[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 3165 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 3165

To amend the Social Security Act to make corrections and refinements in 
the Medicare, Medicaid, and SCHIP health insurance programs, as revised 
  by the Balanced Budget Act of 1997 and the Medicare, Medicaid, and 
 SCHIP Balanced Budget Refinement Act of 1999, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            October 5 (legislative day, September 22), 2000

 Mr. Roth (for himself, Mr. Moynihan, Mr. Jeffords, Mr. Murkowski, Mr. 
 Hatch, and Mr. Kerrey) introduced the following bill; which was read 
                             the first time

_______________________________________________________________________

                                 A BILL


 
To amend the Social Security Act to make corrections and refinements in 
the Medicare, Medicaid, and SCHIP health insurance programs, as revised 
  by the Balanced Budget Act of 1997 and the Medicare, Medicaid, and 
 SCHIP Balanced Budget Refinement Act of 1999, and for other purposes.

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

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

    (a) Short Title.--This Act may be cited as the ``Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 2000''.
    (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 Other Acts.--In this Act:
            (1) The balanced budget act of 1997.--The term ``BBA'' 
        means the Balanced Budget Act of 1997 (Public Law 105-33; 111 
        Stat. 251).
            (2) The medicare, medicaid, and schip balanced budget 
        refinement act of 1999.--The term ``BBRA'' means the Medicare, 
        Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (113 
        Stat. 1501A-321), as enacted into law by section 1000(a)(6) of 
        Public Law 106-113.
    (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 
                            other acts; table of contents.
                     TITLE I--BENEFIT IMPROVEMENTS

                   Subtitle A--Beneficiary Assistance

Sec. 101. Limiting copayment amount for hospital outpatient services.
Sec. 102. Coverage of immunosuppressive drugs.
Sec. 103. Preservation of coverage of drugs and biologicals under part 
                            B of the medicare program.
Sec. 104. Moratorium on reductions in current reimbursement rates for 
                            outpatient drugs and biologicals; GAO study 
                            and report and HHS comments.
                Subtitle B--Improved Preventive Benefits

Sec. 111. Coverage of biannual screening pap smear and pelvic exams.
Sec. 112. Coverage of screening colonoscopy for average risk 
                            individuals.
Sec. 113. Medical nutrition therapy services for beneficiaries with 
                            diabetes, a cardiovascular disease, or a 
                            renal disease.
Sec. 114. State accreditation of diabetes self-management training 
                            programs.
Sec. 115. Studies on preventive interventions in primary care for older 
                            Americans.
Sec. 116. Institute of Medicine 3-year medicare prevention benefit 
                            study and report.
Sec. 117. MedPAC study and report on medicare coverage of cardiac and 
                            pulmonary rehabilitation therapy services.
                TITLE II--RURAL HEALTH CARE IMPROVEMENTS

            Subtitle A--Critical Access Hospital Provisions

Sec. 201. Clarification of no beneficiary cost-sharing for clinical 
                            diagnostic laboratory tests furnished by 
                            critical access hospitals.
Sec. 202. Revision of payment for professional services provided by a 
                            critical access hospital.
Sec. 203. Permitting critical access hospitals to operate PPS exempt 
                            distinct part psychiatric and 
                            rehabilitation units.
Sec. 204. Exemption of critical access hospital swing beds from SNF 
                            PPS.
              Subtitle B--Other Rural Hospital Provisions

Sec. 211. Equitable treatment for rural disproportionate share 
                            hospitals.
Sec. 212. Option to base eligibility for medicare dependent, small 
                            rural hospital program on discharges during 
                            any of the 3 most recent audited cost 
                            reporting periods.
Sec. 213. Extension of option to use rebased target amounts to all sole 
                            community hospitals.
Sec. 214. MedPAC analysis of impact of volume on per unit cost of rural 
                            hospitals with psychiatric units.
                   Subtitle C--Other Rural Provisions

Sec. 221. Provider-based rural health clinic cap exemption.
Sec. 222. Payment for certain physician assistant services.
Sec. 223. Temporary increase for home health services furnished in a 
                            rural area.
Sec. 224. Refinement of medicare reimbursement for telehealth services.
Sec. 225. MedPAC study on low-volume, isolated rural health care 
                            providers.
                TITLE III--PROVISIONS RELATING TO PART A

                       Subtitle A--PPS Hospitals

Sec. 301. Delay of reduction in PPS hospital payment update.
Sec. 302. Revision of reduction of indirect graduate medical education 
                            payments.
Sec. 303. Decrease in reductions for disproportionate share hospital 
                            payments.
Sec. 304. Modification of payment rate for Puerto Rico hospitals.
Sec. 305. MedPAC study and report on hospital area wage indexes.
Sec. 306. MedPAC study and report regarding certain hospital costs.
                    Subtitle B--PPS Exempt Hospitals

Sec. 311. Permanent guarantee of pre-BBA payment levels for outpatient 
                            services furnished by children's hospitals.
Sec. 312. Payment for inpatient services of rehabilitation hospitals.
Sec. 313. Implementation of prospective payment system for long-term 
                            care hospitals.
                 Subtitle C--Skilled Nursing Facilities

Sec. 321. Revision to the skilled nursing facility (SNF) market basket 
                            update for fiscal years 2001 and 2002.
Sec. 322. Application of SNF consolidated billing requirement limited 
                            to part A covered stays.
Sec. 323. Reexamination of, and authority to revise, the skilled 
                            nursing facility market basket percentage 
                            increase.
                        Subtitle D--Hospice Care

Sec. 331. Revision of market basket increase for 2001 and 2002.
Sec. 332. Study and report on physician certification requirement for 
                            hospice benefits.
Sec. 333. Hospice demonstration program and hospice education grants.
                      Subtitle E--Other Provisions

Sec. 341. Six-month delay in implementation of rule regarding provider-
                            based criteria.
                TITLE IV--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

Sec. 401. Application of transitional corridor to certain hospitals 
                            that did not submit a 1996 cost report.
Sec. 402. Clarifying process and standards for determining eligibility 
                            of devices for pass-through payments under 
                            hospital outpatient PPS.
Sec. 403. Contrast enhanced diagnostic procedures under hospital 
                            prospective payment system.
Sec. 404. Transitional pass-through for contrast agents.
             Subtitle B--Provisions Relating to Physicians

Sec. 411. MedPAC study on the resource-based practice expense system.
Sec. 412. GAO studies and reports on medicare payments.
Sec. 413. GAO study on gastrointestinal endoscopic services furnished 
                            in physicians' offices and hospital 
                            outpatient department services.
                     Subtitle C--Ambulance Services

Sec. 421. Elimination of reduction in inflation adjustments for 
                            ambulance services.
Sec. 422. Election to forego phase-in of fee schedule for ambulance 
                            services.
Sec. 423. Study and report on the costs of rural ambulance services.
Sec. 424. GAO study and report on the costs of emergency and medical 
                            transportation services.
                       Subtitle D--Other Services

Sec. 431. Revision of moratorium in caps for therapy services.
Sec. 432. Update in renal dialysis composite rate.
Sec. 433. Full update in 2001 for durable medical equipment, oxygen, 
                            and oxygen equipment.
Sec. 434. National limitation amount equal to 100 percent of national 
                            median for new pap smear technologies and 
                            other new clinical laboratory test 
                            technologies.
Sec. 435. Delay and revision of PPS for ambulatory surgical centers.
Sec. 436. Treatment of certain physician pathology services.
Sec. 437. Modification of medicare billing requirements for certain 
                            Indian providers.
Sec. 438. Replacement of prosthetic devices and parts.
Sec. 439. MedPAC study and report on medicare reimbursement for 
                            services provided by certain providers.
Sec. 440. MedPAC study and report on medicare coverage of services 
                            provided by certain non-physician 
                            providers.
             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

Sec. 501. 1-year additional delay in application of 15 percent 
                            reduction on payment limits for home health 
                            services.
Sec. 502. Restoration of full home health market basket update for home 
                            health services for fiscal year 2001.
Sec. 503. Exclusion of certain nonroutine medical supplies under the 
                            PPS for home health services.
Sec. 504. Treatment of branch offices; GAO study on supervision of home 
                            health care provided in isolated rural 
                            areas.
Sec. 505. Temporary additional payments for high-cost patients.
Sec. 506. Clarification of the homebound definition under the medicare 
                            home health benefit.
             Subtitle B--Direct Graduate Medical Education

Sec. 511. Authority to include costs of training of clinical 
                            psychologists in payments to hospitals.
 TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

              Subtitle A--Medicare+Choice Payment Reforms

Sec. 601. Increase in national per capita medicare+choice growth 
                            percentage in 2001 and 2002.
Sec. 602. Removing application of budget neutrality for 2002.
Sec. 603. Increase in minimum payment amount.
Sec. 604. Allowing movement to 50:50 percent blend in 2002.
Sec. 605. Increased update for payment areas with only one or no 
                            medicare+choice contracts.
Sec. 606. 10-year phase-in of risk adjustment and new methodology.
Sec. 607. Permitting premium reductions as additional benefits under 
                            medicare+choice plans.
Sec. 608. Delay from July to November 2000, in deadline for offering 
                            and withdrawing medicare+choice plans for 
                            2001.
Sec. 609. Revision of payment rates for ESRD patients enrolled in 
                            medicare+choice plans.
Sec. 610. Modification of payment rules for certain frail elderly 
                            medicare beneficiaries.
Sec. 611. Full implementation of risk adjustment for congestive heart 
                            failure enrollees for 2001.
Sec. 612. Inclusion of costs of DOD military treatment facility 
                            services to medicare-eligible beneficiaries 
                            in calculation of medicare+choice payment 
                            rates.
               Subtitle B--Other Medicare+Choice Reforms

Sec. 621. Amounts in medicare trust funds available for Secretary's 
                            share of medicare+choice education and 
                            enrollment-related costs.
Sec. 622. Special medigap enrollment antidiscrimination provision for 
                            certain beneficiaries.
Sec. 623. Restoring effective date of elections and changes of 
                            elections of medicare+choice plans.
Sec. 624. Permitting ESRD beneficiaries to enroll in another 
                            medicare+choice plan if the plan in which 
                            they are enrolled is terminated.
Sec. 625. Election of uniform local coverage policy for medicare+choice 
                            plan covering multiple localities.
                 Subtitle C--Other Managed Care Reforms

Sec. 631. Revised terms and conditions for extension of medicare 
                            community nursing organization (CNO) 
                            demonstration project.
Sec. 632. Service area expansion for medicare cost contracts during 
                            transition period.
                          TITLE VII--MEDICAID

Sec. 701. New prospective payment system for Federally-qualified health 
                            centers and rural health clinics.
Sec. 702. Medicaid DSH allotments.
Sec. 703. Permanent extension of payment of medicare part B premiums 
                            for qualified medicare beneficiaries with 
                            income up to 135 percent of poverty.
Sec. 704. Streamlined approval of continued State-wide section 1115 
                            medicaid waivers.
Sec. 705. Alaska FMAP.
     TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP)

Sec. 801. Special rule for redistribution and availability of unused 
                            fiscal year 1998 and 1999 SCHIP allotments.
Sec. 802. Presumptive eligibility under SCHIP.
Sec. 803. Authority to pay medicaid expansion SCHIP costs from title 
                            XXI appropriation.
                       TITLE IX--OTHER PROVISIONS

Sec. 901. Increase in authorization of appropriations for the maternal 
                            and child health services block grant.
Sec. 902. Increase in appropriations for special diabetes programs for 
                            children with type I diabetes and Indians.

                     TITLE I--BENEFIT IMPROVEMENTS

                   Subtitle A--Beneficiary Assistance

SEC. 101. LIMITING COPAYMENT AMOUNT FOR HOSPITAL OUTPATIENT SERVICES.

    (a) In General.--Section 1833(t)(8)(C) (42 U.S.C. 1395l(t)(8)(C)) 
is amended--
            (1) in the heading, by striking ``to inpatient hospital 
        deductible amount''; and
            (2) by striking ``exceed the amount'' and all that follows 
        before the period and inserting ``exceed an amount equal to the 
        greater of--
                            ``(i) one-half of the amount of the 
                        inpatient hospital deductible established under 
                        section 1813(b) for that year; or
                            ``(ii) 20 percent of the payment amount 
                        determined under this subsection for the 
                        procedure.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to services furnished on or after January 1, 2001.

SEC. 102. COVERAGE OF IMMUNOSUPPRESSIVE DRUGS.

    (a) Elimination of Time Limitation for Coverage of 
Immunosuppressive Drugs.--
            (1) In general.--Section 1861(s)(2)(J) (42 U.S.C. 
        1395x(s)(2)(J)) is amended to read as follows:
            ``(J) prescription drugs used in immunosuppressive therapy 
        furnished to an individual who--
                    ``(A) receives an organ transplant for which 
                payment is made under this title; or
                    ``(B) received an organ transplant during the 36-
                month period immediately preceding the individual's 
                most recent effective date of coverage of benefits 
                under this part.''.
            (2) Conforming amendments.--
                    (A) Extended coverage.--Section 1832 (42 U.S.C. 
                1395k) is amended--
                            (i) by striking subsection (b); and
                            (ii) by redesignating subsection (c) as 
                        subsection (b).
                    (B) Pass-through; report.--Subsections (c) and (d) 
                of section 227 of BBRA (113 Stat. 1501A-355) are 
                repealed.
    (b) Continued Entitlement for Immunosuppressive Drugs for Certain 
Individuals After Medicare Benefits End.--
            (1) In general.--Section 226A(b)(2) (42 U.S.C. 426-1(b)(2)) 
        is amended by inserting ``(except for the provision of 
        immunosuppressive drugs pursuant to section 1861(s)(2)(J))'' 
        after ``shall end''.
            (2) Application.--In the case of an individual whose 
        eligibility for benefits under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) has ended except for the 
        provision of immunosuppressive drugs pursuant to the amendment 
        made by paragraph (1), such individual shall be deemed to be 
        enrolled in the original medicare fee-for-service program for 
        purposes of receiving coverage of such drugs.
            (3) Technical amendment.--Subsection (c) of section 226A 
        (42 U.S.C. 426-1), as added by section 201(a)(3)(D)(ii) of the 
        Social Security Independence and Program Improvements Act of 
        1994 (Public Law 103-296; 108 Stat. 1497), is redesignated as 
        subsection (d).
    (c) Effective Date.--The amendments made by this section shall 
apply to immunosuppressive drugs furnished on or after January 1, 2000, 
to individuals whose period of entitlement (without regard to the 
amendment made by subsection (b)(1)) to such drugs under title XVIII of 
the Social Security Act ends after such date.

SEC. 103. PRESERVATION OF COVERAGE OF DRUGS AND BIOLOGICALS UNDER PART 
              B OF THE MEDICARE PROGRAM.

    (a) In General.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
is amended, in each of subparagraphs (A) and (B), by striking 
``(including drugs and biologicals which cannot, as determined in 
accordance with regulations, be self-administered)'' and inserting 
``(including injectable and infusable drugs and biologicals which are 
not usually self-administered by the patient)''.
    (b) Preserving Existing Coverage of Injectable and Infusable Drugs 
and Biologicals.--
            (1) Report to congress required before coverage is limited 
        or terminated.--Notwithstanding any other provision of law, 
        beginning on the date of enactment of this Act, the Secretary 
        of Health and Human Services (in this subsection referred to as 
        the ``Secretary'') may not limit or terminate coverage (or 
        permit an agency or organization with a contract under section 
        1816 or 1842 of the Social Security Act (42 U.S.C. 1395h; 42 
        U.S.C. 1395u) to limit or terminate coverage) of any injectable 
        or infusable drug or biological that was reimbursed (as 
        determined under policies established by each such agency or 
        organization) under section 1861(s)(2) of such Act (42 U.S.C. 
        1395x(s)(2)) on January 1, 2000, solely on the basis that the 
        drug or biological can be self-administered. This paragraph 
        shall apply to any such drug or biological until the date that 
        is 60 days after the date on which the Secretary submits to 
        Congress a report described in paragraph (2) with respect to 
        such drug or biological.
            (2) Report described.--A report described in this paragraph 
        is a report that describes in detail--
                    (A) the action the Secretary (or any agency or 
                organization described in paragraph (1)) proposes to 
                take with respect to the limitation or termination of 
                coverage of an injectable or infusable drug or 
                biological under section 1861(s)(2) of the Social 
                Security Act (42 U.S.C. 1395x(s)(2)); and
                    (B) the reasons for taking such action.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to drugs and biologicals furnished on or after October 1, 2000.

SEC. 104. MORATORIUM ON REDUCTIONS IN CURRENT REIMBURSEMENT RATES FOR 
              OUTPATIENT DRUGS AND BIOLOGICALS; GAO STUDY AND REPORT 
              AND HHS COMMENTS.

    (a) Moratorium.--Notwithstanding any other provision of law, the 
Secretary of Health and Human Services may not implement any reduction 
in the rate of reimbursement for any outpatient drug or biological 
under the medicare program under title XVIII of the Social Security Act 
(42 U.S.C. 1395 et seq.) during the period that begins on the date of 
enactment of this Act and ends on September 15, 2001.
    (b) GAO Study and Report Regarding Reimbursement Rates for 
Outpatient Drugs and Biologicals.--
            (1) Study.--
                    (A) In general.--The Comptroller General of the 
                United States shall conduct a study on the 
                reasonableness of the reimbursement policy for 
                outpatient drugs and biologicals under the medicare 
                program under title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.) based on the average wholesale 
                price of such drugs.
                    (B) Requirements.--The study described in 
                subparagraph (A) shall include an examination of the 
                purchase prices providers pay for such drugs and 
                biologicals and an identification of the factors that 
                affect such purchase prices.
            (2) Report.--Not later than July 1, 2001, the Comptroller 
        General of the United States shall submit to the Secretary of 
        Health and Human Services and Congress a report on the study 
        conducted under paragraph (1) together with recommendations for 
        such legislation and administrative actions as the Comptroller 
        General considers appropriate regarding any adjustment in 
        payment policy necessary to ensure reasonable reimbursement for 
        outpatient drugs and biologicals under the medicare program.
    (c) Comments.--Not later than 90 days after the date on which the 
Comptroller General of the United States submits the report under 
subsection (b) to the Secretary of Health and Human Services, the 
Secretary shall submit comments on such report to Congress.

                Subtitle B--Improved Preventive Benefits

SEC. 111. COVERAGE OF BIANNUAL SCREENING PAP SMEAR AND PELVIC EXAMS.

    (a) In General.--
            (1) Biannual screening pap smear.--Section 1861(nn)(1) (42 
        U.S.C. 1395x(nn)(1)) is amended by striking ``3 years'' and 
inserting ``2 years''.
            (2) Biannual screening pelvic exam.--Section 1861(nn)(2) 
        (42 U.S.C. 1395x(nn)(2)) is amended by striking ``3 years'' and 
        inserting ``2 years''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to items and services furnished on or after January 1, 2001.

SEC. 112. COVERAGE OF SCREENING COLONOSCOPY FOR AVERAGE RISK 
              INDIVIDUALS.

    (a) In General.--Section 1861(pp) (42 U.S.C. 1395x(pp)) is 
amended--
            (1) in paragraph (1)(C), by striking ``In the case of an 
        individual at high risk for colorectal cancer, screening 
        colonoscopy'' and inserting ``Screening colonoscopy''; and
            (2) in paragraph (2), by striking ``In paragraph (1)(C), 
        an'' and inserting ``An''.
    (b) Frequency Limits for Screening Colonoscopy.--Section 1834(d) 
(42 U.S.C. 1395m(d)) is amended--
            (1) in paragraph (2)(E)(ii), by inserting before the period 
        at the end the following: ``or, in the case of an individual 
        who is not at high risk for colorectal cancer, if the procedure 
        is performed within the 119 months after a previous screening 
        colonoscopy'';
            (2) in paragraph (3)--
                    (A) in the heading by striking ``for individuals at 
                high risk for colorectal cancer'';
                    (B) in subparagraph (A), by striking ``for 
                individuals at high risk for colorectal cancer (as 
                defined in section 1861(pp)(2))'';
                    (C) in subparagraph (E), by inserting before the 
                period at the end the following: ``or for other 
                individuals if the procedure is performed within the 
                119 months after a previous screening colonoscopy or 
                within 47 months of a previous screening flexible 
                sigmoidoscopy''.
    (c) Effective Date.--The amendments made by this section apply to 
colorectal cancer screening services provided on or after January 1, 
2001.

SEC. 113. MEDICAL NUTRITION THERAPY SERVICES FOR BENEFICIARIES WITH 
              DIABETES, A CARDIOVASCULAR DISEASE, OR A RENAL DISEASE.

    (a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is 
amended--
            (1) in subparagraph (S), by striking ``and'' at the end;
            (2) in subparagraph (T), by adding ``and'' at the end; and
            (3) by adding at the end the following new subparagraph:
            ``(U) medical nutrition therapy services (as defined in 
        subsection (uu)(1)) in the case of a beneficiary with diabetes, 
        a cardiovascular disease (including congestive heart failure, 
        arteriosclerosis, hyperlipidemia, hypertension, and 
        hypercholesterolemia), or a renal disease;''.
    (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is amended 
by adding at the end the following new subsection:

``Medical Nutrition Therapy Services; Registered Dietitian or Nutrition 
                              Professional

    ``(uu)(1) The term `medical nutrition therapy services' means 
nutritional diagnostic, therapy, and counseling services for the 
purpose of disease management which are furnished by a registered 
dietitian or nutrition professional (as defined in paragraph (2)) 
pursuant to a referral by a physician (as defined in subsection 
(r)(1)).
    ``(2) Subject to paragraph (3), the term `registered dietitian or 
nutrition professional' means an individual who--
            ``(A) holds a baccalaureate or higher degree granted by a 
        regionally accredited college or university in the United 
        States (or an equivalent foreign degree) with completion of the 
        academic requirements of a program in nutrition or dietetics, 
        as accredited by an appropriate national accreditation 
        organization recognized by the Secretary for this purpose;
            ``(B) has completed at least 900 hours of supervised 
        dietetics practice under the supervision of a registered 
        dietitian or nutrition professional; and
            ``(C)(i) is licensed or certified as a dietitian or 
        nutrition professional by the State in which the service is 
        performed; or
            ``(ii) in the case of an individual in a State that does 
        not provide for such licensure or certification, meets such 
        other criteria as the Secretary establishes.
    ``(3) Subparagraphs (A) and (B) of paragraph (2) shall not apply in 
the case of an individual who, as of the date of enactment of this 
subsection, is licensed or certified as a dietitian or nutrition 
professional by the State in which the medical nutrition therapy 
service is performed.''.
    (c) Limitation on Frequency.--Section 1834 (42 U.S.C. 1395m) is 
amended by adding at the end the following new subsection:
    ``(m) Frequency Limitation for Coverage of Medical Nutrition 
Therapy Services.--Notwithstanding any other provision of this part, no 
payment may be made under this part for a medical nutrition therapy 
service (as defined in section 1861(uu)) provided to an individual if 
such service is provided--
            ``(1) during the 12-month period beginning on the date that 
        such individual first received a medical nutrition therapy 
        service covered under this part and such individual has 
        previously received 3 medical nutritional therapy services 
        during such period; or
            ``(2) at any time after such 12-month period if such 
        individual has previously received 3 medical nutritional 
        therapy services covered under this part after such 12-month 
        period.
    (d) Payment.--Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is 
amended--
            (1) by striking ``and'' before ``(S)''; and
            (2) by inserting before the semicolon at the end the 
        following: ``, and (T) with respect to medical nutrition 
        therapy services (as defined in section 1861(uu)(1)), the 
        amount paid shall be 85 percent of the lesser of the actual 
charge for the services or the amount determined under the fee schedule 
established under section 1848(b) for the same services if furnished by 
a physician''.
    (e) Conforming Amendments.--Section 1862(a)(1) (42 U.S.C. 
1395y(a)(1)) is amended--
            (1) in subparagraph (H), by striking ``and'' at the end;
            (2) in subparagraph (I), by striking the semicolon at the 
        end and inserting ``, and''; and
            (3) by adding at the end the following new subparagraph:
            ``(J) in the case of medical nutrition therapy services (as 
        defined in section 1861(uu)(1)), which are provided more 
        frequently than is covered under section 1834(m);''.
    (f) Effective Date.--The amendments made by this section apply to 
services furnished on or after July 1, 2001.

