[House Report 106-436]
[From the U.S. Government Publishing Office]
106th Congress Rept. 106-436
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
MEDICARE BALANCED BUDGET REFINEMENT ACT OF 1999
_______
November 2, 1999.--Ordered to be printed
_______
Mr. Archer, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 3075]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3075) To amend title XVIII of the Social Security
Act to make corrections and refinements in the Medicare Program
as revised by the Balanced Budget Act of 1997, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
I. Introduction....................................................32
A. Purpose and Summary................................... 32
B. Background and Need for Legislation................... 33
C. Legislative History................................... 36
II. Explanation of Provisions.......................................38
III. Votes of the Committee..........................................84
IV. Budget Effects of the Bill......................................86
A. Committee Estimate of Budgetary Effects............... 86
B. Statement Regarding New Budget Authority and Tax
Expenditures......................................... 86
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 86
V. Other Matters to be Discussed under the Rules of the House......94
A. Committee Oversight Findings and Recommendations...... 94
B. Summary of Findings and Recommendations of the
Government Reform Committee.......................... 95
C. Constitutional Authority Statement.................... 95
VI. Changes in Existing Law Made by the bill as Respond.............95
VII. Additional Views...............................................150
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES
TO BBA; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare Balanced
Budget Refinement Act of 1999''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this title an amendment is expressed
in terms of an amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that section or other
provision of the Social Security Act.
(c) References to Balanced Budget Act of 1997.--In this Act, the term
``BBA'' means the Balanced Budget Act of 1997 (Public Law 105-33).
(d) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; amendments to Social Security Act; references to
BBA; table of contents.
TITLE I--PROVISIONS RELATING TO PART A
Subtitle A--PPS Hospitals
Sec. 101. One-year delay in transition for indirect medical education
(IME) percentage adjustment.
Sec. 102. Decrease in reductions for disproportionate share hospitals;
data collection requirements.
Subtitle B--PPS Exempt Hospitals
Sec. 111. Wage adjustment of percentile cap for PPS-exempt hospitals.
Sec. 112. Enhanced payments for long-term care and psychiatric
hospitals until development of prospective payment systems for those
hospitals.
Sec. 113. Per discharge prospective payment system for long-term care
hospitals.
Sec. 114. Per diem prospective payment system for psychiatric
hospitals.
Sec. 115. Refinement of prospective payment system for inpatient
rehabilitation services.
Subtitle C--Adjustments to PPS Payments for Skilled Nursing Facilities
Sec. 121. Temporary increase in payment for certain high cost patients.
Sec. 122. Market basket increase.
Sec. 123. Authorizing facilities to elect immediate transition to
Federal rate.
Sec. 124. Part A pass-through payment for certain ambulance services,
prostheses, and chemotherapy drugs.
Sec. 125. Provision for part B add-ons for facilities participating in
the NHCMQ demonstration project.
Sec. 126. Special consideration for facilities serving specialized
patient populations.
Sec. 127. MedPAC study on special payment for facilities located in
Hawaii and Alaska.
Subtitle D--Other
Sec. 131. Part A BBA technical corrections.
TITLE II--PROVISIONS RELATING TO PART B
Subtitle A--Adjustments to Physician Payment Updates
Sec. 201. Modification of update adjustment factor provisions to reduce
update oscillations and require estimate revisions.
Subtitle B--Hospital Outpatient Services
Sec. 211. Outlier adjustment and transitional pass-through for certain
medical devices, drugs, and biologicals.
Sec. 212. Establishing a transitional corridor for application of OPD
PPS.
Sec. 213. Delay in application of prospective payment system to cancer
center hospitals.
Sec. 214. Limitation on outpatient hospital copayment for a procedure
to the hospital deductible amount.
Subtitle C--Other
Sec. 221. Application of separate caps to physical and speech therapy
services.
Sec. 222. Transitional outlier payments for therapy services for
certain high acuity patients.
Sec. 223. Update in renal dialysis composite rate.
Sec. 224. Temporary update in durable medical equipment and oxygen
rates.
Sec. 225. Requirement for new proposed rulemaking for implementation of
inherent reasonableness policy.
Sec. 226. Increase in reimbursement for pap smears.
Sec. 227. Refinement of ambulance services demonstration project.
Sec. 228. Additional provisions.
TITLE III--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 301. Adjustment to reflect administrative costs not included in
the interim payment system.
Sec. 302. Delay in application of 15 percent reduction in payment rates
for home health services until 1 year after implementation of
prospective payment system.
Sec. 303. Clarification of surety bond requirements.
Sec. 304. Technical amendment clarifying applicable market basket
increase for PPS.
Subtitle B--Direct Graduate Medical Education
Sec. 311. Use of national average payment methodology in computing
direct graduate medical education (DGME) payments.
Subtitle C--Other
Sec. 321. GAO study on geographic reclassification.
Sec. 322. MedPAC study on medicare payment for non-physician health
professional clinical training in hospitals.
TITLE IV--RURAL PROVIDER PROVISIONS
Sec. 401. Permitting reclassification of certain urban hospitals as
rural hospitals.
Sec. 402. Update of standards applied for geographic reclassification
for certain hospitals.
Sec. 403. Improvements in the critical access hospital (CAH) program.
Sec. 404. 5-year extension of medicare dependent hospital (MDH)
program.
Sec. 405. Rebasing for certain sole community hospitals.
Sec. 406. Increased flexibility in providing graduate physician
training in rural areas.
Sec. 407. Elimination of certain restrictions with respect to hospital
swing bed program.
Sec. 408. Grant program for rural hospital transition to prospective
payment.
Sec. 409. MedPAC study of rural providers.
Sec. 410. Expansion of access to paramedic intercept services in rural
areas.
TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM)
Subtitle A--Medicare+Choice
Sec. 501. Phase-in of new risk adjustment methodology.
Sec. 502. Encouraging offering of Medicare+Choice plans in areas
without plans.
Sec. 503. Modification of 5-year re-entry rule for contract
terminations.
Sec. 504. Continued computation and publication of AAPCC data.
Sec. 505. Changes in Medicare+Choice enrollment rules.
Sec. 506. Allowing variation in premium waivers within a service area
if Medicare+Choice payment rates vary within the area.
Sec. 507. Delay in deadline for submission of adjusted community rates
and related information.
Sec. 508. 2 year extension of medicare cost contracts.
Sec. 509. Medicare+Choice nursing and allied health professional
education and earmark.
Sec. 510. Miscellaneous changes and studies.
Sec. 511. MedPAC report on medicare MSA (medical savings account)
plans.
Sec. 512. Clarification of nonapplicability of certain provisions of
discharge planning process to Medicare+Choice plans.
Subtitle B--Managed Care Demonstration Projects
Sec. 521. Extension of social health maintenance organization
demonstration (SHMO) project authority.
Sec. 522. Extension of medicare community nursing organization
demonstration project.
Sec. 523. Medicare+Choice competitive bidding demonstration project.
TITLE I--PROVISIONS RELATING TO PART A
Subtitle A--PPS Hospitals
SEC. 101. ONE-YEAR DELAY IN TRANSITION FOR INDIRECT MEDICAL EDUCATION
(IME) PERCENTAGE ADJUSTMENT.
(a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C.
1395ww(d)(5)(B)(ii)), as amended by section 4621(a)(1) of BBA, is
amended--
(1) in subclause (IV), by inserting ``and 2001'' after
``2000''; and
(2) by striking ``2000'' in subclause (V) and inserting
``2001''.
(b) Conforming Amendment Relating to Determination of Standardized
Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)), as
amended by section 4621(a)(2) of BBA, is amended by inserting ``or any
additional payments under such paragraph resulting from the amendment
made by section 101(a) of Medicare Balanced Budget Refinement Act of
1999'' after ``Balanced Budget Act of 1997''.
SEC. 102. DECREASE IN REDUCTIONS FOR DISPROPORTIONATE SHARE HOSPITALS;
DATA COLLECTION REQUIREMENTS.
(a) In General.--Section 1886(d)(5)(F)(ix) (42 U.S.C.
1395ww(d)(5)(F)(ix)), as added by section 4403(a) of BBA, is amended--
(1) in subclause (III), by striking ``during fiscal year
2000'' and inserting ``during each of fiscal years 2000 and
2001'';
(2) by striking subclause (IV);
(3) by redesignating subclauses (V) and (VI) and subclauses
(IV) and (V), respectively; and
(4) in subclause (IV), as so redesignated, by striking
``reduced by 5 percent'' and inserting ``reduced by 4
percent''.
(b) Data Collection.--
(1) In general.--The Secretary of Health and Human Services
shall require any subsection (d) hospital (as defined in
section 1886(d)(1)(B) of the Social Security Act (42 U.S.C.
1395ww(d)(1)(B)) to submit to the Secretary, in the cost
reports submitted to the Secretary by such hospital for
discharges occurring during a fiscal year, data on the costs
incurred by the hospital for providing inpatient and outpatient
hospital services for which the hospital is not compensated,
including bad debt and charity care.
(2) Effective date.--The Secretary shall require the
submission of the data described in paragraph (1) in cost
reports for cost reporting periods beginning on or after the
date of the enactment of this Act.
Subtitle B--PPS Exempt Hospitals
SEC. 111. WAGE ADJUSTMENT OF PERCENTILE CAP FOR PPS-EXEMPT HOSPITALS.
(a) In General.--Section 1886(b)(3)(H) (42 U.S.C. 1395ww(b)(3)(H)),
as amended by section 4414 of BBA, is amended--
(1) in clause (i), by inserting ``, as adjusted under clause
(iii)'' before the period,
(2) in clause (ii), by striking ``clause (i)'' and ``such
clause'' and inserting ``subclause (I)'' and ``such subclause''
respectively,
(3) by striking ``(H)(i)'' and inserting ``(ii)(I)'',
(4) by redesignating clauses (ii) and (iii) as subclauses
(II) and (III),
(5) by inserting after clause (ii), as so redesignated, the
following new clause:
``(iii) In applying clause (ii)(I) in the case of a hospital or unit,
the Secretary shall provide for an appropriate adjustment to the labor-
related portion of the amount determined under such subparagraph to
take into account differences between average wage-related costs in the
area of the hospital and the national average of such costs within the
same class of hospital.'', and
(6) by inserting before clause (ii), as so redesignated, the
following new clause:
``(H)(i) In the case of a hospital or unit that is within a class of
hospital described in clause (iv), for a cost reporting period
beginning during fiscal years 1998 through 2002, the target amount for
such a hospital or unit may not exceed the amount as updated up to or
for such cost reporting period under clause (ii).''.
(b) Effective Date.--The amendments made by subsection (a) apply to
cost reporting periods beginning on or after October 1, 1999.
SEC. 112. ENHANCED PAYMENTS FOR LONG-TERM CARE AND PSYCHIATRIC
HOSPITALS UNTIL DEVELOPMENT OF PROSPECTIVE PAYMENT
SYSTEMS FOR THOSE HOSPITALS.
Section 1886(b)(2) (42 U.S.C. 1395ww(b)(2)), as added by section
4415(b) of BBA, is amended--
(1) in subparagraph (A), by striking ``In addition to'' and
inserting ``Except as provided in subparagraph (E), in addition
to''; and
(2) by adding at the end the following new subparagraph:
``(E)(i) In the case of an eligible hospital that is a hospital or
unit that is within a class of hospital described in clause (ii) with a
12-month cost reporting period beginning before the enactment of this
subparagraph, in determining the amount of the increase under
subparagraph (A), the Secretary shall substitute for the percentage of
the target amount applicable under subparagraph (A)(ii)--
``(I) for a cost reporting period beginning on or after
October 1, 2000, and before September 30, 2001, 1.5 percent;
and
``(II) for a cost reporting period beginning on or after
October 1, 2001, and before September 30, 2002, 2 percent.
``(ii) For purposes of clause (i), each of the following
shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(II) Hospitals described in clause (iv) of such
subsection.''.
SEC. 113. PER DISCHARGE PROSPECTIVE PAYMENT SYSTEM FOR LONG-TERM CARE
HOSPITALS.
(a) Development of System.--
(1) In general.--The Secretary of Health and Human Services
shall develop a per discharge prospective payment system for
payment for inpatient hospital services of long-term care
hospitals described in section 1886(d)(1)(B)(iv) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B)(iv)) under the medicare
program. Such system shall include an adequate patient
classification system that is based on diagnosis-related groups
(DRGs) and that reflects the differences in patient resource
use and costs, and shall maintain budget neutrality.
(2) Collection of data and evaluation.--In developing the
system described in paragraph (1), the Secretary may require
such long-term care hospitals to submit such information to the
Secretary as the Secretary may require to develop the system.
(b) Report.--Not later than October 1, 2001, the Secretary shall
submit to the appropriate committees of Congress a report that includes
a description of the system developed under subsection (a)(1).
(c) Implementation of Prospective Payment System.--Notwithstanding
section 1886(b)(3) of the Social Security Act (42 U.S.C. 1395ww(b)(3)),
the Secretary shall provide, for cost reporting periods beginning on or
after October 1, 2002, for payments for inpatient hospital services
furnished by long-term care hospitals under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) in accordance with the system
described in subsection (a).
SEC. 114. PER DIEM PROSPECTIVE PAYMENT SYSTEM FOR PSYCHIATRIC
HOSPITALS.
(a) Development of System.--
(1) In general.--The Secretary of Health and Human Services
shall develop a per diem prospective payment system for payment
for inpatient hospital services of psychiatric hospitals and
units (as defined in paragraph (3)) under the medicare program.
Such system shall include an adequate patient classification
system that reflects the differences in patient resource use
and costs among such hospitals and shall maintain budget
neutrality.
(2) Collection of data and evaluation.--In developing the
system described in paragraph (1), the Secretary may require
such psychiatric hospitals and units to submit such information
to the Secretary as the Secretary may require to develop the
system.
(3) Definition.--In this section, the term ``psychiatric
hospitals and units'' means a psychiatric hospital described in
clause (i) of section 1886(d)(1)(B) of the Social Security Act
(42 U.S.C. 1395ww(d)(1)(B)) and psychiatric units described in
the matter following clause (v) of such section.
(b) Report.--Not later than October 1, 2001, the Secretary shall
submit to the appropriate committees of Congress a report that includes
a description of the system developed under subsection (a)(1).
(c) Implementation of Prospective Payment System.--Notwithstanding
section 1886(b)(3) of the Social Security Act (42 U.S.C. 1395ww(b)(3)),
the Secretary shall provide, for cost reporting periods beginning on or
after October 1, 2002, for payments for inpatient hospital services
furnished by psychiatric hospitals and units under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) in accordance with the
prospective payment system established by the Secretary under this
section.
SEC. 115. REFINEMENT OF PROSPECTIVE PAYMENT SYSTEM FOR INPATIENT
REHABILITATION SERVICES.
(a) Election to Apply Full Prospective Payment Rate Without Phase-
In.--
(1) In general.--Paragraph (1) of section 1886(j) (42 U.S.C.
1395ww(j)), as added by section 4421(a) of BBA, is amended--
(A) in subparagraph (C), by inserting ``subject to
subparagraph (E),'' after ``subparagraph (A),''; and
(B) by adding at the end the following new
subparagraph:
``(E) Election to apply full prospective payment
system.--A rehabilitation facility may elect for either
or both cost reporting periods described in
subparagraph (C) to have the TEFRA percentage and
prospective payment percentage set at 0 percent and 100
percent, respectively, for the facility.''.
(2) Budget neutrality in application.--Paragraph (3)(B) of
such section is amended by inserting ``and taking into account
the election permitted under paragraph (1)(E)'' after ``in the
Secretary's estimation''.
(3) Transitional adjustment and implementation.--In order to
implement the amendments made by this subsection on a budget
neutral basis--
(A) the Secretary of Health and Human Services shall
decrease the prospective payment rate otherwise
established for fiscal year 2001 by 10 percent, and
shall adjust such rate for subsequent years to reflect
the extent to which such 10 percent payment adjustment
was inappropriate, as determined by the Secretary based
upon an analysis that takes into account utilization
and payments made during fiscal year 2001; and
(B) the Secretary shall provide for the computation
of such rate in an iterative manner to take into
account the effect of permitting an election under
section 1886(j)(1)(E) of the Social Security Act, under
the amendment made by paragraph (1).
(b) Use of Discharge as Payment Unit.--
(1) In general.--Paragraph (1)(D) of such section is amended
by striking ``, day of inpatient hospital services, or other
unit of payment defined by the Secretary''.
(2) Conforming amendment to classification.--Paragraph (2)(A)
of such section is amended by amending clause (i) of to read as
follows:
``(i) classes of patient discharges of
rehabilitation facilities (each in this
subsection referred to as a `case mix group'),
based on impairment, age, comorbidities, and
functional capability of the patient and such
other factors as the Secretary deems
appropriate to improve the explanatory power of
functional independence measure-function
related groups; and''.
(3) Construction relating to transfer authority.--Paragraph
(1) of such section, as amended by subsection (a)(1), is
further amended by adding at the end the following new
subparagraph:
``(F) Construction relating transfer authority.--
Nothing in this subsection shall be construed as
preventing the Secretary from providing for an
adjustment to payments to take into account the early
transfer of a patient from a rehabilitation facility to
another site of care.''.
(c) Study on Impact of Implementation of Prospective Payment
System.--
(1) Study.--The Secretary of Health and Human Services shall
conduct a study of the impact on utilization and beneficiary
access to services of the implementation of the medicare
prospective payment system for inpatient hospital services or
rehabilitation facilities under section 1886(j) of the Social
Security Act (as added by section 4421(a) of BBA).
(2) Report.--Not later than 3 years after the date such
system is first implemented, the Secretary shall submit to
Congress a report on such study.
(d) Effective Date.--The amendments made by subsections (a) and (b)
are effective as if included in the enactment of section 4421(a) of
BBA.
Subtitle C--Adjustments to PPS Payments for Skilled Nursing Facilities
SEC. 121. TEMPORARY INCREASE IN PAYMENT FOR CERTAIN HIGH COST PATIENTS.
(a) Adjustment for Medically Complex Patients Until Establishment of
Refined Case-Mix Adjustment.--For purposes of computing payments for
covered skilled nursing facility payments under paragraph (1) of
section 1888(e) of the Social Security Act (42 U.S.C. 1395yy(e)), as
added by section 4432(a) of BBA, for such services furnished on or
after April 1, 2000, and before October 1, 2000, the Secretary of
Health and Human Services shall increase by 10 percent the adjusted
Federal per diem rate otherwise determined under paragraph (4) of such
section (but for this section) for covered skilled nursing facility
services for RUG-III groups described in subsection (b) furnished to an
individual entitled to benefits under part A of title XVIII of such Act
during the period in which such individual is classified in such a RUG-
III category.
(b) Groups Described.--The RUG-III groups for which the adjustment
described in subsection (a) applies are SE3, SE2, SE1, SSC, SSB, SSA,
CC2, CC1, CB2, CB1, CA2, and CA1, as specified in Tables 3 and 4 of the
final rule published in the Federal Register by the Health Care
Financing Administration on July 30, 1999 (64 FR 41684).
SEC. 122. MARKET BASKET INCREASE.
Section 1888(e)(4)(E)(ii) (42 U.S.C. 1395yy(e)(4)(E)(ii)) is
amended--
(1) by redesignating subclause (III) as subclause (IV); and
(2) by striking subclause (II) and inserting after subclause
(I) the following:
``(II) for fiscal year 2001, the rate
computed for fiscal year 2000
(determined without regard to section
121 of the Medicare Balanced Budget
Refinement Act of 1999) increased by
the skilled nursing facility market
basket percentage change for the fiscal
year involved plus 0.8 percentage
point;
``(III) for fiscal year 2002, the
rate computed for the previous fiscal
year increased by the skilled nursing
facility market basket percentage
change for the fiscal year involved
minus 1 percentage point; and''.
SEC. 123. AUTHORIZING FACILITIES TO ELECT IMMEDIATE TRANSITION TO
FEDERAL RATE.
(a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as added by
section 4432(a) of BBA, is amended--
(1) in paragraph (1), in the matter preceding subparagraph
(A), by striking ``paragraph (7)'' and inserting ``paragraphs
(7) and (11)''; and
(2) by adding at the end the following new paragraph:
``(11) Permitting facilities to waive 3-year transition.--
Notwithstanding paragraph (1)(A), a facility may elect to have
the amount of the payment for all costs of covered skilled
nursing facility services for each day of such services
furnished in cost reporting periods beginning after the date of
such election determined pursuant to subparagraph (B) of
paragraph (1).''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to elections made more than 60 days after the date of enactment
of this Act.
SEC. 124. PART A PASS-THROUGH PAYMENT FOR CERTAIN AMBULANCE SERVICES,
PROSTHESES, AND CHEMOTHERAPY DRUGS.
(a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as added by
section 4432(a) of BBA, is amended--
(1) in paragraph (2)(A)(i)(II), by striking ``services
described in clause (ii)'' and inserting ``items and services
described in clauses (ii) and (iii)'';
(2) by adding at the end of paragraph (2)(A) the following
new clause:
``(iii) Exclusion of certain additional
items.--Items described in this clause are the
following:
``(I) Ambulance services furnished to
an individual in conjunction with renal
dialysis services described in section
1861(s)(2)(F).
``(II) Chemotherapy items (identified
as of July 1, 1999, by HCPCS codes
J9000-J9020; J9040-J9151; J9170-J9185;
J9200-J9201; J9206-J9208; J9211; J9230-
J9245; and J9265-J9600 (and as
subsequently modified by the
Secretary)).
``(III) Chemotherapy administration
services (identified as of July 1,
1999, by HCPCS codes 36260-36262;
36489; 36530-36535; 36640; 36823; and
96405-96542 (and as subsequently
modified by the Secretary)).
``(IV) Radioisotope services
(identified as of July 1, 1999, by
HCPCS codes 79030-79440 (and as
subsequently modified by the
Secretary)).
``(V) Customized prosthetic devices
(commonly known as artificial limbs or
components or artifical limbs) under
the following HCPCS codes (as of July
1, 1999 (and as subsequently modified
by the Secretary)) if delivered to an
inpatient for use during the stay in
the extended care facility and intended
to be used by the patient after
discharge from the facility: L5050-
L5340; L5500-L5610; L5613-L5986; L5988;
L6050-L6370; L6400-L6880; L6920-L7274;
and L7362-7366.''; and
(3) by adding at the end of paragraph (9) the following: ``In
the case of an item or service described in clause (iii) of
paragraph (2)(A) that would be payable under part A but for the
exclusion of such item or service under such clause, payment
shall be made for the item or service, in an amount otherwise
determined under part B of this title for such item or service,
from the Federal Hospital Insurance Trust Fund under section
1817 (rather than from the Federal Supplementary Medical
Insurance Trust Fund under section 1841).''.
(b) Conforming for Budget Neutrality for Fiscal Year 2001.--Section
1888(e)(4)(G) (42 U.S.C. 1395yy(e)(4)(G)) is amended by adding at the
end the following new clause:
``(iii) Adjustment for exclusion of certain
additional items.--The Secretary shall provide
for an appropriate proportional reduction in
payments so that beginning with fiscal year
2001, the aggregate amount of such reductions
is equal to the aggregate increase in payments
attributable to the exclusion effected under
clause (iii) of paragraph (2)(A).''.
(c) Effective Date.--The amendments made by subsection (a) shall
apply to payments made for items furnished on or after April 1, 2000.
SEC. 125. PROVISION FOR PART B ADD-ONS FOR FACILITIES PARTICIPATING IN
THE NHCMQ DEMONSTRATION PROJECT.
(a) In General.--Section 1888(e)(3) (42 U.S.C. 1395yy(e)(3)), as
added by section 4432(a) of BBA, is amended--
(1) in subparagraph (A)--
(A) in clause (i), by inserting ``or, in the case of
a facility participating in the Nursing Home Case-Mix
and Quality Demonstration (RUGS-III), the RUGS-III rate
received by the facility during the cost reporting
period beginning in 1997'' after ``to nonsettled cost
reports''; and
(B) in clause (ii), by striking ``furnished during
such period'' and inserting ``furnished during the
applicable cost reporting period described in clause
(i)''.
(2) in subparagraph (B), to read as follows:
``(B) Update to first cost reporting period.--The
Secretary shall update the amount determined under
subparagraph (A), for each cost reporting period after
the applicable cost reporting period described in
subparagraph (A)(i) and up to the first cost reporting
period by a factor equal to the skilled nursing
facility market basket percentage increase minus 1
percentage point (except that for the cost reporting
period beginning in fiscal year 2001, the factor shall
be equal to such market basket percentage plus 0.8
percentage point).''.
(b) Effective Date.--The amendments made by subsection (a) shall be
effective as if included in the enactment of section 4432(a) of BBA.
SEC. 126. SPECIAL CONSIDERATION FOR FACILITIES SERVING SPECIALIZED
PATIENT POPULATIONS.
(a) In General.--Section 1888(e) (42 U.S.C. 1395yy(e)), as amended by
section 123(a)(1), is further amended--
(1) in paragraph (1), by striking ``subject to paragraphs (7)
and (11)'' and inserting ``subject to paragraphs (7), (11), and
(12)''; and
(2) by adding at the end the following new paragraph:
``(12) Payment rule for certain facilities.--
``(A) In general.--In the case of a qualified acute
skilled nursing facility described in subparagraph (B),
the per diem amount of payment shall be determined by
applying the non-Federal percentage and Federal
percentage specified in paragraph (2)(C)(ii).
``(B) Facility described.--For purposes of
subparagraph (A), a qualified acute skilled nursing
facility is a facility that--
``(i) was certified by the Secretary as a
skilled nursing facility eligible to furnish
services under this title before July 1, 1992;
``(ii) is a hospital-based facility; and
``(iii) for the cost reporting period
beginning in fiscal year 1998, the facility had
more than 60 percent of total patient days
comprised of patients who are described in
subparagraph (C).
``(C) Description of patients.--For purposes of
subparagraph (B), a patient described in this
subparagraph is an individual who--
``(i) is entitled to benefits under part A;
and
``(ii) is immuno-compromised secondary to an
infectious disease, with specific diagnoses as
specified by the Secretary.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply for the period beginning on the date on which after the date of
the enactment of this Act the first cost reporting period of the
facility begins and ending on September 30, 2001, and applies to
skilled nursing facilities furnishing covered skilled nursing facility
services on the date of the enactment of this Act for which payment is
made under title XVIII of the Social Security Act.
(c) Report to Congress.--By not later than one year after the date of
the enactment of this Act, the Secretary of Health and Human Services
shall assess the resource use of patients of skilled nursing facilities
furnishing services under the medicare program who are immuno-
compromised secondary to an infectious disease, with specific diagnoses
as specified by the Secretary (under paragraph (12)(C), as added by
subsection (a), of section 1888(e) of the Social Security Act (42
U.S.C. 1395yy(e))) to determine whether any permanent adjustments are
needed to the RUGs to take into account the resource uses and costs of
these patients.
SEC. 127. MEDPAC STUDY ON SPECIAL PAYMENT FOR FACILITIES LOCATED IN
HAWAII AND ALASKA.
(a) In General.--The Medicare Payment Advisory Commission shall
conduct a study on skilled nursing facilities furnishing covered
skilled nursing facility services (as defined in section 1888(e)(2)(A)
of the Social Security Act (42 U.S.C. 1395yy(e)(2)(A)) to determine the
need for an additional payment amount under section 1888(e)(4)(G) of
such Act (42 U.S.C. 1395yy(e)(4)(G)) to take into account the unique
circumstances of skilled nursing facilities located in Alaska and
Hawaii.
(b) Report.--By not later than 18 months after the date of the
enactment of this Act, the Medicare Payment Advisory Commission shall
submit a report to Congress on the study conducted under subsection
(a).
Subtitle D--Other
SEC. 131. PART A BBA TECHNICAL CORRECTIONS.
(a) Section 4201.--Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-
4(c)(2)(B)(i)), as amended by section 4201(a) of BBA, is amended by
striking ``and is located in a county (or equivalent unit of local
government) in a rural area (as defined in section 1886(d)(2)(D))
that'' and inserting ``that is located in a county (or equivalent unit
of local government) in a rural area (as defined in section
1886(d)(2)(D)), and that''.
(b) Section 4204.--(1) Section 1886(d)(5)(G) (42 U.S.C.
1395ww(d)(5)(G)), as amended by section 4204(a)(1) of BBA, is amended--
(A) in clause (i), by striking ``or beginning on or after
October 1, 1997, and before October 1, 2001,'' and inserting
``or discharges on or after October 1, 1997, and before October
1, 2001,''; and
(B) in clause (ii)(II), by striking ``or beginning on or
after October 1, 1997, and before October 1, 2001,'' and
inserting ``or discharges on or after October 1, 1997, and
before October 1, 2001,''.
(2) Section 1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)), as amended by
section 4204(a)(2) of BBA, is amended in the matter preceding clause
(i) by striking ``and for cost reporting periods beginning on or after
October 1, 1997, and before October 1, 2001,'' and inserting ``and for
discharges beginning on or after October 1, 1997, and before October 1,
2001,''.
(c) Section 4205.--Section 4205(a)(1)(B) of BBA (42 U.S.C. 1395l
note) is amended by striking ``services furnished'' and inserting
``cost reporting periods beginning''.
