Social Security Act (as added by section 4421(a) of BBA).
            (2) Report.--Not later than 3 years after the date such 
        system is first implemented, the Secretary shall submit to 
        Congress a report on such study.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
are effective as if included in the enactment of section 4421(a) of 
BBA.

 Subtitle C--Adjustments to PPS Payments for Skilled Nursing Facilities

SEC. 121. TEMPORARY INCREASE IN PAYMENT FOR CERTAIN HIGH COST PATIENTS.

    (a) Adjustment for Medically Complex Patients Until Establishment 
of Refined Case-Mix Adjustment.--For purposes of computing payments for 
covered skilled nursing facility services under paragraph (1) of 
section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)), as 
added by section 4432(a) of BBA, for such services furnished on or 
after April 1, 2000, and before October 1, 2000, the Secretary of 
Health and Human Services shall increase by 10 percent the adjusted 
Federal per diem rate otherwise determined under paragraph (4) of such 
section (but for this section) for covered skilled nursing facility 
services for RUG-III groups described in subsection (b) furnished to an 
individual during the period in which such individual is classified in 
such a RUG-III category.
    (b) Groups Described.--The RUG-III groups for which the adjustment 
described in subsection (a) applies are SE3, SE2, SE1, SSC, SSB, SSA, 
CC2, CC1, CB2, CB1, CA2, and CA1, as specified in Tables 3 and 4 of the 
final rule published in the Federal Register by the Health Care 
Financing Administration on July 30, 1999 (64 Fed. Reg. 41684).

SEC. 122. MARKET BASKET INCREASE.

    Section 1888(e)(4)(E)(ii) (42 U.S.C. 1395yy(e)(4)(E)(ii)) is 
amended--
            (1) by redesignating subclause (III) as subclause (IV); and
            (2) by striking subclause (II) and inserting after 
        subclause (I) the following:
                                    ``(II) for fiscal year 2001, the 
                                rate computed for fiscal year 2000 
                                (determined without regard to section 
                                121 of the Medicare, Medicaid, and 
                                SCHIP Balanced Budget Refinement Act of 
                                1999) increased by the skilled nursing 
                                facility market basket percentage 
                                change for the fiscal year involved 
                                plus 0.8 percentage point;
                                    ``(III) for fiscal year 2002, the 
                                rate computed for the previous fiscal 
                                year increased by the skilled nursing 
                                facility market basket percentage 
                                change for the fiscal year involved 
                                minus 1 percentage point; and''.

SEC. 123. AUTHORIZING FACILITIES TO ELECT IMMEDIATE TRANSITION TO 
              FEDERAL RATE.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as added by 
section 4432(a) of BBA, is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by striking ``paragraph (7)'' and inserting ``paragraphs 
        (7) and (11)''; and
            (2) by adding at the end the following new paragraph:
            ``(11) Permitting facilities to waive 3-year transition.--
        Notwithstanding paragraph (1)(A), a facility may elect to have 
        the amount of the payment for all costs of covered skilled 
        nursing facility services for each day of such services 
        furnished in cost reporting periods beginning after the date of 
        such election determined pursuant to subparagraph (B) of 
        paragraph (1).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to elections made more than 60 days after the date of the 
enactment of this Act.

SEC. 124. PART A PASS-THROUGH PAYMENT FOR CERTAIN AMBULANCE SERVICES, 
              PROSTHESES, AND CHEMOTHERAPY DRUGS.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as added by 
section 4432(a) of BBA, is amended--
            (1) in paragraph (2)(A)(i)(II), by striking ``services 
        described in clause (ii)'' and inserting ``items and services 
        described in clauses (ii) and (iii)'';
            (2) by adding at the end of paragraph (2)(A) the following 
        new clause:
                            ``(iii) Exclusion of certain additional 
                        items.--Items described in this clause are the 
                        following:
                                    ``(I) Ambulance services furnished 
                                to an individual in conjunction with 
                                renal dialysis services described in 
                                section 1861(s)(2)(F).
                                    ``(II) Chemotherapy items 
                                (identified as of July 1, 1999, by 
                                HCPCS codes J9000-J9020; J9040-J9151; 
                                J9170-J9185; J9200-J9201; J9206-J9208; 
                                J9211; J9230-J9245; and J9265-J9600 
                                (and as subsequently modified by the 
                                Secretary)).
                                    ``(III) Chemotherapy administration 
                                services (identified as of July 1, 
                                1999, by HCPCS codes 36260-36262; 
                                36489; 36530-36535; 36640; 36823; and 
                                96405-96542 (and as subsequently 
                                modified by the Secretary)).
                                    ``(IV) Radioisotope services 
                                (identified as of July 1, 1999, by 
                                HCPCS codes 79030-79440 (and as 
                                subsequently modified by the 
                                Secretary)).
                                    ``(V) Customized prosthetic devices 
                                (commonly known as artificial limbs or 
                                components or artifical limbs) under 
                                the following HCPCS codes (as of July 
                                1, 1999 (and as subsequently modified 
                                by the Secretary)) if delivered to an 
                                inpatient for use during the stay in 
                                the skilled nursing facility and 
                                intended to be used by the individual 
                                after discharge from the facility: 
                                L5050-L5340; L5500-L5610; L5613-L5986; 
                                L5988; L6050-L6370; L6400-L6880; L6920-
                                L7274; and L7362-7366.''; and
            (3) by adding at the end of paragraph (9) the following: 
        ``In the case of an item or service described in clause (iii) 
        of paragraph (2)(A) that would be payable under part A but for 
        the exclusion of such item or service under such clause, 
        payment shall be made for the item or service, in an amount 
        otherwise determined under part B of this title for such item 
        or service, from the Federal Hospital Insurance Trust Fund 
        under section 1817 (rather than from the Federal Supplementary 
        Medical Insurance Trust Fund under section 1841).''.
    (b) Conforming for Budget Neutrality Beginning with Fiscal Year 
2001.--Section 1888(e)(4)(G) (42 U.S.C. 1395yy(e)(4)(G)) is amended by 
adding at the end the following new clause:
                            ``(iii) Adjustment for exclusion of certain 
                        additional items.--The Secretary shall provide 
                        for an appropriate proportional reduction in 
                        payments so that beginning with fiscal year 
                        2001, the aggregate amount of such reductions 
                        is equal to the aggregate increase in payments 
                        attributable to the exclusion effected under 
                        clause (iii) of paragraph (2)(A).''.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to payments made for items furnished on or after April 1, 2000.

SEC. 125. PROVISION FOR PART B ADD-ONS FOR FACILITIES PARTICIPATING IN 
              THE NHCMQ DEMONSTRATION PROJECT.

    (a) In General.--Section 1888(e)(3) (42 U.S.C. 1395yy(e)(3)), as 
added by section 4432(a) of BBA, is amended--
            (1) in subparagraph (A)--
                    (A) in clause (i), by inserting ``or, in the case 
                of a facility participating in the Nursing Home Case-
                Mix and Quality Demonstration (RUGS-III), the RUGS-III 
                rate received by the facility during the cost reporting 
                period beginning in 1997'' after ``to non-settled cost 
                reports''; and
                    (B) in clause (ii), by striking ``furnished during 
                such period'' and inserting ``furnished during the 
                applicable cost reporting period described in clause 
                (i)''; and
            (2) by amending subparagraph (B) to read as follows:
                    ``(B) Update to first cost reporting period.--The 
                Secretary shall update the amount determined under 
                subparagraph (A), for each cost reporting period after 
                the applicable cost reporting period described in 
                subparagraph (A)(i) and up to the first cost reporting 
                period by a factor equal to the skilled nursing 
                facility market basket percentage increase minus 1 
                percentage point (except that for the cost reporting 
                period beginning in fiscal year 2001, the factor shall 
                be equal to such market basket percentage plus 0.8 
                percentage point).''.
    (b) Effective Date.--The amendments made by subsection (a) shall be 
effective as if included in the enactment of section 4432(a) of BBA.

SEC. 126. SPECIAL CONSIDERATION FOR FACILITIES SERVING SPECIALIZED 
              PATIENT POPULATIONS.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as amended 
by section 123(a)(1), is further amended--
            (1) in paragraph (1), by striking ``subject to paragraphs 
        (7) and (11)'' and inserting ``subject to paragraphs (7), (11), 
        and (12)''; and
            (2) by adding at the end the following new paragraph:
            ``(12) Payment rule for certain facilities.--
                    ``(A) In general.--In the case of a qualified acute 
                skilled nursing facility described in subparagraph (B), 
                the per diem amount of payment shall be determined by 
                applying the non-Federal percentage and Federal 
                percentage specified in paragraph (2)(C)(ii).
                    ``(B) Facility described.--For purposes of 
                subparagraph (A), a qualified acute skilled nursing 
                facility is a facility that--
                            ``(i) was certified by the Secretary as a 
                        skilled nursing facility eligible to furnish 
                        services under this title before July 1, 1992;
                            ``(ii) is a hospital-based facility; and
                            ``(iii) for the cost reporting period 
                        beginning in fiscal year 1998, the facility had 
                        more than 60 percent of total patient days 
                        comprised of patients who are described in 
                        subparagraph (C).
                    ``(C) Description of patients.--For purposes of 
                subparagraph (B), a patient described in this 
                subparagraph is an individual who--
                            ``(i) is entitled to benefits under part A; 
                        and
                            ``(ii) is immuno-compromised secondary to 
                        an infectious disease, with specific diagnoses 
                        as specified by the Secretary.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply for the period beginning on the date on which after the date of 
the enactment of this Act the first cost reporting period of the 
facility begins and ending on September 30, 2001, and applies to 
skilled nursing facilities furnishing covered skilled nursing facility 
services on the date of the enactment of this Act for which payment is 
made under title XVIII of the Social Security Act.
    (c) Report to Congress.--By not later than 1 year after the date of 
the enactment of this Act, the Secretary of Health and Human Services 
shall assess the resource use of patients of skilled nursing facilities 
furnishing services under the Medicare program who are immuno-
compromised secondary to an infectious disease, with specific diagnoses 
as specified by the Secretary (under paragraph (12)(C), as added by 
subsection (a), of section 1888(e) of the Social Security Act (42 
U.S.C. 1395yy(e))) to determine whether any permanent adjustments are 
needed to the RUGs to take into account the resource uses and costs of 
these patients.

SEC. 127. MEDPAC STUDY ON SPECIAL PAYMENT FOR FACILITIES LOCATED IN 
              HAWAII AND ALASKA.

    (a) In General.--The Medicare Payment Advisory Commission shall 
conduct a study on skilled nursing facilities furnishing covered 
skilled nursing facility services (as defined in section 1888(e)(2)(A) 
of the Social Security Act (42 U.S.C. 1395yy(e)(2)(A)) to determine the 
need for an additional payment amount under section 1888(e)(4)(G) of 
such Act (42 U.S.C. 1395yy(e)(4)(G)) to take into account the unique 
circumstances of skilled nursing facilities located in Alaska and 
Hawaii.
    (b) Report.--By not later than 18 months after the date of the 
enactment of this Act, the Medicare Payment Advisory Commission shall 
submit a report to Congress on the study conducted under subsection 
(a).

                           Subtitle D--Other

SEC. 131. PART A BBA TECHNICAL CORRECTIONS.

    (a) Section 4201.--Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-
4(c)(2)(B)(i)), as amended by section 4201(a) of BBA, is amended by 
striking ``and is located in a county (or equivalent unit of local 
government) in a rural area (as defined in section 1886(d)(2)(D)) 
that'' and inserting ``that is located in a county (or equivalent unit 
of local government) in a rural area (as defined in section 
1886(d)(2)(D)), and that''.
    (b) Section 4204.--(1) Section 1886(d)(5)(G) (42 U.S.C. 
1395ww(d)(5)(G)), as amended by section 4204(a)(1) of BBA, is amended--
            (A) in clause (i), by striking ``or beginning on or after 
        October 1, 1997, and before October 1, 2001,'' and inserting 
        ``or discharges on or after October 1, 1997, and before October 
        1, 2001,''; and
            (B) in clause (ii)(II), by striking ``or beginning on or 
        after October 1, 1997, and before October 1, 2001,'' and 
        inserting ``or discharges on or after October 1, 1997, and 
        before October 1, 2001,''.
    (2) Section 1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)), as amended 
by section 4204(a)(2) of BBA, is amended in the matter preceding clause 
(i) by striking ``and for cost reporting periods beginning on or after 
October 1, 1997, and before October 1, 2001,'' and inserting ``and for 
discharges beginning on or after October 1, 1997, and before October 1, 
2001,''.
    (c) Section 4319.--Section 1847(b)(2) (42 U.S.C. 1395w-3(b)(2)), as 
added by section 4319 of BBA, is amended by inserting ``and'' after 
``specified by the Secretary''.
    (d) Section 4401.--Section 4401(b)(1)(B) of BBA (42 U.S.C. 1395ww 
note) is amended by striking ``section 1886(b)(3)(B)(i)(XIII) of the 
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))'' and 
inserting ``section 1886(b)(3)(B)(i)(XIV) of the Social Security Act 
(42 U.S.C. 1395ww(b)(3)(B)(i)(XIV))''.
    (e) Section 4402.--The last sentence of section 1886(g)(1)(A) (42 
U.S.C. 1395ww(g)(1)(A)), as added by section 4402 of BBA, is amended by 
striking ``September 30, 2002,'' and inserting ``October 1, 2002,''.
    (f) Section 4419.--The first sentence of section 1886(b)(4)(A)(i) 
(42 U.S.C. 1395ww(b)(4)(A)(i)), as amended by section 4419(a)(1) of 
BBA, by striking ``or unit''.
    (g) Section 4442.--Section 4442(b) of BBA (42 U.S.C. 1395f note) is 
amended by striking ``applies to cost reporting periods beginning'' and 
inserting ``applies to items and services furnished''.
    (h) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of BBA.

                TITLE II--PROVISIONS RELATING TO PART B

          Subtitle A--Adjustments to Physician Payment Updates

SEC. 201. MODIFICATION OF UPDATE ADJUSTMENT FACTOR PROVISIONS TO REDUCE 
              UPDATE OSCILLATIONS AND REQUIRE ESTIMATE REVISIONS.

