[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3426 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 3426

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 17, 1999

  Mr. Thomas introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Commerce, 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 make 
   corrections and refinements in the Medicare, Medicaid, and State 
children's health insurance programs, as revised by the Balanced Budget 
                              Act of 1997.

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

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

    (a) Short Title.--This Act may be cited as the ``Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act 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 the Balanced Budget Act of 1997.--In this Act, 
the term ``BBA'' means the Balanced Budget Act of 1997 (Public Law 105-
33).
    (d) Table of Contents.--The table of contents of this Act is as 
follows:

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

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

Sec. 101. Temporary increase in payment for certain high cost patients.
Sec. 102. Authorizing facilities to elect immediate transition to 
                            Federal rate.
Sec. 103. Part A pass-through payment for certain ambulance services, 
                            prostheses, and chemotherapy drugs.
Sec. 104. Provision for part B add-ons for facilities participating in 
                            the NHCMQ demonstration project.
Sec. 105. Special consideration for facilities serving specialized 
                            patient populations.
Sec. 106. MedPAC study on special payment for facilities located in 
                            Hawaii and Alaska.
Sec. 107. Study and report regarding State licensure and certification 
                            standards and respiratory therapy 
                            competency examinations.
                       Subtitle B--PPS Hospitals

Sec. 111. Modification in transition for indirect medical education 
                            (IME) percentage adjustment.
Sec. 112. Decrease in reductions for disproportionate share hospitals; 
                            data collection requirements.
                    Subtitle C--PPS-Exempt Hospitals

Sec. 121. Wage adjustment of percentile cap for PPS-exempt hospitals.
Sec. 122. Enhanced payments for long-term care and psychiatric 
                            hospitals until development of prospective 
                            payment systems for those hospitals.
Sec. 123. Per discharge prospective payment system for long-term care 
                            hospitals.
Sec. 124. Per diem prospective payment system for psychiatric 
                            hospitals.
Sec. 125. Refinement of prospective payment system for inpatient 
                            rehabilitation services.
                        Subtitle D--Hospice Care

Sec. 131. Temporary increase in payment for hospice care.
Sec. 132. Study and report to Congress regarding modification of the 
                            payment rates for hospice care.
                      Subtitle E--Other Provisions

Sec. 141. MedPAC study on medicare payment for nonphysician health 
                            professional clinical training in 
                            hospitals.
                  Subtitle F--Transitional Provisions

Sec. 151. Exception to CMI qualifier for one year.
Sec. 152. Reclassification of certain counties and other areas for 
                            purposes of reimbursement under the 
                            medicare program.
Sec. 153. Wage index correction.
Sec. 154. Calculation and application of wage index floor for a certain 
                            area.
Sec. 155. Special rule for certain skilled nursing facilities.
                TITLE II--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

Sec. 201. Outlier adjustment and transitional pass-through for certain 
                            medical devices, drugs, and biologicals.
Sec. 202. Establishing a transitional corridor for application of OPD 
                            PPS.
Sec. 203. Study and report to Congress regarding the special treatment 
                            of rural and cancer hospitals in 
                            prospective payment system for hospital 
                            outpatient department services.
Sec. 204. Limitation on outpatient hospital copayment for a procedure 
                            to the hospital deductible amount.
                     Subtitle B--Physician Services

Sec. 211. Modification of update adjustment factor provisions to reduce 
                            update oscillations and require estimate 
                            revisions.
Sec. 212. Use of data collected by organizations and entities in 
                            determining practice expense relative 
                            values.
Sec. 213. GAO study on resources required to provide safe and effective 
                            outpatient cancer therapy.
                       Subtitle C--Other Services

Sec. 221. Revision of provisions relating to therapy services.
Sec. 222. Update in renal dialysis composite rate.
Sec. 223. Implementation of the inherent reasonableness (IR) authority.
Sec. 224. Increase in reimbursement for pap smears.
Sec. 225. Refinement of ambulance services demonstration project.
Sec. 226. Phase-in of PPS for ambulatory surgical centers.
Sec. 227. Extension of medicare benefits for immunosuppressive drugs.
Sec. 228. Temporary increase in payment rates for durable medical 
                            equipment and oxygen.
Sec. 229. Studies and reports.
            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 301. Adjustment to reflect administrative costs not included in 
                            the interim payment system; GAO report on 
                            costs of compliance with OASIS data 
                            collection requirements.
Sec. 302. Delay in application of 15 percent reduction in payment rates 
                            for home health services until one year 
                            after implementation of prospective payment 
                            system.
Sec. 303. Increase in per beneficiary limits.
Sec. 304. Clarification of surety bond requirements.
Sec. 305. Refinement of home health agency consolidated billing.
Sec. 306. Technical amendment clarifying applicable market basket 
                            increase for PPS.
Sec. 307. Study and report to Congress regarding the exemption of rural 
                            agencies and populations from inclusion in 
                            the home health prospective payment system.
             Subtitle B--Direct Graduate Medical Education

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

Sec. 321. BBA technical corrections.
                  TITLE IV--RURAL PROVIDER PROVISIONS

                      Subtitle A--Rural Hospitals

Sec. 401. Permitting reclassification of certain urban hospitals as 
                            rural hospitals.
Sec. 402. Update of standards applied for geographic reclassification 
                            for certain hospitals.
Sec. 403. Improvements in the critical access hospital (CAH) program.
Sec. 404. 5-year extension of medicare dependent hospital (MDH) 
                            program.
Sec. 405. Rebasing for certain sole community hospitals.
Sec. 406. One year sole community hospital payment increase.
Sec. 407. Increased flexibility in providing graduate physician 
                            training in rural and other areas.
Sec. 408. Elimination of certain restrictions with respect to hospital 
                            swing bed program.
Sec. 409. Grant program for rural hospital transition to prospective 
                            payment.
Sec. 410. GAO study on geographic reclassification.
                   Subtitle B--Other Rural Provisions

Sec. 411. MedPAC study of rural providers.
Sec. 412. Expansion of access to paramedic intercept services in rural 
                            areas.
Sec. 413. Promoting prompt implementation of informatics, telemedicine, 
                            and education demonstration project.
 TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

      Subtitle A--Provisions To Accommodate and Protect Medicare 
                             Beneficiaries

Sec. 501. Changes in Medicare+Choice enrollment rules.
Sec. 502. Change in effective date of elections and changes of 
                            elections of Medicare+Choice plans.
Sec. 503. 2-year extension of medicare cost contracts.
      Subtitle B--Provisions To Facilitate Implementation of the 
                        Medicare+Choice Program

Sec. 511. Phase-in of new risk adjustment methodology; studies and 
                            reports on risk adjustment.
Sec. 512. Encouraging offering of Medicare+Choice plans in areas 
                            without plans.
Sec. 513. Modification of 5-year re-entry rule for contract 
                            terminations.
Sec. 514. Continued computation and publication of medicare original 
                            fee-for-service expenditures on a county-
                            specific basis.
Sec. 515. Flexibility to tailor benefits under Medicare+Choice plans.
Sec. 516. Delay in deadline for submission of adjusted community rates.
Sec. 517. Reduction in adjustment in national per capita 
                            Medicare+Choice growth percentage for 2002.
Sec. 518. Deeming of Medicare+Choice organization to meet requirements.
Sec. 519. Timing of Medicare+Choice health information fairs.
Sec. 520. Quality assurance requirements for preferred provider 
                            organization plans.
Sec. 521. Clarification of nonapplicability of certain provisions of 
                            discharge planning process to 
                            Medicare+Choice plans.
Sec. 522. User fee for Medicare+Choice organizations based on number of 
                            enrolled beneficiaries.
Sec. 523. Clarification regarding the ability of a religious fraternal 
                            benefit society to operate any 
                            Medicare+Choice plan.
Sec. 524. Rules regarding physician referrals for Medicare+Choice 
                            program.
  Subtitle C--Demonstration Projects and Special Medicare Populations

Sec. 531. Extension of social health maintenance organization 
                            demonstration (SHMO) project authority.
Sec. 532. Extension of medicare community nursing organization 
                            demonstration project.
Sec. 533. Medicare+Choice competitive bidding demonstration project.
Sec. 534. Extension of medicare municipal health services demonstration 
                            projects.
Sec. 535. Medicare coordinated care demonstration project.
Sec. 536. Medigap protections for PACE program enrollees.
  Subtitle D--Medicare+Choice Nursing and Allied Health Professional 
                           Education Payments

Sec. 541. Medicare+Choice nursing and allied health professional 
                            education payments.
                    Subtitle E--Studies and Reports

Sec. 551. Report on accounting for VA and DOD expenditures for medicare 
                            beneficiaries.
Sec. 552. Medicare Payment Advisory Commission studies and reports.
Sec. 553. GAO studies, audits, and reports.
                           TITLE VI--MEDICAID

Sec. 601. Increase in DSH allotment for certain States and the District 
                            of Columbia.
Sec. 602. Removal of fiscal year limitation on certain transitional 
                            administrative costs assistance.
Sec. 603. Modification of the phase-out of payment for Federally-
                            qualified health center services and rural 
                            health clinic services based on reasonable 
                            costs.
Sec. 604. Parity in reimbursement for certain utilization and quality 
                            control services; elimination of 
                            duplicative requirements for external 
                            quality review of medicaid managed care 
                            organizations.
Sec. 605. Inapplicability of enhanced match under the State children's 
                            health insurance program to medicaid DSH 
                            payments.
Sec. 606. Optional deferment of the effective date for outpatient drug 
                            agreements.
Sec. 607. Making medicaid DSH transition rule permanent.
Sec. 608. Medicaid technical corrections.
      TITLE VII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP)

Sec. 701. Stabilizing the State children's health insurance program 
                            allotment formula.
Sec. 702. Increased allotments for territories under the State 
                            children's health insurance program.
Sec. 703. Improved data collection and evaluations of the State 
                            children's health insurance program.
Sec. 704. References to SCHIP and State children's health insurance 
                            program.
Sec. 705. SCHIP technical corrections.

                 TITLE I--PROVISIONS RELATING TO PART A

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

SEC. 101. TEMPORARY INCREASE IN PAYMENT FOR CERTAIN HIGH COST PATIENTS.

    (a) Adjustment for Medically Complex Patients Until Establishment 
of Refined Case-Mix Adjustment.--For purposes of computing payments for 
covered skilled nursing facility services under paragraph (1) of 
section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)) for 
such services furnished on or after April 1, 2000, and before the date 
described in subsection (c), the Secretary of Health and Human Services 
shall increase by 20 percent the adjusted Federal per diem rate 
otherwise determined under paragraph (4) of such section (but for this 
section) for covered skilled nursing facility services for RUG-III 
groups described in subsection (b) furnished to an individual during 
the period in which such individual is classified in such a RUG-III 
category.
    (b) Groups Described.--The RUG-III groups for which the adjustment 
described in subsection (a) applies are SE3, SE2, SE1, SSC, SSB, SSA, 
CC2, CC1, CB2, CB1, CA2, CA1, RHC, RMC, and RMB as specified in Tables 
3 and 4 of the final rule published in the Federal Register by the 
Health Care Financing Administration on July 30, 1999 (64 Fed. Reg. 
41684).
    (c) Date Described.--For purposes of subsection (a), the date 
described in this subsection is the later of--
            (1) October 1, 2000; or
            (2) the date on which the Secretary implements a refined 
        case mix classification system under section 1888(e)(4)(G)(i) 
        of the Social Security Act (42 U.S.C. 1395yy(e)(4)(G)(i)) to 
        better account for medically complex patients.
    (d) Increase for Fiscal Years 2001 and 2002.--
            (1) In general.--For purposes of computing payments for 
        covered skilled nursing facility services under paragraph (1) 
        of section 1888(e) of the Social Security Act (42 U.S.C. 
        1395yy(e)) for covered skilled nursing facility services 
        furnished during fiscal years 2001 and 2002, the Secretary of 
        Health and Human Services shall increase by 4.0 percent for 
        each such fiscal year the adjusted Federal per diem rate 
        otherwise determined under paragraph (4) of such section (but 
        for this section).
            (2) Additional payment not built into the base.--The 
        Secretary of Health and Human Services shall not include any 
        additional payment made under this subsection in updating the 
        Federal per diem rate under section 1888(e)(4) of that Act (42 
        U.S.C. 1395yy(e)(4)).

SEC. 102. AUTHORIZING FACILITIES TO ELECT IMMEDIATE TRANSITION TO 
              FEDERAL RATE.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)) is amended--
            (1) in paragraph (1), in the matter preceding subparagraph 
        (A), by striking ``paragraph (7)'' and inserting ``paragraphs 
        (7) and (11)''; and
            (2) by adding at the end the following new paragraph:
            ``(11) Permitting facilities to waive 3-year transition.--
        Notwithstanding paragraph (1)(A), a facility may elect to have 
        the amount of the payment for all costs of covered skilled 
        nursing facility services for each day of such services 
        furnished in cost reporting periods beginning no earlier than 
        30 days before the date of such election determined pursuant to 
        paragraph (1)(B).''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to elections made on or after December 15, 1999, except that no 
election shall be effective under such amendments for a cost reporting 
period beginning before January 1, 2000.

SEC. 103. PART A PASS-THROUGH PAYMENT FOR CERTAIN AMBULANCE SERVICES, 
              PROSTHESES, AND CHEMOTHERAPY DRUGS.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)) is amended--
            (1) in paragraph (2)(A)(i)(II), by striking ``services 
        described in clause (ii)'' and inserting ``items and services 
        described in clauses (ii) and (iii)'';
            (2) by adding at the end of paragraph (2)(A) the following 
        new clause:
                            ``(iii) Exclusion of certain additional 
                        items and services.--Items and services 
                        described in this clause are the following:
                                    ``(I) Ambulance services furnished 
                                to an individual in conjunction with 
                                renal dialysis services described in 
                                section 1861(s)(2)(F).
                                    ``(II) Chemotherapy items 
                                (identified as of July 1, 1999, by 
                                HCPCS codes J9000-J9020; J9040-J9151; 
                                J9170-J9185; J9200-J9201; J9206-J9208; 
                                J9211; J9230-J9245; and J9265-J9600 
                                (and as subsequently modified by the 
                                Secretary)) and any additional 
                                chemotherapy items identified by the 
                                Secretary.
                                    ``(III) Chemotherapy administration 
                                services (identified as of July 1, 
                                1999, by HCPCS codes 36260-36262; 
                                36489; 36530-36535; 36640; 36823; and 
                                96405-96542 (and as subsequently 
                                modified by the Secretary)) and any 
                                additional chemotherapy administration 
                                services identified by the Secretary.
                                    ``(IV) Radioisotope services 
                                (identified as of July 1, 1999, by 
                                HCPCS codes 79030-79440 (and as 
                                subsequently modified by the 
                                Secretary)) and any additional 
                                radioisotope services identified by the 
                                Secretary.
                                    ``(V) Customized prosthetic devices 
                                (commonly known as artificial limbs or 
                                components of artificial limbs) under 
                                the following HCPCS codes (as of July 
                                1, 1999 (and as subsequently modified 
                                by the Secretary)), and any additional 
                                customized prosthetic devices 
                                identified by the Secretary, if 
                                delivered to an inpatient for use 
                                during the stay in the skilled nursing 
                                facility and intended to be used by the 
                                individual after discharge from the 
                                facility: L5050-L5340; L5500-L5611; 
                                L5613-L5986; L5988; L6050-L6370; L6400-
                                L6880; L6920-L7274; and L7362-7366.''; 
                                and
            (3) by adding at the end of paragraph (9) the following: 
        ``In the case of an item or service described in clause (iii) 
        of paragraph (2)(A) that would be payable under part A but for 
        the exclusion of such item or service under such clause, 
        payment shall be made for the item or service, in an amount 
        otherwise determined under part B of this title for such item 
        or service, from the Federal Hospital Insurance Trust Fund 
        under section 1817 (rather than from the Federal Supplementary 
        Medical Insurance Trust Fund under section 1841).''.
    (b) Conforming for Budget Neutrality Beginning With Fiscal Year 
2001.--
            (1) In general.--Section 1888(e)(4)(G) (42 U.S.C. 
        1395yy(e)(4)(G)) is amended by adding at the end the following 
        new clause:
                            ``(iii) Adjustment for exclusion of certain 
                        additional items and services.--The Secretary 
                        shall provide for an appropriate proportional 
                        reduction in payments so that beginning with 
                        fiscal year 2001, the aggregate amount of such 
                        reductions is equal to the aggregate increase 
                        in payments attributable to the exclusion 
                        effected under clause (iii) of paragraph 
                        (2)(A).''.
            (2) Conforming amendment.--Section 1888(e)(8)(A) (42 U.S.C. 
        1395yy(e)(8)(A)) is amended by striking ``and adjustments for 
        variations in labor-related costs under paragraph (4)(G)(ii)'' 
        and inserting ``adjustments for variations in labor-related 
        costs under paragraph (4)(G)(ii), and adjustments under 
        paragraph (4)(G)(iii)''.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to payments made for items and services furnished on or after 
April 1, 2000.

SEC. 104. 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)) is 
amended--
            (1) in subparagraph (A)--
                    (A) in clause (i), by inserting ``or, in the case 
                of a facility participating in the Nursing Home Case-
                Mix and Quality Demonstration (RUGS-III), the RUGS-III 
                rate received by the facility during the cost reporting 
                period beginning in 1997'' after ``to non-settled cost 
                reports''; and
                    (B) in clause (ii), by striking ``furnished during 
                such period'' and inserting ``furnished during the 
                applicable cost reporting period described in clause 
                (i)''; and
            (2) by striking subparagraph (B) and inserting the 
        following new subparagraph:
                    ``(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 1.0 
                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. 105. SPECIAL CONSIDERATION FOR FACILITIES SERVING SPECIALIZED 
              PATIENT POPULATIONS.

    (a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as amended 
by section 102(a)(1), is further amended--
            (1) in paragraph (1), by striking ``subject to paragraphs 
        (7) and (11)'' and inserting ``subject to paragraphs (7), (11), 
        and (12)''; and
            (2) by adding at the end the following new paragraph:
            ``(12) Payment rule for certain facilities.--
                    ``(A) In general.--In the case of a qualified acute 
                skilled nursing facility described in subparagraph (B), 
                the per diem amount of payment shall be determined by 
                applying the non-Federal percentage and Federal 
                percentage specified in paragraph (2)(C)(ii).
                    ``(B) Facility described.--For purposes of 
                subparagraph (A), a qualified acute skilled nursing 
                facility is a facility that--
                            ``(i) was certified by the Secretary as a 
                        skilled nursing facility eligible to furnish 
                        services under this title before July 1, 1992;
                            ``(ii) is a hospital-based facility; and
                            ``(iii) for the cost reporting period 
                        beginning in fiscal year 1998, the facility had 
                        more than 60 percent of total patient days 
                        comprised of patients who are described in 
                        subparagraph (C).
                    ``(C) Description of patients.--For purposes of 
                subparagraph (B), a patient described in this 
                subparagraph is an individual who--
                            ``(i) is entitled to benefits under part A; 
                        and
                            ``(ii) is immuno-compromised secondary to 
                        an infectious disease, with specific diagnoses 
                        as specified by the Secretary.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply for the period beginning on the date on which the first cost 
reporting period of the facility begins after the date of the enactment 
of this Act and ending on September 30, 2001, and applies to skilled 
nursing facilities furnishing covered skilled nursing facility services 
on the date of the enactment of this Act for which payment is made 
under title XVIII of the Social Security Act.
    (c) Report to Congress.--Not later than March 1, 2001, the 
Secretary of Health and Human Services shall assess the resource use of 
patients of skilled nursing facilities furnishing services under the 
medicare program who are immuno-compromised secondary to an infectious 
disease, with specific diagnoses as specified by the Secretary (under 
paragraph (12)(C), as added by subsection (a), of section 1888(e) of 
the Social Security Act (42 U.S.C. 1395yy(e))) to determine whether any 
permanent adjustments are needed to the RUGs to take into account the 
resource uses and costs of these patients.

SEC. 106. MEDPAC STUDY ON SPECIAL PAYMENT FOR FACILITIES LOCATED IN 
              HAWAII AND ALASKA.

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

SEC. 107. STUDY AND REPORT REGARDING STATE LICENSURE AND CERTIFICATION 
              STANDARDS AND RESPIRATORY THERAPY COMPETENCY 
              EXAMINATIONS.

