[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3146 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 3146

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 26, 1999

Mr. Bliley (for himself, Mr. Bilirakis, Mr. Tauzin, Mr. Pickering, Mr. 
   Blunt, Mr. Burr of North Carolina, Mr. Greenwood, Mr. Upton, Mr. 
Shadegg, Mr. Oxley, Mr. Rogan, Mr. Whitfield, Mr. Deal of Georgia, Mr. 
    Lazio, and Mr. Bryant) introduced the following bill; which was 
referred to the Committee on Commerce, and in addition to the Committee 
 on Ways and Means, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend titles XVIII, XIX, and XXI of the Social Security Act to 
    adjust the Medicare, Medicaid, and 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 ``Health Care 
Restoration 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 II--PROVISIONS RELATING TO PART B

               Subtitle A--Payment for Physician Services

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. Study and report to Congress on resources required to provide 
                            safe and effective outpatient cancer 
                            therapy.
Sec. 204. Limitation on application of practice expense site-of-service 
                            differential; reversion to 1997 practice 
                            expense RVU's for certain services.
                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. Hold-harmless for cancer hospitals and small rural hospitals.
Sec. 214. Annual review process for development of HOPD PPS.
                           Subtitle C--Other

Sec. 221. 2-year moratorium on therapy caps.
Sec. 222. Phase-in of PPS for ambulatory surgical centers.
Sec. 223. Expanding coverage to direct services under telehealth 
                            program for medicare beneficiaries 
                            participating in certain demonstration 
                            projects.
Sec. 224. Provision for part B add-ons for facilities participating in 
                            the NHCMQ demonstration project.
Sec. 225. Study on effect of credentialing of technologists and 
                            sonographers on quality of ultrasound and 
                            imaging services.
Sec. 226. MedPAC study on the complexity of the medicare program and 
                            the levels of burdens placed on providers 
                            through Federal regulations.
Sec. 227. Elimination of time limitation on medicare benefits for 
                            immunosuppressive drugs.
            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 301. Report on costs of compliance with OASIS data collection 
                            requirements.
Sec. 302. Limitation of OASIS data collection requirements to medicare 
                            and medicaid patients.
Sec. 303. Phase-in and partial elimination of the 15 percent reduction 
                            in payments under the PPS for home health 
                            services.
Sec. 304. Refinement of home health agency consolidated billing for 
                            durable medical equipment.
Sec. 305. Use of payments under PPS for home health services for costs 
                            associated with the use of 
                            telecommunications systems.
                           Subtitle B--Other

Sec. 311. Permitting reclassification of certain urban hospitals as 
                            rural hospitals.
Sec. 312. MedPAC study on medicare payment for non-physician health 
                            professional clinical training in 
                            hospitals.
    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. Continued computation and publication of AAPCC data.
Sec. 503. Changes in Medicare+Choice and medigap enrollment rules.
Sec. 504. Allowing variation in premium waivers within a service area 
                            if Medicare+Choice payment rates vary 
                            within the area.
Sec. 505. Delay in deadline for submission of adjusted community rates 
                            and related information.
Sec. 506. Deeming of Medicare+Choice organization to meet requirements.
Sec. 507. Reduction in adjustment in national per capita 
                            Medicare+Choice growth percentage for 2001 
                            and 2002.
Sec. 508. 3 year extension of medicare cost contracts.
Sec. 509. Reducing to 2 years the re-entry period after contract 
                            termination.
Sec. 510. MedPAC studies relating to risk adjustment.
Sec. 511. MedPAC report on medicare MSA (medical savings account) 
                            plans.
Sec. 512. Miscellaneous changes.
               Subtitle B--Other Managed Care Provisions

Sec. 521. Medicare competitive pricing demonstration project.
Sec. 512. Inapplicability of OASIS to PACE.
                           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 II--PROVISIONS RELATING TO PART B

               Subtitle A--Payment for Physician Services

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 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) 1-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) Use.--The Secretary of Health and Human Services shall use, to 
the maximum extent practicable and 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).
    (b) Report.--The Secretary shall submit to Congress, in connection 
with the publication of the update under section 1848(c) of such Act 
for 2001, a report on the extent to which the Secretary has used data 
described in subsection (a) in making adjustments in relative values to 
be applied under such section in 2001 and the reasons (if any) why the 
Secretary has not used such data, 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. STUDY AND REPORT TO CONGRESS ON RESOURCES REQUIRED TO PROVIDE 
              SAFE AND EFFECTIVE OUTPATIENT CANCER THERAPY.