    (a) Update Adjustment Factor.--
            (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is 
        amended--
                    (A) in paragraph (3)--
                            (i) in the heading, by inserting ``for 1999 
                        and 2000'' after ``Update'';
                            (ii) in subparagraph (A), by striking ``a 
                        year beginning with 1999'' and inserting ``1999 
                        and 2000''; and
                            (iii) in subparagraph (C), by inserting 
                        ``and paragraph (4)'' after ``For purposes of 
                        this paragraph''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Update for years beginning with 2001.--
                    ``(A) In general.--Unless otherwise provided by 
                law, subject to the budget-neutrality factor determined 
                by the Secretary under subsection (c)(2)(B)(ii) and 
                subject to adjustment under subparagraph (F), the 
                update to the single conversion factor established in 
                paragraph (1)(C) for a year beginning with 2001 is 
                equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the MEI (as defined 
                        in section 1842(i)(3)) for the year (divided by 
                        100); and
                            ``(ii) 1 plus the Secretary's estimate of 
                        the update adjustment factor under subparagraph 
                        (B) for the year.
                    ``(B) Update adjustment factor.--For purposes of 
                subparagraph (A)(ii), subject to subparagraph (D), the 
                `update adjustment factor' for a year is equal (as 
                estimated by the Secretary) to the sum of the 
                following:
                            ``(i) Prior year adjustment component.--An 
                        amount determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of the allowed 
                                expenditures for physicians' services 
                                for the prior year (as determined under 
                                subparagraph (C)) and the amount of the 
                                actual expenditures for such services 
                                for that year;
                                    ``(II) dividing that difference by 
                                the amount of the actual expenditures 
                                for such services for that year; and
                                    ``(III) multiplying that quotient 
                                by 0.75.
                            ``(ii) Cumulative adjustment component.--An 
                        amount determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of the allowed 
                                expenditures for physicians' services 
                                (as determined under subparagraph (C)) 
                                from April 1, 1996, through the end of 
                                the prior year and the amount of the 
                                actual expenditures for such services 
                                during that period;
                                    ``(II) dividing that difference by 
                                actual expenditures for such services 
                                for the prior year as increased by the 
                                sustainable growth rate under 
                                subsection (f) for the year for which 
                                the update adjustment factor is to be 
                                determined; and
                                    ``(III) multiplying that quotient 
                                by 0.33.
                    ``(C) Determination of allowed expenditures.--For 
                purposes of this paragraph:
                            ``(i) Period up to april 1, 1999.--The 
                        allowed expenditures for physicians' services 
                        for a period before April 1, 1999, shall be the 
                        amount of the allowed expenditures for such 
                        period as determined under paragraph (3)(C).
                            ``(ii) Transition to calendar year allowed 
                        expenditures.--Subject to subparagraph (E), the 
                        allowed expenditures for--
                                    ``(I) the 9-month period beginning 
                                April 1, 1999, shall be the Secretary's 
                                estimate of the amount of the allowed 
                                expenditures that would be permitted 
                                under paragraph (3)(C) for such period; 
                                and
                                    ``(II) the year of 1999, shall be 
                                the Secretary's estimate of the amount 
                                of the allowed expenditures that would 
                                be permitted under paragraph (3)(C) for 
                                such year.
                            ``(iii) Years beginning with 2000.--The 
                        allowed expenditures for a year (beginning with 
                        2000) is equal to the allowed expenditures for 
                        physicians' services for the previous year, 
                        increased by the sustainable growth rate under 
                        subsection (f) for the year involved.
                    ``(D) Restriction on update adjustment factor.--The 
                update adjustment factor determined under subparagraph 
                (B) for a year may not be less than -0.07 or greater 
                than 0.03.
                    ``(E) Recalculation of allowed expenditures for 
                updates beginning with 2001.--For purposes of 
                determining the update adjustment factor for a year 
                beginning with 2001, the Secretary shall recompute the 
                allowed expenditures for previous periods beginning on 
                or after April 1, 1999, consistent with subsection 
                (f)(3).
                    ``(F) Transitional adjustment designed to provide 
                for budget neutrality.--Under this subparagraph the 
                Secretary shall provide for an adjustment to the update 
                under subparagraph (A)--
                            ``(i) for each of 2001, 2002, 2003, and 
                        2004, of -0.2 percent; and
                            ``(ii) for 2005 of +0.8 percent.''.
            (2) Publication change.--
                    (A) In general.--Section 1848(d)(1)(E) (42 U.S.C. 
                1395w-4(d)(1)(E)) is amended to read as follows:
                    ``(E) Publication and dissemination of 
                information.--The Secretary shall--
                            ``(i) cause to have published in the 
                        Federal Register not later than November 1 of 
                        each year (beginning with 2000) the conversion 
                        factor which will apply to physicians' services 
                        for the succeeding year, the update determined 
                        under paragraph (4) for such succeeding year, 
                        and the allowed expenditures under such 
                        paragraph for such succeeding year; and
                            ``(ii) make available to the Medicare 
                        Payment Advisory Commission and the public by 
                        March 1 of each year (beginning with 2000) an 
                        estimate of the sustainable growth rate and of 
                        the conversion factor which will apply to 
                        physicians' services for the succeeding year 
                        and data used in making such estimate.''.
                    (B) MedPAC review of conversion factor estimates.--
                Section 1805(b)(1)(D) (42 U.S.C. 1395b-6(b)(1)(D)) is 
                amended by inserting ``and including a review of the 
                estimate of the conversion factor submitted under 
                section 1848(d)(1)(E)(ii)'' before the period at the 
                end.
                    (C) One-time publication of information on 
                transition.--The Secretary of Health and Human Services 
                shall cause to have published in the Federal Register, 
                not later than 90 days after the date of the enactment 
                of this section, the Secretary's determination, based 
                upon the best available data, of--
                            (i) the allowed expenditures under 
                        subclauses (I) and (II) of section 
                        1848(d)(4)(C)(ii) of the Social Security Act, 
                        as added by subsection (a)(1)(B), for the 9-
                        month period beginning on April 1, 1999, and 
                        for 1999;
                            (ii) the estimated actual expenditures 
                        described in section 1848(d) of such Act for 
                        1999; and
                            (iii) the sustainable growth rate under 
                        section 1848(f) of such Act (42 U.S.C. 1395w-
                        4(f)) for 2000.
            (3) Conforming amendments.--
                    (A) Section 1848 (42 U.S.C. 1395w-4) is amended--
                            (i) in subsection (d)(1)(A), by inserting 
                        ``(for years before 2001) and, for years 
                        beginning with 2001, multiplied by the update 
                        (established under paragraph (4)) for the year 
                        involved'' after ``for the year involved''; and
                            (ii) in subsection (f)(2)(D), by inserting 
                        ``or (d)(4)(B), as the case may be'' after 
                        ``(d)(3)(B)''.
                    (B) Section 1833(l)(4)(A)(i)(VII) (42 U.S.C. 
                1395l(l)(4)(A)(i)(VII)) is amended by striking 
                ``1848(d)(3)'' and inserting ``1848(d)''.
    (b) Sustainable Growth Rates.--Section 1848(f) (42 U.S.C. 1395w-
4(f)) is amended--
            (1) by amending paragraph (1) to read as follows:
            ``(1) Publication.--The Secretary shall cause to have 
        published in the Federal Register not later than--
                    ``(A) November 1, 2000, the sustainable growth rate 
                for 2000 and 2001; and
                    ``(B) November 1 of each succeeding year the 
                sustainable growth rate for such succeeding year and 
                each of the preceding 2 years.'';
            (2) in paragraph (2)--
                    (A) in the matter before subparagraph (A), by 
                striking ``fiscal year 1998)'' and inserting ``fiscal 
                year 1998 and ending with fiscal year 2000) and a year 
                beginning with 2000''; and
                    (B) in subparagraphs (A) through (D), by striking 
                ``fiscal year'' and inserting ``applicable period'' 
                each place it appears;
            (3) in paragraph (3), by adding at the end the following 
        new subparagraph:
                    ``(C) Applicable period.--The term `applicable 
                period' means--
                            ``(i) a fiscal year, in the case of fiscal 
                        year 1998, fiscal year 1999, and fiscal year 
                        2000; or
                            ``(ii) a calendar year with respect to a 
                        year beginning with 2000,
                as the case may be.'';
            (4) by redesignating paragraph (3) as paragraph (4); and
            (5) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Data to be used.--For purposes of determining the 
        update adjustment factor under subsection (d)(4)(B) for a year 
        beginning with 2001, the sustainable growth rates taken into 
        consideration in the determination under paragraph (2) shall be 
        determined as follows:
                    ``(A) For 2001.--For purposes of such calculations 
                for 2001, the sustainable growth rates for fiscal year 
                2000 and the years 2000 and 2001 shall be determined on 
                the basis of the best data available to the Secretary 
                as of September 1, 2000.
                    ``(B) For 2002.--For purposes of such calculations 
                for 2002, the sustainable growth rates for fiscal year 
                2000 and for years 2000, 2001, and 2002 shall be 
                determined on the basis of the best data available to 
                the Secretary as of September 1, 2001.
                    ``(C) For 2003 and succeeding years.--For purposes 
                of such calculations for a year after 2002--
                            ``(i) the sustainable growth rates for that 
                        year and the preceding 2 years shall be 
                        determined on the basis of the best data 
                        available to the Secretary as of September 1 of 
                        the year preceding the year for which the 
                        calculation is made; and
                            ``(ii) the sustainable growth rate for any 
                        year before a year described in clause (i) 
                        shall be the rate as most recently determined 
                        for that year under this subsection.
        Nothing in this paragraph shall be construed as affecting the 
        sustainable growth rates established for fiscal year 1998 or 
        fiscal year 1999.''.
    (c) Effective Date.--The amendments made by this section shall be 
effective in determining the conversion factor under section 1848(d) of 
the Social Security Act (42 U.S.C. 1395w-4(d)) for years beginning with 
2001 and shall not apply to or affect any update (or any update 
adjustment factor) for any year before 2001.

SEC. 202. USE OF DATA COLLECTED BY ORGANIZATIONS AND ENTITIES IN 
              DETERMINING PRACTICE EXPENSE RELATIVE VALUES.

    (a) In General.--The Secretary of Health and Human Services shall 
establish by regulation (after notice and opportunity for public 
comment) a process (including data collection standards) under which 
the Secretary will accept for use and will use, to the maximum extent 
practicable consistent with sound data practices, data collected or 
developed by entities and organizations (other than the Department of 
Health and Human Services) to supplement the data normally collected by 
that department in determining the practice expense component under 
section 1848(c)(2)(C)(ii) of the Social Security Act (42 U.S.C. 1395w-
4(c)(2)(C)(ii)) for purposes of determining relative values for payment 
for physicians' services under the fee schedule under section 1848 of 
such Act (42 U.S.C. 1395w-4). The Secretary shall first promulgate such 
regulation on an interim final basis in a manner that permits the 
submission and use of data in the computation of practice expense 
relative value units for payment rates for 2001.
    (b) Publication of Information.--The Secretary shall include, in 
the publication of the estimated and final updates under section 
1848(c) of such Act (42 U.S.C. 1395w-4(c)) for payments for 2001 and 
for 2002, a description of the process established under subsection (a) 
for the use of external data in making adjustments in relative value 
units and the extent to which the Secretary has used such external data 
in making such adjustments for each such year, particularly in cases in 
which the data otherwise used are inadequate because they are not based 
upon a large enough sample size to be statistically reliable.

SEC. 203. GAO STUDY ON RESOURCES REQUIRED TO PROVIDE SAFE AND EFFECTIVE 
              OUTPATIENT CANCER THERAPY.

    (a) Study .--The Comptroller General of the United States shall 
conduct a nationwide study to determine the physician and non-physician 
clinical resources necessary to provide safe outpatient cancer therapy 
services and the appropriate payment rates for such services under the 
Medicare program. In making such determination, the Comptroller General 
shall--
            (1) determine the adequacy of practice expense relative 
        value units associated with the utilization of those clinical 
        resources;
            (2) determine the adequacy of work units in the practice 
        expense formula; and
            (3) assess various standards to assure the provision of 
        safe outpatient cancer therapy services.
    (b) Report to Congress.--The Comptroller General shall submit to 
Congress a report on the study conducted under subsection (a). The 
report shall include recommendations regarding practice expense 
adjustments to the payment methodology under part B of the Medicare 
program, including the development and inclusion of adequate work units 
to assure the adequacy of payment amounts for safe outpatient cancer 
therapy services. The study shall also include an estimate of the cost 
of implementing such recommendations.

                Subtitle B--Hospital Outpatient Services

SEC. 211. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS-THROUGH FOR CERTAIN 
              MEDICAL DEVICES, DRUGS, AND BIOLOGICALS.

    (a) Outlier Adjustment.--Section 1833(t) (42 U.S.C. 1395l(t)), as 
added by section 4523(a) of BBA, is amended--
            (1) by redesignating paragraphs (5) through (9) as 
        paragraphs (7) through (11), respectively; and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Outlier adjustment.--
                    ``(A) In general.--The Secretary shall provide for 
                an additional payment for each covered OPD service (or 
                group of services) for which a hospital's charges, 
                adjusted to cost, exceed--
                            ``(i) a fixed multiple of the sum of--
                                    ``(I) the applicable Medicare OPD 
                                fee schedule amount determined under 
                                paragraph (3)(D), as adjusted under 
                                paragraph (4)(A) (other than for 
                                adjustments under this paragraph or 
                                paragraph (6)); and
                                    ``(II) any transitional pass-
                                through payment under paragraph (6); 
                                and
                            ``(ii) at the option of the Secretary, such 
                        fixed dollar amount as the Secretary may 
                        establish.
                    ``(B) Amount of adjustment.--The amount of the 
                additional payment under subparagraph (A) shall be 
                determined by the Secretary and shall approximate the 
                marginal cost of care beyond the applicable cutoff 
                point under such subparagraph.
                    ``(C) Limit on aggregate outlier adjustments.--
                            ``(i) In general.--The total of the 
                        additional payments made under this paragraph 
                        for covered OPD services furnished in a year 
                        (as projected or estimated by the Secretary 
                        before the beginning of the year) may not 
                        exceed the applicable percentage (specified in 
                        clause (ii)) of the total program payments 
                        projected or estimated to be made under this 
                        subsection for all covered OPD services 
                        furnished in that year. If this paragraph is 
                        first applied to less than a full year, the 
                        previous sentence shall apply only to the 
                        portion of such year.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means a percentage specified by the Secretary 
                        up to (but not to exceed)--
                                    ``(I) for a year (or portion of a 
                                year) before 2004, 2.5 percent; and
                                    ``(II) for 2004 and thereafter, 3.0 
                                percent.''.
    (b) Transitional Pass-Through for Additional Costs of Innovative 
Medical Devices, Drugs, and Biologicals.--Such section is further 
amended by inserting after paragraph (5) the following new paragraph:
            ``(6) Transitional pass-through for additional costs of 
        innovative medical devices, drugs, and biologicals.--
                    ``(A) In general.--The Secretary shall provide for 
                an additional payment under this paragraph for any of 
                the following that are provided as part of a covered 
                OPD service (or group of services):
                            ``(i) Current orphan drugs.--A drug or 
                        biological that is used for a rare disease or 
                        condition with respect to which the drug or 
                        biological has been designated as an orphan 
                        drug under section 526 of the Federal Food, 
                        Drug and Cosmetic Act if payment for the drug 
                        or biological as an outpatient hospital service 
                        under this part was being made on the first 
                        date that the system under this subsection is 
                        implemented.
                            ``(ii) Current cancer therapy drugs and 
                        biologicals.--A drug or biological that is used 
                        in cancer therapy, including (but not limited 
                        to) a chemotherapeutic agent, antiemetic, 
                        hematopoietic growth factor, colony stimulating 
                        factor, a biological response modifier, and a 
                        bisphosponate, or brachytherapy, if payment for 
                        such drug, biological, or device as an 
                        outpatient hospital service under this part was 
                        being made on such first date.
                            ``(iii) New medical devices, drugs, and 
                        biologicals.--A medical device, drug, or 
                        biological not described in clause (i) or (ii) 
                        if--
                                    ``(I) payment for the device, drug, 
                                or biological as an outpatient hospital 
                                service under this part was not being 
                                made as of December 31, 1996; and
                                    ``(II) the cost of the device, 
                                drug, or biological is not 
                                insignificant in relation to the OPD 
                                fee schedule amount (as calculated 
                                under paragraph (3)(D)) payable for the 
                                service (or group of services) 
                                involved.
                    ``(B) Limited period of payment.--The payment under 
                this paragraph with respect to a medical device, drug, 
                or biological shall only apply during a period of at 
                least 2 years, but not more than 3 years, that begins--
                            ``(i) on the first date this subsection is 
                        implemented in the case of a drug or biological 
                        described in clause (i) or (ii) of subparagraph 
                        (A) and in the case of a device, drug, or 
                        biological described in subparagraph (A)(iii) 
                        for which payment under this part is made as an 
                        outpatient hospital service before such first 
                        date; or
                            ``(ii) in the case of a device, drug, or 
                        biological described in subparagraph (A)(iii) 
                        not described in clause (i), on the first date 
                        on which payment is made under this part for 
                        the device, drug, or biological as an 
                        outpatient hospital service.
                    ``(C) Amount of additional payment.--Subject to 
                subparagraph (D)(iii), the amount of the payment under 
                this paragraph with respect to a device, drug, or 
                biological provided as part of a covered OPD service 
                is--
                            ``(i) in the case of a drug or biological, 
                        the amount by which the amount determined under 
                        section 1842(o) for the drug or biological 
                        exceeds the portion of the otherwise applicable 
                        Medicare OPD fee schedule that the Secretary 
                        determines is associated with the drug or 
                        biological; or
                            ``(ii) in the case of a medical device, the 
                        amount by which the hospital's charges for the 
                        device, adjusted to cost, exceeds the portion 
                        of the otherwise applicable Medicare OPD fee 
                        schedule that the Secretary determines is 
                        associated with the device.
                    ``(D) Limit on aggregate annual adjustment.--
                            ``(i) In general.--The total of the 
                        additional payments made under this paragraph 
                        for covered OPD services furnished in a year 
                        (as projected or estimated by the Secretary 
                        before the beginning of the year) may not 
                        exceed the applicable percentage (specified in 
                        clause (ii)) of the total program payments 
                        projected or estimated to be made under this 
                        subsection for all covered OPD services 
                        furnished in that year. If this paragraph is 
                        first applied to less than a full year, the 
                        previous sentence shall apply only to the 
                        portion of such year.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means--
                                    ``(I) for a year (or portion of a 
                                year) before 2004, 2.5 percent; and
                                    ``(II) for 2004 and thereafter, a 
                                percentage specified by the Secretary 
                                up to (but not to exceed) 2.0 percent.
                            ``(iii) Uniform prospective reduction if 
                        aggregate limit projected to be exceeded.--If 
                        the Secretary projects or estimates before the 
                        beginning of a year that the amount of the 
                        additional payments under this paragraph for 
                        the year (or portion thereof) as determined 
                        under clause (i) without regard to this clause) 
                        will exceed the limit established under such 
                        clause, the Secretary shall reduce pro rata the 
                        amount of each of the additional payments under 
                        this paragraph for that year (or portion 
                        thereof) in order to ensure that the aggregate 
                        additional payments under this paragraph (as so 
                        projected or estimated) do not exceed such 
                        limit.''.
    (c) Application of New Adjustments on a Budget Neutral Basis.--
Section 1833(t)(2)(E) (42 U.S.C. 1395l(t)(2)(E)) is amended by striking 
``other adjustments, in a budget neutral manner, as determined to be 
necessary to ensure equitable payments, such a outlier adjustments or'' 
and inserting ``, in a budget neutral manner, outlier adjustments under 
paragraph (5) and transitional pass-through payments under paragraph 
(6) and other adjustments as determined to be necessary to ensure 
equitable payments, such as''.
    (d) Limitation on Judicial Review for New Adjustments.--Section 
1833(t)(11), as redesignated by subsection (a)(1), is amended--
            (1) by striking ``and'' at the end of subparagraph (C);
            (2) by striking the period at the end of subparagraph (D) 
        and inserting ``; and''; and
            (3) by adding at the end the following:
                    ``(E) the determination of the fixed multiple, or a 
                fixed dollar cutoff amount, the marginal cost of care, 
                or applicable percentage under paragraph (5) or the 
                determination of insignificance of cost, the duration 
                of the additional payments (consistent with paragraph 
                (6)(B)), the portion of the Medicare OPD fee schedule 
                amount associated with particular devices, drugs, or 
                biologicals, and the application of any pro rata 
                reduction under paragraph (6).''.
    (e) Inclusion of Medical Devices under System.--Section 1833(t) (42 
U.S.C. 1395l(t)) is amended--
            (1) in paragraph (1)(B)(ii), by striking ``clause (iii)'' 
        and inserting ``clause (iv)'' and by striking ``but'';
            (2) by redesignating clause (iii) of paragraph (1)(B) as 
        clause (iv) and inserting after clause (ii) of such paragraph 
        the following new clause:
                            ``(iii) includes medical devices (such as 
                        implantable medical devices); but''; and
            (3) in paragraph (2)(B), by inserting after ``resources'' 
        the following: ``and so that a device is classified to the 
        group that includes the service to which the device relates''.
    (f) Authorizing Payment Weights Based on Mean Hospital Costs.--
Section 1833(t)(2)(C) (42 U.S.C. 1395l(t)(2)(C)) is amended by 
inserting ``(or, at the election of the Secretary, mean)'' after 
``median''.
    (g) Limiting Variation of Costs of Services Classified With a 
Group.--Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended by adding 
at the end the following new flush sentence:
        ``For purposes of subparagraph (B), items and services within a 
        group shall not be treated as `comparable with respect to the 
        use of resources' if the highest median cost (or mean cost, if 
        elected by the Secretary under subparagraph (C)) for an item or 
        service within the group is more than two times greater than 
        the lowest median cost (or mean cost, if so elected) for an 
        item or service within the group; except that the Secretary may 
        make exceptions in unusual cases, such as low volume items and 
        services, but may not make such an exception in the case of a 
        drug or biological has been designated as an orphan drug under 
        section 526 of the Federal Food, Drug and Cosmetic Act.''.
    (h) Annual Review of OPD PPS Components.--
            (1) In general.--Section 1833(t)(8)(A) (42 U.S.C. 
        1395l(t)(8)(A)), as redesignated by subsection (a), is 
        amended--
                    (A) by striking ``may periodically review'' and 
                inserting ``shall review not less often than 
                annually''; and
                    (B) by adding at the end the following: ``The 
                Secretary shall consult with an expert outside advisory 
                panel composed of an appropriate selection of 
                representatives of providers to review (and advise the 
                Secretary concerning) the clinical integrity of the 
                groups and weights. Such panel may use data collected 
                or developed by entities and organizations (other than 
                the Department of Health and Human Services) in 
                conducting such review.''.
            (2) Effective dates.--The Secretary of Health and Human 
        Services shall first conduct the annual review under the 
        amendment made by paragraph (1)(A) in 2001 for application in 
        2002 and the amendment made by paragraph (1)(B) takes effect on 
        the date of the enactment of this Act.
    (i) No Impact on Copayment.--Section 1833(t)(7) (42 U.S.C. 
1395l(t)(7)), as redesignated by subsection (a), is amended by adding 
at the end the following new subparagraph:
                    ``(D) Computation ignoring outlier and pass-through 
                adjustments.--The copayment amount shall be computed 
                under subparagraph (A) as if the adjustments under 
                paragraphs (5) and (6) (and any adjustment made under 
                paragraph (2)(E) in relation to such adjustments) had 
                not occurred.''.
    (j) Technical Correction in Reference Relating to Hospital-Based 
Ambulance Services.--Section 1833(t)(9) (42 U.S.C. 1395l(t)(9)), as 
redesignated by subsection (a), is amended by striking ``the matter in 
subsection (a)(1) preceding subparagraph (A)'' and inserting ``section 
1861(v)(1)(U)''.
    (k) Effective Date.--Except as provided in this section, the 
amendments made by this section shall be effective as if included in 
the enactment of BBA.
    (l) Study of Delivery of Intravenous Immune Globulin (IVIG) Outside 
Hospitals and Physicians' Offices.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study of the extent to which intravenous immune 
        globulin (IVIG) could be delivered and reimbursed under the 
        Medicare program outside of a hospital or physician's office. 
        In conducting the study, the Secretary shall--
                    (A) consider the sites of service that other 
                payors, including Medicare+Choice plans, use for these 
                drugs and biologicals;
                    (B) determine whether covering the delivery of 
                these drugs and biologicals in a Medicare patient's 
                home raises any additional safety and health concerns 
                for the patient;
                    (C) determine whether covering the delivery of 
                these drugs and biologicals in a patient's home can 
                reduce overall spending under the Medicare program; and
                    (D) determine whether changing the site of setting 
                for these services would affect beneficiary access to 
                care.
            (2) Report.--The Secretary shall submit a report on such 
        study to the Committees on Way and Means and Commerce of the 
        House of Representatives and the Committee on Finance of the 
        Senate within 1 year after the date of the enactment of this 
        Act. The Secretary shall include in the report recommendations 
        regarding on the appropriate manner and settings under which 
        the Medicare program should pay for these drugs and biologicals 
        delivered outside of a hospital or physician's office.