    (a) Study.--The Secretary of Health and Human Services shall 
conduct a study that--
            (1) identifies variations in State licensure and 
        certification standards for health care providers (including 
        nursing and allied health professionals) and other individuals 
        providing respiratory therapy in skilled nursing facilities;
            (2) examines State requirements relating to respiratory 
        therapy competency examinations for such providers and 
        individuals; and
            (3) determines whether regular respiratory therapy 
        competency examinations or certifications should be required 
        under the medicare program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) for such providers and 
        individuals.
    (b) Report.--Not later than 18 months after the date of enactment 
of this Act, the Secretary of Health and Human Services shall submit to 
Congress a report on the results of the study conducted under this 
section, together with any recommendations for legislation that the 
Secretary determines to be appropriate as a result of such study.

                       Subtitle B--PPS Hospitals

SEC. 111. MODIFICATION IN TRANSITION FOR INDIRECT MEDICAL EDUCATION 
              (IME) PERCENTAGE ADJUSTMENT.

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended--
            (1) in subclause (IV), by striking ``and'' at the end;
            (2) by redesignating subclause (V) as subclause (VI);
            (3) by inserting after subclause (IV) the following new 
        subclause:
                            ``(V) during fiscal year 2001, `c' is equal 
                        to 1.54; and''; and
            (4) in subclause (VI), as so redesignated, by striking 
        ``2000'' and inserting ``2001''.
    (b) Special Payments To Maintain 6.5 Percent IME Payment for Fiscal 
Year 2000.--
            (1) Additional payment.--In addition to payments made to 
        each subsection (d) hospital (as defined in section 
        1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
        1395ww(d)(1)(B)) under section 1886(d)(5)(B) of such Act (42 
        U.S.C. 1395ww(d)(5)(B))) which receives payment for the direct 
        costs of medical education for discharges occurring in fiscal 
        year 2000, the Secretary of Health and Human Services shall 
        make one or more payments to each such hospital in an amount 
        which, as estimated by the Secretary, is equal in the aggregate 
        to the difference between the amount of payments to the 
        hospital under such section for such discharges and the amount 
        of payments that would have been paid under such section for 
        such discharges if ``c'' in clause (ii)(IV) of such section 
        equalled 1.6 rather than 1.47. Additional payments made under 
        this subsection shall be made applying the same structure as 
        applies to payments made under section 1886(d)(5)(B) of such 
        Act.
            (2) No effect on other payments or determinations.--In 
        making such additional payments, the Secretary shall not change 
        payments, determinations, or budget neutrality adjustments made 
        for such period under section 1886(d) of such Act (42 U.S.C. 
        1395ww(d)).
    (c) Conforming Amendment Relating to Determination of Standardized 
Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is 
amended by inserting ``or any additional payments under such paragraph 
resulting from the application of section 111 of the Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999'' after 
``Balanced Budget Act of 1997''.

SEC. 112. DECREASE IN REDUCTIONS FOR DISPROPORTIONATE SHARE HOSPITALS; 
              DATA COLLECTION REQUIREMENTS.

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

                    Subtitle C--PPS-Exempt Hospitals

SEC. 121. WAGE ADJUSTMENT OF PERCENTILE CAP FOR PPS-EXEMPT HOSPITALS.

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

SEC. 122. ENHANCED PAYMENTS FOR LONG-TERM CARE AND PSYCHIATRIC 
              HOSPITALS UNTIL DEVELOPMENT OF PROSPECTIVE PAYMENT 
              SYSTEMS FOR THOSE HOSPITALS.

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

SEC. 123. PER DISCHARGE PROSPECTIVE PAYMENT SYSTEM FOR LONG-TERM CARE 
              HOSPITALS.

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

SEC. 124. PER DIEM PROSPECTIVE PAYMENT SYSTEM FOR PSYCHIATRIC 
              HOSPITALS.

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

SEC. 125. REFINEMENT OF PROSPECTIVE PAYMENT SYSTEM FOR INPATIENT 
              REHABILITATION SERVICES.

    (a) Use of Discharge as Payment Unit.--
            (1) In general.--Section 1886(j)(1)(D) (42 U.S.C. 
        1395ww(j)(1)(D)) is amended by striking ``, day of inpatient 
        hospital services, or other unit of payment defined by the 
        Secretary''.
            (2) Conforming amendment to classification.--Section 
        1886(j)(2)(A)(i) (42 U.S.C. 1395ww(j)(2)(A)(i)) is amended to 
        read as follows:
                            ``(i) classes of patient discharges of 
                        rehabilitation facilities by functional-related 
                        groups (each in this subsection referred to as 
                        a `case mix group'), based on impairment, age, 
                        comorbidities, and functional capability of the 
                        patient and such other factors as the Secretary 
                        deems appropriate to improve the explanatory 
                        power of functional independence measure-
                        function related groups; and''.
            (3) Construction relating to transfer authority.--Section 
        1886(j)(1) (42 U.S.C. 1395ww(j)(1)) is amended by adding at the 
        end the following new subparagraph:
                    ``(E) Construction relating to transfer 
                authority.--Nothing in this subsection shall be 
                construed as preventing the Secretary from providing 
                for an adjustment to payments to take into account the 
                early transfer of a patient from a rehabilitation 
                facility to another site of care.''.
    (b) Study on Impact of Implementation of Prospective Payment 
System.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study of the impact on utilization and 
        beneficiary access to services of the implementation of the 
        medicare prospective payment system for inpatient hospital 
        services or rehabilitation facilities under section 1886(j) of 
        the Social Security Act (42 U.S.C. 1395ww(j)).
            (2) Report.--Not later than 3 years after the date such 
        system is first implemented, the Secretary shall submit to 
        Congress a report on such study.
    (c) Effective Date.--The amendments made by subsection (a) are 
effective as if included in the enactment of section 4421(a) of BBA.

                        Subtitle D--Hospice Care

SEC. 131. TEMPORARY INCREASE IN PAYMENT FOR HOSPICE CARE.

    (a) Increase for Fiscal Years 2001 and 2002.--For purposes of 
payments under section 1814(i)(1)(C) of the Social Security Act (42 
U.S.C. 1395f(i)(1)(C)) for hospice care furnished during fiscal years 
2001 and 2002, the Secretary of Health and Human Services shall 
increase the payment rate in effect (but for this section) for--
            (1) fiscal year 2001, by 0.5 percent, and
            (2) fiscal year 2002, by 0.75 percent.
    (b) Additional Payment Not Built Into the Base.--The Secretary of 
Health and Human Services shall not include any additional payment made 
under this subsection (a) in updating the payment rate, as increased by 
the applicable market basket percentage increase for the fiscal year 
involved under section 1814(i)(1)(C)(ii) of that Act (42 U.S.C. 
1395f(i)(1)(C)(ii)).

SEC. 132. STUDY AND REPORT TO CONGRESS REGARDING MODIFICATION OF THE 
              PAYMENT RATES FOR HOSPICE CARE.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study to determine the feasibility and advisability of 
updating the payment rates and the cap amount determined with respect 
to a fiscal year under section 1814(i) of the Social Security Act (42 
U.S.C. 1395f(i)) for routine home care and other services included in 
hospice care. Such study shall examine the cost factors used to 
determine such rates and such amount and shall evaluate whether such 
factors should be modified, eliminated, or supplemented with additional 
cost factors.
    (b) Report.--Not later than one year after the date of enactment of 
this Act, the Comptroller General of the United States shall submit to 
Congress a report on the study conducted under subsection (a), together 
with any recommendations for legislation that the Comptroller General 
determines to be appropriate as a result of such study.

                      Subtitle E--Other Provisions

SEC. 141. MEDPAC STUDY ON MEDICARE PAYMENT FOR NONPHYSICIAN HEALTH 
              PROFESSIONAL CLINICAL TRAINING IN HOSPITALS.

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

                  Subtitle F--Transitional Provisions

SEC. 151. EXCEPTION TO CMI QUALIFIER FOR ONE YEAR.

    Notwithstanding any other provision of law, for purposes of fiscal 
year 2000, the Northwest Mississippi Regional Medical Center located in 
Clarksdale, Mississippi shall be deemed to have satisfied the case mix 
index criteria under section 1886(d)(5)(C)(ii) of the Social Security 
Act (42 U.S.C. 1395ww(d)(5)(C)(ii)) for classification as a rural 
referral center.

SEC. 152. RECLASSIFICATION OF CERTAIN COUNTIES AND AREAS FOR PURPOSES 
              OF REIMBURSEMENT UNDER THE MEDICARE PROGRAM.

    (a) Fiscal Year 2000.--Notwithstanding any other provision of law, 
effective for discharges occurring during fiscal year 2000, for 
purposes of making payments under section 1886(d) of the Social 
Security Act (42 U.S.C. 1395ww(d))--
            (1) to hospitals in Iredell County, North Carolina, such 
        county is deemed to be located in the Charlotte-Gastonia-Rock 
        Hill, North Carolina-South Carolina Metropolitan Statistical 
        Area;
            (2) to hospitals in Orange County, New York, the large 
        urban area of New York, New York is deemed to include such 
        county;
            (3) to hospitals in Lake County, Indiana, and to hospitals 
        in Lee County, Illinois, such counties are deemed to be located 
        in the Chicago, Illinois Metropolitan Statistical Area;
            (4) to hospitals in Hamilton-Middletown, Ohio, Hamilton-
        Middletown, Ohio, is deemed to be located in the Cincinnati, 
        Ohio-Kentucky-Indiana Metropolitan Statistical Area;
            (5) to hospitals in Brazoria County, Texas, such county is 
        deemed to be located in the Houston, Texas Metropolitan 
        Statistical Area; and
            (6) to hospitals in Chittenden County, Vermont, such county 
        is deemed to be located in the Boston-Worcester-Lawrence-
        Lowell-Brockton, Massachusetts-New Hampshire Metropolitan 
        Statistical Area.
    (b) Fiscal Year 2001.--Notwithstanding any other provision of law, 
effective for discharges occurring during fiscal year 2001, for 
purposes of making payments under section 1886(d) of the Social 
Security Act (42 U.S.C. 1395ww(d))--
            (1) Iredell County, North Carolina is deemed to be located 
        in the Charlotte-Gastonia-Rock Hill, North Carolina-South 
        Carolina Metropolitan Statistical Area;
            (2) the large urban area of New York, New York is deemed to 
        include Orange County, New York;
            (3) Lake County, Indiana, and Lee County, Illinois, are 
        deemed to be located in the Chicago, Illinois Metropolitan 
        Statistical Area;
            (4) Hamilton-Middletown, Ohio, is deemed to be located in 
        the Cincinnati, Ohio-Kentucky-Indiana Metropolitan Statistical 
        Area;
            (5) Brazoria County, Texas, is deemed to be located in the 
        Houston, Texas Metropolitan Statistical Area; and
            (6) Chittenden County, Vermont is deemed to be located in 
        the Boston-Worcester-Lawrence-Lowell-Brockton, Massachusetts-
        New Hampshire Metropolitan Statistical Area.
For purposes of that section, any reclassification under this 
subsection shall be treated as a decision of the Medicare Geographic 
Classification Review Board under paragraph (10) of that section.

SEC. 153. WAGE INDEX CORRECTION.

    Notwithstanding any other provision of section 1886(d) of the 
Social Security Act (42 U.S.C. 1395ww(d)), the Secretary of Health and 
Human Services shall calculate and apply the Hattiesburg, Mississippi 
Metropolitan Statistical Area wage index under that section for 
discharges occurring during fiscal year 2000 using fiscal year 1996 
wage and hour data for Wesley Medical Center for purposes of payment 
under that section for that fiscal year. Such recalculation shall not 
affect the wage index for any other area.

SEC. 154. CALCULATION AND APPLICATION OF WAGE INDEX FLOOR FOR A CERTAIN 
              AREA.

    (a) Fiscal Year 2000.--Notwithstanding any other provision of 
section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)), for 
discharges occurring during fiscal year 2000, the Secretary of Health 
and Human Services shall calculate and apply the wage index for the 
Allentown-Bethlehem-Easton Metropolitan Statistical Area under that 
section as if the Lehigh Valley Hospital were classified in such area 
for purposes of payment under that section for such fiscal year. Such 
recalculation shall not affect the wage index for any other area.
    (b) Fiscal Year 2001.--Notwithstanding any other provision of 
section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)), in 
calculating and applying the wage indices under that section for 
discharges occurring during fiscal year 2001, Lehigh Valley Hospital 
shall be treated as being classified in the Allentown-Bethlehem-Easton 
Metropolitan Statistical Area.

SEC. 155. SPECIAL RULE FOR CERTAIN SKILLED NURSING FACILITIES.

    (a) In General.--Notwithstanding any provision of section 1888(e) 
of the Social Security Act (42 U.S.C. 1395yy(e)), for the cost 
reporting period beginning in fiscal year 2000 and for the cost 
reporting period beginning in fiscal year 2001, if a skilled nursing 
facility which meets the criteria described in subsection (b) elects to 
be paid in accordance with subsection (c), the Secretary of Health and 
Human Services shall establish a per diem payment amount for such 
facility according to the methodology described in subsection (c) for 
such cost reporting periods in lieu of the payment amount that would 
otherwise be established for such facility under section 1888(e)(1) of 
such Act (42 U.S.C. 1395yy(e)(1)).
    (b) Facility Eligibility Criteria.--For purposes of this 
subsection, a skilled nursing facility is one--
            (1) that began participation in the Medicare program under 
        title XVIII of the Social Security Act before January 1, 1995;
            (2) for which at least 80 percent of the total inpatient 
        days of the facility in the cost reporting period beginning in 
        fiscal year 1998 were comprised of individuals entitled to 
        benefits under such title; and
            (3) that is located in Baldwin or Mobile County, Alabama.
    (c) Determination of Per Diem Amount.--For purposes of subsection 
(a), the per diem payment amount shall be equal to 100 percent of the 
amount determined under section 1888(e)(3) of the Social Security Act 
(42 U.S.C. 1395yy(e)(3)) except that, in determining such amount, the 
Secretary shall--
            (1) substitute the allowable costs of the facility for the 
        cost reporting period beginning in fiscal year 1998 for those 
        allowable costs of the cost reporting period beginning in 
        fiscal year 1995; and
            (2) exclude the update to the first cost reporting period 
        (from fiscal year 1995 to fiscal year 1998) described in 
        section 1888(e)(3)(B)(i) of such Act (42 U.S.C. 
        1395yy(e)(3)(B)(i)).

                TITLE II--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

SEC. 201. 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)) 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.--Subject to subparagraph (D), 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 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 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.
                    ``(D) Transitional authority.--In applying 
                subparagraph (A) for covered OPD services furnished 
                before January 1, 2002, the Secretary may--
                            ``(i) apply such subparagraph to a bill for 
                        such services related to an outpatient 
                        encounter (rather than for a specific service 
                        or group of services) using OPD fee schedule 
                        amounts and transitional pass-through payments 
                        covered under the bill; and
                            ``(ii) use an appropriate cost-to-charge 
                        ratio for the hospital involved (as determined 
                        by the Secretary), rather than for specific 
                        departments within the hospital.''.
    (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 and brachytherapy.--A drug or 
                        biological that is used in cancer therapy, 
                        including (but not limited to) a 
                        chemotherapeutic agent, an antiemetic, a 
                        hematopoietic growth factor, a colony 
                        stimulating factor, a biological response 
                        modifier, a bisphosphonate, and a device of 
                        brachytherapy, if payment for such drug, 
                        biological, or device as an outpatient hospital 
                        service under this part was being made on such 
                        first date.
                            ``(iii) Current radiopharmaceutical drugs 
                        and biological products.--A radiopharmaceutical 
                        drug or biological product used in diagnostic, 
                        monitoring, and therapeutic nuclear medicine 
                        procedures if payment for the drug or 
                        biological as an outpatient hospital service 
                        under this part was being made on such first 
                        date.
                            ``(iv) New medical devices, drugs, and 
                        biologicals.--A medical device, drug, or 
                        biological not described in clause (i), (ii), 
                        or (iii) 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, biological, 
                        or device described in clause (i), (ii), or 
                        (iii) of subparagraph (A) and in the case of a 
                        device, drug, or biological described in 
                        subparagraph (A)(iv) and 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)(iv) 
                        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 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 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 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 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 as 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 Certain Implantable Items Under System.--
            (1) In general.--Section 1833(t) (42 U.S.C. 1395l(t)) is 
        amended--
                    (A) in paragraph (1)(B)(ii), by striking ``clause 
                (iii)'' and inserting ``clause (iv)'' and by striking 
                ``but'';
                    (B) 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 implantable items 
                        described in paragraph (3), (6), or (8) of 
                        section 1861(s); but''; and
                    (C) in paragraph (2)(B), by inserting after 
                ``resources'' the following: ``and so that an 
                implantable item is classified to the group that 
                includes the service to which the item relates''.
            (2) Conforming amendment.--(A) Section 1834(a)(13) (42 
        U.S.C. 1395m(a)(13)) is amended by striking ``1861(m)(5))'' and 
        inserting ``1861(m)(5), but not including implantable items for 
        which payment may be made under section 1833(t)''.
            (B) Section 1834(h)(4)(B) (42 U.S.C. 1395m(h)(4)(B)) is 
        amended by inserting before the semicolon the following: ``and 
        does not include an implantable item for which payment may be 
        made under section 1833(t)''.
    (f) Authorizing Payment Weights Based on Mean Hospital Costs.--
Section 1833(t)(2)(C) (42 U.S.C. 1395l(t)(2)(C)) is amended by 
inserting ``(or, at the election of the Secretary, mean)'' after 
``median''.
    (g) Limiting Variation of Costs of Services Classified With a 
Group.--Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended by adding 
at the end the following new flush sentence:
        ``For purposes of subparagraph (B), items and services within a 
        group shall not be treated as `comparable with respect to the 
        use of resources' if the highest median cost (or mean cost, if 
        elected by the Secretary under subparagraph (C)) for an item or 
        service within the group is more than 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, but may not make such an exception in the case of a 
        drug or biological that has been designated as an orphan drug 
        under section 526 of the Federal Food, Drug and Cosmetic 
        Act.''.
    (h) Annual Review of OPD PPS Components.--
            (1) In general.--Section 1833(t)(8)(A) (42 U.S.C. 
        1395l(t)(8)(A)), as redesignated by subsection (a), is 
        amended--
                    (A) by striking ``may periodically review'' and 
                inserting ``shall review not less often than 
                annually''; and
                    (B) by adding at the end the following: ``The 
                Secretary shall consult with an expert outside advisory 
                panel composed of an appropriate selection of 
                representatives of providers to review (and advise the 
                Secretary concerning) the clinical integrity of the 
                groups and weights. Such panel may use data collected 
                or developed by entities and organizations (other than 
                the Department of Health and Human Services) in 
                conducting such review.''.
            (2) Effective dates.--The Secretary of Health and Human 
        Services shall first conduct the annual review under the 
        amendment made by paragraph (1)(A) in 2001 for application in 
        2002 and the amendment made by paragraph (1)(B) takes effect on 
        the date of the enactment of this Act.
    (i) No Impact on Copayment.--Section 1833(t)(7) (42 U.S.C. 
1395l(t)(7)), as redesignated by subsection (a), is amended by adding 
at the end the following new subparagraph:
                    ``(D) Computation ignoring outlier and pass-through 
                adjustments.--The copayment amount shall be computed 
                under subparagraph (A) as if the adjustments under 
                paragraphs (5) and (6) (and any adjustment made under 
                paragraph (2)(E) in relation to such adjustments) had 
                not occurred.''.
    (j) Technical Correction in Reference Relating to Hospital-Based 
Ambulance Services.--Section 1833(t)(9) (42 U.S.C. 1395l(t)(9)), as 
redesignated by subsection (a), is amended by striking ``the matter in 
subsection (a)(1) preceding subparagraph (A)'' and inserting ``section 
1861(v)(1)(U)''.
    (k) Extension of Payment Provisions of Section 4522 of BBA Until 
Implementation of PPS.--Section 1861(v)(1)(S)(ii) (42 U.S.C. 
1395x(v)(1)(S)(ii)) is amended in subclauses (I) and (II) by striking 
``and during fiscal year 2000 before January 1, 2000'' and inserting 
``and until the first date that the prospective payment system under 
section 1833(t) is implemented'' each place it appears.
    (l) Congressional Intention Regarding Base Amounts in Applying the 
HOPD PPS.--With respect to determining the amount of copayments 
described in paragraph (3)(A)(ii) of section 1833(t) of the Social 
Security Act, as added by section 4523(a) of BBA, Congress finds that 
such amount should be determined without regard to such section, in a 
budget neutral manner with respect to aggregate payments to hospitals, 
and that the Secretary of Health and Human Services has the authority 
to determine such amount without regard to such section.
    (m) Effective Date.--Except as provided in this section, the 
amendments made by this section shall be effective as if included in 
the enactment of BBA.
    (n) Study of Delivery of Intravenous Immune Globulin (IVIG) Outside 
Hospitals and Physicians' Offices.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study of the extent to which intravenous immune 
        globulin (IVIG) could be delivered and reimbursed under the 
        medicare program outside of a hospital or physician's office. 
        In conducting the study, the Secretary shall--
                    (A) consider the sites of service that other 
                payors, including Medicare+Choice plans, use for these 
                drugs and biologicals;
                    (B) determine whether covering the delivery of 
                these drugs and biologicals in a medicare patient's 
                home raises any additional safety and health concerns 
                for the patient;
                    (C) determine whether covering the delivery of 
                these drugs and biologicals in a patient's home can 
                reduce overall spending under the medicare program; and
                    (D) determine whether changing the site of setting 
                for these services would affect beneficiary access to 
                care.
            (2) Report.--The Secretary shall submit a report on such 
        study to the Committees on Ways and Means and Commerce of the 
        House of Representatives and the Committee on Finance of the 
        Senate within 18 months after the date of the enactment of this 
        Act. The Secretary shall include in the report recommendations 
        regarding the appropriate manner and settings under which the 
        medicare program should pay for these drugs and biologicals 
        delivered outside of a hospital or physician's office.