(d) Section 4319.--Section 1847(b)(2) (42 U.S.C. 1395w-3(b)(2)), as
added by section 4319 of BBA, is amended by inserting ``and'' after
``specified by the Secretary''.
(e) Section 4401.--Section 4401(b)(1)(B) of BBA (42 U.S.C. 1395ww
note) is amended by striking ``section 1886(b)(3)(B)(i)(XIII) of the
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII)))'' and
inserting ``section 1886(b)(3)(B)(i)(XIV) of the Social Security Act
(42 U.S.C. 1395ww(b)(3)(B)(i)(XIV)))''.
(f) Section 4402.--The last sentence of section 1886(g)(1)(A) (42
U.S.C. 1395ww(g)(1)(A)), as added by section 4402 of BBA, is amended by
striking ``September 30, 2002,'' and inserting ``October 1, 2002,''.
(g) Section 4419.--The first sentence of section 1886(b)(4)(A)(i) (42
U.S.C. 1395ww(b)(4)(A)(i)), as amended by section 4419(a)(1) of BBA, by
striking ``or unit''.
(h) Section 4442.--Section 4442(b) of BBA (42 U.S.C. 1395f note) is
amended by striking ``applies to cost reporting periods beginning'' and
inserting ``applies to items and services furnished''.
(i) Effective Date.--The amendments made by this section shall take
effect as if included in the enactment of BBA.
TITLE II--PROVISIONS RELATING TO PART B
Subtitle A--Adjustments to Physician Payment Updates
SEC. 201. MODIFICATION OF UPDATE ADJUSTMENT FACTOR PROVISIONS TO REDUCE
UPDATE OSCILLATIONS AND REQUIRE ESTIMATE REVISIONS.
(a) Update Adjustment Factor.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended--
(A) in paragraph (3)--
(i) in the heading, by inserting ``for 1999
and 2000'' after ``Update'';
(ii) in subparagraph (A), by striking ``a
year beginning with 1999'' and inserting ``1999
and 2000''; and
(iii) in subparagraph (C), by inserting ``and
paragraph (4)'' after ``For purposes of this
paragraph''; and
(B) by adding at the end the following new paragraph:
``(4) Update for years beginning with 2001.--
``(A) In general.--Unless otherwise provided by law,
subject to the budget-neutrality factor determined by
the Secretary under subsection (c)(2)(B)(ii) and
subject to adjustment under subparagraph (F), the
update to the single conversion factor established in
paragraph (1)(C) for a year beginning with 2001 is
equal to the product of--
``(i) 1 plus the Secretary's estimate of the
percentage increase in the MEI (as defined in
section 1842(i)(3)) for the year (divided by
100), and
``(ii) 1 plus the Secretary's estimate of the
update adjustment factor under subparagraph (B)
for the year.
``(B) Update adjustment factor.--For purposes of
subparagraph (A)(ii), subject to subparagraph (D), the
`update adjustment factor' for a year is equal (as
estimated by the Secretary) to the sum of the
following:
``(i) Prior year adjustment component.--An
amount determined by--
``(I) computing the difference (which
may be positive or negative) between
the amount of the allowed expenditures
for physicians' services for the prior
year (as determined under subparagraph
(C)) and the amount of the actual
expenditures for such services for that
year;
``(II) dividing that difference by
the amount of the actual expenditures
for such services for that year; and
``(III) multiplying that quotient by
0.75.
``(ii) Cumulative adjustment component.--An
amount determined by--
``(I) computing the difference (which
may be positive or negative) between
the amount of the allowed expenditures
for physicians' services (as determined
under subparagraph (C)) from April 1,
1996, through the end of the prior year
and the amount of the actual
expenditures for such services during
that period;
``(II) dividing that difference by
actual expenditures for such services
for the prior year as increased by the
sustainable growth rate under
subsection (f) for the year for which
the update adjustment factor is to be
determined; and
``(III) multiplying that quotient by
0.33.
``(C) Determination of allowed expenditures.--For
purposes of this paragraph:
``(i) Period up to april 1, 1999.--The
allowed expenditures for physicians' services
for a period before April 1, 1999, shall be the
amount of the allowed expenditures for such
period as determined under paragraph (3)(C).
``(ii) Transition to calendar year allowed
expenditures.--Subject to subparagraph (E), the
allowed expenditures for--
``(I) the 9-month period beginning
April 1, 1999, shall be the Secretary's
estimate of the amount of the allowed
expenditures that would be permitted
under paragraph (3)(C) for such period;
and
``(II) the year of 1999, shall be the
Secretary's estimate of the amount of
the allowed expenditures that would be
permitted under paragraph (3)(C) for
such year.
``(iii) Years beginning with 2000.--The
allowed expenditures for a year (beginning with
2000) is equal to the allowed expenditures for
physicians' services for the previous year,
increased by the sustainable growth rate under
subsection (f) for the year involved.
``(D) Restriction on update adjustment factor.--The
update adjustment factor determined under subparagraph
(B) for a year may not be less than -0.07 or greater
than 0.03.
``(E) Recalculation of allowed expenditures for
updates beginning with 2001.--For purposes of
determining the update adjustment factor for a year
beginning with 2001, the Secretary shall recompute the
allowed expenditures for previous periods beginning on
or after April 1, 1999, consistent with subsection
(f)(3).
``(F) Transitional adjustment designed to provide for
budget neutrality.--Under this subparagraph the
Secretary shall provide for an adjustment to the update
under subparagraph (A)--
``(i) for each of 2001, 2002, 2003, and 2004,
of -0.2 percent; and
``(ii) for 2005 of +0.8 percent.''.
(2) Publication change.--
(A) In general.--Section 1848(d)(1)(E) (42 U.S.C.
1395w-4(d)(1)(E)) is amended to read as follows:
``(E) Publication and dissemination of information.--
The Secretary shall--
``(i) cause to have published in the Federal
Register not later than November 1 of each year
(beginning with 2000) the conversion factor
which will apply to physicians' services for
the succeeding year, the update determined
under paragraph (4) for such succeeding year,
and the allowed expenditures under such
paragraph for such succeeding year; and
``(ii) make available to the Medicare Payment
Advisory Commission and the public by March 1
of each year (beginning with 2000) an estimate
of the conversion factor which will apply to
physicians' services for the succeeding year
and data used in making such estimate.''.
(B) MedPAC review of conversion factor estimates.--
Section 1805(b)(1)(D) (42 U.S.C. 1395b-6(b)(1)(D)) is
amended by inserting ``and including a review of the
estimate of the conversion factor submitted under
section 1848(d)(1)(E)(ii)'' before the period at the
end.
(C) 1-Time publication of information on
transition.--The Secretary of Health and Human Services
shall cause to have published in the Federal Register,
not later than 90 days after the date of the enactment
of this section, the Secretary's determination, based
upon the best available data, of--
(i) the allowed expenditures under subclauses
(I) and (II) of section 1848(d)(4)(C)(ii) of
the Social Security Act, as added by subsection
(a)(1)(B), for the 9-month period beginning on
April 1, 1999, and for 1999;
(ii) the estimated actual expenditures
described in section 1848(d) of such Act for
1999; and
(iii) the sustainable growth rate under
section 1848(f) of such Act (42 U.S.C. 1395w-
4(f)) for 2000.
(3) Conforming amendments.--
(A) Section 1848 (42 U.S.C. 1395w-4) is amended--
(i) in subsection (d)(1)(A), by inserting
``(for years before 2001) and, for years
beginning with 2001, multiplied by the update
(established under paragraph (4)) for the year
involved'' after ``for the year involved''; and
(ii) in subsection (f)(2)(D), by inserting
``or (d)(4)(B), as the case may be'' after
``(d)(3)(B)''.
(B) Section 1833(l)(4)(A)(i)(VII) (42 U.S.C.
1395l(l)(4)(A)(i)(VII)) is amended by striking
``1848(d)(3)'' and inserting ``1848(d)''.
(b) Sustainable Growth Rates.--Section 1848(f) (42 U.S.C. 1395w-4(f))
is amended--
(1) by amending paragraph (1) to read as follows:
``(1) Publication.--The Secretary shall cause to have
published in the Federal Register not later than--
``(A) November 1, 2000, the sustainable growth rate
for 2000 and 2001; and
``(B) November 1 of each succeeding year the
sustainable growth rate for such succeeding year and
each of the preceding 2 years.'';
(2) in paragraph (2)--
(A) in the matter before subparagraph (A), by
striking ``fiscal year 1998)'' and inserting ``fiscal
year 1998 and ending with fiscal year 2000) and a year
beginning with 2000''; and
(B) in subparagraphs (A) through (D), by striking
``fiscal year'' and inserting ``applicable period''
each place it appears;
(3) in paragraph (3), by adding at the end the following new
subparagraph:
``(C) Applicable period.--The term `applicable
period' means--
``(i) a fiscal year, in the case of fiscal
year 1998, fiscal year 1999, and fiscal year
2000; or
``(ii) a calendar year with respect to a year
beginning with 2000;
as the case may be.'';
(4) by redesignating paragraph (3) as paragraph (4); and
(5) by inserting after paragraph (2) the following new
paragraph:
``(3) Data to be used.--For purposes of determining the
update adjustment factor under subsection (d)(4)(B) for a year
beginning with 2001, the sustainable growth rates taken into
consideration in the determination under paragraph (2) shall be
determined as follows:
``(A) For 2001.--For purposes of such calculations
for 2001, the sustainable growth rates for fiscal year
2000 and the years 2000 and 2001 shall be determined on
the basis of the best data available to the Secretary
as of September 1, 2000.
``(B) For 2002.--For purposes of such calculations
for 2002, the sustainable growth rates for fiscal year
2000 and for years 2000, 2001, and 2002 shall be
determined on the basis of the best data available to
the Secretary as of September 1, 2001.
``(C) For 2003 and succeeding years.--For purposes of
such calculations for a year after 2002--
``(i) the sustainable growth rates for that
year and the preceding 2 years shall be
determined on the basis of the best data
available to the Secretary as of September 1 of
the year preceding the year for which the
calculation is made; and
``(ii) the sustainable growth rate for any
year before a year described in clause (i)
shall be the rate as most recently determined
for that year under this subsection.
Nothing in this paragraph shall be construed as affecting the
sustainable growth rates established for fiscal year 1998 or
fiscal year 1999.''.
(c) Effective Date.--The amendments made by this section shall be
effective in determining the conversion factor under section 1848(d) of
the Social Security Act (42 U.S.C. 1395w-4(d)) for years beginning with
2001 and shall not apply to or affect any update (or any update
adjustment factor) for any year before 2001.
Subtitle B--Hospital Outpatient Services
SEC. 211. OUTLIER ADJUSTMENT AND TRANSITIONAL PASS-THROUGH FOR CERTAIN
MEDICAL DEVICES, DRUGS, AND BIOLOGICALS.
(a) Outlier Adjustment.--Section 1833(t) (42 U.S.C. 1395l(t)), as
added by section 4523(a) of BBA, is amended--
(1) by redesignating paragraphs (5) through (9) as paragraphs
(7) through (11), respectively; and
(2) by inserting after paragraph (4) the following new
paragraph:
``(5) Outlier adjustment.--
``(A) In general.--The Secretary shall provide for an
additional payment for each covered OPD service (or
group of services) for which a hospital's charges,
adjusted to cost, exceed--
``(i) a fixed multiple of the sum of--
``(I) the applicable Medicare OPD fee
schedule amount determined under
paragraph (3)(D), as adjusted under
paragraph (4)(A) (other than for
adjustments under this paragraph or
paragraph (6)); and
``(II) any transitional pass-through
payment under paragraph (6); and
``(ii) at the option of the Secretary, such
fixed dollar amount as the Secretary may
establish.
``(B) Amount of adjustment.--The amount of the
additional payment under subparagraph (A) shall be
determined by the Secretary and shall approximate the
marginal cost of care beyond the applicable cutoff
point under such subparagraph.
``(C) Limit on aggregate outlier adjustments.--
``(i) In general.--The total of the
additional payments made under this paragraph
for covered OPD services furnished in a year
(as projected or estimated by the Secretary
before the beginning of the year) may not
exceed the applicable percentage (specified in
clause (ii)) of the total program payments
projected or estimated to be made under this
subsection for all covered OPD services
furnished in that year. If this paragraph is
first applied to less than a full year, the
previous sentence shall apply only to the
portion of such year.
``(ii) Applicable percentage.--For purposes
of clause (i), the term `applicable percentage'
means a percentage specified by the Secretary
up to (but not to exceed)--
``(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
``(II) for 2004 and thereafter, 3.0
percent.''.
(b) Transitional Pass-Through for Additional Costs of Innovative
Medical Devices, Drugs, and Biologicals.--Such section is further
amended by inserting after paragraph (5) the following new paragraph:
``(6) Transitional pass-through for additional costs of
innovative medical devices, drugs, and biologicals.--
``(A) In general.--The Secretary shall provide for an
additional payment under this paragraph for any of the
following that are provided as part of a covered OPD
service (or group of services):
``(i) Current orphan drugs.--A drug or
biological that is used for a rare disease or
condition with respect to which the drug or
biological has been designated as an orphan
drug under section 526 of the Federal Food,
Drug and Cosmetic Act if payment for the drug
or biological as an outpatient hospital service
under this part was being made on the first
date that the system under this subsection is
implemented.
``(ii) Current cancer therapy drugs and
biologicals.--A drug or biological that is used
in cancer therapy if payment for the drug or
biological as an outpatient hospital service
under this part was being made on such first
date.
``(iii) New medical devices, drugs, and
biologicals.--A medical device, drug, or
biological not described in clause (i) or (ii)
if--
``(I) payment for the device, drug,
or biological as an outpatient hospital
service under this part was not being
made as of December 31, 1996; and
``(II) the cost of the device, drug,
or biological is not insignificant in
relation to the OPD fee schedule amount
(as calculated under paragraph (3)(D))
payable for the service (or group of
services) involved.
``(B) Limited period of payment.--The payment under
this paragraph with respect to a medical device, drug,
or biological shall only apply during a period of at
least 2 years, but not more than 3 years, that begins--
``(i) on the first date this subsection is
implemented in the case of a drug or biological
described in clause (i) or (ii) of subparagraph
(A) and in the case of a device, drug, or
biological described in subparagraph (A)(iii)
for which payment under this part is made as an
outpatient hospital service before such first
date; or
``(ii) in the case of a device, drug, or
biological described in subparagraph (A)(iii)
not described in clause (i), on the first date
on which payment is made under this part for
the device, drug, or biological as an
outpatient hospital service.
``(C) Amount of additional payment.--Subject to
subparagraph (D)(iii), the amount of the payment under
this paragraph with respect to a device, drug, or
biological provided as part of a covered OPD service
is--
``(i) in the case of a drug or biological,
the amount by which the amount determined under
section 1842(o) for the drug or biological
exceeds the portion of the otherwise applicable
medicare OPD fee schedule that the Secretary
determines is associated with the drug or
biological; or
``(ii) in the case of a medical device, the
amount by which the hospital's charges for the
device, adjusted to cost, exceeds the portion
of the otherwise applicable medicare OPD fee
schedule that the Secretary determines is
associated with the device.
``(D) Limit on aggregate annual adjustment.--
``(i) In general.--The total of the
additional payments made under this paragraph
for covered OPD services furnished in a year
(as projected or estimated by the Secretary
before the beginning of the year) may not
exceed the applicable percentage (specified in
clause (ii)) of the total program payments
projected or estimated to be made under this
subsection for all covered OPD services
furnished in that year. If this paragraph is
first applied to less than a full year, the
previous sentence shall apply only to the
portion of such year.
``(ii) Applicable percentage.--For purposes
of clause (i), the term `applicable percentage'
means--
``(I) for a year (or portion of a
year) before 2004, 2.5 percent; and
``(II) for 2004 and thereafter, a
percentage specified by the Secretary
up to (but not to exceed) 2.0 percent.
``(iii) Uniform prospective reduction if
aggregate limit projected to be exceeded.--If
the Secretary projects or estimates before the
beginning of a year that the amount of the
additional payments under this paragraph for
the year (or portion thereof) as determined
under clause (i) without regard to this clause)
will exceed the limit established under such
clause, the Secretary shall reduce pro rata the
amount of each of the additional payments under
this paragraph for that year (or portion
thereof) in order to ensure that the aggregate
additional payments under this paragraph (as so
projected or estimated) do not exceed such
limit.''.
(c) Application of New Adjustments on a Budget Neutral Basis.--
Section 1833(t)(2)(E) (42 U.S.C. 1395l(t)(2)(E)) is amended by striking
``other adjustments, in a budget neutral manner, as determined to be
necessary to ensure equitable payments, such a outlier adjustments or''
and inserting ``, in a budget neutral manner, outlier adjustments under
paragraph (5) and transitional pass-through payments under paragraph
(6) and other adjustments as determined to be necessary to ensure
equitable payments, such as''.
(d) Limitation on Judicial Review for New Adjustments.--Section
1833(t)(11), as redesignated by subsection (a)(1), is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by striking the period at the end of subparagraph (D) and
inserting ``; and''; and
(3) by adding at the end the following:
``(E) the determination of the fixed multiple, or a
fixed dollar cutoff amount, the marginal cost of care,
or applicable percentage under paragraph (5) or the
determination of insignificance of cost, the duration
of the additional payments (consistent with paragraph
(6)(B)), the portion of the Medicare OPD fee schedule
amount associated with particular devices, drugs, or
biologicals, and the application of any pro rata
reduction under paragraph (6).''.
(e) Inclusion of Medical Devices under System.--Section 1833(t) (42
U.S.C. 1395l(t)) is amended--
(1) in paragraph (1)(B)(ii), by striking ``clause (iii)'' and
inserting ``clause (iv)'' and by striking ``but'';
(2) by redesignating clause (iii) of paragraph (1)(B) as
clause (iv) and inserting after clause (ii) of such paragraph
the following new clause:
``(iii) includes medical devices (such as
implantable medical devices); but''; and
(3) in paragraph (2)(B), by inserting after ``resources'' the
following: ``and so that a device is classified to the group
that includes the service to which the device relates''.
(f) Authorizing Payment Weights Based on Mean Hospital Costs.--
Section 1833(t)(2)(C) (42 U.S.C. 1395l(t)(2)(C)) is amended by
inserting ``(or, at the election of the Secretary, mean)'' after
``median''.
(g) Limiting Variation of Costs of Services Classified With a
Group.--Section 1833(t)(2) (42 U.S.C. 1395l(t)(2)) is amended by adding
at the end the following new flush sentence:
``For purposes of subparagraph (B), items and services within a
group shall not be treated as `comparable with respect to the
use of resources' if the highest median cost (or mean cost, if
elected by the Secretary under subparagraph (C)) for an item or
service within the group is more than 2 times greater than the
lowest median cost (or mean cost, if so elected) for an item or
service within the group; except that the Secretary may make
exceptions in unusual cases, such as low volume items and
services.''.
(h) Annual Review of OPD PPS Components.--
(1) In general.--Section 1833(t)(8)(A) (42 U.S.C.
1395l(t)(8)(A)) as redesignated by subsection (a), is amended
by striking ``may periodically review'' and inserting ``shall
review not less often than annually''.
(2) Effective date.--The amendment made by paragraph (1)
applies beginning with 2002.
(i) No Impact on Copayment.--Section 1833(t)(7) (42 U.S.C.
1395l(t)(7)), as redesignated by subsection (a), is amended by adding
at the end the following new subparagraph:
``(D) Computation ignoring outlier and pass-through
adjustments.--The copayment amount shall be computed
under subparagraph (A) as if the adjustments under
paragraphs (5) and (6) (and any adjustment made under
paragraph (2)(E) in relation to such adjustments) had
not occurred.''.
(j) Technical Correction in Reference Relating to Hospital-Based
Ambulance Services.--Section 1833(t)(9) (42 U.S.C. 1395l(t)(9)), as
redesignated by subsection (a), is amended by striking ``the matter in
subsection (a)(1) preceding subparagraph (A)'' and inserting ``section
1861(v)(1)(U)''.
(k) Effective Date.--Except as provided in this section, the
amendments made by this section shall be effective as if included in
the enactment of BBA.
(l) Study of Delivery of Intravenous Immune Globulin (IVIG) Outside
Hospitals and Physicians' Offices.--
(1) Study.--The Secretary of Health and Human Services shall
conduct a study of the extent to which intravenous immune
globulin (IVIG) could be delivered and reimbursed under the
medicare program outside of a hospital or physician's office.
In conducting the study, the Secretary shall--
(A) consider the sites of service that other payors,
including Medicare+Choice plans, use for these drugs
and biologicals;
(B) determine whether covering the delivery of these
drugs and biologicals in a medicare patient's home
raises any additional safety and health concerns for
the patient;
(C) determine whether covering the delivery of these
drugs and biologicals in a patient's home can reduce
overall spending under the medicare program; and
(D) determine whether changing the site of setting
for these services would affect beneficiary access to
care.
(2) Report.--The Secretary shall submit a report on such
study to the Committees on Way and Means and Commerce of the
House of Representatives and the Committee on Finance of the
Senate within 1 year after the date of the enactment of this
Act. The Secretary shall include in the report recommendations
regarding on the appropriate manner and settings under which
the medicare program should pay for these drugs and biologicals
delivered outside of a hospital or physician's office.
SEC. 212. ESTABLISHING A TRANSITIONAL CORRIDOR FOR APPLICATION OF OPD
PPS.
(a) In General.--Section 1833(t) (42 U.S.C. 1395l(t)), as amended by
section 211(a), is further amended--
(1) in paragraph (4), in the matter before subparagraph (A),
by inserting ``, subject to paragraph (7),'' after ``is
determined''; and
(2) by redesignating paragraphs (7) through (11) as paragraphs (8)
through (12), respectively; and
(3) by inserting after paragraph (6), as inserted by section
211(b), the following new paragraph:
``(7) Transitional adjustment to limit decline in payment.--
``(A) Before 2002.--For covered OPD services
furnished before January 1, 2002, for which the PPS
amount (as defined in subparagraph (D)(i)) is--
``(i) at least 90 percent, but less than 100
percent, of the pre-BBA amount (as defined in
subparagraph (D)(ii)), the amount of payment
under this subsection shall be increased by 80
percent of the amount of such difference;
``(ii) at least 80 percent, but less than 90
percent, of the pre-BBA amount, the amount of
payment under this subsection shall be
increased by the amount by which (I) the
product of 0.71 and the pre-BBA amount, exceeds
(II) the product of 0.70 and the PPS amount;
``(iii) at least 70 percent, but less than 80
percent, of the pre-BBA amount, the amount of
payment under this subsection shall be
increased by the amount by which (I) the
product of 0.63 and the pre-BBA amount, exceeds
(II) the product of 0.60 and the PPS amount;
``(iv) less than 70 percent of the pre-BBA
amount, the amount of payment under this
subsection shall be increased by 21 percent of
the pre-BBA amount.
``(B) 2002.--For covered OPD services furnished
during 2002, for which the PPS amount is--
``(i) at least 90 percent, but less than 100
percent, of the pre-BBA amount, the amount of
payment under this subsection shall be
increased by 70 percent of the amount of such
difference;
``(ii) at least 80 percent, but less than 90
percent, of the pre-BBA amount, the amount of
payment under this subsection shall be
increased by the amount by which (I) the
product of 0.61 and the pre-BBA amount, exceeds
(II) the product of 0.60 and the PPS amount;
``(iii) less than 80 percent of the pre-BBA
amount, the amount of payment under this
subsection shall be increased by 13 percent of
the pre-BBA amount.
``(C) 2003.--For covered OPD services furnished
during 2003, for which the PPS amount is--
``(i) at least 90 percent, but less than 100
percent, of the pre-BBA amount, the amount of
payment under this subsection shall be
increased by 60 percent of the amount of such
difference; or
``(ii) less than 90 percent of the pre-BBA
amount, the amount of payment under this
subsection shall be increased by 6 percent of
the pre-BBA amount.
``(D) Definitions.--For purposes of this
subparagraph:
``(i) PPS amount.--The term `PPS amount'
means, with respect to a covered OPD service,
the amount of payment under this title for such
service (determined without regard to this
paragraph).
``(ii) Pre-bba amount.--The term `pre-BBA
amount' means, with respect to a covered OPD
service, the amount that would have been paid
under this title for such service if this
subsection did not apply.
``(E) Construction.--Nothing in this paragraph shall
be construed to affect the copayment amount under
paragraph (8).''.
(b) Effective Date.--The amendments made by subsection (a) shall be
effective as if included in the enactment of BBA.
(c) Report on Rural Hospitals.--Not later than July 1, 2002, the
Secretary of Health and Human Services shall submit to Congress a
report and recommendations on whether the prospective payment system
for covered outpatient services furnished under title XVIII of the
Social Security Act should apply to the following providers of services
furnishing outpatient items and services for which payment is made
under such title:
(1) Medicare-dependent, small rural hospitals (as defined in
section 1886(d)(5)(G)(iv) of such Act (42 U.S.C.
1395ww(d)(5)(G)(iv))).
(2) Sole community hospitals (as defined in section
1886(d)(5)(D)(iii) of such Act (42 U.S.C.
1395ww(d)(5)(D)(iii)).
(3) Rural health clinics (as defined in section 1861(aa)(2)
of such Act (42 U.S.C. 1395x(aa)(2)).
(4) Rural referral centers (as so classified under section
1886(d)(5)(C) of such Act (42 U.S.C. 1395ww(d)(5)(C)).
(5) Any other rural hospital that the Secretary determines
appropriate.
SEC. 213. DELAY IN APPLICATION OF PROSPECTIVE PAYMENT SYSTEM TO CANCER
CENTER HOSPITALS.
Section 1833(t)(11)(A) (42 U.S.C. 1395l(t)(11)(A)), as redesignated
by section 212(a), is amended by striking ``January 1, 2000'' and
inserting ``the first day of the first year that begins 2 years after
the date the prospective payment system under this section is first
implemented''.
SEC. 214. LIMITATION ON OUTPATIENT HOSPITAL COPAYMENT FOR A PROCEDURE
TO THE HOSPITAL DEDUCTIBLE AMOUNT.
(a) In General.--Section 1833(t)(8) (42 U.S.C. 1395l(t)(8)) as
redesignated by section 212(a), is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)'' and
inserting ``subparagraphs (B) and (C)'';
(2) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively; and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Limiting copayment amount to inpatient hospital
deductible amount.--In no case shall the copayment
amount for a procedure performed in a year exceed the
amount of the inpatient hospital deductible established
under section 1813(b) for that year.''.
(b) Increase in Payment to Reflect Reduction in Copayment.--Section
1833(t)(4)(C) (42 U.S.C. 1395l(t)(4)(C)) is amended by inserting ``,
plus the amount of any reduction in the copayment amount attributable
to paragraph (5)(C)'' before the period at the end.
(c) Effective Date.--The amendments made by this section apply as if
included in the enactment of BBA and shall only apply to procedures
performed for which payment is made on the basis of the prospective
payment system under section 1833(t) of the Social Security Act.
Subtitle C--Other
SEC. 221. APPLICATION OF SEPARATE CAPS TO PHYSICAL AND SPEECH THERAPY
SERVICES.
(a) In General.--Section 1833(g) (42 U.S.C. 1395l(g)) is amended--
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``(g)(1)''; and
(B) by adding at the end the following new
subparagraph:
``(B) Subparagraph (A) shall be applied separately for speech-
language pathology services described in the fourth sentence of section
1861(p) and for other outpatient physical therapy services.''; and
(2) by adding at the end the following new paragraph:
``(4) The limitations of this subsection apply to the services
involved on a per beneficiary, per facility (or provider) basis.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
services furnished on or after January 1, 2000.
SEC. 222. TRANSITIONAL OUTLIER PAYMENTS FOR THERAPY SERVICES FOR
CERTAIN HIGH ACUITY PATIENTS.
Section 1833(g) (42 U.S.C. 1395l(g)), as amended by section 221, is
further amended by adding at the end the following new paragraph:
``(5)(A) The Secretary shall establish a process under which a
facility or provider that is providing therapy services to which the
limitation of this subsection applies to a beneficiary may apply to the
Secretary for an increase in such limitation under this paragraph for
services furnished in 2000 or in 2001.
``(B) Such process shall take into account the clinical diagnosis and
shall provide that the aggregate amount of additional payments
resulting from the application of this paragraph--
``(i) during fiscal year 2000 may not exceed $40,000,000;
``(ii) during fiscal year 2001 may not exceed $60,000,000;
and
``(iii) during fiscal year 2002 may not exceed
$20,000,000.''.
SEC. 223. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) In General.--Section 1881(b)(7) (42 U.S.C. 1395rr(b)(7)) is
amended by adding at the end the following new flush sentence:
``The Secretary shall increase the amount of each composite rate
payment for dialysis services furnished on or after January 1, 2000,
and on or before December 31, 2000, by 1.2 percent above such composite
rate payment amounts for such services furnished on December 31, 1999,
and for such services furnished on or after January 1, 2001, by 1.2
percent above such composite rate payment amounts for such services
furnished on December 31, 2000.''.