SEC. 212. ESTABLISHING A TRANSITIONAL CORRIDOR FOR APPLICATION OF OPD 
              PPS.

    (a) In General.--Section 1833(t) (42 U.S.C. 1395l(t)), as amended 
by section 211(a), is further amended--
            (1) in paragraph (4), in the matter before subparagraph 
        (A), by inserting ``, subject to paragraph (7),'' after ``is 
        determined''; and
            (2) by redesignating paragraphs (7) through (11) as 
        paragraphs (8) through (12), respectively; and
            (3) by inserting after paragraph (6), as inserted by 
        section 211(b), the following new paragraph:
            ``(7) Transitional adjustment to limit decline in 
        payment.--
                    ``(A) Before 2002.--Subject to subparagraph (D), 
                for covered OPD services furnished before January 1, 
                2002, for which the PPS amount (as defined in 
                subparagraph (E)) is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount (as defined 
                        in subparagraph (F)), the amount of payment 
                        under this subsection shall be increased by 80 
                        percent of the amount of such difference;
                            ``(ii) at least 80 percent, but less than 
                        90 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by the amount by which (I) the 
                        product of 0.71 and the pre-BBA amount, exceeds 
                        (II) the product of 0.70 and the PPS amount;
                            ``(iii) at least 70 percent, but less than 
                        80 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by the amount by which (I) the 
                        product of 0.63 and the pre-BBA amount, exceeds 
                        (II) the product of 0.60 and the PPS amount;
                            ``(iv) less than 70 percent of the pre-BBA 
                        amount, the amount of payment under this 
                        subsection shall be increased by 21 percent of 
                        the pre-BBA amount.
                    ``(B) 2002.--Subject to subparagraph (D), for 
                covered OPD services furnished during 2002, for which 
                the PPS amount is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by 70 percent of the amount of such 
                        difference;
                            ``(ii) at least 80 percent, but less than 
                        90 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by the amount by which (I) the 
                        product of 0.61 and the pre-BBA amount, exceeds 
                        (II) the product of 0.60 and the PPS amount;
                            ``(iii) less than 80 percent of the pre-BBA 
                        amount, the amount of payment under this 
                        subsection shall be increased by 13 percent of 
                        the pre-BBA amount.
                    ``(C) 2003.--Subject to subparagraph (D), for 
                covered OPD services furnished during 2003, for which 
                the PPS amount is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by 60 percent of the amount of such 
                        difference; or
                            ``(ii) less than 90 percent of the pre-BBA 
                        amount, the amount of payment under this 
                        subsection shall be increased by 6 percent of 
                        the pre-BBA amount.
                    ``(D) Special rule for small rural hospitals.--In 
                the case of a hospital located in a rural area and that 
                has not more than 100 beds, for covered OPD services 
                furnished before January 1, 2004, for which the PPS 
                amount is less than the pre-BBA amount, the amount of 
                payment under this subsection shall be increased by 100 
                percent of the amount of such difference.
                    ``(E) PPS amount defined.--In this paragraph, the 
                term `PPS amount' means, with respect to covered OPD 
                services, the amount payable under this title for such 
                services (determined without regard to this paragraph), 
                including amounts payable as copayment under paragraph 
                (5), coinsurance under section 1866(a)(2)(A)(ii), and 
                the deductible under section 1833(b).
                    ``(F) Pre-BBA amount defined.--
                            ``(i) In general.--In this paragraph, the 
                        `pre-BBA amount' means, with respect to covered 
                        OPD services furnished by a hospital in a year, 
                        an amount equal to the product of the 
                        reasonable cost of the hospital for such 
                        services for the portions of the hospital's 
                        cost reporting period (or periods) occurring in 
                        the year and the base OPD payment-to-cost ratio 
                        for the hospital (as defined in clause (ii)).
                            ``(ii) Base payment-to-cost-ratio 
                        defined.--For purposes of this subparagraph, 
                        the `base payment-to-cost ratio' for a hospital 
                        means the ratio of--
                                    ``(I) the hospital's reimbursement 
                                under this part for covered OPD 
                                services furnished during the cost 
                                reporting period ending in 1996, 
                                including any reimbursement for such 
                                services through cost-sharing described 
                                in subparagraph (D), to
                                    ``(II) the reasonable cost of such 
                                services for such period.
                    ``(G) No effect on copayments.--Nothing in this 
                paragraph shall be construed to affect the unadjusted 
                copayment amount described in paragraph (3)(B) or the 
                copayment amount under paragraph (8).
                    ``(H) Application without regard to budget 
                neutrality.--The additional payments made under this 
                paragraph--
                            ``(i) shall not be considered an adjustment 
                        under paragraph (2)(E); and
                            ``(ii) shall not be implemented in a budget 
                        neutral manner.''.
    (b) Effective Date.--The amendments made by subsection (a) shall be 
effective as if included in the enactment of BBA.
    (c) Report on Rural Hospitals.--Not later than July 1, 2002, the 
Secretary of Health and Human Services shall submit to Congress a 
report and recommendations on whether the prospective payment system 
for covered outpatient services furnished under title XVIII of the 
Social Security Act should apply to the following providers of services 
furnishing outpatient items and services for which payment is made 
under such title:
            (1) Medicare-dependent, small rural hospitals (as defined 
        in section 1886(d)(5)(G)(iv) of such Act (42 U.S.C. 
        1395ww(d)(5)(G)(iv))).
            (2) Sole community hospitals (as defined in section 
        1886(d)(5)(D)(iii) of such Act (42 U.S.C. 
        1395ww(d)(5)(D)(iii)).
            (3) Rural health clinics (as defined in section 1861(aa)(2) 
        of such Act (42 U.S.C. 1395x(aa)(2)).
            (4) Rural referral centers (as so classified under section 
        1886(d)(5)(C) of such Act (42 U.S.C. 1395ww(d)(5)(C)).
            (5) Any other rural hospital with not more than 100 beds.
            (6) Any other rural hospital that the Secretary determines 
        appropriate.

SEC. 213. DELAY IN APPLICATION OF PROSPECTIVE PAYMENT SYSTEM TO CANCER 
              CENTER HOSPITALS.

    Section 1833(t)(11)(A) (42 U.S.C. 1395l(t)(11)(A)), as redesignated 
by section 212(a), is amended by striking ``January 1, 2000'' and 
inserting ``the first day of the first year that begins 2 years after 
the date the prospective payment system under this section is first 
implemented''.

SEC. 214. LIMITATION ON OUTPATIENT HOSPITAL COPAYMENT FOR A PROCEDURE 
              TO THE HOSPITAL DEDUCTIBLE AMOUNT.

    (a) In General.--Section 1833(t)(8) (42 U.S.C. 1395l(t)(8)), as 
redesignated by sections 212(a)(1) and 212(a)(2), is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)'';
            (2) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (D) and (E), respectively; and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Limiting copayment amount to inpatient 
                hospital deductible amount.--In no case shall the 
                copayment amount for a procedure performed in a year 
                exceed the amount of the inpatient hospital deductible 
                established under section 1813(b) for that year.''.
    (b) Increase in Payment to Reflect Reduction in Copayment.--Section 
1833(t)(4)(C) (42 U.S.C. 1395l(t)(4)(C)) is amended by inserting ``, 
plus the amount of any reduction in the copayment amount attributable 
to paragraph (5)(C)'' before the period at the end.
    (c) Effective Date.--The amendments made by this section apply as 
if included in the enactment of BBA and shall only apply to procedures 
performed for which payment is made on the basis of the prospective 
payment system under section 1833(t) of the Social Security Act.

                           Subtitle C--Other

SEC. 221. APPLICATION OF SEPARATE CAPS TO PHYSICAL AND SPEECH THERAPY 
              SERVICES.

    (a) In General.--Section 1833(g) (42 U.S.C. 1395l(g)) is amended--
            (1) in paragraph (1)--
                    (A) by inserting ``(A)'' after ``(g)(1)''; and
                    (B) by adding at the end the following new 
                subparagraph:
    ``(B) Subparagraph (A) shall be applied separately for speech-
language pathology services described in the fourth sentence of section 
1861(p) and for other outpatient physical therapy services.''; and
            (2) by adding at the end the following new paragraph:
    ``(4) The limitations of this subsection apply to the services 
involved on a per beneficiary, per facility (or provider) basis.''.
    (b) Technical Amendment Relating to Being Under the Care of a 
Physician.--Section 1861 (42 U.S.C. 1395x) is amended--
            (1) in subsection (p)(1), by striking ``or (3)'' and 
        inserting ``, (3), or (4)''; and
            (2) in subsection (r)(4), by inserting ``for purposes of 
        subsection (p)(1) and'' after ``but only''.
    (c) Effective Date.--The amendments made by this section apply to 
services furnished on or after January 1, 2000.

SEC. 222. TRANSITIONAL OUTLIER PAYMENTS FOR THERAPY SERVICES FOR 
              CERTAIN HIGH ACUITY PATIENTS.

    Section 1833(g) (42 U.S.C. 1395l(g)), as amended by section 221, is 
further amended by adding at the end the following new paragraph:
    ``(5)(A) The Secretary shall establish a process under which a 
facility or provider that is providing therapy services to which the 
limitation of this subsection applies to a beneficiary may apply to the 
Secretary for an increase in such limitation under this paragraph for 
services furnished in 2000 or in 2001.
    ``(B) Such process shall take into account the clinical diagnosis 
and shall provide that the aggregate amount of additional payments 
resulting from the application of this paragraph--
            ``(i) during fiscal year 2000 may not exceed $40,000,000;
            ``(ii) during fiscal year 2001 may not exceed $60,000,000; 
        and
            ``(iii) during fiscal year 2002 may not exceed 
        $20,000,000.''.

SEC. 223. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

    (a) In General.--Section 1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is 
amended by adding at the end the following new flush sentence:
``The Secretary shall increase the amount of each composite rate 
payment for dialysis services furnished on or after January 1, 2000, 
and on or before December 31, 2000, by 1.2 percent above such composite 
rate payment amounts for such services furnished on December 31, 1999, 
and for such services furnished on or after January 1, 2001, by 1.2 
percent above such composite rate payment amounts for such services 
furnished on December 31, 2000.''.
    (b) Conforming Amendment.--
            (1) In general.--Section 9335(a) of the Omnibus Budget 
        Reconciliation Act of 1986 (42 U.S.C. 1395rr note) is amended 
        by striking paragraph (1).
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on January 1, 2000.
    (c) Study on Payment Level for Home Hemodialysis.--The Medicare 
Payment Advisory Commission shall conduct a study on the 
appropriateness of the differential in payment under the Medicare 
program for hemodialysis services furnished in a facility and such 
services furnished in a home. Not later than 18 months after the date 
of the enactment of this Act, the Commission shall submit to Congress a 
report on such study and shall include recommendations regarding 
changes in Medicare payment policy in response to the study.

SEC. 224. TEMPORARY UPDATE IN DURABLE MEDICAL EQUIPMENT AND OXYGEN 
              RATES.

    (a) Durable Medical Equipment and Oxygen.--Section 1834(a)(14) (42 
U.S.C. 1395m(a)(14)), as amended by section 4551(a)(1) of BBA, is 
amended--
            (1) by redesignating subparagraph (D) as subparagraph (E); 
        and
            (2) by striking subparagraph (C) and inserting the 
        following:
                    ``(C) for each of the years 1998 through 2000, 0 
                percentage points;
                    ``(D) for each of the years 2001 and 2002, the 
                percentage increase in the consumer price index for all 
                urban consumers (United States city average) for the 
                12-month period ending with June of the previous year 
                minus 2 percentage points; and''.
    (b) Conforming Amendments.--Section 1834(a)(9)(B) (42 U.S.C. 
1395m(a)(9)(B)), as amended by section 4552(a) of BBA, is amended--
            (1) by striking ``and'' at the end of clause (v);
            (2) in clause (vi), by striking ``and each subsequent 
        year'' and inserting ``and 2000'' and by striking the period at 
        the end and inserting ``; and''; and
            (3) by adding at the end the following new clause:
                            ``(vii) for 2001 and each subsequent year, 
                        the amount determined under this subparagraph 
                        for the preceding year increased by the covered 
                        item update for such subsequent year.''.