SEC. 114. STATE ACCREDITATION OF DIABETES SELF-MANAGEMENT TRAINING 
              PROGRAMS.

    Section 1861(qq)(2) (42 U.S.C. 1395xx(qq)(2)) is amended--
            (1) in the matter preceding subparagraph (A), by striking 
        ``paragraph (1)--'' and inserting ``paragraph (1):'';
            (2) in subparagraph (A)--
                    (A) by striking ``a `certified provider''' and 
                inserting ``A `certified provider'''; and
                    (B) by striking ``; and'' and inserting a period; 
                and
            (3) in subparagraph (B)--
                    (A) by striking ``a physician, or such other 
                individual'' and inserting ``(i) A physician, or such 
                other individual'';
                    (B) by inserting ``(I)'' before ``meets applicable 
                standards'';
                    (C) by inserting ``(II)'' before ``is recognized'';
                    (D) by inserting ``, or by a program described in 
                clause (ii),'' after ``recognized by an organization 
                that represents individuals (including individuals 
                under this title) with diabetes''; and
                    (E) by adding at the end the following new clause:
            ``(ii) Notwithstanding any reference to `a national 
        accreditation body' in section 1865(b), for purposes of clause 
        (i), a program described in this clause is a program operated 
        by a State for the purposes of accrediting diabetes self-
        management training programs, if the Secretary determines that 
        such State program has established quality standards that meet 
        or exceed the standards established by the Secretary under 
        clause (i) or the standards originally established by the 
        National Diabetes Advisory Board and subsequently revised as 
        described in clause (i).''.

SEC. 115. STUDIES ON PREVENTIVE INTERVENTIONS IN PRIMARY CARE FOR OLDER 
              AMERICANS.

    (a) Studies.--The Secretary of Health and Human Services, acting 
through the United States Preventive Services Task Force, shall conduct 
a series of studies designed to identify preventive interventions that 
can be delivered in the primary care setting and that are most valuable 
to older Americans.
    (b) Mission Statement.--The mission statement of the United States 
Preventive Services Task Force is amended to include the evaluation of 
services that are of particular relevance to older Americans.
    (c) Report.--Not later than 1 year after the date of enactment of 
this Act, and annually thereafter, the Secretary of Health and Human 
Services shall submit a report to Congress on the conclusions of the 
studies conducted under subsection (a), together with recommendations 
for such legislation and administrative actions as the Secretary 
considers appropriate.

SEC. 116. INSTITUTE OF MEDICINE 3-YEAR MEDICARE PREVENTION BENEFIT 
              STUDY AND REPORT.

    (a) Study.--
            (1) In general.--The Secretary of Health and Human Services 
        shall contract with the Institute of Medicine of the National 
        Academy of Sciences--
                    (A) to conduct a comprehensive study of current 
                literature and best practices in the field of health 
                promotion and disease prevention among medicare 
                beneficiaries, including the issues described in 
                paragraph (2); and
                    (B) to submit the report described in subsection 
                (b).
            (2) Issues studied.--The study required under paragraph (1) 
        shall include an assessment of--
                    (A) whether each covered benefit is--
                            (i) medically effective; and
                            (ii) a cost-effective benefit or a cost-
                        saving benefit;
                    (B) utilization of covered benefits (including any 
                barriers to or incentives to increase utilization); and
                    (C) quality of life issues associated with both 
                health promotion and disease prevention benefits 
                covered under the medicare program and those that are 
                not covered under such program that would affect all 
                medicare beneficiaries.
    (b) Report.--
            (1) In general.--Not later than 3 years after the date of 
        enactment of this Act, and every third year thereafter, the 
        Institute of Medicine of the National Academy of Sciences shall 
        submit to the Secretary of Health and Human Services and 
        Congress a report that contains a detailed statement of the 
        findings and conclusions of the study conducted under 
        subsection (a) and the recommendations for legislation 
        described in paragraph (2).
            (2) Recommendations for legislation.--The Institute of 
        Medicine of the National Academy of Sciences, in consultation 
        with the Partnership for Prevention, shall develop 
        recommendations in legislative form that--
                    (A) prioritize the preventive benefits under the 
                medicare program; and
                    (B) modify preventive benefits offered under the 
                medicare program based on the study conducted under 
                subsection (a).
            (3) Requirements for initial report.--The initial report 
        submitted pursuant to paragraph (1) shall address issues 
        related to the following preventive benefits:
                    (A) Thyroid screening.
                    (B) Smoking cessation therapy services.
                    (C) Glaucoma detection tests.
                    (D) Appropriate preventive treatments for 
                precancerous skin lesions.
    (c) Definitions.--In this section:
            (1) Cost-effective benefit.--The term ``cost-effective 
        benefit'' means a benefit or technique that has--
                    (A) been subject to peer review;
                    (B) been described in scientific journals; and
                    (C) demonstrated value as measured by unit costs 
                relative to health outcomes achieved.
            (2) Cost-saving benefit.--The term ``cost-saving benefit'' 
        means a benefit or technique that has--
                    (A) been subject to peer review;
                    (B) been described in scientific journals; and
                    (C) caused a net reduction in health care costs for 
                medicare beneficiaries.
            (3) Medically effective.--The term ``medically effective'' 
        means, with respect to a benefit or technique, that the benefit 
        or technique has been--
                    (A) subject to peer review;
                    (B) described in scientific journals; and
                    (C) determined to achieve an intended goal under 
                normal programmatic conditions.
            (4) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means any individual who is entitled to benefits 
        under part A or enrolled under part B of the medicare program 
        under title XVIII of the Social Security Act, including any 
        individual enrolled in a Medicare+Choice plan offered by a 
        Medicare+Choice organization under part C of such program.

SEC. 117. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF CARDIAC AND 
              PULMONARY REHABILITATION THERAPY SERVICES.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        established under section 1805 of the Social Security Act (42 
        U.S.C. 1395b-6) (in this section referred to as ``MedPAC'') 
        shall conduct a study on coverage of cardiac and pulmonary 
        rehabilitation therapy services under the medicare program 
        under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
        seq.).
            (2) Focus.--In conducting the study under paragraph (1), 
        MedPAC shall focus on the appropriate--
                    (A) qualifying diagnoses required for coverage of 
                cardiac and pulmonary rehabilitation therapy services;
                    (B) level of physician direct involvement and 
                supervision in furnishing such services; and
                    (C) level of reimbursement for such services.
    (b) Report.--Not later than 18 months after the date of 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 such recommendations for legislation and 
administrative action as MedPAC determines appropriate.

                TITLE II--RURAL HEALTH CARE IMPROVEMENTS

            Subtitle A--Critical Access Hospital Provisions

SEC. 201. CLARIFICATION OF NO BENEFICIARY COST-SHARING FOR CLINICAL 
              DIAGNOSTIC LABORATORY TESTS FURNISHED BY CRITICAL ACCESS 
              HOSPITALS.

    (a) Payment Clarification.--Section 1834(g) (42 U.S.C. 1395m(g)) is 
amended by adding at the end the following new paragraph:
            ``(4) No beneficiary cost-sharing for clinical diagnostic 
        laboratory services.--No coinsurance, deductible, copayment, or 
        other cost sharing otherwise applicable under this part shall 
        apply with respect to clinical diagnostic laboratory services 
        furnished as an outpatient critical access hospital service. 
        Nothing in this title shall be construed as providing for 
        payment for clinical diagnostic laboratory services furnished 
        as part of outpatient critical access hospital services, other 
        than on the basis described in this subsection.''.
    (b) Technical and Conforming Amendments.--
            (1) Paragraphs (1)(D)(i) and (2)(D)(i) of section 1833(a) 
        (42 U.S.C. 1395l(a)(1)(D)(i); 1395l(a)(2)(D)(i)) are each 
        amended by striking ``or which are furnished on an outpatient 
        basis by a critical access hospital''.
            (2) Section 403(d)(2) of BBRA (113 Stat. 1501A-371) is 
        amended by striking ``The amendment made by subsection (a) 
        shall apply'' and inserting ``Paragraphs (1) through (3) of 
        section 1834(g) of the Social Security Act (as amended by 
        paragraph (1)) apply''.
    (c) Effective Dates.--The amendment made--
            (1) by subsection (a) applies to services furnished on or 
        after the date of the enactment of BBRA;
            (2) by subsection (b)(1) applies as if included in the 
        enactment of section 403(e)(1) of BBRA (113 Stat. 1501A-371); 
        and
            (3) by subsection (b)(2) applies as if included in the 
        enactment of section 403(d)(2) of BBRA (113 Stat. 1501A-371).

SEC. 202. REVISION OF PAYMENT FOR PROFESSIONAL SERVICES PROVIDED BY A 
              CRITICAL ACCESS HOSPITAL.

    (a) In General.--Section 1834(g)(2)(B) (42 U.S.C. 1395m(g)(2)(B)), 
as amended by section 403(d) of BBRA (113 Stat. 1501A-371), is amended 
by inserting ``120 percent of'' after ``hospital services,''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of section 403(d) of BBRA 
(113 Stat. 1501A-371).

SEC. 203. PERMITTING CRITICAL ACCESS HOSPITALS TO OPERATE PPS EXEMPT 
              DISTINCT PART PSYCHIATRIC AND REHABILITATION UNITS.

    (a) Criteria for Designation as a Critical Access Hospital.--
Section 1820(c)(2)(B)(iii) (42 U.S.C. 1395i-4(c)(2)(B)(iii)) is amended 
by inserting ``excluding any psychiatric or rehabilitation unit of the 
facility which is a distinct part of the facility,'' before ``provides 
not''.
    (b) Definition of PPS Exempt Distinct Part Psychiatric and 
Rehabilitation Units.--Section 1886(d)(1)(B) (42 U.S.C. 
1395ww(d)(1)(B)) is amended by inserting before the last sentence the 
following new sentence: ``In establishing such definition, the 
Secretary may not exclude from such definition a psychiatric or 
rehabilitation unit of a critical access hospital which is a distinct 
part of such hospital solely because such hospital is exempt from the 
prospective payment system under this section.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 204. EXEMPTION OF CRITICAL ACCESS HOSPITAL SWING BEDS FROM SNF 
              PPS.

    (a) In General.--Section 1888(e)(7) Act (42 U.S.C. 1395yy(e)(7)) is 
amended--
            (1) in the heading, by striking ``Transition for'' and 
        inserting ``Treatment of'';
            (2) in subparagraph (A), by striking ``In general.--The'' 
        and inserting ``Transition.--Subject to subparagraph (C), 
        the'';
            (3) in subparagraph (A), by inserting ``(other than 
        critical access hospitals)'' after ``facilities described in 
        subparagraph (B)'';
            (4) in subparagraph (B), by striking ``, for which 
        payment'' and all that follows before the period at the end; 
        and
            (5) by adding at the end the following new subparagraph:
                    ``(C) Exemption from pps of swing-bed services 
                furnished in critical access hospitals.--The 
                prospective payment system established under this 
                subsection shall not apply to services furnished by a 
                critical access hospital pursuant to an agreement under 
                section 1883.''.
    (b) Payment on a Reasonable Cost Basis for Swing Bed Services 
Furnished by Critical Access Hospitals.--Section 1883(a) (42 U.S.C 
1395tt(a)) is amended--
            (1) in paragraph (2)(A), by inserting ``(other than a 
        critical access hospital)'' after ``any hospital''; and
            (2) by adding at the end the following new paragraph:
            ``(3) Notwithstanding any other provision of this title, a 
        critical access hospital shall be paid for covered skilled 
        nursing facility services furnished under an agreement entered 
        into under this section on the basis of the reasonable costs of 
        such services (as determined under section 1861(v)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to cost reporting periods beginning on or after the date of the 
enactment of this Act.

              Subtitle B--Other Rural Hospital Provisions

SEC. 211. EQUITABLE TREATMENT FOR RURAL DISPROPORTIONATE SHARE 
              HOSPITALS.

    (a) Application of Uniform Threshold.--Section 1886(d)(5)(F)(v) (42 
U.S.C. 1395ww(d)(5)(F)(v)) is amended--
            (1) in subclause (II), by inserting ``(or 15 percent, for 
        discharges occurring on or after October 1, 2001)'' after ``30 
        percent'';
            (2) in subclause (III), by inserting ``(or 15 percent, for 
        discharges occurring on or after October 1, 2001)'' after ``40 
        percent''; and
            (3) in subclause (IV), by inserting ``(or 15 percent, for 
        discharges occurring on or after October 1, 2001)'' after ``45 
        percent''.
    (b) Adjustment of Payment Formulas.--
            (1) Sole community hospitals.--Section 1886(d)(5)(F) (42 
        U.S.C. 1395ww(d)(5)(F)) is amended--
                    (A) in clause (iv)(VI), by inserting after ``10 
                percent'' the following: ``or, for discharges occurring 
                on or after October 1, 2001, is equal to the percent 
                determined in accordance with clause (x)''; and
                    (B) by adding at the end the following new clause:
    ``(x) For purposes of clause (iv)(VI), in the case of a hospital 
for a cost reporting period with a disproportionate patient percentage 
(as defined in clause (vi)) that--
            ``(I) is less than 17.3, the disproportionate share 
        adjustment percentage is determined in accordance with the 
        following formula: (P-15)(.65) + 2.5;
            ``(II) is equal to or exceeds 17.3, but is less than 30.0, 
        such adjustment percentage is equal to 4 percent; or
            ``(III) is equal to or exceeds 30, such adjustment 
        percentage is equal to 10 percent,
where `P' is the hospital's disproportionate patient percentage (as 
defined in clause (vi)).''.
            (2) Rural referral centers.--Such section is further 
        amended--
                    (A) in clause (iv)(V), by inserting after ``clause 
                (viii)'' the following: ``or, for discharges occurring 
                on or after October 1, 2001, is equal to the percent 
                determined in accordance with clause (xi)''; and
                    (B) by adding at the end the following new clause:
    ``(xi) For purposes of clause (iv)(V), in the case of a hospital 
for a cost reporting period with a disproportionate patient percentage 
(as defined in clause (vi)) that--
            ``(I) is less than 17.3, the disproportionate share 
        adjustment percentage is determined in accordance with the 
        following formula: (P-15)(.65) + 2.5;
            ``(II) is equal to or exceeds 17.3, but is less than 30.0, 
        such adjustment percentage is equal to 4 percent; or
            ``(III) is equal to or exceeds 30, such adjustment 
        percentage is determined in accordance with the following 
        formula: (P-30)(.6) + 4,
where `P' is the hospital's disproportionate patient percentage (as 
defined in clause (vi)).''.
            (3) Small rural hospitals generally.--Such section is 
        further amended--
                    (A) in clause (iv)(III), by inserting after ``4 
                percent'' the following: ``or, for discharges occurring 
                on or after October 1, 2001, is equal to the percent 
                determined in accordance with clause (xii)''; and
                    (B) by adding at the end the following new clause:
    ``(xii) For purposes of clause (iv)(III), in the case of a hospital 
for a cost reporting period with a disproportionate patient percentage 
(as defined in clause (vi)) that--
            ``(I) is less than 17.3, the disproportionate share 
        adjustment percentage is determined in accordance with the 
        following formula: (P-15)(.65) + 2.5;
            ``(II) is equal to or exceeds 17.3, such adjustment 
        percentage is equal to 4 percent,
where `P' is the hospital's disproportionate patient percentage (as 
defined in clause (vi)).''.
            (4) Hospitals that are both sole community hospitals and 
        rural referral centers.--Such section is further amended, in 
        clause (iv)(IV), by inserting after ``clause (viii)'' the 
        following: ``or, for discharges occurring on or after October 
        1, 2001, the greater of the percentages determined under clause 
        (x) or (xi)''.
            (5) Urban hospitals with less than 100 beds.--Such section 
        is further amended--
                    (A) in clause (iv)(II), by inserting after ``5 
                percent'' the following: ``or, for discharges occurring 
                on or after October 1, 2001, is equal to the percent 
                determined in accordance with clause (xiii)''; and
                    (B) by adding at the end the following new clause:
    ``(xiii) For purposes of clause (iv)(II), in the case of a hospital 
for a cost reporting period with a disproportionate patient percentage 
(as defined in clause (vi)) that--
            ``(I) is less than 17.3, the disproportionate share 
        adjustment percentage is determined in accordance with the 
        following formula: (P-15)(.65) + 2.5;
            ``(II) is equal to or exceeds 17.3, but is less than 40.0, 
        such adjustment percentage is equal to 4 percent; or
            ``(III) is equal to or exceeds 40, such adjustment 
        percentage is equal to 5 percent,
where `P' is the hospital's disproportionate patient percentage (as 
defined in clause (vi)).''.
    (c) Technical Amendment.--Section 1886(d)(5)(F)(i) (42 U.S.C. 
1395ww(d)(5)(F)(i)) is amended by striking ``and before October 1, 
1997,''.

SEC. 212. OPTION TO BASE ELIGIBILITY FOR MEDICARE DEPENDENT, SMALL 
              RURAL HOSPITAL PROGRAM ON DISCHARGES DURING ANY OF THE 3 
              MOST RECENT AUDITED COST REPORTING PERIODS.

    (a) In General.--Section 1886(d)(5)(G)(iv)(IV) (42 U.S.C. 
1395ww(d)(5)(G)(iv)(IV)) is amended by inserting ``, or any of the 3 
most recent audited cost reporting periods,'' after ``1987''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to cost reporting periods beginning on or after the date 
of enactment of this Act.

SEC. 213. EXTENSION OF OPTION TO USE REBASED TARGET AMOUNTS TO ALL SOLE 
              COMMUNITY HOSPITALS.

    (a) In General.--Section 1886(b)(3)(I)(i) (42 U.S.C. 
1395ww(b)(3)(I)(i)) is amended--
            (1) in the matter preceding subclause (I)--
                    (A) by striking ``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''; and
                    (B) by striking ``substituted for such target 
                amount'' and inserting ``substituted, if such 
                substitution results in a greater payment under this 
                section for such hospital, for the amount otherwise 
                determined under subsection (d)(5)(D)(i)'';
            (2) in subclause (I), by striking ``target amount otherwise 
        applicable'' and all that follows through ``target amount')'' 
        and inserting ``the amount otherwise applicable to the hospital 
        under subsection (d)(5)(D)(i) (referred to in this clause as 
        the `subsection (d)(5)(D)(i) amount')''; and
            (3) in each of subclauses (II) and (III), by striking 
        ``subparagraph (C) target amount'' and inserting ``subsection 
        (d)(5)(D)(i) amount''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 405 of BBRA (113 
Stat. 1501A-372).

SEC. 214. MEDPAC ANALYSIS OF IMPACT OF VOLUME ON PER UNIT COST OF RURAL 
              HOSPITALS WITH PSYCHIATRIC UNITS.

    The Medicare Payment Advisory Commission, in its study conducted 
pursuant to subsection (a) of section 411 of BBRA (113 Stat. 1501A-
377), shall include--
            (1) in such study an analysis of the impact of volume on 
        the per unit cost of rural hospitals with psychiatric units; 
        and
            (2) in its report under subsection (b) of such section a 
        recommendation on whether special treatment for such hospitals 
        may be warranted.

                   Subtitle C--Other Rural Provisions

SEC. 221. PROVIDER-BASED RURAL HEALTH CLINIC CAP EXEMPTION.

    (a) In General.--The matter in section 1833(f) (42 U.S.C. 1395l(f)) 
preceding paragraph (1) is amended by striking ``with less than 50 
beds'' and inserting ``with an average daily patient census that does 
not exceed 50''.
    (b) Effective Date.--The amendment made by subparagraph (A) shall 
apply to services furnished on or after January 1, 2001.

SEC. 222. PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT SERVICES.

    (a) Payment for Certain Physician Assistant Services.--Section 
1842(b)(6)(C) (42 U.S.C. 1395u(b)(6)(C)) is amended by striking ``for 
such services provided before January 1, 2003,''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act.

SEC. 223. TEMPORARY INCREASE FOR HOME HEALTH SERVICES FURNISHED IN A 
              RURAL AREA.

    (a) Increase for 2001 and 2002.--In the case of a unit of home 
health service furnished in a rural area (as defined in section 
1886(d)(2)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(2)(D))) 
during 2001 or 2002, the Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall increase the 
payment amount otherwise made under section 1895 of such Act (42 U.S.C. 
1395fff) for such unit of service by 10 percent.
    (b) Additional Payment Not Built Into the Base.--The Secretary 
shall not include any additional payment made under subsection (a) in 
updating the standard prospective payment amount (or amounts) 
applicable to units of home health services furnished during a period, 
as increased by the home health applicable increase percentage for the 
fiscal year involved under section 1895(b)(3)(B) of the Social Security 
Act (42 U.S.C. 1395fff(b)(3)(B)).
    (c) Waiving Budget Neutrality.--The Secretary shall not reduce the 
standard prospective payment amount (or amounts) under section 1895 of 
the Social Security Act (42 U.S.C. 1395fff) applicable to units of home 
health services furnished during a period to offset the increase in 
payments resulting from the application of subsection (a).

SEC. 224. REFINEMENT OF MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.