    (a) Study.--The Administrator of the Health Care Financing 
Administration 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 Secretary shall--
            (1) shall determine the adequacy of practice expenses 
        associated with the utilization of those clinical resources;
            (2) shall 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 Administrator, after consultation with 
the Medicare Payment Advisory Commission, shall submit to Congress a 
report on the study conducted under subsection (a). The report shall 
include recommendations for 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.

SEC. 204. LIMITATION ON APPLICATION OF PRACTICE EXPENSE SITE-OF-SERVICE 
              DIFFERENTIAL; REVERSION TO 1997 PRACTICE EXPENSE RVU'S 
              FOR CERTAIN SERVICES.

    (a) In General.--Section 1848(c)(2)(C) (42 U.S.C. 1395w-4(c)(2)(C)) 
is amended by adding at the end the following new clauses:
                            ``(iv) Limitation on application of 
                        practice expense site-of-service 
                        differential.--No site-of-service differential 
                        shall be applied to relative value units for 
                        services which are provided 10 percent or less 
                        in an office setting.
                            ``(v) Reversion to 1997 relative value 
                        units.--The schedule established under this 
                        section shall, as of January 1, 2001, revert to 
                        reflect only one professional fee for each CPT-
                        coded service which is provided 10 percent or 
                        less in an office setting. The Secretary shall 
                        utilize the practice expense relative value 
                        units for those services that were published on 
                        November 22, 1996, and implemented beginning on 
                        January 1, 1997.''.
    (b) Effective Date.--The amendment made by subsection (a) is 
effective for services furnished on or after January 1, 2001.

                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, if payment for the drug or 
                        biological 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: ``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 2 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.''.
    (h) 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.''.
    (i) 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)''.
    (j) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of BBA.

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.--For covered OPD services 
                furnished before January 1, 2002, for which the PPS 
                amount (as defined in subparagraph (D)(i)) is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount (as defined 
                        in subparagraph (D)(ii)), 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.--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.--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) Definitions.--For purposes of this 
                subparagraph:
                            ``(i) PPS amount.--The term `PPS amount' 
                        means, with respect to a covered OPD service, 
                        the amount of payment under this title for such 
                        service (determined without regard to this 
                        paragraph).
                            ``(ii) Pre-bba amount.--The term `pre-BBA 
                        amount' means, with respect to a covered OPD 
                        service, the amount that would have been paid 
                        under this title for such service if this 
                        subsection did not apply.
                    ``(E) Construction.--Nothing in this paragraph 
                shall be construed to affect the copayment amount under 
                paragraph (5).''.
    (b) Effective Date.--The amendments made by subsection shall be 
effective as if included in the enactment of BBA.
    (c) Report on Rural and Cancer 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 that the Secretary determines 
        appropriate.
            (6) Hospitals described in section 1886(d)(1)(B)(v) of such 
        Act (42 U.S.C. 1395ww(d)(1)(B)(v)).

SEC. 213. HOLD-HARMLESS FOR CANCER HOSPITALS AND SMALL RURAL HOSPITALS.

    (a) In General.--Section 1833(t)(10), as so redesignated by section 
201(a)(1), is amended--
            (1) by striking `` described in section 1886(d)(1)(B)(v)'' 
        in the matter before subparagraph (A);
            (2) in subparagraphs (A) and (B), by inserting ``described 
        in section 1886(d)(1)(B)(v)'' after ``(A)'' and ``(B)'', 
        respectively;
            (3) by striking ``and'' at the end of subparagraph (A);
            (4) by striking the period at the end of subparagraph (B) 
        and inserting ``; and''; and
            (5) by adding at the end the following new subparagraph:
                    ``(C) notwithstanding paragraph (1), hospitals 
                described in section 1886(d)(1)(B)(v) and hospitals 
                located in a rural area with less than 100 beds, the 
                amount of payment under the system under this 
                subsection for covered OPD services furnished before 
                January 1, 2005, may not be less than the amount of 
                payment under this part for such services that would 
                have been payable under this part under the law as in 
                effect immediately before the implementation of this 
subsection (but applying for purposes of such law, the copayment amount 
otherwise applicable under paragraph (7)).''.
    (b) Effective Date.--The amendments made by subsection (a) are 
effective as if included in the enactment of the BBA.

SEC. 214. ANNUAL REVIEW PROCESS FOR DEVELOPMENT OF HOPD PPS.