SEC. 225. REQUIREMENT FOR NEW PROPOSED RULEMAKING FOR IMPLEMENTATION OF 
              INHERENT REASONABLENESS POLICY.

    The Secretary of Health and Human Services shall not exercise 
inherent reasonableness authority provided under section 1842(b)(8) of 
the Social Security Act (42 U.S.C. 1395u(b)(8)) before such time as--
            (1) the Secretary has published in the Federal Register a 
        new notice of proposed rulemaking to implement subparagraph (A) 
        of such section;
            (2) has provided for a period of not less than 60 days for 
        public comment on such proposed rule; and
            (3) the Secretary has published in the Federal Register a 
        final rule which takes into account comments received during 
        such period.

SEC. 226. INCREASE IN REIMBURSEMENT FOR PAP SMEARS.

    (a) Pap Smear Payment Increase.--Section 1833(h) (42 U.S.C. 
1395l(h)) is amended by adding at the end the following new paragraph:
    ``(7) Notwithstanding paragraphs (1) and (4), the Secretary shall 
establish a minimum payment amount under this subsection for all areas 
for a diagnostic or screening pap smear laboratory test (including all 
cervical cancer screening technologies that have been approved by the 
Food and Drug Administration) of not less than $14.60.''.
    (b) Sense of the Congress.--It is the sense of the Congress that--
            (1) the Health Care Financing Administration has been slow 
        to incorporate or provide incentives for providers to use new 
        screening diagnostic health care technologies in the area of 
        cervical cancer;
            (2) some new technologies have been developed which 
        optimize the effectiveness of pap smear screening; and
            (3) the Health Care Financing Administration should 
        institute an appropriate increase in the payment rate for new 
        cervical cancer screening technologies that have been approved 
        by the Food and Drug Administration as significantly more 
        effective than a conventional pap smear.
    (c) Effective Date.--The amendments made by subsection (a) apply to 
services items and furnished on or after January 1, 2000.

SEC. 227. REFINEMENT OF AMBULANCE SERVICES DEMONSTRATION PROJECT.

    Effective as if included in the enactment of BBA, section 4532 of 
BBA is amended--
            (1) in subsection (a), by adding at the end the following: 
        ``The Secretary shall publish by not later than July 1, 2000, a 
        request for proposals for such projects.''; and
            (2) by amending paragraph (2) of subsection (b) to read as 
        follows:
            ``(2) Capitated payment rate defined.--In this subsection, 
        the `capitated payment rate' means, with respect to a 
        demonstration project--
                    ``(A) in its first year, a rate established for the 
                project by the Secretary, using the most current 
                available data, in a manner that ensures that aggregate 
                payments under the project will not exceed the 
                aggregate payment that would have been made for 
                ambulance services under part B of title XVIII of the 
                Social Security Act in the local area of government's 
                jurisdiction; and
                    ``(B) in a subsequent year, the capitated payment 
                rate established for the previous year increased by an 
                appropriate inflation adjustment factor.''.

SEC. 228. PHASE-IN OF PPS FOR AMBULATORY SURGICAL CENTERS.

    If the Secretary of Health and Human Services implements a revised 
prospective payment system for services of ambulatory surgical 
facilities under part B of title XVIII of the Social Security Act, 
prior to incorporating data from the 1999 Medicare cost survey, such 
system shall be implemented in a manner so that--
            (1) in the first year of its implementation, only a 
        proportion (specified by the Secretary and not to exceed \1/3\) 
        of the payment for such services shall be made in accordance 
        with such system and the remainder shall be made in accordance 
        with current regulations; and
            (2) in the following year a proportion (specified by the 
        Secretary and not to exceed \2/3\) of the payment for such 
        services shall be made under such system and the remainder 
        shall be made in accordance with current regulations.

SEC. 229. EXTENSION OF MEDICARE BENEFITS FOR IMMUNOSUPPRESSIVE DRUGS.

    (a) In General.--The Secretary of Health and Human Services shall 
provide under this section for an extension of the period of coverage 
of immunosuppressive drugs under section 1861(s)(2)(J) of the Social 
Security Act (42 U.S.C. 1395x(s)(2)(J)) to individuals described in 
such section under terms and conditions specified by the Secretary 
consistent with subsection (c) and the objectives--
            (1) of improving health outcomes by decreasing transplant 
        rejection rates that are attributable to failure to comply with 
        immunosuppressive drug regimens; and
            (2) of achieving cost saving to the Medicare program by 
        decreasing the need for secondary transplants and other care 
        relating to post-transplant complications.
    (b) Authority.--In carrying out this section--
            (1) the Secretary shall provide priority in eligibility to 
        those Medicare beneficiaries who, because of income or other 
        factors, would be less likely to maintain an immunosuppressive 
        drug regimen in the absence of such an extension; and
            (2) the Secretary is authorized to vary the beneficiary 
        cost-sharing otherwise applicable in order to promote the 
        objectives described in subsection (a).
    (c) Limitations.--The total amount expended by the Secretary under 
title XVIII of the Social Security Act to carry out this section shall 
not exceed $200,000,000, and with respect to expenditures in fiscal 
year 2000 shall not exceed $40,000,000. The Secretary shall not provide 
an extension of coverage under this section for immunosuppressive drugs 
furnished after September 30, 2004.
    (d) Report.--Not later than 36 months after the first month in 
which the Secretary provides for extended benefits under this section, 
the Secretary shall submit to Congress a report on the operation of 
this section. The report shall include--
            (1) an analysis of the impact of this section on meeting 
        the objectives described in subsection (a); and
            (2) recommendations regarding an appropriate cost-effective 
        method for extending coverage of immunosuppressive drugs under 
        the Medicare program on a permanent basis.

SEC. 230. ADDITIONAL STUDIES.

    (a) MedPAC Study on Postsurgical Recovery Care Center Services.--
            (1) In general.--The Medicare Payment Advisory Commission 
        shall conduct a study on the cost-effectiveness and efficacy of 
        covering under the Medicare program services of a post-surgical 
        recovery care center (that provides an intermediate level of 
        recovery care following surgery). In conducting such study, the 
        Commission shall consider data on these centers gathered in 
        demonstration projects.
            (2) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Commission shall submit to Congress 
        a report on such study and shall include in the report 
        recommendations on the feasibility, costs, and savings of 
        covering such services under the Medicare program.
    (b) ACHPR Study on Effect of Credentialing of Technologists and 
Sonographers on Quality of Ultrasound and Imaging Services.--
            (1) Study.--The Administrator for Health Care Policy and 
        Research shall provide for a study that compares the 
        differences in quality of ultrasound and other imaging services 
        (including error rates and resulting complications) furnished 
        under the Medicare and Medicaid programs between such services 
        furnished by individuals who are credentialed by private 
        entities or organizations and by those who are not so 
        credentialed. Such study shall examine and evaluate differences 
        in error rates and patient outcomes as a result of the 
        differences in credentialing. In designing the study, the 
        Administrator shall consult with organizations nationally 
        recognized for their expertise in ultrasound procedures.
            (2) Report.--By not later than 2 years after the date of 
        the enactment of this Act, the Administrator shall submit a 
        report to Congress on the study conducted under paragraph (1).
    (c) MedPAC Study on the Complexity of the Medicare Program and the 
Levels of Burdens Placed on Providers Through Federal Regulations.--
            (1) Study.--The Medicare Payment Advisory Commission shall 
        undertake a comprehensive study to review the regulatory 
        burdens placed on all classes of health care providers under 
        parts A and B of the Medicare program under title XVIII of the 
        Social Security Act and to determine the costs these burdens 
        impose on the nation's health care system. The study shall also 
        examine the complexity of the current regulatory system and its 
        impact on providers.
            (2) Report.--not later than December 31, 2001, the 
        Commission shall submit to Congress a report on the study 
        conducted under paragraph (1). The report shall include 
        recommendations regarding--
                    (A) how the Health Care Financing Administration 
                can reduce the regulatory burdens placed on patients 
                and providers; and
                    (B) legislation that may be appropriate to reduce 
                the complexity of the Medicare program, including 
                improvement of the rules regarding billing, compliance, 
                and fraud and abuse.
    (d) GAO Continued Monitoring of Department of Justice Application 
of Guidelines on Use of False Claims Act in Civil Health Care 
Matters.--The Comptroller General of the United States shall--
            (1) continue the monitoring, begun under section 118 of the 
        Department of Justice Appropriations Act, 1999 (included in 
        Public Law 105-277) of the compliance of the Department of 
        Justice and all United States Attorneys with the ``Guidance on 
        the Use of the False Claims Act in Civil Health Care Matters'' 
        issued by the Department of Justice on June 3, 1998, including 
        any revisions to that guidance; and
            (2) not later than April 1, 2000, and of each of the two 
        succeeding years, submit a report on such compliance to the 
        appropriate committees of Congress.

            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

SEC. 301. ADJUSTMENT TO REFLECT ADMINISTRATIVE COSTS NOT INCLUDED IN 
              THE INTERIM PAYMENT SYSTEM; GAO REPORT ON COSTS OF 
              COMPLIANCE WITH OASIS DATA COLLECTION REQUIREMENTS.

    (a) Adjustment to Reflect Administrative Costs.--
            (1) In general.--In the case of a home health agency that 
        furnishes home health services to a Medicare beneficiary, for 
        each such beneficiary to whom the agency furnished such 
        services during the agency's cost reporting period beginning in 
        fiscal year 2000, the Secretary of Health Services shall pay 
        the agency, in addition to any amount of payment made under 
        subsection (v)(1)(L) of such section for the beneficiary and 
        only for such cost reporting period, an aggregate amount of $10 
        to defray costs incurred by the agency attributable to data 
        collection and reporting requirements under the Outcome and 
        Assessment Information Set (OASIS) required by reason of 
        section 4602(e) of the Balanced Budget Act of 1997 (42 U.S.C. 
        1395fff note).
            (2) Payment schedule.--
                    (A) Midyear payment.--By not later than April 1, 
                2000, the Secretary shall pay to a home health agency 
                an amount that the Secretary estimates to be 50 percent 
                of the aggregate amount payable to the agency by reason 
                of this subsection.
                    (B) Upon settled cost report.--The Secretary shall 
                pay the balance of amounts payable to an agency under 
                this subsection on the date that the cost report 
                submitted by the agency for the cost reporting period 
                beginning in fiscal year 2000 is settled.
            (3) Payment from trust funds.--Payments under this 
        subsection shall be made, in appropriate part as specified by 
        the Secretary, from the Federal Hospital Insurance Trust Fund 
        and from the Federal Supplementary Medical Insurance Trust 
        Fund.
            (4) Definitions.--in this subsection:
                    (A) Home health agency.--The term ``home health 
                agency'' has the meaning given that term under section 
                1861(o) of the Social Security Act (42 U.S.C. 
                1395x(o)).
                    (B) Home health services.--The term ``home health 
                services'' has the meaning given that term under 
                section 1861(m) of such Act (42 U.S.C. 1395x(m)).
                    (C) Medicare beneficiary.--The term ``Medicare 
                beneficiary'' means a beneficiary described in section 
                1861(v)(1)(L)(vi)(II) of the Social Security Act (42 
                U.S.C. 1395x(v)(1)(L)(vi)(II)).
    (b) GAO Report on Costs of Compliance With OASIS Data Collection 
Requirements.--
            (1) Report to congress.--
                    (A) In general.--Not later than 180 days after the 
                date of the enactment of this Act, the Comptroller 
                General of the United States shall submit a report to 
                Congress on matters described in subparagraph (B) with 
                respect to the data collection requirement of patients 
                of such agencies under the Outcome and Assessment 
                Information Set (OASIS) standard as part of the 
                comprehensive assessment of patients.
                    (B) Matters studied.--For purposes of subparagraph 
                (A), the matters described in this subparagraph include 
                the following:
                            (i) An assessment of the costs incurred by 
                        Medicare home health agencies in complying with 
                        such data collection requirement.
                            (ii) An analysis of the effect of such data 
                        collection requirement on the privacy interests 
                        of patients from whom data is collected.
                    (C) Audit.--The Comptroller General shall conduct 
                an independent audit of the costs described in 
                subparagraph (B)(i). Not later than 180 days after 
                receipt of the report under subparagraph (A), the 
                Comptroller General shall submit to Congress a report 
                describing the Comptroller General's findings with 
                respect to such audit, and shall include comments on 
                the report submitted to Congress by the Secretary of 
                Health and Human Services under subparagraph (A).
            (2) Definitions.--In this subsection:
                    (A) Comprehensive assessment of patients.--The term 
                ``comprehensive assessment of patients'' means the rule 
                published by the Health Care Financing Administration 
                that requires, as a condition of participation in the 
                Medicare program, a home health agency to provide a 
                patient-specific comprehensive assessment that 
                accurately reflects the patient's current status and 
                that incorporates the Outcome and Assessment 
                Information Set (OASIS).
                    (B) Outcome and assessment information set.--The 
                term ``Outcome and Assessment Information Set'' means 
                the standard provided under the rule relating to data 
                items that must be used in conducting a comprehensive 
                assessment of patients.

SEC. 302. DELAY IN APPLICATION OF 15 PERCENT REDUCTION IN PAYMENT RATES 
              FOR HOME HEALTH SERVICES UNTIL 1 YEAR AFTER 
              IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.

    (a) Contingency Reduction.--Section 4603(e) of the Balanced Budget 
Act of 1997 (42 U.S.C. 1395fff note) (as amended by section 5101(c)(3) 
of the Tax and Trade Relief Extension Act of 1998 (contained in 
division J of Public Law 105-277)) is amended by striking ``September 
30, 2000'' and inserting ``on the date that is 12 months after the date 
the Secretary implements such system''.
    (b) Prospective Payment System.--Section 1895(b)(3)(A)(i) (42 
U.S.C. 1395fff(b)(3)(A)(i)) (as amended by section 5101 of the Tax and 
Trade Relief Extension Act of 1998 (contained in division J of Public 
Law 105-277)) is amended to read as follows:
                            ``(i) In general.--Under such system the 
                        Secretary shall provide for computation of a 
                        standard prospective payment amount (or 
                        amounts). Such amount (or amounts) shall 
                        initially be based on the most current audited 
                        cost report data available to the Secretary and 
                        shall be computed in a manner so that the total 
                        amounts payable under the system--
                                    ``(I) for the 12-month period 
                                beginning on the date the Secretary 
                                implements the system, shall be equal 
                                to the total amount that would have 
                                been made if the system had not been in 
                                effect; and
                                    ``(II) for periods beginning after 
                                the period described in subclause (I), 
                                shall be equal to the total amount that 
                                would have been made for fiscal year 
                                2001 if the system had not been in 
                                effect but if the reduction in limits 
                                described in clause (ii) had been in 
                                effect, and updated under subparagraph 
                                (B).
                        Each such amount shall be standardized in a 
                        manner that eliminates the effect of variations 
                        in relative case mix and wage levels among 
                        different home health agencies in a budget 
                        neutral manner consistent with the case mix and 
                        wage level adjustments provided under paragraph 
                        (4)(A). Under the system, the Secretary may 
                        recognize regional differences or differences 
                        based upon whether or not the services or 
                        agency are in an urbanized area.''.
    (c) Report.--
            (1) In general.--The Secretary of Health and Human Services 
        shall submit to Congress a report analyzing the need for the 15 
        percent reduction under section 1895(b)(3)(A)(ii) of the Social 
        Security Act (42 U.S.C. 1395fff(b)(3)(A)(ii)), or for any 
        reduction, in the computation of the base payment amounts under 
        the prospective payment system for home health services under 
        section 1895 of such Act (42 U.S.C. 1395w-29).
            (2) Deadline.--The Secretary shall submit to Congress the 
        report described in paragraph (1) by not later than the date 
        that is 6 months after the date the Secretary implements the 
        prospective payment system for home health services under such 
        section 1895.

SEC. 303. CLARIFICATION OF SURETY BOND REQUIREMENTS.

    (a) Home Health Agencies.--Section 1861(o)(7) (42 U.S.C. 
1395x(o)(7)) is amended to read as follows:
            ``(7) provides the Secretary with a surety bond--
                    ``(A) effective for a period of 4 years (as 
                specified by the Secretary) or in the case of a change 
                in the ownership or control of the agency (as 
                determined by the Secretary) during or after such 4-
                year period, an additional period of time that the 
                Secretary determines appropriate, such additional 
                period not to exceed 4 years from the date of such 
                change in ownership or control;
                    ``(B) in a form specified by the Secretary; and
                    ``(C) for a year in the period described in 
                subparagraph (A) in an amount that is equal to the 
                lesser of $50,000 or 10 percent of the aggregate amount 
                of payments to the agency under this title and title 
                XIX for that year, as estimated by the Secretary; 
                and''.
    (b) Coordination of Surety Bonds.--Part A of title XI is amended by 
adding at the end the following new section:

     ``coordination of medicare and medicaid surety bond provisions

    ``Sec. 1148. In the case of a home health agency that is subject to 
a surety bond under title XVIII and title XIX, the surety bond provided 
to satisfy the requirement under one such title shall satisfy the 
requirement under the other such title so long as the bond applies to 
guarantee return of overpayments under both such titles.''.
    (c) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act and in applying section 
1861(o)(7) of the Social Security Act, as amended by subsection (a), 
the Secretary of Health and Human Services may take into account the 
previous period for which a home health agency had a surety bond in 
effect under such section before such date.