SEC. 202. 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 201(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 201(b), the following new paragraph:
            ``(7) Transitional adjustment to limit decline in 
        payment.--
                    ``(A) Before 2002.--Subject to subparagraph (D), 
                for covered OPD services furnished before January 1, 
                2002, for which the PPS amount (as defined in 
                subparagraph (E)) is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount (as defined 
                        in subparagraph (F)), the amount of payment 
                        under this subsection shall be increased by 80 
                        percent of the amount of such difference;
                            ``(ii) at least 80 percent, but less than 
                        90 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by the amount by which (I) the 
                        product of 0.71 and the pre-BBA amount, exceeds 
                        (II) the product of 0.70 and the PPS amount;
                            ``(iii) at least 70 percent, but less than 
                        80 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by the amount by which (I) the 
                        product of 0.63 and the pre-BBA amount, exceeds 
                        (II) the product of 0.60 and the PPS amount; or
                            ``(iv) less than 70 percent of the pre-BBA 
                        amount, the amount of payment under this 
                        subsection shall be increased by 21 percent of 
                        the pre-BBA amount.
                    ``(B) 2002.--Subject to subparagraph (D), for 
                covered OPD services furnished during 2002, for which 
                the PPS amount is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by 70 percent of the amount of such 
                        difference;
                            ``(ii) at least 80 percent, but less than 
                        90 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by the amount by which (I) the 
                        product of 0.61 and the pre-BBA amount, exceeds 
                        (II) the product of 0.60 and the PPS amount; or
                            ``(iii) less than 80 percent of the pre-BBA 
                        amount, the amount of payment under this 
                        subsection shall be increased by 13 percent of 
                        the pre-BBA amount.
                    ``(C) 2003.--Subject to subparagraph (D), for 
                covered OPD services furnished during 2003, for which 
                the PPS amount is--
                            ``(i) at least 90 percent, but less than 
                        100 percent, of the pre-BBA amount, the amount 
                        of payment under this subsection shall be 
                        increased by 60 percent of the amount of such 
                        difference; or
                            ``(ii) less than 90 percent of the pre-BBA 
                        amount, the amount of payment under this 
                        subsection shall be increased by 6 percent of 
                        the pre-BBA amount.
                    ``(D) Hold harmless provisions.--
                            ``(i) Temporary treatment for small rural 
                        hospitals.--In the case of a hospital located 
                        in a rural area and that has not more than 100 
                        beds, for covered OPD services furnished before 
                        January 1, 2004, for which the PPS amount is 
                        less than the pre-BBA amount, the amount of 
                        payment under this subsection shall be 
                        increased by the amount of such difference.
                            ``(ii) Permanent treatment for cancer 
                        hospitals.--In the case of a hospital described 
                        in section 1886(d)(1)(B)(v), for covered OPD 
                        services for which the PPS amount is less than 
                        the pre-BBA amount, the amount of payment under 
                        this subsection shall be increased by the 
                        amount of such difference.
                    ``(E) PPS amount defined.--In this paragraph, the 
                term `PPS amount' means, with respect to covered OPD 
                services, the amount payable under this title for such 
                services (determined without regard to this paragraph), 
                including amounts payable as copayment under paragraph 
                (8), coinsurance under section 1866(a)(2)(A)(ii), and 
                the deductible under section 1833(b).
                    ``(F) Pre-BBA amount defined.--
                            ``(i) In general.--In this paragraph, the 
                        `pre-BBA amount' means, with respect to covered 
                        OPD services furnished by a hospital in a year, 
                        an amount equal to the product of the 
                        reasonable cost of the hospital for such 
                        services for the portions of the hospital's 
                        cost reporting period (or periods) occurring in 
                        the year and the base OPD payment-to-cost ratio 
                        for the hospital (as defined in clause (ii)).
                            ``(ii) Base payment-to-cost-ratio 
                        defined.--For purposes of this subparagraph, 
                        the `base payment-to-cost ratio' for a hospital 
                        means the ratio of--
                                    ``(I) the hospital's reimbursement 
                                under this part for covered OPD 
                                services furnished during the cost 
                                reporting period ending in 1996, 
                                including any reimbursement for such 
                                services through cost-sharing described 
                                in subparagraph (E), to
                                    ``(II) the reasonable cost of such 
                                services for such period.
                        The Secretary shall determine such ratios as if 
                        the amendments made by section 4521 of the 
                        Balanced Budget Act of 1997 were in effect in 
                        1996.
                    ``(G) Interim payments.--The Secretary shall make 
                payments under this paragraph to hospitals on an 
                interim basis, subject to retrospective adjustments 
                based on settled cost reports.
                    ``(H) No effect on copayments.--Nothing in this 
                paragraph shall be construed to affect the unadjusted 
                copayment amount described in paragraph (3)(B) or the 
                copayment amount under paragraph (8).
                    ``(I) Application without regard to budget 
                neutrality.--The additional payments made under this 
                paragraph--
                            ``(i) shall not be considered an adjustment 
                        under paragraph (2)(E); and
                            ``(ii) shall not be implemented in a budget 
                        neutral manner.''.
    (b) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of BBA.

SEC. 203. STUDY AND REPORT TO CONGRESS REGARDING THE SPECIAL TREATMENT 
              OF RURAL AND CANCER HOSPITALS IN PROSPECTIVE PAYMENT 
              SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        (referred to in this section as ``MedPAC'') shall conduct a 
        study to determine the appropriateness (and the appropriate 
        method) of providing payments to hospitals described in 
        paragraph (2) for covered OPD services (as defined in paragraph 
        (1)(B) of section 1833(t) of the Social Security Act (42 U.S.C. 
        1395l(t))) based on the prospective payment system established 
        by the Secretary in accordance with such section.
            (2) Hospitals described.--The hospitals described in this 
        paragraph are the following:
                    (A) A medicare-dependent, small rural hospital (as 
                defined in section 1886(d)(5)(G)(iv) of the Social 
                Security Act (42 U.S.C. 1395ww(d)(5)(G)(iv))).
                    (B) A sole community hospital (as defined in 
                section 1886(d)(5)(D)(iii) of such Act (42 U.S.C. 
                1395ww(d)(5)(D)(iii))).
                    (C) Rural health clinics (as defined in section 
                1861(aa)(2) of such Act (42 U.S.C. 1395x(aa)(2)).
                    (D) Rural referral centers (as so classified under 
                section 1886(d)(5)(C) of such Act (42 U.S.C. 
                1395ww(d)(5)(C)).
                    (E) Any other rural hospital with not more than 100 
                beds.
                    (F) Any other rural hospital that the Secretary 
                determines appropriate.
                    (G) A hospital described in section 
                1886(d)(1)(B)(v) of such Act (42 U.S.C. 
                1395ww(d)(1)(B)(v)).
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, MedPAC shall submit a report to the Secretary of Health 
and Human Services and Congress on the study conducted under subsection 
(a), together with any recommendations for legislation that MedPAC 
determines to be appropriate as a result of such study.
    (c) Comments.--Not later than 60 days after the date on which 
MedPAC submits the report under subsection (b) to the Secretary of 
Health and Human Services, the Secretary shall submit comments on such 
report to Congress.

SEC. 204. LIMITATION ON OUTPATIENT HOSPITAL COPAYMENT FOR A PROCEDURE 
              TO THE HOSPITAL DEDUCTIBLE AMOUNT.

    (a) In General.--Section 1833(t)(8) (42 U.S.C. 1395l(t)(8)), as 
redesignated by sections 201(a)(1) and 202(a)(2), is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)'';
            (2) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (D) and (E), respectively; and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Limiting copayment amount to inpatient 
                hospital deductible amount.--In no case shall the 
                copayment amount for a procedure performed in a year 
                exceed the amount of the inpatient hospital deductible 
                established under section 1813(b) for that year.''.
    (b) Increase in Payment To Reflect Reduction in Copayment.--Section 
1833(t)(4)(C) (42 U.S.C. 1395l(t)(4)(C)) is amended by inserting ``, 
plus the amount of any reduction in the copayment amount attributable 
to paragraph (8)(C)'' before the period at the end.
    (c) Effective Date.--The amendments made by this section apply as 
if included in the enactment of BBA and shall only apply to procedures 
performed for which payment is made on the basis of the prospective 
payment system under section 1833(t) of the Social Security Act.

                     Subtitle B--Physician Services

SEC. 211. MODIFICATION OF UPDATE ADJUSTMENT FACTOR PROVISIONS TO REDUCE 
              UPDATE OSCILLATIONS AND REQUIRE ESTIMATE REVISIONS.

    (a) Update Adjustment Factor.--
            (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is 
        amended--
                    (A) in paragraph (3)--
                            (i) in the heading, by inserting ``for 1999 
                        and 2000'' after ``Update'';
                            (ii) in subparagraph (A), by striking ``a 
                        year beginning with 1999'' and inserting ``1999 
                        and 2000''; and
                            (iii) in subparagraph (C), by inserting 
                        ``and paragraph (4)'' after ``For purposes of 
                        this paragraph''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Update for years beginning with 2001.--
                    ``(A) In general.--Unless otherwise provided by 
                law, subject to the budget-neutrality factor determined 
                by the Secretary under subsection (c)(2)(B)(ii) and 
                subject to adjustment under subparagraph (F), the 
                update to the single conversion factor established in 
                paragraph (1)(C) for a year beginning with 2001 is 
                equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the MEI (as defined 
                        in section 1842(i)(3)) for the year (divided by 
                        100); and
                            ``(ii) 1 plus the Secretary's estimate of 
                        the update adjustment factor under subparagraph 
                        (B) for the year.
                    ``(B) Update adjustment factor.--For purposes of 
                subparagraph (A)(ii), subject to subparagraph (D), the 
                `update adjustment factor' for a year is equal (as 
                estimated by the Secretary) to the sum of the 
                following:
                            ``(i) Prior year adjustment component.--An 
                        amount determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of the allowed 
                                expenditures for physicians' services 
                                for the prior year (as determined under 
                                subparagraph (C)) and the amount of the 
                                actual expenditures for such services 
                                for that year;
                                    ``(II) dividing that difference by 
                                the amount of the actual expenditures 
                                for such services for that year; and
                                    ``(III) multiplying that quotient 
                                by 0.75.
                            ``(ii) Cumulative adjustment component.--An 
                        amount determined by--
                                    ``(I) computing the difference 
                                (which may be positive or negative) 
                                between the amount of the allowed 
                                expenditures for physicians' services 
                                (as determined under subparagraph (C)) 
                                from April 1, 1996, through the end of 
                                the prior year and the amount of the 
                                actual expenditures for such services 
                                during that period;
                                    ``(II) dividing that difference by 
                                actual expenditures for such services 
                                for the prior year as increased by the 
                                sustainable growth rate under 
                                subsection (f) for the year for which 
                                the update adjustment factor is to be 
                                determined; and
                                    ``(III) multiplying that quotient 
                                by 0.33.
                    ``(C) Determination of allowed expenditures.--For 
                purposes of this paragraph:
                            ``(i) Period up to april 1, 1999.--The 
                        allowed expenditures for physicians' services 
                        for a period before April 1, 1999, shall be the 
                        amount of the allowed expenditures for such 
                        period as determined under paragraph (3)(C).
                            ``(ii) Transition to calendar year allowed 
                        expenditures.--Subject to subparagraph (E), the 
                        allowed expenditures for--
                                    ``(I) the 9-month period beginning 
                                April 1, 1999, shall be the Secretary's 
                                estimate of the amount of the allowed 
                                expenditures that would be permitted 
                                under paragraph (3)(C) for such period; 
                                and
                                    ``(II) the year of 1999, shall be 
                                the Secretary's estimate of the amount 
                                of the allowed expenditures that would 
                                be permitted under paragraph (3)(C) for 
                                such year.
                            ``(iii) Years beginning with 2000.--The 
                        allowed expenditures for a year (beginning with 
                        2000) is equal to the allowed expenditures for 
                        physicians' services for the previous year, 
                        increased by the sustainable growth rate under 
                        subsection (f) for the year involved.
                    ``(D) Restriction on update adjustment factor.--The 
                update adjustment factor determined under subparagraph 
                (B) for a year may not be less than -0.07 or greater 
                than 0.03.
                    ``(E) Recalculation of allowed expenditures for 
                updates beginning with 2001.--For purposes of 
                determining the update adjustment factor for a year 
                beginning with 2001, the Secretary shall recompute the 
                allowed expenditures for previous periods beginning on 
                or after April 1, 1999, consistent with subsection 
                (f)(3).
                    ``(F) Transitional adjustment designed to provide 
                for budget neutrality.--Under this subparagraph the 
                Secretary shall provide for an adjustment to the update 
                under subparagraph (A)--
                            ``(i) for each of 2001, 2002, 2003, and 
                        2004, of -0.2 percent; and
                            ``(ii) for 2005 of +0.8 percent.''.
            (2) Publication change.--
                    (A) In general.--Section 1848(d)(1)(E) (42 U.S.C. 
                1395w-4(d)(1)(E)) is amended to read as follows:
                    ``(E) Publication and dissemination of 
                information.--The Secretary shall--
                            ``(i) cause to have published in the 
                        Federal Register not later than November 1 of 
                        each year (beginning with 2000) the conversion 
                        factor which will apply to physicians' services 
                        for the succeeding year, the update determined 
                        under paragraph (4) for such succeeding year, 
                        and the allowed expenditures under such 
                        paragraph for such succeeding year; and
                            ``(ii) make available to the Medicare 
                        Payment Advisory Commission and the public by 
                        March 1 of each year (beginning with 2000) an 
                        estimate of the sustainable growth rate and of 
                        the conversion factor which will apply to 
                        physicians' services for the succeeding year 
                        and data used in making such estimate.''.
                    (B) Medpac review of conversion factor estimates.--
                Section 1805(b)(1)(D) (42 U.S.C. 1395b-6(b)(1)(D)) is 
                amended by inserting ``and including a review of the 
                estimate of the conversion factor submitted under 
                section 1848(d)(1)(E)(ii)'' before the period at the 
                end.
                    (C) One-time publication of information on 
                transition.--The Secretary of Health and Human Services 
                shall cause to have published in the Federal Register, 
                not later than 90 days after the date of the enactment 
                of this section, the Secretary's determination, based 
                upon the best available data, of--
                            (i) the allowed expenditures under 
                        subclauses (I) and (II) of subsection 
                        (d)(4)(C)(ii) of section 1848 of the Social 
                        Security Act (42 U.S.C. 1395w-4), 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 subsection (d) of such section for 
                        1999; and
                            (iii) the sustainable growth rate under 
                        subsection (f) of such section 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) Study and Report Regarding the Utilization of Physicians' 
Services by Medicare Beneficiaries.--
            (1) Study by secretary.--The Secretary of Health and Human 
        Services, acting through the Administrator of the Agency for 
        Health Care Policy and Research, shall conduct a study of the 
        issues specified in paragraph (2).
            (2) Issues to be studied.--The issues specified in this 
        paragraph are the following:
                    (A) The various methods for accurately estimating 
                the economic impact on expenditures for physicians' 
                services under the original medicare fee-for-service 
                program under parts A and B of title XVIII of the 
                Social Security Act (42 U.S.C. 1395 et seq.) resulting 
                from--
                            (i) improvements in medical capabilities;
                            (ii) advancements in scientific technology;
                            (iii) demographic changes in the types of 
                        medicare beneficiaries that receive benefits 
                        under such program; and
                            (iv) geographic changes in locations where 
                        medicare beneficiaries receive benefits under 
                        such program.
                    (B) The rate of usage of physicians' services under 
                the original medicare fee-for-service program under 
                parts A and B of title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.) among beneficiaries between 
                ages 65 and 74, 75 and 84, 85 and over, and disabled 
                beneficiaries under age 65.
                    (C) Other factors that may be reliable predictors 
                of beneficiary utilization of physicians' services 
                under the original medicare fee-for-service program 
                under parts A and B of title XVIII of the Social 
                Security Act (42 U.S.C. 1395 et seq.).
            (3) Report to congress.--Not later than 3 years after the 
        date of the enactment of this Act, the Secretary of Health and 
        Human Services shall submit a report to Congress setting forth 
        the results of the study conducted pursuant to paragraph (1), 
        together with any recommendations the Secretary determines are 
        appropriate.
            (4) Medpac report to congress.--Not later than 180 days 
        after the date of submission of the report under paragraph (3), 
        the Medicare Payment Advisory Commission shall submit a report 
        to Congress that includes--
                    (A) an analysis and evaluation of the report 
                submitted under paragraph (3); and
                    (B) such recommendations as it determines are 
                appropriate.
    (d) 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. 212. USE OF DATA COLLECTED BY ORGANIZATIONS AND ENTITIES IN 
              DETERMINING PRACTICE EXPENSE RELATIVE VALUES.

    (a) In General.--The Secretary of Health and Human Services shall 
establish by regulation (after notice and opportunity for public 
comment) a process (including data collection standards) under which 
the Secretary will accept for use and will use, to the maximum extent 
practicable 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). The Secretary shall first promulgate such 
regulation on an interim final basis in a manner that permits the 
submission and use of data in the computation of practice expense 
relative value units for payment rates for 2001.
    (b) Publication of Information.--The Secretary shall include, in 
the publication of the estimated and final updates under section 
1848(c) of such Act (42 U.S.C. 1395w-4(c)) for payments for 2001 and 
for 2002, a description of the process established under subsection (a) 
for the use of external data in making adjustments in relative value 
units and the extent to which the Secretary has used such external data 
in making such adjustments for each such year, particularly in cases in 
which the data otherwise used are inadequate because such data are not 
based upon a large enough sample size to be statistically reliable.

SEC. 213. GAO STUDY ON RESOURCES REQUIRED TO PROVIDE SAFE AND EFFECTIVE 
              OUTPATIENT CANCER THERAPY.

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

                       Subtitle C--Other Services

SEC. 221. REVISION OF PROVISIONS RELATING TO THERAPY SERVICES.

    (a) 2-Year Moratorium on Caps.--
            (1) In general.--Section 1833(g) of the Social Security Act 
        (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 with 
respect to services furnished during 2000 and 2001.''.
            (2) Focused medical reviews of claims during moratorium 
        period.--During years in which paragraph (4) of section 1833(g) 
        of the Social Security Act (42 U.S.C. 1395l(g)) applies (under 
        the amendment made by paragraph (1)(B)), the Secretary of 
        Health and Human Services shall conduct focused medical reviews 
        of claims for reimbursement for services described in paragraph 
        (1) or (3) of such section, with an emphasis on such claims for 
        services that are provided to residents of skilled nursing 
        facilities.
    (b) Technical Amendment Relating To Being Under the Care of a 
Physician.--
            (1) In general.--Section 1861 (42 U.S.C. 1395x) is 
        amended--
                    (A) in subsection (p)(1), by striking ``or (3)'' 
                and inserting ``, (3), or (4)''; and
                    (B) in subsection (r)(4), by inserting ``for 
                purposes of subsection (p)(1) and'' after ``but only''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply to services furnished on or after January 1, 2000.
    (c) Revision of Report.--
            (1) In general.--Section 4541(d)(2) of BBA (42 U.S.C. 1395l 
        note) is amended to read as follows:
            ``(2) Report.--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 BBA.
    (d) 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 June 30, 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. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

    (a) In General.--Section 1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is 
amended by adding at the end the following new flush sentence:
``The Secretary shall increase the amount of each composite rate 
payment for dialysis services furnished during 2000 by 1.2 percent 
above such composite rate payment amounts for such services furnished 
on December 31, 1999, and for such services furnished on or after 
January 1, 2001, by 1.2 percent above such composite rate payment 
amounts for such services furnished on December 31, 2000.''.
    (b) Conforming Amendment.--The second sentence of section 
9335(a)(1) of the Omnibus Budget Reconciliation Act of 1986 (42 U.S.C. 
1395rr note) is amended by inserting ``and before January 1, 2000,'' 
after ``on or after January 1, 1991,''.
    (c) Study on Payment Level for Home Hemodialysis.--The Medicare 
Payment Advisory Commission shall conduct a study on the 
appropriateness of the differential in payment under the medicare 
program for hemodialysis services furnished in a facility and such 
services furnished in a home. Not later than 18 months after the date 
of the enactment of this Act, the Commission shall submit to Congress a 
report on such study and shall include recommendations regarding 
changes in medicare payment policy in response to the study.