    (a) In General.--Section 1833(t)(8)(A) (42 U.S.C. 1395l(t)(8)(A)), 
as redesignated by section 211(a)(1), is amended--
            (1) by striking ``may periodically review'' and inserting 
        ``shall review not less often than annually''; and
            (2) by adding at the end the following: ``The Secretary 
        shall accept and use, to the maximum extent practicable and 
        consistent with sound data practice, data (particularly 
        including data relating to drugs, devices, and biologicals) 
        collected or developed by entities and organizations (other 
        than the Department of Health and Human Services) to supplement 
        the data collected by the Secretary in such review and 
        revisions and shall collect new data with respect to new 
        technologies. The Secretary shall consult with an expert 
        outside panel composed of an appropriate selection of 
        representatives of providers to review revisions proposed to be 
        made by the Secretary.''.
    (b) Effective Dates.--The Secretary of Health and Human Services 
shall first conduct the annual review under the amendment made by 
subsection (a)(1) in 2001 for application in 2002 and the amendment 
made by subsection (a)(2) takes effect on the date of the enactment of 
this Act.

                           Subtitle C--Other

SEC. 221. 2-YEAR MORATORIUM ON THERAPY CAPS.

    (a) Moratorium.--
            (1) In general.--Section 1833(g) (42 U.S.C. 1395l(g)) is 
        amended--
                    (A) in paragraphs (1) and (3), by striking ``In the 
                case'' each place it appears and inserting ``Subject to 
                paragraph (4), in the case''; and
                    (B) by adding at the end the following:
    ``(4) This subsection shall not apply to expenses incurred in 2000 
and 2001.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to expenses incurred on or after January 1, 2000.
    (b) Revision of Report.--
            (1) In general.--Section 4541(d)(2) of the Balanced Budget 
        Act of 1997 (42 U.S.C. 1395l note) is amended to read as 
        follows:
            ``(2) Report.--By not later than January 1, 2001, the 
        Secretary of Health and Human Services shall submit to Congress 
        a report that includes recommendations on--
                    ``(A) the establishment of a mechanism for assuring 
                appropriate utilization of outpatient physical therapy 
                services, outpatient occupational therapy services, and 
                speech-language pathology services that are covered 
                under the medicare program under title XVIII of the 
                Social Security Act (42 U.S.C. 1395); and
                    ``(B) the establishment of an alternative payment 
                policy for such services based on classification of 
                individuals by diagnostic category, functional status, 
                prior use of services (in both inpatient and outpatient 
                settings), and such other criteria as the Secretary 
                determines appropriate, in place of the uniform dollar 
                limitations specified in section 1833(g) of such Act, 
                as amended by paragraph (1).
        The recommendations shall include how such a mechanism or 
        policy might be implemented in a budget-neutral manner.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect as if included in the enactment of section 
        4541 of the Balanced Budget Act of 1997 (Public Law 105-33; 111 
        Stat. 454).
    (c) Study and Report on Utilization.--
            (1) Study.--
                    (A) In general.--The Secretary of Health and Human 
                Services shall conduct a study which compares--
                            (i) utilization patterns (including 
                        nationwide patterns, and patterns by region, 
                        types of settings, and diagnosis or condition) 
                        of outpatient physical therapy services, 
                        outpatient occupational therapy services, and 
                        speech-language pathology services that are 
                        covered under the medicare program under title 
                        XVIII of the Social Security Act (42 U.S.C. 
                        1395) and provided on or after January 1, 2000; 
                        with
                            (ii) such patterns for such services that 
                        were provided in 1998 and 1999.
                    (B) Review of claims.--In conducting the study 
                under this subsection the Secretary of Health and Human 
                Services shall review a statistically significant 
                number of claims for reimbursement for the services 
                described in subparagraph (A).
            (2) Report.--Not later than March 31, 2001, the Secretary 
        of Health and Human Services shall submit a report to Congress 
        on the study conducted under paragraph (1), together with any 
        recommendations for legislation that the Secretary determines 
        to be appropriate as a result of such study.

SEC. 222. 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 consistent with the following principles:
            (1) Phase-in.--The system shall provide that, in the first 
        year (or similar period) 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 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.
            (2) Budget neutrality.--The system shall be designed so 
        that aggregate payments under such part for such services after 
        the system is implemented shall approximate the aggregate 
        payments that would have been made under such part for such 
        services if the system had not been implemented.