    (a) Revision of Telehealth Payment Methodology and Elimination of 
Fee-Sharing Requirement.--Section 4206(b) of the Balanced Budget Act of 
1997 (42 U.S.C. 1395l note) is amended to read as follows:
    ``(b) Methodology for Determining Amount of Payments.--
            ``(1) In general.--The Secretary shall pay to--
                    ``(A) the physician or practitioner at a distant 
                site that provides an item or service under subsection 
                (a) an amount equal to the amount that such physician 
                or provider would have been paid had the item or 
                service been provided without the use of a 
                telecommunications system; and
                    ``(B) the originating site a facility fee for 
                facility services furnished in connection with such 
                item or service.
            ``(2) Application of part b coinsurance and deductible.--
        Any payment made under this section shall be subject to the 
        coinsurance and deductible requirements under subsections 
        (a)(1) and (b) of section 1833 of the Social Security Act (42 
        U.S.C. 1395l).
            ``(3) Definitions.--In this subsection:
                    ``(A) Distant site.--The term `distant site' means 
                the site at which the physician or practitioner is 
                located at the time the item or service is provided via 
                a telecommunications system.
                    ``(B) Facility fee.--The term `facility fee' means 
                an amount equal to--
                            ``(i) for 2000 and 2001, $20; and
                            ``(ii) for a subsequent year, the facility 
                        fee under this subsection for the previous year 
                        increased by the percentage increase in the MEI 
                        (as defined in section 1842(i)(3)) for such 
                        subsequent year.
                    ``(C) Originating site.--
                            ``(i) In general.--The term `originating 
                        site' means the site described in clause (ii) 
                        at which the eligible telehealth beneficiary 
                        under the medicare program is located at the 
                        time the item or service is provided via a 
                        telecommunications system.
                            ``(ii) Sites described.--The sites 
                        described in this paragraph are as follows:
                                    ``(I) On or before January 1, 2002, 
                                the office of a physician or a 
                                practitioner, a critical access 
                                hospital, a rural health clinic, and a 
                                Federally qualified health center.
                                    ``(II) On or before January 1, 
                                2003, a hospital, a skilled nursing 
                                facility, a comprehensive outpatient 
                                rehabilitation facility, a renal 
                                dialysis facility, an ambulatory 
                                surgical center, an Indian Health 
                                Service facility, and a community 
                                mental health center.''.
    (b) Elimination of Requirement for Telepresenter.--Section 4206 of 
the Balanced Budget Act of 1997 (42 U.S.C. 1395l note) is amended--
            (1) in subsection (a), by striking ``, notwithstanding that 
        the individual physician'' and all that follows before the 
        period at the end; and
            (2) by adding at the end the following new subsection:
    ``(e) Telepresenter Not Required.--Nothing in this section shall be 
construed as requiring an eligible telehealth beneficiary to be 
presented by a physician or practitioner for the provision of an item 
or service via a telecommunications system.''.
    (c) Reimbursement for Medicare Beneficiaries Who Do Not Reside in a 
HPSA.--Section 4206(a) of the Balanced Budget Act of 1997 (42 U.S.C. 
1395l note), as amended by subsection (b), is amended--
            (1) by striking ``In General.--Not later than'' and 
        inserting the following: ``Telehealth Services Reimbursed.--
            ``(1) In general.--Not later than'';
            (2) by striking ``furnishing a service for which payment'' 
        and all that follows before the period and inserting ``to an 
        eligible telehealth beneficiary''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Eligible telehealth beneficiary defined.--In this 
        section, the term `eligible telehealth beneficiary' means a 
        beneficiary under the medicare program under title XVIII of the 
        Social Security Act (42 U.S.C. 1395 et seq.) that resides in--
                    ``(A) an area that is designated as a health 
                professional shortage area under section 332(a)(1)(A) 
                of the Public Health Service Act (42 U.S.C. 
                254e(a)(1)(A));
                    ``(B) a county that is not included in a 
                Metropolitan Statistical Area; or
                    ``(C) an inner-city area that is medically 
                underserved (as defined in section 330(b)(3) of the 
                Public Health Service Act (42 U.S.C. 254b(b)(3))).''.
    (d) Telehealth Coverage for Direct Patient Care.--
            (1) In general.--Section 4206 of the Balanced Budget Act of 
        1997 (42 U.S.C. 1395l note), as amended by subsection (c), is 
        amended--
                    (A) in subsection (a)(1), by striking 
                ``professional consultation via telecommunications 
                systems with a physician'' and inserting ``items and 
                services for which payment may be made under such part 
                that are furnished via a telecommunications system by a 
                physician''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(f) Coverage of Items and Services.--Payment for items and 
services provided pursuant to subsection (a) shall include payment for 
professional consultations, office visits, office psychiatry services, 
including any service identified as of July 1, 2000, by HCPCS codes 
99241-99275, 99201-99215, 90804-90815, and 90862.''.
            (2) Study and report regarding additional items and 
        services.--
                    (A) Study.--The Secretary of Health and Human 
                Services shall conduct a study to identify items and 
                services in addition to those described in section 
                4206(f) of the Balanced Budget Act of 1997 (as added by 
                paragraph (1)) that would be appropriate to provide 
                payment under title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.).
                    (B) Report.--Not later than 2 years after the date 
                of enactment of this Act, the Secretary shall submit a 
                report to Congress on the study conducted under 
                subparagraph (A) together with such recommendations for 
                legislation that the Secretary determines are 
                appropriate.
    (e) All Physicians and Practitioners Eligible for Telehealth 
Reimbursement.--Section 4206(a) of the Balanced Budget Act of 1997 (42 
U.S.C. 1395l note), as amended by subsection (d), is amended--
            (1) in paragraph (1), by striking ``(described in section 
        1842(b)(18)(C) of such Act (42 U.S.C. 1395u(b)(18)(C))''; and
            (2) by adding at the end the following new paragraph:
            ``(3) Practitioner defined.--For purposes of paragraph (1), 
        the term `practitioner' includes--
                    ``(A) a practitioner described in section 
                1842(b)(18)(C) of the Social Security Act (42 U.S.C. 
                1395u(b)(18)(C)); and
                    ``(B) a physical, occupational, or speech 
                therapist.''.
    (f) Telehealth Services Provided Using Store-and-Forward 
Technologies.--Section 4206(a)(1) of the Balanced Budget Act of 1997 
(42 U.S.C. 1395l note), as amended by subsection (e), is amended by 
adding at the end the following new paragraph:
            ``(4) Use of store-and-forward technologies.--For purposes 
        of paragraph (1), in the case of any Federal telemedicine 
        demonstration program in Alaska or Hawaii, the term 
        `telecommunications system' includes store-and-forward 
        technologies that provide for the asynchronous transmission of 
        health care information in single or multimedia formats.''.
    (g) Construction Relating to Home Health Services.--Section 4206(a) 
of the Balanced Budget Act of 1997 (42 U.S.C. 1395l note), as amended 
by subsection (f), is amended by adding at the end the following new 
paragraph:
            ``(5) Construction relating to home health services.--
                    ``(A) In general.--Nothing in this section or in 
                section 1895 of the Social Security Act (42 U.S.C. 
                1395fff) shall be construed as preventing a home health 
                agency that is receiving payment under the prospective 
                payment system described in such section from 
                furnishing a home health service via a 
                telecommunications system.
                    ``(B) Limitation.--The Secretary shall not consider 
                a home health service provided in the manner described 
                in subparagraph (A) to be a home health visit for 
                purposes of--
                            ``(i) determining the amount of payment to 
                        be made under the prospective payment system 
                        established under section 1895 of the Social 
                        Security Act (42 U.S.C. 1395fff); or
                            ``(ii) any requirement relating to the 
                        certification of a physician required under 
                        section 1814(a)(2)(C) of such Act (42 U.S.C. 
                        1395f(a)(2)(C)).''.
    (h) Five-Year Application.--The amendments made by this section 
shall apply to items and services provided on or after April 1, 2001, 
and before April 1, 2006.

SEC. 225. MEDPAC STUDY ON LOW-VOLUME, ISOLATED RURAL HEALTH CARE 
              PROVIDERS.

    (a) Study.--The Medicare Payment Advisory Commission established 
under section 1805 of the Social Security Act (42 U.S.C. 1395b-6) (in 
this section referred to as ``MedPAC'') shall conduct a study on the 
effect of low patient and procedure volume on the financial status of 
low-volume, isolated rural health care providers participating in the 
medicare program under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.).
    (b) Report.--Not later than 18 months after the date of 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) indicating--
            (1) whether low-volume, isolated rural health care 
        providers are having, or may have, significantly decreased 
        medicare margins or other financial difficulties resulting from 
        any of the payment methodologies described in subsection (c);
            (2) whether the status as a low-volume, isolated rural 
        health care provider should be designated under the medicare 
program and any criteria that should be used to qualify for such a 
status; and
            (3) any changes in the payment methodologies described in 
        subsection (c) that are necessary to provide appropriate 
        reimbursement under the medicare program to low-volume, 
        isolated rural health care providers (as designated pursuant to 
        paragraph (2)).
    (c) Payment Methodologies Described.--The payment methodologies 
described in this subsection are the following:
            (1) The prospective payment system for hospital outpatient 
        department services under section 1833(t) of the Social 
        Security Act (42 U.S.C. 1395l).
            (2) The fee schedule for ambulance services under section 
        1834(l) of such Act (42 U.S.C. 1395m(l)).
            (3) The prospective payment system for inpatient hospital 
        services under section 1886 of such Act (42 U.S.C. 1395ww).
            (4) The prospective payment system for routine service 
        costs of skilled nursing facilities under section 1888(e) of 
        such Act (42 U.S.C. 1395yy(e)).
            (5) The prospective payment system for home health services 
        under section 1895 of such Act (42 U.S.C. 1395fff).

                TITLE III--PROVISIONS RELATING TO PART A

                       Subtitle A--PPS Hospitals

SEC. 301. DELAY OF REDUCTION IN PPS HOSPITAL PAYMENT UPDATE.

    (a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
1395ww(b)(3)(B)(i)) is amended--
            (1) in subclause (XVI), by striking ``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,'' and inserting ``for hospitals in all 
        areas,'';
            (2) in subclause (XVII)--
                    (A) by striking ``minus 1.1 percentage points''; 
                and
                    (B) by striking ``and'' at the end;
            (3) by redesignating subclause (XVIII) as subclause (XIX);
            (4) in subclause (XIX), as so redesignated, by striking 
        ``fiscal year 2003'' and inserting ``fiscal year 2004''; and
            (5) by inserting after subclause (XVII) the following new 
        subclause:
            ``(XVIII) for fiscal year 2003, the market basket 
        percentage increase minus 1 percentage point for hospitals in 
        all areas, and''.
    (b) Special Rule for Payment for Inpatient Hospital Services for 
Fiscal Year 2001.--Notwithstanding the amendments made by subsection 
(a), for purposes of making payments for fiscal year 2001 for inpatient 
hospital services furnished by subsection (d) hospitals (as defined in 
section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
1395ww(d)(1)(B))), the ``applicable percentage increase'' referred to 
in section 1886(b)(3)(B)(i) of such Act (42 U.S.C. 
1395ww(b)(3)(B)(i))--
            (1) for discharges occurring on or after October 1, 2000, 
        and before April 1, 2001, shall be determined in accordance 
        with subclause (XVI) of such section as in effect on the day 
        before the date of enactment of this Act; and
            (2) for discharges occurring on or after April 1, 2001, and 
        before October 1, 2001, shall be equal to--
                    (A) the market basket percentage increase plus 1.1 
                percentage points for hospitals (other than sole 
                community hospitals) in all areas; and
                    (B) the market basket percentage increase for sole 
                community hospitals.

SEC. 302. REVISION OF REDUCTION OF INDIRECT GRADUATE MEDICAL EDUCATION 
              PAYMENTS.

    (a) Revision.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended--
            (1) in subclause (V)--
                    (A) by striking ``fiscal year 2001'' and inserting 
                ``each of fiscal years 2001 and 2002''; and
                    (B) by striking ``equal to 1.54'' and inserting 
                ``equal to 1.6''; and
            (2) in subclause (VI), by striking ``2001'' and inserting 
        ``2002''.
    (b) Special Rule for Payment for Fiscal Year 2001.--Notwithstanding 
paragraph (5)(B)(ii)(V) of section 1886(d) of the Social Security Act 
(42 U.S.C. 1395ww(d)(5)(B)(ii)(V)) (as amended by subsection (a)), for 
purposes of making payments for fiscal year 2001 for subsection (d) 
hospitals (as defined in paragraph (1)(B) of such section) with 
indirect costs of medical education, the indirect teaching adjustment 
factor referred to in paragraph (5)(B)(ii) of such section shall be 
determined--
            (1) for discharges occurring on or after October 1, 2000, 
        and before April 1, 2001, in accordance with paragraph 
        (5)(B)(ii)(V) of such section as in effect on the day before 
        the date of enactment of this Act; and
            (2) for discharges occurring on or after April 1, 2001, and 
        before October 1, 2001, as if ``c'' in such paragraph equalled 
        1.66.
    (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--
            (1) by striking ``1997'' and inserting ``1997,''; and
            (2) by inserting ``, or any additional payments under such 
        paragraph resulting from the application of section 302 of the 
        Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
        2000'' after ``Balanced Budget Refinement Act of 1999''.
    (d) Clerical Amendments.--Section 1886(d)(5)(B) (42 U.S.C. 
1395ww(d)(5)(B)), as amended by subsection (a), is amended by moving 
the indentation of each of the following 2 ems to the left:
            (1) Clauses (ii), (v), and (vi).
            (2) Subclauses (I) through (VI) of clause (ii).
            (3) Subclauses (I) and (II) of clause (vi) and the flush 
        sentence at the end of such clause.

SEC. 303. DECREASE IN REDUCTIONS FOR DISPROPORTIONATE SHARE HOSPITAL 
              PAYMENTS.

    (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 ``each of fiscal years 
        2000 and 2001'' and inserting ``fiscal year 2000'';
            (2) by redesignating subclauses (IV) and (V) as subclauses 
        (V) and (IV), respectively;
            (3) in subclause (V), as redesignated, by striking ``4 
        percent'' and inserting ``3 percent''; and
            (4) by inserting after subclause (III) the following new 
        subclause:
            ``(IV) during fiscal year 2001, such additional payment 
        amount shall be reduced by 2 percent;''.
    (b) Special Rule for DSH Payment.--Notwithstanding the amendments 
made by subsection (a), for purposes of making disproportionate share 
payments for subsection (d) hospitals (as defined in section 
1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) 
for fiscal year 2001, the additional payment amount otherwise 
determined under clause (ii) of section 1886(d)(5)(F) of the Social 
Security Act (42 U.S.C. 1395ww(d)(5)(F))--
            (1) for discharges occurring on or after October 1, 2000, 
        and before April 1, 2001, shall be adjusted as provided by 
        clause (ix)(III) of such section as in effect on the day before 
        the date of enactment of this Act; and
            (2) for discharges occurring on or after April 1, 2001, and 
        before October 1, 2001, shall, instead of being adjusted as 
        provided by clause (ix)(IV) of such section as in effect after 
        the date of enactment of this Act, shall be decreased by 1 
        percent.
    (c) Conforming Amendments Relating to Determination of Standardized 
Amount.--Section 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)), is 
amended--
            (1) by striking ``1989 or'' and inserting ``1989,''; and
            (2) by inserting ``, or the enactment of section 303 of the 
        Medicare, Medicaid, and SCHIP Balanced Budget Further 
        Refinement Act of 2000'' after ``Omnibus Budget Reconciliation 
        Act of 1990''.

SEC. 304. MODIFICATION OF PAYMENT RATE FOR PUERTO RICO HOSPITALS.

    (a) Modification of Payment Rate.--Section 1886(d)(9)(A) (42 U.S.C. 
1395ww(d)(9)(A)) is amended--
            (1) in clause (i), by striking ``October 1, 1997, 50 
        percent ('' and inserting ``October 1, 2000, 25 percent (for 
        discharges between October 1, 1997, and September 30, 2000, 50 
        percent,''; and
            (2) in clause (ii), in the matter preceding subclause (I), 
        by striking ``after October 1, 1997, 50 percent ('' and 
        inserting ``after October 1, 2000, 75 percent (for discharges 
        between October 1, 1997, and September 30, 2000, 50 percent,''.
    (b) Special Rule for Payment for Fiscal Year 2001.--
            (1) In general.--Notwithstanding the amendment made by 
        subsection (a), for purposes of making payments for the 
        operating costs of inpatient hospital services of a section 
        1886(d) Puerto Rico hospital for fiscal year 2001, the amount 
        referred to in the matter preceding clause (i) of section 
        1886(d)(9)(A) of the Social Security Act (42 U.S.C. 
        1395ww(d)(9)(A))--
                    (A) for discharges occurring on or after October 1, 
                2000, and before April 1, 2001, shall be determined in 
                accordance with such section as in effect on the day 
                before the date of enactment of this Act; and
                    (B) for discharges occurring on or after April 1, 
                2001, and before October 1, 2001, shall be determined--
                            (i) using 0 percent of the Puerto Rico 
                        adjusted DRG prospective payment rate referred 
                        to in clause (i) of such section; and
                            (ii) using 100 percent of the discharge-
                        weighted average referred to in clause (ii) of 
                        such section.
            (2) Section 1886(d) puerto rico hospital.--For purposes of 
        this subsection, the term ``section 1886(d) Puerto Rico 
        hospital'' has the meaning given the term ``subsection (d) 
        Puerto Rico hospital'' in the last sentence of section 
        1886(d)(9)(A) of the Social Security Act (42 U.S.C. 
        1395ww(d)(9)(A)).

SEC. 305. MEDPAC STUDY AND REPORT ON HOSPITAL AREA WAGE INDEXES.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        established under section 1805 of the Social Security Act (42 
        U.S.C. 1395b-6) (in this section referred to as ``MedPAC'') 
        shall conduct a study on the hospital area wage indexes used in 
        making payments to hospitals under section 1886(d) of the 
        Social Security Act (42 U.S.C. 1395ww(d)), including an 
        assessment of the accuracy of those indexes in reflecting 
        geographic differences in wage and wage-related costs of 
        hospitals.
            (2) Considerations.--In conducting the study under 
        paragraph (1), MedPAC shall consider--
                    (A) the appropriate method for determining hospital 
                area wage indexes;
                    (B) the appropriate portion of hospital payments 
                that should be adjusted by the applicable area wage 
                index;
                    (C) the appropriate method for adjusting the wage 
                index by occupational mix; and
                    (D) the feasibility and impact of making changes 
                (as determined appropriate by MedPAC) to the methods 
                used to determine such indexes, including the need for 
                a data system required to implement such changes.
    (b) Report.--Not later than 18 months after the date of 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 such recommendations for legislation and 
administrative action as MedPAC determines appropriate.

SEC. 306. MEDPAC STUDY AND REPORT REGARDING CERTAIN HOSPITAL COSTS.

    (a) Study.--
            (1) In general.--The Medicare Payment Advisory Commission 
        established under section 1805 of the Social Security Act (42 
        U.S.C. 1395b-6) (in this section referred to as ``MedPAC'') 
        shall conduct a study on--
                    (A) any increased costs incurred by subsection (d) 
                hospitals (as defined in paragraph (1)(B) of section 
                1886(d) of the Social Security Act (42 U.S.C. 
                1395ww(d))) in providing inpatient hospital services to 
                medicare beneficiaries under title XVIII of such Act 
                during the period beginning on October 1, 1983, and 
                ending on September 30, 1999, that were attributable 
                to--
                            (i) complying with new blood safety measure 
                        requirements; and
                            (ii) providing such services using new 
                        technologies;
                    (B) the extent to which the prospective payment 
                system for such services under such section provides 
adequate and timely recognition of such increased costs;
                    (C) the prospects for (and to the extent 
                practicable, the magnitude of) cost increases that 
                hospitals will incur in providing such services that 
                are attributable to complying with new blood safety 
                measure requirements and providing such services using 
                new technologies during the 10 years after the date of 
                enactment of this Act; and
                    (D) the feasibility and advisability of 
                establishing mechanisms under such payment system to 
                provide for more timely and accurate recognition of 
                such cost increases in the future.
            (2) Consultation.--In conducting the study under this 
        section, MedPAC shall consult with representatives of the blood 
        community, including
                    (A) hospitals;
                    (B) organizations involved in the collection, 
                processing, and delivery of blood; and
                    (C) organizations involved in the development of 
                new blood safety technologies.
    (b) Report.--Not later than 1 year after the date of 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 such recommendations for legislation and administrative 
action as MedPAC determines appropriate.

                    Subtitle B--PPS Exempt Hospitals

SEC. 311. PERMANENT GUARANTEE OF PRE-BBA PAYMENT LEVELS FOR OUTPATIENT 
              SERVICES FURNISHED BY CHILDREN'S HOSPITALS.

    (a) In General.--Section 1833(t) (42 U.S.C. 1395l(t)) is amended--
            (1) in the heading of paragraph (7)(D)(ii), by inserting 
        ``and children's hospitals'' after ``cancer hospitals''; and
            (2) in paragraphs (7)(D)(ii) and (11), by striking 
        ``section 1886(d)(1)(B)(v)'' and inserting ``clause (iii) or 
        (v) of section 1886(d)(1)(B)''.
    (b) Effective Date.--The amendments made by subsection (a) apply as 
if included in the enactment of section 202 of BBRA.

SEC. 312. PAYMENT FOR INPATIENT SERVICES OF REHABILITATION HOSPITALS.

    (a) Assistance With Administrative Costs Associated With Completion 
of Patient Assessment.--Section 1886(j)(3)(B) (42 U.S.C. 
1395ww(j)(3)(B)) is amended by striking ``98 percent'' and inserting 
``100 percent for fiscal year 2001 and 98 percent for fiscal year 
2002''.
    (b) Election To Apply Full Prospective Payment Rate Without Phase-
In.--
            (1) In general.--Paragraph (1) of section 1886(j) (42 
        U.S.C. 1395ww(j)) is amended--
                    (A) in subparagraph (A), by inserting ``other than 
                a facility making an election under subparagraph (F)'' 
                before ``, in a cost reporting period'';
                    (B) in subparagraph (B), by inserting ``or, in the 
                case of a facility making an election under 
                subparagraph (F), for any cost reporting period 
                described in such subparagraph,'' after ``2002,''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F) Election to apply full prospective payment 
                system.--A rehabilitation facility may elect, at least 
                30 days before the first date on which the payment 
                methodology under this subsection applies, to have 
                payment made to the facility under this subsection 
                under the provisions of subparagraph (B) (rather than 
                subparagraph (A)) for each cost reporting period to 
                which such payment methodology applies.''.
            (2) Clarification.--Paragraph (3)(B) of such section is 
        amended by inserting ``but not taking into account any payment 
        adjustment resulting from an election permitted under paragraph 
        (1)(F)'' after ``paragraphs (4) and (6)''.
    (c) Effective Date.--The amendments made by this section take 
effect as if included in the enactment of BBA.

SEC. 313. IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM FOR LONG-TERM 
              CARE HOSPITALS.

    (a) Modification of Requirement.--In developing the prospective 
payment system required under section 123 of BBRA (113 Stat. 1501A-
331), the Secretary of Health and Human Services shall examine the 
feasibility and the impact of basing payment under such system on the 
use of existing (or refined) hospital diagnosis-related groups (DRGs) 
and the use of the most recently available hospital discharge data.
    (b) Default Implementation of System Based on Existing DRG 
Methodology.--If the Secretary is unable to implement the prospective 
payment system described in subsection (a) by October 1, 2002, the 
Secretary shall implement a prospective payment system for long-term 
care hospitals that bases payment under such a system using existing 
hospital diagnosis-related groups (DRGs), consistent with subsection 
(a), for such services furnished on or after that date.

                 Subtitle C--Skilled Nursing Facilities

SEC. 321. REVISION TO THE SKILLED NURSING FACILITY (SNF) MARKET BASKET 
              UPDATE FOR FISCAL YEARS 2001 AND 2002.

    (a) Revision.--Section 1888(e)(4)(E)(ii)(II) of the Social Security 
Act (42 U.S.C. 1395yy(e)(4)(E)(ii)(II)) is amended by striking ``minus 
1 percentage point'' and inserting ``plus 1 percentage point''.
    (b) Special Rule for Payment for Skilled Nursing Facility Services 
for Fiscal Year 2001.--Notwithstanding the amendment made by subsection 
(a), for purposes of making payments for covered skilled nursing 
facility services under section 1888(e) of the Social Security Act (42 
U.S.C. 1395yy(e)) for fiscal year 2001, the Federal per diem rate 
referred to in paragraph (4)(E)(ii) of such section--
            (1) for the period beginning on October 1, 2000, and ending 
        on March 31, 2001, shall be the rate determined in accordance 
        with subclause (II) of such paragraph as in effect on the day 
before the date of enactment of this Act; and
            (2) for the period beginning on April 1, 2001, and ending 
        on September 30, 2001, shall be the rate computed for fiscal 
        year 2000 pursuant to subclause (I) of such paragraph increased 
        by the skilled nursing facility market basket percentage change 
        for fiscal year 2001 plus 3 percentage points.