SEC. 304. TECHNICAL AMENDMENT CLARIFYING APPLICABLE MARKET BASKET 
              INCREASE FOR PPS.

    Section 1895(b)(3)(B)(ii)(I) (42 U.S.C. 1395fff(b)(3)(B)(ii)(I)), 
as added by section 4603 of BBA (as amended by section 5101(d)(2) of 
the Tax and Trade Relief Extension Act of 1998 (contained in division J 
of Public Law 105-277)) is amended by striking ``fiscal year 2002 or 
2003'' and inserting ``each of fiscal years 2002 and 2003''.

             Subtitle B--Direct Graduate Medical Education

SEC. 311. USE OF NATIONAL AVERAGE PAYMENT METHODOLOGY IN COMPUTING 
              DIRECT GRADUATE MEDICAL EDUCATION (DGME) PAYMENTS.

    Section 1886(h) (42 U.S.C. 1395ww(h)) is amended--
            (1) by amending clause (i) of paragraph (3)(B) to read as 
        follows:
                            ``(i)(I) for a cost reporting period 
                        beginning before October 1, 2000, the 
                        hospital's approved FTE resident amount 
                        (determined under paragraph (2)) for that 
                        period;
                            ``(II) for a cost reporting period 
                        beginning on or after October 1, 2000, and 
                        before October 1, 2004, the national average 
                        per resident amount determined under paragraph 
                        (7) or, if greater, the sum of the hospital-
                        specific percentage (as defined in subparagraph 
                        (E)) of the hospital's approved FTE resident 
                        amount (determined under paragraph (2)) for the 
                        period and the national percentage (as defined 
                        in such subparagraph) of the national average 
                        per resident amount determined under paragraph 
                        (7); and
                            ``(III) for a cost reporting period 
                        beginning on or after October 1, 2004, the 
                        national average per resident amount determined 
                        under paragraph (7); and'';
            (2) in paragraph (3), by adding at the end the following 
        new subparagraph:
                    ``(E) Transition to national average per resident 
                payment system.--For purposes of subparagraph 
                (B)(i)(II), for the cost reporting period of a hospital 
                beginning--
                            ``(i) during fiscal year 2001, the 
                        hospital-specific percentage is 80 percent and 
                        the national percentage is 20 percent;
                            ``(ii) during fiscal year 2002, the 
                        hospital-specific percentage is 60 percent and 
                        the national percentage is 40 percent;
                            ``(iii) during fiscal year 2003, the 
                        hospital-specific percentage is 40 percent and 
                        the national percentage is 60 percent; and
                            ``(iv) during fiscal year 2004, the 
                        hospital-specific percentage is 20 percent and 
                        the national percentage is 80 percent.''; and
            (3) by adding at the end the following new paragraph:
            ``(7) National average per resident amount.--The national 
        average per resident amount for a hospital for a cost reporting 
        period beginning in a fiscal year is an amount determined as 
        follows:
                    ``(A) Determination of hospital single per resident 
                amount.--The Secretary shall compute for each hospital 
                operating an approved graduate medical education 
                program a single per resident amount equal to the 
                average (weighted by number of full-time equivalent 
                residents) of the primary care per resident amount and 
                the non-primary care per resident amount computed under 
                paragraph (2) for cost reporting periods ending during 
                fiscal year 1997.
                    ``(B) Determination of wage and non-wage-related 
                proportion of the single per resident amount.--The 
                Secretary shall estimate the average proportion of the 
                single per resident amounts computed under subparagraph 
                (A) that is attributable to wages and wage-related 
                costs.
                    ``(C) Standardizing per resident amounts.--The 
                Secretary shall establish a standardized per resident 
                amount for each such hospital--
                            ``(i) by dividing the single per resident 
                        amount computed under subparagraph (A) into a 
                        wage-related portion and a non-wage-related 
                        portion by applying the proportion determined 
                        under subparagraph (B);
                            ``(ii) by dividing the wage-related portion 
                        by the factor applied under subsection 
                        (d)(3)(E) for discharges occurring during 
                        fiscal year 1999 for the hospital's area; and
                            ``(iii) by adding the non-wage-related 
                        portion to the amount computed under clause 
                        (ii).
                    ``(D) Determination of national average.--The 
                Secretary shall compute a national average per resident 
                amount equal to the average of the standardized per 
                resident amounts computed under subparagraph (C) for 
                such hospitals, with the amount for each hospital 
                weighted by the average number of full-time equivalent 
                residents at such hospital.
                    ``(E) Application to individual hospitals.--The 
                Secretary shall compute for each such hospital a per 
                resident amount--
                            ``(i) by dividing the national average per 
                        resident amount computed under subparagraph (D) 
                        into a wage-related portion and a non-wage-
                        related portion by applying the proportion 
                        determined under subparagraph (B);
                            ``(ii) by multiplying the wage-related 
                        portion by the factor described in subparagraph 
                        (C)(ii) for the hospital's area; and
                            ``(iii) by adding the non-wage-related 
                        portion to the amount computed under clause 
                        (ii).
                In applying clause (ii) for a cost reporting period 
                beginning before October 1, 2004, the factor described 
                in such clause shall be deemed to be 1 for a hospital 
                if the national average per resident amount computed 
                under subparagraph (D) is less than the hospital's 
                approved FTE resident amount (determined under 
                paragraph (2)) for the period involved and the factor 
                described in subparagraph (C)(ii) for the hospital's 
                area is less than 1.
                    ``(F) Initial updating rate.--The Secretary shall 
                update such per resident amount for the hospital's cost 
                reporting period that begins during fiscal year 2001 
                for each such hospital by the estimated percentage 
                increase in the consumer price index for all urban 
                consumers during the period beginning October 1997 and 
                ending with the midpoint of the hospital's cost 
                reporting period that begins during fiscal year 2001.
                    ``(G) Subsequent updating.--For each subsequent 
                cost reporting period, subject to subparagraph (H), the 
                national average per resident amount for a hospital is 
                equal to the amount determined under this paragraph for 
                the previous cost reporting period updated, through the 
                midpoint of the period, by projecting the estimated 
                percentage change in the consumer price index during 
                the 12-month period ending at that midpoint, with 
                appropriate adjustments to reflect previous under-or 
                over-estimations under this subparagraph in the 
                projected percentage change in the consumer price 
                index.
                    ``(H) Transitional budget neutrality adjustment.--
                            ``(i) In general.--If the Secretary 
                        estimates that, as a result of the amendments 
                        made by section 311 of the Medicare, Medicaid, 
                        and SCHIP Balanced Budget Refinement Act of 
                        1999, the post-MBBRA expenditures for fiscal 
                        year 2005 will be greater or less than the pre-
                        MBBRA expenditures for that fiscal year--
                                    ``(I) the Secretary shall adjust 
                                the update applied under subparagraph 
                                (G) in determining the national average 
                                per resident amount for cost reporting 
                                periods beginning during fiscal year 
                                2005 so that the amount of the post-
                                MBBRA expenditures for those cost 
                                reporting periods is equal to the 
                                amount of the pre-MBBRA expenditures 
                                for such periods; and
                                    ``(II) the Secretary shall, taking 
                                into account the adjustment made under 
                                subclause (I), adjust the national 
                                average per resident amount, as applied 
                                for the portion of a cost reporting 
                                period beginning during fiscal year 
                                2004 that occur in fiscal year 2005, so 
                                that the amount of the post-MBBRA 
                                expenditures made during fiscal year 
                                2005 is equal to the amount of the pre-
                                MBBRA expenditures during such fiscal 
                                year.
                            ``(ii) Definitions.--In this subparagraph:
                                    ``(I) Aggregate subsection (h)-
                                related expenditures.--The term 
                                `aggregate subsection (h)-related 
                                expenditures' means, with respect to 
                                cost reporting periods beginning during 
                                a fiscal year or with respect to a 
                                fiscal year, the aggregate expenditures 
                                under this title for such periods or 
                                fiscal year, respectively, which are 
                                attributable to the operation of this 
                                subsection.
                                    ``(II) Pre-mbbra expenditures.--The 
                                term `pre-MBBRA expenditures' means 
                                aggregate subsection (h)-related 
                                expenditures determined as if the 
                                amendments made by section 311 of the 
                                Medicare, Medicaid, and SCHIP Balanced 
                                Budget Refinement Act of 1999 had not 
                                been enacted.
                                    ``(III) Post-mbbra expenditures.--
                                The term `post-MBBRA expenditures' 
                                means aggregate subsection (h)-related 
                                expenditures determined taking into 
                                account the amendments made by section 
                                311 of the Medicare, Medicaid, and 
                                SCHIP Balanced Budget Refinement Act of 
                                1999.''.

SEC. 312. INITIAL RESIDENCY PERIOD FOR CHILD NEUROLOGY RESIDENCY 
              TRAINING PROGRAMS.

    (a) In General.--Section 1886(h)(5)(F) (42 U.S.C. 1395ww(h)(5)(F)) 
is amended--
            (1) in clause (i) by striking ``clause (ii)'' and inserting 
        ``clause (ii) or (iii)'';
            (2) in clause (i), by striking ``and'' at the end;
            (3) in clause (ii), by striking the period at the end and 
        inserting ``, and''; and
            (4) by inserting after clause (ii), the following new 
        clause:
                            ``(iii) a period, of not more than three 
                        years, during which an individual is in a child 
                        neurology residency program, shall be treated 
                        as part of the initial residency period, but 
                        shall not be counted against any limitation on 
                        the initial residency period.''.
    (b) Effective Date.--The amendments made by subsection (a) apply on 
and after July 1, 2000, to residency programs that began before, on, or 
after the date of the enactment of this Act.
    (c) MedPAC Report.--The Medicare Payment Advisory Commission shall 
include in its report submitted to Congress in March of 2001 
recommendations on whether there should be an extension of the initial 
residency period under section 1886(h)(5)(F) of the Social Security Act 
(42 U.S.C. 1395ww(h)(5)(F)) for other residency training programs in a 
specialty requiring preliminary years of study in another specialty.

                           Subtitle C--Other

SEC. 321. GAO STUDY ON GEOGRAPHIC RECLASSIFICATION.

    (a) In General.--The Comptroller General of the United States shall 
conduct a study of the current laws and regulations for geographic 
reclassification of hospitals to determine whether such 
reclassification is appropriate for purposes of applying wage indices 
under the Medicare program and whether it results in more accurate 
payments for all hospitals. Such study shall examine data on the number 
of hospitals that are reclassified and their special designation status 
in determining payments under the Medicare program. The study shall 
evaluate--
            (1) the magnitude of the effect of geographic 
        reclassification on rural hospitals that do not reclassify;
            (2) whether the current thresholds used in geographic 
        reclassification reclassify hospitals to the appropriate labor 
        markets;
            (3) the effect of eliminating geographic reclassification 
        through use of the occupational mix data;
            (4) the group reclassification policy;
            (5) changes in the number of reclassifications and the 
        compositions of the groups;
            (6) the effect of State-specific budget neutrality compared 
        to national budget neutrality; and
            (7) whether there are sufficient controls over the 
        intermediary evaluation of the wage data reported by hospitals.
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit to Congress a report on the study conducted under 
subsection (a).

SEC. 322. MEDPAC STUDY ON MEDICARE PAYMENT FOR NON-PHYSICIAN HEALTH 
              PROFESSIONAL CLINICAL TRAINING IN HOSPITALS.

    (a) In General.--The Medicare Payment Advisory Commission shall 
conduct a study on Medicare payment policy with respect to professional 
clinical training of different classes of non-physician health care 
professionals (such as nurses,nurse practitioners, allied health 
professionals, physician assistants, and psychologists) and the basis 
for any differences in treatment among such classes.
    (b) Report.--The Commission shall submit a report to Congress on 
the study conducted under subsection (a) not later than 18 months after 
the date of the enactment of this Act.

                  TITLE IV--RURAL PROVIDER PROVISIONS

SEC. 401. PERMITTING RECLASSIFICATION OF CERTAIN URBAN HOSPITALS AS 
              RURAL HOSPITALS.

    (a) In General.--Section 1886(d)(8) (42 U.S.C. 1395ww(d)(8)) is 
amended by adding at the end the following new subparagraph:
    ``(E)(i) For purposes of this subsection, not later than 60 days 
after the receipt of an application from a subsection (d) hospital 
described in clause (ii), the Secretary shall treat the hospital as 
being located in the rural area (as defined in such paragraph (2)(D)) 
of the State in which the hospital is located.
    ``(ii) For purposes of clause (i), a subsection (d) hospital 
described in this clause is a subsection (d) hospital that is located 
in an urban area (as defined in paragraph (2)(D)) and satisfies any of 
the following criteria:
            ``(I) The hospital is located in a rural census tract of a 
        metropolitan statistical area (as determined under the 
        Goldsmith Modification, as published in the Federal Register on 
        February 27, 1992 (57 Fed. Reg. 6725)).
            ``(II) The hospital is located in an area designated by any 
        law or regulation of such State as a rural area (or is 
        designated by such State as a rural hospital).
            ``(III) The hospital would qualify as a rural or regional 
        or national referral center under paragraph (5)(C) or as a sole 
        community hospital under paragraph (5)(D) if the hospital were 
        located in a rural area.
            ``(IV) The hospital meets such other criteria as the 
        Secretary may specify.''.
    (b) Conforming Changes.--(1) Section 1833(t) (42 U.S.C. 1395l(t)), 
as amended by sections 211 and 212, is further amended by adding at the 
end the following new paragraph:
            ``(13) Miscellaneous provisions.--
                    ``(A) Application of reclassification of certain 
                hospitals.--If a hospital is being treated as being 
                located a rural under section 1886(d)(8)(E), that 
                hospital shall be treated under this subsection as 
                being located in that rural area.''.
    (2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-4(c)(2)(B)(i)) is 
amended by inserting ``or is treated as being located in a rural area 
pursuant to section 1886(d)(8)(E)'' after ``section 1886(d)(2)(D))''.
    (c) Effective Date.--The amendments made by this section shall 
become effective on January 1, 2000.

SEC. 402. UPDATE OF STANDARDS APPLIED FOR GEOGRAPHIC RECLASSIFICATION 
              FOR CERTAIN HOSPITALS.

    (a) In General.--Section 1886(d)(8)(B) (42 U.S.C. 1395ww(d)(8)(B)) 
is amended--
            (1) by inserting ``(i)'' after ``(B)'';
            (2) by striking ``published in the Federal Register on 
        January 3, 1980'' and inserting ``described in clause (ii)''; 
        and
            (3) by adding at the end the following new clause:
    ``(ii) The standards described in this clause for cost reporting 
periods beginning in a fiscal year--
            ``(I) before fiscal year 2003, are the standards published 
        in the Federal Register on January 3, 1980, or, at the election 
        of the hospital with respect to fiscal years 2001 and 2002, 
        standards so published on March 30, 1990; and
            ``(II) after fiscal year 2002, are the standards published 
        in the Federal Register by the Director of the Office of 
        Management and Budget based on the most recent available 
        decennial population data.
Subparagraphs (C) and (D) shall not apply with respect to the 
application of subclause (I).''.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to discharges occurring during cost reporting periods 
beginning on or after October 1, 1999.

SEC. 403. IMPROVEMENTS IN THE CRITICAL ACCESS HOSPITAL (CAH) PROGRAM.