SEC. 223. IMPLEMENTATION OF THE INHERENT REASONABLENESS (IR) AUTHORITY.

    (a) Limitation on Use.--The Secretary of Health and Human Services 
may not use, or permit fiscal intermediaries or carriers to use, the 
inherent reasonableness authority provided under section 1842(b)(8) of 
the Social Security Act (42 U.S.C. 1395u(b)(8)) until after--
            (1) the Comptroller General of the United States releases a 
        report pursuant to the request for such a report made on March 
        1, 1999, regarding the impact of the Secretary's, fiscal 
        intermediaries', and carriers' use of such authority; and
            (2) the Secretary has published a notice of final 
        rulemaking in the Federal Register that relates to such 
        authority and that responds to such report and to comments 
        received in response to the Secretary's interim final 
        regulation relating to such authority that was published in the 
        Federal Register on January 7, 1998.
    (b) Reevaluation of IR Criteria.--In promulgating the final 
regulation under subsection (a)(2), the Secretary shall--
            (1) reevaluate the appropriateness of the criteria included 
        in such interim final regulation for identifying payments which 
        are excessive or deficient; and
            (2) take appropriate steps to ensure the use of valid and 
        reliable data when exercising such authority.
    (c) Technical Correction.--Section 1842(b)(8)(A)(i)(I) (42 U.S.C. 
1395u(b)(8)(A)(i)(I)) is amended by striking ``the application of this 
part'' and inserting ``the application of this title to payment under 
this part''.

SEC. 224. INCREASE IN REIMBURSEMENT FOR PAP SMEARS.

    (a) Pap Smear Payment Increase.--Section 1833(h) (42 U.S.C. 
1395l(h)) is amended by adding at the end the following new paragraph:
    ``(7) Notwithstanding paragraphs (1) and (4), the Secretary shall 
establish a national minimum payment amount under this subsection for a 
diagnostic or screening pap smear laboratory test (including all 
cervical cancer screening technologies that have been approved by the 
Food and Drug Administration as a primary screening method for 
detection of cervical cancer) equal to $14.60 for tests furnished in 
2000. For such tests furnished in subsequent years, such national 
minimum payment amount shall be adjusted annually as provided in 
paragraph (2).''.
    (b) Sense of Congress.--It is the sense of the Congress that--
            (1) the Health Care Financing Administration has been slow 
        to incorporate or provide incentives for providers to use new 
        screening diagnostic health care technologies in the area of 
        cervical cancer;
            (2) some new technologies have been developed which 
        optimize the effectiveness of pap smear screening; and
            (3) the Health Care Financing Administration should 
        institute an appropriate increase in the payment rate for new 
        cervical cancer screening technologies that have been approved 
        by the Food and Drug Administration and that are significantly 
        more effective than a conventional pap smear.

SEC. 225. REFINEMENT OF AMBULANCE SERVICES DEMONSTRATION PROJECT.

    Effective as if included in the enactment of BBA, section 4532 of 
BBA (42 U.S.C. 1395m note) is amended--
            (1) in subsection (a), by adding at the end the following: 
        ``Not later than July 1, 2000, the Secretary shall publish a 
        request for proposals for such projects.''; and
            (2) by amending paragraph (2) of subsection (b) to read as 
        follows:
            ``(2) Capitated payment rate defined.--In this subsection, 
        the term `capitated payment rate' means, with respect to a 
        demonstration project--
                    ``(A) in its first year, a rate established for the 
                project by the Secretary, using the most current 
                available data, in a manner that ensures that aggregate 
                payments under the project will not exceed the 
                aggregate payment that would have been made for 
                ambulance services under part B of title XVIII of the 
                Social Security Act in the local area of government's 
                jurisdiction; and
                    ``(B) in a subsequent year, the capitated payment 
                rate established for the previous year increased by an 
                appropriate inflation adjustment factor.''.

SEC. 226. 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 section 1833(i) of the Social Security Act (42 U.S.C. 
1395l(i)), prior to incorporating data from the 1999 Medicare cost 
survey or a subsequent cost survey, such system shall be implemented in 
a manner so that--
            (1) in the first year of its implementation, only a 
        proportion (specified by the Secretary and not to exceed \1/3\) 
        of the payment for such services shall be made in accordance 
        with such system and the remainder shall be made in accordance 
        with current regulations; and
            (2) in the following year a proportion (specified by the 
        Secretary and not to exceed \2/3\) of the payment for such 
        services shall be made under such system and the remainder 
        shall be made in accordance with current regulations.

SEC. 227. EXTENSION OF MEDICARE BENEFITS FOR IMMUNOSUPPRESSIVE DRUGS.

    (a) In General.--Section 1861(s)(2)(J)(v) (42 U.S.C. 
1395x(s)(2)(J)(v)) is amended by inserting before the semicolon at the 
end the following: ``plus such additional number of months (if any) 
provided under section 1832(b)''.
    (b) Specification of Number of Additional Months.--Section 1832 (42 
U.S.C. 1395k) is amended--
            (1) by redesignating subsection (b) as subsection (c); and
            (2) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Extension of Coverage of Immunosuppressive Drugs.--
            ``(1) Extension.--
                    ``(A) In general.--The Secretary shall specify 
                consistent with this subsection an additional number of 
                months (which may be portions of months) of coverage of 
                immunosuppressive drugs for each cohort (as defined in 
                subparagraph (C)) in a year during the 5-year period 
                beginning with 2000. The number of such months for the 
                cohort--
                            ``(i) for 2000 shall be 8 months; and
                            ``(ii) for 2001 shall, subject to paragraph 
                        (2)(A)(i), be 8 months.
                    ``(B) Application of additional months in a year 
                only to cohort in that year.--
                            ``(i) In general.--The additional months 
                        specified under this subsection for a cohort in 
                        a year in such 5-year period shall apply under 
                        section 1861(s)(2)(J)(v) only to individuals 
                        within such cohort for such year.
                            ``(ii) Construction.--Nothing in this 
                        subsection shall be construed as preventing 
                        additional months of coverage provided for a 
                        cohort for a year from extending coverage to 
                        drugs furnished in months in the succeeding 
                        year.
                    ``(C) Cohort defined.--In this subsection, the term 
                `cohort' means, with respect to a year, those 
                individuals who would (but for this subsection) exhaust 
                benefits under section 1861(s)(2)(J)(v) for 
                prescription drugs used in immunosuppressive therapy 
                furnished at any time during such year.
            ``(2) Timing of specification.--Consistent with paragraphs 
        (3) and (4)--
                    ``(A) May 1, 2001.--Not later than May 1, 2001, the 
                Secretary--
                            ``(i) may increase the number of months for 
                        the cohort for 2001 above the 8 months provided 
                        under paragraph (1)(A)(ii); and
                            ``(ii) shall compute and specify the number 
                        of additional months of benefits that will be 
                        available for the cohort for 2002.
                    ``(B) May 1, 2002 and 2003.--Not later than May 1 
                of 2002 and 2003, the Secretary shall compute and 
                specify the number of additional months of benefits 
                that will be available for the cohort for the following 
                year under this subsection. Such number may be more or 
                less than 8 months.
            ``(3) Basis for specification.--Using appropriate actuarial 
        methods, the Secretary shall compute the number of additional 
        months for the cohort for a year under this subsection in a 
        manner so that the total expenditures under this part 
        attributable to this subsection, as computed based upon the 
        best available data at the time additional months are specified 
        under this subsection, do not exceed $150,000,000. Subject to 
        paragraph (4), the Secretary shall seek to compute such months 
        in a manner that provides for a level number of months for each 
        cohort in each year in the last 4 years of the 5-year period 
        described in paragraph (1)(A).
            ``(4) Annual adjustment to maintain aggregate expenditures 
        within limits.--In computing and specifying the number of 
        additional months under paragraph (2), the Secretary shall 
        adjust the number of additional months under this subsection 
        for a cohort for a year from that provided in the previous year 
        within such 5-year period to the extent necessary to take into 
        account, based upon the best available data, differences 
        between actual and estimated expenditures under this part 
        attributable to this subsection for previous years and to 
        comply with the limitation on total expenditures under 
        paragraph (3).''.
    (c) Transitional Pass-Through of Additional Costs Under 
Medicare+Choice Program for 2000.--The provisions of subparagraphs (A) 
and (B) of section 1852(a)(5) of the Social Security Act (42 U.S.C. 
1395w-22(a)(5)) shall apply with respect to the coverage of additional 
benefits for immunosuppressive drugs under the amendments made by this 
section for drugs furnished in 2000 in the same manner as if such 
amendments constituted a national coverage determination described in 
the matter in such section before subparagraph (A).
    (d) Report on Immunosuppressive Drug Benefit.--
            (1) In general.--Not later than March 1, 2003, the 
        Secretary of Health and Human Services shall submit to Congress 
        a report on the operation of this section and the amendments 
        made by this section. The report shall include--
                    (A) an analysis of the impact of this section; and
                    (B) recommendations regarding an appropriate cost-
                effective method for providing coverage of 
                immunosuppressive drugs under the medicare program on a 
                permanent basis.
            (2) Considerations.--In making recommendations under 
        paragraph (1)(B), the Secretary shall identify potential 
        modifications to the immunosuppressive drug benefit that would 
        best promote the objectives of--
                    (A) improving health outcomes (by decreasing 
                transplant rejection rates that are attributable to 
                failure to comply with immunosuppressive drug 
                regimens);
                    (B) achieving cost savings to the medicare program 
                (by decreasing the need for secondary transplants and 
                other care relating to post-transplant complications); 
                and
                    (C) meeting the needs of those medicare 
                beneficiaries who, because of income or other factors, 
                would be less likely to maintain an immunosuppressive 
                drug regimen in the absence of such modifications.

SEC. 228. TEMPORARY INCREASE IN PAYMENT RATES FOR DURABLE MEDICAL 
              EQUIPMENT AND OXYGEN.

    (a) In General.--For purposes of payments under section 1834(a) of 
the Social Security Act (42 U.S.C. 1395m(a)) for covered items (as 
defined in paragraph (13) of that section) furnished during 2001 and 
2002, the Secretary of Health and Human Services shall increase the 
payment amount in effect (but for this section) for such items for--
            (1) 2001 by 0.3 percent, and
            (2) 2002 by 0.6 percent.
    (b) Limiting Application to Specified Years.--The payment amount 
increase--
            (1) under subsection (a)(1) shall not apply after 2001 and 
        shall not be taken into account in calculating the payment 
        amounts applicable for covered items furnished after such year; 
        and
            (2) under subsection (a)(2) shall not apply after 2002 and 
        shall not be taken into account in calculating the payment 
        amounts applicable for covered items furnished after such year.

SEC. 229. STUDIES AND REPORTS.

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

            TITLE III--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

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

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

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

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

SEC. 303. INCREASE IN PER BENEFICIARY LIMITS.

    (a) Increase in Per Beneficiary Limits.--Section 1861(v)(1)(L) of 
the Social Security Act (42 U.S.C. 1395x(v)(1)(L)), 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) by redesignating clause (ix) as clause (x); and
            (2) by inserting after clause (viii) the following new 
        clause:
    ``(ix) Notwithstanding the per beneficiary limit under clause 
(viii), if the limit imposed under clause (v) (determined without 
regard to this clause) for a cost reporting period beginning during or 
after fiscal year 2000 is less than the median described in clause 
(vi)(I) (but determined as if any reference in clause (v) to `98 
percent' were a reference to `100 percent'), the limit otherwise 
imposed under clause (v) for such provider and period shall be 
increased by 2 percent.''.
    (b) Increase Not Included in PPS Base.--The second sentence of 
section 1895(b)(3)(A)(i) (42 U.S.C. 1395fff(b)(3)(A)(i)), as amended by 
section 302(b), is further amended--
            (1) in subclause (I), by inserting ``and if section 
        1861(v)(1)(L)(ix) had not been enacted'' before the semicolon; 
        and
            (2) in subclause (II), by inserting ``and if section 
        1861(v)(1)(L)(ix) had not been enacted'' after ``if the system 
        had not been in effect''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished by home health agencies for cost reporting 
periods beginning on or after October 1, 1999.

SEC. 304. CLARIFICATION OF SURETY BOND REQUIREMENTS.

    (a) Home Health Agencies.--Section 1861(o)(7) (42 U.S.C. 
1395x(o)(7)) is amended to read as follows:
            ``(7) provides the Secretary with a surety bond--
                    ``(A) effective for a period of 4 years (as 
                specified by the Secretary) or in the case of a change 
                in the ownership or control of the agency (as 
                determined by the Secretary) during or after such 4-
                year period, an additional period of time that the 
                Secretary determines appropriate, such additional 
                period not to exceed 4 years from the date of such 
                change in ownership or control;
                    ``(B) in a form specified by the Secretary; and
                    ``(C) for a year in the period described in 
                subparagraph (A) in an amount that is equal to the 
                lesser of $50,000 or 10 percent of the aggregate amount 
                of payments to the agency under this title and title 
                XIX for that year, as estimated by the Secretary; 
                and''.
    (b) Coordination of Surety Bonds.--Part A of title XI of the Social 
Security Act is amended by inserting after section 1128E the following 
new section:

     ``coordination of medicare and medicaid surety bond provisions

    ``Sec. 1128F. In the case of a home health agency that is subject 
to a surety bond requirement under title XVIII and title XIX, the 
surety bond provided to satisfy the requirement under one such title 
shall satisfy the requirement under the other such title so long as the 
bond applies to guarantee return of overpayments under both such 
titles.''.
    (c) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act, and in applying 
section 1861(o)(7) of the Social Security Act (42 U.S.C. 1395x(o)(7)), 
as amended by subsection (a), the Secretary of Health and Human 
Services may take into account the previous period for which a home 
health agency had a surety bond in effect under such section before 
such date.

SEC. 305. REFINEMENT OF HOME HEALTH AGENCY CONSOLIDATED BILLING.

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

SEC. 306. TECHNICAL AMENDMENT CLARIFYING APPLICABLE MARKET BASKET 
              INCREASE FOR PPS.

    Section 1895(b)(3)(B)(ii)(I) (42 U.S.C. 1395fff(b)(3)(B)(ii)(I)) is 
amended by striking ``fiscal year 2002 or 2003'' and inserting ``each 
of fiscal years 2002 and 2003''.

SEC. 307. STUDY AND REPORT TO CONGRESS REGARDING THE EXEMPTION OF RURAL 
              AGENCIES AND POPULATIONS FROM INCLUSION IN THE HOME 
              HEALTH PROSPECTIVE PAYMENT SYSTEM.

    (a) Study.--The Medicare Payment Advisory Commission (referred to 
in this section as ``MedPAC'') shall conduct a study to determine the 
feasibility and advisability of exempting home health services provided 
by a home health agency (or by others under arrangements with such 
agency) located in a rural area, or to an individual residing in a 
rural area, from payment under the prospective payment system for such 
services established by the Secretary of Health and Human Services in 
accordance with section 1895 of the Social Security Act (42 U.S.C. 
1395fff).
    (b) Report.--Not later than 2 years after the date of the enactment 
of this Act, MedPAC shall submit a report to Congress on the study 
conducted under subsection (a), together with any recommendations for 
legislation that MedPAC determines to be appropriate as a result of 
such study.

             Subtitle B--Direct Graduate Medical Education

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

    (a) In General.--Section 1886(h)(2) (42 U.S.C. 1395ww(h)(2)) is 
amended--
            (1) in subparagraph (D)(i), by striking ``clause (ii)'' and 
        inserting ``a subsequent clause'';
            (2) by adding at the end of subparagraph (D) the following 
        new clauses:
                            ``(iii) Floor in fiscal year 2001 at 70 
                        percent of locality adjusted national average 
                        per resident amount.--The approved FTE resident 
                        amount for a hospital for the cost reporting 
                        period beginning during fiscal year 2001 shall 
                        not be less than 70 percent of the locality 
                        adjusted national average per resident amount 
                        computed under subparagraph (E) for the 
                        hospital and period.
                            ``(iv) Adjustment in rate of increase for 
                        hospitals with fte approved amount above 140 
                        percent of locality adjusted national average 
                        per resident amount.--
                                    ``(I) Freeze for fiscal years 2001 
                                and 2002.--For a cost reporting period 
                                beginning during fiscal year 2001 or 
                                fiscal year 2002, if the approved FTE 
                                resident amount for a hospital for the 
                                preceding cost reporting period exceeds 
                                140 percent of the locality adjusted 
                                national average per resident amount 
                                computed under subparagraph (E) for 
                                that hospital and period, subject to 
                                subclause (III), the approved FTE 
                                resident amount for the period involved 
                                shall be the same as the approved FTE 
                                resident amount for the hospital for 
                                such preceding cost reporting period.
                                    ``(II) 2 percent decrease in update 
                                for fiscal years 2003, 2004, and 
                                2005.--For a cost reporting period 
                                beginning during fiscal year 2003, 
                                fiscal year 2004, or fiscal year 2005, 
                                if the approved FTE resident amount for 
                                a hospital for the preceding cost 
                                reporting period exceeds 140 percent of 
                                the locality adjusted national average 
                                per resident amount computed under 
                                subparagraph (E) for that hospital and 
                                preceding period, the approved FTE 
                                resident amount for the period involved 
                                shall be updated in the manner 
                                described in subparagraph (D)(i) except 
                                that, subject to subclause (III), the 
                                consumer price index applied for a 12-
                                month period shall be reduced (but not 
                                below zero) by 2 percentage points.
                                    ``(III) No adjustment below 140 
                                percent.--In no case shall subclause 
                                (I) or (II) reduce an approved FTE 
                                resident amount for a hospital for a 
                                cost reporting period below 140 percent 
                                of the locality adjusted national 
                                average per resident amount computed 
                                under subparagraph (E) for such 
                                hospital and period.'';
            (3) by redesignating subparagraph (E) as subparagraph (F); 
        and
            (4) by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) Determination of locality adjusted national 
                average per resident amount.--The Secretary shall 
                determine a locality adjusted national average per 
                resident amount with respect to a cost reporting period 
                of a hospital beginning during a fiscal year as 
                follows:
                            ``(i) Determining hospital single per 
                        resident amount.--The Secretary shall compute 
                        for each hospital operating an approved 
                        graduate medical education program a single per 
                        resident amount equal to the average (weighted 
                        by number of full-time equivalent residents, as 
                        determined under paragraph (4)) of the primary 
                        care per resident amount and the non-primary 
                        care per resident amount computed under 
                        paragraph (2) for cost reporting periods ending 
                        during fiscal year 1997.
                            ``(ii) Standardizing per resident 
                        amounts.--The Secretary shall compute a 
                        standardized per resident amount for each such 
                        hospital by dividing the single per resident 
                        amount computed under clause (i) by an average 
                        of the 3 geographic index values (weighted by 
                        the national average weight for each of the 
                        work, practice expense, and malpractice 
                        components) as applied under section 1848(e) 
                        for 1999 for the fee schedule area in which the 
                        hospital is located.
                            ``(iii) Computing of weighted average.--The 
                        Secretary shall compute the average of the 
                        standardized per resident amounts computed 
                        under clause (ii) for such hospitals, with the 
                        amount for each hospital weighted by the 
                        average number of full-time equivalent 
                        residents at such hospital (as determined under 
                        paragraph (4)).
                            ``(iv) Computing national average per 
                        resident amount.--The Secretary shall compute 
                        the national average per resident amount, for a 
                        hospital's cost reporting period that begins 
                        during fiscal year 2001, equal to the weighted 
                        average computed under clause (iii) increased 
                        by the estimated percentage increase in the 
                        consumer price index for all urban consumers 
                        during the period beginning with the month that 
                        represents the midpoint of the cost reporting 
                        periods described in clause (i) and ending with 
                        the midpoint of the hospital's cost reporting 
                        period that begins during fiscal year 2001.
                            ``(v) Adjusting for locality.--The 
                        Secretary shall compute the product of--
                                    ``(I) the national average per 
                                resident amount computed under clause 
                                (iv) for the hospital, and
                                    ``(II) the geographic index value 
                                average (described and applied under 
                                clause (ii)) for the fee schedule area 
                                in which the hospital is located.
                            ``(vi) Computing locality adjusted 
                        amount.--The locality adjusted national per 
                        resident amount for a hospital for--
                                    ``(I) the cost reporting period 
                                beginning during fiscal year 2001 is 
                                the product computed under clause (v); 
                                or
                                    ``(II) each subsequent cost 
                                reporting period is equal to the 
                                locality adjusted national per resident 
                                amount for the hospital for the 
                                previous cost reporting period (as 
                                determined under this clause) updated, 
                                through the midpoint of the period, by 
                                projecting the estimated percentage 
                                change in the consumer price index for 
                                all urban consumers during the 12-month 
                                period ending at that midpoint.''.
    (b) Conforming Amendments.--Section 1886(h)(2)(D) (42 U.S.C. 
1395ww(h)(2)(D)) is further amended--
            (1) in clause (i)--
                    (A) by striking ``periods.--(i)'' and inserting the 
                following (and conforming the indentation of the 
                succeeding matter accordingly): ``periods.--
                            ``(i) In general.--''; and
                    (B) by striking ``the amount determined'' and 
                inserting ``the approved FTE resident amount 
                determined''; and
            (2) in clause (ii)--
                    (A) by indenting the clause 2 ems to the right; and
                    (B) by inserting ``Freeze in update for fiscal 
                years 1994 and 1995.--'' after ``(ii)''.