SEC. 322. APPLICATION OF SNF CONSOLIDATED BILLING REQUIREMENT LIMITED 
              TO PART A COVERED STAYS.

    (a) In General.--Section 1862(a)(18) (42 U.S.C. 1395y(a)(18)) is 
amended by inserting after ``(as determined under regulations)'' the 
following: ``during a period in which the resident is provided covered 
post-hospital extended care services''.
    (b) Conforming Amendments.--(1) Section 1842(b)(6)(E) (42 U.S.C. 
1395u(b)(6)(E)) is amended by striking ``in the case of an item or 
service (other than services described in section 1888(e)(2)(A)(ii))'' 
and inserting ``in the case of services described in section 
1861(s)(2)(D)''.
    (2) Section 1866(a)(1)(H)(ii)(I) (42 U.S.C. 1395cc(a)(1)(H)(ii)(I)) 
is amended by inserting after ``who is a resident of the skilled 
nursing facility'' the following: ``during a period in which the 
resident is provided covered post-hospital extended care services (or, 
for services described in section 1861(s)(2)(D), that are furnished to 
such an individual without regard to such period)''.
    (c) Effective Date.--The amendment made by subsection (a) applies 
to services furnished on or after January 1, 2001.
    (d) Oversight.--The Secretary of Health and Human Services, through 
the Office of the Inspector General in the Department of Health and 
Human Services or otherwise, shall monitor payments made under part B 
of the title XVIII of the Social Security Act for items and services 
furnished to residents of skilled nursing facilities during a time in 
which the residents are not being provided medicare covered post-
hospital extended care services to ensure that there is not duplicate 
billing for services or excessive services provided.

SEC. 323. REEXAMINATION OF, AND AUTHORITY TO REVISE, THE SKILLED 
              NURSING FACILITY MARKET BASKET PERCENTAGE INCREASE.

    (a) Reexamination.--
            (1) In general.--The Secretary of Health and Human Services 
        shall reexamine the skilled nursing facility market basket 
        percentage (as defined in paragraph (5)(B) of section 1888(e) 
        of the Social Security Act (42 U.S.C. 1395yy(e)) that was used 
        in making the update to the first fiscal year under paragraph 
        (4)(B) of such section under the prospective payment system for 
        skilled nursing facility services.
            (2) Specific elements.--In conducting the reexamination 
        under paragraph (1), the Secretary of Health and Human Services 
        shall account for costs based on actual data and actual 
        medicare skilled nursing facility cost increases.
    (b) Authority.--Notwithstanding any other provision of law, the 
Secretary of Health and Human Services shall make adjustments to 
payments under the prospective payment system under section 1888(e) of 
the Social Security Act (42 U.S.C. 1395yy(e)) for covered skilled 
nursing facility services furnished in fiscal year 2002 to reflect any 
necessary adjustments to such payments as is appropriate as a result of 
the reexamination conducted under subsection (a).
    (c) Publication.--
            (1) In general.--Not later than April 1, 2001, the 
        Secretary of Health and Human Services shall publish for public 
        comment a description of--
                    (A) whether the Secretary will make any adjustments 
                pursuant to this section; and
                    (B) if so, the form of such adjustments.
            (2) Final form.--Not later than August 1, 2001, the 
        Secretary of Health and Human Services shall publish the 
        description described in paragraph (1) in final form.

                        Subtitle D--Hospice Care

SEC. 331. REVISION OF MARKET BASKET INCREASE FOR 2001 AND 2002.

    (a) In General.--Section 1814(i)(1)(C)(ii) (42 U.S.C. 
1395f(i)(1)(C)(ii)) is amended--
            (1) by redesignating subclause (VII) as subclause (VIII);
            (2) in subclause (VI)--
                    (A) by striking ``through 2002'' and inserting 
                ``through 2000''; and
                    (B) by striking ``and'' at the end; and
            (3) by inserting after subclause (VI) the following new 
        subclause:
            ``(VII) for each of fiscal years 2001 and 2002, the market 
        basket percentage increase for the fiscal year plus 1.0 
        percentage point; and''.
    (b) Repeal of BBRA Temporary Increase.--
            (1) In general.--Section 131 of BBRA (113 Stat. 1501A-333) 
        is repealed.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect as if included in the enactment of BBRA.
    (c) Transition During Fiscal Year 2001.--Notwithstanding the 
amendments made by subsection (a), for purposes of making payments for 
hospice care under section 1814(i) of the Social Security Act (42 
U.S.C. 1395f(i)) for fiscal year 2001, the payment rates referred to in 
paragraph (1)(C) of such section--
            (1) for the period beginning on October 1, 2000, and ending 
        on March 31, 2001, shall be the rate determined in accordance 
        with the law as in effect on the day before the date of 
        enactment of this Act; and
            (2) for the period beginning on April 1, 2001, and ending 
        on September 30, 2001, shall be the rate that would have been 
        determined under paragraph (1) if ``plus 3.0 percentage 
        points'' were substituted for ``minus 1.0 percentage points 
        under paragraph (1)(C)(ii)(VI) of such section for fiscal year 
        2001.
    (d) Technical Amendment.--Section 1814(a)(7)(A)(ii) (42 U.S.C. 
1395f(a)(7)(A)(ii)) is amended by striking the period at the end and 
inserting a semicolon.

SEC. 332. STUDY AND REPORT ON PHYSICIAN CERTIFICATION REQUIREMENT FOR 
              HOSPICE BENEFITS.

    (a) In General.--The Secretary of Health and Human Services shall 
conduct a study to examine the appropriateness of the certification 
regarding terminal illness of an individual under section 1814(a)(7) of 
the Social Security Act (42 U.S.C. 1395f(a)(7)) that is required in 
order for such individual to receive hospice benefits under the 
medicare program under title XVIII of such Act (42 U.S.C. 1395 et 
seq.).
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary of Health and Human Services shall submit a 
report to Congress on the study conducted under subsection (a), 
together with any recommendations for legislation that the Secretary 
deems appropriate.

SEC. 333. HOSPICE DEMONSTRATION PROGRAM AND HOSPICE EDUCATION GRANTS.

    (a) Definitions.--In this section:
            (1) Demonstration program.--The term ``demonstration 
        program'' means the Hospice Demonstration Program established 
        by the Secretary under subsection (b)(1).
            (2) Hospice care; hospice program.--Except as otherwise 
        provided, the terms ``hospice care'' and ``hospice program'' 
        have the meanings given such terms in paragraphs (1) and (2) of 
        section 1861(dd) of the Social Security Act (42 U.S.C. 
        1395x(dd)).
            (3) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means any individual who is entitled to benefits 
        under part A or enrolled under part B of the medicare program, 
        including any individual enrolled in a Medicare+Choice plan 
        offered by a Medicare+Choice organization under part C of such 
        program.
            (4) Medicare program.--The term ``medicare program'' means 
        the health benefits program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services, acting through the Administrator 
        of the Health Care Financing Administration.
            (6) Seriously ill.--The term ``seriously ill'' has the 
        meaning given such term by the Secretary (in consultation with 
        hospice programs and academic experts in end-of-life care), 
        except that the Secretary may not limit such term to 
        individuals that are terminally ill (as defined in section 
        1861(dd)(3) of the Social Security Act (42 U.S.C. 
        1395x(dd)(3))).
    (b) Hospice Demonstration Program.--
            (1) Establishment.--Not later than 2 years after the date 
        of enactment of this Act, the Secretary shall establish a 
        Hospice Demonstration Program in accordance with the provisions 
        of this subsection to increase the utility of hospice care for 
        seriously ill medicare beneficiaries.
            (2) Participation.--
                    (A) Hospice programs.--Except as provided in 
                paragraph (4)(A), only a hospice program with an 
                agreement under section 1866 of the Social Security Act 
                (42 U.S.C. 1395cc), a consortium of such hospice 
                programs, or a State hospice association may 
                participate in the demonstration program.
                    (B) Medicare beneficiaries.--The Secretary shall 
                permit any seriously ill medicare beneficiary residing 
                in the service area of a hospice program participating 
                in the demonstration program to participate in the 
                demonstration program on a voluntary basis.
            (3) Hospice care under demonstration program.--The 
        provisions of section 1814(i) of the Social Security Act (42 
        U.S.C. 1395f(i)) shall apply to the payment for hospice care 
        provided under the demonstration program, except that--
                    (A) notwithstanding section 1862(a)(1)(C) of such 
                Act (42 U.S.C. 1395y(a)(1)(C)), the Secretary shall 
                provide for reimbursement for hospice care provided 
                under the supportive and comfort care benefit 
                established under paragraph (4);
                    (B) any licensed nurse practitioner or physician 
                assistant may admit a seriously ill medicare 
                beneficiary as the primary care provider when necessary 
                and within the scope of practice of such practitioner 
                or assistant under State law;
                    (C) if a community does not have a qualified social 
                worker, any professional (other than a social worker) 
                who has the necessary knowledge, skills, and ability to 
                provide medical social services may provide such 
                services;
                    (D) the Secretary shall waive any requirement that 
                nursing facilities used for respite care have skilled 
                nurses on the premises 24 hours per day;
                    (E) the Secretary shall permit respite care to be 
                provided to a seriously ill medicare beneficiary at 
                home; and
                    (F) the Secretary shall waive reimbursement 
                regulations to provide--
                            (i) reimbursement for consultations and 
                        preadmission informational visits, even if the 
                        seriously ill medicare beneficiary does not 
                        elect hospice care (including the supportive 
                        and comfort care benefit under paragraph (4)) 
                        at that time;
                            (ii) except with respect to the supportive 
                        and comfort care benefit under paragraph (4), a 
                        minimum payment for hospice care provided under 
                        the demonstration program based on the 
                        provision of hospice care to a seriously ill 
                        medicare beneficiary for a period of 14 days 
                        that--
                                    (I) the Secretary shall pay to any 
                                hospice program participating in the 
                                demonstration program and providing 
                                hospice care (regardless of the length 
                                of stay of the seriously ill medicare 
                                beneficiary); and
                                    (II) may not be less than the 
                                amount of payment that would have been 
                                made for hospice care if payment had 
                                been made at the daily rate of payment 
                                for such care under section 1814(i) of 
                                the Social Security Act (42 U.S.C. 
                                1395f(i));
                            (iii) an increase in the reimbursement 
                        rates for hospice care to offset--
                                    (I) changes in hospice care and 
                                oversight under the demonstration 
                                program; and
                                    (II) the higher costs of providing 
                                hospice care in rural areas due to lack 
                                of economies of scale or large 
                                geographic areas;
                            (iv) direct payment of any nurse 
                        practitioner or physician assistant practicing 
                        within the scope of State law in relation to 
                        hospice care provided by such practitioner or 
                        assistant; and
                            (v) a per diem rate of payment for in-home 
                        care under subparagraph (E) that reflects the 
                        range of care needs of the seriously ill 
                        medicare beneficiary and that--
                                    (I) in the case of a seriously ill 
                                medicare beneficiary that needs routine 
                                care, is not less than 150 percent, and 
                                not more than 200 percent, of the 
                                routine home care rate for hospice 
                                care; and
                                    (II) in the case of a seriously ill 
                                medicare beneficiary that needs acute 
                                care, is equal to the continuous home 
                                care day rate for hospice care.
            (4) Supportive and comfort care benefit.--
                    (A) In general.--For purposes of the demonstration 
                program, the Secretary shall establish a supportive and 
                comfort care benefit for any seriously ill medicare 
                beneficiary electing hospice care.
                    (B) Participation.--Any individual or entity with 
                an agreement under section 1866 of the Social Security 
                Act (42 U.S.C. 1395cc) may furnish items or services 
                covered under the supportive and comfort care benefit.
                    (C) Benefit.--Under the supportive and comfort care 
                benefit, any seriously ill medicare beneficiary may--
                            (i) continue to receive benefits for 
                        disease and symptom modifying treatment under 
                        the medicare program (and the Secretary may not 
                        require or prohibit any specific treatment or 
                        decision);
                            (ii) receive case management and hospice 
                        care through a hospice program participating in 
                        the demonstration program (for which payment 
                        shall be made under paragraph (3)(F)(ii)); and
                            (iii) receive information and experience in 
                        order to better understand the utility of 
                        hospice care.
                    (D) Payment.--The Secretary shall establish 
                procedures under which the Secretary pays for items and 
                services furnished to seriously ill medicare 
                beneficiaries under the supportive and comfort care 
                benefit on a fee-for-service basis.
            (5) Conduct of demonstration program.--
                    (A) Sites.--The demonstration program shall be 
                conducted in 3 sites, only 1 of which may be 
                multistate.
                    (B) Selection of sites.--
                            (i) In general.--Except as provided in 
                        clause (ii), the Secretary shall select 
                        demonstration sites, on the basis of proposals 
                        submitted under subparagraph (C), that are 
                        located in geographic areas that--
                                    (I) include both urban and rural 
                                hospice programs; and
                                    (II) are geographically diverse and 
                                readily accessible to a significant 
                                number of medicare beneficiaries.
                            (ii) Exceptions.--
                                    (I) Underserved urban areas.--If a 
                                geographic area does not have any rural 
                                hospice program available to 
                                participate in the demonstration 
                                program, such area may substitute an 
                                underserved urban area, but the 
                                Secretary shall give priority to those 
                                proposals that include a rural hospice 
                                program.
                                    (II) Specific site.--The Secretary 
                                shall select 1 demonstration site in 
                                the State in which, according to the 
                                Hospital Referral Region of Residence, 
                                1994-1995, as listed in the Dartmouth 
                                Atlas of Health Care 1998, the largest 
                                metropolitan area of such State had the 
                                lowest percentage of medicare 
                                beneficiary deaths in a hospital 
                                compared to the largest metropolitan 
                                area of each other State and the 
                                percentage of enrollees who experienced 
                                intensive care during the last 6 months 
                                of life was 21.5 percent.
                    (C) Proposals.--
                            (i) In general.--Under the demonstration 
                        program, the Secretary shall accept proposals 
                        by any State hospice association, hospice 
                        program, or consortium of hospice programs at 
                        such time, in such manner, and in such form as 
                        the Secretary may reasonably require.
                            (ii) Research designs.--The Secretary shall 
                        permit research designs that use time series, 
                        sequential implementation of the intervention, 
                        randomization by wait list, or any other design 
                        that allows the strongest possible 
                        implementation of the demonstration program.
                    (D) Facilitation of evaluation.--The Secretary 
                shall design the demonstration program to facilitate 
                the evaluation conducted under paragraph (7).
            (6) Duration.--The Secretary shall conduct the 
        demonstration program for a period of 3 years.
            (7) Evaluation.--During the 18-month period following the 
        completion of the demonstration program, the Secretary shall 
        conduct an evaluation of the demonstration program in order to 
        determine--
                    (A) the short-term and long-term costs and benefits 
                of changing hospice care provided under the medicare 
                program to include the items, services, and 
                reimbursement options provided under the demonstration 
                program;
                    (B) whether any increase in payments for hospice 
                care provided under the medicare program is offset by 
                savings in other parts of the medicare program;
                    (C) the projected cost of implementing the 
                demonstration program on a national basis; and
                    (D) in consultation with hospice organizations and 
                hospice programs (including organizations and programs 
                that represent rural areas), whether a payment system 
                based on diagnosis-related groups is useful for 
                administering the hospice care provided under the 
medicare program.
            (8) Reports to congress.--
                    (A) Interim report.--Not later than 2 years after 
                the implementation of the demonstration program, the 
                Secretary, in consultation with participants in the 
                program, shall submit to the to the Committee on Ways 
                and Means of the House of Representatives and to the 
                Committee on Finance of the Senate an interim report on 
                the demonstration program.
                    (B) Final report.--Not later than 2 years after the 
                date on which the demonstration program ends, the 
                Secretary shall submit to the committees described in 
                subparagraph (A) a final report on the demonstration 
                program that includes the results of the evaluation 
                conducted under paragraph (7) and recommendations for 
                appropriate legislative changes.
            (9) Waiver of medicare requirements.--The Secretary shall 
        waive compliance with such requirements of the medicare program 
        to the extent and for the period the Secretary finds necessary 
        for the conduct of the demonstration program.
            (10) Special rules for payment of medicare+choice 
        organizations.--The Secretary shall establish procedures under 
        which the Secretary provides for an appropriate adjustment in 
        the monthly payments made under section 1853 of the Social 
        Security Act (42 U.S.C. 1395w-23) to any Medicare+Choice 
        organization offering a Medicare+Choice plan to reflect the 
        participation of each medicare beneficiary enrolled in such 
        plan in the demonstration program.
    (c) Hospice Education Grant Program.--
            (1) Establishment.--The Secretary shall establish a Hospice 
        Education Grant Program under which the Secretary awards 
        education grants to hospice programs participating in the 
        demonstration program for the purpose of providing information 
        about--
                    (A) hospice care under the medicare program; and
                    (B) the benefits available to medicare 
                beneficiaries under the demonstration program.
            (2) Use of funds.--Grants awarded under paragraph (1) shall 
        be used--
                    (A) to provide--
                            (i) individual or group education to 
                        medicare beneficiaries and the families of such 
                        beneficiaries; and
                            (ii) individual or group education of the 
                        medical and mental health community caring for 
                        medicare beneficiaries; and
                    (B) to test strategies to improve the general 
                public knowledge about hospice care under the medicare 
                program and the benefits available to seriously ill 
                medicare beneficiaries under the demonstration program.
    (d) Funding.--
            (1) Hospice demonstration program.--
                    (A) In general.--Except as provided in subparagraph 
                (B), expenditures made for the demonstration program 
                shall be in lieu of the funds that would have been 
                provided to participating hospices under section 
                1814(i) of the Social Security Act (42 U.S.C. 
                1395f(i)).
                    (B) Supportive and comfort care benefit.--The 
                Secretary shall pay any expenses for the supportive and 
                comfort care benefit established under subsection 
                (a)(4) from the Federal Hospital Insurance Trust Fund 
                established under section 1817 of the Social Security 
                Act (42 U.S.C. 1395i) and the Federal Supplementary 
                Medical Insurance Trust Fund established under section 
                1841 of such Act (42 U.S.C. 1395t), in such proportion 
                as the Secretary determines is appropriate.
            (2) Hospice education grants.--The Secretary is authorized 
        to expend such sums as may be necessary for the purposes of 
        carrying out the Hospice Education Grant program established 
        under subsection (c)(1) from the Research and Demonstration 
        Budget of the Health Care Financing Administration.

                      Subtitle E--Other Provisions

SEC. 341. SIX-MONTH DELAY IN IMPLEMENTATION OF RULE REGARDING PROVIDER-
              BASED CRITERIA.

    The Secretary of Health and Human Services may not implement the 
provider-based criteria contained in the final rule that was published 
in the Federal Register by the Health Care Financing Administration on 
April 7, 2000 (65 Fed. Reg. 18434) until after July 9, 2001.

                TITLE IV--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

SEC. 401. APPLICATION OF TRANSITIONAL CORRIDOR TO CERTAIN HOSPITALS 
              THAT DID NOT SUBMIT A 1996 COST REPORT.

    (a) In General.--Section 1833(t)(7)(F)(ii)(I) (42 U.S.C. 
1395l(t)(7)(F)(ii)(I)) is amended by inserting ``(or, in the case of a 
hospital that did not submit a cost report for such period, during the 
first cost reporting period ending in a year after 1996 and before 2001 
for which the hospital submitted a cost report)'' after ``1996''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of section 202 of BBRA.

SEC. 402. CLARIFYING PROCESS AND STANDARDS FOR DETERMINING ELIGIBILITY 
              OF DEVICES FOR PASS-THROUGH PAYMENTS UNDER HOSPITAL 
              OUTPATIENT PPS.

    (a) In General.--Section 1833(t)(6) (42 U.S.C. 1395l(t)(6)) is 
amended--
            (1) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (D) and (E), respectively; and
            (2) by striking subparagraph (B) and inserting the 
        following new subparagraphs:
                    ``(B) Use of categories in determining eligibility 
                of a device for pass-through payments.--The following 
                provisions apply for purposes of determining whether a 
                medical device qualifies for additional payments under 
                clause (ii) or (iv) of subparagraph (A):
                            ``(i) Establishment of initial 
                        categories.--The Secretary shall initially 
                        establish under this clause categories of 
                        medical devices based on type of device by 
                        April 1, 2001. Such categories shall be 
                        established in a manner such that each medical 
                        device that meets the requirements of clause 
                        (ii) or (iv) of subparagraph (A) as of such 
                        date is included in such a category and no such 
                        device is included in more than one category. 
                        For purposes of the preceding sentence, whether 
                        a medical device meets such requirements as of 
                        such date shall be determined on the basis of 
                        the program memoranda issued before such date 
                        or if the Secretary determines the medical 
                        device would have been included in the program 
                        memoranda but for the requirement of 
                        subparagraph (A)(iv)(I). The categories may be 
                        established under this clause by program 
                        memorandum or otherwise, after consultation 
                        with groups representing hospitals, 
                        manufacturers of medical devices, and other 
                        affected parties.
                            ``(ii) Establishing criteria for additional 
                        categories.--
                                    ``(I) In general.--The Secretary 
                                shall establish criteria that will be 
                                used for creation of additional 
                                categories (other than those 
                                established under clause (i)) through 
                                rulemaking (which may include use of an 
                                interim final rule with comment 
                                period).
                                    ``(II) Standard.--Such categories 
                                shall be established under this clause 
                                in a manner such that no medical device 
                                is described by more than one category. 
                                Such criteria shall include a test of 
                                whether the average cost of devices 
                                that would be included in a category 
                                and are in use at the time the category 
                                is established is not insignificant, as 
                                described in subparagraph (A)(iv)(II).
                                    ``(III) Deadline.--Criteria shall 
                                first be established under this clause 
                                by July 1, 2001. The Secretary may 
                                establish in compelling circumstances 
                                categories under this clause before the 
                                date such criteria are established.
                                    ``(IV) Adding categories.--The 
                                Secretary shall promptly establish a 
                                new category of medical device under 
                                this clause for any medical device that 
                                meets the requirements of subparagraph 
                                (A)(iv) and for which none of the 
                                categories in effect (or that were 
                                previously in effect) is appropriate.
                            ``(iii) Period for which category is in 
                        effect.--A category of medical devices 
                        established under clause (i) or clause (ii) 
                        shall be in effect for a period of at least 2 
                        years, but not more than 3 years, that begins--
                                    ``(I) in the case of a category 
                                established under clause (i), on the 
                                first date on which payment was made 
                                under this paragraph for any device 
                                described by such category (including 
                                payments made during the period before 
                                April 1, 2001); and
                                    ``(II) in the case of any other 
                                category, on the first date on which 
                                payment is made under this paragraph 
                                for any medical device that is 
                                described by such category.
                            ``(iv) Requirements treated as met.--A 
                        medical device shall be treated as meeting the 
                        requirements of subparagraph (A)(iv) if--
                                    ``(I) the device is described by a 
                                category established and in effect 
                                under clause (i); or
                                    ``(II) the device is described by a 
                                category established and in effect 
                                under clause (ii) and an application 
                                under section 515 of the Federal Food, 
                                Drug, and Cosmetic Act has been 
                                approved with respect to the device, or 
                                the device has been cleared for market 
                                under section 510(k) of such Act, or 
                                the device is exempt from the 
                                requirements of section 510(k) of such 
                                Act pursuant to subsection (l) or (m) 
                                of section 510 of such Act or section 
                                520(g) of such Act.
                        Nothing in this clause shall be construed as 
                        requiring an application or prior approval 
                        (other than that described in subclause (II)) 
                        in order for a device to qualify for payment 
                        under this paragraph.
                    ``(C) Limited period of payment.--
                            ``(i) Drugs and biologicals.--The payment 
                        under this paragraph with respect to a drug or 
                        biological shall only apply during a period of 
                        at least 2 years, but not more than 3 years, 
                        that begins--
                                    ``(I) on the first date this 
                                subsection is implemented in the case 
                                of a drug or biological described in 
                                clause (i), (ii), or (iii) of 
                                subparagraph (A) and in the case of a 
                                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 drug or 
                                biological described in subparagraph 
                                (A)(iv) not described in subclause (I), 
                                on the first date on which payment is 
                                made under this part for the drug or 
                                biological as an outpatient hospital 
                                service.
                            ``(ii) Medical devices.--Payment shall be 
                        made under this paragraph with respect to a 
                        medical device only if such device--
                                    ``(I) is described by a category of 
                                medical devices established and in 
                                effect under subparagraph (B); and
                                    ``(II) is provided as part of a 
                                service (or group of services) paid for 
                                under this subsection and provided 
                                during the period for which such 
                                category is in effect under such 
                                subparagraph.''.
    (b) Conforming Amendments.--Section 1833(t) (42 U.S.C. 1395l(t)) 
amended--
            (1) in paragraph (6)(A)(iv)(II), by striking ``the cost of 
        the device, drug, or biological'' and inserting ``the cost of 
        the drug or biological or the average cost of the category of 
        devices'';
            (2) in paragraph (6)(D) (as redesignated by subsection 
        (a)(1)), by striking ``subparagraph (D)(iii)'' in the matter 
        preceding clause (i) and inserting ``subparagraph (E)(iii)''; 
        and
            (3) in paragraph (12)(E), by striking ``additional payments 
        (consistent with paragraph (6)(B))'' and inserting ``additional 
        payments, the determination and deletion of initial and new 
        categories (consistent with subparagraphs (B) and (C) of 
        paragraph (6))''.
    (c) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act.
    (d) Transition.--In the case of a medical device provided as part 
of a service (or group of services) furnished during the period 
beginning on the date that is 30 days after the date of the enactment 
of this Act and ending on the day before the initial categories are 
implemented under subparagraph (B)(i) of section 1833(t)(6) of the 
Social Security Act (as amended by subsection (a)), payment shall be 
made for such device under such section in accordance with the 
provisions in effect before the date of the enactment of this Act, 
except that (notwithstanding subparagraph (C)(ii) of such section, as 
so amended) payment shall also be made for such a device that is not 
included in a program memorandum described in such subparagraph if the 
Secretary determines that the device is likely to be described by such 
an initial category.