    (a) Applying 96-Hour Limit on a Average Annual Basis.--
            (1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C. 
        1395i-4(c)(2)(B)(iii)), as added by section 4201(a) of BBA, is 
        amended by striking ``for a period not to exceed 96 hours'' and 
        all that follows and inserting ``for a period that does not 
        exceed, as determined on an annual, average basis, 96 hours per 
        patient;''.
            (2) Effective date.--The amendment made by paragraph (1) 
        takes effect on the date of the enactment of this Act.
    (b) Permitting For-Profit Hospitals to Qualify for Designation as a 
Critical Access Hospital.--Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-
4(c)(2)(B)(i)), as added by section 4201(a) of BBA, is amended in the 
matter preceding subclause (I), by striking ``nonprofit or public 
hospital'' and inserting ``hospital''.
    (c) Allowing Closed or Downsized Hospitals to Convert to Critical 
Access Hospitals.--Section 1820(c)(2) (42 U.S.C. 1395i-4(c)(2)), as 
added by section 4201(a) of BBA, is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B), (C), and (D)''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(C) Recently closed facilities.--A State may 
                designate a facility as a critical access hospital if 
                the facility--
                            ``(i) was a hospital that ceased operations 
                        on or after the date that is 10 years before 
                        the date of the enactment of this subparagraph; 
                        and
                            ``(ii) as of the effective date of such 
                        designation, meets the criteria for designation 
                        under subparagraph (B).
                    ``(D) Downsized facilities.--A State may designate 
                a health clinic or a health center (as defined by the 
                State) as a critical access hospital if such clinic or 
                center--
                            ``(i) is licensed by the State as a health 
                        clinic or a health center;
                            ``(ii) was a hospital that was downsized to 
                        a health clinic or health center; and
                            ``(iii) as of the effective date of such 
                        designation, meets the criteria for designation 
                        under subparagraph (B).''.
    (d) All-inclusive Payment Option for Outpatient Critical Access 
Hospital Services.--
            (1) In general.--Section 1834(g) (42 U.S.C. 1395m(g)), as 
        added by section 4201(c)(5) of BBA, is amended to read as 
        follows:
    ``(g) Payment for Outpatient Critical Access Hospital Services.--
            ``(1) Election of cah.--At the election of a critical 
        access hospital, the amount of payment for outpatient critical 
        access hospital services under this part shall be determined 
        under paragraph (2) or (3), such amount determined under either 
        paragraph without regard to the amount of the customary or 
        other charge.
            ``(2) Cost-based hospital outpatient service payment plus 
        fee schedule for professional services.--If a hospital elects 
        this paragraph to apply, there shall be paid amounts equal to 
        the sum of the following, less the amount that such hospital 
        may charge as described in section 1866(a)(2)(A):
                    ``(A) Facility fee.--With respect to facility 
                services, not including any services for which payment 
                may be made under subparagraph (B), the reasonable 
                costs of the critical access hospital in providing such 
                services.
                    ``(B) Fee schedule for professional services.--With 
                respect to professional services otherwise included 
                within outpatient critical access hospital services, 
                such amounts as would otherwise be paid under this part 
                if such services were not included in outpatient 
                critical access hospital services.
            ``(3) All-inclusive rate.--If a hospital elects this 
        paragraph to apply, with respect to both facility services and 
        professional services, there shall be paid amounts equal to the 
        reasonable costs of the critical access hospital in providing 
        such services, less the amount that such hospital may charge as 
        described in section 1866(a)(2)(A).''.
            (2) Effective date.--The amendment made by subsection (a) 
        shall apply for cost reporting periods beginning on or after 
        October 1, 1999.
    (e) Elimination of Coinsurance for Clinical Diagnostic Laboratory 
Tests Furnished by a Critical Access Hospital on an Outpatient Basis.--
            (1) In general.--Section 1833(a)(1)(D) (42 U.S.C. 
        1395l(a)(1)(D)) is amended by inserting ``or which are 
        furnished on an outpatient basis by a critical access 
        hospital'' after ``on an assignment-related basis''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to services furnished on or after the date of the 
        enactment of this Act.
    (f) Participation in Swing Bed Program.--Section 1883 (42 U.S.C. 
1395tt) is amended--
            (1) in subsection (a)(1), by striking ``(other than a 
        hospital which has in effect a waiver under subparagraph (A) of 
        the last sentence of section 1861(e))''; and
            (2) in subsection (c), by striking ``, or during which 
        there is in effect for the hospital a waiver under subparagraph 
        (A) of the last sentence of section 1861(e)''.

SEC. 404. FIVE-YEAR EXTENSION OF MEDICARE DEPENDENT HOSPITAL (MDH) 
              PROGRAM.

    (a) Extension of Payment Methodology.--Section 1886(d)(5)(G) (42 
U.S.C. 1395ww(d)(5)(G)), as amended by section 4204(a)(1) of BBA, is 
amended--
            (1) in clause (i), by striking ``and before October 1, 
        2001,'' and inserting ``and before October 1, 2006''; and
            (2) in clause (ii)(II), by striking ``and before October 1, 
        2001,'' and inserting ``and before October 1, 2006''.
    (b) Conforming Amendments.--
            (1) Extension of target amount.--Section 1886(b)(3)(D) (42 
        U.S.C. 1395ww(b)(3)(D)), as amended by section 4204(a)(2) of 
        BBA, is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``and before October 1, 2001,'' and inserting ``and 
                before October 1, 2006''; and
                    (B) in clause (iv), by striking ``during fiscal 
                year 1998 through fiscal year 2000'' and inserting 
                ``during fiscal year 1998 through fiscal year 2005''.
            (2) Permitting hospitals to decline reclassification.--
        Section 13501(e)(2) of Omnibus Budget Reconciliation Act of 
        1993 (42 U.S.C. 1395ww note), as amended by section 4204(a)(3) 
        of BBA, is amended by striking ``or fiscal year 2000'' and 
        inserting ``or fiscal year 2000 through fiscal year 2005''.

SEC. 405. REBASING FOR CERTAIN SOLE COMMUNITY HOSPITALS.

    Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as amended by sections 
4413 and 4414 of BBA, is amended--
            (1) in subparagraph (C), by inserting ``subject to 
        subparagraph (I)'' before ``the term `target amount' means''; 
        and
            (2) by adding at the end the following new subparagraph:
    ``(I)(i) For cost reporting periods beginning on or after October 
1, 2000, in the case of a sole community hospital that for its cost 
reporting period beginning during 1999 is paid on the basis of the 
target amount applicable to the hospital under subparagraph (C) and 
that elects (in a form and manner determined by the Secretary) this 
subparagraph to apply to the hospital, there shall be substituted for 
the base cost reporting period described in subparagraph (C) the 
rebased target amount determined under this subparagraph.
    ``(ii) For purposes of clause (i), the rebased target amount 
applicable to a hospital making an election under this subparagraph is 
equal to the sum of the following:
            ``(I) With respect to discharges occurring in fiscal year 
        2001, 75 percent of the target amount applicable to the 
        hospital under subparagraph (C) (hereinafter in this 
        subparagraph referred to as the `subparagraph (C) target 
        amount') and 25 percent of the amount of the allowable 
        operating costs of inpatient hospital services (as defined in 
        subsection (a)(4)) recognized under this title for the hospital 
        for the 12-month cost reporting period beginning during fiscal 
        year 1996 (hereinafter in this subparagraph referred to as the 
        `rebased target amount'), increased by the applicable 
        percentage increase under subparagraph (B)(iv).
            ``(II) With respect to discharges occurring in fiscal year 
        2002, 50 percent of the subparagraph (C) target amount and 50 
        percent of the rebased target amount, increased by the 
        applicable percentage increase under subparagraph (B)(iv).
            ``(III) With respect to discharges occurring in fiscal year 
        2003, 25 percent of the subparagraph (C) target amount and 75 
        percent of the rebased target amount, increased by the 
        applicable percentage increase under subparagraph (B)(iv).
            ``(IV) With respect to discharges occurring in fiscal year 
        2003 or any subsequent fiscal year, 100 percent of the rebased 
        target amount, increased by the applicable percentage increase 
        under subparagraph (B)(iv).''.

SEC. 406. INCREASED FLEXIBILITY IN PROVIDING GRADUATE PHYSICIAN 
              TRAINING IN RURAL AREAS.

    (a) Permitting 30 Percent Expansion in Current GME Training 
Programs for Hospitals Located in Rural Areas.--
            (1) Payment for direct graduate medical education costs.--
        Section 1886(h)(4)(F) (42 U.S.C. 1395ww(h)(4)(F)), as added by 
        section 4623 of BBA, is amended by inserting ``(or, 130 percent 
        of such number in the case of a hospital located in a rural 
        area)'' after ``may not exceed the number''.
            (2) Payment for indirect graduate medical education 
        costs.--Section 1886(d)(5)(B)(v) (42 U.S.C. 
        1395ww(d)(5)(B)(v)), as added by section 4621(b)(1) of BBA, is 
        amended by inserting ``(or, 130 percent of such number in the 
        case of a hospital located in a rural area)'' after ``may not 
        exceed the number''.
            (3) Effective dates.--(A) The amendment made by paragraph 
        (1) applies to cost reporting periods beginning on or after 
        October 1, 1999.
            (B) The amendment made by paragraph (2) applies to 
        discharges occurring on or after October 1, 1999.
    (b) Special Rule for Non-Rural Facilities Serving Rural Areas.--
            (1) In general.--Section 1886(h)(4)(H) (42 U.S.C. 
        1395ww(h)(4)(H)), as added by section 4623 of BBA, is amended 
        by adding at the end the following new clause:
                            ``(iv) Non-rural hospitals operating 
                        training programs in underserved rural areas.--
                        In the case of a hospital that is not located 
                        in a rural area but establishes separately 
                        accredited approved medical residency training 
                        programs (or rural tracks) in an underserved 
                        rural area or has an accredited training 
                        program with an integrated rural track, the 
                        Secretary shall adjust the limitation under 
                        subparagraph (F) in an appropriate manner 
                        insofar as it applies to such programs in such 
                        underserved rural areas in order to encourage 
                        the training of physicians in underserved rural 
                        areas.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies with respect to--
                    (A) payments to hospitals under section 1886(h) of 
                the Social Security Act (42 U.S.C. 1395ww(h)) for cost 
                reporting periods beginning on or after October 1, 
                1999; and
                    (B) payments to hospitals under section 
                1886(d)(5)(B)(v) of such Act (42 U.S.C. 
                1395ww(d)(5)(B)(v)) for discharges occurring on or 
                after October 1, 1999.

SEC. 407. ELIMINATION OF CERTAIN RESTRICTIONS WITH RESPECT TO HOSPITAL 
              SWING BED PROGRAM.

    (a) Elimination of Requirement for State Certificate of Need.--
Section 1883(b) (42 U.S.C. 1395tt(b)) is amended to read as follows:
    ``(b) The Secretary may not enter into an agreement under this 
section with any hospital unless, except as provided under subsection 
(g), the hospital is located in a rural area and has less than 100 
beds.''.
    (b) Elimination of Swing Bed Restrictions on Certain Hospitals with 
More than 49 Beds.--Section 1883(d) (42 U.S.C. 1395tt(d)) is amended--
            (1) by striking paragraphs (2) and (3); and
            (2) by striking ``(d)(1)'' and inserting ``(d)''.
    (c) Effective Date.--The amendments made by this section take 
effect on the date that is the first day after the expiration of the 
transition period under section 1888(e)(2)(E) of the Social Security 
Act (42 U.S.C. 1395yy(e)(2)(E)), as added by section 4432(a) of BBA, 
for payments for covered skilled nursing facility services under the 
Medicare program.

SEC. 408. GRANT PROGRAM FOR RURAL HOSPITAL TRANSITION TO PROSPECTIVE 
              PAYMENT.

    Section 1820(g) (42 U.S.C. 1395i-4(g)), as added by section 4201(a) 
of BBA, is amended by adding at the end the following new paragraph:
            ``(3) Upgrading data systems.--
                    ``(A) Grants to hospitals.--The Secretary may award 
                grants to hospitals that have submitted applications in 
                accordance with subparagraph (C) to assist eligible 
                small rural hospitals in meeting the costs of 
                implementing data systems required to meet requirements 
                established under the Medicare program pursuant to 
                amendments made by the Balanced Budget Act of 1997.
                    ``(B) Eligible small rural hospital defined.--For 
                purposes of this paragraph, the term `eligible small 
                rural hospital' means a non-Federal, short-term general 
                acute care hospital that--
                            ``(i) is located in a rural area (as 
                        defined for purposes of section 1886(d)); and
                            ``(ii) has less than 50 beds.
                    ``(C) Application.--A hospital seeking a grant 
                under this paragraph shall submit an application to the 
                Secretary on or before such date and in such form and 
                manner as the Secretary specifies.
                    ``(D) Amount of grant.--A grant to a hospital under 
                this paragraph may not exceed $50,000.
                    ``(E) Use of funds.--A hospital receiving a grant 
                under this paragraph may use the funds for the purchase 
                of computer software and hardware and for the education 
                and training of hospital staff on computer information 
                systems and costs related to the implementation of 
                prospective payment systems.
                    ``(F) Report.--
                            ``(i) Information.--A hospital receiving a 
                        grant under this section shall furnish the 
                        Secretary with such information as the 
                        Secretary may require to evaluate the project 
                        for which the grant is made and to ensure that 
                        the grant is expended for the purposes for 
                        which it is made.
                            ``(ii) Reporting.--
                                    ``(I) Interim reports.--The 
                                Secretary shall report to the Committee 
                                on Ways and Means of the House of 
                                Representatives and the Committee on 
                                Finance of the Senate at least annually 
                                on the grant program established under 
                                this section, including in such report 
                                information on the number of grants 
                                made, the nature of the projects 
                                involved, the geographic distribution 
                                of grant recipients, and such other 
                                matters as the Secretary deems 
                                appropriate.
                                    ``(II) Final report.--The Secretary 
                                shall submit a final report to such 
                                committees not later than 180 days 
                                after the completion of all of the 
                                projects for which a grant is made 
                                under this section.''.

SEC. 409. MEDPAC STUDY OF RURAL PROVIDERS.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct 
a study on rural providers furnishing items and services for which 
payment is made under title XVIII of the Social Security Act. Such 
study shall examine and evaluate the adequacy and appropriateness of 
the categories of special payments (and payment methodologies) 
established for rural hospitals under the Medicare program, and their 
impact on beneficiary access and quality of health care services.
    (b) Report.--By not later than 18 months after the date of the 
enactment of this Act, the Medicare Payment Advisory Commission shall 
submit to Congress a report on the study conducted under subsection 
(a).

SEC. 410. EXPANSION OF ACCESS TO PARAMEDIC INTERCEPT SERVICES IN RURAL 
              AREAS.

    (a) Expansion of Payment Areas.--Section 4531(c) of BBA (42 U.S.C. 
1395x(s)(7) note; 111 Stat. 452) is amended by adding at the end the 
following flush sentence:
``For purposes of this subsection, an area shall be treated as a rural 
area if it is designated as a rural area by any law or regulation of 
the State or if it is located in a rural census tract of a metropolitan 
statistical area (as determined under the Goldsmith Modification, as 
published in the Federal Register on February 27, 1992 (57 Fed. Reg. 
6725)).''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on January 1, 2000, and applies to paramedic intercept services 
furnished on or after such date.

    TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM)

                      Subtitle A--Medicare+Choice

SEC. 501. PHASE-IN OF NEW RISK ADJUSTMENT METHODOLOGY.

    Section 1853(a)(3)(C) (42 U.S.C. 1395w-23(a)(3)(C)) is amended--
            (1) by redesignating the first sentence as clause (i) with 
        the heading ``In general.--'' and appropriate indentation; and
            (2) by adding at the end the following new clause:
                            ``(ii) Phase-in.--Such risk adjustment 
                        methodology shall be implemented in a phased-in 
                        manner so that the methodology insofar as it 
                        makes adjustments for health status based on 
                        clinical data applies to--
                                    ``(I) not more than 10 percent of 
                                the payment amount in 2000 and 2001;
                                    ``(II) not more than 20 percent of 
                                such amount in 2002;
                                    ``(III) not more than 30 percent of 
                                such amount in 2003; and
                                    ``(IV) 100 percent of such amount 
                                in any subsequent year (at which time 
                                the risk adjustment methodology should 
                                reflect data from multiple 
                                settings).''.

SEC. 502. ENCOURAGING OFFERING OF MEDICARE+CHOICE PLANS IN AREAS 
              WITHOUT PLANS.

    Section 1853 (42 U.S.C. 1395w-23) is amended--
            (1) in subsection (a)(1), by striking ``subsections (e) and 
        (f)'' and inserting ``subsections (e), (g), and (i)'';
            (2) in subsection (c)(5), by inserting ``(other than those 
        attributable to subsection (i))'' after ``payments under this 
        part''; and
            (3) by adding at the end the following new subsection:
    ``(i) New Entry Bonus.--
            ``(1) In general.--Subject to paragraphs (2) and (3), in 
        the case of Medicare+Choice payment area in which a 
        Medicare+Choice plan has not been offered since 1997 (or in 
        which all organizations that offered a plan since such date 
        have filed notice with the Secretary, as of October 13, 1999, 
        that they will not be offering such a plan as of January 1, 
        2000), the amount of the monthly payment otherwise made under 
        this subsection shall be increased--
                    ``(A) only for the first 12 months in which any 
                Medicare+Choice plan is offered in the area, by 5 
                percent of the total monthly payment otherwise computed 
                for such payment area; and
                    ``(B) only for the subsequent 12 months, by 3 
                percent of the total monthly payment otherwise computed 
                for such payment area.
            ``(2) Period of application.--Paragraph (1) shall only 
        apply to payment for Medicare+Choice plans which are first 
        offered in a Medicare+Choice payment area during the 2-year 
        period beginning with January 1, 2000.
            ``(3) Limitation to organization offering first plan in an 
        area.--Paragraph (1) shall only apply to payment to the first 
        Medicare+Choice organization that offers a Medicare+Choice plan 
        in each Medicare+Choice payment area, except that if more than 
        one such organization first offers such a plan in an area on 
        the same date, paragraph (1) shall apply to payment for such 
        organizations.
            ``(4) Construction.--Nothing in paragraph (1) shall be 
        construed as affecting the calculation of the annual 
        Medicare+Choice capitation rate for any payment area under 
        subsection (c) or as applying to payment for any period not 
        described in such paragraph.
            ``(5) Offered defined.--In this subsection, the term 
        `offered' means, with respect to a Medicare+Choice plan as of a 
        date, that a Medicare+Choice eligible individual may enroll 
        with the plan on that date, regardless of when the enrollment 
        takes effect or the individual obtain benefits under the 
        plan.''.

SEC. 503. MODIFICATION OF 5-YEAR RE-ENTRY RULE FOR CONTRACT 
              TERMINATIONS.