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

    (a) In General.--Section 1886(h)(5) (42 U.S.C. 1395ww(h)(5)) is 
amended--
            (1) in the last sentence of subparagraph (F), by striking 
        ``The initial residency period'' and inserting ``Subject to 
        subparagraph (G)(v), the initial residency period''; and
            (2) in subparagraph (G)--
                    (A) in clause (i) by striking ``and (iv)'' and 
                inserting ``(iv), and (v)''; and
                    (B) by adding at the end the following new clause:
                            ``(v) Child neurology training programs.--
                        In the case of a resident enrolled in a child 
                        neurology residency training program, the 
                        period of board eligibility and the initial 
                        residency period shall be the period of board 
                        eligibility for pediatrics plus 2 years.''.
    (b) Effective Date.--The amendments made by subsection (a) apply on 
and after July 1, 2000, to residency programs that began before, on, or 
after the date of the enactment of this Act.
    (c) MedPAC Report.--The Medicare Payment Advisory Commission shall 
include in its report submitted to Congress in March of 2001 
recommendations regarding the appropriateness of the initial residency 
period used under section 1886(h)(5)(F) of the Social Security Act (42 
U.S.C. 1395ww(h)(5)(F)) for other residency training programs in a 
specialty that require preliminary years of study in another specialty.

                   Subtitle C--Technical Corrections

SEC. 321. BBA TECHNICAL CORRECTIONS.

    (a) Section 4201.--Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-
4(c)(2)(B)(i)) is amended by striking ``and is located in a county (or 
equivalent unit of local government) in a rural area (as defined in 
section 1886(d)(2)(D)) that'' and inserting ``that is located in a 
county (or equivalent unit of local government) in a rural area (as 
defined in section 1886(d)(2)(D)), and that''.
    (b) Section 4204.--(1) Section 1886(d)(5)(G) (42 U.S.C. 
1395ww(d)(5)(G)) is amended--
            (A) in clause (i), by striking ``or beginning on or after 
        October 1, 1997, and before October 1, 2001,'' and inserting 
        ``or discharges occurring on or after October 1, 1997, and 
        before October 1, 2001,''; and
            (B) in clause (ii)(II), by striking ``or beginning on or 
        after October 1, 1997, and before October 1, 2001,'' and 
        inserting ``or discharges occurring on or after October 1, 
        1997, and before October 1, 2001,''.
    (2) Section 1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)) is amended in 
the matter preceding clause (i) by striking ``and for cost reporting 
periods beginning on or after October 1, 1997, and before October 1, 
2001,'' and inserting ``and for discharges beginning on or after 
October 1, 1997, and before October 1, 2001,''.
    (c) Section 4319.--Section 1847(b)(2) (42 U.S.C. 1395w-3(b)(2)) is 
amended by inserting ``and'' after ``specified by the Secretary''.
    (d) Section 4401.--Section 4401(b)(1)(B) of BBA (42 U.S.C. 1395ww 
note) is amended by striking ``section 1886(b)(3)(B)(i)(XIII) of the 
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII)))'' and 
inserting ``section 1886(b)(3)(B)(i)(XIV) of the Social Security Act 
(42 U.S.C. 1395ww(b)(3)(B)(i)(XIV)))''.
    (e) Section 4402.--The last sentence of section 1886(g)(1)(A) (42 
U.S.C. 1395ww(g)(1)(A)) is amended by striking ``September 30, 2002,'' 
and inserting ``October 1, 2002,''.
    (f) Section 4419.--The first sentence of section 1886(b)(4)(A)(i) 
(42 U.S.C. 1395ww(b)(4)(A)(i)) is amended by striking ``or unit''.
    (g) Section 4432.--(1) Section 1888(e)(8)(B) (42 U.S.C. 
1395yy(e)(8)(B)) is amended by striking ``January 1, 1999,'' and 
inserting ``July 1, 1999''.
    (2) Section 1833(h)(5)(A)(iii) (42 U.S.C. 1395l(h)(5)(A)(iii)) is 
amended--
            (A) by striking ``or critical access hospital,'' and 
        inserting ``, critical access hospital, or skilled nursing 
        facility,''; and
            (B) by inserting ``or skilled nursing facility'' before the 
        period.
    (h) Section 4416.--Section 1886(b)(7)(A)(i)(II) (42 U.S.C. 
1395ww(b)(7)(A)(i)(II)) is amended by inserting ``(as estimated by the 
Secretary)'' after ``median''.
    (i) Section 4442.--Section 4442(b) of BBA (42 U.S.C. 1395f note) is 
amended by striking ``applies to cost reporting periods beginning'' and 
inserting ``applies to items and services furnished''.
    (j) HIPAA Section 201.--
            (1) In general.--Section 1817(k)(2)(C)(i) (42 U.S.C. 
        1395i(k)(2)(C)(i)) is amended by striking ``section 
        982(a)(6)(B)'' and inserting ``section 24(a)''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the amendment made by 
        section 201 of the Health Insurance Portability and 
        Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
        1992).
    (k) Other Technical Amendments.--
            (1) Section 4611.--Section 1812(b) (42 U.S.C. 1395d(b)) is 
        amended in the matter following paragraph (3) by inserting 
        ``during'' after ``100 visits''.
            (2) Section 4511.--Section 1833(a)(1)(O) (42 U.S.C. 
        1395l(a)(1)(O)) is amended by striking the semicolon and 
        inserting a comma.
            (3) Section 4551.--Section 1834(h)(4)(A) (42 U.S.C. 
        1395m(h)(4)(A)) is amended--
                    (A) in clause (i), by striking the comma at the end 
                and inserting a semicolon; and
                    (B) in clause (v), by striking ``, and'' and 
                inserting ``; and''.
            (4) Section 4315.-- Section 1842(s)(2)(E) (42 U.S.C. 
        1395u(s)(2)(E)) is amended by inserting a period at the end.
            (5) Sections 4103, 4104, and 4106.--
                    (A) Section 4103.--Section 1848(j)(3) (42 U.S.C. 
                1395w-4(j)(3)) is amended by striking ``1861(oo)(2),'' 
                and inserting ``1861(oo)(2))''.
                    (B) Section 4104.--Such section is further amended 
                by striking ``(B) ,'' and inserting ``(B),''.
                    (C) Section 4106.--Such section is further amended 
                by striking ``and (15)'' and inserting ``, and (15)''.
            (6) Section 4001.--(A) Section 1851(i)(2) (42 U.S.C. 1395w-
        21(i)(2)) is amended by striking ``and'' after ``1857(f)(2),''.
            (B) Section 1852 (42 U.S.C. 1395w-22) is amended--
                    (i) in subsection (a)(3)(A)--
                            (I) by striking the comma after ``MSA 
                        plan''; and
                            (II) by inserting a comma after ``the 
                        coverage)'';
                    (ii) in subsection (g)--
                            (I) in paragraph (1)(B), by inserting 
                        ``or'' after ``in whole''; and
                            (II) in paragraph (3)(B)(ii), by inserting 
                        a period at the end;
                    (iii) in subsection (h)(2), by striking the comma 
                and inserting a semicolon; and
                    (iv) in subsection (k)(2)(C)(ii), by striking 
                ``balancing'' and inserting ``balance''.
            (C) Section 1854(a) (42 U.S.C. 1395w-24(a)) is amended--
                    (i) in paragraph (2)--
                            (I) in subparagraph (A), in the matter 
                        preceding clause (i), by inserting ``section'' 
                        before ``1852(a)(1)(A)''; and
                            (II) in subparagraph (B), in the matter 
                        preceding clause (i), by inserting ``section'' 
                        after ``described in'';
                    (ii) in paragraph (3)--
                            (I) in subparagraph (A), by inserting 
                        ``section'' after ``described in''; and
                            (II) in subparagraph (B), by inserting 
                        ``section'' after ``described in''; and
                    (iii) in paragraph (4)--
                            (I) in the matter preceding subparagraph 
                        (A), by inserting ``section'' after ``described 
                        in'';
                            (II) in subparagraph (A), in the matter 
                        preceding clause (i), by inserting ``section'' 
                        after ``described in''; and
                            (III) in subparagraph (B), by inserting 
                        ``section'' after ``described in''.
            (7) Section 4557.--Section 1861(s)(2)(T)(ii) (42 U.S.C. 
        1395x(s)(2)(T)(ii)) is amended by striking the period and 
        inserting a semicolon.
            (8) Section 4205.--Section 1861(aa)(2) (42 U.S.C. 
        1395x(aa)(2)) is amended--
                    (A) in subparagraph (I), by striking the comma at 
                the end and inserting a semicolon; and
                    (B) by realigning subparagraph (I) so as to align 
                the left margin of such subparagraph with the left 
                margin of subparagraph (H); and
            (9) Section 4454.--Section 1861(ss)(1)(G)(i) (42 U.S.C. 
        1395x(ss)(1)(G)(i)) is amended--
                    (A) by striking ``owed'' and inserting ``owned''; 
                and
                    (B) by striking ``of'' and inserting ``or''.
            (10) Section 4103.--Section 1862(a)(7) (42 U.S.C. 
        1395y(a)(7)) is amended by striking ``subparagraphs'' and 
        inserting ``subparagraph''.
            (11) Section 4002.--Section 1866(a)(1) (42 U.S.C. 
        1395cc(a)(1)) is amended--
                    (A) in subparagraph (I)(iii), by striking the 
                semicolon and inserting a comma;
                    (B) in subparagraph (N)(iv), by striking ``and'' at 
                the end; and
                    (C) in subparagraph (O), by striking the semicolon 
                at the end and inserting a comma.
            (12) Section 4321.--Section 1866(a)(1) (42 U.S.C. 
        1395cc(a)(1)) is amended--
                    (A) in subparagraph (Q), by striking the semicolon 
                at the end and inserting a comma; and
                    (B) in subparagraph (R), by inserting ``, and'' at 
                the end.
            (13) Section 4003.--Section 1882(g)(1) (42 U.S.C. 
        1395ss(g)(1)) is amended by striking ``or'' after ``does not 
        include''.
            (14) Section 4031.--Section 1882(s)(2)(D) (42 U.S.C. 
        1395ss(s)(2)(D)), is amended in the matter preceding clause 
        (i), by inserting ``section'' after ``as defined in''.
            (15) Section 4421.--Section 1886(b) (42 U.S.C. 1395ww(b)) 
        is amended--
                    (A) in paragraph (1), in the matter following 
                subparagraph (C), by inserting a comma after 
                ``paragraph (2)''; and
                    (B) in paragraph (3)(B)(ii)--
                            (i) in subclause (VI), by striking the 
                        semicolon and inserting a comma; and
                            (ii) in subclause (VII), by striking the 
                        semicolon and inserting a comma.
            (16) Section 4403.--Section 1886(d)(5)(F) (42 U.S.C. 
        1395ww(d)(5)(F)) is amended by inserting a comma after 
        ``1986''.
            (17) Section 4406.--Section 1886(d)(9)(A)(ii) (42 U.S.C. 
        1395ww(d)(9)(A)(ii)) is amended by inserting a comma after 
        ``1987''.
            (18) Section 4432.--Section 1888(e)(4)(E) (42 U.S.C. 
        1395yy(e)(4)(E)) is amended--
                    (A) in clause (i), by striking ``federal'' and 
                inserting ``Federal''; and
                    (B) in clause (ii), in the matter preceding 
                subclause (I), by striking ``federal'' each place it 
                appears and inserting ``Federal''.
            (19) Section 4603.--Section 1895(b)(1) (42 U.S.C. 
        1395fff(b)(1)) is amended by striking ``the this section'' and 
        inserting ``this section''.
    (l) Section 1135 of the Social Security Act.--Effective on the date 
of the enactment of this Act, section 1135 (42 U.S.C. 1320b-5) is 
repealed.
    (m) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall take effect as if included in the enactment 
of BBA.

                  TITLE IV--RURAL PROVIDER PROVISIONS

                      Subtitle A--Rural Hospitals

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

    (a) In General.--Section 1886(d)(8) (42 U.S.C. 1395ww(d)(8)) is 
amended by adding at the end the following new subparagraph:
    ``(E)(i) For purposes of this subsection, not later than 60 days 
after the receipt of an application (in a form and manner determined by 
the Secretary) 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 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 most 
        recent modification of the Goldsmith Modification, originally 
        published in the Federal Register on February 27, 1992 (57 Fed. 
        Reg. 6725)).
            ``(II) The hospital is located in an area designated by any 
        law or regulation of such State as a rural area (or is 
        designated by such State as a rural hospital).
            ``(III) The hospital would qualify as a rural, regional, or 
        national referral center under paragraph (5)(C) or as a sole 
        community hospital under paragraph (5)(D) if the hospital were 
        located in a rural area.
            ``(IV) The hospital meets such other criteria as the 
        Secretary may specify.''.
    (b) Conforming Changes.--(1) Section 1833(t) (42 U.S.C. 1395l(t)), 
as amended by sections 201 and 202, is further amended by adding at the 
end the following new paragraph:
            ``(13) Miscellaneous provisions.--
                    ``(A) Application of reclassification of certain 
                hospitals.--If a hospital is being treated as being 
                located in a rural area under section 1886(d)(8)(E), 
                that hospital shall be treated under this subsection as 
                being located in that rural area.''.
    (2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-4(c)(2)(B)(i)) is 
amended, in the matter preceding subclause (I), by inserting ``or is 
treated as being located in a rural area pursuant to section 
1886(d)(8)(E)'' after ``section 1886(d)(2)(D))''.
    (c) Effective Date.--The amendments made by this section shall 
become effective on January 1, 2000.

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

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

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

    (a) Applying 96-Hour Limit on an Annual, Average Basis.--
            (1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C. 
        1395i-4(c)(2)(B)(iii)) is amended by striking ``for a period 
        not to exceed 96 hours'' and all that follows and inserting 
        ``for a period that does not exceed, as determined on an 
        annual, average basis, 96 hours per patient;''.
            (2) Effective date.--The amendment made by paragraph (1) 
        takes effect on the date of the enactment of this Act.
    (b) Permitting For-Profit Hospitals To Qualify for Designation as a 
Critical Access Hospital.--Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-
4(c)(2)(B)(i)) is amended in the matter preceding subclause (I), by 
striking ``nonprofit or public hospital'' and inserting ``hospital''.
    (c) Allowing Closed or Downsized Hospitals To Convert to Critical 
Access Hospitals.--Section 1820(c)(2) (42 U.S.C. 1395i-4(c)(2)) is 
amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B), (C), and (D)''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(C) Recently closed facilities.--A State may 
                designate a facility as a critical access hospital if 
                the facility--
                            ``(i) was a hospital that ceased operations 
                        on or after the date that is 10 years before 
                        the date of the enactment of this subparagraph; 
                        and
                            ``(ii) as of the effective date of such 
                        designation, meets the criteria for designation 
                        under subparagraph (B).
                    ``(D) Downsized facilities.--A State may designate 
                a health clinic or a health center (as defined by the 
                State) as a critical access hospital if such clinic or 
                center--
                            ``(i) is licensed by the State as a health 
                        clinic or a health center;
                            ``(ii) was a hospital that was downsized to 
                        a health clinic or health center; and
                            ``(iii) as of the effective date of such 
                        designation, meets the criteria for designation 
                        under subparagraph (B).''.
    (d) Election of Cost-Based Payment Option for Outpatient Critical 
Access Hospital Services.--
            (1) In general.--Section 1834(g) (42 U.S.C. 1395m(g)) is 
        amended to read as follows:
    ``(g) Payment for Outpatient Critical Access Hospital Services.--
            ``(1) In general.--The amount of payment for outpatient 
        critical access hospital services of a critical access hospital 
        is the reasonable costs of the hospital in providing such 
        services, unless the hospital makes the election under 
        paragraph (2).
            ``(2) Election of cost-based hospital outpatient service 
        payment plus fee schedule for professional services.--A 
        critical access hospital may elect to be paid for outpatient 
        critical access hospital services amounts equal to the sum of 
        the following, less the amount that such hospital may charge as 
        described in section 1866(a)(2)(A):
                    ``(A) Facility fee.--With respect to facility 
                services, not including any services for which payment 
                may be made under subparagraph (B), the reasonable 
                costs of the critical access hospital in providing such 
                services.
                    ``(B) Fee schedule for professional services.--With 
                respect to professional services otherwise included 
                within outpatient critical access hospital services, 
                such amounts as would otherwise be paid under this part 
                if such services were not included in outpatient 
                critical access hospital services.
            ``(3) Disregarding charges.--The payment amounts under this 
        subsection shall be determined without regard to the amount of 
        the customary or other charge.''.
            (2) Effective date.--The amendment made by subsection (a) 
        shall apply for cost reporting periods beginning on or after 
        October 1, 2000.
    (e) Elimination of Coinsurance for Clinical Diagnostic Laboratory 
Tests Furnished by a Critical Access Hospital on an Outpatient Basis.--
            (1) In general.--Paragraphs (1)(D)(i) and (2)(D)(i) of 
        section 1833(a) (42 U.S.C. 1395l(a)) are each amended by 
        inserting ``or which are furnished on an outpatient basis by a 
        critical access hospital'' after ``on an assignment-related 
        basis''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to services furnished on or after the date of the 
        enactment of this Act.
    (f) Participation in Swing Bed Program.--Section 1883 (42 U.S.C. 
1395tt) is amended--
            (1) in subsection (a)(1), by striking ``(other than a 
        hospital which has in effect a waiver under subparagraph (A) of 
        the last sentence of section 1861(e))''; and
            (2) in subsection (c), by striking ``, or during which 
        there is in effect for the hospital a waiver under subparagraph 
        (A) of the last sentence of section 1861(e)''.

SEC. 404. 5-YEAR EXTENSION OF MEDICARE DEPENDENT HOSPITAL (MDH) 
              PROGRAM.

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

SEC. 405. REBASING FOR CERTAIN SOLE COMMUNITY HOSPITALS.

    Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)) is amended--
            (1) in subparagraph (C), by inserting ``subject to 
        subparagraph (I),'' before ``the term `target amount' means''; 
        and
            (2) by adding at the end the following new subparagraph:
    ``(I)(i) For cost reporting periods beginning on or after October 
1, 2000, in the case of a sole community hospital that for its cost 
reporting period beginning during 1999 is paid on the basis of the 
target amount applicable to the hospital under subparagraph (C) and 
that elects (in a form and manner determined by the Secretary) this 
subparagraph to apply to the hospital, there shall be substituted for 
such target amount--
            ``(I) with respect to discharges occurring in fiscal year 
        2001, 75 percent of the target amount otherwise applicable to 
        the hospital under subparagraph (C) (referred to in this clause 
        as the `subparagraph (C) target amount') and 25 percent of the 
        rebased target amount (as defined in clause (ii));
            ``(II) with respect to discharges occurring in fiscal year 
        2002, 50 percent of the subparagraph (C) target amount and 50 
        percent of the rebased target amount;
            ``(III) with respect to discharges occurring in fiscal year 
        2003, 25 percent of the subparagraph (C) target amount and 75 
        percent of the rebased target amount; and
            ``(IV) with respect to discharges occurring after fiscal 
        year 2003, 100 percent of the rebased target amount.
    ``(ii) For purposes of this subparagraph, the `rebased target 
amount' has the meaning given the term `target amount' in subparagraph 
(C) except that--
            ``(I) there shall be substituted for the base cost 
        reporting period the 12-month cost reporting period beginning 
        during fiscal year 1996;
            ``(II) any reference in subparagraph (C)(i) to the `first 
        cost reporting period' described in such subparagraph is deemed 
        a reference to the first cost reporting period beginning on or 
        after October 1, 2000; and
            ``(III) applicable increase percentage shall only be 
        applied under subparagraph (C)(iv) for discharges occurring in 
        fiscal years beginning with fiscal year 2002.''.

SEC. 406. ONE YEAR SOLE COMMUNITY HOSPITAL PAYMENT INCREASE.

    Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is 
amended--
            (1) by redesignating subclause (XVII) as subclause (XVIII);
            (2) by striking subclause (XVI); and
            (3) by inserting after subclause (XV) the following new 
        subclauses:
            ``(XVI) for fiscal year 2001, the market basket percentage 
        increase minus 1.1 percentage points for hospitals (other than 
        sole community hospitals) in all areas, and the market basket 
        percentage increase for sole community hospitals,
            ``(XVII) for fiscal year 2002, the market basket percentage 
        increase minus 1.1 percentage points for hospitals in all 
        areas, and''.

SEC. 407. INCREASED FLEXIBILITY IN PROVIDING GRADUATE PHYSICIAN 
              TRAINING IN RURAL AND OTHER AREAS.

    (a) Counting Primary Care Residents on Certain Approved Leaves of 
Absence in Base Year FTE Count.--
            (1) Payment for direct graduate medical education.--Section 
        1886(h)(4)(F) (42 U.S.C. 1395ww(h)(4)(F)) is amended--
                    (A) by redesignating the first sentence as clause 
                (i) with the heading ``In general.--'' and appropriate 
                indentation; and
                    (B) by adding at the end the following new clause:
                            ``(ii) Counting primary care residents on 
                        certain approved leaves of absence in base year 
                        fte count.--
                                    ``(I) In general.--In determining 
                                the number of such full-time equivalent 
                                residents for a hospital's most recent 
                                cost reporting period ending on or 
                                before December 31, 1996, for purposes 
                                of clause (i), the Secretary shall 
                                count an individual to the extent that 
                                the individual would have been counted 
                                as a primary care resident for such 
                                period but for the fact that the 
                                individual, as determined by the 
                                Secretary, was on maternity or 
                                disability leave or a similar approved 
                                leave of absence.
                                    ``(II) Limitation to 3 fte 
                                residents for any hospital.--The total 
                                number of individuals counted under 
                                subclause (I) for a hospital may not 
                                exceed 3 full-time equivalent 
                                residents.''.
            (2) Payment for indirect medical education.--Section 
        1886(d)(5)(B)(v) (42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by 
        adding at the end the following: ``Rules similar to the rules 
        of subsection (h)(4)(F)(ii) shall apply for purposes of this 
        clause.''.
            (3) Effective date.--
                    (A) DGME.--The amendments made by paragraph (1) 
                apply to cost reporting periods that begin on or after 
                the date of the enactment of this Act.
                    (B) IME.--The amendment made by paragraph (2) 
                applies to discharges occurring in cost reporting 
                periods that begin on or after such date of enactment.
    (b) Permitting 30 Percent Expansion in Current GME Training 
Programs for Hospitals Located in Rural Areas.--
            (1) Payment for direct graduate medical education.--Section 
        1886(h)(4)(F)(i) (42 U.S.C. 1395ww(h)(4)(F)(i)), as amended by 
        subsection (a)(1), is amended by inserting ``(or, 130 percent 
        of such number in the case of a hospital located in a rural 
        area)'' after ``may not exceed the number''.
            (2) Payment for indirect medical education.--Section 
        1886(d)(5)(B)(v) (42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by 
        inserting ``(or, 130 percent of such number in the case of a 
        hospital located in a rural area)'' after ``may not exceed the 
        number''.
            (3) Effective dates.--
                    (A) DGME.--The amendment made by paragraph (1) 
                applies to cost reporting periods beginning on or after 
                April 1, 2000.
                    (B) IME.--The amendment made by paragraph (2) 
                applies to discharges occurring on or after April 1, 
                2000.
    (c) Special Rule for Nonrural Facilities Serving Rural Areas.--
            (1) In general.--Section 1886(h)(4)(H) (42 U.S.C. 
        1395ww(h)(4)(H)) is amended by adding at the end the following 
        new clause:
                            ``(iv) Nonrural hospitals operating 
                        training programs in rural areas.--In the case 
                        of a hospital that is not located in a rural 
                        area but establishes separately accredited 
                        approved medical residency training programs 
                        (or rural tracks) in an rural area or has an 
                        accredited training program with an integrated 
                        rural track, the Secretary shall adjust the 
                        limitation under subparagraph (F) in an 
                        appropriate manner insofar as it applies to 
                        such programs in such rural areas in order to 
                        encourage the training of physicians in rural 
                        areas.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies with respect to--
                    (A) payments to hospitals under section 1886(h) of 
                the Social Security Act (42 U.S.C. 1395ww(h)) for cost 
                reporting periods beginning on or after April 1, 2000; 
                and
                    (B) payments to hospitals under section 
                1886(d)(5)(B)(v) of such Act (42 U.S.C. 
                1395ww(d)(5)(B)(v)) for discharges occurring on or 
                after April 1, 2000.
    (d) Not Counting Against Numerical Limitation Certain Interns and 
Residents Transferred from a VA Residency Program That Loses 
Accreditation.--
            (1) In general.--Any applicable resident described in 
        paragraph (2) shall not be taken into account in applying any 
        limitation regarding the number of residents or interns for 
        which payment may be made under section 1886 of the Social 
        Security Act (42 U.S.C. 1395ww).
            (2) Applicable resident described.--An applicable resident 
        described in this paragraph is a resident or intern who--
                    (A) participated in graduate medical education at a 
                facility of the Department of Veterans Affairs;
                    (B) was subsequently transferred on or after 
                January 1, 1997, and before July 31, 1998, to a 
                hospital that was not a Department of Veterans Affairs 
                facility; and
                    (C) was transferred because the approved medical 
                residency program in which the resident or intern 
                participated would lose accreditation by the 
                Accreditation Council on Graduate Medical Education if 
                such program continued to train residents at the 
                Department of Veterans Affairs facility.
            (3) Effective date.--
                    (A) In general.--Paragraph (1) applies as if 
                included in the enactment of BBA.
                    (B) Retroactive payments.--If the Secretary of 
                Health and Human Services determines that a hospital 
                operating an approved medical residency program is owed 
                payments as a result of enactment of this subsection, 
                the Secretary shall make such payments not later than 
                60 days after the date of the enactment of this Act.

SEC. 408. ELIMINATION OF CERTAIN RESTRICTIONS WITH RESPECT TO HOSPITAL 
              SWING BED PROGRAM.

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

SEC. 409. GRANT PROGRAM FOR RURAL HOSPITAL TRANSITION TO PROSPECTIVE 
              PAYMENT.

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

SEC. 410. GAO STUDY ON GEOGRAPHIC RECLASSIFICATION.

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

                   Subtitle B--Other Rural Provisions

SEC. 411. MEDPAC STUDY OF RURAL PROVIDERS.

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

SEC. 412. EXPANSION OF ACCESS TO PARAMEDIC INTERCEPT SERVICES IN RURAL 
              AREAS.

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

SEC. 413. PROMOTING PROMPT IMPLEMENTATION OF INFORMATICS, TELEMEDICINE, 
              AND EDUCATION DEMONSTRATION PROJECT.

    Section 4207 of BBA (42 U.S.C. 1395b-1 note) is amended--
            (1) in subsection (a)(1), by adding at the end the 
        following: ``The Secretary shall make an award for such project 
        not later than 3 months after the date of the enactment of the 
        Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
        1999. The Secretary shall accept the proposal adjudged to be 
        the best technical proposal as of such date of enactment 
        without the need for additional review or resubmission of 
        proposals.'';
            (2) in subsection (a)(2)(A), by inserting before the period 
        at the end the following: ``that qualify as Federally 
        designated medically underserved areas or health professional 
        shortage areas at the time of enrollment of beneficiaries under 
        the project'';
            (3) in subsection (c)(2), by striking ``and the source and 
        amount of non-Federal funds used in the project'';
            (4) in subsection (d)(2)(A), by striking ``at a rate of 50 
        percent of the costs that are reasonable and'' and inserting 
        ``for the costs that are'';
            (5) in subsection (d)(2)(B)(i), by striking ``(but only in 
        the case of patients located in medically underserved areas)'' 
        and inserting ``or at sites providing health care to patients 
        located in medically underserved areas'';
            (6) in subsection (d)(2)(C)(i), by striking ``to deliver 
        medical informatics services under'' and inserting ``for 
        activities related to''; and
            (7) by amending paragraph (4) of subsection (d) to read as 
        follows:
            ``(4) Cost-sharing.--The project may not impose cost-
        sharing on a medicare beneficiary for the receipt of services 
        under the project. Project costs will cover all costs to 
        medicare beneficiaries and providers related to participation 
        in the project.''.

 TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

      Subtitle A--Provisions To Accommodate and Protect Medicare 
                             Beneficiaries

SEC. 501. CHANGES IN MEDICARE+CHOICE ENROLLMENT RULES.

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

SEC. 502. CHANGE IN EFFECTIVE DATE OF ELECTIONS AND CHANGES OF 
              ELECTIONS OF MEDICARE+CHOICE PLANS.

    (a) Open Enrollment.--Section 1851(f)(2) (42 U.S.C. 1395w-21(f)(2)) 
is amended--
            (1) by inserting ``or change'' before ``is made''; and
            (2) by inserting ``, except that if such election or change 
        is made after the 10th day of any calendar month, then the 
        election or change shall not take effect until the first day of 
        the second calendar month following the date on which the 
        election or change is made'' before the period.
    (b) Effective Date.--The amendments made by this section apply to 
elections and changes of coverage made on or after January 1, 2000.

SEC. 503. 2-YEAR EXTENSION OF MEDICARE COST CONTRACTS.

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

      Subtitle B--Provisions To Facilitate Implementation of the 
                        Medicare+Choice Program

SEC. 511. PHASE-IN OF NEW RISK ADJUSTMENT METHODOLOGY; STUDIES AND 
              REPORTS ON RISK ADJUSTMENT.

    (a) Phase-In.--Section 1853(a)(3)(C) (42 U.S.C. 1395w-23(a)(3)(C)) 
is amended--
            (1) by redesignating the first sentence as clause (i) with 
        the heading ``In general.--'' and appropriate indentation; and
            (2) by adding at the end the following new clause:
                            ``(ii) Phase-in.--Such risk adjustment 
                        methodology shall be implemented in a phased-in 
                        manner so that the methodology insofar as it 
                        makes adjustments to capitation rates for 
                        health status applies to--
                                    ``(I) 10 percent of \1/12\ of the 
                                annual Medicare+Choice capitation rate 
                                in 2000 and 2001; and
                                    ``(II) not more than 20 percent of 
                                such capitation rate in 2002.''.
    (b) MedPAC Study and Report.--
            (1) Study.--The Medicare Payment Advisory Commission shall 
        conduct a study that evaluates the methodology used by the 
        Secretary of Health and Human Services in developing the risk 
        factors used in adjusting the Medicare+Choice capitation rate 
        paid to Medicare+Choice organizations under section 1853 of the 
        Social Security Act (42 U.S.C. 1395w-23) and includes the 
        issues described in paragraph (2).
            (2) Issues to be studied.--The issues described in this 
        paragraph are the following:
                    (A) The ability of the average risk adjustment 
                factor applied to a Medicare+Choice plan to explain 
                variations in plans' average per capita medicare costs, 
                as reported by Medicare+Choice plans in the plans' 
                adjusted community rate filings.
                    (B) The year-to-year stability of the risk factors 
                applied to each Medicare+Choice plan and the potential 
                for substantial changes in payment for small 
                Medicare+Choice plans.
                    (C) For medicare beneficiaries newly enrolled in 
                Medicare+Choice plans in a given year, the 
                correspondence between the average risk factor 
                calculated from medicare fee-for-service data for those 
                individuals from the period prior to their enrollment 
                in a Medicare+Choice plan and the average risk factor 
                calculated for such individuals during their initial 
                year of enrollment in a Medicare+Choice plan.
                    (D) For medicare beneficiaries disenrolling from or 
                switching among Medicare+Choice plans in a given year, 
                the correspondence between the average risk factor 
                calculated from data pertaining to the period prior to 
                their disenrollment from a Medicare+Choice plan and the 
                average risk factor calculated from data pertaining to 
                the period after disenrollment.
                    (E) An evaluation of the exclusion of 
                ``discretionary'' hospitalizations from consideration 
                in the risk adjustment methodology.
                    (F) Suggestions for changes or improvements in the 
                risk adjustment methodology.
            (3) Report.--Not later than December 1, 2000, the 
        Commission shall submit a report to Congress on the study 
        conducted under paragraph (1), together with any 
        recommendations for legislation that the Commission determines 
        to be appropriate as a result of such study.
    (c) Study and Report Regarding Reporting of Encounter Data.--
            (1) Study.--The Secretary of Health and Human Services 
        shall conduct a study on how to reduce the costs and burdens on 
        Medicare+Choice organizations of their complying with reporting 
        requirements for encounter data imposed by the Secretary in 
        establishing and implementing a risk adjustment methodology 
        used in making payments to such organizations under section 
        1853 of the Social Security Act (42 U.S.C. 1395w-23). The 
        Secretary shall consult with representatives of Medicare+Choice 
        organizations in conducting the study. The study shall address 
        the following issues:
                    (A) Limiting the number and types of sites of 
                services (that are in addition to inpatient sites) for 
                which encounter data must be reported.
                    (B) Establishing alternative risk adjustment 
                methods that would require submission of less data.
                    (C) The potential for Medicare+Choice organizations 
                to misreport, overreport, or underreport prevalence of 
                diagnoses in outpatient sites of care, the potential 
                for increases in payments to Medicare+Choice 
                organizations from changes in Medicare+Choice plan 
                coding practices (commonly known as ``coding creep'') 
                and proposed methods for detecting and adjusting for 
                such variations in diagnosis coding as part of the risk 
                adjustment methodology using encounter data from 
                multiple sites of care.
                    (D) The impact of such requirements on the 
                willingness of insurers to offer Medicare+Choice MSA 
                plans and options for modifying encounter data 
                reporting requirements to accommodate such plans.
                    (E) Differences in the ability of Medicare+Choice 
                organizations to report encounter data, and the 
                potential for adverse competitive impacts on group and 
                staff model health maintenance organizations or other 
                integrated providers of care based on data reporting 
                capabilities.
            (2) Report.--Not later than January 1, 2001, the Secretary 
        shall submit a report to Congress on the study conducted under 
        this subsection, together with any recommendations for 
        legislation that the Secretary determines to be appropriate as 
        a result of such study.

SEC. 512. ENCOURAGING OFFERING OF MEDICARE+CHOICE PLANS IN AREAS 
              WITHOUT PLANS.

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

SEC. 513. MODIFICATION OF 5-YEAR RE-ENTRY RULE FOR CONTRACT 
              TERMINATIONS.

    (a) Reduction of General Exclusion Period to 2 Years.--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) Specific Exception Where Change in Payment Policy.--
            (1) In general.--Section 1857(c)(4) (42 U.S.C. 1395w-
        27(c)(4)) is amended--
                    (A) by striking ``except in circumstances'' and 
                inserting ``except as provided in subparagraph (B) and 
                except in such other circumstances'';
                    (B) by redesignating the sentence following ``(4)'' 
                as a subparagraph (A) with an appropriate indentation 
                and the heading ``In general.--''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) Earlier re-entry permitted where change in 
                payment policy.--Subparagraph (A) shall not apply with 
                respect to the offering by a Medicare+Choice 
                organization of a Medicare+Choice plan in a 
                Medicare+Choice payment area if during the 6-month 
                period beginning on the date the organization notified 
                the Secretary of the intention to terminate the most 
                recent previous contract, there was a legislative 
                change enacted (or a regulatory change adopted) that 
                has the effect of increasing payment amounts under 
                section 1853 for that Medicare+Choice payment area.''.
            (2) Construction relating to additional exceptions.--
        Nothing in the amendment made by paragraph (1)(C) shall be 
        construed to affect the authority of the Secretary of Health 
        and Human Services to provide for exceptions in addition to the 
        exception provided in such amendment, including exceptions 
        provided under Operational Policy Letter #103 (OPL99.103).
    (c) Effective Date.--The amendments made by this section apply to 
contract terminations occurring before, on, or after the date of the 
enactment of this Act.

SEC. 514. CONTINUED COMPUTATION AND PUBLICATION OF MEDICARE ORIGINAL 
              FEE-FOR-SERVICE EXPENDITURES ON A COUNTY-SPECIFIC BASIS.

    (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 beginning with 2001 at the time 
        of publication of the annual Medicare+Choice capitation rates 
        under paragraph (1), of the following information for the 
        original medicare fee-for-service program under parts A and B 
        (exclusive of individuals eligible for coverage under section 
        226A) for each Medicare+Choice payment area for the second 
        calendar year ending before the date of publication:
                    ``(A) Total expenditures per capita per month, 
                computed separately for part A and for part B.
                    ``(B) The expenditures described in subparagraph 
                (A) reduced by the best estimate of the expenditures 
                (such as graduate medical education and 
                disproportionate share hospital payments) not related 
                to the payment of claims.
                    ``(C) The average risk factor for the covered 
                population based on diagnoses reported for medicare 
                inpatient services, using the same methodology as is 
                expected to be applied in making payments under 
                subsection (a).
                    ``(D) Such average risk factor based on diagnoses 
                for inpatient and other sites of service, using the 
                same methodology as is expected to be applied in making 
                payments under subsection (a).''.
    (b) Special Rule for 2001.--In providing for the publication of 
information under section 1853(b)(4) of the Social Security Act (42 
U.S.C. 1395w-23(b)(4)), as added by subsection (a), in 2001, the 
Secretary of Health and Human Services shall also include the 
information described in such section for 1998, as well as for 1999.

SEC. 515. FLEXIBILITY TO TAILOR BENEFITS UNDER MEDICARE+CHOICE PLANS.

    (a) In General.--Section 1854 (42 U.S.C. 1395w-24) is amended--
            (1) in subsection (a)(1), by inserting ``(or segment of 
        such an area if permitted under subsection (h))'' after 
        ``service area'' in the matter preceding subparagraph (A); and
            (2) by adding at the end the following:
    ``(h) Permitting Use of Segments of Service Areas.--The Secretary 
shall permit a Medicare+Choice organization to elect to apply the 
provisions of this section uniformly to separate segments of a service 
area (rather than uniformly to an entire service area) as long as such 
segments are composed of one or more Medicare+Choice payment areas.''.
    (b) Effective Date.--The amendments made by this section apply to 
contract years beginning on or after January 1, 2001.

SEC. 516. DELAY IN DEADLINE FOR SUBMISSION OF ADJUSTED COMMUNITY RATES.

    (a) Delay in Deadline for Submission of Adjusted Community Rates.--
Section 1854(a)(1) (42 U.S.C. 1395w-24(a)(1)) is amended by striking 
``May 1'' and inserting ``July 1'' in the matter preceding subparagraph 
(A).
    (b) Effective Date.--The amendment made by subsection (a) applies 
to information submitted by Medicare+Choice organizations for years 
beginning with 1999.

SEC. 517. REDUCTION IN ADJUSTMENT IN NATIONAL PER CAPITA 
              MEDICARE+CHOICE GROWTH PERCENTAGE FOR 2002.