SEC. 403. CONTRAST ENHANCED DIAGNOSTIC PROCEDURES UNDER HOSPITAL 
              PROSPECTIVE PAYMENT SYSTEM.

    (a) Separate Classification.--Section 1833(t)(2) (42 U.S.C. 
1395l(t)(2)) is amended--
            (1) by striking ``and'' at the end of subparagraph (E);
            (2) by striking the period at the end of subparagraph (F) 
        and inserting ``; and''; and
            (3) by inserting after subparagraph (F) the following new 
        subparagraph:
                    ``(G) the Secretary shall create additional groups 
                of covered OPD services that classify separately those 
                procedures that utilize contrast media from those that 
                do not.''.
    (b) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of BBA.

SEC. 404. TRANSITIONAL PASS-THROUGH FOR CONTRAST AGENTS.

    (a) In General.--Section 1833(t)(6) (42 U.S.C. 1395l(t)(6)), as 
amended by section 402, is amended--
            (1) in subparagraph (A)(iv)--
                    (A) in the heading, by striking ``and biologicals'' 
                and inserting ``biologicals, and contrast agents'';
                    (B) in the matter preceding subclause (I), by 
                striking ``or biological'' and inserting ``biological, 
                or contrast agent'';
                    (C) in subclause (I), by striking ``or biological'' 
                and inserting ``biological, or contrast agent''; and
                    (D) in subclause (II), by striking ``or 
                biological'' and inserting ``, biological, or contrast 
                agent'';
            (2) in subparagraph (C)--
                    (A) in the heading, by striking ``and biologicals'' 
                and inserting ``biologicals, and contrast agents''; and
                    (B) by striking ``or biological'' the first, third, 
                fourth, and fifth place it appears and inserting ``, 
                biological, or contrast agent''; and
            (3) in subparagraph (D)--
                    (A) in the matter preceding clause (i), by striking 
                ``or biological'' and inserting ``biological, or 
                contrast agent''; and
                    (B) in clause (i), by striking ``or biological'' 
                each place it appears and inserting ``, biological, or 
                contrast agent''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on January 1, 2001.

             Subtitle B--Provisions Relating to Physicians

SEC. 411. MEDPAC STUDY ON THE RESOURCE-BASED PRACTICE EXPENSE SYSTEM.

    (a) Study.--The Medicare Payment Advisory Commission established 
under section 1805 of the Social Security Act (42 U.S.C. 1395b-6) (in 
this section referred to as ``MedPAC'') shall conduct a study on the 
refinements to the practice expense relative value units during the 
transition to a resource-based practice expense system for physician 
payments under the medicare program under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) (in this section referred to as 
the ``medicare program'').
    (b) Report.--Not later than July 1, 2001, MedPAC shall submit a 
report to the Secretary of Health and Human Services and Congress on 
the study conducted under subsection (a) together with recommendations 
regarding--
            (1) any change or adjustment that is appropriate to ensure 
        full access to a spectrum of care for beneficiaries under the 
        medicare program; and
            (2) the appropriateness of payments to physicians.

SEC. 412. GAO STUDIES AND REPORTS ON MEDICARE PAYMENTS.

    (a) GAO Study on HCFA Post-Payment Audit Process.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the post-payment audit process under 
        the medicare program under title XVIII of the Social Security 
        Act (42 U.S.C. 1395 et seq.) (in this section referred to as 
        the ``medicare program'') as such process applies to 
        physicians, including the proper level of resources that the 
        Health Care Financing Administration should devote to educating 
        physicians regarding--
                    (A) coding and billing;
                    (B) documentation requirements; and
                    (C) the calculation of overpayments.
            (2) Report.--Not later than 18 months after the date of 
        enactment of this Act, the Comptroller General shall submit a 
        report to the Secretary of Health and Human Services and 
        Congress on the study conducted under paragraph (1) together 
        with specific recommendations for changes or improvements in 
        the post-payment audit process described in such paragraph.
    (b) GAO Study on Administration and Oversight.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study on the aggregate effects of regulatory, 
        audit, oversight, and paperwork burdens on physicians and other 
        health care providers participating in the medicare program.
            (2) Report.--Not later than 18 months after the date of 
        enactment of this Act, the Comptroller General shall submit a 
        report to the Secretary of Health and Human Services and 
        Congress on the study conducted under paragraph (1) together 
        with recommendations regarding any area in which--
                    (A) a reduction in paperwork, an ease of 
                administration, or an appropriate change in oversight 
                and review may be accomplished; or
                    (B) additional payments or education are needed to 
                assist physicians and other health care providers in 
                understanding and complying with any legal or 
                regulatory requirements.

SEC. 413. GAO STUDY ON GASTROINTESTINAL ENDOSCOPIC SERVICES FURNISHED 
              IN PHYSICIANS' OFFICES AND HOSPITAL OUTPATIENT DEPARTMENT 
              SERVICES.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the appropriateness of furnishing gastrointestinal 
endoscopic physicians' services in physicians' offices. In conducting 
this study, the Comptroller General shall--
            (1) review available scientific and clinical evidence 
        regarding the safety of performing procedures in physicians' 
        offices and hospital outpatient departments;
            (2) assess whether resource-based practice expense relative 
        values established by the Secretary of Health and Human 
        Services under the medicare physician fee schedule under 
        section 1848 of the Social Security Act (42 U.S.C. 1395w-4) for 
        gastrointestinal endoscopic services furnished in physicians' 
        offices and hospital outpatient departments create an incentive 
        to furnish such services in physicians' offices instead of 
        hospital outpatient departments; and
            (3) assess the implications for access to care for medicare 
        beneficiaries if gastrointestinal endoscopic services in 
        physicians' offices were not covered under the medicare 
        program. -
    (b) Report.--Not later than July 1, 2002, the Comptroller General 
of the United States shall submit a report to the Secretary of Health 
and Human Services and Congress on the study conducted under subsection 
(a) together with such recommendations for legislation and 
administrative action as the Comptroller General determines 
appropriate.

                     Subtitle C--Ambulance Services

SEC. 421. ELIMINATION OF REDUCTION IN INFLATION ADJUSTMENTS FOR 
              AMBULANCE SERVICES.

    Subparagraphs (A) and (B) of section 1834(l)(3) (42 U.S.C. 
1395m(l)(3)(A)) are each amended by striking ``reduced in the case of 
2001 and 2002 by 1.0 percentage points'' and inserting ``increased in 
the case of 2001 by 1.0 percentage point''.

SEC. 422. ELECTION TO FOREGO PHASE-IN OF FEE SCHEDULE FOR AMBULANCE 
              SERVICES.

    Section 1834(l) (42 U.S.C. 1395m(l)) is amended by adding at the 
end the following new paragraph:
            ``(8) Election to forego phase-in of fee schedule.--
                    ``(A) In general.--If the Secretary provides for a 
                phase-in of the fee schedule established under this 
                subsection, a supplier of ambulance services may make 
                an election to receive payments at any time during such 
                phase-in based only on such fee schedule as in effect 
                after such phase-in, and the Secretary shall begin to 
                make payments to the supplier based only on such fee 
                schedule not later than the date that is 60 days after 
                the date on which the supplier notifies the Secretary 
                of such election.
                    ``(B) Waiver of budget neutrality.--The Secretary 
                shall apply paragraph (3)(A) as if this paragraph had 
                not been enacted.''.

SEC. 423. STUDY AND REPORT ON THE COSTS OF RURAL AMBULANCE SERVICES.

    (a) Study.--The Secretary of Health and Human Services (in this 
section referred to as the ``Secretary''), in consultation with the 
Office of Rural Health Policy, shall conduct a study on the means by 
which rural areas with low population densities can be identified for 
the purpose of designating areas in which the cost of providing 
ambulance services would be expected to be higher than similar services 
provided in more heavily populated areas because of low usage. Such 
study shall also include an analysis of the additional costs of 
providing ambulance services in areas designated under the previous 
sentence.
    (b) Report.--Not later than June 30, 2001, the Secretary shall 
submit a report to Congress on the study conducted under subsection 
(a), together with a regulation based on that study which adjusts the 
fee schedule payment rates for ambulance services provided in low 
density rural areas based on the increased cost of providing such 
services in such areas.

SEC. 424. GAO STUDY AND REPORT ON THE COSTS OF EMERGENCY AND MEDICAL 
              TRANSPORTATION SERVICES.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study on the costs of providing emergency and medical 
transportation services across the range of acuity levels of conditions 
for which such transportation services are provided.
    (b) Report.--Not later than 18 months after the date of enactment 
of this Act, the Comptroller General shall submit a report to the 
Secretary of Health and Human Services and Congress on the study 
conducted under subsection (a), together with recommendations for any 
changes in methodology or payment level necessary to fairly compensate 
suppliers of emergency and medical transportation services and to 
ensure the access of beneficiaries under the medicare program under 
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) to such 
services.

                       Subtitle D--Other Services

SEC. 431. REVISION OF MORATORIUM IN CAPS FOR THERAPY SERVICES.

    (a) Extension of Moratorium.--Section 1833(g)(4) (42 U.S.C. 
1395l(g)(4)) is amended by striking ``during 2000 and 2001'' and 
inserting ``during the period beginning on January 1, 2000, and ending 
on the date that is 18 months after the date on which the Secretary 
submits the report required under section 4541(d)(2) of the Balanced 
Budget Act of 1997 to Congress''.
    (b) Extension of Reporting Date.--Section 4541(d)(2) of BBA (42 
U.S.C. 1395l note), as amended by section 221(c) of BBRA (113 Stat. 
1501A-351), is amended by striking ``January 1, 2001'' and inserting 
``January 1, 2002'' in the matter preceding subparagraph (A).

SEC. 432. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

    The last sentence of section 1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is 
amended by striking ``for such services furnished on or after January 
1, 2001, by 1.2 percent'' and inserting ``for such services furnished 
on or after January 1, 2001, by 2.4 percent''.

SEC. 433. FULL UPDATE IN 2001 FOR DURABLE MEDICAL EQUIPMENT, OXYGEN, 
              AND OXYGEN EQUIPMENT.

    (a) Update for Covered Items.--Section 1834(a)(14) (42 U.S.C. 
1395m(a)(14)) is amended--
            (1) by redesignating subparagraph (D) as subparagraph (F);
            (2) in subparagraph (C)--
                    (A) by striking ``through 2002'' and inserting 
                ``through 2000''; and
                    (B) by striking `` and'' at the end; and
            (3) by inserting after subparagraph (C) the following new 
        subparagraphs:
                    ``(D) for 2001, the percentage increase in the 
                consumer price index for all urban consumers (U.S. 
                urban average) for the 12-month period ending with June 
                2000;
                    ``(E) for 2002, 0 percentage points; and''.
    (b) Orthotics and Prosthetics.--Section 1834(h)(4)(A) (42 U.S.C. 
1395m(h)(4)(A)) is amended--
            (1) by redesignating clause (vi) as clause (viii);
            (2) in clause (v)--
                    (A) by striking ``through 2002'' and inserting 
                ``through 2000''; and
                    (B) by striking `` and'' at the end; and
            (3) by inserting after clause (v) the following new 
        clauses:
                            ``(vi) for 2001, the percentage increase in 
                        the consumer price index for all urban 
                        consumers (United States City average) for the 
                        12-month period ending with June 2000;
                            ``(vi) for 2002, 1 percent; and''.
    (c) Parenteral and Enteral Nutrients, Supplies, and Equipment.--
Section 4551(b) of BBA (42 U.S.C. 1395m note) is amended by striking 
``through 2002'' and inserting ``, 1999, 2000, and 2002''.
    (d) Oxygen and Oxygen Equipment.--Section 1834(a)(9)(B) (42 U.S.C. 
1395m(a)(9)(B)) is amended--
            (1) in clause (v), by striking ``and'' at the end;
            (2) in clause (vi)--
                    (A) by striking ``each subsequent year'' and 
                inserting ``2000''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (3) by adding at the end the following new clauses:
                            ``(vii) for 2001, the amount determined 
                        under this subparagraph for 2000 increased by 
                        the covered item update for 2001;
                            ``(viii) for 2002, 70 percent of the amount 
                        determined under this subparagraph for 1997; 
                        and
                            ``(ix) for 2003 and each subsequent year, 
                        the amount determined under this subparagraph 
                        for the preceding year increased by the covered 
                        item update for such subsequent year.''.
    (e) Conforming Amendment.--Section 228 of BBRA (113 Stat. 1501A-
356) is repealed.

SEC. 434. NATIONAL LIMITATION AMOUNT EQUAL TO 100 PERCENT OF NATIONAL 
              MEDIAN FOR NEW PAP SMEAR TECHNOLOGIES AND OTHER NEW 
              CLINICAL LABORATORY TEST TECHNOLOGIES.

    Section 1833(h)(4)(B)(viii) (42 U.S.C. 1395l(h)(4)(B)(viii)) is 
amended by inserting before the period at the end the following: ``(or 
100 percent of such median in the case of a clinical diagnostic 
laboratory test performed on or after January 1, 2001, that the 
Secretary determines is a new test for which no limitation amount has 
previously been established under this subparagraph)''.

SEC. 435. DELAY AND REVISION OF PPS FOR AMBULATORY SURGICAL CENTERS.

    (a) Delay in Implementation of Prospective Payment System.--The 
Secretary of Health and Human Services may not implement 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)) before January 1, 2002.
    (b) Extending Phase-in to 4 Years.--Section 226 of the BBRA (113 
Stat. 1501A-354) is amended by striking paragraphs (1) and (2) and 
inserting the following:
            ``(1) in the first year of its implementation, only a 
        proportion (specified by the Secretary and not to exceed \1/4\) 
        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 each of the following 2 years a proportion 
        (specified by the Secretary and not to exceed \1/2\, and \3/4\, 
        respectively) of the payment for such services shall be made 
        under such system and the remainder shall be made in accordance 
        with current regulations.''.
    (c) Deadline for Use of 1999 or Later Cost Surveys.--Section 226 of 
BBRA (113 Stat. 1501A-354) is amended by adding at the end the 
following:
``By not later than January 1, 2003, the Secretary shall incorporate 
data from a 1999 Medicare cost survey or a subsequent cost survey for 
purposes of implementing or revising such system.''.

SEC. 436. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES.

    (a) In General.--Section 1848(i) (42 U.S.C. 1395w-4(i)) is amended 
by adding at the end the following new paragraph:
            ``(4) Treatment of certain physician pathology services.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, when an independent laboratory 
                furnishes the technical component of a physician 
                pathology service with respect to a fee-for-service 
                medicare beneficiary who is a patient of a 
                grandfathered hospital, such component shall be treated 
                as a service for which payment shall be made to the 
                laboratory under this section and not as--
                            ``(i) an inpatient hospital service for 
                        which payment is made to the hospital under 
                        section 1886(d); or
                            ``(ii) a hospital outpatient service for 
                        which payment is made to the hospital under the 
                        prospective payment system under section 
                        1834(t).
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Grandfathered hospital.--The term 
                        `grandfathered hospital' means a hospital that 
                        had an arrangement with an independent 
                        laboratory--
                                    ``(I) that was in effect as of July 
                                22, 1999; and
                                    ``(II) under which the laboratory 
                                furnished the technical component of 
                                physician pathology services with 
                                respect to patients of the hospital and 
                                submitted a claim for payment for such 
                                component to a carrier with a contract 
                                under section 1842 (and not to the 
                                hospital).
                            ``(ii) Fee-for-service medicare 
                        beneficiary.--The term `fee-for-service 
                        medicare beneficiary' means an individual who 
                        is not enrolled--
                                    ``(I) in a Medicare+Choice plan 
                                under part C;
                                    ``(II) in a plan offered by an 
                                eligible organization under section 
                                1876;
                                    ``(III) with a PACE provider under 
                                section 1894;
                                    ``(IV) in a medicare managed care 
                                demonstration project; or
                                    ``(V) in the case of a service 
                                furnished to an individual on an 
                                outpatient basis, in a health care 
                                prepayment plan under section 
                                1833(a)(1)(A).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to services furnished on or after January 1, 2001.

SEC. 437. MODIFICATION OF MEDICARE BILLING REQUIREMENTS FOR CERTAIN 
              INDIAN PROVIDERS.

    (a) In General.--Section 1880(a) (42 U.S.C. 1395qq(a)) is amended 
by adding at the end the following new sentence: ``A hospital or a 
free-standing ambulatory care clinic (as defined by the Secretary), 
whether operated by the Indian Health Service or by an Indian tribe or 
tribal organization (as those terms are defined in section 4 of the 
Indian Health Care Improvement Act), shall be eligible for payments for 
services for which payment is made pursuant to section 1848, 
notwithstanding sections 1814(c) and 1835(d), if and for so long as it 
meets all of the requirements which are applicable generally to such 
payments, services, hospitals, and clinics.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after January 1, 2001.

SEC. 438. REPLACEMENT OF PROSTHETIC DEVICES AND PARTS.

    (a) In General.--Section 1834(h)(1) of the Social Security Act (42 
U.S.C. 1395m(h)(1)) is amended by adding at the end the following new 
subparagraph:
                    ``(F) Replacement of prosthetic devices and 
                parts.--
                            ``(i) In general.--Payment shall be made 
                        for the replacement of prosthetic devices which 
                        are artificial limbs, or for the replacement of 
                        any part of such devices, without regard to 
                        continuous use or useful lifetime restrictions 
                        if an ordering physician determines that the 
                        provision of a replacement device, or a 
                        replacement part of such a device, is necessary 
because of any of the following:
                                    ``(I) A change in the physiological 
                                condition of the patient.
                                    ``(II) An irreparable change in the 
                                condition of the device, or in a part 
                                of the device.
                                    ``(III) The condition of the 
                                device, or the part of the device, 
                                requires repairs and the cost of such 
                                repairs would be more than 60 percent 
                                of the cost of a replacement device, 
                                or, as the case may be, of the part 
                                being replaced.
                            ``(ii) Confirmation may be required if 
                        replacement device or part is less than 2 years 
                        old.--If a physician determines that a 
                        replacement device, or a replacement part, is 
                        necessary pursuant to clause (i)--
                                    ``(I) such determination shall be 
                                controlling; and
                                    ``(II) such replacement device or 
                                part shall be deemed to be reasonable 
                                and necessary for purposes of section 
                                1862(a)(1)(A);
                        except that if the device, or part, being 
                        replaced is less than 2 years old (calculated 
                        from the date on which the beneficiary began to 
                        use the device or part), the Secretary may also 
                        require the beneficiary to provide confirmation 
                        of necessity of the replacement device, or, as 
                        the case may be, the replacement part, by a 
                        prosthetist selected by the beneficiary.''.
    (b) Preemption of Rule.--The provisions of section 1834(h)(1)(F) of 
the Social Security Act (42 U.S.C. 1395m(h)(1)(F)), as added by 
subsection (a), shall supersede any rule that as of the date of 
enactment of this Act may have applied a 5-year replacement rule with 
regard to prosthetic devices.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to items furnished on or after the date of enactment of this Act.

SEC. 439. MEDPAC STUDY AND REPORT ON MEDICARE REIMBURSEMENT FOR 
              SERVICES PROVIDED BY CERTAIN PROVIDERS.

    (a) Study.--The Medicare Payment Advisory Commission (referred to 
in this section as ``MedPAC'') shall conduct a study on the 
appropriateness of the current payment rates under the medicare program 
under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) 
for services provided by a--
            (1) certified nurse-midwife (as defined in subsection 
        (gg)(2) of section 1861 of the Social Security Act (42 U.S.C. 
        1395x);
            (2) physician assistant (as defined in subsection 
        (aa)(5)(A) of such section);
            (3) nurse practitioner (as defined in such subsection); and
            (4) clinical nurse specialist (as defined in subsection 
        (aa)(5)(B) of such section).
    (b) Report.--Not later than 18 months after the date of 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.

SEC. 440. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF SERVICES 
              PROVIDED BY CERTAIN NON-PHYSICIAN PROVIDERS.

    (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 of providing coverage 
        under the medicare program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) for services provided by 
        a--
                    (A) certified first nurse assistant;
                    (B) marriage counselor;
                    (C) pastoral care counselor; and
                    (D) licensed professional counselor of mental 
                health.
            (2) Costs to program.--The study shall consider the short-
        term and long-term benefits, and costs to the medicare program, 
        of providing the coverage described in paragraph (1).
    (b) Report.--Not later than 18 months after the date of 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.