(b) Conforming Amendment.--
(1) In general.--Section 9335(a) of the Omnibus Budget
Reconciliation Act of 1986 (42 U.S.C. 1395rr note) is amended
by striking paragraph (1).
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on January 1, 2000.
(c) Study on Payment Level for Home Hemodialysis.--The Medicare
Payment Advisory Commission shall conduct a study on the
appropriateness of the differential in payment under the medicare
program for hemodialysis services furnished in a facility and such
services furnished in a home. Not later than 1 year after the date of
the enactment of this Act, the Commission shall submit to Congress a
report on such study and shall include recommendations regarding
changes in medicare payment policy in response to the study.
SEC. 224. TEMPORARY UPDATE IN DURABLE MEDICAL EQUIPMENT AND OXYGEN
RATES.
(a) Durable Medical Equipment and Oxygen.--Section 1834(a)(14) (42
U.S.C. 1395m(a)(14)), as amended by section 4551(a)(1) of BBA, is
amended --
(1) by redesignating subparagraph (D) as subparagraph (E);
and
(2) by striking subparagraph (C) and inserting the following:
``(C) for each of the years 1998 through 2000, 0
percentage points;
``(D) for each of the years 2001 and 2002, the
percentage increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-month
period ending with June of the previous year minus 2
percentage points; and''.
(b) Conforming Amendments.--Section 1834(a)(9)(B) (42 U.S.C.
1395m(a)(9)(B)), as amended by section 4552(a) of BBA, is amended--
(1) by striking ``and'' at the end of clause (v);
(2) in clause (vi), by striking ``and each subsequent year''
and inserting ``and 2000'' and by striking the period at the
end and inserting ``; and''; and
(3) by adding at the end the following new clause:
``(vii) for 2001 and each subsequent year,
the amount determined under this subparagraph
for the preceding year increased by the covered
item update for such subsequent year.''.
SEC. 225. REQUIREMENT FOR NEW PROPOSED RULEMAKING FOR IMPLEMENTATION OF
INHERENT REASONABLENESS POLICY.
The Secretary of Health and Human Services shall not exercise
inherent reasonableness authority provided under section 1842(b)(8) of
the Social Security Act (42 U.S.C. 1395u(b)(8)) before such time as--
(1) the Secretary has published in the Federal Register a new
notice of proposed rulemaking to implement subparagraph (A) of
such section;
(2) has provided for a period of not less than 60 days for
public comment on such proposed rule; and
(3) the Secretary has published in the Federal Register a
final rule which takes into account comments received during
such period.
SEC. 226. INCREASE IN REIMBURSEMENT FOR PAP SMEARS.
(a) Pap Smear Payment Increase.--Section 1833(h) (42 U.S.C. 1395l(h))
is amended by adding at the end the following new paragraph:
``(7) Notwithstanding paragraphs (1) and (4), the Secretary shall
establish a minimum payment amount under this subsection for all areas
for a diagnostic or screening pap smear laboratory test (including all
cervical cancer screening technologies that have been approved by the
Food and Drug Administration) of not less than $14.60.''.
(b) Sense of Congress.--It is the sense of the Congress that--
(1) the Health Care Financing Administration has been slow to
incorporate or provide incentives for providers to use new
screening diagnostic health care technologies in the area of
cervical cancer;
(2) some new technologies have been developed which optimize
the effectiveness of pap smear screening; and
(3) the Health Care Financing Administration should institute
an appropriate increase in the payment rate for new cervical
cancer screening technologies that have been approved by the
Food and Drug Administration as significantly more effective
than a conventional pap smear.
(c) Effective Date.--The amendments made by subsection (a) apply to
services items and furnished on or after January 1, 2000.
SEC. 227. REFINEMENT OF AMBULANCE SERVICES DEMONSTRATION PROJECT.
Effective as if included in the enactment of BBA, section 4532 of BBA
is amended--
(1) in subsection (a), by adding at the end the following:
``The Secretary shall publish by not later than July 1, 2000, a
request for proposals for such projects.''; and
(2) by amending paragraph (2) of subsection (b) to read as
follows:
``(2) Capitated payment rate defined.--In this subsection,
the `capitated payment rate' means, with respect to a
demonstration project--
``(A) in its first year, a rate established for the
project by the Secretary, using the most current
available data, in a manner that ensures that aggregate
payments under the project will not exceed the
aggregate payment that would have been made for
ambulance services under part B of title XVIII of the
Social Security Act in the local area of government's
jurisdiction; and
``(B) in a subsequent year, the capitated payment
rate established for the previous year increased by an
appropriate inflation adjustment factor.''.
SEC. 228. ADDITIONAL PROVISIONS.
(a) MedPAC Study on Postsurgical Recovery Care Center Services.--
(1) In general.--The Medicare Payment Advisory Commission
shall conduct a study on the cost-effectiveness and efficacy of
covering under the medicare program services of a post-surgical
recovery care center (that provides an intermediate level of
recovery care following surgery). In conducting such study, the
Commission shall consider data on these centers gathered in
demonstration projects.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Commission shall submit to Congress
a report on such study and shall include in the report
recommendations on the feasibility, costs, and savings of
covering such services under the medicare program.
TITLE III--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 301. ADJUSTMENT TO REFLECT ADMINISTRATIVE COSTS NOT INCLUDED IN
THE INTERIM PAYMENT SYSTEM.
(a) In General.--In the case of a home health agency that furnishes
home health services to a medicare beneficiary, for each such
beneficiary to whom the agency furnished such services during the
agency's cost reporting period beginning in fiscal year 2000, the
Secretary of Health Services shall pay the agency, in addition to any
amount of payment made under subsection (v)(1)(L) of such section for
the beneficiary and only for such cost reporting period, an aggregate
amount of $10 to defray costs incurred by the agency attributable to
data collection and reporting requirements under the Outcome and
Assessment Information Set (OASIS) required by reason of section
4602(e) of the Balanced Budget Act of 1997 (42 U.S.C. 1395fff note).
(b) Payment Schedule.--
(1) Midyear payment.--By not later than April 1 2000, the
Secretary shall pay to a home health agency an amount that the
Secretary estimates to be 50 percent of the aggregate amount
payable to the agency by reason of this section.
(2) Upon settled cost report.--The Secretary shall pay the
balance of amounts payable to an agency under this section on
the date that the cost report submitted by the agency for the
cost reporting period beginning in fiscal year 2000 is settled.
(c) Payment from Trust Funds.--Payments under this section shall be
made, in appropriate part as specified by the Secretary, from the
Federal Hospital Insurance Trust Fund and from the Federal
Supplementary Medical Insurance Trust Fund.
(d) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency'' has
the meaning given that term under section 1861(o) of the Social
Security Act (42 U.S.C. 1395x(o)).
(2) Home health services.--The term ``home health services''
has the meaning given that term under section 1861(m) of such
Act (42 U.S.C. 1395x(m)).
(3) Medicare beneficiary.--The term ``medicare beneficiary''
means a beneficiary described in section 1861(v)(1)(L)(vi)(II)
of the Social Security Act (42 U.S.C. 1395x(v)(1)(L)(vi)(II)).
SEC. 302. DELAY IN APPLICATION OF 15 PERCENT REDUCTION IN PAYMENT RATES
FOR HOME HEALTH SERVICES UNTIL 1 YEAR AFTER
IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.
(a) Contingency Reduction.--Section 4603(e) of the Balanced Budget
Act of 1997 (42 U.S.C. 1395fff note) (as amended by section 5101(c)(3)
of the Tax and Trade Relief Extension Act of 1998 (contained in
division J of Public Law 105-277)) is amended by striking ``September
30, 2000'' and inserting ``on the date that is 12 months after the date
the Secretary implements such system''.
(b) Prospective Payment System.--Section 1895(b)(3)(A)(i) (42 U.S.C.
1395fff(b)(3)(A)(i)) (as amended by section 5101 of the Tax and Trade
Relief Extension Act of 1998 (contained in division J of Public Law
105-277)) is amended to read as follows:
``(i) In general.--Under such system the
Secretary shall provide for computation of a
standard prospective payment amount (or
amounts). Such amount (or amounts) shall
initially be based on the most current audited
cost report data available to the Secretary and
shall be computed in a manner so that the total
amounts payable under the system--
``(I) for the 12-month period
beginning on the date the Secretary
implements the system, shall be equal
to the total amount that would have
been made if the system had not been in
effect; and
``(II) for periods beginning after
the period described in subclause (I),
shall be equal to the total amount that
would have been made for fiscal year
2001 if the system had not been in
effect but if the reduction in limits
described in clause (ii) had been in
effect, and updated under subparagraph
(B).
Each such amount shall be standardized in a
manner that eliminates the effect of variations
in relative case mix and wage levels among
different home health agencies in a budget
neutral manner consistent with the case mix and
wage level adjustments provided under paragraph
(4)(A). Under the system, the Secretary may
recognize regional differences or differences
based upon whether or not the services or
agency are in an urbanized area.''.
(c) Report.--
(1) In general.--The Secretary of Health and Human Services
shall submit to Congress a report analyzing the need for the 15
percent reduction under section 1895(b)(3)(A)(ii) of the Social
Security Act (42 U.S.C. 1395fff(b)(3)(A)(ii)), or for any
reduction, in the computation of the base payment amounts under
the prospective payment system for home health services under
section 1895 of such Act (42 U.S.C. 1395w-29).
(2) Deadline.--The Secretary shall submit to Congress the
report described in paragraph (1) by not later than the date
that is six months after the date the Secretary implements the
prospective payment system for home health services under such
section 1895.
SEC. 303. CLARIFICATION OF SURETY BOND REQUIREMENTS.
(a) Home Health Agencies.--Section 1861(o)(7) (42 U.S.C. 1395x(o)(7))
is amended to read as follows:
``(7) provides the Secretary with a surety bond--
``(A) effective for a period of 4 years (as specified
by the Secretary) or in the case of a change in the
ownership or control of the agency (as determined by
the Secretary) during or after such 4-year period, an
additional period of time that the Secretary determines
appropriate, such additional period not to exceed 4
years from the date of such change in ownership or
control;
``(B) in a form specified by the Secretary; and
``(C) for a year in the period described in
subparagraph (A) in an amount that is equal to the
lesser of $50,000 or 10 percent of the aggregate amount
of payments to the agency under this title and title
XIX for that year, as estimated by the Secretary;
and''.
(b) Coordination of Surety Bonds.--Part A of title XI is amended by
adding at the end the following new section:
``coordination of medicare and medicaid surety bond provisions
``Sec. 1148. In the case of a home health agency that is subject to a
surety bond under title XVIII and title XIX, the surety bond provided
to satisfy the requirement under one such title shall satisfy the
requirement under the other such title so long as the bond applies to
guarantee return of overpayments under both such titles.''.
(c) Effective Date.--The amendments made by this section take effect
on the date of the enactment of this Act and in applying section
1861(o)(7) of the Social Security Act, as amended by subsection (a),
the Secretary of Health and Human Services may take into account the
previous period for which a home health agency had a surety bond in
effect under such section before such date.
SEC. 304. TECHNICAL AMENDMENT CLARIFYING APPLICABLE MARKET BASKET
INCREASE FOR PPS.
Section 1895(b)(3)(B)(ii)(I) (42 U.S.C. 1395fff(b)(3)(B)(ii)(I)), as
added by section 4603 of BBA (as amended by section 5101(d)(2) of the
Tax and Trade Relief Extension Act of 1998 (contained in division J of
Public Law 105-277)) is amended by striking ``fiscal year 2002 or
2003'' and inserting ``each of fiscal years 2002 and 2003''.
Subtitle B--Direct Graduate Medical Education
SEC. 311. USE OF NATIONAL AVERAGE PAYMENT METHODOLOGY IN COMPUTING
DIRECT GRADUATE MEDICAL EDUCATION (DGME) PAYMENTS.
Section 1886(h) (42 U.S.C. 1395ww(h)) is amended--
(1) by amending clause (i) of paragraph (3)(B) to read as
follows:
``(i)(I) for a cost reporting period
beginning before October 1, 2000, the
hospital's approved FTE resident amount
(determined under paragraph (2)) for that
period;
``(II) for a cost reporting period beginning
on or after October 1, 2000, and before October
1, 2004, the national average per resident
amount determined under paragraph (7) or, if
greater, the sum of the hospital-specific
percentage (as defined in subparagraph (E)) of
the hospital's approved FTE resident amount
(determined under paragraph (2)) for the period
and the national percentage (as defined in such
subparagraph) of the national average per
resident amount determined under paragraph (7);
and
``(III) for a cost reporting period beginning
on or after October 1, 2004, the national
average per resident amount determined under
paragraph (7); and'';
(2) in paragraph (3), by adding at the end the following new
subparagraph:
``(E) Transition to national average per resident
payment system.--For purposes of subparagraph
(B)(i)(II), for the cost reporting period of a hospital
beginning--
``(i) during fiscal year 2001, the hospital-
specific percentage is 80 percent and the
national percentage is 20 percent;
``(ii) during fiscal year 2002, the hospital-
specific percentage is 60 percent and the
national percentage is 40 percent;
``(iii) during fiscal year 2003, the
hospital-specific percentage is 40 percent and
the national percentage is 60 percent; and
``(iv) during fiscal year 2004, the hospital-
specific percentage is 20 percent and the
national percentage is 80 percent.''; and
(3) by adding at the end the following new paragraph:
``(7) National average per resident amount.--The national
average per resident amount for a hospital for a cost reporting
period beginning in a fiscal year is an amount determined as
follows:
``(A) Determination of hospital single per resident
amount.--The Secretary shall compute for each hospital
operating an approved graduate medical education
program a single per resident amount equal to the
average (weighted by number of full-time equivalent
residents) of the primary care per resident amount and
the non-primary care per resident amount computed under
paragraph (2) for cost reporting periods ending during
fiscal year 1997.
``(B) Determination of wage and non-wage-related
proportion of the single per resident amount.--The
Secretary shall estimate the average proportion of the
single per resident amounts computed under subparagraph
(A) that is attributable to wages and wage-related
costs.
``(C) Standardizing per resident amounts.--The
Secretary shall establish a standardized per resident
amount for each such hospital--
``(i) by dividing the single per resident
amount computed under subparagraph (A) into a
wage-related portion and a non-wage-related
portion by applying the proportion determined
under subparagraph (B);
``(ii) by dividing the wage-related portion
by the factor applied under subsection
(d)(3)(E) for discharges occurring during
fiscal year 1999 for the hospital's area; and
``(iii) by adding the non-wage-related
portion to the amount computed under clause
(ii).
``(D) Determination of national average.--The
Secretary shall compute a national average per resident
amount equal to the average of the standardized per
resident amounts computed under subparagraph (C) for
such hospitals, with the amount for each hospital
weighted by the average number of full-time equivalent
residents at such hospital.
``(E) Application to individual hospitals.--The
Secretary shall compute for each such hospital a per
resident amount--
``(i) by dividing the national average per
resident amount computed under subparagraph (D)
into a wage-related portion and a non-wage-
related portion by applying the proportion
determined under subparagraph (B);
``(ii) by multiplying the wage-related
portion by the factor described in subparagraph
(C)(ii) for the hospital's area; and
``(iii) by adding the non-wage-related
portion to the amount computed under clause
(ii).
``(F) Initial updating rate.--The Secretary shall
update such per resident amount for the hospital's cost
reporting period that begins during fiscal year 2001
for each such hospital by the estimated percentage
increase in the consumer price index for all urban
consumers during the period beginning October 1997 and
ending with the midpoint of the hospital's cost
reporting period that begins during fiscal year 2001.
``(G) Subsequent updating.--For each subsequent cost
reporting period, subject to subparagraph (H), the
national average per resident amount for a hospital is
equal to the amount determined under this paragraph for
the previous cost reporting period updated, through the
midpoint of the period, by projecting the estimated
percentage change in the consumer price index during
the 12-month period ending at that midpoint, with
appropriate adjustments to reflect previous under- or
over-estimations under this subparagraph in the
projected percentage change in the consumer price
index.
``(H) Transitional budget neutrality adjustment.--
``(i) In general.--If the Secretary estimates
that, as a result of the amendments made by
section 311 of the Medicare Balanced Budget
Refinement Act of 1999, the post-MBBRA
expenditures for fiscal year 2005 will be
greater or less than the pre-MBBRA expenditures
for that fiscal year--
``(I) the Secretary shall adjust the
update applied under subparagraph (G)
in determining the national average per
resident amount for cost reporting
periods beginning during fiscal year
2005 so that the amount of the post-
MBBRA expenditures for those cost
reporting periods is equal to the
amount of the pre-MBBRA expenditures
for such periods; and
``(II) the Secretary shall, taking
into account the adjustment made under
subclause (I), adjust the national
average per resident amount, as applied
for the portion of a cost reporting
period beginning during fiscal year
2004 that occur in fiscal year 2005, so
that the amount of the post-MBBRA
expenditures made during fiscal year
2005 is equal to the amount of the pre-
MBBRA expenditures during such fiscal
year.
``(ii) Definitions.--In this subparagraph:
``(I) Aggregate subsection (h)-
related expenditures.--The term
`aggregate subsection (h)-related
expenditures' means, with respect to
cost reporting periods beginning during
a fiscal year or with respect to a
fiscal year, the aggregate expenditures
under this title for such periods or
fiscal year, respectively, which are
attributable to the operation of this
subsection.
``(II) Pre-mbbra expenditures.--The
term `pre-MBBRA expenditures' means
aggregate subsection (h)-related
expenditures determined as if the
amendments made by section 311 of the
Medicare Balanced Budget Refinement Act
of 1999 had not been enacted.
``(III) Post-mbbra expenditures.--The
term `post-MBBRA expenditures' means
aggregate subsection (h)-related
expenditures determined taking into
account the amendments made by section
311 of the Medicare Balanced Budget
Refinement Act of 1999.''.
Subtitle C--Other
SEC. 321. GAO STUDY ON GEOGRAPHIC RECLASSIFICATION.
(a) In General.--The Comptroller General of the United States shall
conduct a study of the current laws and regulations for geographic
reclassification of hospitals under the medicare program. Such study
shall examine data on the number of hospitals that are reclassified and
their special designation status in determining payments under the
medicare program. The study shall evaluate--
(1) the magnitude of the effect of geographic
reclassification on rural hospitals that do not reclassify;
(2) whether the current thresholds used in geographic
reclassification reclassify hospitals to the appropriate labor
markets;
(3) the effect of eliminating geographic reclassification
through use of the occupational mix data;
(4) the group reclassification policy;
(5) changes in the number of reclassifications and the
compositions of the groups;
(6) the effect of State-specific budget neutrality compared
to national budget neutrality; and
(7) whether there are sufficient controls over the
intermediary evaluation of the wage data reported by hospitals.
(b) Report.--Not later than 18 months after the date of enactment of
this Act, the Comptroller General of the United States shall submit to
Congress a report on the study conducted under subsection (a).
SEC. 322. MEDPAC STUDY ON MEDICARE PAYMENT FOR NON-PHYSICIAN HEALTH
PROFESSIONAL CLINICAL TRAINING IN HOSPITALS.
(a) In General.--The Medicare Payment Advisory Commission shall
conduct a study on medicare payment policy with respect to professional
clinical training of different classes of non-physician health care
professionals (such as nurses, allied health professionals, physician
assistants, and psychologists) and the basis for any differences in
treatment among such classes.
(b) Report.--The Commission shall submit a report to Congress on the
study conducted under subsection (a) not later than 18 months after the
date of the enactment of this Act.
TITLE IV--RURAL PROVIDER PROVISIONS
SEC. 401. PERMITTING RECLASSIFICATION OF CERTAIN URBAN HOSPITALS AS
RURAL HOSPITALS.
(a) In General.--Section 1886(d)(8) (42 U.S.C. 1395ww(d)(8)) is
amended by adding at the end the following new subparagraph:
``(E)(i) For purposes of this subsection, not later than 60 days
after the receipt of an application from a subsection (d) hospital
described in clause (ii), the Secretary shall treat the hospital as
being located in the rural area (as defined in such paragraph (2)(D))
of the State in which the hospital is located.
``(ii) For purposes of clause (i), a subsection (d) hospital
described in this clause is a subsection (d) hospital that is located
in an urban area (as defined in paragraph (2)(D)) and satisfies any of
the following criteria:
``(I) The hospital is located in a rural census tract of a
metropolitan statistical area (as determined under the
Goldsmith Modification, as published in the Federal Register on
February 27, 1992 (57 FR 6725)).
``(II) The hospital is located in an area designated by any
law or regulation of such State as a rural area (or is
designated by such State as a rural hospital).
``(III) The hospital would qualify as a sole community
hospital under paragraph (5)(D) if the hospital were located in
a rural area.
``(IV) The hospital meets such other criteria as the
Secretary may specify.''.
(b) Conforming Changes.--(1) Section 1833(t) (42 U.S.C. 1395l(t)), as
amended by sections 211 and 212, is further amended by adding at the
end the following new paragraph:
``(13) Miscellaneous provisions.--
``(A) Application of reclassification of certain
hospitals.--If a hospital is being treated as being
located a rural under section 1886(d)(8)(E), that
hospital shall be treated under this subsection as
being located in that rural area.''.
(2) Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-4(c)(2)(B)(i)) is
amended by inserting ``or is treated as being located in a rural area
pursuant to section 1886(d)(8)(E)'' after ``section 1886(d)(2)(D))''.
(c) Effective Date.--The amendments made by this section shall become
effective on January 1, 2000.
SEC. 402. UPDATE OF STANDARDS APPLIED FOR GEOGRAPHIC RECLASSIFICATION
FOR CERTAIN HOSPITALS.
(a) In General.--Section 1886(d)(8)(B) (42 U.S.C. 1395ww(d)(8)(B)) is
amended--
(1) by inserting ``(i)'' after ``(B)'';
(2) by striking ``published in the Federal Register on
January 3, 1980'' and inserting ``described in clause (ii)'';
and
(3) by adding at the end the following new clause:
``(ii) The standards described in this clause for cost reporting
periods beginning in a fiscal year--
``(I) before fiscal year 2003, are the standards published in
the Federal Register on January 3, 1980, or, at the election of
the hospital with respect to fiscal years 2001 and 2002,
standards so published on March 30, 1990; and
``(II) after fiscal year 2002, are the standards published in
the Federal Register by the Director of the Office of
Management and Budget based on the most recent available
decennial population data.
Subparagraphs (C) and (D) shall not apply with respect to the
application of subclause (I).''.
(b) Effective Date.--The amendments made by subsection (a) apply with
respect to discharges occurring during cost reporting periods beginning
on or after October 1, 1999.
SEC. 403. IMPROVEMENTS IN THE CRITICAL ACCESS HOSPITAL (CAH) PROGRAM.
(a) Applying 96-Hour Limit on an Average Annual Basis.--
(1) In general.--Section 1820(c)(2)(B)(iii) (42 U.S.C. 1395i-
4(c)(2)(B)(iii)), as added by section 4201(a) of BBA, is
amended by striking ``for a period not to exceed 96 hours'' and
all that follows and inserting ``for a period that does not
exceed, as determined on an annual, average basis, 96 hours per
patient;''.
(2) Effective date.--The amendment made by paragraph (1)
takes effect on the date of the enactment of this Act.
(b) Permitting For-Profit Hospitals to Qualify for Designation as a
Critical Access Hospital.--Section 1820(c)(2)(B)(i) (42 U.S.C. 1395i-
4(c)(2)(B)(i)), as added by section 4201(a) of BBA, is amended in the
matter preceding subclause (I), by striking ``nonprofit or public
hospital'' and inserting ``hospital''.
(c) Allowing Closed or Downsized Hospitals to Convert to Critical
Access Hospitals.--Section 1820(c)(2) (42 U.S.C. 1395i-4(c)(2)), as
added by section 4201(a) of BBA, is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)'' and
inserting ``subparagraphs (B), (C), and (D)''; and
(2) by adding at the end the following new subparagraphs:
``(C) Recently closed facilities.--A State may
designate a facility as a critical access hospital if
the facility--
``(i) was a hospital that ceased operations
on or after the date that is 10 years before
the date of enactment of this subparagraph; and
``(ii) as of the effective date of such
designation, meets the criteria for designation
under subparagraph (B).
``(D) Downsized facilities.--A State may designate a
health clinic or a health center (as defined by the
State) as a critical access hospital if such clinic or
center--
``(i) is licensed by the State as a health
clinic or a health center;
``(ii) was a hospital that was downsized to a
health clinic or health center; and
``(iii) as of the effective date of such
designation, meets the criteria for designation
under subparagraph (B).''.
(d) All-Inclusive Payment Option for Outpatient Critical Access
Hospital Services.--
(1) In general.--Section 1834(g) (42 U.S.C. 1395m(g)), as
added by section 4201(c)(5) of BBA, is amended to read as
follows:
``(g) Payment for Outpatient Critical Access Hospital Services.--
``(1) Election of cah.--At the election of a critical access
hospital, the amount of payment for outpatient critical access
hospital services under this part shall be determined under
paragraph (2) or (3), such amount determined under either
paragraph without regard to the amount of the customary or
other charge.
``(2) Cost-based hospital outpatient service payment plus fee
schedule for professional services.--If a hospital elects this
paragraph to apply, there shall be paid amounts equal to the
sum of the following, less the amount that such hospital may
charge as described in section 1866(a)(2)(A):
``(A) Facility fee.--With respect to facility
services, not including any services for which payment
may be made under subparagraph (B), the reasonable
costs of the critical access hospital in providing such
services.
``(B) Fee schedule for professional services.--With
respect to professional services otherwise included
within outpatient critical access hospital services,
such amounts as would otherwise be paid under this part
if such services were not included in outpatient
critical access hospital services.
``(3) All-inclusive rate.--If a hospital elects this
paragraph to apply, with respect to both facility services and
professional services, there shall be paid amounts equal to the
reasonable costs of the critical access hospital in providing
such services, less the amount that such hospital may charge as
described in section 1866(a)(2)(A).''.
(2) Effective date.--The amendment made by subsection (a)
shall apply for cost reporting periods beginning on or after
October 1, 1999.
(e) Elimination of Coinsurance for Clinical Diagnostic Laboratory
Tests Furnished by a Critical Access Hospital on an Outpatient Basis.--
(1) In general.--Section 1833(a)(1)(D) (42 U.S.C.
1395l(a)(1)(D)) is amended by inserting ``or which are
furnished on an outpatient basis by a critical access
hospital'' after ``on an assignment-related basis''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after the date of the
enactment of this Act.
(f) Participation in Swing Bed Program.--Section 1883 (42 U.S.C.
1395tt) is amended--
(1) in subsection (a)(1), by striking ``(other than a
hospital which has in effect a waiver under subparagraph (A) of
the last sentence of section 1861(e))''; and
(2) in subsection (c), by striking ``, or during which there
is in effect for the hospital a waiver under subparagraph (A)
of the last sentence of section 1861(e)''.
SEC. 404. 5-YEAR EXTENSION OF MEDICARE DEPENDENT HOSPITAL (MDH)
PROGRAM.
(a) Extension of Payment Methodology.--Section 1886(d)(5)(G) (42
U.S.C. 1395ww(d)(5)(G)), as amended by section 4204(a)(1) of BBA, is
amended--
(1) in clause (i), by striking ``and before October 1,
2001,'' and inserting ``and before October 1, 2006''; and
(2) in clause (ii)(II), by striking ``and before October 1,
2001,'' and inserting ``and before October 1, 2006''.
(b) Conforming Amendments.--
(1) Extension of target amount.--Section 1886(b)(3)(D) (42
U.S.C. 1395ww(b)(3)(D)), as amended by section 4204(a)(2) of
BBA, is amended--
(A) in the matter preceding clause (i), by striking
``and before October 1, 2001,'' and inserting ``and
before October 1, 2006''; and
(B) in clause (iv), by striking ``during fiscal year
1998 through fiscal year 2000'' and inserting ``during
fiscal year 1998 through fiscal year 2005''.
(2) Permitting hospitals to decline reclassification.--
Section 13501(e)(2) of Omnibus Budget Reconciliation Act of
1993 (42 U.S.C. 1395ww note), as amended by section 4204(a)(3)
of BBA, is amended by striking ``or fiscal year 2000'' and
inserting ``or fiscal year 2000 through fiscal year 2005''.
SEC. 405. REBASING FOR CERTAIN SOLE COMMUNITY HOSPITALS.
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as amended by sections
4413 and 4414 of BBA, is amended--
(1) in subparagraph (C), by inserting ``subject to
subparagraph (I)'' before ``the term `target amount' means'';
and
(2) by adding at the end the following new subparagraph:
``(I)(i) For cost reporting periods beginning on or after October 1,
2000, in the case of a sole community hospital that for its cost
reporting period beginning during 1999 is paid on the basis of the
target amount applicable to the hospital under subparagraph (C) and
that elects (in a form and manner determined by the Secretary) this
subparagraph to apply to the hospital, there shall be substituted for
the base cost reporting period described in subparagraph (C) the
rebased target amount determined under this subparagraph.