    (a) In General.--Section 1857(c)(4) (42 U.S.C. 1395w-27(c)(4)) is 
amended--
            (1) by inserting ``as provided in paragraph (2) and 
        except'' after ``except'';
            (2) by redesignating the first sentence as a subparagraph 
        (A) with an appropriate indentation and the heading ``In 
        general.--''; and
            (3) by adding at the end the following new subparagraph:
                    ``(B) Earlier re-entry permitted where change in 
                payment policy and no more than one other plan 
                available.--Subparagraph (A) shall not apply with 
                respect to the offering by a Medicare+Choice 
                organization of a Medicare+Choice plan in a 
                Medicare+Choice payment area if--
                            ``(i) during the 6-month period beginning 
                        on the date the organization notified the 
                        Secretary of the intention to terminate the 
                        most recent previous contract, there was a 
                        legislative change enacted (or a regulatory 
                        change adopted) that has the effect of 
                        increasing payment rates under section 1853 for 
                        that Medicare+Choice payment area; and
                            ``(ii) at the time the organization 
                        notifies the Secretary of its intent to enter 
                        into a contract to offer such a plan in the 
                        area, there is no more than one Medicare+Choice 
                        plan offered in the area.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to contract terminations occurring before, on, or after the date 
of the enactment of this Act.

SEC. 504. CONTINUED COMPUTATION AND PUBLICATION OF AAPCC DATA.

    (a) In General.--Section 1853(b) (42 U.S.C. 1395w-23(b)) is amended 
by adding at the end the following new paragraph:
            ``(4) Continued computation and publication of county-
        specific per capita fee-for-service expenditure information.--
        The Secretary, through the Chief Actuary of the Health Care 
        Financing Administration, shall provide for the computation and 
        publication, on an annual basis at the time of publication of 
        the annual Medicare+Choice capitation rates, of information on 
        the level of the average annual per capita costs (described in 
        section 1876(a)(4)) for each Medicare+Choice payment area.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act and apply to 
publications of the annual Medicare+Choice capitation rates made on or 
after such date.

SEC. 505. CHANGES IN MEDICARE+CHOICE ENROLLMENT RULES.

    (a) Permitting Enrollment in Alternative Medicare+Choice Plans and 
Medigap Coverage in Case of Involuntary Termination of Medicare+Choice 
Enrollment.--
            (1) In general.--Section 1851(e)(4) (42 U.S.C. 1395w-
        21(e)(4)) is amended by striking subparagraph (A) and inserting 
        the following:
                    ``(A)(i) the certification of the organization or 
                plan under this part has been terminated, or the 
                organization or plan has notified the individual or the 
                Secretary of an impending termination of such 
                certification; or
                    ``(ii) the organization has terminated or otherwise 
                discontinued providing the plan in the area in which 
                the individual resides, or has notified the individual 
                or Secretary of an impending termination or 
                discontinuation of such plan;''.
            (2) Conforming medigap amendment.--Section 1882(s)(3) (42 
        U.S.C. 1395ss(s)(3)) is amended--
                    (A) in subparagraph (A), by inserting ``, subject 
                to subparagraph (E),'' after ``in the case of an 
                individual described in subparagraph (B) who''; and
                    (B) by adding at the end the following new 
                subparagraph:
    ``(E)(i) An individual described in subparagraph (B)(ii) may elect 
to apply subparagraph (A) by substituting, for the date of termination 
of enrollment, the date on which the individual or Secretary was 
notified by the Medicare+Choice organization of the impending 
termination or discontinuance of the Medicare+Choice plan in the area 
in which the individual resides, but only if the individual disenrolls 
from the plan as a result of such notification.
    ``(ii) In the case of an individual making such an election, the 
issuer involved shall accept the application of the individual 
submitted before the date of termination of enrollment, but the 
coverage under subparagraph (A) shall only become effective upon 
termination of coverage under the Medicare+Choice plan involved.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to notices of impending terminations or 
        discontinuances made on or after the date of the enactment of 
        this Act.
    (b) Continuous Open Enrollment for Institutionalized Individuals.--
Section 1851(e)(2) (42 U.S.C. 1395w-21(e)(2)) is amended--
            (1) in subparagraph (B)(i), by inserting ``and subparagraph 
        (D)'' after ``clause (ii)'';
            (2) in subparagraph (C)(i), by inserting ``and subparagraph 
        (D)'' after ``clause (ii)''; and
            (3) by adding at the end the following new subparagraph:
                    ``(D) Continuous open enrollment for 
                institutionalized individuals.--At any time after 2001 
                in the case of a Medicare+Choice eligible individual 
                who is institutionalized, the individual may change the 
                election under subsection (a)(1).''.
    (c) Continuing Enrollment for Certain Enrollees.--Section 
1851(b)(1) (42 U.S.C. 1395w-21(b)(1)) is amended--
            (1) in subparagraph (A), by inserting ``and except as 
        provided in subparagraph (C)'' after ``may otherwise provide''; 
        and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Continuation of enrollment permitted where 
                service changed.--Notwithstanding subparagraph (B), if 
                a Medicare+Choice organization eliminates from its 
                service area a geographic area that was previously 
                within its service area, the organization may elect to 
                offer individuals residing in all or portions of the 
                affected geographic area who would otherwise be 
                ineligible to continue enrollment the option to 
                continue enrollment in a Medicare+Choice plan it offers 
                so long as--
                            ``(i) the enrollee agrees to receive the 
                        full range of basic benefits (excluding 
                        emergency and urgently needed care) exclusively 
                        at facilities designated by the organization 
                        within the plan service area; and
                            ``(ii) there is no other Medicare+Choice 
                        plan offered in the area in which the enrollee 
                        resides at the time of the organization's 
                        election.''.
    (d) Effective Date.--The amendments made by subsections (b) and (c) 
apply as if included in the enactment of BBA and the amendments made by 
subsection (c) apply to eliminations of geographic areas from a service 
area that occur before, on, or after the date of the enactment of this 
Act.

SEC. 506. ALLOWING VARIATION IN PREMIUM WAIVERS WITHIN A SERVICE AREA 
              IF MEDICARE+CHOICE PAYMENT RATES VARY WITHIN THE AREA.

    (a) In General.--Section 1854(c) (42 U.S.C. 1395w-24(c)) is 
amended--
            (1) by striking ``The'' and inserting ``Subject to 
        paragraph (2), the'';
            (2) by redesignating the first sentence as a paragraph (1) 
        with an appropriate indentation and the heading ``In general.--
        ''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Variation in premium waiver permitted.--A 
        Medicare+Choice organization may waive part or all of a premium 
        described in paragraph (1) for one or more Medicare+Choice 
        payment areas within its service area if the annual 
        Medicare+Choice capitation rates under section 1853(c) vary 
        between such payment area and other payment areas within such 
        service area.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
premiums for contract years beginning on or after January 1, 2001.

SEC. 507. DELAY IN DEADLINE FOR SUBMISSION OF ADJUSTED COMMUNITY RATES 
              AND RELATED INFORMATION.

    (a) Delay in Deadline for Submission of Adjusted Community Rates 
and Related Information.--Section 1854(a)(1) (42 U.S.C. 1395w-24(a)(1)) 
is amended by striking ``May 1'' and inserting ``July 1''.
    (b) Adjustment in Information Disclosure Provisions.--Section 
1851(d)(2)(A)(ii) (42 U.S.C. 1395w-21(d)(2)(A)(ii)) is amended by 
inserting after ``information described in paragraph (4) concerning 
such plans'' the following: ``, to the extent such information is 
available at the time of preparation of the material for mailing''.
    (c) Effective Date.--The amendments made by this section apply with 
respect to information submitted by Medicare+Choice organizations (and 
provided to beneficiaries) for years beginning with 1999.

SEC. 508. TWO-YEAR EXTENSION OF MEDICARE COST CONTRACTS.

    Section 1876(h)(5)(B) (42 U.S.C. 1395mm(h)(5)(B)) is amended by 
striking ``2002'' and inserting ``2004''.

SEC. 509. MEDICARE+CHOICE NURSING AND ALLIED HEALTH PROFESSIONAL 
              EDUCATION PAYMENTS.

    Section 1886(d)(11) (42 U.S.C. 1395ww(d)(11)) is amended--
            (1) in subparagraph (A)--
                    (A) by designating the portion following ``In 
                general.--'' as a clause (i) with the heading 
                ``Graduate medical training.--'' and appropriate 
                indentation; and
                    (B) by adding at the end the following new clause:
                            ``(ii) Nursing and allied health 
                        training.--For portions of cost reporting 
                        periods occurring on or after January 1, 2000, 
                        the Secretary shall provide for an additional 
                        payment amount for each applicable discharge of 
                        any subsection (d) hospital that has direct 
                        costs of approved education activities for 
                        nurse and allied health professional 
                        training.'';
            (2) in subparagraph (C)--
                    (A) designating the portion following 
                ``Determination of amount.--'' as a clause (i) with the 
                heading ``Graduate medical training.--'' and 
                appropriate indentation;
                    (B) by striking ``under this paragraph'' and 
                inserting ``under subparagraph (A)(i)'';
                    (C) by inserting ``the DGME portion (as defined in 
                clause (iii)) of'' after ``shall be equal to''; and
                    (D) by adding at the end the following new clauses:
                            ``(ii) Nursing and allied health 
                        training.--The amount of the payment under 
                        subparagraph (A)(ii) with respect to any 
                        applicable discharge shall be equal to an 
                        amount specified by the Secretary in a manner 
                        consistent with the following:
                                    ``(I) The total payments under such 
                                subparagraph in a year shall bear the 
                                same ratio to the Secretary's estimate 
                                of the total payments under 
                                subparagraph (A)(i) in the year as the 
                                ratio (as estimated by the Secretary) 
                                of the total payments under this title 
                                for direct costs described in 
                                subparagraph (A)(ii) in the year bear 
                                to the total payments under section 
                                1886(h) in the year; but in no case 
                                shall the total payments under 
                                subparagraph (A)(ii) exceed $60,000,000 
                                in a year.
                                    ``(II) The payments to different 
                                hospitals are proportional to the 
                                direct costs of each hospital described 
                                in subparagraph (A)(ii).
                            ``(iii) DGME portion defined.--For purposes 
                        of this subparagraph, the `DGME portion' means, 
                        for a year, the ratio of--
                                    ``(I) the amount by which (aa) the 
                                Secretary's estimate of the total 
                                additional payments that would be 
                                payable under this paragraph for the 
                                year if subparagraph (A)(ii) and clause 
                                (ii) of this subparagraph did not 
                                apply, exceeds (bb) the total payments 
                                in the year under subparagraph (A)(ii), 
                                to
                                    ``(II) the total additional 
                                payments estimated under subclause 
                                (I)(aa) for the year.''.

SEC. 510. REDUCTION IN ADJUSTMENT IN NATIONAL PER CAPITA 
              MEDICARE+CHOICE GROWTH PERCENTAGE FOR 2002.

    Section 1853(c)(6)(B)(iv) (42 U.S.C. 1395w-23(c)(6)(B)(iv)) is 
amended by striking ``0.5 percentage points'' and inserting ``0.3 
percentage points''.

SEC. 511. DEEMING OF MEDICARE+CHOICE ORGANIZATION TO MEET REQUIREMENTS.

    Section 1852(e)(4) (42 U.S.C. 1395w-22(e)(4)) is amended to read as 
follows:
            ``(4) Treatment of accreditation.--The Secretary shall 
        provide that a Medicare+Choice organization is deemed to meet 
        requirements of paragraphs (1) and (2) of this subsection and 
        subsection (h) (relating to confidentiality and accuracy of 
        enrollee records) if the organization is accredited (and 
        periodically reaccredited) by a private accrediting 
        organization under a process that the Secretary has determined 
        assures that the accrediting organization applies standards 
        that meet or exceed the standards established under section 
        1856 to carry out the respective requirements. The Secretary 
        shall determine, within 210 days after the date the Secretary 
        receives an application by a private accrediting organization, 
        whether the process of the private accrediting organization 
        meets the requirements of the preceding sentence using the 
        criteria specified in section 1865(b)(2). The Secretary shall, 
        using the process described in section 1865(b), deem a 
        Medicare+Choice organization that is so accredited as meeting 
        the requirements of paragraphs (1) and (2) of this subsection 
        and subsection (h).''

SEC. 512. MISCELLANEOUS CHANGES AND STUDIES.

    (a) Permitting Religious Fraternal Benefit Societies to Offer a 
Range of Medicare+Choice Plans.--Section 1859(e)(2) (42 U.S.C. 1395w-
29(e)(2)) is amended in the matter preceding subparagraph (A) by 
striking ``section 1851(a)(2)(A)'' and inserting ``section 
1851(a)(2)''.
    (b) Study of Accounting for VA and DOD Expenditures for Medicare 
Beneficiaries.--The Secretary of Health and Human Services, jointly 
with the Secretaries of Defense and of Veterans Affairs, shall submit 
to Congress not later than 1 year after the date of the enactment of 
this Act a report on the estimated use of health care services 
furnished by the Departments of Defense and of Veterans Affairs to 
Medicare beneficiaries, including both beneficiaries under the original 
Medicare fee-for-service program and under the Medicare+Choice program. 
The report shall include an analysis of how best to properly account 
for expenditures for such services in the computation of 
Medicare+Choice capitation rates.
    (c) Promoting Prompt Implementation of Informatics, Telemedicine, 
and Education Demonstration Project.--Section 4207 of BBA is amended--
            (1) in subsection (a)(1), by adding at the end the 
        following: ``The Secretary shall make an award for such project 
        not later than 3 months after the date of the enactment of the 
        Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
        1999. The Secretary shall accept the proposal adjudged to be 
        the best technical proposal as of such date of the enactment 
        without the need for additional review or resubmission of 
        proposals.'';
            (2) in subsection (a)(2)(A), by inserting before the period 
        at the end the following: ``that qualify as Federally 
        designated medically underserved areas or health professional 
        shortage areas at the time of enrollment of beneficiaries under 
        the project'';
            (3) in subsection (c)(2), by striking ``and the source and 
        amount of non-Federal funds used in the project'';
            (4) in subsection (d)(2)(A), by striking ``at a rate of 50 
        percent of the costs that are reasonable and'' and inserting 
        ``for the costs that are related'';
            (5) in subsection (d)(2)(B)(i), by striking ``(but only in 
        the case of patients located in medically underserved areas)'' 
        and inserting ``or at sites providing health care to patients 
        located in medically underserved areas'';
            (6) in subsection (d)(2)(C)(i), by striking ``to deliver 
        medical informatics services under'' and inserting ``for 
        activities related to''; and
            (7) by amending paragraph (4) of subsection (d) to read as 
        follows:
            ``(4) Cost-sharing.--The project may not impose cost 
        sharing on a Medicare beneficiary for the receipt of services 
        under the project. Project costs will cover all costs to 
        patients and providers related to participation in the 
        project.''.

SEC. 513. MEDPAC REPORT ON MEDICARE MSA (MEDICAL SAVINGS ACCOUNT) 
              PLANS.

    Not later than 1 year after the date of the enactment of this Act, 
the Medicare Payment Advisory Commission shall submit to Congress a 
report on specific legislative changes that should be made to make MSA 
plans a viable option under the Medicare+Choice program.

SEC. 514. CLARIFICATION OF NONAPPLICABILITY OF CERTAIN PROVISIONS OF 
              DISCHARGE PLANNING PROCESS TO MEDICARE+CHOICE PLANS.

    (a) In General.--Section 1861(ee)(2)(H) (42 U.S.C. 
1395x(ee)(2)(H)), as added by section 4431 of BBA, is amended--
            (1) in clause (i)--
                    (A) by striking ``not specify'' and inserting 
                ``subject to clause (iii), not specify''; and
                    (B) by striking ``and'' at the end; and
            (2) in clause (ii), by striking the period at the end and 
        inserting ``, and''; and
            (3) by adding at the end the following new clause:
                    ``(iii) for individuals enrolled under a 
                Medicare+Choice plan, under a contract with the 
                Secretary under section 1857, for whom a hospital 
                furnishes inpatient hospital services, the hospital may 
                specify with respect to such individual the provider of 
                post-hospital home health services or other post-
                hospital services under the plan.''.

            Subtitle B--Managed Care Demonstration Projects

SEC. 521. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION 
              DEMONSTRATION (SHMO) PROJECT AUTHORITY.

    (a) Extension.--Section 4018(b) of the Omnibus Budget 
Reconciliation Act of 1987 (Public Law 100-203), as amended by section 
4014(a)(1) of BBA, is amended--
            (1) in paragraph (1), by striking ``December 31, 2000'' and 
        inserting ``the date that is 18 months after the date that the 
        Secretary submits to Congress the report described in section 
        4014(c) of the Balanced Budget Act of 1997''; and
            (2) by adding at the end of paragraph (4) the following: 
        ``Not later than 6 months after the date the Secretary submits 
        such final report, the Medicare Payment Advisory Commission 
        shall submit to Congress a report containing recommendations 
        regarding such project.''.
    (b) Substitution of Aggregate Cap.--Section 13567(c) of the Omnibus 
Budget Reconciliation Act of 1993 (Public Law 103-66), as amended by 
section 4014(b) of BBA, is amended to read as follows:
    ``(c) Aggregate Limit on Number of Members.--The Secretary of 
Health and Human Services may not impose a limit on the number of 
individuals that may participate in a project conducted under section 
2355 of the Deficit Reduction Act of 1984, other than an aggregate 
limit of not less than 324,000 for all sites.''.