             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

SEC. 501. 1-YEAR ADDITIONAL DELAY IN APPLICATION OF 15 PERCENT 
              REDUCTION ON PAYMENT LIMITS FOR HOME HEALTH SERVICES.

    (a) In General.--Section 1895(b)(3)(A)(i) (42 U.S.C. 
1395fff(b)(3)(A)(i)) is amended--
            (1) by redesignating subclause (II) as subclause (III);
            (2) in subclause (III), as redesignated, by striking 
        ``described in subclause (I)'' and inserting ``described in 
        subclause (II)''; and
            (3) by inserting after subclause (I) the following new 
        subclause:
                                    ``(II) For the 12-month period 
                                beginning after the period described in 
                                subclause (I), such amount (or amounts) 
                                shall be equal to the amount (or 
                                amounts) determined under subclause 
                                (I), updated under subparagraph (B).''.
    (b) Change in Report.--Section 302(c) of BBRA is amended by 
striking ``Not later than'' and all that follows through ``(42 U.S.C. 
1395fff)'' and inserting ``Not later than October 1, 2001''.

SEC. 502. RESTORATION OF FULL HOME HEALTH MARKET BASKET UPDATE FOR HOME 
              HEALTH SERVICES FOR FISCAL YEAR 2001.

    (a) In General.--Section 1861(v)(1)(L)(x) (42 U.S.C. 
1395x(v)(1)(L)(x)) is amended--
            (1) by striking ``2001,''; and
            (2) by adding at the end the following: ``With respect to 
        cost reporting periods beginning during fiscal year 2001, the 
        update to any limit under this subparagraph shall be the home 
        health market basket index.''.
    (b) Special Rule for Payment for Fiscal Year 2001 Based on Adjusted 
Prospective Payment Amounts.--
            (1) In general.--Notwithstanding the amendments made by 
        subsection (a), for purposes of making payments under section 
        1895(b) of the Social Security Act (42 U.S.C. 1395fff(b)) for 
        home health services for fiscal year 2001, the Secretary of 
        Health and Human Services shall--
                    (A) with respect to episodes and visits ending on 
                or after October 1, 2000, and before April 1, 2001, use 
                the final standardized and budget neutral prospective 
payment amounts for 60 day episodes and standardized average per visit 
amounts for fiscal year 2001 as published by the Secretary in Federal 
Register of the July 3, 2000 (65 Federal Register 41128-41214); and
                    (B) with respect to episodes and visits ending on 
                or after April 1, 2001, and before October 1, 2001, use 
                such amounts increased by an actuarially determined 
                amount that represents the different distributions of 
                episodes and visits in the first and second 6 month 
                periods of fiscal year 2001 due to implementation of 
                the home health prospective payment system under 
                section 1895 of such Act (42 U.S.C. 1395fff).
            (2) No effect on other payments or determinations.--The 
        Secretary shall not take the provisions of paragraph (1) into 
        account for purposes of payments, determinations, or budget 
        neutrality adjustments under section 1895 of the Social 
        Security Act.
    (c) Adjustment for Case Mix Changes.--
            (1) In general.--Section 1895(b)(3)(B) (42 U.S.C. 
        1395fff(b)(3)(B)) is amended by adding at the end the following 
        new clause:
                            ``(vi) Adjustment for case mix changes.--
                        Insofar as the Secretary determines that the 
                        adjustments under paragraph (4)(A)(i) for a 
                        previous fiscal year (or estimates that such 
                        adjustments for a future fiscal year) did (or 
                        are likely to) result in a change in aggregate 
                        payments under this subsection during the 
                        fiscal year that are a result of changes in the 
                        coding or classification of different units of 
                        services that do not reflect real changes in 
                        case mix, the Secretary may adjust the standard 
                        prospective payment amount (or amounts) under 
                        paragraph (3) for subsequent fiscal years so as 
                        to eliminate the effect of such coding or 
                        classification changes.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to episodes concluding on or after October 1, 2001.

SEC. 503. EXCLUSION OF CERTAIN NONROUTINE MEDICAL SUPPLIES UNDER THE 
              PPS FOR HOME HEALTH SERVICES.

    (a) Exclusion.--
            (1) In general.--Section 1895 (42 U.S.C. 1395fff) is 
        amended by adding at the end the following new subsection:
    ``(e) Exclusion of Nonroutine Medical Supplies.--
            ``(1) In general.--Notwithstanding the preceding provisions 
        of this section, in the case of all nonroutine medical supplies 
        (as defined by the Secretary) furnished by a home health agency 
        during a year (beginning with 2001) for which payment is 
        otherwise made on the basis of the prospective payment amount 
        under this section, payment under this section shall be based 
        instead on the lesser of--
                    ``(A) the actual charge for the nonroutine medical 
                supply; or
                    ``(B) the amount determined under the fee schedule 
                established by the Secretary for purposes of making 
                payment for such items under part B for nonroutine 
                medical supplies furnished during that year.
            ``(2) Budget neutrality adjustment.--The Secretary shall 
        provide for an appropriate proportional reduction in payments 
        under this section 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 paragraph (1).''.
            (2) Conforming amendment.--Section 1895(b)(1) of the Social 
        Security Act (42 U.S.C. 1395fff(b)(1)) is amended by striking 
        ``The Secretary'' and inserting ``Subject to subsection (e), 
        the Secretary''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to supplies furnished on or after January 1, 2001.
    (b) Exclusion From Consolidated Billing.--
            (1) In general.--For items provided during the applicable 
        period, the Secretary of Health and Human Services shall 
        administer the medicare program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.) as if--
                    (A) section 1842(b)(6)(F) of such Act (42 U.S.C. 
                1395u(b)(6)(F)) was amended by striking ``(including 
                medical supplies described in section 1861(m)(5), but 
                excluding durable medical equipment to the extent 
                provided for in such section)'' and inserting 
                ``(excluding medical supplies and durable medical 
                equipment described in section 1861(m)(5))''; and
                    (B) section 1862(a)(21) of such Act (42 U.S.C. 
                1395y(a)(21)) was amended by striking ``(including 
                medical supplies described in section 1861(m)(5), but 
                excluding durable medical equipment to the extent 
                provided for in such section)'' and inserting 
                ``(excluding medical supplies and durable medical 
                equipment described in section 1861(m)(5))''.
            (2) Applicable period defined.--For purposes of paragraph 
        (1), the term ``applicable period'' means the period beginning 
        on January 1, 2001, and ending on the later of--
                    (A) the date that is 18 months after the date of 
                enactment of this Act; or
                    (B) the date determined appropriate by the 
                Secretary of Health and Human Services.
    (c) Study on Exclusion of Certain Nonroutine Medical Supplies Under 
the PPS for Home Health Services.--
            (1) Study.--The Secretary of Health and Human Services (in 
        this subsection referred to as the ``Secretary'') shall conduct 
        a study to identify any nonroutine medical supply that may be 
        appropriately and cost-effectively excluded from the 
        prospective payment system for home health services  under 
section 1895 of the Social Security Act (42 U.S.C. 1395fff). 
Specifically, the Secretary shall consider whether wound care and 
ostomy supplies should be excluded from such prospective payment 
system.
            (2) Report.--Not later than 18 months after the date of 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the study conducted under paragraph (1), including a 
        list of any nonroutine medical supplies that should be excluded 
        from the prospective payment system for home health services 
        under section 1895 of the Social Security Act (42 U.S.C. 
        1395fff).
    (d) Exclusion of Other Nonroutine Medical Supplies.--Upon 
submission of the report under subsection (c)(2), the Secretary shall 
(if necessary) revise the definition of nonroutine medical supply, as 
defined for purposes of section 1895(e) (as added by subsection (a)), 
based on the list of nonroutine medical supplies included in such 
report.

SEC. 504. TREATMENT OF BRANCH OFFICES; GAO STUDY ON SUPERVISION OF HOME 
              HEALTH CARE PROVIDED IN ISOLATED RURAL AREAS.

    (a) Treatment of Branch Offices.--
            (1) In general.--Notwithstanding any other provision of 
        law, in determining for purposes of title XVIII of the Social 
        Security Act whether an office of a home health agency 
        constitutes a branch office or a separate home health agency, 
        neither the time nor distance between a parent office of the 
        home health agency and a branch office shall be the sole 
        determinant of a home health agency's branch office status.
            (2) Consideration of forms of technology in definition of 
        supervision.--The Secretary of Health and Human Services may 
        include forms of technology in determining what constitutes 
        ``supervision'' for purposes of determining a home heath 
        agency's branch office status under paragraph (1).
    (b) GAO Study.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study of the provision of adequate supervision 
        to maintain quality of home health services delivered under the 
        medicare program in isolated rural areas. The study shall 
        evaluate the methods that home health agency branches and 
        subunits use to maintain adequate supervision in the delivery 
        of services to clients residing in those areas, how these 
        methods of supervision compare to requirements that subunits 
        independently meet medicare conditions of participation, and 
        the resources utilized by subunits to meet such conditions.
            (2) Report.--Not later than January 1, 2002, the 
        Comptroller General shall submit to Congress a report on the 
        study conducted under paragraph (1). The report shall include 
        recommendations on whether exceptions are needed for subunits 
        and branches of home health agencies under the medicare program 
        to maintain access to the home health benefit or whether 
        alternative policies should be developed to assure adequate 
        supervision and access and recommendations on whether a 
        national standard for supervision is appropriate.

SEC. 505. TEMPORARY ADDITIONAL PAYMENTS FOR HIGH-COST PATIENTS.

    (a) Increase for Fiscal Years 2001 and 2002.--For each of fiscal 
years 2001 and 2002, the Secretary of Health and Human Services shall 
increase the addition or adjustment for outliers under section 
1895(b)(5) of the Social Security Act (42 U.S.C. 1395fff(b)(5)) 
applicable to home health services furnished during a fiscal year by 
such proportion as will result in an aggregate increase in such 
addition or adjustment for the fiscal year estimated to equal 
$150,000,000.
    (b) Additional Payment Not Built Into the Base.--The Secretary of 
Health and Human Services shall not include any additional payment made 
under subsection (a) in updating the standard prospective payment 
amount (or amounts) applicable to units of home health services 
furnished during a period, as increased by the home health applicable 
increase percentage for the fiscal year involved under section 
1895(b)(3)(B) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(B)).
    (c) Waiving Budget Neutrality.--The Secretary of Health and Human 
Services shall not reduce the standard prospective payment amount (or 
amounts) under section 1895 of the Social Security Act (42 U.S.C. 
1395fff), including under subsection (b)(3)(C) of such Act, applicable 
to units of home health services furnished during a period to offset 
the increase in payments resulting from the application of subsection 
(a).

SEC. 506. CLARIFICATION OF THE HOMEBOUND DEFINITION UNDER THE MEDICARE 
              HOME HEALTH BENEFIT.

    (a) In General.--Sections 1814(a) and 1835(a) (42 U.S.C. 1395f(a) 
and 1395n(a)) are each amended--
            (1) in the last sentence, by striking ``, and that absences 
        of the individual from home are infrequent or of relatively 
        short duration, or are attributable to the need to receive 
        medical treatment''; and
            (2) by adding at the end the following new sentences: ``Any 
        absence of an individual from the home attributable to the need 
        to receive health care treatment, including regular absences 
        for the purpose of participating in therapeutic, psychosocial, 
        or medical treatment in an adult day-care program that is 
        licensed or certified by a State, or accredited, to furnish 
        adult day-care services in the State shall not disqualify an 
        individual from being considered to be `confined to his home'. 
        Any other absence of an individual from the home shall not so 
        disqualify an individual if the absence is of infrequent or 
        short duration. For purposes of the preceding sentence, any 
        absence for the purpose of visiting a family member who is 
        unable to visit the individual or for the purpose of attending 
        a religious service shall be deemed to be an absence of 
        infrequent and short duration.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to items and services provided on or after the date of enactment 
of this Act.

             Subtitle B--Direct Graduate Medical Education

SEC. 511. AUTHORITY TO INCLUDE COSTS OF TRAINING OF CLINICAL 
              PSYCHOLOGISTS IN PAYMENTS TO HOSPITALS.

    Effective for cost reporting periods beginning on or after October 
1, 1999, for purposes of payments to hospitals under the medicare 
program under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) for costs of approved educational activities (as defined in 
section 413.85 of title 42 of the Code of Federal Regulations), such 
approved educational activities shall include the clinical portion of 
professional educational training programs, recognized by the 
Secretary, for clinical psychologists.

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

              Subtitle A--Medicare+Choice Payment Reforms

SEC. 601. INCREASE IN NATIONAL PER CAPITA MEDICARE+CHOICE GROWTH 
              PERCENTAGE IN 2001 AND 2002.

    Section 1853(c)(6)(B) (42 U.S.C. 1395w-23(c)(6)(B)) is amended--
            (1) in clause (iv), by striking ``for 2001, 0.5 percentage 
        points'' and inserting ``for 2001, 0 percentage points''; and
            (2) in clause (v), by striking ``for 2002, 0.3 percentage 
        points'' and inserting ``for 2002, 0 percentage points''.

SEC. 602. REMOVING APPLICATION OF BUDGET NEUTRALITY FOR 2002.

    Section 1853(c) (42 U.S.C. 1395w-23(c)) is amended--
            (1) in paragraph (1)(A), in the matter following clause 
        (ii), by inserting ``(except for 2002)'' after ``multiplied''; 
        and
            (2) in paragraph (5), by inserting ``(except for 2002)'' 
        after ``for each year''.

SEC. 603. INCREASE IN MINIMUM PAYMENT AMOUNT.

    Section 1853(c)(1)(B)(ii) (42 U.S.C. 1395w-23(c)(1)(B)(ii)) is 
amended--
            (1) by striking ``(ii) For a succeeding year'' and 
        inserting ``(ii)(I) Subject to subclause (II), for a succeeding 
        year''; and
            (2) by adding at the end the following new subclause:
                            ``(II) For 2001 for any area in any 
                        Metropolitan Statistical Area with a population 
                        of more than 250,000, $475 (and for any area 
                        outside such an area, $425).''.

SEC. 604. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND IN 2002.

    Section 1853(c)(2) (42 U.S.C. 1395w-23(c)(2)) is amended--
            (1) by striking the period at the end of subparagraph (F) 
        and inserting a semicolon; and
            (2) by adding after and below subparagraph (F) the 
        following:
        ``except that a Medicare+Choice organization may elect to apply 
        subparagraph (F) (rather than subparagraph (E)) for 2002.''.

SEC. 605. INCREASED UPDATE FOR PAYMENT AREAS WITH ONLY ONE OR NO 
              MEDICARE+CHOICE CONTRACTS.

    (a) In General.--Section 1853(c)(1)(C)(ii) (42 U.S.C. 1395w-
23(c)(1)(C)(ii)) is amended--
            (1) by striking ``(ii) For a subsequent year'' and 
        inserting ``(ii)(I) Subject to subclause (II), for a subsequent 
        year''; and
            (2) by adding at the end the following new subclause:
                            ``(II) During 2002 and 2003, in the case of 
                        a Medicare+Choice payment area in which there 
                        is no more than 1 contract entered into under 
                        this part as of July 1 before the beginning of 
                        the year, 102.5 percent of the annual 
                        Medicare+Choice capitation rate under this 
                        paragraph for the area for the previous 
                        year.''.
    (b) Construction.--The amendments made by subsection (a) shall not 
affect the payment of a first time bonus under section 1853(i) of the 
Social Security Act (42 U.S.C. 1395w-23(i)).

SEC. 606. 10-YEAR PHASE-IN OF RISK ADJUSTMENT AND NEW METHODOLOGY.

    Section 1853(a)(3)(C)(ii) (42 U.S.C. 1395w-23(c)(1)(C)(ii)) is 
amended--
            (1) in subclause (I), by striking ``and'' at the end;
            (2) in subclause (II), by striking ``2002.'' and inserting 
        ``2002 and 2003.''; and
            (3) by adding at the end the following:
                                    ``(IV) 30 percent of such 
                                capitation rate in 2004 (in which such 
                                methodology should reflect a blend of 
                                20 percent of only data from inpatient 
                                settings and 10 percent of data from 
                                all settings);
                                    ``(V) 40 percent of such amount in 
                                2005 (in which such methodology should 
                                reflect a blend of 10 percent of only 
                                data from inpatient settings and 30 
                                percent of data from all settings);
                                    ``(VI) 50 percent of such amount in 
                                2006 (in which such methodology should 
                                reflect data from all settings);
                                    ``(VII) 60 percent of such amount 
                                in 2007 (in which such methodology 
                                should reflect data from all settings);
                                    ``(VIII) 70 percent of such amount 
                                in 2008 (in which such methodology 
                                should reflect data from all settings);
                                    ``(IX) 80 percent of such amount in 
                                2009 (in which such methodology should 
                                reflect data from all settings);
                                    ``(X) 90 percent of such amount in 
                                2010 (in which such methodology should 
                                reflect data from all settings); and
                                    ``(XI) 100 percent of such amount 
                                in any subsequent year (in which such 
                                methodology should reflect data from 
                                all settings).''.

SEC. 607. PERMITTING PREMIUM REDUCTIONS AS ADDITIONAL BENEFITS UNDER 
              MEDICARE+CHOICE PLANS.

    (a) In General.--
            (1) Authorization of part b premium reductions.--Section 
        1854(f)(1) (42 U.S.C. 1395w-24(f)(1)) is amended by adding at 
        the end the following new subparagraph:
                    ``(F) Premium reductions.--
                            ``(i) In general.--Subject to clause (ii), 
                        as part of providing any additional benefits 
                        required under subparagraph (A), a 
                        Medicare+Choice organization may elect a 
                        reduction in its payments under section 
                        1853(a)(1)(A) with respect to a Medicare+Choice 
                        plan and the Secretary shall apply such 
                        reduction to reduce the premium under section 
                        1839 of each enrollee in such plan as provided 
                        in section 1840(i).
                            ``(ii) Amount of reduction.--The amount of 
                        the reduction under clause (i) with respect to 
                        any enrollee in a Medicare+Choice plan--
                                    ``(I) may not exceed 120 percent of 
                                the premium described under section 
                                1839(a)(3); and
                                    ``(II) shall apply uniformly to 
                                each enrollee of the Medicare+Choice 
                                plan to which such reduction 
                                applies.''.
            (2) Conforming amendments.--
                    (A) Adjustment of payments to medicare+choice 
                organizations.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-
                23(a)(1)(A)) is amended by inserting ``reduced by the 
                amount of any reduction elected under section 
                1854(f)(1)(F) and'' after ``for that area,''.
                    (B) Adjustment and payment of part b premiums.--
                            (i) Adjustment of premiums.--Section 
                        1839(a)(2) (42 U.S.C. 1395r(a)(2)) is amended 
                        by striking ``shall'' and all that follows and 
                        inserting the following: ``shall be the amount 
                        determined under paragraph (3), adjusted as 
                        required in accordance with subsections (b), 
                        (c), and (f), and to reflect 80 percent of any 
                        reduction elected under section 
                        1854(f)(1)(F).''.
                            (ii) Payment of premiums.--Section 1840 (42 
                        U.S.C. 1395s) is amended by adding at the end 
                        the following new subsection:
    ``(i) In the case of an individual enrolled in a Medicare+Choice 
plan, the Secretary shall provide for necessary adjustments of the 
monthly beneficiary premium to reflect 80 percent of any reduction 
elected under section 1854(f)(1)(F). This premium adjustment may be 
provided directly or as an adjustment to any social security, railroad 
retirement, and civil service retirement benefits, to the extent which 
the Secretary determines that such an adjustment is appropriate and 
feasible with the concurrence of the agencies responsible for the 
administration of such benefits.''.
                    (C) Information comparing plan premiums under part 
                c.--Section 1851(d)(4)(B) (42 U.S.C. 1395w-21(d)(4)(B)) 
                is amended--
                            (i) by striking ``premiums.--The'' and 
                        inserting ``premiums.--
                            ``(i) In general.--The''; and
                            (ii) by adding at the end the following new 
                        clause:
                            ``(ii) Reductions.--The reduction in 
                        premiums, if any.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to years beginning with 2002.

SEC. 608. DELAY FROM JULY TO NOVEMBER 2000, IN DEADLINE FOR OFFERING 
              AND WITHDRAWING MEDICARE+CHOICE PLANS FOR 2001.

    Notwithstanding any other provision of law, the deadline for a 
Medicare+Choice organization to withdraw the offering of a 
Medicare+Choice plan under part C of title XVIII of the Social Security 
Act (or otherwise to submit information required for the offering of 
such a plan) for 2001 is delayed from July 1, 2000, to November 15, 
2000, and any such organization that provided notice of withdrawal of 
such a plan during 2000 before the date of enactment of this Act may 
rescind such withdrawal at any time before November 15, 2000.

SEC. 609. REVISION OF PAYMENT RATES FOR ESRD PATIENTS ENROLLED IN 
              MEDICARE+CHOICE PLANS.

    (a) In General.--Section 1853(a)(1)(B) (42 U.S.C. 1395w-
23(a)(1)(B)) is amended by adding at the end the following: ``In 
establishing such rates the Secretary shall provide for appropriate 
adjustments to increase each rate to reflect the demonstration rate 
(including the risk-adjustment methodology associated with such rate) 
of the social health maintenance organization end-stage renal disease 
demonstrations established by section 2355 of the Deficit Reduction Act 
of 1984 (Public Law 98-369; 98 Stat. 1103), as amended by section 
13567(b) of the Omnibus Budget Reconciliation Act of 1993 (Public Law 
103-66; 107 Stat. 608), and shall compute such rates by taking into 
account such factors as renal treatment modality, age, and the 
underlying cause of the end-stage renal disease.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to payments for months beginning with January 2002.
    (c) Publication.--The Secretary of Health and Human Services, not 
later than 6 months after the date of enactment of this Act, shall 
publish for public comment a description of the appropriate adjustments 
described in the last sentence of section 1853(a)(1)(B) of the Social 
Security Act (42 U.S.C. 1395w-23(a)(1)(B)), as added by subsection (a). 
The Secretary shall publish such adjustments in final form by not later 
than July 1, 2001, so that the amendment made by subsection (a) is 
implemented on a timely basis consistent with subsection (b).

SEC. 610. MODIFICATION OF PAYMENT RULES FOR CERTAIN FRAIL ELDERLY 
              MEDICARE BENEFICIARIES.