``(ii) For purposes of clause (i), the rebased target amount
applicable to a hospital making an election under this subparagraph is
equal to the sum of the following:
``(I) With respect to discharges occurring in fiscal year
2001, 75 percent of the target amount applicable to the
hospital under subparagraph (C) (hereinafter in this
subparagraph referred to as the `subparagraph (C) target
amount') and 25 percent of the amount of the allowable
operating costs of inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title for the hospital
for the 12-month cost reporting period beginning during fiscal
year 1996 (hereinafter in this subparagraph referred to as the
`rebased target amount'), increased by the applicable
percentage increase under subparagraph (B)(iv).
``(II) With respect to discharges occurring in fiscal year
2002, 50 percent of the subparagraph (C) target amount and 50
percent of the rebased target amount, increased by the
applicable percentage increase under subparagraph (B)(iv).
``(III) With respect to discharges occurring in fiscal year
2003, 25 percent of the subparagraph (C) target amount and 75
percent of the rebased target amount, increased by the
applicable percentage increase under subparagraph (B)(iv).
``(IV) With respect to discharges occurring in fiscal year
2003 or any subsequent fiscal year, 100 percent of the rebased
target amount, increased by the applicable percentage increase
under subparagraph (B)(iv).''.
SEC. 406. INCREASED FLEXIBILITY IN PROVIDING GRADUATE PHYSICIAN
TRAINING IN RURAL AREAS.
(a) Permitting 30 Percent Expansion in Current GME Training Programs
for Hospitals Located in Rural Areas.--
(1) Payment for direct graduate medical education costs.--
Section 1886(h)(4)(F) (42 U.S.C. 1395ww(h)(4)(F)), as added by
section 4623 of BBA, is amended by inserting ``(or, 130 percent
of such number in the case of a hospital located in a rural
area)'' after ``may not exceed the number''.
(2) Payment for indirect graduate medical education costs.--
Section 1886(d)(5)(B)(v) (42 U.S.C. 1395ww(d)(5)(B)(v)), as
added by section 4621(b)(1) of BBA, is amended by inserting
``(or, 130 percent of such number in the case of a hospital
located in a rural area)'' after ``may not exceed the number''.
(3) Effective dates.--(A) The amendment made by paragraph (1)
applies to cost reporting periods beginning on or after October
1, 1999.
(B) The amendment made by paragraph (2) applies to discharges
occurring during cost reporting periods beginning on or after
October 1, 1999.
(b) Special Rule for Non-Rural Facilities Serving Rural Areas.--
(1) In general.--Section 1886(h)(4)(H) (42 U.S.C.
1395ww(h)(4)(H)), as added by section 4623 of BBA, is amended
by adding at the end the following new clause:
``(iv) Non-rural hospitals operating training
programs in underserved rural areas.--In the
case of a hospital that is not located in a
rural area but establishes separately
accredited approved medical residency training
programs (or rural tracks) in an underserved
rural area or has an accredited training
program with an integrated rural track, the
Secretary shall adjust the limitation under
subparagraph (F) in an appropriate manner
insofar as it applies to such programs in such
underserved rural areas in order to encourage
the training of physicians in underserved rural
areas.''.
(2) Effective date.--The amendment made by paragraph (1)
applies with respect to payments to hospitals for cost
reporting periods beginning on or after October 1, 1999.
SEC. 407. ELIMINATION OF CERTAIN RESTRICTIONS WITH RESPECT TO HOSPITAL
SWING BED PROGRAM.
(a) Elimination of Requirement for State Certificate of Need.--
Section 1883(b) (42 U.S.C. 1395tt(b)) is amended to read as follows:
``(b) The Secretary may not enter into an agreement under this
section with any hospital unless, except as provided under subsection
(g), the hospital is located in a rural area and has less than 100
beds.''.
(b) Elimination of Swing Bed Restrictions on Certain Hospitals with
More than 49 Beds.--Section 1883(d) (42 U.S.C. 1395tt(d)) is amended--
(1) by striking paragraphs (2) and (3); and
(2) by striking ``(d)(1)'' and inserting ``(d)''.
(c) Effective Date.--The amendments made by this section take effect
on the date that is the first day after the expiration of the
transition period under section 1888(e)(2)(E) of the Social Security
Act (42 U.S.C. 1395yy(e)(2)(E)), as added by section 4432(a) of BBA,
for payments for covered skilled nursing facility services under the
medicare program.
SEC. 408. GRANT PROGRAM FOR RURAL HOSPITAL TRANSITION TO PROSPECTIVE
PAYMENT.
Section 1820(g) (42 U.S.C. 1395i-4(g)), as added by section 4201(a)
of BBA, is amended by adding at the end the following new paragraph:
``(3) Upgrading data systems.--
``(A) Grants to hospitals.--The Secretary may award
grants to hospitals that have submitted applications in
accordance with subparagraph (C) to assist eligible
small rural hospitals in meeting the costs of
implementing data systems required to meet requirements
established under the medicare program pursuant to
amendments made by the Balanced Budget Act of 1997.
``(B) Eligible small rural hospital defined.--For
purposes of this paragraph, the term `eligible small
rural hospital' means a non-Federal, short-term general
acute care hospital that--
``(i) is located in a rural area (as defined
for purposes of section 1886(d)); and
``(ii) has less than 50 beds.
``(C) Application.--A hospital seeking a grant under
this paragraph shall submit an application to the
Secretary on or before such date and in such form and
manner as the Secretary specifies.
``(D) Amount of grant.--A grant to a hospital under
this paragraph may not exceed $50,000.
``(E) Use of funds.--A hospital receiving a grant
under this paragraph may use the funds for the purchase
of computer software and hardware and for the education
and training of hospital staff on computer information
systems and costs related to the implementation of
prospective payment systems.
``(F) Report.--
``(i) Information.--A hospital receiving a
grant under this section shall furnish the
Secretary with such information as the
Secretary may require to evaluate the project
for which the grant is made and to ensure that
the grant is expended for the purposes for
which it is made.
``(ii) Reporting.--
``(I) Interim reports.--The Secretary
shall report to the Committee on Ways
and Means of the House of
Representatives and the Committee on
Finance of the Senate at least annually
on the grant program established under
this section, including in such report
information on the number of grants
made, the nature of the projects
involved, the geographic distribution
of grant recipients, and such other
matters as the Secretary deems
appropriate.
``(II) Final report.--The Secretary
shall submit a final report to such
committees not later than 180 days
after the completion of all of the
projects for which a grant is made
under this section.''.
SEC. 409. MEDPAC STUDY OF RURAL PROVIDERS.
(a) Study.--The Medicare Payment Advisory Commission shall conduct a
study on rural providers furnishing items and services for which
payment is made under title XVIII of the Social Security Act. Such
study shall examine and evaluate the adequacy and appropriateness of
the categories of special payments (and payment methodologies)
established for rural hospitals under the medicare program, and their
impact on beneficiary access and quality of health care services.
(b) Report.--By not later than 18 months after the date of the
enactment of this Act, the Medicare Payment Advisory Commission shall
submit to Congress a report on the study conducted under subsection
(a).
SEC. 410. EXPANSION OF ACCESS TO PARAMEDIC INTERCEPT SERVICES IN RURAL
AREAS.
(a) Expansion of Payment Areas.--Section 4531(c) of BBA (42 U.S.C.
1395x(s)(7) note, 111 Stat. 452) is amended by adding at the end the
following flush sentence:
``For purposes of this subsection, an area shall be treated as a rural
area if it is designated as a rural area by any law or regulation of
the State or if it is located in a rural census tract of a metropolitan
statistical area (as determined under the Goldsmith Modification, as
published in the Federal Register on February 27, 1992 (57 FR
6725)).''.
(b) Effective Date.--The amendment made by subsection (a) takes
effect on January 1, 2000, and applies to paramedic intercept services
furnished on or after such date.
TITLE V--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM)
Subtitle A--Medicare+Choice
SEC. 501. PHASE-IN OF NEW RISK ADJUSTMENT METHODOLOGY.
Section 1853(a)(3)(C) (42 U.S.C. 1395w-23(a)(3)(C)) is amended--
(1) by redesignating the first sentence as clause (i) with
the heading ``In general.--'' and appropriate indentation; and
(2) by adding at the end the following new clause:
``(ii) Phase-in.--Such risk adjustment
methodology shall be implemented in a phased-in
manner so that the new methodology applies only
to--
``(I) 10 percent of the payment
amount in 2000 and 2001;
``(II) 20 percent of such amount in
2002;
``(III) 30 percent of such amount in
2003; and
``(IV) 100 percent of such amount in
any subsequent year (at which time the
risk adjustment methodology should
reflect data from multiple
settings).''.
SEC. 502. ENCOURAGING OFFERING OF MEDICARE+CHOICE PLANS IN AREAS
WITHOUT PLANS.
Section 1853 (42 U.S.C. 1395w-23) is amended--
(1) in subsection (a)(1), by striking ``subsections (e) and
(f)'' and inserting ``subsections (e), (g), and (i)'';
(2) in subsection (c)(5), by inserting ``(other than those
attributable to subsection (i))'' after ``payments under this
part''; and
(3) by adding at the end the following new subsection:
``(i) New Entry Bonus.--
``(1) In general.--Subject to paragraphs (2) and (3), in the
case of Medicare+Choice payment area in which a Medicare+Choice
plan has not been offered since 1997 (or in which any
organization that offered a plan since such date has announced,
as of October 13, 1999, that it will not be offering such plan
as of January 1, 2000), the amount of the monthly payment
otherwise made under this subsection shall be increased--
``(A) only for the first 12 months in which any
Medicare+Choice plan is offered in the area, by 5
percent of the payment rate otherwise computed; and
``(B) only for the subsequent 12 months, by 3 percent
of the payment rate otherwise computed.
If such 12 months are not a calendar year, the Secretary shall
provide for an appropriate blend of such percentage increases
for the second and third calendar years in which months
described in subparagraph (B) occur to reflect the proportion
of such months in each such year.
``(2) Period of application.--Paragraph (1) shall only apply
to payment for Medicare+Choice plans which are first offered in
a Medicare+Choice payment area during the 2-year period
beginning with January 1, 2000.
``(3) Limitation to organization offering first plan in an
area.--Paragraph (1) shall only apply to payment to the first
Medicare+Choice organization that offers a Medicare+Choice plan
in each Medicare+Choice payment area, except that if more than
one such organization first offers such a plan in an area on
the same date, paragraph (1) shall apply to payment for such
organizations.
``(4) Construction.--Nothing in paragraph (1) shall be
construed as affecting the Medicare+Choice capitation rate for
any area or as applying to payment for any period not described
in such paragraph.
``(5) Offered defined.--In this subsection, the term
`offered' means, with respect to a Medicare+Choice plan as of a
date, that a Medicare+Choice eligible individual may enroll
with the plan on that date, regardless of when the enrollment
takes effect or the individual obtain benefits under the
plan.''.
SEC. 503. MODIFICATION OF 5-YEAR RE-ENTRY RULE FOR CONTRACT
TERMINATIONS.
(a) In General.--Section 1857(c)(4) (42 U.S.C. 1395w-27(c)(4)) is
amended--
(1) by inserting ``as provided in paragraph (2) and except''
after ``except'';
(2) by redesignating the first sentence as a subparagraph (A)
with an appropriate indentation and the heading ``In general.--
''; and
(3) by adding at the end the following new subparagraph:
``(B) Earlier re-entry permitted where change in
payment policy and no more than one other plan
available.--Subparagraph (A) shall not apply with
respect to the offering by a Medicare+Choice
organization of a Medicare+Choice plan in a
Medicare+Choice payment area if--
``(i) during the 6-month period beginning on
the date the organization notified the
Secretary of the intention to terminate the
most recent previous contract, there was a
legislative change enacted (or a regulatory
change adopted) that has the effect of
increasing payment rates under section 1853 for
that Medicare+Choice payment area; and
``(ii) at the time the organization notifies
the Secretary of its intent to enter into a
contract to offer such a plan in the area,
there is no more than one Medicare+Choice plan
offered in the area.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to contract terminations occurring before, on, or after the date
of the enactment of this Act.
SEC. 504. CONTINUED COMPUTATION AND PUBLICATION OF AAPCC DATA.
(a) In General.--Section 1853(b) (42 U.S.C. 1395w-23(b)) is amended
by adding at the end the following new paragraph:
``(4) Continued computation and publication of county-
specific per capita fee-for-service expenditure information.--
The Secretary, through the Chief Actuary of the Health Care
Financing Administration, shall provide for the computation and
publication, on an annual basis at the time of publication of
the annual Medicare+Choice capitation rates, of information on
the level of the average annual per capita costs (described in
section 1876(a)(4)) for each Medicare+Choice payment area.''.
(b) Effective Date.--The amendment made by subsection (a) shall take
effect on the date of the enactment of this Act and apply to
publications of the annual Medicare+Choice capitation rates made on or
after such date.
SEC. 505. CHANGES IN MEDICARE+CHOICE ENROLLMENT RULES.
(a) Permitting Enrollment in Alternative Medicare+Choice Plans and
Medigap Coverage in Case of Involuntary Termination of Medicare+Choice
Enrollment.--
(1) In general.--Section 1851(e)(4) (42 U.S.C. 1395w-
21(e)(4)) is amended by striking subparagraph (A) and inserting
the following:
``(A)(i) the certification of the organization or
plan under this part has been terminated, or the
organization or plan has notified the individual or the
Secretary of an impending termination of such
certification; or
``(ii) the organization has terminated or otherwise
discontinued providing the plan in the area in which
the individual resides, or has notified the individual
or Secretary of an impending termination or
discontinuation of such plan;''.
(2) Conforming medigap amendment.--Section 1882(s)(3)(A) (42
U.S.C. 1395ss(s)(3)(A)) is amended, in the matter following
clause (iii)--
(A) by inserting ``(or, if elected by the individual,
the date of notification of the individual or the
Secretary by the plan or organization of the impending
termination or discontinuance of the plan in the area
in which the individual resides)'' after ``the date of
the termination of enrollment described in such
subparagraph''; and
(B) by inserting ``(or the date of such
notification)'' after ``the date of termination or
disenrollment''.
(3) Effective date.--The amendments made by this subsection
shall apply to notices of impending terminations or
discontinuances made before, on, or after the date of the
enactment of this Act, except that, for purposes of applying
such amendments with respect to a notice of a termination or
discontinuance that was made before such date and for which the
termination or discontinuance occurs after such date, such
notice shall be treated as having occurred on the date of the
enactment of this Act.
(b) Continuous Open Enrollment for Institutionalized Individuals.--
Section 1851(e)(2) (42 U.S.C. 1395w-21(e)(2)) is amended--
(1) in subparagraph (B)(i), by inserting ``and subparagraph
(D)'' after ``clause (ii)'';
(2) in subparagraph (C)(i), by inserting ``and subparagraph
(D)'' after ``clause (ii)''; and
(3) by adding at the end the following new subparagraph:
``(D) Continuous open enrollment for
institutionalized individuals.--At any time after 2001
in the case of a Medicare+Choice eligible individual
who is institutionalized, the individual may change the
election under subsection (a)(1).''.
(c) Continuing Enrollment for Certain Enrollees.--Section 1851(b)(1)
(42 U.S.C. 1395w-21(b)(1)) is amended--
(1) in subparagraph (A), by inserting ``and except as
provided in subparagraph (C)'' after ``may otherwise provide'';
and
(2) by adding at the end the following new subparagraph:
``(C) Continuation of enrollment permitted where
service changed.--Notwithstanding subparagraph (B), if
a Medicare+Choice organization eliminates from its
service area a geographic area that was previously
within its service area, the organization may elect to
offer individuals residing in the affected geographic
area who would otherwise be ineligible to continue
enrollment the option to continue enrollment in a
Medicare+Choice plan it offers so long as--
``(i) the enrollee agrees to receive the full
range of basic benefits (excluding emergency
and urgently needed care) exclusively at
facilities designated by the organization
within the plan service area; and
``(ii) there is no other Medicare+Choice plan
offered in the area in which the enrollee
resides at the time of the organization's
election.''.
(d) Effective Date.--The amendments made by subsections (b) and (c)
apply as if included in the enactment of BBA.
SEC. 506. ALLOWING VARIATION IN PREMIUM WAIVERS WITHIN A SERVICE AREA
IF MEDICARE+CHOICE PAYMENT RATES VARY WITHIN THE
AREA.
(a) In General.--Section 1854(c) (42 U.S.C. 1395w-24(c)) is amended--
(1) by striking ``The'' and inserting ``Subject to paragraph
(2), the'';
(2) by redesignating the first sentence as a paragraph (1)
with an appropriate indentation and the heading ``In general.--
''; and
(3) by adding at the end the following new paragraph:
``(2) Variation in premium waiver permitted.--A
Medicare+Choice organization may waive part or all of a premium
described in paragraph (1) for one or more Medicare+Choice
payment areas within its service area if the annual
Medicare+Choice capitation rates under section 1853(c) vary
between such payment area and other payment areas within such
service area.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
premiums for contract years beginning on or after January 1, 2001.
SEC. 507. DELAY IN DEADLINE FOR SUBMISSION OF ADJUSTED COMMUNITY RATES
AND RELATED INFORMATION.
(a) Delay in Deadline for Submission of Adjusted Community Rates and
Related Information.--Section 1854(a)(1) (42 U.S.C. 1395w-24(a)(1)) is
amended by striking ``May 1'' and inserting ``July 1''.
(b) Adjustment in Information Disclosure Provisions.--Section
1851(d)(2)(A)(ii) (42 U.S.C. 1395w-21(d)(2)(A)(ii)) is amended by
inserting after ``information described in paragraph (4) concerning
such plans'' the following: ``, to the extent such information is
available at the time of preparation of the material for mailing''.
SEC. 508. 2 YEAR EXTENSION OF MEDICARE COST CONTRACTS.
Section 1876(h)(5)(B) (42 U.S.C. 1395mm(h)(5)(B)) is amended by
striking ``2002'' and inserting ``2004''.
SEC. 509. MEDICARE+CHOICE NURSING AND ALLIED HEALTH PROFESSIONAL
EDUCATION AND EARMARK.
Section 1886(d)(11) (42 U.S.C. 1395ww(d)(11)) is amended--
(1) in subparagraph (A)--
(A) by inserting ``(i)'' after ``.--'', and
(B) by adding at the end the following new clause:
``(ii) For portions of cost reporting periods
occurring on or after January 1, 2000, the Secretary
shall provide for an additional payment amount for each
applicable discharge of any subsection (d) hospital
that has direct costs of approved education activities
for nurse and allied health professional training.'';
(2) in subparagraph (C)--
(A) by inserting ``(i)'' after ``.--'';
(B) by striking ``under this paragraph'' and
inserting ``under subparagraph (A)(i)'';
(C) by inserting ``the DGME portion of'' after
``shall be equal to''; and
(D) by adding at the end the following new clauses:
``(ii) The amount of the payment under subparagraph
(A)(ii) with respect to any applicable discharge shall
be equal to an amount, specified by the Secretary, in a
manner consistent with the following:
``(I) The total payments under such
subparagraph in a year are equal to
$60,000,000.
``(II) The payments to different hospitals
are proportional to the direct costs of each
hospital described in such subparagraph.
``(iii) For purposes of this subparagraph, the `DGME
portion' means, for a year, the ratio of--
``(I) the amount by which (aa) the
Secretary's estimate of the total additional
payments that would be payable under this
paragraph for the year if subparagraph (A)(ii)
and clause (ii) of this subparagraph did not
apply, exceeds (bb) $60,000,000; to
``(II) the total additional payments
estimated under subclause (I)(aa) for the
year.''.
SEC. 510. MISCELLANEOUS CHANGES AND STUDIES.
(a) Permitting Religious Fraternal Benefit Societies to Offer a Range
of Medicare+Choice Plans.--Section 1859(e)(2) (42 U.S.C. 1395w-
29(e)(2)) is amended in the matter preceding subparagraph (A) by
striking ``section 1851(a)(2)(A)'' and inserting ``section
1851(a)(2)''.
(b) Study of Accounting for VA and DOD Expenditures for
Medicare+Choice Enrollees.--The Secretary of Health and Human Services,
jointly with the Secretaries of Defense and of Veterans Affairs, shall
submit to Congress not later than 1 year after the date of the
enactment of this Act a report on the estimated use of health care
services furnished by the Departments of Defense and of Veterans
Affairs to medicare beneficiaries including enrollees in
Medicare+Choice plans. The report shall include an analysis of how best
to properly account for expenditures for such services in the
computation of Medicare+Choice capitation rates.
(c) Promoting Prompt Implementation of Informatics, Telemedicine, and
Education Demonstration Project.--Section 4207 of BBA is amended--
(1) in subsection (a)(1), by adding at the end the following:
``The Secretary shall make an award for such project not later
than 3 months after the date of the enactment of the Medicare
Balanced Budget Refinement Act of 1999. The Secretary shall
accept the proposal adjudged to be the best technical proposal
as of such date of enactment without the need for additional
review or resubmission of proposals.'';
(2) in subsection (a)(2)(A), by inserting before the period
at the end the following: ``that qualify as Federally
designated medically underserved areas or health professional
shortage areas at the time of enrollment of beneficiaries under
the project'';
(3) in subsection (c)(2), by striking ``and the source and
amount of non-Federal funds used in the project'';
(4) in subsection (d)(2)(A), by striking ``at a rate of 50
percent of the costs that are reasonable and'' and inserting
``for the costs that are related'';
(5) in subsection (d)(2)(B)(i), by striking ``(but only in
the case of patients located in medically underserved areas)''
and inserting ``or at sites providing health care to patients
located in medically underserved areas'';
(6) in subsection (d)(2)(C)(i), by striking ``to deliver
medical informatics services under'' and inserting ``for
activities related to''; and
(7) by amending paragraph (4) of subsection (d) to read as
follows:
``(4) Cost-sharing.--The project may not impose cost sharing
on a medicare beneficiary for the receipt of services under the
project. Project costs will cover all costs to patients and
providers related to participation in the project.''.
SEC. 511. MEDPAC REPORT ON MEDICARE MSA (MEDICAL SAVINGS ACCOUNT)
PLANS.
Not later than 1 year after the date of the enactment of this Act,
the Medicare Payment Advisory Commission shall submit to Congress a
report on specific legislative changes that should be made to make MSA
plans a viable option under the Medicare+Choice program.
SEC. 512. CLARIFICATION OF NONAPPLICABILITY OF CERTAIN PROVISIONS OF
DISCHARGE PLANNING PROCESS TO MEDICARE+CHOICE
PLANS.
(a) In General.--Section 1861(ee)(2)(H) (42 U.S.C. 1395x(ee)(2)(H)),
as added by section 4431 of BBA, is amended--
(1) in clause (i)--
(A) by striking ``not specify'' and inserting
``subject to clause (iii), not specify''; and
(B) by striking ``and'' at the end; and
(2) in clause (ii), by striking the period at the end and
inserting ``, and''; and
(3) by adding at the end the following new clause:
``(iii) for individuals enrolled under a
Medicare+Choice plan, under a contract with the
Secretary under section 1857, for whom a hospital
furnishes inpatient hospital services, the hospital may
specify with respect to such individual the provider of
post-hospital home health services or other post-
hospital services under the plan.''.
Subtitle B--Managed Care Demonstration Projects
SEC. 521. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION
DEMONSTRATION (SHMO) PROJECT AUTHORITY.
(a) Extension.--Section 4018(b) of the Omnibus Budget Reconciliation
Act of 1987 (Public Law 100-203), as amended by section 4014(a)(1) of
BBA, is amended--
(1) in paragraph (1), by striking ``December 31, 2000'' and
inserting ``the date that is 18 months after the date that the
Secretary submits to Congress the report described in section
4014(c) of the Balanced Budget Act of 1997''; and
(2) by adding at the end of paragraph (4) the following:
``Not later than 6 months after the date the Secretary submits
such final report, the Medicare Payment Advisory Commission
shall submit to Congress a report containing recommendations
regarding such project.''.
(b) Substitution of Aggregate Cap.--Section 13567(c) of the Omnibus
Budget Reconciliation Act of 1993 (Public Law 103-66), as amended by
section 4014(b) of BBA, is amended to read as follows:
``(c) Aggregate Limit on Number of Members.--The Secretary of Health
and Human Services may not impose a limit on the number of individuals
that may participate in a project conducted under section 2355 of the
Deficit Reduction Act of 1984, other than an aggregate limit of not
less than 324,000 for all sites.''.
SEC. 522. EXTENSION OF MEDICARE COMMUNITY NURSING ORGANIZATION
DEMONSTRATION PROJECT.
(a) Extension.--Notwithstanding any other provision of law, any
demonstration project conducted under section 4079 of the Omnibus
Budget Reconciliation Act of 1987 (Public Law 100-123) and conducted
for the additional period of 2 years as provided for under section 4019
of BBA, shall be conducted for an additional period of 2 years.
(b) Report.--By not later than July 1, 2001, the Secretary of Health
and Human Services shall submit to Congress a report describing the
results of any demonstration project conducted under section 4079 of
the Omnibus Budget Reconciliation Act of 1987, and describing the data
collected by the Secretary relevant to the analysis of the results of
such project, including the most recently available data through the
end of 2000.
SEC. 523. MEDICARE+CHOICE COMPETITIVE BIDDING DEMONSTRATION PROJECT.
Section 4011 of BBA is amended--
(1) in subsection (a)--
(A) by striking ``The Secretary'' and inserting the
following:
``(1) In general.--Subject to the succeeding provisions of
this subsection, the Secretary''; and
(B) by adding at the end the following:
``(2) Delay in implementation.--The Secretary shall not
implement the project until January 1, 2002, or, if later, 6
months after the date the Competitive Pricing Advisory
Committee has submitted to Congress a report on each of the
following topics:
``(A) Incorporation of original fee-for-service
medicare program into project.--What changes would be
required in the project to feasibly incorporate the
original fee-for-service medicare program into the
project in the areas in which the project is
operational.
``(B) Quality activities.--The nature and extent of
the quality reporting and monitoring activities that
should be required of plans participating in the
project, the estimated costs that plans will incur as a
result of these requirements, and the current ability
of the Health Care Financing Administration to collect
and report comparable data, sufficient to support
comparable quality reporting and monitoring activities
with respect to beneficiaries enrolled in the original
fee-for-service medicare program generally.
``(C) Rural project.--The current viability of
initiating a project site in a rural area, given the
site specific budget neutrality requirements of the
project, and insofar as the Committee decides that the
addition of such a site is not viable, recommendations
on how the project might best be changed so that such a
site is viable.
``(D) Benefit structure.--The nature and extent of
the benefit structure that should be required of plans
participating in the project, the rationale for such
benefit structure, the potential implications that any
benefit standardization requirement may have on the
number of plan choices available to a beneficiary in an
area designated under the project, the potential
implications of requiring participating plans to offer
variations on any standardized benefit package the
committee might recommend, such that a beneficiary
could elect to pay a higher percentage of out-of-pocket
costs in exchange for a lower premium (or premium
rebate as the case may be), and the potential
implications of expanding the project (in conjunction
with the potential inclusion of the original fee-for-
service medicare program) to require medicare
supplemental insurance plans operating in an area
designated under the project to offer a coordinated and
comparable standardized benefit package.
``(3) Conforming deadlines.--Any dates specified in the
succeeding provisions of this section shall be delayed (as
specified by the Secretary) in a manner consistent with the
delay effected under paragraph (2).''; and
(2) in subsection (c)(1)(A)--
(A) by striking ``and'' at the end of clause (i); and
(B) by adding at the end the following new clause:
``(iii) establish beneficiary premiums for
plans offered in such area in a manner such
that a beneficiary who enrolls in an offered
plan with a below average price (as established
by the competitive pricing methodology
established for such area) may, at the plan's
election, be offered a rebate of some or all of
the medicare part B premium that such
individual must otherwise pay in order to
participate in a Medicare+Choice plan under the
Medicare+Choice program; and''.
I. INTRODUCTION
A. Purpose and Summary
The Balanced Budget Act of 1997 (P.L. 105-33) contained
more than 300 Medicare provisions and represented the most
extensive reforms since the enactment of the program in 1965.
Among the changes were Medicare's expanded coverage of
preventive benefits, additional choices for seniors through the
new Medicare+Choice program, new tools to combat health care
waste, fraud and abuse, and many initiatives to modernize and
strengthen Medicare fee-for-service payment systems. New
payment methodologies were established affecting virtually
every segment of the health care industry including managed
care plans, hospitals, skilled nursing facilities, and home
health agencies.
H.R. 3075, the ``Medicare Balanced Budget Refinement Act of
1999,'' makes necessary refinements to many of the complex
program changes enacted in the Balanced Budget Act of 1997
(BBA). The provisions of H.R. 3075 are designed to strengthen
and improve the Medicare program for current and future
generations by addressing concerns about BBA policies that have
been raised by Medicare's 39 million beneficiaries and the
providers who deliver care to them.
Coupled with the legislative measures contained in H.R.
3075, the Committee believes very strongly that there are
several administrative steps that the Health Care Financing
Administration (HCFA) must take to ensure that the policies
enacted in the BBA are implemented in a manner that reflects
Congressional intent in 1997. The Committee feels very strongly
that prompt attention to these administrative issues is
critical in addressing the concerns that have arisen since the
passage of the BBA.