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

SEC. 518. 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.--
                    ``(A) In general.--The Secretary shall provide that 
                a Medicare+Choice organization is deemed to meet all 
                the requirements described in any specific clause of 
                subparagraph (B) 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 and enforces standards that meet or exceed the 
                standards established under section 1856 to carry out 
                the requirements in such clause.
                    ``(B) Requirements described.--The provisions 
                described in this subparagraph are the following:
                            ``(i) Paragraphs (1) and (2) of this 
                        subsection (relating to quality assurance 
                        programs).
                            ``(ii) Subsection (b) (relating to 
                        antidiscrimination).
                            ``(iii) Subsection (d) (relating to access 
                        to services).
                            ``(iv) Subsection (h) (relating to 
                        confidentiality and accuracy of enrollee 
                        records).
                            ``(v) Subsection (i) (relating to 
                        information on advance directives).
                            ``(vi) Subsection (j) (relating to provider 
                        participation rules).
                    ``(C) Timely action on applications.--The Secretary 
                shall determine, within 210 days after the date the 
                Secretary receives an application by a private 
                accrediting organization and using the criteria 
                specified in section 1865(b)(2), whether the process of 
                the private accrediting organization meets the 
                requirements with respect to any specific clause in 
                subparagraph (B) with respect to which the application 
                is made. The Secretary may not deny such an application 
                on the basis that it seeks to meet the requirements 
                with respect to only one, or more than one, such 
                specific clause.
                    ``(D) Construction.--Nothing in this paragraph 
                shall be construed as limiting the authority of the 
                Secretary under section 1857, including the authority 
                to terminate contracts with Medicare+Choice 
                organizations under subsection (c)(2) of such 
                section.''.

SEC. 519. TIMING OF MEDICARE+CHOICE HEALTH INFORMATION FAIRS.

    (a) In General.--Section 1851(e)(3)(C) (42 U.S.C. 1395w-
21(e)(3)(C)) is amended by striking ``In the month of November'' and 
inserting ``During the fall season''.
    (b) Effective Date.--The amendment made by subsection (a) first 
applies to campaigns conducted beginning in 2000.

SEC. 520. QUALITY ASSURANCE REQUIREMENTS FOR PREFERRED PROVIDER 
              ORGANIZATION PLANS.

    (a) In General.--Section 1852(e)(2) (42 U.S.C. 1395w-22(e)(2)) is 
amended--
            (1) in subparagraph (A), by striking ``or a non-network MSA 
        plan'' and inserting ``, a non-network MSA plan, or a preferred 
        provider organization plan';
            (2) in subparagraph (B)--
                    (A) in the heading, by striking ``and non-network 
                msa plans'' and inserting ``, non-network msa plans, 
                and preferred provider organization plans''; and
                    (B) by striking ``or a non-network MSA plan'' and 
                inserting ``, a non-network MSA plan, or a preferred 
                provider organization plan'';
            (3) by adding at the end the following:
                    ``(D) Definition of preferred provider organization 
                plan.--In this paragraph, the term `preferred provider 
                organization plan' means a Medicare+Choice plan that--
                            ``(i) has a network of providers that have 
                        agreed to a contractually specified 
                        reimbursement for covered benefits with the 
                        organization offering the plan;
                            ``(ii) provides for reimbursement for all 
                        covered benefits regardless of whether such 
                        benefits are provided within such network of 
                        providers; and
                            ``(iii) is offered by an organization that 
                        is not licensed or organized under State law as 
                        a health maintenance organization.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
contract years beginning on or after January 1, 2000.
    (c) Quality Improvement Standards.--
            (1) Study.--The Medicare Payment Advisory Commission shall 
        conduct a study on the appropriate quality improvement 
        standards that should apply to--
                    (A) each type of Medicare+Choice plan described in 
                section 1851(a)(2) of the Social Security Act (42 
                U.S.C. 1395w-21(a)(2)), including each type of 
                Medicare+Choice plan that is a coordinated care plan 
                (as described in subparagraph (A) of such section); and
                    (B) the original medicare fee-for-service program 
                under parts A and B title XVIII of such Act (42 U.S.C. 
                1395 et seq.).
            (2) Considerations.--Such study shall specifically examine 
        the effects, costs, and feasibility of requiring entities, 
        physicians, and other health care providers that provide items 
        and services under the original medicare fee-for-service 
        program to comply with quality standards and related reporting 
        requirements that are comparable to the quality standards and 
        related reporting requirements that are applicable to 
        Medicare+Choice organizations.
            (3) Report.--Not later than 2 years after the date of the 
        enactment of this Act, such Commission shall submit a report to 
        Congress on the study conducted under this subsection, together 
        with any recommendations for legislation that it determines to 
        be appropriate as a result of such study.

SEC. 521. CLARIFICATION OF NONAPPLICABILITY OF CERTAIN PROVISIONS OF 
              DISCHARGE PLANNING PROCESS TO MEDICARE+CHOICE PLANS.

    Section 1861(ee) (42 U.S.C. 1395x(ee)(2)(H)) is amended by adding 
at the end the following:
    ``(3) With respect to a discharge plan for an individual who is 
enrolled with a Medicare+Choice organization under a Medicare+Choice 
plan and is furnished inpatient hospital services by a hospital under a 
contract with the organization--
            ``(A) the discharge planning evaluation under paragraph 
        (2)(D) is not required to include information on the 
        availability of home health services through individuals and 
        entities which do not have a contract with the organization; 
        and
            ``(B) notwithstanding subparagraph (H)(i), the plan may 
        specify or limit the provider (or providers) of post-hospital 
        home health services or other post-hospital services under the 
        plan.''.

SEC. 522. USER FEE FOR MEDICARE+CHOICE ORGANIZATIONS BASED ON NUMBER OF 
              ENROLLED BENEFICIARIES.

    (a) In General.--Section 1857(e)(2) (42 U.S.C. 1395w-27(e)(2)) is 
amended--
            (1) in subparagraph (B), by striking ``Any amounts 
        collected are authorized to be appropriated only for'' and 
        inserting ``Any amounts collected shall be available without 
        further appropriation to the Secretary for'';
            (2) by amending subparagraph (C) to read as follows:
                    ``(C) Authorization of appropriations.--There are 
                authorized to be appropriated for the purposes 
                described in subparagraph (B) for each fiscal year 
                beginning with fiscal year 2001 an amount equal to 
                $100,000,000, reduced by the amount of fees authorized 
                to be collected under this paragraph for the fiscal 
                year.'';
            (3) in subparagraph (D)(ii)--
                    (A) in subclause (II), by striking ``and'';
                    (B) in subclause (III), by striking `` and each 
                subsequent fiscal year.'' and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(IV) the Medicare+Choice portion (as 
                        defined in subparagraph (E)) of $100,000,000 in 
                        fiscal year 2001 and each succeeding fiscal 
                        year.''; and
            (4) by adding at the end the following:
                    ``(E) Medicare+choice portion defined.--In this 
                paragraph, the term `Medicare+Choice portion' means, 
                for a fiscal year, the ratio, as estimated by the 
                Secretary, of--
                            ``(i) the average number of individuals 
                        enrolled in Medicare+Choice plans during the 
                        fiscal year, to
                            ``(ii) the average number of individuals 
                        entitled to benefits under part A, and enrolled 
                        under part B, during the fiscal year.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
fees charged on or after January 1, 2001. The Secretary of Health and 
Human Services may not increase the fees charged under section 
1857(e)(2) of the Social Security Act (42 U.S.C. 1395w-27(e)(2)) for 
the 3-month period beginning with October 2000 above the level in 
effect during the previous 9-month period.

SEC. 523. CLARIFICATION REGARDING THE ABILITY OF A RELIGIOUS FRATERNAL 
              BENEFIT SOCIETY TO OPERATE ANY MEDICARE+CHOICE PLAN.

    Section 1859(e)(2) (42 U.S.C. 1395w-29(e)(2)) is amended in the 
matter preceding subparagraph (A) by striking ``section 1851(a)(2)(A)'' 
and inserting ``section 1851(a)(2)''.

SEC. 524. RULES REGARDING PHYSICIAN REFERRALS FOR MEDICARE+CHOICE 
              PROGRAM.

    (a) In General.--Section 1877(b)(3) (42 U.S.C. 1395nn(b)(3)) is 
amended--
            (1) in subparagraph (C), by striking ``or'' at the end;
            (3) by adding at the end the following:
            (2) in subparagraph (D), by striking the period at the end 
        and inserting ``, or''; and
                    ``(E) that is a Medicare+Choice organization under 
                part C that is offering a coordinated care plan 
                described in section 1851(a)(2)(A) to an individual 
                enrolled with the organization.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to services furnished on or after the date of the enactment of this 
Act.

  Subtitle C--Demonstration Projects and Special Medicare Populations

SEC. 531. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION 
              DEMONSTRATION (SHMO) PROJECT AUTHORITY.

    (a) Extension.--Section 4018(b) of the Omnibus Budget 
Reconciliation Act of 1987 (Public Law 100-203) is amended--
            (1) in paragraph (1), by striking ``December 31, 2000'' and 
        inserting ``the date that is 18 months after the date that the 
        Secretary submits to Congress the report described in section 
        4014(c) of the Balanced Budget Act of 1997'';
            (2) in paragraph (4), by striking ``March 31, 2001'' and 
        inserting ``the date that is 21 months after the date on which 
        Secretary submits to Congress the report described in section 
        4014(c) of the Balanced Budget Act of 1997''; and
            (3) by adding at the end of paragraph (4) the following: 
        ``Not later than 6 months after the date the Secretary submits 
        such final report, the Medicare Payment Advisory Commission 
        shall submit to Congress a report containing recommendations 
        regarding such project.''.
    (b) Substitution of Aggregate Cap.--Section 13567(c) of the Omnibus 
Budget Reconciliation Act of 1993 (Public Law 103-66) is amended to 
read as follows:
    ``(c) Aggregate Limit on Number of Members.--The Secretary of 
Health and Human Services may not impose a limit on the number of 
individuals that may participate in a project conducted under section 
2355 of the Deficit Reduction Act of 1984, other than an aggregate 
limit of not less than 324,000 for all sites.''.

SEC. 532. EXTENSION OF MEDICARE COMMUNITY NURSING ORGANIZATION 
              DEMONSTRATION PROJECT.

    (a) Extension.--Notwithstanding any other provision of law, any 
demonstration project conducted under section 4079 of the Omnibus 
Budget Reconciliation Act of 1987 (Public Law 100-123; 42 U.S.C. 1395mm 
note) and conducted for the additional period of 2 years as provided 
for under section 4019 of BBA, shall be conducted for an additional 
period of 2 years. The Secretary of Health and Human Services shall 
provide for such reduction in payments under such project in the 
extension period provided under the previous sentence as the Secretary 
determines is necessary to ensure that total Federal expenditures 
during the extension period under the project do not exceed the total 
Federal expenditures that would have been made under title XVIII of the 
Social Security Act if such project had not been so extended.
    (b) Report.--Not later than July 1, 2001, the Secretary of Health 
and Human Services shall submit to Congress a report describing the 
results of any demonstration project conducted under section 4079 of 
the Omnibus Budget Reconciliation Act of 1987, and describing the data 
collected by the Secretary relevant to the analysis of the results of 
such project, including the most recently available data through the 
end of 2000.

SEC. 533. MEDICARE+CHOICE COMPETITIVE BIDDING DEMONSTRATION PROJECT.

    Section 4011 of BBA (42 U.S.C. 1395w-23 note) is amended--
            (1) in subsection (a)--
                    (A) by striking ``The Secretary'' and inserting the 
                following (and conforming the indentation for the 
                remainder of the subsection accordingly):
            ``(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 medicare fee-for-
                service program into project.--What changes would be 
                required in the project to feasibly incorporate the 
                original medicare fee-for-service 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 
                medicare fee-for-service 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 under subsection (g), 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 medicare 
                fee-for-service 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 the per capita bid for which is less than 
                        the standard per capita government contribution 
                        (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. 534. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES DEMONSTRATION 
              PROJECTS.

    Section 9215(a) of the Consolidated Omnibus Budget Reconciliation 
Act of 1985, as amended by section 6135 of the Omnibus Budget 
Reconciliation Act of 1989, section 13557 of the Omnibus Budget 
Reconciliation Act of 1993, and section 4017 of BBA, is amended by 
striking ``December 31, 2000'' and inserting ``December 31, 2002''.

SEC. 535. MEDICARE COORDINATED CARE DEMONSTRATION PROJECT.

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

SEC. 536. MEDIGAP PROTECTIONS FOR PACE PROGRAM ENROLLEES.

    (a) In General.--Section 1882(s)(3)(B) (42 U.S.C. 1395ss(s)(3)(B)) 
is amended--
            (1) in clause (ii), by inserting ``or the individual is 65 
        years of age or older and is enrolled with a PACE provider 
        under section 1894, and there are circumstances that would 
        permit the discontinuance of the individual's enrollment with 
        such provider under circumstances that are similar to the 
        circumstances that would permit discontinuance of the 
        individual's election under the first sentence of such section 
        if such individual were enrolled in a Medicare+Choice plan'' 
        before the period;
            (2) in clause (v)(II), by inserting ``any PACE provider 
        under section 1894,'' after ``demonstration project 
        authority,''; and
            (3) in clause (vi)--
                    (A) by inserting ``or in a PACE program under 
                section 1894'' after ``part C''; and
                    (B) by striking ``such plan'' and inserting ``such 
                plan or such program''.
    (b) Effective Date.--The amendments made by this section shall 
apply to terminations or discontinuances made on or after the date of 
the enactment of this Act.

  Subtitle D--Medicare+Choice Nursing and Allied Health Professional 
                           Education Payments

SEC. 541. MEDICARE+CHOICE NURSING AND ALLIED HEALTH PROFESSIONAL 
              EDUCATION PAYMENTS.

    (a) Additional Payments for Nursing and Allied Health Education.--
Section 1886 (42 U.S.C. 1395ww) is amended by adding at the end the 
following new subsection:
    ``(l) Payment for Nursing and Allied Health Education for Managed 
Care Enrollees.--
            ``(1) In general.--For portions of cost reporting periods 
        occurring in a year (beginning with 2000), the Secretary shall 
        provide for an additional payment amount for any hospital that 
        receives payments for the costs of approved educational 
        activities for nurse and allied health professional training 
        under section 1861(v)(1).
            ``(2) Payment amount.--The additional payment amount under 
        this subsection for each hospital for portions of cost 
        reporting periods occurring in a year shall be an amount 
        specified by the Secretary in a manner consistent with the 
        following:
                    ``(A) Determination of managed care enrollee 
                payment ratio for graduate medical education 
                payments.--The Secretary shall estimate the ratio of 
                payments for all hospitals for portions of cost 
                reporting periods occurring in the year under 
                subsection (h)(3)(D) to total direct graduate medical 
                education payments estimated for such portions of 
                periods under subsection (h)(3).
                    ``(B) Application to fee-for-service nursing and 
                allied health education payments.--Such ratio shall be 
                applied to the Secretary's estimate of total payments 
                for nursing and allied health education determined 
                under section 1861(v) for portions of cost reporting 
                periods occurring in the year to determine a total 
                amount of additional payments for nursing and allied 
                health education to be distributed to hospitals under 
                this subsection for portions of cost reporting periods 
                occurring in the year; except that in no case shall 
                such total amount exceed $60,000,000 in any year.
                    ``(C) Application to hospital.--The amount of 
                payment under this subsection to a hospital for 
                portions of cost reporting periods occurring in a year 
                is equal to the total amount of payments determined 
                under subparagraph (B) for the year multiplied by the 
                Secretary's estimate of the ratio of the amount of 
                payments made under section 1861(v) to the hospital for 
                nursing and allied health education activities for the 
                hospital's cost reporting period ending in the second 
                preceding fiscal year to the total of such amounts for 
                all hospitals for such cost reporting periods.''.
    (b) Adjustments in Payments for Direct Graduate Medical 
Education.--Section 1886(h)(3)(D) (42 U.S.C. 1395ww(h)(3)(D)) is 
amended--
            (1) in clause (i), by inserting ``, subject to clause 
        (iii),'' after ``shall equal'';
            (2) by redesignating clause (iii) as clause (iv); and
            (3) by inserting after clause (ii) the following new 
        clause:
                            ``(iii) Proportional reduction for nursing 
                        and allied health education.--The Secretary 
                        shall estimate a proportional adjustment in 
                        payments to all hospitals determined under 
                        clauses (i) and (ii) for portions of cost 
                        reporting periods beginning in a year 
                        (beginning with 2000) such that the 
                        proportional adjustment reduces payments in an 
                        amount for such year equal to the total 
                        additional payment amounts for nursing and 
                        allied health education determined under 
                        subsection (l) for portions of cost reporting 
                        periods occurring in that year.''.

                    Subtitle E--Studies and Reports

SEC. 551. REPORT ON ACCOUNTING FOR VA AND DOD EXPENDITURES FOR MEDICARE 
              BENEFICIARIES.

    Not later April 1, 2001, the Secretary of Health and Human 
Services, jointly with the Secretaries of Defense and of Veterans 
Affairs, shall submit to Congress a report on the estimated use of 
health care services furnished by the Departments of Defense and of 
Veterans Affairs to medicare beneficiaries, including both 
beneficiaries under the original medicare fee-for-service program and 
under the Medicare+Choice program. The report shall include an analysis 
of how best to properly account for expenditures for such services in 
the computation of Medicare+Choice capitation rates.

SEC. 552. MEDICARE PAYMENT ADVISORY COMMISSION STUDIES AND REPORTS.

    (a) Development of Special Payment Rules Under the Medicare+Choice 
Program for Frail Elderly Enrolled in Specialized Programs.--
            (1) Study.--The Medicare Payment Advisory Commission shall 
        conduct a study on the development of a payment methodology 
        under the Medicare+Choice program for frail elderly 
        Medicare+Choice beneficiaries enrolled in a Medicare+Choice 
        plan under a specialized program for the frail elderly that--
                    (A) accounts for the prevalence, mix, and severity 
                of chronic conditions among such frail elderly 
                Medicare+Choice beneficiaries;
                    (B) includes medical diagnostic factors from all 
                provider settings (including hospital and nursing 
                facility settings); and
                    (C) includes functional indicators of health status 
                and such other factors as may be necessary to achieve 
                appropriate payments for plans serving such 
                beneficiaries.
            (2) Report.--Not later than 1 year after the date of the 
        enactment of this Act, the Commission shall submit a report to 
        Congress on the study conducted under paragraph (1), together 
        with any recommendations for legislation that the Commission 
        determines to be appropriate as a result of such study.
    (b) 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 Assessment Commission shall submit to Congress a 
report on specific legislative changes that should be made to make MSA 
plans (as defined in section 1859(b)(3) of the Social Security Act, 42 
U.S.C. 1395w-29(b)(3)) a viable option under the Medicare+Choice 
program.

SEC. 553. GAO STUDIES, AUDITS, AND REPORTS.

    (a) Study of Medigap Policies.--
            (1) In general.--The Comptroller General of the United 
        States (in this section referred to as the ``Comptroller 
        General'') shall conduct a study of the issues described in 
        paragraph (2) regarding medicare supplemental policies 
        described in section 1882(g)(1) of the Social Security Act (42 
        U.S.C. 1395ss(g)(1)).
            (2) Issues to be studied.--The issues described in this 
        paragraph are the following:
                    (A) The level of coverage provided by each type of 
                medicare supplemental policy.
                    (B) The current enrollment levels in each type of 
                medicare supplemental policy.
                    (C) The availability of each type of medicare 
                supplemental policy to medicare beneficiaries over age 
                65\1/2\.
                    (D) The number and type of medicare supplemental 
                policies offered in each State.
                    (E) The average out-of-pocket costs (including 
                premiums) per beneficiary under each type of medicare 
                supplemental policy.
            (2) Report.--Not later than July 31, 2001, the Comptroller 
        General shall submit a report to Congress on the results of the 
        study conducted under this subsection, together with any 
        recommendations for legislation that the Comptroller General 
        determines to be appropriate as a result of such study.
    (b) GAO Audit and Reports on the Provision of Medicare+Choice 
Health Information to Beneficiaries.--
            (1) In general.--Beginning in 2000, the Comptroller General 
        shall conduct an annual audit of the expenditures by the 
        Secretary of Health and Human Services during the preceding 
        year in providing information regarding the Medicare+Choice 
        program under part C of title XVIII of the Social Security Act 
        (42 U.S.C. 1395w-21 et seq.) to eligible medicare 
        beneficiaries.
            (3) Reports.--Not later than March 31 of 2001, 2004, 2007, 
        and 2010, the Comptroller General shall submit a report to 
        Congress on the results of the audit of the expenditures of the 
        preceding 3 years conducted pursuant to subsection (a), 
        together with an evaluation of the effectiveness of the means 
        used by the Secretary of Health and Human Services in providing 
        information regarding the Medicare+Choice program under part C 
        of title XVIII of the Social Security Act (42 U.S.C. 1395w-21 
        et seq.) to eligible medicare beneficiaries.