    (a) Modification of Payment Rules.--Section 1853 (42 U.S.C. 1395w-
23) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)(A), by striking ``subsections 
                (e), (g), and (i)'' and inserting ``subsections (e), 
                (g), (i), and (j)'';
                    (B) in paragraph (3)(D), by inserting ``paragraph 
                (4) and'' after ``Subject to''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(4) Exemption from risk-adjustment system for frail 
        elderly beneficiaries enrolled in specialized programs.--
                    ``(A) In general.--In applying the risk-adjustment 
                factors established under paragraph (3) during the 
                period described in subparagraph (B), the limitation 
                under paragraph (3)(C)(ii)(I) shall apply to a frail 
                elderly Medicare+Choice beneficiary (as defined in 
                subsection (j)(3)) who is enrolled in a Medicare+Choice 
                plan under a specialized program for the frail elderly 
                (as defined in subsection (j)(2)) during the entire 
                period.
                    ``(B) Period of application.--The period described 
                in this subparagraph begins with January 2001, and ends 
                with the first month for which the Secretary certifies 
                to Congress that a comprehensive risk adjustment 
                methodology under paragraph (3)(C) that takes into 
                account the factors described in subsection (j)(1)(B) 
                is being fully implemented.''; and
            (2) by adding at the end the following new subsection:
    ``(j) Special Rules for Frail Elderly Enrolled in Specialized 
Programs for the Frail Elderly.--
            ``(1) Development and implementation of new payment 
        system.--
                    ``(A) In general.--The Secretary shall develop and 
                implement (as soon as possible after the date of 
                enactment of the Medicare, Medicaid, and SCHIP Balanced 
                Budget Refinement Act of 2000) a payment methodology 
                for frail elderly Medicare+Choice beneficiaries 
                enrolled in a Medicare+Choice plan under a specialized 
                program for the frail elderly (as defined in paragraph 
                (2)(A)).
                    ``(B) Factors described.--The methodology developed 
                and implemented under subparagraph (A) shall take into 
                account the prevalence, mix, and severity of chronic 
                conditions among frail elderly Medicare+Choice 
                beneficiaries and shall include--
                            ``(i) medical diagnostic factors from all 
                        provider settings (including hospital and 
                        nursing facility settings);
                            ``(ii) functional indicators of health 
                        status; and
                            ``(iii) such other factors as may be 
                        necessary to achieve appropriate payments for 
                        plans serving such beneficiaries.
            ``(2) Specialized program for the frail elderly defined.--
                    ``(A) In general.--In this part, the term 
                `specialized program for the frail elderly' means a 
                program that the Secretary determines--
                            ``(i) is offered under this part as a 
                        distinct part of a Medicare+Choice plan;
                            ``(ii) primarily enrolls frail elderly 
                        Medicare+Choice beneficiaries; and
                            ``(iii) has a clinical delivery system that 
                        is specifically designed to serve the special 
                        needs of such beneficiaries and to coordinate 
                        short-term and long-term care for such 
                        beneficiaries through the use of a team 
                        described in subparagraph (B) and through the 
                        provision of primary care services to such 
                        beneficiaries by means of such a team at the 
                        nursing facility involved.
                    ``(B) Specialized team described.--A team described 
                in this subparagraph--
                            ``(i) includes--
                                    ``(I) a physician; and
                                    ``(II) a nurse practitioner or 
                                geriatric care manager; and
                            ``(ii) has as members individuals who--
                                    ``(I) have special training in the 
                                care and management of the frail 
                                elderly beneficiaries; and
                                    ``(II) specialize in the care and 
                                management of such beneficiaries.
            ``(3) Frail elderly medicare+choice beneficiary defined.--
        In this part, the term `frail elderly Medicare+Choice 
        beneficiary' means a Medicare+Choice eligible individual who--
                    ``(A) is residing in a skilled nursing facility (as 
                defined in section 1819(a)) or a nursing facility (as 
                defined in section 1919(a)) for an indefinite period 
                and without any intention of residing outside the 
                facility; and
                    ``(B) has a severity of condition that makes the 
                individual frail (as determined under guidelines 
                approved by the Secretary).''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act.

SEC. 611. FULL IMPLEMENTATION OF RISK ADJUSTMENT FOR CONGESTIVE HEART 
              FAILURE ENROLLEES FOR 2001.

    (a) In General.--Section 1853(a)(3)(C) (42 U.S.C. 1395w-
23(a)(3)(C)) is amended--
            (1) in clause (ii), by striking ``Such risk adjustment'' 
        and inserting ``Except as provided in clause (iii), such risk 
        adjustment''; and
            (2) by adding at the end the following new clause:
                            ``(iii) Full implementation of risk 
                        adjustment for congestive heart failure 
                        enrollees for 2001.--
                                    ``(I) Exemption from phase-in.--
                                Subject to subclause (II), the 
                                Secretary shall fully implement the 
                                risk adjustment methodology described 
                                in clause (i) with respect to each 
                                individual who has had a qualifying 
                                congestive heart failure inpatient 
                                diagnosis (as determined by the 
                                Secretary under such risk 
adjustment methodology) during the period beginning on July 1, 1999, 
and ending on June 30, 2000, and who is enrolled in a coordinated care 
plan that is the only coordinated care plan offered on January 1, 2001, 
in the service area of the individual.
                                    ``(II) Period of application.--
                                Subclause (I) shall only apply during 
                                the 1-year period beginning on January 
                                1, 2001.''.
    (b) Exclusion From Determination of the Budget Neutrality Factor.--
Section 1853(c)(5) (42 U.S.C. 1395w-23(c)(5)) is amended by striking 
``subsection (i)'' and inserting ``subsections (a)(3)(C)(iii) and 
(i)''.

SEC. 612. INCLUSION OF COSTS OF DOD MILITARY TREATMENT FACILITY 
              SERVICES TO MEDICARE-ELIGIBLE BENEFICIARIES IN 
              CALCULATION OF MEDICARE+CHOICE PAYMENT RATES.

    Section 1853(c)(3) (42 U.S.C. 1395w-23(c)(3)) is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (E)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Inclusion of costs of certain dod military 
                treatment facility services to medicare-eligible 
                beneficiaries.--
                            ``(i) In general.--In determining the area-
                        specific Medicare+Choice capitation rate under 
                        subparagraph (A) for a year (beginning with 
                        2001), the annual per capita rate of payment 
                        for 1997 determined under section 1876(a)(1)(C) 
                        for a Medicare+Choice payment area that is 
                        within 1 or more MTF affected areas (as defined 
                        in clause (ii)) shall be increased by the sum 
                        of the MTF percentages (as described in clause 
                        (iii)) for the MTF affected area or areas. The 
                        increase under this subparagraph shall not be 
                        taken into account in computing the national 
                        standardized annual Medicare+Choice capitation 
                        rate under paragraph (4)(B).
                            ``(ii) MTF affected area defined.--In this 
                        subparagraph, the term `MTF affected area' 
                        means, with respect to a military treatment 
                        facility (as defined in subsection (a)(6) of 
                        section 1896), an area that includes the 
                        following:
                                    ``(I) The Medicare+Choice payment 
                                area in which a military treatment 
                                facility that was part of the medicare 
                                subvention demonstration project under 
                                such section as of July 1, 2000, is 
                                located.
                                    ``(II) Any Medicare+Choice payment 
                                area which is contiguous to the area 
                                described in subclause (I) and located 
                                not farther than 40 miles from the 
                                facility.
                            ``(iii) MTF percentage.--For purposes of 
                        clause (i), the MTF percentage for an MTF 
                        affected area is equal to the ratio of--
                                    ``(I) the aggregate amount of costs 
                                incurred by the Department of Defense 
                                in furnishing items and services to 
                                individuals entitled to benefits under 
                                this title who received services from 
                                the military treatment facility 
                                described in clause (ii) for that area 
                                in 1996 (as determined pursuant to 
                                section 1896(j)(1)(A)), increased by 
                                the national per capita Medicare+Choice 
                                growth percentage under paragraph (6) 
                                for 1997, to
                                    ``(II) the average number of 
                                individuals residing in such area in 
                                1996 entitled to benefits under part A 
                                and enrolled under part B.''.

               Subtitle B--Other Medicare+Choice Reforms

SEC. 621. AMOUNTS IN MEDICARE TRUST FUNDS AVAILABLE FOR SECRETARY'S 
              SHARE OF MEDICARE+CHOICE EDUCATION AND ENROLLMENT-RELATED 
              COSTS.

    (a) Relocation of Provisions.--Section 1857(e)(2) (42 U.S.C. 1395w-
27(e)(2)) is amended to read as follows:
            ``(2) Cost-sharing in enrollment-related costs.--A 
        Medicare+Choice organization shall pay the fee established by 
        the Secretary under section 1851(j)(3)(A).''.
    (b) Funding for Education and Enrollment Activities.--Section 1851 
(42 U.S.C. 1395w-21) is amended by adding at the end the following new 
subsection:
    ``(j) Funding for Beneficiary Education and Enrollment 
Activities.--
            ``(1) Secretary's estimate of total costs.--The Secretary 
        shall annually estimate the total cost for a fiscal year of 
        carrying out this section, section 4360 of the Omnibus Budget 
        Reconciliation Act of 1990 (relating to the health insurance 
        counseling and assistance program), and related activities.
            ``(2) Total amount available.--The total amount available 
        to the Secretary for a fiscal year for the costs of the 
        activities described in paragraph (1) shall be equal to the 
        lesser of--
                    ``(A) the amount estimated for such fiscal year 
                under paragraph (1); or
                    ``(B) for--
                            ``(i) fiscal year 2001, $115,000,000; and
                            ``(ii) fiscal year 2002 and each subsequent 
                        fiscal year, the amount for the previous fiscal 
                        year, adjusted to account for inflation, any 
                        change in the number of beneficiaries under 
                        this title, and any other relevant factors.
            ``(3) Cost-sharing in enrollment-related costs.--
                    ``(A) Amounts from medicare+choice organizations.--
                            ``(i) In general.--The Secretary is 
                        authorized to charge a fee to each 
                        Medicare+Choice organization with a contract 
                        under this part that is equal to the 
                        organization's pro rata share (as determined by 
                        the Secretary) of the Medicare+Choice portion 
                        (as defined in clause (ii)) of the total amount 
                        available under paragraph (2) for a fiscal 
                        year. Any amounts collected shall be available 
                        without further appropriation to the Secretary 
                        for the costs of the activities described in 
                        paragraph (1).
                            ``(ii) Medicare+choice portion defined.--
                        For purposes of clause (i), 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) Secretary's share.--
                            ``(i) Amounts available from trust funds.--
                        The Secretary's share of expenses shall be 
                        payable from funds in the Federal Hospital 
                        Insurance Trust Fund and the Federal 
                        Supplementary Medical Insurance Trust Fund, in 
                        such proportion as the Secretary shall deem to 
                        be fair and equitable after taking into 
                        consideration the expenses attributable to the 
                        administration of this part with respect to 
                        parts A and B. The Secretary shall make such 
                        transfers of moneys between such Trust Funds as 
                        may be appropriate to settle accounts between 
                        the Trust Funds in cases where expenses 
                        properly payable from one such Trust Fund have 
                        been paid from the other such Trust Fund.
                            ``(ii) Secretary's share of expenses 
                        defined.--For purposes of clause (i), the term 
                        `Secretary's share of expenses' means, for a 
                        fiscal year, an amount equal to--
                                    ``(I) the total amount available to 
                                the Secretary under paragraph (2) for 
                                the fiscal year; less
                                    ``(II) the amount collected under 
                                subparagraph (A) for the fiscal 
                                year.''.

SEC. 622. SPECIAL MEDIGAP ENROLLMENT ANTIDISCRIMINATION PROVISION FOR 
              CERTAIN BENEFICIARIES.

    (a) Disenrollment Window in Accordance With Beneficiary's 
Circumstance.--Section 1882(s)(3) (42 U.S.C. 1395ss(s)(3)) is amended--
            (1) in subparagraph (A), in the matter following clause 
        (iii), by striking ``, subject to subparagraph (E), seeks to 
        enroll under the policy not later than 63 days after the date 
        of termination of enrollment described in such subparagraph'' 
        and inserting ``seeks to enroll under the policy during the 
        period specified in subparagraph (E)''; and
            (2) by striking subparagraph (E) and inserting the 
        following new subparagraph:
    ``(E) For purposes of subparagraph (A), the time period specified 
in this subparagraph is--
            ``(i) in the case of an individual described in 
        subparagraph (B)(i), the period beginning on the date the 
        individual receives a notice of termination or cessation of all 
        supplemental health benefits (or, if no such notice is 
        received, notice that a claim has been denied because of such a 
        termination or cessation) and ending on the date that is 63 
        days after the applicable notice;
            ``(ii) in the case of an individual described in clause 
        (ii), (iii), (v), or (vi) of subparagraph (B) whose enrollment 
        is terminated involuntarily, the period beginning on the date 
        that the individual receives a notice of termination and ending 
        on the date that is 63 days after the date the applicable 
        coverage is terminated;
            ``(iii) in the case of an individual described in 
        subparagraph (B)(iv)(I), the period beginning on the earlier of 
        (I) the date that the individual receives a notice of 
        termination, a notice of the issuer's bankruptcy or insolvency, 
        or other such similar notice, if any, and (II) the date that 
        the applicable coverage is terminated, and ending on the date 
        that is 63 days after the date the coverage is terminated;
            ``(iv) in the case of an individual described in clause 
        (ii), (iii), (iv)(II), (iv)(III), (v), or (vi) of subparagraph 
        (B) who disenrolls voluntarily, the period beginning on the 
        date that is 60 days before the effective date of the 
        disenrollment and ending on the date that is 63 days after such 
        effective date; and
            ``(v) in the case of an individual described in 
        subparagraph (B) but not described in the preceding provisions 
        of this subparagraph, the period beginning on the effective 
        date of the disenrollment and ending on the date that is 63 
        days after such effective date.''.
    (b) Extended Medigap Access for Interrupted Trial Periods.--Section 
1882(s)(3) (42 U.S.C. 1395ss(s)(3)), as amended by subsection (a), is 
amended by adding at the end the following new subparagraph:
    ``(F)(i) Subject to clause (ii), for purposes of this paragraph--
            ``(I) in the case of an individual described in 
        subparagraph (B)(v) (or deemed to be so described, pursuant to 
        this subparagraph) whose enrollment with an organization or 
        provider described in subclause (II) of such subparagraph is 
        involuntarily terminated within the first 12 months of such 
        enrollment, and who, without an intervening enrollment, enrolls 
        with another such organization or provider, such subsequent 
        enrollment shall be deemed to be an initial enrollment 
described in such subparagraph; and
            ``(II) in the case of an individual described in clause 
        (vi) of subparagraph (B) (or deemed to be so described, 
        pursuant to this subparagraph) whose enrollment with a plan or 
        in a program described in such clause is involuntarily 
        terminated within the first 12 months of such enrollment, and 
        who, without an intervening enrollment, enrolls in another such 
        plan or program, such subsequent enrollment shall be deemed to 
        be an initial enrollment described in such clause.
    ``(ii) For purposes of clauses (v) and (vi) of subparagraph (B), no 
enrollment of an individual with an organization or provider described 
in clause (v)(II), or with a plan or in a program described in clause 
(vi), may be deemed to be an initial enrollment under this clause after 
the 2-year period beginning on the date on which the individual first 
enrolled with such an organization, provider, plan, or program.''.

SEC. 623. RESTORING 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 by striking ``, 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''.
    (b) Effective Date.--The amendment made by this section shall apply 
to elections and changes of coverage made on or after January 1, 2001.

SEC. 624. PERMITTING ESRD BENEFICIARIES TO ENROLL IN ANOTHER 
              MEDICARE+CHOICE PLAN IF THE PLAN IN WHICH THEY ARE 
              ENROLLED IS TERMINATED.

    (a) In General.--Section 1851(a)(3)(B) (42 U.S.C. 1395w-
21(a)(3)(B)) is amended by striking ``except that'' and all that 
follows and inserting the following: ``except that--
                            ``(i) an individual who develops end-stage 
                        renal disease while enrolled in a 
                        Medicare+Choice plan may continue to be 
                        enrolled in that plan; and
                            ``(ii) in the case of such an individual 
                        who is enrolled in a Medicare+Choice plan under 
                        clause (i) (or subsequently under this clause), 
                        if the enrollment is discontinued under 
                        circumstances described in section 
                        1851(e)(4)(A), then the individual will be 
                        treated as a `Medicare+Choice eligible 
                        individual' for purposes of electing to 
                        continue enrollment in another Medicare+Choice 
                        plan.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to terminations and discontinuations occurring on or 
        after the date of enactment of this Act.
            (2) Application to prior plan terminations.--Clause (ii) of 
        section 1851(a)(3)(B) of the Social Security Act (as inserted 
        by subsection (a)) also shall apply to individuals whose 
        enrollment in a Medicare+Choice plan was terminated or 
        discontinued after December 31, 1997, and before the date of 
        enactment of this Act. In applying this paragraph, such an 
        individual shall be treated, for purposes of part C of title 
        XVIII of the Social Security Act, as having discontinued 
        enrollment in such a plan as of the date of enactment of this 
        Act.

SEC. 625. ELECTION OF UNIFORM LOCAL COVERAGE POLICY FOR MEDICARE+CHOICE 
              PLAN COVERING MULTIPLE LOCALITIES.

    Section 1852(a)(2) (42 U.S.C. 1395w-22(a)(2)) is amended by adding 
at the end the following new subparagraph:
                    ``(C) Election of uniform coverage policy.--With 
                respect to each item or service furnished by a 
                Medicare+Choice organization that offers a 
                Medicare+Choice plan in a geographic area that includes 
                at least 15 States and in which more than 1 local 
                coverage policy is applied with respect to different 
                parts of the area, the organization may elect to have 
                the local coverage policy for the part of the area that 
                affords the broadest coverage to Medicare+Choice 
                enrollees (as determined by the Secretary) with respect 
                to such item or service apply with respect to all 
                Medicare+Choice enrollees enrolled in the plan.''.

                 Subtitle C--Other Managed Care Reforms

SEC. 631. REVISED TERMS AND CONDITIONS FOR EXTENSION OF MEDICARE 
              COMMUNITY NURSING ORGANIZATION (CNO) DEMONSTRATION 
              PROJECT.

    (a) In General.--Section 532 of BBRA (42 U.S.C. 1395mm note) is 
amended--
            (1) in subsection (a), by striking the second sentence; and
            (2) by striking subsection (b) and inserting the following 
        new subsections:
    ``(b) Terms and Conditions.--
            ``(1) January through september 2000.--For the 9-month 
        period beginning with January 2000, any such demonstration 
        project shall be conducted under the same terms and conditions 
        as applied to such project during 1999.
            ``(2) October 2000 through december 2001.--For the 15-month 
        period beginning with October 2000, any such demonstration 
        project shall be conducted under the same terms and conditions 
        as applied to such project during 1999, except that the 
        following modifications shall apply:
                    ``(A) Basic capitation rate.--The basic capitation 
                rate paid for services covered under the project (other 
                than case management services) per enrollee per month 
                shall be the basic capitation rate paid for such 
                services for 1999, reduced by 10 percent in the case of 
                the demonstration sites located in Arizona, Minnesota, 
                and Illinois, and 15 percent for the demonstration site 
                located in New York.
                    ``(B) Targeted case management fee.--A case 
                management fee shall be paid only for enrollees who are 
                classified as `moderate' or `at risk' through a 
                baseline health assessment (as required for 
                Medicare+Choice plans under section 1852(e) of the 
                Social Security Act (42 U.S.C. 1395ww-22(e)).
                    ``(C) Greater uniformity in clinical features among 
                sites.--The project shall implement for each site--
                            ``(i) protocols for periodic telephonic 
                        contact with enrollees based on--
                                    ``(I) the results of such 
                                standardized written health assessment; 
                                and
                                    ``(II) the application of 
                                appropriate care planning approaches;
                            ``(ii) disease management programs for 
                        targeted diseases (such as congestive heart 
                        failure, arthritis, diabetes, and hypertension) 
                        that are highly prevalent in the enrolled 
                        populations;
                            ``(iii) systems and protocols to track 
                        enrollees through hospitalizations, including 
                        preadmission planning, concurrent management 
                        during inpatient hospital stays, and post-
                        discharge assessment, planning, and followup; 
                        and
                            ``(iv) standardized patient educational 
                        materials for specified diseases and health 
                        conditions.
                    ``(D) Quality improvement.--The project shall 
                implement at each site once during the 15-month 
                period--
                            ``(i) surveys on enrollee satisfaction; and
                            ``(ii) reports on specified quality 
                        indicators for the enrolled population.
    ``(c) Evaluation.--
            ``(1) Preliminary report.--Not later than July 1, 2001, the 
        Secretary of Health and Human Services shall submit to the 
        Committees on Ways and Means and Commerce of the House of 
        Representatives and the Committee on Finance of the Senate a 
        preliminary report that--
                    ``(A) evaluates such demonstration projects for the 
                period beginning July 1, 1997, and ending December 31, 
                1999, on a site-specific basis with respect to the 
                impact on per beneficiary spending, specific health 
                utilization measures, and enrollee satisfaction; and
                    ``(B) includes a similar evaluation of such 
                projects for the portion of the extension period that 
                occurs after September 30, 2000.
            ``(2) Final report.--The Secretary shall submit a final 
        report to such Committees on such demonstration projects not 
        later than July 1, 2002. Such report shall include the same 
        elements as the preliminary report required by paragraph (1), 
        but for the period after December 31, 1999.
            ``(3) Methodology for spending comparisons.--Any evaluation 
        of the impact of the demonstration projects on per beneficiary 
        spending included in such reports shall be based on a 
        comparison of--
                    ``(A) data for all individuals who--
                            ``(i) were enrolled in such demonstration 
                        projects as of the first day of the period 
                        under evaluation; and
                            ``(ii) were enrolled for a minimum of 6 
                        months thereafter; with
                    ``(B) data for a matched sample of individuals who 
                are enrolled under part B of title XVIII of the Social 
                Security Act (42 U.S.C. 1395j et seq.) and who are not 
                enrolled in such a project, in a Medicare+Choice plan 
                under part C of such title (42 U.S.C. 1395w-21 et 
                seq.), a plan offered by an eligible organization under 
                section 1876 of such Act (42 U.S.C. 1395mm), or a 
                health care prepayment plan under section 1833(a)(1)(A) 
                of such Act (42 U.S.C. 1395l(a)(1)(A)).''.
    (b) Effective Date.--The amendments made by subsection (a) shall be 
effective as if included in the enactment of section 532 of BBRA (42 
U.S.C. 1395mm note).

SEC. 632. SERVICE AREA EXPANSION FOR MEDICARE COST CONTRACTS DURING 
              TRANSITION PERIOD.

    Section 1876(h)(5) (42 U.S.C. 1395mm(h)(5)) is amended--
            (1) by redesignating subparagraph (B) as subparagraph (C); 
        and
            (2) by inserting after subparagraph (A), the following new 
        subparagraph:
    ``(B) Subject to subparagraph (C), the Secretary shall approve an 
application for a modification to a reasonable cost contract under this 
section in order to expand the service area of such contract if--
            ``(i) such application is submitted to the Secretary on or 
        before September 1, 2003; and
            ``(ii) the Secretary determines that the organization with 
        the contract continues to meet the requirements applicable to 
        such organizations and contracts under this section.''.

                          TITLE VII--MEDICAID

SEC. 701. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH 
              CENTERS AND RURAL HEALTH CLINICS.