H.R. 3075 was developed after receiving input from public
hearings before the Committee on Ways and Means Subcommittee on
Health. During these hearings, the Subcommittee received
testimony from many witnesses, including representatives of
beneficiary organizations, medical providers, actuaries, health
economists, health plan professionals, and other experts in
Medicare and healthcare policy.
B. Background and Need for the Legislation
In the years ahead, the Medicare program will face serious
challenges brought on by rapid changes in the aging of the
population and increasing medical costs. The ability of
Medicare's current financing structure to adequately fund
program growth has been a concern for many years. Since 1970,
the Medicare Trustees have been predicting the imminent
insolvency of the Part A Trust Fund. Not until 1995, however,
did Medicare insolvency become a substantial part of the budget
debate. The Balanced Budget Act of 1997 contains major
revisions in Medicare payment policies designed to modernize
Medicare so as to provide mechanisms to ensure quality care
while slowing the rate of growth of payments to hospitals,
physicians, and other providers.
When the Balanced Budget Act of 1997 was adopted, Congress
utilized the data and estimates available at the time, and
relied upon the Administration's representations that it could
successfully implement, in a timely manner, the many
programmatic changes required to curb unnecessary growth.
During enactment, the Congressional Budget Office (CBO)
estimated that, because of the changes initiated by the BBA,
Medicare spending would be reduced by $116 billion over five
years (FY 1998-FY 2002) and $393 billion over ten years. The
BBA was expected to achieve the target savings both by slowing
the rate of payment growth to hospitals, physicians, and other
providers and by establishing new prospective payment systems
(PPS) for the reimbursement of skilled nursing facilities,
hospital outpatient departments, home health agencies, and
other providers. Additionally, the establishment of the
Medicare+Choice program expanded coverage options for
beneficiaries.
Actual Medicare spending since BBA enactment is even lower
than was anticipated. For the ten-year period for which the
original CBO estimates were done, the agency now expects
spending to be billions of dollars less in each year. As
recently as March of 1999, CBO lowered its Medicare spending
estimates for the FY 1998-FY 2007 period by $229 billion.
Between 1980 and 1997, Medicare spending increased at an
average rate of 11% per year. In 1998, however, total Medicare
outlays rose by only 1.5%. The CBO has stated that the program
may experience an even smaller percentage growth increase in
1999. Commentators have attributed a portion of these changes
to BBA policies, but have also recognized that other factors
have played a part as well. In any event, the change in annual
growth rates and the disparity between projected and realized
savings since the enactment of the BBA have given the
Committee, participating providers, and affected beneficiaries
reason for concern.
The BBA changes had varying effects on different sectors of
the health care delivery system. Similarly, within these
sectors, the changes in policy have raised some specific
concerns that vary accordingly. The provisions of H.R. 3075 are
intended to address each of these concerns.
The Committee has heard many concerns about the effects of
Medicare payment changes on the financial stability of the
inpatient hospital sector. Many provisions of the BBA had an
impact on inpatient facility revenues. While testimony
presented to the Subcommittee on Health indicated that it has
been difficult to determine the precise effects of the BBA on
the hospital sector, commentators agreed that many hospital
margins are in decline and under increasing pressure from both
the payment reductions made in 1997 and similar payment
pressures from private sector payors. With this in mind, the
Committee bill seeks to provide some targeted relief with
respect to particular BBA policies. Among other things, the
bill provides a one-year delay in the phase-in of the indirect
medical education (IME) percentage adjustment, reduces the
reduction in the disproportionate share adjustment that was
established by the BBA, and includes various refinements to the
new payment methodologies proposed for long-term care and
psychiatric hospitals and inpatient rehabilitation providers.
In response to criticisms of HCFA's prospective payment system
(PPS) for skilled nursing facilities (SNFs), provisions are
included to provide additional payments to facilities that care
for high acuity nursing patients. This is done in the form of
special payment adjustments and pass-through payments for
patients with specific needs. In addition, general assistance
for SNFs is provided through an increase in the market basket
update.
Targeted refinements in the Part B program are also
included. Recommendations of the current sustainable growth
rate (SGR) system by the Medicare Payment Advisory Commission
(MedPAC) prompted the Committee to include technical changes to
the physician payment update mechanism, so that future updates
will be more accurate and updates will not oscillate severely,
as experts now predict will be the case under current law. In
addition, revisions to the proposed prospective payment system
for hospital outpatient services are included to help ensure
that appropriate payments are made for all patients, including
those whose treatment requires the utilization of costly drugs
or devices. In addition, provisions implementing payment
corridors are included to help hospitals with above average
operating costs manage the transition to the PPS system.
In response to expressed concerns about the potential
effect of BBA caps on physical therapy, occupational therapy
and speech pathology services on patient access to care, the
bill amends this provision to expand physical therapy and
speech pathology benefits, and provides for an outlier poll to
fund the inordinate therapy costs that can be incurred by high
acuity patients. The bill also provides minor adjustments to
ease the effects of the BBA on durable medical equipment
suppliers and increases the reimbursement rate for pap smears,
so as to ensure continuing access to this important preventive
care benefit.
Although the Committee worked hard to address concerns
about the BBA's effects on the supply of home health care
agencies last year [with the passage of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act for
Fiscal year 1999 (P.L. 105-277)], continuing concerns about
instability in this area prompted the inclusion of several
additional provisions designed to provide assistance to these
providers so as to ensure beneficiary access to these services.
The bill includes special payments to help offset the
administrative costs of conducting the OASIS patient survey,
delays the 15% reduction in payment rates for one year after
the implementation of the PPS, and makes modifications to the
surety bond requirements.
Title III also includes revisions to Medicare Direct
Graduate Medical Education (DGME) payments and requires several
studies, including one on geographic reclassification
methodologies, that are intended to help the Committee consider
the need for additional revisions to make payments more
accurate in the future.
The impact of the policy changes made by the BBA on rural
health care providers has been of particular concern to the
Committee. Rural hospitals are often the only available medical
care facility capable of serving the health care needs of a
rural community's Medicare population. Yet, while critical to
the region's public health, these facilities often have low
volume, few resources, and have experienced the most trouble
adapting to broad changes in payment methodologies initiated by
the BBA. The bill seeks to address this concern by including
various provisions in Title IV that are designed to help rural
providers, and the beneficiaries they serve, make the
transition to the post-BBA environment. Included are provisions
extending the Medicare Dependent Hospital Program, several
sections allowing for greater flexibility in the geographic and
categorical designations of rural health facilities, augmented
payments for certain non-PPS facilities, and a grant program
designed to help rural hospitals transition to Medicare's
newly-required prospective payment systems.
Problems in the Medicare+Choice market have also been
evident since enacted BBA policies have begun to be implemented
by the Administration. Many plans have announced that they are
withdrawing from the program, thus reducing the choices
available to seniors. These disruptions have been compounded by
wide-scale reductions in benefits by some of the plans that
have decided to remain in the program. Testimony received by
the Subcommittee has indicated that these changes are due to
many factors, including changes made in both the payment and
regulation of Medicare managed care plans. The transition to a
new risk adjustment methodology, particularly the system
proposed by HCA, has been of special concern.
The bill seeks to address the concerns that have arisen in
the Medicare+Choice market, by including several provisions in
Title V that are designed to stabilize the system. Among other
things, these provisions would slow down the phase-in of HCFA's
new risk adjuster, offer incentives to plans to enter markets
where no Medicare+Choice plans now exist, and provide increased
flexibility in several enrollment and participation rules so
that beneficiaries would be more likely to retain access to
Medicare+Choice plan options in the future.
C. Legislative History
Committee bill
H.R. 3075 was introduced on October 14, 1999 by Chairman
Bill Thomas and was referred to the Committee on Ways and Means
Subcommittee on Health and, in addition, the Committee on
Commerce. The Subcommittee on Health ordered favorably reported
the bill on October 15, 1999 to the full Ways and Means
Committee by voice vote with no amendments. On October 21,
1999, H.R. 3075 was taken up for consideration by the full
Committee. The bill was amended by an amendment in the nature
of a substitute offered by Representative Thomas and reported
to the House of Representatives by a roll call vote of 26 ayes
and 11 nays.
The bill contains five main titles. Title I contains
provisions relating to Medicare Part A and is divided into four
subtitles. Subtitle A applies to acute care hospitals that are
paid under the prospective payment system (PPS) and includes a
one-year delay in the application of the indirect medical
education (IME) adjustment and a decrease in scheduled
reductions for disproportionate share hospitals. Subtitle B
addresses PPS-exempt hospitals and provides enhanced payments
for long-term care and psychiatric hospitals until the
development of the PPS system for those facilities. It also
specifies certain design components of these PPS systems and
specifies certain refinements in the prospective payment system
for inpatient rehabilitation services. Subtitle C addresses
payments for skilled nursing facilities and includes a
temporary increase in payment for certain high cost patients,
an increase in payments to account for inflation, authorization
for facilities to elect immediate transition to the federal
rate, payment adjustments for certain ambulance services,
prostheses, and chemotherapy drugs, and provisions for Part B
add-ons for facilities participating in the Nursing Home Case-
Mix and Quality (NHCMQ) demonstration project. Subtitle D
includes various technical corrections to Part A policies
included in the BBA.
Title II contains provisions relating to Medicare Part B
and is divided into three subtitles. Subtitle A provides for
technical adjustments to the physician payment update system,
so as to improve the accuracy and reduce oscillations in future
payment updates. Subtitle B applies to hospital outpatient
services and allows for outlier adjustments and transitional
pass-through payments for certain medical devices, drugs, and
biologicals. It also establishes a transitional corridor to
help hospitals with above-average costs adjust to the new
prospective payment system for outpatient services (OPD PPS).
Subtitle C relates to other Part B issues and provides for the
application of separate benefit caps to physical and speech
therapy services, an outlier pool for high-cost therapy
patients, an update in the renal dialysis composite rate, a
temporary update in durable medical equipment and oxygen rates,
an increase in the reimbursement rate for pap smear tests, and
refinements in the ambulance services demonstration project.
Title III contains provisions relating to Medicare Parts A
and B and is divided into three subtitles. Subtitle A applies
to home health services. It provides for special payments to
reflect administrative costs not included in the interim
payment system (IPS) and a delay in the application of a 15
percent reduction in payment rates for home health services. In
addition, it modifies current surety bond requirements for home
health agencies (HHAs). Subtitle B would provide for a
transition to a national average payment methodology in
computing DGME payments. Subtitle C requires a study by the
General Accounting Office (GAO) which would focus on refining
geographic reclassification methodologies, and one by MedPAC,
which would study Medicare payment policies with respect to
non-physician clinical training programs.
Title IV contains provisions relating to rural providers.
It includes provisions to permit the reclassification of
certain urban hospitals as rural hospitals, update the
standards applied for the geographic reclassification for
certain hospitals, and improve the Critical Access Hospital
(CAH) program. In addition, it provides for a five-year
extension of the Medicare Dependent Hospital (MDH) program,
allows for the re-basing of certain Sole Community Hospitals,
increases flexibility in providing graduate physician training
in rural areas, eliminates certain restrictions with respect to
the hospital swing bed program, establishes a grant program to
assist rural hospitals in the transition to prospective
payment, requires a MedPAC study of rural providers, and
expands access to paramedic intercept services in rural areas.
Title V contains provisions relating to Medicare Part C and
is divided into two subtitles. Subtitle A applies to the
Medicare+Choice program. Various provisions would restructure
the phase-in of a new risk adjustment methodology, encourage
the offering of Medicare+Choice plans in areas without plans,
modify the five-year reentry rule for contract terminations,
require the continued computation and publication of average
adjusted per capita costs (AAPCC) data for each county, modify
several current Medicare+Choice enrollment rules, allow for the
variation in Medicare+Choice plan premium waivers within a
contractor's service area, delay the deadline for submission of
adjusted community rates (ACR) proposals, extend for two years
the Medicare+Choice cost contracting program, and request a
MedPAC report on Medicare+Choice Medical Savings Account (MSA)
plans. Subtitle B addresses several managed care demonstration
projects. It would extend the Social Health Maintenance
Organizations (SHMOs) and Community Nursing Organizations
(CNOs) demonstration projects, and delay the Medicare+Choice
competitive pricing demonstration project until 2002 or until
such time as several specified reports are submitted to
Congress by the Competitive Pricing Advisory Committee (CPAC).
Legislative hearings
The Committee on Ways and Means Subcommittee on Health held
several hearings focusing on various Medicare payment policy
issues in 1999. On February 11, 1999, the Subcommittee examined
HCFA's ability to administer the current Medicare program and
to manage the future needs of the program's growing number of
beneficiaries. More specifically, the Subcommittee examined
HCFA's inability to implement many aspects of the Balanced
Budget Act within the time-frames specified in law. Some of the
BBA requirements discussed were the proposed prospective
payment systems for skilled nursing, hospital outpatient and
home health services.
On March 2, 1999, the Subcommittee held a hearing on the
annual MedPAC Report to the Congress on Medicare Payment
Policy. The Subcommittee examined MedPAC's recommendations
regarding Medicare Parts A and B which specifically addressed
factors affecting hospitals, skilled nursing facilities,
physicians and other providers. The Subcommittee also analyzed
Medicare+Choice payment calculations, risk selection, and
quality assurance mechanisms. In addition, on March 18, 1999,
the Subcommittee held a hearing on the Medicare+Choice program
to examine the Administration's proposed new risk adjustment
method, dissemination of health plan information to seniors,
and new plan requirements for quality measurement.
On October 1, 1999, the Subcommittee held a hearing on
Medicare Balanced Budget Act refinements. The hearing provided
the opportunity to hear from the Administration, Congressional
advisory bodies, and providers about the implementation and
impact of policy changes included in the BBA, including changes
in various payment methodologies. The Subcommittee also sought
input regarding a variety of potential refinements to these BBA
policies.
II. EXPLANATION OF PROVISIONS
Section 1. Short title; Amendments to Social Security act; References
to BBA; Table of Contents
The Act may be cited as the ``Medicare Balanced Budget
Refinement Act of 1999.''
TITLE I. PROVISIONS RELATING TO PART A
Subtitle A--PPS Hospitals
Section 101. One year Delay in Transition for Indirect Medical
Education (IME) Percentage Adjustment
Current law
The Balanced Budget Act of 1997 (hereafter referred to as
``BBA'') reduced the indirect medical education adjustment from
the existing 7.7% in FY 1997 to 7.0% in FY 1998; to 6.5% in FY
1999; to 6.0% in FY 2000; and to 5.5% in FY 2001 and subsequent
years.
Explanation of provisions
This provision would freeze the indirect medical education
(IME) adjustment at its current FY 2000 level of 6.0% for one
year (FY 2001). The IME adjustment would be decreased to 5.5%
in FY 2002 and for subsequent years.
Effective date
Upon enactment.
Reason for change
This provision eases the transition to a level of the IME
adjustment that is closer to its empirical estimate of
approximately 4.1 percent as calculated by the Prospective
Payment Assessment Commission (ProPAC) in 1997. A delay in the
reduction of the IME adjustment is warranted so that teaching
hospitals can adjust to the impact of the Balanced Budget Act
of 1997.
Section 102. Decrease in reductions for Disproportionate Share
Hospitals; Data Collection Requirements
Current law
The BBA reduced the disproportionate share adjustment for
hospitals by one percentage point each year starting in FY 1998
and continuing through FY 2002. The Secretary of Health and
Human Services (hereafter referred to as ``Secretary'') is
required to submit a report to Congress that contains a formula
for a new disproportionate share adjustment.
Explanation of provision
This provision would freeze the reduction in the
disproportionate share (DSH) adjustment at its current FY 2000
level of 3% for one year (FY 2001). The DSH adjustment would be
reduced by 4% in FY 2002 and for subsequent years the reduction
would be 0 percent. The Secretary would be required to collect
data on the costs incurred in providing inpatient and
outpatient uncompensated care, including bad debt and charity
care.
Effective date
Upon enactment.
Reason for change
This provision eases the financial impact on hospitals for
caring for a disproportionate share of low-income individuals.
In addition, the Secretary is required to collect additional
data necessary to develop a DSH payment methodology that takes
into account the cost of serving uninsured and underinsured
patients, as recommended by MedPAC. Presently, the DSH formula
is based only on the costs associated with Medicaid patients
and Medicare patients eligible for Supplementary Security
Income (SSI). MedPAC has recommended that the formula be
amended to include inpatient and outpatient costs associated
with services provided to low-income patients, defined broadly
to include all care to the poor. In order to develop such a
revised formula, it is necessary first to collect additional
data. MedPAC recommends that data be collected on patients
enrolled in state and local indigent care programs, as well as
uncompensated care associated with uninsured or underinsured
patients. State and local indigent care programs would include
non-federally financed programs with specific eligibility
criteria for specified health care services. Financial data on
state and local appropriations that offset uncompensated care
expenses should also be collected. Uncompensated care costs and
charges are those identified more typically as bad debt and
charity care. While the Committee recognizes that there may be
problems in defining and appropriately measuring such costs and
charges in a way that avoids duplication, such problems can
best be overcome by developing standard definitions at the
national level. The Committee expects the Secretary to report
on the financial interactions and potential for shifts between
Federal and State governments.
Subtitle B--PPS Exempt Hospitals
Section 111. Wage Adjustment to Percentile Cap for PPS--Exempt
Hospitals
Current law
Psychiatric, rehabilitation, and long-term care providers,
including separate facilities and qualified distinct part units
in acute general hospitals, were excluded from the Medicare
inpatient prospective payment system (PPS) when the system was
implemented in FY 1984. These Medicare providers are subject to
the payment limitations and incentives established by the Tax
Equity and Fiscal Responsibility of 1982 (TEFRA) as modified by
the BBA.
Generally speaking, these PPS-exempt providers are paid
based on their costs per discharge, subject to provider-
specific limits established by TEFRA and to national limits
established by the BBA. The provider's target amount is based
on its Medicare allowable costs per discharge in a base year,
inflated to the current year by an annual update factor. A
national limit or cap amount is calculated for these 3 classes
of PPS-exempt providers. Each provider's limit is the lesser of
its target or cap amount. Generally, a provider with costs per
discharge under its limit is rewarded with a bonus payment
while a provider with costs per discharge above its limit
receives a relief payment.
The BBA established a national cap on the TEFRA limits for
PPS-exempt hospitals and units in cost reporting periods,
beginning on or after October 1, 1997 and before October 1,
2002. The cap is set at the 75th percentile of the target
amount for each class of provider in FY 1996, updated each year
by the increase in the hospital market basket. There is
currently no provision for a wage adjustment of the percentile
cap used to set limits for established PPS-exempt providers.
Explanation of provision
The provision would require the Secretary to recalculate
the 75th percentile cap to reflect differences in wage-related
costs across geographic areas and also to adjust the cap for
differences in wage-related costs when applied to new TEFRA
hospitals.
Effective date
The provision would be effective for cost reporting periods
beginning on or after October 1, 1999.
Reason for change
This provision makes the appropriate adjustment to
recognize differences in wage-related costs across geographic
areas for TEFRA hospitals.
Section 112. Enhanced Payments for Long-term Care and Psychiatric
Hospitals Until Development of Prospective Payment systems for Those
Hospitals
Current law
The BBA established the amount of bonus and relief payments
payable to eligible PPS-exempt providers. A provider with costs
under its limit is rewarded with a bonus payment that is equal
to the lesser of: (1) 15% of the amount by which the target
amount exceeds the amount of operating costs; or (2) 2% of the
target amount. In addition, eligible hospitals could also
receive an increased bonus payment (called a continuous
improvement payment) equal to the lesser of: (1) 50% of the
amount by which the eligible hospital's operating costs are
less than those expected for the period; or (2) 1% of the
target amount of the period.
Explanation of provision
The provision would increase the continuous improvement
bonus payments from 1% to 1.5% for cost reporting periods
beginning on or after October 1, 2000 and before September 30,
2001, and to 2% for cost reporting periods beginning on or
after October 1, 2001 and before September 30, 2002. Only
psychiatric hospitals, psychiatric units exempt from the PPS
and long-term care hospitals would be eligible for these
payments.
Effective date
The provision would be effective for cost reporting periods
beginning on or after October 1, 2000.
Reason for change
This provision would provide temporary relief to eligible
PPS-exempt hospitals and units until a prospective payment
system is implemented for these providers.
Section 113. Per Discharge Prospective Payment System for Long-term
Care Hospitals
Current law
The BBA requires the Secretary to collect data to develop,
establish, administer, and evaluate a case-mix adjusted
prospective payment system (PPS) for long-term care hospitals.
The Secretary is required to develop a legislative proposal for
establishing and administering a payment system that includes
an adequate patient classification system that reflects
differences in patient resource use. The Secretary may require
these hospitals to submit necessary data to develop this
proposal. The Secretary is instructed to consider several
payment methodologies including the feasibility of expanding
the diagnosis-related groups (DRGs) and inpatient PPS for acute
hospitals established under section 1886(d) of the Social
Security Act. The Secretary's legislative proposal is due to
the appropriate Congressional committees no later than October
1, 1999.
Explanation of provision
The provision would require the Secretary to report to
Congress by October 1, 2001 on a prospective payment system
(PPS) for long-term care hospitals, based on DRGs, per
discharge payment. The PPS would then be implemented in a
budget neutral manner beginning October 1, 2002.
Effective date
Upon enactment.
Reason for change
This provision clarifies the type of prospective payment
system, a per discharge system based on DRGs, that should be
designed for long-term care hospitals. It also specifies budget
neutrality and the time frame for implementation. In developing
and evaluating the new PPS system, the Committee encourages the
Secretary to measure the quality of outcomes.
section 114. per diem prospective payment system for psychiatric
hospitals
Current law
There is currently no provision for a prospective payment
system for psychiatric hospitals.
Explanation of provision
The provision would require the Secretary to report to
Congress by October 1, 2001 on a prospective payment system
(PPS) for psychiatric hospitals and distinct part units, based
on a per diem payment. The PPS would then be implemented in a
budget neutral manner beginning October 1, 2002.
Effective date
Upon enactment.
Reason for change
This provision clarifies the type of prospective payment
system, a per diem system, that should be designed for
psychiatric hospitals and PPS-exempt psychiatric units. It also
specifies budget neutrality and the time frame for
implementation. In developing and evaluating the new PPS
system, the Committee encourages the Secretary to measure the
quality of outcomes. The Committee notes a recent GAO report
(``Mental Health: Improper Restraint or Seclusion Use Places
People at Risk'') concerning unnecessary deaths and lack of
reporting by institutions on death and injury from the use of
restraints and seclusion. The Committee urges the Secretary to
examine the cause of these unnecessary deaths.
section 115. refinement of prospective payment system for inpatient
rehabilitation services
Current law
The BBA requires the Secretary to establish a case-mix
adjusted prospective payment system (PPS) for rehabilitation
hospitals and distinct part units, effective October 1, 2000.
The system is designed to be phased-in over a three-year period
with an increasing percentage of the base amount based on the
PPS amount. Total payments are to be set to equal 98% of the
amount that would have been paid if the PPS had not been
enacted.
Explanation of provision
This provision would allow rehabilitation facilities to
elect the full national prospective rate upon implementation of
the prospective payment system instead of a gradual transition.
The rates are adjusted in each year to ensure that aggregate
payments do not increase. The Secretary is also directed to use
discharges as the payment unit for the new PPS to improve the
Functional Independence Measure-Function-Related Groups. Within
three years of implementation, the Secretary is required to
report to Congress on the impact of the prospective payment
system on utilization and access to services.
Effective date
Upon enactment.
Reason for change
This provision would allow rehabilitation facilities
increased flexibility in adjusting to the new prospective
payment system.
Subtitle C--Adjustments to PPS Payments for Skilled Nursing Facilities
section 121. temporary increase in payment for certain high cost
patients
Current law
The BBA required the Secretary to implement a prospective
payment system for skilled nursing facility care starting in
July 1998. The prospective payment system outlined in the BBA
is based on the Resource Utilization Group (RUG) design that
HCFA developed over several years and tested on a demonstration
project basis. The RUG system requires skilled nursing
facilities (SNFs) to categorize their Medicare patients
according to 44 hierarchical groups based on the kinds and
intensities of care and services they need. For example,
patients needing mostly physical therapy or speech therapy of
different intensities use different kinds and amounts of
resources than patients needing such things as skilled nursing
care, intravenous feeding or medications, extensive laboratory
testing, or use of a respirator, and such patients would be
assigned to different groups. The SNF prospective payment
system provides facilities a fixed amount per day per patient
(a ``per diem'' payment), with the amount of the payment
determined by the RUG into which the patient is classified.
This RUG classification system serves as the case-mix
adjustment that is used to relate program payment to individual
patient characteristics and resource use.
The BBA instructed the Secretary how to: (a) compute
average per diem payment rates using Medicare-approved SNF
costs in 1995 as the base year; (b) adjust the average rates
for facility case-mix and geographic differences; and (c)
update the per diem rates for years after 1995. This
methodology aims at setting the prospective payment system per
diem amounts in a budget neutral manner relative to payments
that would have been made before the PPS. The law specifies
limited updates to payments under the RUG system in future
years.
Explanation of provision
This provision would temporarily increase the Federal
portion of the rates by 10 percent for 12 RUGs in the
``Extensive Services,'' ``Special Care'' and ``Clinically
Complex'' categories to adjust for the costs of medically
complex patients. Payments would be increased from April 1,
2000 through September 30, 2000 at which time the Secretary is
expected to make refinements to the case-mix measure and adjust
the average rates for case-mix with more refined data on
intensity than had been available at the inception of the PPS.
Effective date
Upon enactment.
Reason for change
Independent research has demonstrated that the RUG
categories containing medically complex patients have higher
average per diem costs than the average per diem payment rates.
The Committee has proposed increases in payments for certain
RUG categories so that access to SNF services is not impaired.
This provision temporarily increases payments for certain
medically complex patients in specified RUG categories for a 6-
month period until the Secretary can implement a case-mix
adjustment based on refined data.
section 122. market basket increase
Current law
The BBA requires the Secretary to update the Federal per
diem for skilled nursing facilities by the skilled nursing
facility market basket minus one percentage point in FY 2000.
In FY 2001 and 2002, the rate would be updated by market basket
minus one percentage point.
Explanation of provision
The provision would increase the update for FY 2001 to the
skilled nursing facility market basket plus 0.8 percentage
points. For FY 2002 and subsequent years, the update would
remain as specified by the BBA.
Effective date
Upon enactment.
Reason for change
This provision would provide a greater-than-market basket
increase because aggregate payments to skilled nursing
facilities have been significantly lower than anticipated. The
Committee encourages the Secretary to determine the cost and
utilization of new technologies and medications that are used
in the treatment of SNF patients.
section 123. authorizing facilities to elect immediate transition to
federal rule
Current law
The BBA requires that the SNF prospective payment system be
phased in over 3 years starting July 1, 1998 (or the first date
thereafter on which a SNF started a new annual cost reporting
period). During this phase-in period, the per diem payment to
each SNF is based part on the facility's Medicare-covered costs
in 1995 with certain updates (the ``facility-specific''
component of the prospective payment system), and in part of
the new federal per diem prospective payment. During the 3-year
phase-in period starting in 1998, a SNF receives per diem rates
that are a ``blend'' of 75% of the facility-specific rate and
25% of the federal per diem rate, and the proportions of
facility-specific rates to federal per diem rates shift
annually by 25 percentage points until the federal prospective
payment system rate equals the full payment.
Explanation of provision
This provision would permit skilled nursing facilities to
choose to receive the full Federal rate.
Effective date
Skilled nursing facilities could elect the full Federal
rate 60 days after enactment.
Reason for change
This provision allows those skilled nursing facilities that
have experienced increases in volume or case mix since the 1995
base year to choose the Federal rate instead of a facility-
specific and Federal blended rate, thus providing them with
increased flexibility.
section 124. part a pass-through payment for certain ambulance
services, prostheses and chemotherapy drugs
Current law
The per diem amounts Medicare pays SNFs under the
prospective payment system include the costs of ``ancillary
services'' needed by Medicare patients. These services include
restorative therapies, laboratory services, drugs, supplies,
prosthetic devices, and equipment. Thus, SNFs do not receive
separate payments for these services and items in addition to
the per diem payment.
Explanation of provision
This provision would exclude certain services and items
from the per diem amounts that Medicare pays to SNFs because of
their relatively rate occurrence and high cost. They would be
paid for separately starting April 1, 2000. These services
include ambulance services furnished in conjunction with renal
dialysis services, specific chemotherapy items, chemotherapy
services, radioisotopes services, and customized prosthetic
devices, such as artificial limbs. Base payment rates would not
be adjusted to account for the exclusion of these services and
items in FY 2000, but beginning in FY 2001, the Secretary would
provide for an appropriate reduction in payments so that the
exclusion of the above items would be budget neutral.
Effective date
April 1, 2000.