SEC. 223. EXPANDING COVERAGE TO DIRECT SERVICES UNDER TELEHEALTH 
              PROGRAM FOR MEDICARE BENEFICIARIES PARTICIPATING IN 
              CERTAIN DEMONSTRATION PROJECTS.

    Section 4206 of BBA (42 U.S.C. 1395l note) is amended by adding at 
the end the following new subsection:
    ``(e) Expanding Coverage to Direct Services for Medicare 
Beneficiaries Participating in Certain Demonstration Projects.--
            ``(1) In general.--Not later than January 1, 2000, the 
        Secretary shall make payments from the Federal Supplementary 
        Medical Insurance Trust Fund under part B of such title in 
        accordance with a payment methodology specified by the 
        Secretary for direct professional services furnished before 
        January 1, 2005, by a physician or practitioner described in 
        subsection (a) via telecommunications systems if--
                    ``(A) payment may be made under such part if the 
                service were provided in person, and
                    ``(B) the beneficiary is participating in a 
                demonstration project receiving funds from the Health 
                Care Financing Administration or the Health Resources 
                and Services Administration.
        Such services shall include the broadest possible range of 
        billing codes as determined appropriate by the Secretary.
            ``(2) Study.--The Secretary shall conduct a study of the 
        effectiveness of the use of telemedicine services in delivering 
        health care to beneficiaries. The study also shall examine the 
        desirability of permitting billing for direct services across 
        all settings. Not later than 3 years after the date of the 
        enactment of this subsection, the Secretary shall submit to 
        Congress a report on such study.''.

SEC. 224. 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 nonsettled 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)''.
            (2) in 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. 225. STUDY ON EFFECT OF CREDENTIALING OF TECHNOLOGISTS AND 
              SONOGRAPHERS ON QUALITY OF ULTRASOUND AND IMAGING 
              SERVICES.

    (a) 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.
    (b) Report.--By not later than two years after the date of the 
enactment of this Act, the Administrator shall submit a report to 
Congress on the study conducted under subsection (a).

SEC. 226. MEDPAC STUDY ON THE COMPLEXITY OF THE MEDICARE PROGRAM AND 
              THE LEVELS OF BURDENS PLACED ON PROVIDERS THROUGH FEDERAL 
              REGULATIONS.

    (a) 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.
    (b) Report.--Not later than December 31, 2001, the Commission shall 
submit to Congress a report on the study conducted under subsection 
(a). The report shall include recommendations regarding--
            (1) how the Health Care Financing Administration can reduce 
        the regulatory burdens placed on patients and providers; and
            (2) 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.

SEC. 227. ELIMINATION OF TIME LIMITATION ON MEDICARE BENEFITS FOR 
              IMMUNOSUPPRESSIVE DRUGS.

    (a) In General.--Section 1861(s)(2)(J) of the Social Security Act 
(42 U.S.C. 1395x(s)(2)(J)) is amended by striking ``, but only'' and 
all that follows up to the semicolon at the end.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to drugs furnished on or after October 1, 2000.

            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

SEC. 301. REPORT ON COSTS OF COMPLIANCE WITH OASIS DATA COLLECTION 
              REQUIREMENTS.

    (a) Report to Congress.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary of Health and Human 
        Services shall submit to Congress and the Comptroller General 
        of the United States a report on matters described in paragraph 
        (2) 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.
            (2) Matters studied.--For purposes of paragraph (1), the 
        matters described in this paragraph include the following:
                    (A) An assessment of the costs incurred by medicare 
                home health agencies in complying with such data 
                collection requirement.
                    (B) An analysis of the effect of such data 
                collection requirement on the privacy interests of 
                patients from whom data is collected.
            (3) GAO audit.--The Comptroller General of the United 
        States shall conduct an independent audit of the costs 
        described in paragraph (2)(A). Not later than 180 days after 
        receipt of the report under paragraph (1), 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 paragraph (1).
    (b) Definitions.--In this section:
            (1) 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).
            (2) 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. LIMITATION OF OASIS DATA COLLECTION REQUIREMENTS TO MEDICARE 
              AND MEDICAID PATIENTS.

    Effective as if included in the enactment of the Balanced Budget 
Act of 1997 (Public Law 105-33), section 4602(e) of such Act (42 U.S.C. 
1395fff note) is amended by adding at the end the following new 
sentence: ``Notwithstanding any provision of section 1891 of the Social 
Security Act (42 U.S.C. 1395bbb) to the contrary, the Secretary may 
only require the submission of additional information under this 
subsection with respect to individuals who are entitled to benefits 
under parts A, B, or C of title XVIII of such Act, or an individual 
eligible for medical assistance under the State plan under title XIX of 
such Act.''.