    (a) In General.--Section 1902(a) (42 U.S.C. 1396a(a)) is amended--
            (1) in paragraph (13)--
                    (A) in subparagraph (A), by adding ``and'' at the 
                end;
                    (B) in subparagraph (B), by striking ``and'' at the 
                end; and
                    (C) by striking subparagraph (C); and
            (2) by inserting after paragraph (14) the following new 
        paragraph:
            ``(15) provide for payment for services described in 
        subparagraph (B) or (C) of section 1905(a)(2) under the plan in 
        accordance with subsection (aa);''.
    (b) New Prospective Payment System.--Section 1902 (42 U.S.C. 1396a) 
is amended by adding at the end the following:
    ``(aa) Payment for Services Provided by Federally-Qualified Health 
Centers and Rural Health Clinics.--
            ``(1) In general.--Beginning with fiscal year 2001 and each 
        succeeding fiscal year, the State plan shall provide for 
        payment for services described in section 1905(a)(2)(C) 
        furnished by a Federally-qualified health center and services 
        described in section 1905(a)(2)(B) furnished by a rural health 
        clinic in accordance with the provisions of this subsection.
            ``(2) Fiscal year 2001.--Subject to paragraph (4), for 
        services furnished during fiscal year 2001, the State plan 
        shall provide for payment for such services in an amount 
        (calculated on a per visit basis) that is equal to 100 percent 
        of the average of the costs of the center or clinic of 
        furnishing such services during fiscal years 1999 and 2000 
        which are reasonable and related to the cost of furnishing such 
        services, or based on such other tests of reasonableness as the 
        Secretary prescribes in regulations under section 1833(a)(3), 
        or, in the case of services to which such regulations do not 
        apply, the same methodology used under section 1833(a)(3), 
        adjusted to take into account any increase or decrease in the 
        scope of such services furnished by the center or clinic during 
        fiscal year 2001.
            ``(3) Fiscal year 2002 and succeeding fiscal years.--
        Subject to paragraph (4), for services furnished during fiscal 
        year 2002 or a succeeding fiscal year, the State plan shall 
        provide for payment for such services in an amount (calculated 
        on a per visit basis) that is equal to the amount calculated 
        for such services under this subsection for the preceding 
        fiscal year--
                    ``(A) increased by the percentage increase in the 
                MEI (as defined in section 1842(i)(3)) applicable to 
                primary care services (as defined in section 
                1842(i)(4)) for that fiscal year; and
                    ``(B) adjusted to take into account any increase or 
                decrease in the scope of such services furnished by the 
                center or clinic during that fiscal year.
            ``(4) Establishment of initial year payment amount for new 
        centers or clinics.--In any case in which an entity first 
        qualifies as a Federally-qualified health center or rural 
        health clinic after fiscal year 2000, the State plan shall 
        provide for payment for services described in section 
        1905(a)(2)(C) furnished by the center or services described in 
        section 1905(a)(2)(B) furnished by the clinic in the first 
        fiscal year in which the center or clinic so qualifies in an 
        amount (calculated on a per visit basis) that is equal to 100 
        percent of the costs of furnishing such services during such 
        fiscal year based on the rates established under this 
        subsection for the fiscal year for other such centers or 
        clinics located in the same or adjacent area with a similar 
        case load or, in the absence of such a center or clinic, in 
        accordance with the regulations and methodology referred to in 
        paragraph (2) or based on such other tests of reasonableness as 
        the Secretary may specify. For each fiscal year following the 
        fiscal year in which the entity first qualifies as a Federally-
        qualified health center or rural health clinic, the State plan 
        shall provide for the payment amount to be calculated in 
        accordance with paragraph (3).
            ``(5) Administration in the case of managed care.--
                    ``(A) In general.--In the case of services 
                furnished by a Federally-qualified health center or 
                rural health clinic pursuant to a contract between the 
                center or clinic and a managed care entity (as defined 
                in section 1932(a)(1)(B)), the State plan shall provide 
                for payment to the center or clinic by the State of a 
                supplemental payment equal to the amount (if any) by 
                which the amount determined under paragraphs (2), (3), 
                and (4) of this subsection exceeds the amount of the 
                payments provided under the contract.
                    ``(B) Payment schedule.--The supplemental payment 
                required under subparagraph (A) shall be made pursuant 
                to a payment schedule agreed to by the State and the 
                Federally-qualified health center or rural health 
                clinic.
            ``(6) Alternative payment methodologies.--Notwithstanding 
        any other provision of this section, the State plan may provide 
        for payment in any fiscal year to a Federally-qualified health 
        center for services described in section 1905(a)(2)(C) or to a 
        rural health clinic for services described in section 
        1905(a)(2)(B) in an amount which is determined under an 
        alternative payment methodology that--
                    ``(A) is agreed to by the State and the center or 
                clinic; and
                    ``(B) results in payment to the center or clinic of 
                an amount which is at least equal to the amount 
                otherwise required to be paid to the center or clinic 
                under this section.''.
    (c) Conforming Amendments.--
            (1) Section 4712 of the BBA (Public Law 105-33; 111 Stat. 
        508) is amended by striking subsection (c).
            (2) Section 1915(b) (42 U.S.C. 1396n(b)) is amended by 
        striking ``1902(a)(13)(E)'' and inserting ``1902(a)(15), 
        1902(aa),''.
    (d) GAO Study of Future Rebasing.--The Comptroller General of the 
United States shall provide for a study on the need for, and how to, 
rebase or refine costs for making payment under the medicaid program 
for services provided by Federally-qualified health centers and rural 
health centers (as provided under the amendments made by this section). 
The Comptroller General shall provide for submittal of a report on such 
study to Congress by not later than 4 years after the date of the 
enactment of this Act.
    (e) Effective Date.--The amendments made by this section take 
effect on October 1, 2000, and apply to services furnished on or after 
such date.

SEC. 702. MEDICAID DSH ALLOTMENTS.

    (a) One-Year Freeze in Medicaid DSH Allotments.--Section 1923(f)(2) 
(42 U.S.C. 1396r-4(f)(2)) is amended--
            (1) in the matter preceding the table, by inserting ``(and 
        the DSH allotment for a State for fiscal year 2001 is the same 
        as the DSH allotment for the State for fiscal year 2000, as 
        determined under the following table)'' after ``2002''; and
            (2) in the table--
                    (A) by striking the column in the table relating to 
                FY 01 (fiscal year 2001); and
                    (B) by striking the heading in such table relating 
                to FY 00 (fiscal year 2000) and inserting ``FYS 00, 
                01''.
    (b) Effective Date.--The amendments made by this section take 
effect on October 1, 2000.

SEC. 703. PERMANENT EXTENSION OF PAYMENT OF MEDICARE PART B PREMIUMS 
              FOR QUALIFIED MEDICARE BENEFICIARIES WITH INCOME UP TO 
              135 PERCENT OF POVERTY.

    (a) In General.--Section 1902(a)(10)(E)(iv) (42 U.S.C. 
1396a(a)(10)(E)(iv)) is amended--
            (1) in the matter preceding subclause (I), by striking 
        ``(but only for premiums payable with respect to months during 
        the period beginning with January 1998, and ending with 
        December 2002)'';
            (2) in subclause (I), by inserting ``only for premiums 
        payable with respect to months beginning with January 1998,'' 
        after ``(I)''; and
            (3) in subclause (II), by inserting ``only for premiums 
        payable with respect to months during the period beginning with 
        January 1998, and ending with December 2002,'' after ``(II)''.
    (b) Conforming Amendment.--Section 1933(c)(1) (42 U.S.C. 1396u-
3(c)(1)) is amended--
            (1) in subparagraph (D), by striking ``and'' at the end;
            (2) in subparagraph (E), by striking the period and 
        inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(F) fiscal year 2003 and each fiscal year 
                thereafter, the amount specified under this paragraph 
                for the preceding fiscal year increased by the 
                percentage increase (if any) in the medical care 
                expenditure category of the Consumer Price Index for 
                All Urban Consumers (United States city average).''.

SEC. 704. STREAMLINED APPROVAL OF CONTINUED STATE-WIDE SECTION 1115 
              MEDICAID WAIVERS.

    (a) In General.--Section 1115 (42 U.S.C. 1315) is amended by adding 
at the end the following new subsection:
    ``(f) An application by the chief executive officer of a State for 
an extension of a waiver project the State is operating under an 
extension under subsection (e) (in this subsection referred to as the 
`waiver project') shall be submitted and approved or disapproved in 
accordance with the following:
            ``(1) The application for an extension of the waiver 
        project shall be submitted to the Secretary at least 120 days 
        prior to the expiration of the current period of the waiver 
        project.
            ``(2) Not later than 45 days after the date such 
        application is received by the Secretary, the Secretary shall 
        notify the State if the Secretary intends to review the 
        existing terms and conditions of the waiver project. A failure 
        to provide such notification shall be deemed to be an approval 
        of the application.
            ``(3) Not later than 45 days after the date of a 
        notification made in accordance with paragraph (2), the 
        Secretary shall inform the State of proposed changes in the 
        terms and conditions of the waiver project. A failure to 
        provide such information shall be deemed to be an approval of 
        the application.
            ``(4) During the 30-day period that begins on the date 
        information described in paragraph (3) is provided to a State, 
        the Secretary shall negotiate revised terms and conditions of 
        the waiver project with the State.
            ``(5)(A) Not later than 120 days after the date an 
        application for an extension of the waiver project is submitted 
        to the Secretary (or such later date agreed to by the chief 
        executive officer of the State), the Secretary shall--
                    ``(i) approve the application subject to such 
                modifications in the terms and conditions--
                            ``(I) as have been agreed to by the 
                        Secretary and the State; or
                            ``(II) in the absence of such agreement, as 
                        are determined by the Secretary to be 
                        reasonable consistent with the overall 
                        objectives of the waiver project; or
                    ``(ii) disapprove the application.
            ``(B) A failure by the Secretary to approve or disapprove 
        an application submitted under this subsection in accordance 
        with the requirements of subparagraph (A) shall be deemed to be 
        an approval of the application subject to such modifications in 
        the terms and conditions as have been agreed to (if any) by the 
        Secretary and the State.
            ``(6) An approval of an application for an extension of a 
        waiver project under this subsection shall be for a period 
        requested by the State, not to exceed 3 years.
            ``(7) An extension of a waiver project under this 
        subsection shall be subject to the final reporting and 
        evaluation requirements of paragraphs (4) and (5) of subsection 
        (e).''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to requests for extensions of demonstration projects pending or 
submitted on or after the date of enactment of this Act.

SEC. 705. ALASKA FMAP.

    (a) In General.--The first sentence of section 1905(b) (42 U.S.C. 
1396d(b)) is amended--
            (1) by striking ``and (3)'' and inserting ``(3)''; and
            (2) by striking the period and inserting ``, and (4) only 
        with respect to each of fiscal years 2001 through 2005, for 
        purposes of this title and title XXI, the State percentage used 
        to determine the Federal medical assistance percentage for 
        Alaska shall be that percentage which bears the same ratio to 
        45 percent as the square of the adjusted per capita income of 
        Alaska (determined by dividing the State's 3-year average per 
        capita income by 1.05) bears to the square of the per capita 
        income of the 50 States.''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect October 1, 2000.

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

SEC. 801. SPECIAL RULE FOR REDISTRIBUTION AND AVAILABILITY OF UNUSED 
              FISCAL YEAR 1998 AND 1999 SCHIP ALLOTMENTS.

    (a) Change in Rules for Redistribution and Retention of Unused 
SCHIP Allotments for Fiscal Years 1998 and 1999.--Section 2104 (42 
U.S.C. 1397dd) is amended by adding at the end the following new 
subsection:
    ``(g) Rule for Redistribution and Extended Availability of Fiscal 
Years 1998 and 1999  Allotments.--
            ``(1) Amount redistributed.--
                    ``(A) In general.--In the case of a State that 
                expends all of its allotment under subsection (b) or 
                (c) for fiscal year 1998 by the end of fiscal year 
                2000, or for fiscal year 1999 by the end of fiscal year 
                2001, the Secretary shall redistribute to the State 
                under subsection (f) (from the fiscal year 1998 or 1999 
                allotments of other States, respectively, as determined 
                by the application of paragraphs (2) and (3) with 
                respect to the respective fiscal year)) the following 
                amount:
                            ``(i) State.--In the case of 1 of the 50 
                        States or the District of Columbia, with 
                        respect to--
                                    ``(I) the fiscal year 1998 
                                allotment, the amount by which the 
                                State's expenditures under this title 
                                in fiscal years 1998, 1999, and 2000 
                                exceed the State's allotment for fiscal 
                                year 1998 under subsection (b); or
                                    ``(II) the fiscal year 1999 
                                allotment, the amount by which the 
                                State's expenditures under this title 
                                in fiscal years 1999, 2000, and 2001 
                                exceed the State's allotment for fiscal 
                                year 1999 under subsection (b).
                            ``(ii) Territory.--In the case of a 
                        commonwealth or territory described in 
                        subsection (c)(3), an amount that bears the 
                        same ratio to 1.05 percent of the total amount 
                        described in paragraph (2)(B)(i)(I) as the 
                        ratio of the commonwealth's or territory's 
                        fiscal year 1998 or 1999 allotment under 
                        subsection (c) (as the case may be) bears to 
                        the total of all such allotments for such 
                        fiscal year under such subsection.
                    ``(B) Expenditure rules.--An amount redistributed 
                to a State under this paragraph with respect to fiscal 
                year 1998 or 1999--
                            ``(i) shall not be included in the 
                        determination of the State's allotment for any 
                        fiscal year under this section;
                            ``(ii) notwithstanding subsection (e), 
                        shall remain available for expenditure by the 
                        State through the end of fiscal year 2002; and
                            ``(iii) shall be counted as being expended 
                        with respect to a fiscal year allotment in 
                        accordance with applicable regulations of the 
                        Secretary.
            ``(2) Extension of availability of portion of unexpended 
        fiscal years 1998 and 1999 allotments.--
                    ``(A) In general.--Notwithstanding subsection (e):
                            ``(i) Fiscal year 1998 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        section for fiscal year 1998 that were not 
                        expended by the State by the end of fiscal year 
                        2000, the amount specified in subparagraph (B) 
                        for fiscal year 1998 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2002.
                            ``(ii) Fiscal year 1999 allotment.--Of the 
                        amounts allotted to a State pursuant to this 
                        subsection for fiscal year 1999 that were not 
                        expended by the State by the end of fiscal year 
                        2001, the amount specified in subparagraph (B) 
                        for fiscal year 1999 for such State shall 
                        remain available for expenditure by the State 
                        through the end of fiscal year 2002.
                    ``(B) Amount remaining available for expenditure.--
                The amount specified in this subparagraph for a State 
                for a fiscal year is equal to--
                            ``(i) the amount by which (I) the total 
                        amount available for redistribution under 
                        subsection (f) from the allotments for that 
                        fiscal year, exceeds (II) the total amounts 
                        redistributed under paragraph (1) for that 
                        fiscal year; multiplied by
                            ``(ii) the ratio of the amount of such 
                        State's unexpended allotment for that fiscal 
                        year to the total amount described in clause 
                        (i)(I) for that fiscal year.
                    ``(C) Use of up to 10 percent of retained 1998 
                allotments for outreach activities.--Notwithstanding 
                section 2105(c)(2)(A), with respect to any State 
                described in subparagraph (A)(i), the State may use up 
to 10 percent of the amount specified in subparagraph (B) for fiscal 
year 1998 for expenditures for outreach activities approved by the 
Secretary.
            ``(3) Determination of amounts.--For purposes of 
        calculating the amounts described in paragraphs (1) and (2) 
        relating to the allotment for fiscal year 1998 or fiscal year 
        1999, the Secretary shall use the amounts reported by the 
        States not later than November 30, 2000, or November 30, 2001, 
        respectively, on HCFA Form 64 or HCFA Form 21, as approved by 
        the Secretary.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of section 4901 of BBA (111 
Stat. 552).

SEC. 802. PRESUMPTIVE ELIGIBILITY UNDER SCHIP.

    (a) Application Under SCHIP.--Section 2107(e)(1) (42 U.S.C. 
1397gg(e)(1)) is amended by adding at the end the following new 
subparagraph:
                    ``(D) Section 1920A (relating to presumptive 
                eligibility).''.
    (b) Technical Amendments.--Section 1920A (42 U.S.C. 1396r-1a) is 
amended--
            (1) in subsection (b)(3)(A)(ii), by striking ``paragraph 
        (1)(A)'' and inserting ``paragraph (2)''; and
            (2) in subsection (c)(2), in the matter preceding 
        subparagraph (A), by striking ``subsection (b)(1)(A)'' and 
        inserting ``subsection (b)(2)''.
    (c) Effective Date.--
            (1) In general.--The amendment made by subsection (a) takes 
        effect October 1, 2000, and applies to allotments under title 
        XXI of the Social Security Act (42 U.S.C. 1397aa et seq.) for 
        fiscal year 2001 and each succeeding fiscal year thereafter.
            (2) Technical amendments.--The amendments made by 
        subsection (b) take effect as if included in the enactment of 
        section 4912 of BBA (111 Stat. 571).

SEC. 803. AUTHORITY TO PAY MEDICAID EXPANSION SCHIP COSTS FROM TITLE 
              XXI APPROPRIATION.

    (a) Authority To Pay Medicaid Expansion SCHIP Costs From Title XXI 
Appropriation.--Section 2105(a) (42 U.S.C. 1397ee(a)) is amended--
            (1) by redesignating subparagraphs (A) through (D) of 
        paragraph (2) as clauses (i) through (iv), respectively, and 
        indenting appropriately;
            (2) by redesignating paragraph (1) as subparagraph (B), and 
        indenting appropriately;
            (3) by redesignating paragraph (2) as subparagraph (C), and 
        indenting appropriately;
            (4) by striking ``(a) In General.--'' and the remainder of 
        the text that precedes subparagraph (B), as so redesignated, 
        and inserting the following:
    ``(a) Payments.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section, the Secretary shall pay to each State with a plan 
        approved under this title, from its allotment under section 
        2104, an amount for each quarter equal to the enhanced FMAP of 
        expenditures in the quarter--
                    ``(A) for child health assistance under the plan 
                for targeted low-income children in the form of 
                providing medical assistance for which payment is made 
                on the basis of an enhanced FMAP under the fourth 
                sentence of section 1905(b);''; and
            (5) by adding after subparagraph (C), as so redesignated, 
        the following new paragraph:
            ``(2) Order of payments.--Payments under paragraph (1) from 
        a State's allotment shall be made in the following order:
                    ``(A) First, for expenditures for items described 
                in paragraph (1)(A).
                    ``(B) Second, for expenditures for items described 
                in paragraph (1)(B).
                    ``(C) Third, for expenditures for items described 
                in paragraph (1)(C).''.
    (b) Elimination of Requirement To Reduce Title XXI Allotment by 
Medicaid Expansion SCHIP Costs.--Section 2104 (42 U.S.C. 1397dd) is 
amended by striking subsection (d).
    (c) Authority To Transfer Title XXI Appropriations to Title XIX 
Appropriation Account as Reimbursement for Medicaid Expenditures for 
Medicaid Expansion SCHIP Services.--Notwithstanding any other provision 
of law, all amounts appropriated under title XXI and allotted to a 
State pursuant to subsection (b) or (c) of section 2104 of the Social 
Security Act (42 U.S.C. 1397dd) for fiscal years 1998 through 2000 
(including any amounts that, but for this provision, would be 
considered to have expired) and not expended in providing child health 
assistance or related services for which payment may be made pursuant 
to subparagraph (B) or (C) of section 2105(a)(1) of such Act (42 U.S.C. 
1397ee(a)(1)) (as amended by subsection (a)), shall be available to 
reimburse the Grants to States for Medicaid account in an amount equal 
to the total payments made to such State under section 1903(a) of such 
Act (42 U.S.C. 1396b(a)) for expenditures in such years for medical 
assistance described in subparagraph (A) of section 2105(a)(1) of such 
Act (42 U.S.C. 1397ee(a)(1)) (as so amended).
    (d) Conforming Amendments.--
            (1) Section 1905(b) (42 U.S.C. 1396d(b)) is amended in the 
        fourth sentence by striking ``the State's allotment under 
        section 2104 (not taking into account reductions under section 
        2104(d)(2)) for the fiscal year reduced by the amount of any 
        payments made under section 2105 to the State from such 
        allotment for such fiscal year'' and inserting ``the State's 
        available allotment under section 2104''.
            (2) Section 1905(u)(1)(B) (42 U.S.C. 1396d(u)(1)(B)) is 
        amended by striking ``and section 2104(d)''.
            (3) Section 2104 (42 U.S.C. 1397dd), as amended by 
        subsection (b), is further amended--
                    (A) in subsection (b)(1), by striking ``and 
                subsection (d)''; and
                    (B) in subsection (c)(1), by striking ``subject to 
                subsection (d),''.
            (4) Section 2105(c) (42 U.S.C. 1397ee(c)) is amended--
                    (A) in paragraph (2)(A), by striking all that 
                follows ``Except as provided in this paragraph,'' and 
                inserting ``the amount of payment that may be made 
                under subsection (a) for a fiscal year for expenditures 
                for items described in paragraph (1)(C) of such 
                subsection shall not exceed 10 percent of the total 
                amount of expenditures for which payment is made under 
                subparagraphs (A), (B), and (C) of paragraph (1) of 
                such subsection.'';
                    (B) in paragraph (2)(B), by striking ``described in 
                subsection (a)(2)'' and inserting ``described in 
                subsection (a)(1)(C)''; and
                    (C) in paragraph (6)(B), by striking ``Except as 
                otherwise provided by law,'' and inserting ``Except as 
                provided in subsection (a)(1)(A) or any other provision 
                of law,''.
            (5) Section 2110(a) (42 U.S.C. 1397jj(a)) is amended by 
        striking ``section 2105(a)(2)(A)'' and inserting ``section 
        2105(a)(1)(C)(i)''.
    (e) Technical Amendment.--Section 2105(d)(2)(B)(ii) (42 U.S.C. 
1397ee(d)(2)(B)(ii)) is amended by striking ``enhanced FMAP under 
section 1905(u)'' and inserting ``enhanced FMAP under the fourth 
sentence of section 1905(b)''.
    (f) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of section 4901 of the BBA 
(111 Stat. 552).

                       TITLE IX--OTHER PROVISIONS

SEC. 901. INCREASE IN AUTHORIZATION OF APPROPRIATIONS FOR THE MATERNAL 
              AND CHILD HEALTH SERVICES BLOCK GRANT.

    (a) In General.--Section 501(a) (42 U.S.C. 701(a)) is amended in 
the matter preceding paragraph (1) by striking ``$705,000,000 for 
fiscal year 1994'' and inserting ``$1,000,000,000 for fiscal year 
2001''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on October 1, 2000.

SEC. 902. INCREASE IN APPROPRIATIONS FOR SPECIAL DIABETES PROGRAMS FOR 
              CHILDREN WITH TYPE I DIABETES AND INDIANS.

    (a) Special Diabetes Programs for Children With Type I Diabetes.--
Section 330B(b) of the Public Health Service Act (42 U.S.C. 254c-2(b)) 
is amended--
            (1) by striking ``Notwithstanding'' and inserting the 
        following:
            ``(1) Transferred funds.--Notwithstanding''; and
            (2) by adding at the end the following:
            ``(2) Appropriations.--For the purpose of making grants 
        under this section, there is appropriated, out of any funds in 
        the Treasury not otherwise appropriated $70,000,000 for each of 
        fiscal years 2001 and 2002 (which shall be combined with 
        amounts transferred under paragraph (1) for each such fiscal 
        years).''.
    (b) Special Diabetes Programs for Indians.--Section 330C(c) of the 
Public Health Service Act (42 U.S.C. 254c-3(c)) is amended--
            (1) by striking ``Notwithstanding'' and inserting the 
        following:
            ``(1) Transferred funds.--Notwithstanding''; and
            (2) by adding at the end the following:
            ``(2) Appropriations.--For the purpose of making grants 
        under this section, there is appropriated, out of any money in 
        the Treasury not otherwise appropriated $70,000,000 for each of 
        fiscal years 2001 and 2002 (which shall be combined with 
        amounts transferred under paragraph (1) for each such fiscal 
        years).''.
                                 <all>