Reason for change
Some services and items furnished in SNFs are very high
cost but very infrequent events. This provision would exclude
certain specified services and items from the per diem amounts
that Medicare pays to SNFs and pay for them separately. While
the bill exempts ambulance services for ESRD patients, the
Committee notes that, in many cases, regularly scheduled trips
may be made in vehicles that are less costly than an Advanced
or Basic Life Support ambulance, and the Committee urges that
SNFs use these cost-saving services appropriately.
section 125. provision for Part B Add-ons for Facilities Participating
in the NHCMQ Demonstration Project
Current law
A demonstration project known as the Nursing Home Case Mix
and Quality (NHCMQ) demonstration project preceded
implementation of the SNF prospective payment system. Skilled
nursing facilities that participated in that demonstration
project do not have the cost of Medicare Part B services to SNF
patients accounted for under the facility-specific component of
the prospective payment system during the transition period as
do other SNFs, although their federal per diem amounts are
higher than those for other SNFs.
Explanation of provision
This provision would treat skilled nursing facilities that
participated in the demonstration project in the same way as
other skilled nursing facilities by accounting for the cost of
Medicare Part B services to SNF patients under the facility-
specific component of the prospective payment system during the
transition period to a prospective payment system.
Effective date
This provision would become effective as if it were
included in the BBA.
Reason for change
HCFA has interpreted inadvertent placement of the Part B
provisions in the BBA as Congressional intent that these
facilities should not receive payments for Part B services to
facility-specific rates for participants in the RUG III
demonstration project. This provision would clarify that these
facilities should be treated as other SNFs in receiving payment
for Part B services under the facility-specific component.
section 126. special consideration for facilities servicing specialized
patient populations
Current law
The SNF prospective payment system provides facilities a
fixed amount per day per patient (a ``per diem'' payment), with
the amount of the payment determined by the Resource
Utilization Group (RUG) into which the patient is classified.
This RUG classification system serves as the case-mix
adjustment that is used to relate program payment to individual
patient characteristics and resource use, but the RUG system is
not diagnosis-based. As a result, certain types of patients may
not be classified accurately for payment purposes.
Explanation of provision
This provision would allow for payments based on costs for
certain skilled nursing facilities that threat very specialized
patients, who are immuno-compromised secondary to an infectious
disease with specific diagnoses. These payments would be made
for a limited time until the Secretary reports no later than
within one year of enactment on the resource use of these
patients and whether any permanent adjustment is necessary.
Effective date
This provision applies beginning on the date of the first
cost reporting period that begins after enactment and ends on
September 30, 2001.
Reason for change
This provision would adjust payment for certain patients
whose medical conditions are not well-accounted for in the RUG
classification system.
section 127. Medpac study on special payment for facilities located in
hawaii and alaska
Current law
Skilled nursing facility payments are adjusted by a wage
index, but no adjustment is made for the special circumstances
of skilled nursing facilities in Alaska and Hawaii.
Explanation of provision
This provision would require the Medicare Payment Advisory
Commission (MedPAC) to study the need for a special adjustment
for Alaska and Hawaii and submit a report to Congress within 18
months of enactment.
Effective date
Upon enactment.
Reason for change
This provision would assist the Congress in determining
whether a special adjustment for skilled nursing facilities in
Alaska and Hawaii is necessary.
Subtitle D--Other
Section 313. Part A Technical Corrections
Current law
Part A of Medicare law was amended by various provisions in
the BBA.
Explanation of provision
This provision makes miscellaneous grammatical, cross-
reference, or similar technical changes in parts of the BBA
relating to Part A of the Medicare program.
Effective date
As if included in enactment of the BBA.
Reason for change
This provision would make technical corrections.
TITLE II. PROVISIONS RELATING TO PART B
Subtitle A--Adjustments to Physician Payment Updates
section 201. modification of update adjustment factor provisions to
reduce update oscillations and require estimate revisions
Current law
The conversion factor is a dollar figure that converts the
geographically adjusted relative value into a dollar payment
amount. This amount is updated each year according to a formula
established in law. Beginning in 1999, the update percentage
equals the Medicare Economic Index (MEI), subject to an
adjustment to match target spending for physician services
under the sustainable growth rate (SGR) system. In no case can
the adjustment be more than three percentage points above or
seven percentage points below the MEI.
Four factors make up the SGR: (1) changes in spending due
to fee increases; (2) fee-for-service enrollment; (3) gross
domestic product (GDP) growth per capita, and; (4) laws and
regulations. Data from various measurement periods are used for
the SGR calculation. Time lags between these measurement
periods can lead to oscillation in conversion factor updates.
Explanation of provision
Subsection (a) provides for technical changes to limit
oscillations in the annual update to the conversion factor used
to determine physician payment rates beginning in CY 2001. This
is accomplished in three ways. First, the provision requires
that future update adjustment factors be calculated using data
measured on a calendar year basis. This will ensure that the
time periods used in the update adjustment formula conforms to
the calendar system, which is used for actually updating
payments. In addition, the provision modifies the formula for
determining the update adjustment factor. In adds a new
component to the formula to measure past year variances from
allowed spending growth. This measure is to be used in
conjunction with the existing fomular component that measures
cumulative spending variances from the sustainable physician
payment baseline established in 1997. In addition, the impact
of these measures on the update formula is mitigated by the
addition of dampening multipliers. Both formula changes are
designed to lessen oscillations in the annual update adjustment
factor and will make annual adjustments in the conversion
factor less severe.
The subsection includes language requiring the Secretary to
develop CY 1999 allowed expenditure targets based on current
law so that a budget neutral transition to the calendar year
system can begin with CY 2000. Similarly, provisions for
special adjustments to the payment updates for CY 2001 to CY
2005 are specified so as to make the transition to the revised
updated adjustment factor formula budget neutral. The
subsection also clarifies that the Secretary make available
annual updates to the conversion factor on November 1, while
adding a new requirement that the Secretary make available an
early estimate of such conversion factor by March 1 each year.
In addition, MedPAC is instructed to review this early estimate
and comment on it in its annual report to Congress. The
subsection also includes conforming technical amendments.
Subsection (b) includes related changes to the existing
sustainable growth rate provision in Section 1848(f) of the
Social Security Act. These provisions clarify that starting in
CY 2000 the sustainable growth rate is also to be determined on
a calendar year basis. The date for publishing applicable rates
is moved to November 1, and the Secretary is required to begin
using the best available data to revise prior estimations of
the sustainable growth rate for up to two years after such an
estimate is first published. This provision is phased in on a
prospective basis to ensure budget neutrality.
Effective date
The changes made by this section are to be effective in
determining the conversion factor for physician services for
years beginning with 2001.
Reason for change
MedPAC recommended these changes to improve the accuracy of
physician payment updates, and to reduce the magnitude of
future oscillations in the update factor.
The Committee is also concerned about other physician
payment issues. The BBA instructed the Secretary to develop
resource-based practice expense relative to value units (RVUs)
to use in calculating relative payment values under the
Medicare physician fee schedule. The Committee agrees with
recent observations made by MedPAC and the General Accounting
Office that these practice expense RVUs may require refinement
during the transition period. Thus, the Committee urges the
Secretary to work with all interested parties to develop and
implement appropriate procedures to ensure the accuracy of the
practice expense RVUs as the transition to the resource-based
fee schedule continues. The Committee also notes that it will
continue to examine these activities to ensure that HCFA's
actions are consistent with the provision of high quality
medical care in all settings.
With regard to physician supervision of anesthesia services
under Medicare's Conditions of Participation, if the Secretary
determines that there is insufficient current scientific data
comparing mortality and adverse outcome rates in the provision
of anesthesia services to Medicare patients, the Secretary
should conduct a comparative outcome study and report back to
the Committee.
If the Secretary believes that she has sufficient mortality
and quality information regarding the provision of anesthesia
services by nurse anesthetists and anesthesiologists, then she
should make appropriate regulatory changes to ensure access to
quality care for Medicare beneficiaries.
Subtitle B--Hospital Outpatient Services
section 211. outlier adjustment and transitional pass-through for
certain medical devices, drugs, and biologicals
Current law
The BBA directed the Secretary to implement a prospective
payment system for hospital outpatient departments in 1999.
However, HCFA delayed implementation of the new system until
after the start of CY 2000 in order to ensure that ``year
2000'' data processing problems are fully resolved before the
new system is implemented. HCFA currently estimates that the
outpatient department prospective payment system will be
implemented in July 2000.
The BBA required that the outpatient prospective payment
system be designated so that the payments to hospital
outpatient departments would equal the aggregate amount that
would have been paid to hospitals in 1999 under old law, prior
to the prospective payment system. The law also changes the
coinsurnace amounts that beneficiaries would be required to pay
for hospital outpatient services.
Explanation of provision
The provision would create an outlier adjustment and a
transitional pass-through for certain medical devices, drugs,
and biologicals. The policy would be implemented on a budget
neutral basis. The outlier payments would be made for
exceptionally high cost cases. The variation in costs of
services within a group would be limited to no more than two
times greater than the lowest median cost (or mean cost, if the
Secretary chooses) for an item or service within a group. From
implementation until 2004, the outlier pool would be up to 2.5
percent of aggregate payment. For 2004 and beyond, the outlier
pool would be up to 3 percent.
The transitional pass-through would allow for additional
payments for orphan drugs, cancer therapy drugs and
biologicals, and new medical devices, drugs, and biologicals.
The Committee intends for the Secretary to include in the
definition of cancer therapy products anti-cancer
chemotherapeutic agents, as well as supportive care drugs and
biologicals (including, but not limited to, antiemetics,
hematopoietic growth factors, colony stimulating factors,
bisphosphonates, and biological response modifiers) used to
treat cancer and the symptoms and side-effects of cancer and
chemotherapy. A medical device, drug or biological would be
considered ``new'' if payments were not made for these items
before December 31, 1996. Any individual device, drug, or
biological would be given the pass-through for a period of at
least two, but not more than three years. The transitional
pass-through pool would be 2.5 percent from implementation
until 2003. For years 2004 and beyond, the pool would be 2
percent.
The Secretary is required to conduct a study of intravenous
immune globulin (IVIG) services in setting other than hospital
outpatient departments and physicians' offices to be completed
within one year of the date of enactment. The Secretary should
make recommendations on the appropriate manner and settings
under which Medicare should pay for these services delivered
outside a hospital or physician's office.
Effective date
Upon implementation of the hospital outpatient prospective
payment system. The report on IVIG should be submitted to
Congress within one year of enactment.
Reason for change
The Committee believes that HCFA plans for implementing the
outpatient prospective payment system (PPS), as described in
HCFA's September 7, 1998 proposed regulation, raise many
concerns. The proposal: (1) fails to provide adjustments for
high cost care; (2) does not adequately provide a transition to
include medical devices, drugs and biologicals in the system,
and; (3) will not be updated annually to keep pace with changes
in technology and medical practice. The Committee is making
several structural changes to improve the design of the
outpatient PPS and to assure that patients are not denied
access to needed care.
In the proposed regulation, HCFA classified many different
services with varying costs into a single payment group. In one
example, brachytherapy has been placed in a group with other
procedures that are much less costly. This could provide
disincentives to use this technology. The Committee believes
that while some level of variation is unavoidable, there should
not be wide variation that could potentially restrict access to
the most costly services. To address this problem, that
provision would place an upper limit on the variation of costs
among services included in the same group. The most costly item
or service in a group could not have a mean or median cost that
was more than twice the mean or median cost of the least costly
item or service in the group. To provide additional
flexibility, the Committee gives the Secretary the option to
base the relative payment weights on either the mean or median
cost of the items and services in a group.
The Committee recognizes that there may be unusual cases,
such as low volume items and services, and the Secretary is
given discretion to exempt these exceptional cases from the
limitation. The Committee expects that the Secretary would not
use this exception to include orphan drugs in a group that
contains very different resources.
In the proposed regulation, HCFA stated its intention not
to update the payment groups and rates annually. This is
different from the agency's process of annually updating the
inpatient prospective payment system. Given the rapid pace of
technological change as well as changes in medical practice,
the Committee requires the Secretary to review the outpatient
payment groups and amounts annually and to update them as
necessary.
The BBA gave the Secretary the discretion to make
additional payments (called outlier payments) to hospitals for
particularly costly costs. The Committee would require the
Secretary to make outlier payments in a budget neutral manner
and in a similar way as is currently done in the inpatient PPS.
The outlier pool would be established at any level up to 2.5
percent of total payments for the first three years under the
new system. After the third year, the pool could be set at any
level up to 3 percent of total payments.
While the statutory provisions for the inpatient PPS
require an outlier pool equal to a level between 5 and 6
percent of total inpatient PPS payments, the Committee believes
that the lower levels of 2.5 and 3.0 percent are more
appropriate for the outpatient PPS because the outpatient PPS
will make separate payments for most individual services
performed during an outpatient encounter. The allowed upper
limit on the size of the pool is increased after the third year
because the need for outlier payments may increase after the
temporary add-on payments for drugs and biologicals, described
below, are replaced with a transitional provision that applies
only to new products.
The Committee is concerned that HCFA's proposed payment
system does not adequately address issues pertaining to the
treatment of drugs, biologicals and new technology. The
Committee believes that these oversights could lead to
restricted beneficiary access to drugs, biologicals and new
technology. The provisions would establish transitional
payments to cover the added costs of certain services involving
the use of medical devices, drugs and biologicals. Hospitals
using these drugs, biologicals and devices would be eligible
for additional payments.
The duration of the transitional payment would be for a
period of at least two years but not more than three years. For
drugs and biologicals used in cancer therapy and orphan drugs,
the period would begin with the implementation date of the
outpatient PPS. This also would be the period applicable to
medical devices first paid as an outpatient hospital service
after 1996 but before implementation of the outpatient PPS (as
well as for any other item or service eligible for the
additional payments at the inception of the outpatient PPS
because of insufficient data or use of the Secretary's
discretion). For products first paid as an outpatient service
after implementation of the outpatient PPS, the transitional
payment would begin with the first date on which payment is
made for the device, drug or biological as an outpatient
hospital service and continue for at least two, but no more
than three, years.
The Committee expects the Secretary to develop a process to
deal with new devices, drugs and biologicals introduced after
the outpatient fee schedule for a particular year has been set.
This process should include assigning an appropriate code (or
codes) to the product and establishing the amount of the add-on
payment. New codes and add-on payment amounts should be made
effective quarterly.
The amount of the additional payment to hospitals, before
applying the limitation described below, should equal the
amount specified for the new technology less the average cost
included in the outpatient payment schedule for the existing
technology. Specifically, for drugs and biologicals, the amount
of the additional payment is the amount by which 95 percent of
the Average Wholesale Price (AWP) exceeds the portion of the
applicable outpatient fee schedule amount that the Secretary
determines is associated with the drug or biological.
Similarly, for new medical devices, the add-on payment is the
amount by which the hospital's charges for the device, adjusted
to cost, exceed the outpatient fee schedule amount associated
with the device.
The total amount of additional payments in a year should
not exceed a prescribed percentage of total projected payments
under the outpatient prospective payment system. The applicable
percentages are: (1) 2.5 percent for the first three years
after implementation of the new outpatient payment system; and
(2) up to 2.0 percent in subsequent years. In setting the
hospital outpatient department (OPD) rates and add-on amounts
for a particular year, the Secretary will estimate the total
amount of additional payments that would be made based on the
add-on amounts specified above and the expected utilization for
each service. If the estimated total amount exceeds the
percentage limitation, the Secretary will apply a pro rata
reduction to the add-on payment amounts so that projected total
payments are within the limitation.
The Committee wishes to make it clear that these changes
are budget neutral, and do not alter the rules for determining
the beneficiary coinsurance. As specified in the BBA,
beneficiary coinsurance for each service or group of services
is frozen at 20 percent of the median charge for the service
(or group of services) in 1996 (adjusted to 1999 to account for
inflation). The coinsurance amount remains frozen at that level
until it equals 20 percent of the outpatient fee schedule.
On a related policy, the Committee notes that, while
Medicare covers drugs and biologicals that are administered in
a hospital or physician office, the program does not cover
these therapies if they are self-administered by the patient at
home for the treatment of the same disease or condition, even
though this may in some cases be more cost-effective. With this
in mind, the Committee asks the Secretary to review current
coverage policy with respect to self injectable biologicals
that may provide alternative therapies (than those currently
covered by Medicare) for use in the treatment of chronic
diseases, including rheumatoid arthritis. The Secretary should
consider the costs and methods of administration when assessing
the efficacy, safety, and costs of currently covered therapies
as compared to self-administrable therapeutic alternatives.
Section 212. Establishing a Transitional Corridor for Application of
OPD PPS
Current law
The BBA required the Secretary to implement a prospective
payment system for hospital outpatient departments (OPD) in
1999. One of the objectives of the PPS was to contain future
rates of cost growth.
Explanation of provision
The provision would establish a three-year corridor system
whereby a hospital would receive additional payments if their
payments under the new system were less than their payments
under the pre-BBA 1997 payment method. During years before
January 1, 2002, hospitals would receive 80% of their first 10%
of losses, 70% of the next 10% of losses, and 60% of the next
10% of losses. During the second year, the adjustments would
change to 70% of the first 10% of losses, and 60% of the next
10% of losses. In the third year, hospitals would receive 60%
of their first 10% of losses.
The Secretary is required to submit a report and
recommendations to Congress by July 1, 2002 on whether a
hospital outpatient prospective payment system (PPS) should
continue to apply to Medicare Dependent Hospitals, Sole
Community Hospitals, rural health clinics, rural referral
centers, and other rural hospitals.
Effective date
Upon implementation of the hospital outpatient prospective
payment system.
Reason for change
This provision provides a temporary transition for
hospitals to adjust to the new prospective payment system. The
approach is intended to offer incentives for improving
efficiency while protecting hospitals from large financial
losses. The study to be conducted by the Secretary is necessary
to assess the impact of the PPS on rural health care providers
and to determine whether these rural providers should remain
subject to the outpatient PPS after the transitional corridor
has ended.
Section 213. Delay in Application of Prospective Payment System to
Cancer Center Hospitals
Current law
The BBA permitted the Secretary to delay by one year the
application of the outpatient prospective payment system to
cancer center hospitals.
Explanation of provision
This provision would direct the Secretary to delay the
application of the outpatient prospective payment system to
services furnished by cancer center hospitals until the first
day of the first year that begins two years after the
outpatient PPS is implemented.
Effective date
Upon enactment.
Reason for change
The Committee is concerned about the impact of the new
outpatient PPS on caner center hospitals and directs the
Secretary to exempt these centers from the outpatient PPS for
two years so that the potential impact of the new payment
method on these centers can be assessed.
Section 214. Limitation on Outpatient Hospital Copayment for a
Procedure to the Hospital Deductible Amount
Current law
Currently, beneficiaries pay 20 percent of charges for
outpatient services.
Explanation of provision
This provision would limit the beneficiary copayment amount
on outpatient services to the inpatient hospital Part A
deductible amount.
Effective date
Upon implementation of the hospital outpatient prospective
payment system.
Reason for change
As services and procedures are moved from the inpatient to
the outpatient setting, the Committee believes that beneficiary
obligations should be held to the amount of the inpatient
hospital Part A deductible. The Committee believes that the
limitation of beneficiary copayments to no more than the cost
of the hospital deductible ($776 in 2000) is an appropriate
modification. There are some medical procedures where the
beneficiary copay exceeds the hospital deductible. In several
cases, the beneficiary faces a $2000 or $3000 bill. This
provision is an important protection for beneficiaries and
ensures that the hospital outpatient department reforms of the
BBA provide some immediate help in high-cost cases.
Subtitle C--Other
section 221. application of separate caps to physical and speech
therapy services
Current law
The BBA established annual payment limits for all
outpatient therapy services provided by non-hospital providers.
The limits apply to services provided by independent therapists
as well as to those provided by comprehensive outpatient
rehabilitation facilities (CORFs), skilled nursing facilities
(under Part B), and other rehabilitation agencies. The limits
do not apply to outpatient services provided by hospitals.
There are two per beneficiary limits. The first is a $1,500
per beneficiary annual cap for all outpatient physical therapy
services and speech language pathology services. The second is
a $1,500 per beneficiary annual cap for all outpatient
occupational therapy services. Beginning in 2002, the amount
will increase by the Medicare Economic Index (MEI), rounded to
the nearest multiple of $10.
Explanation of provision
The provision would create separate $1,500 caps for
physical therapy and speech-language pathology services which
would be applied to services furnished on a per beneficiary,
per facility (or provider) basis. The cap on occupational
therapy services would also be applied on a per beneficiary,
per facility (or provider) basis.
Effective date
This provision would become effective for services
furnished on or after January 1, 2000.
Reason for change
The Committee believes that this provision would provide
additional flexibility under the caps while maintaining the
need to control the growth of therapy services.
section 222. transitional outlier payments for therapy services for
certain high acuity patients
Current law
The therapy caps established by the BBA apply to all
outpatient therapy services provided by non-hospital providers.
The caps apply equally to all beneficiaries regardless of the
amount of services needed or their acuity level.
The BBA requires the Secretary to report to Congress, no
later than January 1, 2001, recommendations for a revised
coverage policy of outpatient physical therapy services and
outpatient occupational therapy services. This revised policy
would be based on a classification of individuals by diagnostic
category and prior use of services, in both inpatient and
outpatient settings. This would be in place of uniform dollar
limitations. The recommendations are required to include how a
system of durational limits by diagnostic category might be
implemented in a budget neutral manner.
Explanation of provision
This provision directs the Secretary to establish a process
so that a facility could apply to the Secretary for an increase
in the limit for services furnished in CY 2000 and CY 2001. The
process would take into account clinical diagnosis and would
not exceed $40 million in FY 2000, $60 million in FY 2001 and
$20 million in FY 2002.
Effective date
This provision is in effect for CY 2000 and CY 2001.
Reason for change
This provision recognizes that some individuals who require
intensive and frequent therapy services are unable to receive
these services in a hospital outpatient department, and
therefore, may exceed the caps that are applied in other
settings. By providing for outlier payments for certain high
acuity patients, these high cost individuals would have greater
access to these services. The Committee is concerned that HCFA
has taken no significant action yet to develop the report
called for in the BBA which would enable payment for outpatient
rehabilitation services on the basis of a classification of
individuals by diagnostic category and prior use of services.
The development of such a system is essential to replacing the
system of rehabilitation caps.
section 223. update in renal dialysis composite rate
Current law
Dialysis facilities providing care to beneficiaries with
end-stage renal disease (ESRD) receive a fixed prospective
payment amount for each dialysis treatment. This composite rate
also includes payment for tests, services, drugs and supplies
routinely required for dialysis treatment. The base composite
rate is $126 for hospital-based providers and $122 for free-
standing facilities. P.L. 101-508 required that the composite
payment rate to dialysis facilities be increased by $1 above
the rate that was in effect as of September 30, 1990. The
composite rate has not been changed since then.
Explanation of provision
This provision would provide an update of 1.2% to the
composite rate payment for dialysis services furnished during
CY 2000 and an update of 1.2% in CY 2001. The provision also
calls for MedPAC to conduct a study on the use of home dialysis
services by Medicare beneficiaries. MedPAC should make further
recommendations to Congress within one year of enactment.
Effective date
January 1, 2000.
Reason for change
This provision would provide an update to the composite
rate for dialysis services, which, according to MedPAC, ``has
remained essentially unchanged since 1983.'' The Committee asks
that MedPAC and HCFA report on whether quality of care could be
improved and payments be made more appropriately if billings
outside the composite rate were reviewed to include an
appropriate mix of additional laboratory tests, pharmaceuticals
(other than erythropoietin) and nutritional services.
In the end stage renal disease area, Medicare covers the
first 36 months of immuno-suppressive drugs after a transplant.
As directed in the BBA, the Committee eagerly awaits the final
report of the Institute of Medicine on this issue, and expects
to examine the issue in the near future. The Committee is
interested in examining this issue to ensure that costly
transplants are not rejected due to the lack of coverage of
immuno-suppressive drugs, and so that these beneficiaries are
able to improve their quality of life by no longer needing
dialysis services.
section 224. temporary update in durable medical equipment and oxygen
rates
Current law
Medicare pays for durable medical equipment, oxygen and
oxygen equipment on the basis of fee schedules. Prior to the
BBA, the fee schedule amounts were updated annually by the
consumer price index for all urban consumers (CPI-U). In
general, the fee schedules established national payment limits
that are subject to floors and ceilings. The BBA eliminated the
1998 through 2002 updates for durable medical equipment. The
BBA reduced the national payment limit for oxygen and oxygen
equipment by 25% in fiscal year 1998 and by an additional 5% in
FY 1999. These reductions were to continue to be reflected in
payments for oxygen in subsequent years.
Explanation of provision
This provision would provide an update for the years 2001
and 2002 of CPI minus 2 percentage points.
Effective date
Upon enactment.
Reason for change
These provisions are intended to help reduce the impact of
BBA payment adjustments on durable medical equipment suppliers.
section 225. requirement for new proposed rulemaking for implementation
of inherent reasonableness policy
Current law
Section 1842(b) of the Social Security Act permits the
Secretary to increase or decrease certain payments under Part B
where the payment amount is ``grossly excessive or grossly
deficient and not inherently reasonable.'' Section 4316 of the
Balanced Budget Act of 1997 modified this authority requiring,
among other things, that the Secretary consider certain
factors, consult with industry and implement payment changes by
formal rulemaking procedures. The Secretary could not apply
factors that would increase or decrease the payment for an item
or service by more than 15% in any given year.
Explanation of provision
The provision requires the Secretary to publish new
proposed and final regulations establishing the procedures by
which the Secretary shall exercise inherent reasonableness
authority. The provision requires a minimum of sixty days for
the public to comment on the new proposed rule, and directs the
Secretary to take into account such comments before
promulgating a new final rule. The Secretary's authority under
section 1842(b) is suspended until the new regulations are in
place.
Effective date
Upon enactment.
Reason for change
In January 1998 the Secretary elected to implement the
changes made to section 1842(b) buy the Balanced Budget Act by
promulgating ``interim final regulations'' in 63 Fed. Reg. 687.
While public comment was solicited as part of this rule, the
Secretary chose not to respond publicly to these comments
before exercising modified inherent reasonableness authority
provided by section 1842(b) should be administered judiciously
and applied only after public concerns and suggestions about
proposed administrative criteria have been openly addressed.
Also, the rules should include an explanation of the
Secretary's costing methodology which should be based on
statistically valid and relevant data.
section 226. increase in reimbursement for pap smears
Current law
Medicare pays for diagnostic and screening pap smears under
regional clinical laboratory test fee schedules. Current
laboratory fees are based on 60% of prevailing charge data from
1984 and 1985. In addition, national payment caps limit the
amount that any carrier can pay for a given test to 74% of the
national median of the carriers fee schedule amounts for that
test. These fees are to be adjusted annually for inflation but,
due to provisions included in the BBA, are currently frozen
through 2002. The national payment cap for a pap smear under
current law is approximately $7.15. The particular technologies
providers may use in performing a reimbursable pap smear test
vary and the corresponding payment amounts are currently
determined on a carrier by carrier basis.
Explanation of provision
The provision would establish a national minimum payment
for a pap smear test of $14.60. It would also clarify that this
minimum payment rate would apply to pap smear tests conducted
using any FDA-approved cervical cancer screening technology. In
addition, a Sense of the Congress provision is included which
encourages the Secretary to closely monitor the appropriateness
of reimbursement rates for tests using new cervical cancer
screening technologies in the future.
Effective date
For services provided on or after January 1, 2000.
Reason for change
The Committee is concerned about evidence that suggests
that the prevailing reimbursement rates for pap smears are
largely inadequate to cover the cost of performing these tests,
particularly those utilizing newer and more sophisticated
screening technologies. The Committee is concerned that the
disparity between estimated costs and actual payments for pap
smears may undermine beneficiary future access to these
important preventive health tools, and in particular, diminish
beneficiary ability to benefit from new and improved diagnostic
technologies in this area.
section 227. refinement of ambulance services demonstration project
Current law
The BBA directed the Secretary to establish a demonstration
project in which a local government could enter into a contract
with the Secretary to furnish ambulance services under Part B
for individuals who live in the local government unit. The
contract must provide for at least 80% of the individuals who
are enrolled under Medicare Part B but who are not enrolled in
Medicare+Choice. Capitated payments are made to a local
government for those individuals. Currently, payments should be
95% of the first year of what otherwise would have been
payable, after which they should be adjusted for inflation.
Explanation of provision
This provision specifies that the Secretary publish a
request for proposals for the ambulance services demonstration
project by July 1, 2000. The provision also asks that the rate
for project be established with the most current data available
and so aggregate payments do not exceed what they otherwise
would have been.
Effective date
As if included in the BBA.
Reason for change
This provision ensures timely implementation of the
demonstration project.
section 228. additional provisions
Current law
Medicare does not currently cover services furnished in
post-surgical recovery care centers.
Explanation of provision
This provision would direct MedPAC to conduct a study on
the cost effectiveness of Medicare coverage of post-surgical
recovery care centers. Within one year of enactment, MedPAC
should make recommendations on the feasibility, costs and
savings of covering such services in its report to the
Congress.
Effective date
Upon enactment.
Reason for change
The Committee is interested in determining the cost
effectiveness of these post-surgical recovery care centers.