SEC. 303. PHASE-IN AND PARTIAL ELIMINATION OF THE 15 PERCENT REDUCTION 
              IN PAYMENTS UNDER THE PPS FOR HOME HEALTH SERVICES.

    Section 1895(b)(3)(A) (42 U.S.C. 1395fff(b)(3)(A)) (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--
            (1) in clause (i)--
                    (A) by striking the period at the end of the first 
                sentence and the second sentence and inserting the 
                following: ``as follows:
                                    ``(I) 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 for 
                                fiscal year 2001 shall be equal to the 
                                total amount that would have been made 
                                if the system had not been in effect, 
                                but if the reduction in limits 
                                described in clause (ii) (applied 
by substituting `5' for `12.5') had been in effect.
                                    ``(II) For fiscal year 2002, such 
                                amount (or amounts) shall be equal to 
                                the amount (or amounts) that would have 
                                been determined under subclause (I) if 
                                the reduction in limits described in 
                                clause (ii) (applied by substituting 
                                `10' for `12.5') had been in effect for 
                                fiscal year 2001, and updated under 
                                subparagraph (B) for fiscal year 2002.
                                    ``(II) For fiscal year 2003, such 
                                amount (or amounts) shall be equal to 
                                the amount (or amounts) that would have 
                                been determined under subclause (I) if 
                                the reduction in limits described in 
                                clause (ii) had been in effect for 
                                fiscal year 2001, and updated under 
                                subparagraph (B) for fiscal years 2002 
                                and 2003.''; and
                    (B) by striking ``Such amount'' in the third 
                sentence and inserting ``Each such amount''; and
            (2) in clause (ii), by striking ``15 percent'' and 
        inserting ``12.5 percent''.

SEC. 304. REFINEMENT OF HOME HEALTH AGENCY CONSOLIDATED BILLING FOR 
              DURABLE MEDICAL EQUIPMENT.

    (a) In General.--Section 1842(a)(6)(F) (42 U.S.C. 1395u(a)(6)(F)), 
as amended by section 4603(c)(2)(B) of BBA, is amended by inserting 
``(including medical supplies but excluding durable medical equipment 
to the extent provided for in section 1861(m)(5))'' after ``home health 
services''.
    (b) Conforming Amendment.--Section 1862(a)(21) (42 U.S.C. 
1395y(a)(21)) is amended by inserting ``(including medical supplies but 
excluding durable medical equipment to the extent provided for in 
section 1861(m)(5))'' after ``home health services''.
    (c) Effective Date.--The amendments made by this section apply to 
services furnished on or after the date of the enactment of this Act.

SEC. 305. USE OF PAYMENTS UNDER PPS FOR HOME HEALTH SERVICES FOR COSTS 
              ASSOCIATED WITH THE USE OF TELECOMMUNICATIONS SYSTEMS.

    (a) In General.--Section 1895(b) (42 U.S.C. 1395fff(b)) (as added 
by section 4603(a) of the Balanced Budget Act of 1997 and 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 by adding 
at the end the following new paragraph:
            ``(7) Use of telecommunications systems.--A home health 
        agency receiving payment under the system under this subsection 
        shall be permitted by the Secretary to use such payments to 
        cover the cost of services, training, and supervision when they 
        are provided to beneficiaries under this title in that 
        beneficiary's place of residence via telecommunication systems. 
        The payment available to the agency under such system shall be 
        the same as it would be if the telecommunications systems were 
        not used. Such telecommunications systems may not be 
        substituted for services required to establish or maintain 
        eligibility for home health services under section 
        1814(a)(2)(C) or 1835(a)(2)(A).''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to items and services furnished on or after the date of 
the enactment of this Act.