SEC. 522. EXTENSION OF MEDICARE COMMUNITY NURSING ORGANIZATION 
              DEMONSTRATION PROJECT.

    (a) Extension.--Notwithstanding any other provision of law, any 
demonstration project conducted under section 4079 of the Omnibus 
Budget Reconciliation Act of 1987 (Public Law 100-123) and conducted 
for the additional period of 2 years as provided for under section 4019 
of BBA, shall be conducted for an additional period of 2 years.
    (b) Report.--By not later than July 1, 2001, the Secretary of 
Health and Human Services shall submit to Congress a report describing 
the results of any demonstration project conducted under section 4079 
of the Omnibus Budget Reconciliation Act of 1987, and describing the 
data collected by the Secretary relevant to the analysis of the results 
of such project, including the most recently available data through the 
end of 2000.

SEC. 523. MEDICARE+CHOICE COMPETITIVE BIDDING DEMONSTRATION PROJECT.

    Section 4011 of BBA is amended--
            (1) in subsection (a)--
                    (A) by striking ``The Secretary'' and inserting the 
                following:
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, the Secretary''; and
                    (B) by adding at the end the following:
            ``(2) Delay in implementation.--The Secretary shall not 
        implement the project until January 1, 2002, or, if later, 6 
        months after the date the Competitive Pricing Advisory 
        Committee has submitted to Congress a report on each of the 
        following topics:
                    ``(A) Incorporation of original fee-for-service 
                medicare program into project.--What changes would be 
                required in the project to feasibly incorporate the 
                original fee-for-service Medicare program into the 
                project in the areas in which the project is 
                operational.
                    ``(B) Quality activities.--The nature and extent of 
                the quality reporting and monitoring activities that 
                should be required of plans participating in the 
                project, the estimated costs that plans will incur as a 
                result of these requirements, and the current ability 
                of the Health Care Financing Administration to collect 
                and report comparable data, sufficient to support 
                comparable quality reporting and monitoring activities 
                with respect to beneficiaries enrolled in the original 
                fee-for-service Medicare program generally.
                    ``(C) Rural project.--The current viability of 
                initiating a project site in a rural area, given the 
                site specific budget neutrality requirements of the 
                project, and insofar as the Committee decides that the 
                addition of such a site is not viable, recommendations 
                on how the project might best be changed so that such a 
                site is viable.
                    ``(D) Benefit structure.--The nature and extent of 
                the benefit structure that should be required of plans 
                participating in the project, the rationale for such 
                benefit structure, the potential implications that any 
                benefit standardization requirement may have on the 
                number of plan choices available to a beneficiary in an 
                area designated under the project, the potential 
                implications of requiring participating plans to offer 
                variations on any standardized benefit package the 
                committee might recommend, such that a beneficiary 
                could elect to pay a higher percentage of out-of-pocket 
                costs in exchange for a lower premium (or premium 
                rebate as the case may be), and the potential 
                implications of expanding the project (in conjunction 
                with the potential inclusion of the original fee-for-
                service Medicare program) to require Medicare 
                supplemental insurance plans operating in an area 
                designated under the project to offer a coordinated and 
                comparable standardized benefit package.
            ``(3) Conforming deadlines.--Any dates specified in the 
        succeeding provisions of this section shall be delayed (as 
        specified by the Secretary) in a manner consistent with the 
        delay effected under paragraph (2).''; and
            (2) in subsection (c)(1)(A)--
                    (A) by striking ``and'' at the end of clause (i); 
                and
                    (B) by adding at the end the following new clause:
                            ``(iii) establish beneficiary premiums for 
                        plans offered in such area in a manner such 
                        that a beneficiary who enrolls in an offered 
                        plan with a below average price (as established 
                        by the competitive pricing methodology 
                        established for such area) may, at the plan's 
                        election, be offered a rebate of some or all of 
                        the Medicare part B premium that such 
                        individual must otherwise pay in order to 
                        participate in a Medicare+Choice plan under the 
                        Medicare+Choice program; and''.

SEC. 524. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES DEMONSTRATION 
              PROJECTS.

    Section 9215(a) of the Consolidated Omnibus Budget Reconciliation 
Act of 1985, as amended by section 6135 of the Omnibus Budget 
Reconciliation Act of 1989, section 13557 of the Omnibus Budget 
Reconciliation Act of 1993, and section 4017 of BBA, is amended by 
striking ``December 31, 2000'' and inserting ``December 31, 2001''.

SEC. 525. MEDICARE COORDINATED CARE DEMONSTRATION PROJECT.

    Section 4016(e)(1)(A)(ii) of the Balanced Budget Act of 1997 (42 
U.S.C. 1395b-1 note) is amended to read as follows:
                            ``(ii) Cancer hospital.--In the case of the 
                        project described in subsection (b)(2)(C), the 
                        Secretary shall provide for the transfer from 
                        the Federal Hospital Insurance Trust Fund and 
                        the Federal Supplementary Insurance Trust Fund 
                        under title XVIII of the Social Security Act 
                        (42 U.S.C. 1395i, 1395t), in such proportions 
                        as the Secretary determines to be appropriate, 
                        of such funds as are necessary to cover costs 
                        of the project, including costs for information 
                        infrastructure and recurring costs of case 
                        management services, flexible benefits, and 
                        program management.''.

                           TITLE VI--MEDICAID

SEC. 601. MAKING MEDICAID DSH TRANSITION RULE PERMANENT.

    (a) In General.--Section 4721(e) of the Balanced Budget Act of 1997 
(42 U.S.C. 1396r-4 note) is amended--
            (1) in the matter before paragraph (1), by striking 
        ``1923(g)(2)(A)'' and ``1396r-4(g)(2)(A)'' and inserting 
        ``1923(g)(2)'' and ``1396r-4(g)(2)'', respectively;
            (2) in paragraphs (1) and (2)--
                    (A) by striking ``, and before July 1, 1999''; and
                    (B) by striking ``in such section'' and inserting 
                ``in subparagraph (A) of such section''; and
            (3) by striking ``and'' at the end of paragraph (1), by 
        striking the period at the end of paragraph (2) and inserting 
        ``; and'', and by adding at the end the following new 
        paragraph:
            ``(3) effective for State fiscal years that begin on or 
        after July 1, 1999, `or (b)(1)(B)' were inserted in section 
        1923(g)(2)(B)(ii)(I) after `(b)(1)(A)'.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the enactment of section 4721(e) of the 
Balanced Budget Act of 1997 (Public Law 105-33; 110 Stat. 514).

SEC. 602. INCREASE IN DSH ALLOTMENT FOR CERTAIN STATES AND THE DISTRICT 
              OF COLUMBIA.

    (a) In General.--The table in section 1923(f)(2) (42 U.S.C. 1396r-
4(f)(2)) is amended under each of the columns for FY 00, FY 01, and FY 
02--
            (1) in the entry for the District of Columbia, by striking 
        ``23'' and inserting ``32'';
            (2) in the entry for Minnesota, by striking ``16'' and 
        inserting ``33'';
            (3) in the entry for New Mexico, by striking ``5'' and 
        inserting ``9''; and
            (4) in the entry for Wyoming, by striking ``0'' and 
        inserting ``.100''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on October 1, 1999, and applies to expenditures made on or after 
such date.

SEC. 603. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH 
              CENTERS AND RURAL HEALTH CLINICS.

    (a) In General.--Section 1902(a) of the Social Security Act (42 
U.S.C. 1396a(a)) is amended--
            (1) in paragraph (13)--
                    (A) in subparagraph (A), by adding ``and'' at the 
                end;
                    (B) in subparagraph (B), by striking ``and'' at the 
                end; and
                    (C) by striking subparagraph (C); and
            (2) by inserting after paragraph (14) the following new 
        paragraph:
            ``(15) for payment for services described in clause (B) or 
        (C) of section 1905(a)(2) under the plan in accordance with 
        subsection (aa);''.
    (b) New Prospective Payment System.--Section 1902 of the Social 
Security Act (42 U.S.C. 1396a) is amended by adding at the end the 
following:
    ``(aa) Payment for Services Provided by Federally-Qualified Health 
Centers and Rural Health Clinics.--
            ``(1) In general.--Beginning with fiscal year 2000 and each 
        succeeding fiscal year, the State plan shall provide for 
        payment for services described in section 1905(a)(2)(C) 
        furnished by a Federally-qualified health center and services 
        described in section 1905(a)(2)(B) furnished by a rural health 
        clinic in accordance with the provisions of this subsection.
            ``(2) Fiscal year 2000.--Subject to paragraph (4), for 
        services furnished during fiscal year 2000, the State plan 
        shall provide for payment for such services in an amount 
        (calculated on a per visit basis) that is equal to 100 percent 
        of the costs of the center or clinic of furnishing such 
        services during fiscal year 1999 which are reasonable and 
        related to the cost of furnishing such services, or based on 
        such other tests of reasonableness as the Secretary prescribes 
        in regulations under section 1833(a)(3), or, in the case of 
        services to which such regulations do not apply, the same 
        methodology used under section 1833(a)(3), adjusted to take 
        into account any increase in the scope of such services 
        furnished by the center or clinic during fiscal year 2000.
            ``(3) Fiscal year 2001 and succeeding fiscal years.--
        Subject to paragraph (4), for services furnished during fiscal 
        year 2001 or a succeeding fiscal year, the State plan shall 
        provide for payment for such services in an amount (calculated 
        on a per visit basis) that is equal to the amount calculated 
        for such services under this subsection for the preceding 
        fiscal year--
                    ``(A) increased by the percentage increase in the 
                MEI (as defined in section 1842(i)(3)) applicable to 
                primary care services (as defined in section 
                1842(i)(4)) for that fiscal year; and
                    ``(B) adjusted to take into account any increase in 
                the scope of such services furnished by the center or 
                clinic during that fiscal year.
            ``(4) Establishment of initial year payment amount for new 
        centers or clinics.--In any case in which an entity first 
        qualifies as a Federally-qualified health center or rural 
        health clinic after fiscal year 1999, the State plan shall 
        provide for payment for services described in section 
        1905(a)(2)(C) furnished by the center or services described in 
        section 1905(a)(2)(B) furnished by the clinic in the first 
        fiscal year in which the center or clinic so qualifies in an 
        amount (calculated on a per visit basis) that is equal to 100 
        percent of the costs of furnishing such services during such 
        fiscal year in accordance with the regulations and methodology 
        referred to in paragraph (2). For each fiscal year following 
        the fiscal year in which the entity first qualifies as a 
        Federally-qualified health center or rural health clinic, the 
        State plan shall provide for the payment amount to be 
        calculated in accordance with paragraph (3).
            ``(5) Administration in the case of managed care.--In the 
        case of services furnished by a Federally-qualified health 
        center or rural health clinic pursuant to a contract between 
        the center or clinic and a managed care entity (as defined in 
        section 1932(a)(1)(B)), the State plan shall provide for 
        payment to the center or clinic (at least quarterly) by the 
        State of a supplemental payment equal to the amount (if any) by 
        which the amount determined under paragraphs (2), (3), and (4) 
        of this subsection exceeds the amount of the payments provided 
        under the contract.
            ``(6) Alternative payment methodologies.--Notwithstanding 
        any other provision of this section, the State plan may provide 
        for payment in any fiscal year to a Federally-qualified health 
        center for services described in section 1905(a)(2)(C) or to a 
        rural health clinic for services described in section 
        1905(a)(2)(B) in an amount which is determined under an 
        alternative payment methodology that--
                    ``(A) is agreed to by the State and the center or 
                clinic; and
                    ``(B) results in payment to the center or clinic of 
                an amount which is at least equal to the amount 
                otherwise required to be paid to the center or clinic 
                under this section.''.
    (c) Conforming Amendments.--
            (1) Section 4712 of the Balanced Budget Act of 1997 (Public 
        Law 105-33; 111 Stat. 508) is amended by striking subsection 
        (c).
            (2) Section 1915(b) of the Social Security Act (42 U.S.C. 
        1396n(b)) is amended by striking ``1902(a)(13)(E)'' and 
        inserting ``1902(a)(15), 1902(aa),''.
    (d) Effective Date.--The amendments made by this section take 
effect on October 1, 1999, and apply to services furnished on or after 
such date.

SEC. 604. PARITY IN REIMBURSEMENT FOR CERTAIN UTILIZATION AND QUALITY 
              CONTROL SERVICES.

    (a) In General.--Section 1903(a)(3)(C)(i) (42 U.S.C. 
1396b(a)(3)(C)(i)) is amended--
            (1) by inserting ``(other than a review described in clause 
        (ii))'' after ``quality review''; and
            (2) by inserting ``(or under a contract with the State that 
        sets forth standards of performance equivalent to those under 
        section 1902(d))'' before the semicolon.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
expenditures made on and after the date of the enactment of this Act.

      TITLE VII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP)

SEC. 701. STABILIZING THE SCHIP ALLOTMENT FORMULA.

    (a) In General.--Section 2104(b) (42 U.S.C. 1397dd(b)) is amended--
            (1) in paragraph (2)(A)--
                    (A) in clause (i), by striking ``through 2000'' and 
                inserting ``and 1999''; and
                    (B) in clause (ii), by striking ``2001'' and 
                inserting ``2000'';
            (2) by amending paragraph (4) to read as follows:
            ``(4) Floors and ceilings in state allotments.--
                    ``(A) In general.--The proportion of the allotment 
                under this subsection for a subsection (b) State (as 
                defined in subparagraph (D)) for fiscal year 2000 and 
                each fiscal year thereafter shall be subject to the 
                following floors and ceilings:
                            ``(i) Floor of $2,000,000.--A floor equal 
                        to $2,000,000 divided by the total of the 
                        amount available under this subsection for all 
                        such allotments for the fiscal year.
                            ``(ii) Annual floor of 10 percent below 
                        preceding fiscal year's proportion.--A floor of 
                        90 percent of the proportion for the State for 
                        the preceding fiscal year.
                            ``(iii) Cumulative floor of 30 percent 
                        below the fy 1999 proportion.--A floor of 70 
                        percent of the proportion for the State for 
                        fiscal year 1999.
                            ``(iv) Cumulative ceiling of 45 percent 
                        above fy 1999 proportion.--A ceiling of 145 
                        percent of the proportion for the State for 
                        fiscal year 1999.
                    ``(B) Reconciliation.--
                            ``(i) Elimination of any deficit by 
                        establishing a percentage increase ceiling for 
                        states with highest annual percentage 
                        increases.--To the extent that the application 
                        of subparagraph (A) would result in the sum of 
                        the proportions of the allotments for all 
                        subsection (b) States exceeding 1.0, the 
                        Secretary shall establish a maximum percentage 
                        increase in such proportions for all subsection 
                        (b) States for the fiscal year in a manner so 
                        that such sum equals 1.0.
                            ``(ii) Allocation of surplus through pro 
                        rata increase.--To the extent that the 
                        application of subparagraph (A) would result in 
                        the sum of the proportions of the allotments 
                        for all subsection (b) States being less than 
                        1.0, the proportions of such allotments (as 
                        computed before the application of floors under 
                        clauses (i), (ii), and (iii) of subparagraph 
                        (A)) for all subsection (b) States shall be 
                        increased in a pro rata manner (but not to 
                        exceed the ceiling established under 
                        subparagraph (A)(iv)) so that (after the 
                        application of such floors and ceiling) such 
                        sum equals 1.0.
                    ``(C) Construction.--This paragraph shall not be 
                construed as applying to (or taking into account) 
                amounts of allotments redistributed under subsection 
                (f).
                    ``(D) Definitions.--In this paragraph:
                            ``(i) Proportion of allotment.--The term 
                        `proportion' means, with respect to the 
                        allotment of a subsection (b) State for a 
                        fiscal year, the amount of the allotment of 
                        such State under this subsection for the fiscal 
                        year divided by the total of the amount 
                        available under this subsection for all such 
                        allotments for the fiscal year.
                            ``(ii) Subsection (b) state.--The term 
                        `subsection (b) State' means one of the 50 
                        States or the District of Columbia.'';
            (3) in paragraph (2)(B), by striking ``the fiscal year'' 
        and inserting ``the calendar year in which such fiscal year 
        begins''; and
            (4) in paragraph (3)(B), by striking ``the fiscal year 
        involved'' and inserting ``the calendar year in which such 
        fiscal year begins''.
    (b) Effective Date.--The amendments made by this section apply to 
allotments determined under title XXI of the Social Security Act (42 
U.S.C. 1397aa et seq.) for fiscal year 2000 and each fiscal year 
thereafter.

SEC. 702. INCREASED ALLOTMENTS FOR TERRITORIES UNDER THE STATE 
              CHILDREN'S HEALTH INSURANCE PROGRAM.

    Section 2104(c)(4)(B) (42 U.S.C. 1397dd(c)(4)(B)) is amended by 
inserting ``, $34,200,000 for each of fiscal years 2000 and 2001, 
$25,200,000 for each of fiscal years 2002 through 2004, $32,400,000 for 
each of fiscal years 2005 and 2006, and $40,000,000 for fiscal year 
2007'' before the period.

            Passed the House of Representatives November 5, 1999.

            Attest:

                                                                 Clerk.