TITLE III. PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
section 301. adjustment to reflect administrative costs not included in
the interim payment system
Current law
The BBA required the Secretary to expand research on a
prospective payment system for home health agencies under the
Medicare program that ties prospective payments to a unit of
service, and it instructed the Secretary to undertake an
intensive effort to develop a reliable case-mix adjuster that
explains a significant amount of the variances in costs among
beneficiaries. It authorized the Secretary, beginning with cost
reporting periods beginning on or after October 1, 1997, to
require all home health agencies to submit additional
information that the Secretary considered necessary for the
development of a reliable case-mix system.
HCFA used this authority in the BBA to require home health
agencies to administer and report information from a data
collection instrument known as the Outcome and Assessment
Information Set (OASIS), which had been under design and pilot
testing for several years. OASIS will permit HCFA to obtain
information for refining the design and case mix adjustment of
the home health care prospective payment system. It is a
questionnaire required to be administered by a home health
worker to home health beneficiaries at the start of a spell of
care and occasionally thereafter. Data are to be encoded and
transmitted to state survey agencies.
Explanation of provision
This provision would provide a $10 payment to a home health
agency for each beneficiary to whom it furnishes services
during the agency's cost reporting period beginning in FY 2000.
Payment would be made in April 2000 and upon cost report
settlement.
Effective date
Upon enactment.
Reason for change
This provision is intended to assist home health agencies
with the administrative costs that are not included in the
interim payment system. The Committee also encourages the
Secretary to provide home health agencies with the opportunity
to repay overpayments (due to incorrect interim payment system
estimates) over a three-year period without interest costs.
section 302. delay in application of 15 percent reduction in payment
rates for home health services until one year after implementation of
prospective payment system
Current law
The BBA required the Secretary to implement a prospective
payment system for Medicare home health care cost reporting
periods beginning on or after October 1, 1999, and required
that the new system be designed to reduce the initial aggregate
cost of Medicare home health care by 15%. The BBA allows a
transition period for implementation of the new system of no
longer than 4 years. The BBA also specified that if the new
prospective payment system were not ready for implementation on
October 1, 1999, the interim payment system then in effect
would be changed to reduce cost limits and per beneficiary
limits by 15%.
The Omnibus Consolidated and Emergency Supplemental
Appropriations Act for Fiscal Year 1999 (P.L. 105-277) moved
implementation of the home health care prospective payment
system to portions of cost reporting periods beginning on or
after October 1, 2000, and moved the 15% reduction in cost
limits and per beneficiary limits to coincide with
implementation of the prospective payment system.
Explanation of provision
This provision would delay the 15% reduction in payment
rates for home health services until one year after the
implementation of the prospective payment system.
The Secretary is required to report to Congress on the need
for a 15% reduction, or for any reduction, in the base payment
amounts no later than 6 months after the Secretary implements
the home health prospective payment system.
Effective date
Upon enactment
Reason for change
This provision would delay the scheduled payment reduction
to allow home health agencies some time to transition to the
new prospective payment system. To ensure that further
reductions in home health payments are warranted, the Committee
directs the Secretary to analyze the need for further
reductions in home health payments. In addition, the Committee
encourages the Secretary to consider what changes would be
necessary to provide home health care agencies with the
flexibility to adopt new market innovations and new
technologies that can improve health outcomes while maintaining
the goals of quality of care and cost containment.
section 303. clarification of surety bond requirements
Current law
Home health agencies must provide the Secretary on a
continuing basis with a surety bond that is not less than
$50,000. HCFA regulations require the bond to be not less than
15% for the agency's Medicare payments in the previous year.
Explanation of provision
This provision clarifies that the surety bond requirement
for home health agencies should be effective for a period of 4
years and in an amount equal to the lesser of $50,000 or 10% of
the aggregate annual amount of payments to the agency.
Effective date
Upon enactment.
Reason for change
This provision would help to stabilize the financial
security of home health agencies, while still protecting
against fraud and abuse.
section 304. technical amendment clarifying applicable market basket
increase for pps
Current law
With respect to FY 2002 and FY 2003, the home health market
basket percentage increase is market basket minus 1.1
percentage points.
Explanation of provision
This provision clarifies that the reduction of 1.1
percentage points applies to both FY 2002 and FY 2003.
Effective date
Upon enactment.
Reason for change
This provision is a technical amendment that clarifies the
applicable market basket update for FY 2002 and FY 2003.
Subtitle B--Direct Graduate Medical Education
section 311. use of national average payment methodology in computing
direct graduate medical education (dgme) payments
Current law
Under section 1886(h) of the Social Security Act, Medicare
pays hospitals for its share of direct graduate medical
education (DGME) costs in approved programs using a count of
the hospital's number of full-time equivalent residents and a
hospital-specific historic cost per resident, updated for
inflation. In general, the BBA limited the number of residents
that hospitals may count for direct GME to the total recognized
by the hospital on or before December 31, 1996.
Explanation of provision
This provision would establish a national average per
resident payment amount, adjusted for differences in area
wages, for all hospitals with residency training programs
starting with cost report periods beginning on or after October
1, 2000. Hospitals would receive the greater of the national
average per resident amount or the sum of a percentage of the
hospital-specific per resident amount and a percentage of the
national average per resident amount. A transition period of
five years is provided for hospitals that have current per
resident amounts above the national average per resident
amount. A budget neutrality adjustment is made to ensure that
aggregate payments are not reduced as a result of the
transition.
Effective date
This provision would become effective with cost reporting
periods beginning on or after October 1, 2000.
Reason for change
This provision would establish a more rational and
equitable payment system for direct graduate medical education
costs similar to other prospective payment systems in the
Medicare program. The transition to the national average per
resident amount over a period of five years provides a gradual
glide path for those hospitals that have per resident amounts
above the national average, while the budget neutrality
adjustment ensures that aggregate payments have not been
reduced at the end of the transition.
Subtitle C--Other
section 321. gao study on geographic reclassification
Current law
The Omnibus Budget Reconciliation Act of 1990 (OBRA) 1990)
established the Medicare Geographic Classification Review Board
to evaluate hospitals' applications for reclassification to a
different geographic area. The Board may reclassify a hospital
for the purposes of determining its standardized amount, its
wage index, or both. Urban and rural hospitals can apply if the
hospital can prove, using established guidelines, that its
geographic assignment is inappropriate, because it competes for
patients and employees with hospitals located in other areas.
For FY 2000, there were 416 rural reclassified hospitals and 83
urban reclassified hospitals.
Explanation of provision
This provision requires the GAO to conduct a study of the
current laws and regulations for geographic reclassification
under the Medicare program and the special designations for
determining Medicare payments. The GAO would submit the study
to Congress within 18 months of enactment.
Effective date
Upon enactment.
Reason for change
The Committee notes that in recent years the geographic
reclassification process and the increasing number of special
designations for groups of hospitals have resulted in a system
that is administratively cumbersome. In addition, the system,
which relies on exceptions and waivers, lacks consistency and
undermines the ability of hospitals to implement long-term
planning. Most hospitals are required to reapply annually for
geographic reclassification with no certainty that they will
receive the desired wage index or standardized amount.
The Committee expects the GAO study to provide background,
rationale, and analytic justification for the current rural
definitions and exceptions process. The Committee hopes that
this report will be an important tool in helping the Congress
craft a more objective and equitable approach to Medicare
payment for rural hospitals. This will only become more
critical as the Congress considers extending geographic
reclassification to other types of prospective payment systems.
The Committee specifically asks the GAO to consider in its
analysis whether the geographic reclassification process should
be extended to other types of providers, particularly to
skilled nursing facilities.
Section 322. MedPAC Study on Medicare Payment for Non-Physician Health
Professional Clinical Training in Hospitals
Current law
The BBA required the MedPac, within two years of enactment
of the BBA, to make recommendations regarding whether and to
what extent payments are being made, or should be made, for
training in the nursing and allied health professions.
Explanation of provision
This provision would require MedPAC to conduct a study on
Medicare payment policy with respect to professional clinical
training of different classes of non-physician health
professionals. The Committee expects MedPAC to consider those
types of health professionals that Medicare currently supports,
such as nurses and allied health professionals, and those
categories that are not supported, such as psychologists and
physician assistants.
The Committee recognizes that MedPAC has considered this
issue in its BBA-mandated report on long-term policies for
graduate medical education. However, the Committee requires
additional explicit information on Medicare's role in financing
clinical training for non-physician health professionals. A
continuation of the existing effort, combined with quantitative
analysis, will provide the Committee with a sound foundation as
it grapples with all aspects of Medicare's support for health
professions training, including possible methodologies for
making payments and the entities that should receive them.
TITLE IV. RURAL PROVIDER PROVISIONS
Section 401. Permitting Reclassification of Certain Urban Hospitals as
Rural Hospitals
Current law
Medicare's payments to an acute hospital will vary
depending upon the geographic location of the hospital. The
Omnibus Budget Reconciliation Act of 1990 (OBRA 1990)
established the Medicare Geographic Classification Review Board
to evaluate hospital applications for reclassification to a
different geographic area. The Board may reclassify a hospital
for the purposes of determining its standardized amount, its
wage index, or both. Urban and rural hospitals can apply if the
hospital can prove, using established guidelines, that its
geographic assignment is inappropriate, because it competes for
patients and employees with hospitals located in other areas.
Explanation of provision
This provision would require the Secretary to establish a
process for hospitals located in urban Metropolitan Statistical
Areas (MSAs) to apply to be treated as rural hospitals,
supplement the federal criteria used to designate rural
providers, allow for state designation as a rural provider, and
permit urban hospitals to be designated as sole community
hospitals.
Effective date
This provision would become effective on January 1, 2000.
Reason for change
This provision would permit additional flexibility for
hospitals to reclassify for purposes of becoming rural
hospitals so that they may participate in Medicare as critical
access or sole community hospitals.
Section 402. Update of Standards Applied for Geographic
Reclassification for Certain Hospitals
Current law
Section 1886(d)(8)(B) of the Social Security Act requires
the Secretary to treat a hospital located in a rural county
adjacent to one or more urban areas as being located in the
urban Metropolitan Statistical Area (MSA) to which the greatest
number of rural workers commute if the rural county's aggregate
commuting rate (to all the contiguous MSAs) meets the standards
for designating outlier counties to MSAs (and New England
County Metropolitan Statistical Areas) that were published in
the Federal Register on January 3, 1980.
Explanation of provision
This provision would update the reclassification criteria
for hospitals located between two MSAs. For FY 2000, the 1980
census data would be used. A transition is provided for
discharges occurring during cost report periods during FY 2001
and 2002 for hospitals to choose between the standards
published in 1980 and 1990. Beginning with cost reporting
periods during FY 2003, standards would be based on the most
recent decennial population data published by the Bureau of the
Census as revised by the Office of Management and Budget.
Effective date
This provision is effective with discharges occurring
during cost reporting periods beginning on or after October 1,
1999.
Reason for change
This provision would update the standards which are used to
classify hospitals located between two MSAs from 1980 to 1990
census data and then to the most recently available decennial
population data for FY 2003 and subsequent years. The Committee
believes that a transition period for hospitals that might be
negatively affected by the change in the standard is
appropriate.
section 403. improvements in the critical access hospital (CAH) program
Current law
The BBA established the criteria for a small, rural,
limited service hospital to be designated as a critical access
hospital (CAH). These hospitals are required to be rural
nonprofit or public hospitals either located more than 35 miles
away (or given geographic constraints, 15 miles away) from
another hospital and certified by the State as a necessary
provider. The CAHs provide 24-hour emergency services, have up
to 15 acute care inpatient beds (or up to 25 beds if the CAH is
also a swing bed provider) and have hospital stays of no more
than 96 hours except under certain circumstances. For instance,
a longer inpatient stay is permitted if inclement weather or
other emergency circumstances prevent the transfer of a patient
to another hospital; alternatively, a peer review organization
or comparable entity may waive the 96-hour restriction on a
case-by-case basis. CAHs are exempt from the hospital
outpatient prospective payment system.
Explanation of provision
This provision would apply the 96-hour length of stay
limitation on an average annual basis. Not-for-profit hospitals
would be permitted to qualify for designation as critical
access hospitals. Hospitals that have closed within the past 10
years or facilities that have downsized may convert to critical
access hospitals. For outpatient services for cost reporting
periods beginning on or after October 1, 1999, hospitals may
choose between a cost-based hospital outpatient service payment
plus a fee schedule payment for professional services or an
all-inclusive rate. Upon enactment, coinsurance for clinical
diagnostic laboratory tests furnished by a CAH on an outpatient
basis would be eliminated. Statutory language would be
clarified to reflect that CAHs may participate in the swing bed
program.
Effective date
Upon enactment unless otherwise specified above.
Reason for change
This provision would strengthen and provide increased
flexibility for the critical access hospital program.
section 404. Five-Year Extension of Medicare Dependent Hospital (MDH)
Program
Current law
Medicare Dependent Hospitals (MDH) are small rural
hospitals that are not classified as sole community hospitals
and that treat relatively high proportions of Medicare
patients. From April 1, 1990 to April 1, 1993, MDHs has been
reimbursed as sole community hospitals. This special payment
status was phased out as of September 30, 1994. The BBA
reinstated and extended the MDH classification, starting on
October 1, 1997 through September 30, 2001. During that time
period, MDH hospitals will be paid at a national standardized
rate or, if higher, 50% of their adjusted FY 1982 or FY 1987
hospital-specific costs. These hospitals continue to be
protected from volume declines that are beyond their control.
Explanation of provision
This provision would extend the Medicare Dependent Hospital
program through FY 2005.
Effective Date
Upon enactment.
Reason for change
This provision would ensure the continuation of the
Medicare Dependent Hospital program beyond September 30, 2001
until September 30, 2005.
section 405. rebasing for certain sole community hospitals
Current law
Sole community hospitals are paid based on whichever of the
following amounts yields the greatest Medicare reimbursement
for the cost reporting period: (1) a hospital-specific target
amount based on its updated FY 1982 costs; (2) a hospital-
specific target amount based on its updated FY 1987 costs; or
(3) the federal national standardized amount.
Explanation of provision
This provision would allow those sole community hospitals
that now paid the Federal rate to rebase over time to their
1996 costs. Starting in FY 2001, these hospitals would receive
payments based on 25% of their 1996 costs and 75% of their 1982
or 1987 costs. In FY 2002, they would receive a 50/50 blend,
and in FY 2003, they would receive 25% of their 1982 or 1987
costs and 75% of their 1996 costs. In FY 2004, their rate would
be 100% of their 1996 costs.
Effective date
This provision becomes effective for discharges occurring
in FY 2001.
Reason for change
This provision would allow those hospitals that had low
costs in 1982 or 1987 to rebase gradually to their 1996 costs.
section 406. increased flexibility in providing graduate physician
training in rural areas
Current law
In general, the BBA limited the number of residents that
hospitals may count for direct GME to the total recognized by
the hospital on or before December 31, 1996.
Explanation of provision
This provision would allow hospitals located in rural areas
to increase their per resident limits by 30% for both direct
medical education and indirect medical education payments. It
also would permit non-rural facilities that operate separately
accredited rural training programs, or rural tracks, to
increase their resident limits.
Effective date
This provision would become effective with respect to
payments on or after October 1, 1999.
Reason for change
Individuals in rural areas often encounter difficulty in
receiving medical services near their home. This provision
provides increased flexibility to hospitals that train
residents in rural areas to provide greater access to these
needed services.
section 407. elimination of certain restrictions with respect to
hospital swing bed program
Current law
The Omnibus Budget Reconciliation Act of 1980 (OBRA 1980)
permitted certain rural hospitals with fewer than 50 beds to
use their inpatient facilities, as necessary, to furnish long-
term care services. The Omnibus Budget Reconciliation Act of
1987 (OBRA 1987) extended the Medicare swing-bed program to
rural hospitals with less than 100 beds with certain payment
limitations. These rural swing bed providers will be included
in the new SNF prospective per diem system no earlier than July
1, 1999.
Explanation of provision
This provision would eliminate the mandate that states
review the need for swing beds through the Certificate of Need
(CON) process. The provision also removes constraints on length
of stay while maintaining requirements for quality.
Effective date
The provision takes effect on the first day after the
expiration of the transition period to the SNF prospective
payment system.
Reason for change
This provision would provide flexibility for hospitals
between 50 and 100 beds that wish to participate more
extensively in the Medicare swing bed program.
section 408. grant program for rural hospital transition to prospective
payment
Current law
The BBA replaced and modified the existing Essential Access
Community Hospital (EACH) program with the Medicare Rural
Flexibility Program. As part of this program, the Secretary was
authorized to award grants to States that submitted
applications in accordance with development or approval of a
rural health plan for the purposes of engaging in activities
related to planning and implementing a rural health care plan
or rural health network, as well as activities related to
designating facilities as critical access hospitals.
Explanation of provision
This provision would modify the grant program to allow
rural hospitals with fewer than 50 beds to apply for grants not
to exceed $50,000 for meeting the costs associated with
implementing new prospective payment systems, such as the
purchase of computer software and hardware and the education
and training of staff.
Effective date
Upon enactment.
Reason for change
This provision would permit small rural hospitals to apply
for grants to help them adjust to the new prospective payment
systems required by the BBA.
section 409. medpac study of rural providers
Current law
There is no explicit provision in current law.
Explanation of provision
This provision would require MedPAC to conduct a study of
rural providers for Congress within 18 months of enactment. The
study would examine and evaluate the appropriateness of the
categories of special payments, and payment methodologies
established for rural hospitals and their impact on beneficiary
access and quality of services.
Effective date
The report is due within 18 months of enactment.
Reason for change
This provision would help Congress improve the
understanding of the needs of health care providers in rural
areas and make informed policy decisions.
section 410. expansion of access to paramedic intercept services in
rural areas
Current law
The BBA authorized coverage of advanced life support (ALS)
services provided by a paramedic intercept service provider in
a rural area when medically necessary to the individual being
transported and provided under contract with one or more
qualified volunteer ambulance services. The volunteer ambulance
service is certified, provides only basic life support
services, and is prohibited by State law from billing for any
services. The entity supplying the advanced life support
services is Medicare-certified and bills all recipients who
receive ALS services, regardless of whether the recipients are
Medicare eligible.
Explanation of provision
For purposes of paramedic intercept services, this
provision would allow States to designate an area as rural or
would allow an area located in a rural census tract of a
metropolitan statistical area (as determined by the Goldsmith
modification as published in the February 27, 1992 Federal
Register) to be treated as a rural area.
Effective date
Applies to paramedic intercept furnished on or after
January 1, 2000.
Reason for change
Many areas depend on paramedic intercept services for
survival of those who live in rural areas. A too-narrow
definition of a ``rural'' area may jeopardize the availability
of emergency services. The Committee believes that a State-
determined designation of a rural area or an area located in a
rural census tract of a Metropolitan Statistical Area should be
acceptable for purposes of expanding access to paramedic
intercept services.
TITLE V. PROVISIONS RELATING TO PART C
Subtitle A--Medicare+Choice
section 501. phase-in of new risk adjustment methodology
Current law
The BBA required the Secretary to develop and submit to
Congress by March 1, 1999 a report on the method of risk
adjustment that would be used to account for variations in per
capita costs based on health status. Medicare+Choice
organizations and risk contract plans would have to submit data
for inpatient hospital services that began on or after July 1,
1997, and data for other services that began on or after July
1, 1998. The Secretary could not require an organization to
submit data before January 1, 1998. Finally, the Secretary
would have to provide for implementation of a risk adjustment
payment methodology that accounts for variation in per capita
costs based on health status by no later than January 1, 2000.
The payment methodology would be applied uniformly without
regard to the type of plan.
Medicare+Choice payments to plans are currently adjusted
using demographic factors, including age, gender, coverage by
Medicaid, institutionalized status, and working status. The
Secretary has proposed use of the principal inpatient
diagnostic cost groups (PIP-DCG) method, which would supplement
demographic factors with health status factors. This
prospective model uses diagnoses in a base year to adjust
payment for a future payment year. Payment is determined by
each Medicare+Choice enrollee's risk factor, which will
initially be based on inpatient data using the PIP-DCG
adjusters. These adjusters predict incremental costs, above the
average for the demographic group, which are expected to be
incurred in the year after hospitalization. the Secretary has
proposed moving to comprehensive risk adjustments by 2004,
which would take into account a wider range of measures for
health status, not just hospitalization.
The Secretary has proposed a phase-in of the new risk
adjustment methodology such that Medicare+Choice payments would
reflect a blend of payments under the current demographic
adjustment procedure and the new PIP-DCG procedure. The
proposed phase-in schedule would be: 90% demographic/10% PIP-
DCG in 2000; 70% demographic/30% PIP-DCG in 2001; 45%
demographic/55% PIP-DCG in 2002; 20% demographic/80% PIP-DCG in
2003; and 10% risk adjustment in 2004.
Explanation of provision
The provision would hold the risk adjuster at the 90%
demographic/10% PIP-DCG blend for 2000 and 2001. In 2002, the
risk adjuster would be 80% demographic/20% PIP-DCG. In 2003,
the risk adjuster would be 70% demographic/30% PIP-DCG. In
2004, Medicare+Choice rates would be risk-adjusted based 100%
on data from multiple settings.
Effective date
These provisions would apply for 2001-2004.
Reason for change
This provision would provide Medicare+Choice and HCFA
additional time to transition to the new risk adjustment
methodology, so as to avoid dramatic changes in Medicare+Choice
payments which could destabilize the program and limit choices
for seniors.
The Committee notes that in 1997, when Congress required
the Secretary to develop a risk adjuster for Medicare+Choice
plans, it was concerned that those plans that treated the most
severely ill enrollees were not adequately paid. The Congress
envisioned a risk adjuster that would be more clinically-based
than the old method of adjusting payments. The Congress did not
instruct HCFA to implement the provision in a manner that would
reduce aggregate Medicare+Choice payments. In addition, the
Congressional Budget Office did not estimate that the provision
would reduce aggregate Medicare+Choice payments. Consequently,
the Committee urges the Secretary to revise the regulations
implementing the risk adjuster so as to provide for more
accurate payments, without reducing overall Medicare+Choice
payments.
The Committee also notes that as currently designed, the
proposed Medicare+Choice risk adjuster fails to account for
several unique aspects of Medicare's frail elderly population.
The Committee notes that the Secretary recently acknowledged
her authority to address this problem by waiving application of
the risk adjuster within the frail elderly demonstration
project commonly known as EverCare. The Committee notes that
the Secretary will begin implementation of a multi-setting risk
adjuster for all enrollees in 2004, and that such a risk
adjuster should be designed to better predict the unique costs
associated with caring for frail elderly beneficiaries.
Consequently, the Committee encourages the Secretary to
consider her ability to waive the application of the new risk
adjuster to such beneficiaries until that time.
The Committee also believes that Medicare enrollees with
end-stage renal disease (ESRD) could benefit by being offered
the opportunity to enroll in Medicare+Choice plans. However,
the Committee understands that the current risk adjuster may
not adequately reflect the varying costs of these patients and
requests further information from the Secretary so that it
might address this issue in the future. The Committee also
encourages the Secretary to develop proposed quality of care
requirements for Medicare beneficiaries with ESRD in this
report.
section 502. encouraging offering of medicare+choice plans in areas
without plans
Current law
For each beneficiary enrolled, the Medicare+Choice plan
receives the Medicare+Choice payment rate applicable to the
payment area (typically a county) in which the enrollee
resides, adjusted for risk. This rate is based on a formula
which gives the county the highest of three different rates: a
floor, or minimum payment rate, a minimum update rate, and a
blended rate.
The floor payment rate was set at $367 per month for aged
beneficiaries in 1998. Each year the floor is increased by an
annual update factor, equal to adjusted growth in Medicare
expenditures per capita, minus 0.8 percentage points in 1998,
and minus 0.5 percentage points annually from 1999 through
2002.
The minimum update rate was set at the county rate in 1997
increased by 2%. This rate increases 2% each year.
The blended rate represents an average of local and
national rates. The local rate is an area-specific capitation
rate, which is adjusted to remove the share of payments that
represent payments for graduate medical education (GME), with a
phase-out over 5 years. Beginning in 1998, local rates for
blending purposes had 20% of GME spending removed. The
reduction in GME payments is increased by 20% annually, until
all GME funds are removed from 2002 forward. The national rate
is the average of local area-specific payment rates, weighted
by the number of Medicare beneficiaries in each county. For
blending purposes, the national rate is input price-adjusted to
reflect differences in the costs of providing medical care
across counties. The blended rate is computed as follows: 90%
local/10% national in 1998; 82% local/18% national in 1999; 74%
local/26% national in 2000; 66% local/34% national in 2001; 58%
local/42% national in 2002; 50% local/50% national from 2003
onward.
Explanation of provision
The provision would encourage new Medicare+Choice plans to
enter counties that would otherwise not have a private plan
participating. The first plan to enter a previously unserved
county would receive a 5 percent added payment during their
first year and a 3 percent added payment during their second
year.
Effective date
This provision would apply during the 2-year period
beginning January 1, 2000.
Reason for change
In some counties, beneficiaries have access to only one
Medicare option: the fee-for-service Medicare program. This
temporary enhancement of payments will encourage new plans to
enter areas without Medicare+Choice options.
section 503. modification of five-year re-entry rule for contract
terminations
Current law
The law specifies that the Secretary cannot enter into a
Medicare+Choice contract with a Medicare+Choice organization,
if within the preceding five years, that organization had a
Medicare+Choice contract which it did not renew. An exception
may be made for special circumstances that warrant special
consideration, as determined by the Secretary.
HCFA has indicated that it will apply the prohibition only
in cases where the entire contract is nonrenewed. Thus, the ban
would not apply if an organization dropped a single county from
a service area while retaining the rest of the service area. It
would also not apply if a managed care organization nonrenewed
one plan under a contract but retained other plans in that
contract.
Explanation of provision
The provision would allow, under certain circumstances, a
plan to reenter a county if a legislative or regulatory change
that would increase Medicare+Choice payments in the area
occurred within 6 months of the plan's decision to terminate
its Medicare+Choice contract. A plan would be permitted reentry
only if, at the time it notified the Secretary of its intent,
there is no more than one Medicare+Choice plan offered in the
area.
Effective date
This provision applies to contracts occurring before, on,
or after the date of enactment.
Reason for change
Some plans left the Medicare+Choice program because of
increased administrative requirements and payment rate growth
that was lower than expected. Since this bill would make
payment changes affecting Medicare+Choice plans, this provision
would provide an opportunity for the plans to return to a
county, and therefore, increase options for beneficiaries.
section 504. continued computation and publication of aapcc data
Current law
The Secretary is required to announce Medicare+Choice
payment rates for each payment area, and risk and other factors
to be used in adjusting payments, not later than March 1 before
the calendar year concerned. At least 45 days before making the
announcement for a year, the Secretary must provide notice to
Medicare+Choice organizations of proposed changes to be made in
the methodology and assumptions used in the previous
announcement. The Secretary must also provide sufficient detail
so that Medicare+Choice organizations can compute monthly
adjusted Medicare+Choice capitation rates for individuals in
each Medicare+Choice payment area. The Secretary is not
required to publish adjusted annual per capita cost (AAPCC)
data. AAPCCs formed the basis of payments to managed care plans
prior to enactment of the BBA, and represented the costs of
providing Medicare benefits to beneficiaries under fee-for-
service care in each county nationwide. Because Medicare+Choice
payments are no longer directly tied to a payment area's fee-
for-service costs, AAPCCs have not been published.
Explanation of provision
This provision would require the Secretary to continue to
publish estimates of AAPCC data.
Effective date
Upon enactment.
Reason for change
This change will ensure that Congress can readily compare
the average per capita payments made under the Medicare+Choice
program to Medicare's average expenditures for a beneficiary in
the traditional fee-for-service program, on a county-by-county
basis.
section 505. changes in medicare+choice enrollment rules
Current law
Some HMOs have announced their intention not to renew their
Medicare+Choice contracts or to reduce the service area covered
by the contracts. These decisions become effective for the next
contract period which begins on January 1, 2000. Most
beneficiaries enrolled in these Medicare+Choice plans will be
able to enroll in another Medicare+Choice plan in their area.
Generally this would occur during the November 1999 open
enrollment period; coverage under the new plan would begin
January 1, 2000. These beneficiaries could also return to fee-
for-service Medicare. Beneficiaries in counties with no
available managed care plans will be automatically moved to
fee-for-service Medicare.
Currently, Medicare+Choice plan enrollees may enroll or
disenroll in a plan available to them at any point in the year.
Starting in 2002, in conjunction with the introduction of an
annual, coordinated election period for all beneficiaries, a
beneficiary's ability to change plans in the middle of the year
will be more limited. In 2002, beneficiaries may change their
plan election at any time during the first six months of the
year. In subsequent years, changes in plan election will only
be allowed in the first three months of the calendar year.
Beneficiaries returning to original Medicare have certain
rights with regard to the purchase of Medigap plans. Medigap
refers to individually purchased insurance policies which
supplement Medicare's benefits. Beneficiaries select a policy
from one of 10 standardized plans; these are known as Plan A
through Plan J.
Individuals who are enrolled with an HMO at the time its
contract terminates are guaranteed issue of any Medigap A, B,
C, or F that is sold to new enrollees by Medigap issuers in the
state. This choice must be exercised within 63 days of
termination of prior HMO coverage. Since prior coverage is
terminated at the end of the calendar year, the 63-day period
begins January 1, 2000.