                           TITLE VI--MEDICAID

SEC. 601. 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 ``0.1''.
    (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. 602. REMOVAL OF FISCAL YEAR LIMITATION ON CERTAIN TRANSITIONAL 
              ADMINISTRATIVE COSTS ASSISTANCE.

    (a) In General.--Section 1931(h) (42 U.S.C. 1396u-1(h)) is 
amended--
            (1) in paragraph (3), by striking ``and ending with fiscal 
        year 2000''; and
            (2) by striking paragraph (4).
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 114 of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (Public 
Law 104-193; 110 Stat. 2177).

SEC. 603. MODIFICATION OF THE PHASE-OUT OF PAYMENT FOR FEDERALLY-
              QUALIFIED HEALTH CENTER SERVICES AND RURAL HEALTH CLINIC 
              SERVICES BASED ON REASONABLE COSTS.

    (a) Modification of Phase-Out.--
            (1) In general.--Section 1902(a)(13)(C)(i) (42 U.S.C. 
        1396a(a)(13)(C)(i)) is amended by striking ``90 percent for 
        services furnished during fiscal year 2001, 85 percent for 
        services furnished during fiscal year 2002, or 70 percent for 
        services furnished during fiscal year 2003'' and inserting 
        ``fiscal year 2001, or fiscal year 2002, 90 percent for 
        services furnished during fiscal year 2003, or 85 percent for 
        services furnished during fiscal year 2004''.
            (2) Conforming amendment to end of transitional payment 
        rules.--Section 4712(c) of BBA (111 Stat. 509) is amended by 
        striking ``2003'' and inserting ``2004''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect as if included in the enactment of section 
        4712 of BBA (111 Stat. 508).
    (b) GAO Study and Report.--Not later than 1 year after the date of 
the enactment of this Act, the Comptroller General of the United States 
shall submit a report to Congress that evaluates the effect on 
Federally-qualified health centers and rural health clinics and on the 
populations served by such centers and clinics of the phase-out and 
elimination of the reasonable cost basis for payment for Federally-
qualified health center services and rural health clinic services 
provided under section 1902(a)(13)(C)(i) of the Social Security Act (42 
U.S.C. 1396a(a)(13)(C)(i)), as amended by section 4712 of BBA (111 
Stat. 508) and subsection (a) of this section. Such report shall 
include an analysis of the amount, method, and impact of payments made 
by States that have provided for payment under title XIX of such Act 
for such services on a basis other than payment of costs which are 
reasonable and related to the cost of furnishing such services, 
together with any recommendations for legislation, including whether a 
new payment system is needed, that the Comptroller General determines 
to be appropriate as a result of the study.

SEC. 604. PARITY IN REIMBURSEMENT FOR CERTAIN UTILIZATION AND QUALITY 
              CONTROL SERVICES; ELIMINATION OF DUPLICATIVE REQUIREMENTS 
              FOR EXTERNAL QUALITY REVIEW OF MEDICAID MANAGED CARE 
              ORGANIZATIONS.

    (a) Parity in Reimbursement for Certain Utilization and Quality 
Control Services.--
            (1) Interim amendment to remove references to quality 
        review.--Section 1902(d) (42 U.S.C. 1396a(d)) is amended by 
        striking ``for the performance of the quality review functions 
        described in subsection (a)(30)(C),''.
            (2) Final amendments to remove references to quality 
        review.--
                    (A) Section 1902.--Section 1902(d) (42 U.S.C. 
                1396a(d)) is amended by striking ``(including quality 
                review functions described in subsection (a)(30)(C))''.
                    (B) Section 1903.--Section 1903(a)(3)(C)(i) (42 
                U.S.C. 1396b(a)(3)(C)(i)) is amended by striking ``or 
                quality review''.
    (b) Elimination of Duplicative Requirements for External Quality 
Review of Medicaid Managed Care Organizations.--
            (1) In general.--Section 1902(a)(30) (42 U.S.C. 
        1396a(a)(30)) is amended--
                    (A) in subparagraph (A), by adding ``and'' at the 
                end;
                    (B) in subparagraph (B)(ii), by striking ``and'' at 
                the end; and
                    (C) by striking subparagraph (C).
            (2) Conforming amendment.--Section 1903(m)(6)(B) (42 U.S.C. 
        1396b(m)(6)(B)) is amended--
                    (A) in clause (ii), by adding ``and'' at the end;
                    (B) in clause (iii), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking clause (iv).
    (c) Effective Dates.--
            (1) The amendment made by subsection (a)(1) applies to 
        expenditures made on and after the date of the enactment of 
        this Act.
            (2) The amendments made by subsections (a)(2) and (b) apply 
        as of such date as the Secretary of Health and Human Services 
        certifies to Congress that the Secretary is fully implementing 
        section 1932(c)(2) of the Social Security Act (42 U.S.C. 1396u-
        2(c)(2)).

SEC. 605. INAPPLICABILITY OF ENHANCED MATCH UNDER THE STATE CHILDREN'S 
              HEALTH INSURANCE PROGRAM TO MEDICAID DSH PAYMENTS.

    (a) In General.--The last sentence of section 1905(b) (42 U.S.C. 
1396d(b)) is amended by inserting ``(other than expenditures under 
section 1923)'' after ``with respect to expenditures''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on October 1, 1999, and applies to expenditures made on or after 
such date.

SEC. 606. OPTIONAL DEFERMENT OF THE EFFECTIVE DATE FOR OUTPATIENT DRUG 
              AGREEMENTS.

    (a) In General.--Section 1927(a)(1) (42 U.S.C. 1396r-8(a)(1)) is 
amended by striking ``shall not be effective until'' and inserting 
``shall become effective as of the date on which the agreement is 
entered into or, at State option, on any date thereafter on or 
before''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to agreements entered into on or after the date of enactment of this 
Act.

SEC. 607. MAKING MEDICAID DSH TRANSITION RULE PERMANENT.

    (a) In General.--Section 4721(e) of BBA (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 BBA.

SEC. 608. MEDICAID TECHNICAL CORRECTIONS.

    (a) Section 1902(a)(64) (42 U.S.C. 1396a(a)(64)) is amended by 
adding ``and'' at the end.
    (b) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking 
``of of'' and inserting ``of''.
    (c) Section 1902(l) (42 U.S.C. 1396a(l)) is amended--
            (1) in paragraph (1)(C), by striking ``children children'' 
        and inserting ``children'';
            (2) in paragraph (3), in the matter preceding subparagraph 
        (A), by striking the first comma after ``(a)(10)(A)(i)(VII)''; 
        and
            (3) in paragraph (4)(B), by inserting a comma after 
        ``(a)(10)(A)(i)(IV)''.
    (d) Section 1902(v) (42 U.S.C. 1396a(v)) is amended by striking 
``(1)''.
    (e) Section 1903(b)(4) (42 U.S.C. 1396b(b)(4)) is amended, in the 
matter preceding subparagraph (A), by inserting ``of'' after ``for the 
use''.
    (f) The left margins of clauses (i) and (ii) of section 
1903(d)(3)(B) (42 U.S.C. 1396b(d)(3)(B)) are each realigned so as to 
align with the left margin of section 1903(d)(3)(A).
    (g) Section 1903(f)(2) (42 U.S.C. 1396b(f)(2)) is amended by 
striking the extra period at the end.
    (h) Section 1903(i)(14) (1396b(i)(14)) is amended by adding ``or'' 
after the semicolon.
    (i) Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is amended--
            (1) in clause (vi), by striking the semicolon the first 
        place it appears; and
            (2) by redesignating the clause (xi) added by section 
        4701(c)(3) of BBA (111 Stat. 493) as clause (xii).
    (j) Section 1903(o) (42 U.S.C. 1396b(o)) is amended by striking 
``1974))'' and inserting ``1974)''.
    (k) Section 1903(w) (42 U.S.C. 1396b(w)) is amended--
            (1) in paragraph (1)(B), by striking ``puroses'' and 
        inserting ``purposes'';
            (2) in paragraph (3)(B), by inserting a comma after 
        ``(D)''; and
            (3) by realigning the left margin of clause (viii) in 
        paragraph (7)(A) so as to align with the left margin of clause 
        (vii) of that paragraph.
    (l) Section 1905(b)(1) (42 U.S.C. 1396d(b)(1)) is amended by 
striking ``per centum,,'' and inserting ``per centum,''.
    (m) Section 1905(l)(2)(B) (42 U.S.C. 1936d(l)(2)(B)) is amended by 
striking ``a entity'' and inserting ``an entity''.
    (n) The heading for section 1910 (42 U.S.C. 1396i) is amended by 
striking ``of'' the first place it appears.
    (o) Section 1915 (42 U.S.C. 1396n) is amended--
            (1) in subsection (b), by striking ``1902(a)(13)(E)'' and 
        inserting ``1902(a)(13)(C)'';
            (2) in the last sentence of subsection (d)(5)(B)(iii), by 
        striking ``75'' and inserting ``65''; and
            (3) in subsection (h), by striking ``90 day'' and inserting 
        ``90 days''.
    (p) Section 1919 (42 U.S.C. 1396r) is amended--
            (1) in subsection (b)(3)(C)(i)(I), by striking ``not later 
        than'' the first place it appears; and
            (2) in subsection (d)(4)(A), by striking ``1124'' and 
        inserting ``1124)''.
    (q) Section 1920(b)(2)(D)(i)(I) (42 U.S.C. 1396r-1(b)(2)(D)(i)(I)) 
is amended by striking ``329, 330, or 340'' and inserting ``330 or 
330A''.
    (r) Section 1920A(d)(1)(B) (42 U.S.C. 1396r-1a(d)(1)(B)) is amended 
by striking ``a entity'' and inserting ``an entity''.
    (s) Section 1923(c)(3)(B) (42 U.S.C. 1396r-4(c)(3)(B)) is amended 
by striking ``patients.'' and inserting ``patients,''.
    (t) Section 1925 (42 U.S.C. 1396r-6) is amended--
            (1) in subsection (a)(3)(C), by striking ``(i)(VI) 
        (i)(VII),,'' and inserting ``(i)(VI), (i)(VII),''; and
            (2) in subsection (b)(3)(C)(i), by striking ``(i)(IV) 
        (i)(VI) (i)(VII),,'' and inserting ``(i)(IV), (i)(VI), 
        (i)(VII),''.
    (u) Section 1927 (42 U.S.C. 1396r-8) is amended--
            (1) in subsection (g)(2)(A)(ii)(II)(cc), by striking 
        ``individuals'' and inserting ``individual's'';
            (2) in subsection (i)(1), by striking ``the the'' and 
        inserting ``the''; and
            (3) in subsection (k)(7)--
                    (A) in subparagraph (A)(iv), by striking 
                ``distributers'' and inserting ``distributors''; and
                    (B) in subparagraph (C)(i), by striking 
                ``pharmaceuutically'' and inserting 
                ``pharmaceutically''.
    (v) Section 1929 (42 U.S.C. 1396t) is amended--
            (1) in subsection (c)(2), by realigning the left margins of 
        clauses (i) and (ii) of subparagraph (E) so as to align with 
        the left margins of clauses (i) and (ii) of subparagraph (F) of 
        that subsection;
            (2) in subsection (k)(1)(A)(i), by striking ``settings,'' 
        and inserting ``settings),''; and
            (3) in subsection (l), by striking ``State wideness'' and 
        inserting ``Statewideness''.
    (w) Section 1932 (42 U.S.C. 1396u-2) is amended--
            (1) in subsection (c)(2)(C), by inserting ``part'' before 
        ``C of title XVIII''; and
            (2) in subsection (d)--
                    (A) in paragraph (1)(C)(ii), by striking ``Act'' 
                and inserting ``Regulation''; and
                    (B) in paragraph (2)(B), by striking ``1903(t)(3)'' 
                and inserting ``1905(t)(3)''.
    (x) Section 1933(b)(4) (42 U.S.C. 1396u-3(b)(4)) is amended by 
inserting ``a'' after ``for a month in''.
    (y)(1) The section 1908 (42 U.S.C. 1396g-1) that relates to 
required laws relating to medical child support is redesignated as 
section 1908A.
    (2) Section 1902(a)(60) (42 U.S.C. 1396b(a)(60)) is amended by 
striking ``1908'' and inserting ``1908A''.
    (z) Effective October 1, 2004, section 1915(b) (42 U.S.C. 1396n(b)) 
is amended, in the matter preceding paragraph (1), by striking 
``sections 1902(a)(13)(C) and'' and inserting ``section''.
    (aa) Effective as if included in the enactment of BBA--
            (1) section 1902(a)(10)(A)(ii)(XIV) (42 U.S.C. 
        1396a(a)(10)(A)(ii)(XIV)) is amended by striking 
        ``1905(u)(2)(C)'' and inserting ``1905(u)(2)(B)'';
            (2) section 1903(f)(4) (42 U.S.C. 1396b(f)(4)) is amended, 
        in the matter preceding subparagraph (A), by striking 
        ``1905(p)(1), or 1905(u)'' and inserting 
        ``1902(a)(10)(A)(ii)(XIII), 1902(a)(10)(A)(ii)(XIV), or 
        1905(p)(1)''; and
            (3) section 1905(a)(15) (42 U.S.C. 1396d(a)(15)) is amended 
        by striking ``1902(a)(31)(A)'' and inserting ``1902(a)(31)''.
    (bb) Except as otherwise provided, the amendments made by this 
section shall take effect on the date of enactment of this Act.

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

SEC. 701. STABILIZING THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM 
              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.

SEC. 703. IMPROVED DATA COLLECTION AND EVALUATIONS OF THE STATE 
              CHILDREN'S HEALTH INSURANCE PROGRAM.

    (a) Funding for Reliable Annual State-by-State Estimates on the 
Number of Children Who Do Not Have Health Insurance Coverage.--Section 
2109 (42 U.S.C. 1397ii) is amended by adding at the end the following:
    ``(b) Adjustment to Current Population Survey To Include State-by-
State Data Relating to Children Without Health Insurance Coverage.--
            ``(1) In general.--The Secretary of Commerce shall make 
        appropriate adjustments to the annual Current Population Survey 
        conducted by the Bureau of the Census in order to produce 
        statistically reliable annual State data on the number of low-
        income children who do not have health insurance coverage, so 
        that real changes in the uninsurance rates of children can 
        reasonably be detected. The Current Population Survey should 
        produce data under this subsection that categorizes such 
        children by family income, age, and race or ethnicity. The 
        adjustments made to produce such data shall include, where 
        appropriate, expanding the sample size used in the State 
        sampling units, expanding the number of sampling units in a 
        State, and an appropriate verification element.
            ``(2) Appropriation.--Out of any money in the Treasury of 
        the United States not otherwise appropriated, there are 
        appropriated $10,000,000 for fiscal year 2000 and each fiscal 
        year thereafter for the purpose of carrying out this 
        subsection.''.
    (b) Federal Evaluation of State Children's Health Insurance 
Programs.--Section 2108 (42 U.S.C. 1397hh) is amended by adding at the 
end the following:
    ``(c) Federal Evaluation.--
            ``(1) In general.--The Secretary, directly or through 
        contracts or interagency agreements, shall conduct an 
        independent evaluation of 10 States with approved child health 
        plans.
            ``(2) Selection of states.--In selecting States for the 
        evaluation conducted under this subsection, the Secretary shall 
        choose 10 States that utilize diverse approaches to providing 
        child health assistance, represent various geographic areas 
        (including a mix of rural and urban areas), and contain a 
        significant portion of uncovered children.
            ``(3) Matters included.--In addition to the elements 
        described in subsection (b)(1), the evaluation conducted under 
        this subsection shall include each of the following:
                    ``(A) Surveys of the target population (enrollees, 
                disenrollees, and individuals eligible for but not 
                enrolled in the program under this title).
                    ``(B) Evaluation of effective and ineffective 
                outreach and enrollment practices with respect to 
                children (for both the program under this title and the 
                medicaid program under title XIX), and identification 
                of enrollment barriers and key elements of effective 
                outreach and enrollment practices, including practices 
                that have successfully enrolled hard-to-reach 
                populations such as children who are eligible for 
                medical assistance under title XIX but have not been 
                enrolled previously in the medicaid program under that 
                title.
                    ``(C) Evaluation of the extent to which State 
                medicaid eligibility practices and procedures under the 
                medicaid program under title XIX are a barrier to the 
                enrollment of children under that program, and the 
                extent to which coordination (or lack of coordination) 
                between that program and the program under this title 
                affects the enrollment of children under both programs.
                    ``(D) An assessment of the effect of cost-sharing 
                on utilization, enrollment, and coverage retention.
                    ``(E) Evaluation of disenrollment or other 
                retention issues, such as switching to private 
                coverage, failure to pay premiums, or barriers in the 
                recertification process.
            ``(4) Submission to congress.--Not later than December 31, 
        2001, the Secretary shall submit to Congress the results of the 
        evaluation conducted under this subsection.
            ``(5) Funding.--Out of any money in the Treasury of the 
        United States not otherwise appropriated, there are 
        appropriated $10,000,000 for fiscal year 2000 for the purpose 
        of conducting the evaluation authorized under this subsection. 
        Amounts appropriated under this paragraph shall remain 
        available for expenditure through fiscal year 2002.''.
    (c) Inspector General Audit and GAO Report on Enrollees Eligible 
for Medicaid.--Section 2108 (42 U.S.C. 1397hh), as amended by 
subsection (b), is amended by adding at the end the following:
    ``(d) Inspector General Audit and GAO Report.--
            ``(1) Audit.--Beginning with fiscal year 2000, and every 
        third fiscal year thereafter, the Secretary, through the 
        Inspector General of the Department of Health and Human 
        Services, shall audit a sample from among the States described 
        in paragraph (2) in order to--
                    ``(A) determine the number, if any, 
                of enrollees under the plan under this title who are 
                eligible for medical assistance under title XIX (other 
                than as optional targeted low-income children under 
                section 1902(a)(10)(A)(ii)(XIV)); and
                    ``(B) assess the progress made in reducing the 
                number of uncovered low-income children, including the 
                progress made to achieve the strategic objectives and 
                performance goals included in the State child health 
                plan under section 2107(a).
            ``(2) State described.--A State described in this paragraph 
        is a State with an approved State child health plan under this 
        title that does not, as part of such plan, provide health 
        benefits coverage under the State's medicaid program under 
        title XIX.
            ``(3) Monitoring and report from gao.--The Comptroller 
        General of the United States shall monitor the audits conducted 
        under this subsection and, not later than March 1 of each 
        fiscal year after a fiscal year in which an audit is conducted 
        under this subsection, shall submit a report to Congress on the 
        results of the audit conducted during the prior fiscal year.''.
    (d) Coordination of Data Collection With Data Requirements Under 
the Maternal and Child Health Services Block Grant.--
            (1) In general.--Paragraphs (2)(D)(ii) and (3)(D)(ii)(II) 
        of section 506(a) (42 U.S.C. 706(a)) are each amended by 
        inserting ``or the State plan under title XXI'' after ``title 
        XIX''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply to annual reports submitted under section 506 of the 
        Social Security Act (42 U.S.C. 706) for years beginning after 
        the date of the enactment of this Act.
    (e) Coordination of Data Surveys and Reports.--The Secretary of 
Health and Human Services, through the Assistant Secretary for Planning 
and Evaluation, shall establish a clearinghouse for the consolidation 
and coordination of all Federal databases and reports regarding 
children's health.

SEC. 704. REFERENCES TO SCHIP AND STATE CHILDREN'S HEALTH INSURANCE 
              PROGRAM.

    The Secretary of Health and Human Services or any other Federal 
officer or employee, with respect to any reference to the program under 
title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) in any 
publication or other official communication, shall use--
            (1) the term ``SCHIP'' instead of the term ``CHIP''; and
            (2) the term ``State children's health insurance program'' 
        instead of the term ``children's health insurance program''.

SEC. 705. SCHIP TECHNICAL CORRECTIONS.

    (a) Section 2104(b)(3)(B) (42 U.S.C. 1397dd(b)(3)(B)) is amended by 
striking ``States.'' and inserting ``States,''.
    (b) Section 2105(d)(2)(B)(iii) (42 U.S.C. 1397ee(d)(2)(B)(iii)) is 
amended by inserting ``in'' after ``described''.
    (c) Section 2109(a) (42 U.S.C.1397ii(a)) is amended--
            (1) in paragraph (1), by striking ``title II'' and 
        inserting ``title I''; and
            (2) in paragraph (2), by inserting ``)'' before the period.
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