                           Subtitle B--Other

SEC. 311. 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 and 
                section 1833(t), 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 FR 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 
                        sole community hospital under paragraph (5)(D) 
                        or as a rural or regional or national referral 
                        center under paragraph (5)(C) if the hospital 
                        were located in a rural area.
                            ``(iv) The hospital meets such other 
                        criteria as the Secretary may specify.''.
    (b) Conforming Change.--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. 312. 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 graduate 
clinical training of different classes of non-physician health care 
professionals (such as nurses, 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 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.--Subject to clause 
                        (iii)(II), such risk adjustment methodology 
                        shall be implemented in a phased-in manner so 
                        that the new methodology applies only to--
                                    ``(I) 10 percent of the payment 
                                amount in 2000, 2001, 2002, and 2003;
                                    ``(II) 50 percent of such amount in 
                                2004;
                                    ``(III) 75 percent of such amount 
                                in 2005; and
                                    ``(IV) 100 percent of such amount 
                                in any subsequent year.
                            ``(iii) Requirement and contingency.--
                                    ``(I) Requirement.--The Secretary 
                                shall provide for the application of 
                                data from multiple settings (including 
                                hospital outpatient settings) in 
                                applying the risk methodology in years 
                                beginning with 2004.
                                    ``(II) Contingency.--The percent 
                                applied under clause (ii) shall not 
                                exceed 10 percent in a year after 2003 
                                unless the Secretary is using data from 
                                multiple settings (including hospital 
                                outpatient settings) in applying the 
                                risk methodology in that year.''.

SEC. 502. 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. 503. CHANGES IN MEDICARE+CHOICE AND MEDIGAP ENROLLMENT RULES.

    (a) Permitting Enrollment in Alternative Medicare+Choice Plans in 
Case of Involuntary Termination of Medicare+Choice Enrollment.--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 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 
                of an impending termination or discontinuation of such 
                plan;''.
    (b) Conforming Medigap Amendment.--Section 1882(s)(3)(A) (42 U.S.C. 
1395ss(s)(3)(A)) is amended, in the matter following clause (iii)--
            (1) by inserting ``(or, if elected by the individual, the 
        date of notification of the individual or the Secretary by the 
        plan or organization of the impending termination or 
        discontinuance of the plan in the area in which the individual 
        resides)'' after ``the date of the termination of enrollment 
described in such subparagraph''; and
            (2) by inserting ``(or the date of such notification)'' 
        after ``the date of termination or disenrollment''.

SEC. 504. 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. 505. 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''.

SEC. 506. 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 90 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. 507. REDUCTION IN ADJUSTMENT IN NATIONAL PER CAPITA 
              MEDICARE+CHOICE GROWTH PERCENTAGE FOR 2001 AND 2002.

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

SEC. 508. 3 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 ``2005''.

SEC. 509. REDUCING TO 2 YEARS THE RE-ENTRY PERIOD AFTER CONTRACT 
              TERMINATION.

    (a) In General.--Section 1857(c)(4) (42 U.S.C. 1395w-27(c)(4)) is 
amended by striking ``5-year period'' and inserting ``2-year period''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to contract terminations occurring before, on, or after the date of the 
enactment of this Act.

SEC. 510. MEDPAC STUDIES RELATING TO RISK ADJUSTMENT.

    (a) Study.--The Medicare Payment Advisory Commission established 
under section 1805 of the Social Security Act (42 U.S.C. 1395b-6) (in 
this section referred to as ``MedPAC'') shall conduct a study on the 
adequacy and accuracy of health-based risk adjustment methodologies 
being developed and used by the Health Care Financing Administration in 
the Medicare+Choice program.
    (b) Report.--The Commission shall submit to Congress by March 1, 
2001, a report on the study under subsection (a) and shall include 
recommendations regarding alternative risk adjustment methodologies 
that are less onerous.

SEC. 511. 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. 512. MISCELLANEOUS CHANGES.

    (a) Permitting Religious Fraternal Benefit Societies to Offer a 
Range of Medicare+Choice Plans.--Section 1859(e)(2)(A) (42 U.S.C. 
1395w-29(e)(2)(A)) is amended by striking ``section 1851(a)(2)(A)'' and 
inserting ``section 1851(a)(2)''.

               Subtitle B--Other Managed Care Provisions

SEC. 521. 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. 522. INAPPLICABILITY OF OASIS TO PACE.

    Sections 1894(e)(3) and 1934(e)(3) (42 U.S.C. 1395eee(e)(3); 1396u-
4(e)(3)) are each amended by adding at the end the following:
                    ``(C) Inapplicability of oasis to pace.--
                Notwithstanding the previous provisions of this 
                paragraph, with respect to any home health service 
                provided under a PACE program under this section, the 
                Secretary shall not apply the data collection and 
                reporting requirements under the Outcome and Assessment 
                Information Set (OASIS) to such program or to any 
                enrollee of such program, regardless of whether such 
                service is provided by a PACE program directly or 
                through a contract with a home health agency.''.

                           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.
                                 <all>