Finally, if a Medicare+Choice plan reduces the size of its
service area such that certain enrollees would lose eligibility
for the plan, the plan may, if it meets specified requirements
established by the Secretary, offer such enrollees the option
of continuing enrollment in the plan if the plan can still
provide reasonable access within the geographic are to the full
range of basic benefits covered by Medicare.
Explanation of provision
Subsection (a) would modify the conditions under which an
individual would be entitled to a special election period to
include situations where the individual is notified of an
impending termination of certification of a plan or an
impending termination or discontinuation of the plan.
This provision would allow Medicare+Choice enrollees who
are in a plan that will no longer participate in the
Medicare+Choice program to choose a Medigap plan within 63 days
of receiving notice from their plan, rather than waiting for
the contract to end.
Subsection (b) would amend the Medicare+Choice enrollment
and disenrollment provisions so that institutionalized
beneficiaries could continue to enroll in Medicare+Choice plans
at any time during the year.
Subsection (c) provides for a new provision allowing plans
who reduce their service area to offer continuing enrollment to
prior enrollees who would otherwise lose coverage, if the
beneficiary agrees to travel to receive the full range of basic
elements (except emergency care and urgent care services) from
certain providers designated by the plan, and the beneficiary
has no other Medicare+Choice plan available to them in their
area of residence.
Effective date
Subsection (a) applies to notices of impending terminations
or discontinuations made before, on or after enactment.
However, notices made before the date of enactment will be
treated as having occurred on the date of enactment.
Subsections (b) and (c) are effective as if included in the
BBA.
Reason for change
Subsection (a) would enable beneficiaries in a
Medicare+Choice plan that is terminating its contract greater
latitude in arranging for subsequent coverage arrangements
under the Medigap program.
Subsection (b) is included to ensure that the general
enrollment restrictions that will accompany the annual,
coordinated election period beginning in 2002 will not preclude
beneficiaries who become institutionalized in the middle of the
year from enrolling in special coordinated care programs
provided by some Medicare+Choice plans at the time of the
institutionalization.
Subsection (c) is included to help minimize the effects of
recent plan withdrawals for certain enrollees. Where a plan
agrees, it will enable certain beneficiaries who would
otherwise lose access to Medicare+Choice the ability to retain
their health plan if they agree to travel to neighboring
communities to receive their services.
section 506. allowing variation in premium waivers within a service
area if medicare+choice payment rates vary within the area
Current law
In general, Medicare+Choice managed care plans offer
benefits in addition to those provided under Medicare's benefit
package. In certain cases, the beneficiary has the option of
selecting the additional benefits, while in other cases some or
all of the supplementary benefits are mandatory.
Some plans may require members to accept additional
benefits and pay extra for them in some cases. The amount a
plan may charge for additional benefits is based on a
comparison between the plan's adjusted community rate
(essentially the estimated market price) for the Medicare
package and the average of the Medicare+Choice payment rate. A
plan must offer ``additional benefits'' at no additional charge
is the plan achieves a savings from Medicare.
If the difference between the average Medicare+Choice
payment rate and the adjusted community rate (ACR) is
insufficient to cover the cost of additional benefits, the plan
may charge a supplemental premium for the benefits. Under
current law, the monthly basic and supplemental premiums cannot
vary among individuals enrolled in the plan.
Explanation of provision
This provision would allow Medicare+Choice plans to waive
part or all of the premiums if Medicare+Choice rates vary
within the service area.
Effective date
The provision would be effective for contract years
beginning on or after January 1, 2001.
Reason for change
This provision recognizes that payment rates to plans vary
by county, and would allow greater flexibility to better
reflect the actual costs of providing supplemental benefits in
each county.
section 507. delay in deadline for submission of adjusted community
rates and related information
Current law
The BBA required Medicare+Choice plans to submit adjusted
community rate (ACR) proposals by May 1 of the previous
calendar year. Medicare+Choice organizations are required to
submit ACR proposals to show that the benefit packages they
plan to market neither exceed cost sharing for traditional
Medicare plans nor unfairly charge enrollees for additional
benefits.
Under the law in effect prior to the BBA, risk plans had a
November 15 deadline for submission of their ACRs. The earlier
deadline means that Medicare+Choice organizations must now
project future payments and costs six months further into the
future. The earlier deadline was selected, in part, to ensure
HCFA had the time both to review and approve submissions and to
include information on all plan choices in the information sent
to beneficiaries before the annual open enrollment season.
Explanation of provision
The provision would change the date for ACR submission from
May 1 to July 1. Also, the provision would modify the
requirement that the Secretary make available to beneficiaries
during the annual open enrollment period comparative
information on all plan choices. This requirement would apply
to the extent that such information was available at the time
of preparation of the material for mailing.
Effective date
Upon enactment.
Reason for change
This change will shorten the time between a plan's ACR
submission and the start of an associated contract year, and
thereby, enable plans to predict more accurately the probable
costs of benefits included in their proposed ACR submissions.
Despite this change, the Committee notes that HCFA will know by
mid-August of each year what the final plan premiums and
benefits will be for each Medicare+Choice plan for the
following calendar year. To help employees who sponsor retiree
health benefits coordinate their own annual enrollment
procedures, the Committee urges the Secretary to make this
information available to such employers as soon as possible.
section 508. 2 year extension of medicare cost contracts
Current law
Prior to enactment of the BBA, beneficiaries were able to
enroll in risk-based HMOs and they could also enroll
organizations with cost contracts. These entities were required
to meet essentially the same conditions of participation as
risk contractors. Under a cost contract, Medicare pays the
entity the patient cost incurred in furnishing covered
services.
The BBA replaced the risk program with Medicare+Choice. It
also specifies cost-based contracts could not be renewed after
December 31, 2002.
Explanation of provision
The provision would extend the cost contract program
through 2004.
Reason for change
This provision ensures that beneficiaries currently
receiving benefits through the cost contract program can
continue to receive such benefits through 2004. By this time,
better payment methodologies for Medicare+Choice plans,
including the use of a multiple setting risk adjuster, should
be in place.
section 509. Medicare+Choice nursing and allied health professional
education and earmark
Current law
The calculation of the Medicare+Choice payment rates
includes payments for teaching hospitals operating residency
training programs. The BBA carved-out the costs attributable to
graduate medical education (GME) payments for physicians over a
5-year period and required additional payments to teaching
hospitals when they treat Medicare+Choice enrollees. Medicare
also recognizes the costs of training nurses and allied health
professionals, but the BBA did not remove these payments from
the Medicare+Choice payment rates.
Explanation of provision
The provision would set aside a fixed amount of dollars
from the GME funds already carved-out of the Medicare+Choice
rates under the BBA, and pay them to hospitals that train
nurses and allied health professionals that care for
Medicare+Choice enrollees.
Effective date
January 1, 2000.
Reason for change
This provision ensures that hospitals with nursing and
allied health training programs that serve Medicare+Choice
enrollees receive funding for the portion of these costs that
are attributable to Medicare.
section 510. miscellaneous changes and studies
Current law
Current law permits religious fraternal benefit societies
that offer Medicare+Choice plans to restrict enrollment in such
plans to their members. Currently this allowable restriction
applies only to coordinated care plans.
Under current law, the county-level per capita payment
rates for Medicare+Choice plans are based on average spending
per beneficiary in the traditional fee-for-service program.
There are no considerations given to the amount of health
services which beneficiaries in a given community may obtain
from Department of Defense or Department of Veterans Affairs
health facilities in this calculation.
Section 4207 of the BBA established an Informatics,
Telemedicine and Education demonstration project to evaluate
the potential for using telemedicine networks to improve the
primary care of beneficiaries with diabetes mellitus. The
project is aimed at beneficiaries residing in medically
underserved rural or inner-city areas. The project was
initially scheduled to begin on May 1998. To date, the
Secretary has made no grants under the program.
Explanation of provision
Subsection (a) would allow religious benefit societies to
offer any type of plan that would qualify under the
Medicare+Choice program.
Subsection (b) would require the Secretary, jointly with
the Secretary of Defense and the Secretary of Veterans Affairs,
to submit to Congress within one year a report estimating the
use of health care services furnished by the Departments of
Defense and the Department of Veterans Affairs by Medicare
beneficiaries.
Subsection (c) would make technical refinements to the
Information, Telemedicine and Education demonstration project
and require the Secretary to make an award initiating the
project within three months of the date of enactment.
Effective date
Upon enactment.
Reason for change
Subsection (a) would increase the range of health plan
choices available to Medicare beneficiaries. Subsection (b) is
intended to provide the Committee with the means to evaluate
the extent to which Medicare+Choice payment rates are
understated in areas with large veteran or military retiree
populations, and to help the Committee develop potential
legislative changes addressing this issue in the future.
Subsection (c) is included to prompt the Secretary to take the
steps necessary to begin implementing the telemedicine
demonstration project required by Congress in the BBA.
Technical corrections to this project are included to simplify
and clarify various copay, cost-sharing, and geographical
definitions so as to ensure that the demonstration is of help
to the low-income residents it was initially designed to serve.
The changes are also intended to ensure that an agreement on
cost sharing can be reached expeditiously.
section 511. medpac on medicare msa (medical savings account) plans
Current law
Medicare allows Medicare+Choice plans to offer Medical
Savings Accounts (MSAs) to beneficiaries. To date, no plans
have participated in the program.
Explanation of provision
The provision would require MedPAC to submit to Congress a
report on specific legislative changes that would make Medical
Savings Account (MSA) plans a viable option under the
Medicare+Choice program.
Effective date
The report is due 12 months after enactment.
Reason for change
The provision is included to identify possible changes in
policy that would make Medicare MSA plans a more viable option
for beneficiaries in the future.
section 512. clarification of nonapplicability of certain provisions of
discharge planning process to medicare+choice plans
Current law
The BBA amended Medicare's discharge planning requirements
to ensure that patients were not directed to a single post-
acute care facility (such as a home health agency, nursing
home, rehabilitation hospital, or other entity). This provision
ensures that patients in Medicare fee-for-service are given an
opportunity to choose their post-discharge care from those
providers available in their area.
Explanation of provision
The section provides an exception from the discharge
notification requirement for enrollees in Medicare+Choice
plans.
Effective date
Upon enactment.
Reason for change
The BBA did not recognize that Medicare+Choice plans
maintain contractual relationships with a selected number of
post-acute providers and, as part of their efforts to
coordinate care and manage treatment costs, and need to direct
patients to those providers with which it has contracts. A
Medicare+Choice plan, and the hospitals it contracts with,
cannot efficiently administer discharge planning activities
without the ability to direct enrollees to specific quality and
cost conscious providers.
Subtitle B--Managed Care Demonstration Projects
secton 521. extension and expansion of social health maintenance
organization demonstration project authority
Current law
The Deficit Reduction Act of 1984 required the Secretary to
grant 3-year waivers for demonstrations of social health
maintenance organizations (SHMOs) which provide integrated
health and long-term care services on a prepaid capitation
basis. The waivers have been extended on several occasions
since then, and a second generation of projects was authorized
by the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990).
The BBA extended waivers for social health maintenance
organizations through December 31, 2000, and expanded the
number of persons who can be served per site from 12,000 to
36,000.
Explanation of provision
The provision would extend the SHMO demonstration until 18
months after the date that the Secretary reports to Congress on
her findings. In addition, the caps on individual sites would
be eliminated, while maintaining the aggregate cap of 324,000
participants.
Effective date
Upon enactment.
Reason for change
The provision ensures that beneficiaries currently
receiving benefits through the SHMO demonstration project can
continue to receive such benefits until 18 months after the
date that the Secretary reports back to Congress on the
effectiveness of this program. At this time, Congress will be
better able to consider the merits of the program and possible
improvements in payment methodologies for all Medicare+Choice
plans, such that the objectives of the SHMO program can
continue to be served.
section 522. extension of certain medicare community nursing
organization demonstration projects
Current law
The Community Nursing Organization (CNO) demonstration
project was established to evaluate the ability of community
nursing organizations to deliver coordinated community nursing
and ambulatory care services to Medicare Part B beneficiaries.
Currently, the project is being conducted at four sites
(Tucson, AZ; Urbana, IL; Minneapolis, MN; New York, NY).
Although Congress first authorized these projects as part of
the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987), they
did not begin until January 1994. The BBA subsequently extended
the project for two years, through 1999.
Explanation of provision
This provision extends the CNO demonstration project for
two years, through 2001. It also requires the Secretary to
submit, not later than July 1, 2001, a report, based on data
collected from the project through 2000, analyzing the
effectiveness of the CNO delivery model.
Effective date
Upon enactment.
Reason for change
The provision is included to give the Secretary additional
time to study the long-term effectiveness of the community
nursing organization delivery model. The Committee notes that
HCFA was initially slow to begin this project, and that a
report on the project, which was due on July 1, 1999, has not
yet been submitted to Congress for its review. The Committee
believes that by extending the project for an additional two
years the Secretary will be better able to evaluate the
potential of the CNO model in caring for beneficiaries over
extended periods of time. Similarly, the extension will allow
for a complete report, which takes into account data collected
over a longer period of time, to be submitted to Congress by
July 1, 2001.
Seciton 523. Medicare+Choice Competitive Bidding Demonstration Project
Current law
Section 4011 of the BBA established a demonstration project
to evaluate the potential for using competitive pricing
practices to establish payment rates for Medicare+Choice plans.
The law requires the Secretary to designate seven Medicare
payment areas to be included in the demonstration project.
Section 4012 of the BBA required the Secretary to establish the
Competitive Pricing Advisory Committee (CPAC), as well as
advisory committees in each of the designated areas, to help
implement the project. To date the Secretary has designated two
areas in which to begin the project: Kansas City, MO and
Phoenix, AZ. However, concerns over the design of the
demonstration project have prompted the CPAC to announce that
the project would not get underway in either locality until
January 1, 2001, at the earliest.
Explanation of provision
This provision would delay implementation of the
competitive pricing demonstration project until January 1, 2002
or six months after the date at which the CPAC report to
Congress on several specified issues related to the project's
preliminary design, whichever is later. In particular, CPAC
would be required to report on the feasibility of expanding the
demonstration to include the traditional fee-for-service
Medicare program, the proposed quality monitoring and
improvement requirements for the project, the current viability
of extending the project to a rural site, and several plan
benefit structure issues related to the project. In addition,
the language establishing the demonstration project is modified
to allow plans who submit competitive prices to offer
prospective enrollees rebates on all or part of their Part B
premiums.
Effective date
Upon enactment.
Reason for change
This provision is designed to give both CPAC and Congress
more time to resolve some of the initial concerns that have
been raised about the demonstration project, as it is currently
designed. By delaying the start date an additional year, and by
tasking CPAC to report back on the identified areas of concern,
the Committee believes appropriate modifications to the project
can be implemented before its inauguration so as to improve its
chances of success. Similarly, the additional time provided by
the delay will afford the Secretary, CPAC and the area advisory
committees additional time to work with the communities
designated under the project to resolve outstanding issues of
concern.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the votes of the Committee on Ways and Means in its
consideration of the bill, H.R. 3075.
motion to report the bill
The bill, H.R. 3075, as amended, was ordered favorably
reported by a roll call vote of 26 yeas and 11 nays (with a
quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Crane...................... X ........ ......... Mr. Stark........ ........ X .........
Mr. Thomas..................... X ........ ......... Mr. Matsui....... ........ X .........
Mr. Shaw....................... X ........ ......... Mr. Coyne........ ........ X .........
Mrs. Johnson................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Houghton................... X ........ ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. McCrery.................... X ........ ......... Mr. Kleczka...... X ........ .........
Mr. Camp....................... ........ ........ ......... Mr. Lewis (GA)... ........ X .........
Mr. Ramstad.................... X ........ ......... Mr. Neal......... X ........ .........
Mr. Nussle..................... X ........ ......... Mr. McNulty...... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Jefferson.... ........ ........ .........
Ms. Dunn....................... X ........ ......... Mr. Tanner....... X ........ .........
Mr. Collins.................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Portman.................... X ........ ......... Mrs. Thurman..... ........ X .........
Mr. English.................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Watkins.................... X ........ ......... ................. ........ ........ .........
Mr. Hayworth................... X ........ ......... ................. ........ ........ .........
Mr. Weller..................... X ........ ......... ................. ........ ........ .........
Mr. Hulshof.................... X ........ ......... ................. ........ ........ .........
Mr. McInnis.................... X ........ ......... ................. ........ ........ .........
Mr. Lewis (KY)................. X ........ ......... ................. ........ ........ .........
Mr. Foley...................... X ........ ......... ................. ........ ........ .........
----------------------------------------------------------------------------------------------------------------
Votes on Amendments
Roll call votes were conducted on the following amendment
to Mr. Thomas' amendment in the nature of a substitute.
An amendment by Mrs. Thurman and Mr. Doggett to Title I,
relating to hospital purchases of outpatient prescription
drugs, was defeated by a roll call vote of 15 yeas to 22 nays.
The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... ........ X ......... Mr. Rangel....... X ........ .........
Mr. Crane...................... ........ X ......... Mr. Stark........ X ........ .........
Mr. Thomas..................... ........ X ......... Mr. Matsui....... X ........ .........
Mr. Shaw....................... ........ X ......... Mr. Coyne........ X ........ .........
Mrs. Johnson................... ........ X ......... Mr. Levin........ X ........ .........
Mr. Houghton................... ........ X ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... ........ X ......... Mr. McDermott.... X ........ .........
Mr. McCrery.................... ........ X ......... Mr. Kleczka...... X ........ .........
Mr. Camp....................... ........ ........ ......... Mr. Lewis (GA)... X ........ .........
Mr. Ramstad.................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Nussle..................... ........ X ......... Mr. McNulty...... X ........ .........
Mr. Johnson.................... ........ X ......... Mr. Jefferson.... ........ ........ .........
Ms. Dunn....................... ........ X ......... Mr. Tanner....... X ........ .........
Mr. Collins.................... ........ X ......... Mr. Becerra...... X ........ .........
Mr. Portman.................... ........ X ......... Mrs. Thurman..... X ........ .........
Mr. English.................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Watkins.................... ........ X ......... ................. ........ ........ .........
Mr. Hayworth................... ........ X ......... ................. ........ ........ .........
Mr. Weller..................... ........ X ......... ................. ........ ........ .........
Mr. Hulshof.................... ........ X ......... ................. ........ ........ .........
Mr. McInnis.................... ........ X ......... ................. ........ ........ .........
Mr. Lewis (KY)................. ........ X ......... ................. ........ ........ .........
Mr. Foley...................... ........ X ......... ................. ........ ........ .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Stark, to add a new Title VI, relating
to Medicare offsets, was defeated by a roll call vote of 15
yeas to 22 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... ........ X ......... Mr. Rangel....... X ........ .........
Mr. Crane...................... ........ X ......... Mr. Stark........ X ........ .........
Mr. Thomas..................... ........ X ......... Mr. Matsui....... X ........ .........
Mr. Shaw....................... ........ X ......... Mr. Coyne........ X ........ .........
Mrs. Johnson................... ........ X ......... Mr. Levin........ X ........
Mr. Houghton................... ........ X ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... ........ X ......... Mr. McDermott.... X ........ .........
Mr. McCrery.................... ........ X ......... Mr. Kleczka...... X ........ .........
Mr. Camp....................... ........ ........ ......... Mr. Lewis (GA)... X ........ .........
Mr. Ramstad.................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Nussle..................... ........ X ......... Mr. McNulty...... X ........ .........
Mr. Johnson.................... ........ X ......... Mr. Jefferson.... ........ ........ .........
Ms. Dunn....................... ........ X ......... Mr. Tanner....... X ........ .........
Mr. Collins.................... ........ X ......... Mr. Becerra...... X ........ .........
Mr. Portman.................... ........ X ......... Mrs. Thurman..... X ........ .........
Mr. English.................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Watkins.................... ........ X ......... ................. ........ ........ .........
Mr. Hayworth................... ........ X ......... ................. ........ ........ .........
Mr. Weller..................... ........ X ......... ................. ........ ........ .........
Mr. Hulshof.................... ........ X ......... ................. ........ ........ .........
Mr. McInnis.................... ........ X ......... ................. ........ ........ .........
Mr. Lewis (Ky)................. ........ X ......... ................. ........ ........ .........
Mr. Foley...................... ........ X ......... ................. ........ ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made:
The Committee agrees with the estimate prepared by the
Congressional Budget Office (CBO) which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
Committee bill results in increased federal direct spending of
$10.5 billion over 5 years.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives requiring a cost estimate
prepared by the Congressional Budget Office (CBO), the
following report prepared by CBO is provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 29, 1999.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed revised cost estimate for H.R. 3075, the
Medicare Balanced Budget Refinement Act of 1999. This estimate
supercedes the estimate provided earlier today by correcting an
error with regard to certain payments to hospitals for patients
enrolled in a Medicare+Choice plan. As a result, our estimate
of the 5-year costs of H.R. 3075 has declined from $10.7
billion to $10.5 billion.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Tom Bradley.
Sincerely,
Dan L. Crippen, Director.
Enclosure.
H.R. 3075--Medicare Balanced Budget Refinement Act of 1999
Summary: The Medicare Balanced Budget Refinement Act would
modify Medicare's payment rates for many services, including
those furnished by hospitals, skilled nursing facilities, home
health agencies, physicians, physical and speech therapists,
occupational therapists, and managed care plans. In addition,
the bill includes technical provisions that would have no
effect on federal spending.
CBO estimates that the bill would increase federal direct
spending by $0.5 billion in fiscal year 2000, by $10.5 billion
over the 2000-2004 period, and by a total of $17.2 billion over
the 2000-2009 period. Because the bill would increase direct
spending, pay-as-you-go procedures would apply.
H.R. 3075 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA). However, the
increases to the Medicare Part B premiums would result in
additional state expenditures for Medicaid totaling about $70
million over the 2000-2004 period. The bill contains one
private-sector mandate as defined in UMRA. CBO estimates that
its cost would be well below the threshold specified in UMRA
($100 million in 1996, adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 3075 is shown in the following table.
The costs of this legislation fall within budget functions 550
(health) and 570 (Medicare).
----------------------------------------------------------------------------------------------------------------
Outlays, by fiscal years, in billions of
dollars--
--------------------------------------------
2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Medicare:
Hospital Inpatient Provisions.................................. 0 0.5 0.3 0.1 0.1
Hospital Outpatient Department Provisions...................... 0.1 0.4 0.7 0.6 0.2
Skilled Nursing Facility Provisions............................ 0.2 0.5 0.5 0.4 0.4
Physician Update............................................... 0 0.3 0.1 -0.1 -0.3
Home Health Provisions......................................... (\2\) 1.0 0.3 (\2\) (\2\)
Rural Provisions............................................... (\2\) 0.1 0.2 0.2 0.1
Managed Care Provisions........................................ (\2\) 0.4 0.4 0.6 0.1
Other Provisions............................................... 0.2 0.3 0.3 0.3 0.3
Interaction of Fee-for-Service Provisions and Medicare+Choice 0 0.8 0.5 0.4 0.2
Payment Rates \1\.............................................
--------------------------------------------
Subtotal, Gross Medicare Outlays............................. 0.5 4.3 3.3 2.4 1.1
Part B Premium Receipts............................................ 0 -0.4 -0.4 -0.3 -0.1
--------------------------------------------
Subtotal, Net Medicare Outlays............................... 0.5 3.9 2.9 2.1 1.1
Medicaid Interaction with Part B Premium \3\....................... (\2\) (\2\) (\2\) (\2\) (\2\)
--------------------------------------------
Total Changes................................................ 0.5 4.0 2.9 2.1 1.1
----------------------------------------------------------------------------------------------------------------
\1\ The effect of changes in per-enrollee spending in the fee-for-service sector on payment rates for enrollees
in Medicare+Choice plans.
\2\ The federal share of Medicaid payments for Part B premiums on behalf of certain low-income Medicare
enrollees.
\3\ Costs or savings of less than $50 million.
Note.--Components may not sum to totals because of rounding.
Basis of estimate
Medicare
Compared with spending projected under current law, the
bill would increase Medicare outlays by $0.5 billion in fiscal
year 2000 and by $10.4 billion over the 2000-2004 period. The
following sections discuss changes in gross outlays directly
attributable to provisions of the bill. In addition, the
estimate includes three interactions: the effect of changes in
per-enrollee spending in the fee-for-service sector on payment
rates for enrollees in Medicare+Choice plans, the effect of
changes in Medicare Part B outlays on receipts from Part B
premiums, and the effect of changes in Part B premiums on
federal spending for Medicaid.
Payment rates for Medicare+Choice plans are based on
spending in the fee-for-service sector, so provisions of the
bill that increase fee-for-service spending would lead to
higher payments to Medicare+Choice plans, beginning in 2001. No
interaction with Medicare+Choice payments would occur in 2000
because the rates for 2000 have already been published and will
not be adjusted unless services covered by the Medicare program
change; the bill would not change covered services. CBO
estimates the increase in spending attributable to the
interaction between fee-for-service spending and
Medicare+Choice payment rates would total $1.9 billion during
the 2000-2004 period.
Part B premiums for 2000 have already been announced and
would not be changed by this bill. In subsequent years,
however, about 25 percent of new Part B outlays would be
covered by premium payments by beneficiaries. CBO estimates
that those premium payments would total $1.1 billion from 2000
through 2004.
A change in the Medicare Part B premium affects federal
Medicaid spending because Medicaid covers the cost of the
Medicare Part B premium for individuals dually eligible for
Medicaid and Medicare and for other low-income Medicare
beneficiaries not poor enough to qualify for full Medicaid
benefits. CBO estimates that by increasing the amount of the
Part B premium, the bill would increase federal Medicaid costs
by about $0.1 billion over the 2000-2004 period.
Hospital Inpatient Services. H.R. 3075 contains numerous
provisions that would affect Medicare payments to hospitals for
inpatient care. CBO estimates these provisions would increase
Medicare payments by about $1 billion during the 2000-2004
period.
Prospective Payment Hospitals. Medicare's prospective
payment system (PPS) for hospital inpatient services adjusts
payments to reflect higher patient care costs associated with
medical education. The bill would set the adjustment at 6.0
percent for every 0.1 change in the ratio of residents to beds
in 2001. In 2002, the adjustment would revert to the 5.5
percent specified in current law. CBO estimates that provision
would increase outlays by $0.3 billion over the 2000-2004
period.
The bill also requires that Medicare's payment formula for
its share of the direct costs of medical education be revised
in a budget-neutral manner to be based on a national-average
rate, adjusted for differences in local wage rates, rather than
the current system in which payments are based on hospital-
specific historical costs. Hospitals that would receive higher
payments under the national-average rate would receive that
rate immediately. However, the national-average rate would be
phased in over a five-year period for hospitals that would
receive payments. This provision would increase spending by
$0.3 billion during 2000 through 2004.
Hospitals that serve a large number of low-income patients
receive a ``disproportionate share'' adjustment to their
prospective payment rates. Balanced Budget Act of 1997 (BBA)
reduced those adjustments by 4 percent in 2001 and by 5 percent
in 2002. The bill would limit those reductions to 3 percent in
2001 and 4 percent in 2002, which would increase spending by
less than $0.1 billion during the 2000-2004 period.
PPS-exempt Hospitals. Hospitals that generally do not
provide acute care services are exempted from the PPS and are
paid on the basis of target amounts, (that is, hospital-
specific historical costs, adjusted for inflation). The BBA
capped the target amounts at the 75th percentile. The bill
would adjust the 75th-percentile cap for differences in local
wages rates. CBO estimates that those adjustments would
increase outlays by $0.3 billion over the 2000-2004 period. The
bill would also increase the bonuses paid to psychiatric and
long-term care hospitals with costs during cost-reporting
periods beginning in 2001 and 2002 that are below their target
amounts. We estimate that provision would increase outlays by
less than $50 million over five years.
The BBA required the Secretary of Health and Human Services
(HHS) to develop a new PPS for inpatient services furnished by
rehabilitation hospitals, and to phase-in that PPS over three
years, beginning in 2001. During the transition, the bill would
permit hospitals to choose the higher of the PPS payment rate
or the transitional blend of PPS and hospital-specific rates.
To offset the cost of that choice, the bill would reduce the
PPS payment rate by 10 percent. Following analysis of claims
and payment date, the Secretary would subsequently adjust
payment rates to compensate hospitals or the Medicare program
for the amount by which that 10-percent reduction was an over-
adjustment or under-adjustment for the cost of permitting
hospitals to choose the higher of PPS rates or transitional
rates. CBO estimates this provision would have no effect on
federal spending.
The bill also mandates that new prospective payment systems
be developed for long-term and psychiatric hospitals by the
Secretary of HHS by October 1, 2001, so that they may be
implemented beginning in 2003. The bill would direct the
Secretary to devise payment systems which are budget neutral.
CBO estimates that implementing those prospective payment
systems would not have a significant effect on Medicare
spending.
Hospital Outpatient Department Services. The BBA required
the Secretary of HHS to implement a PPS to replace cost-based
reimbursement for most outpatient hospital services. The
Secretary plans to implement that PPS in July 2000. Some
hospitals will experience gains under the PPS--Medicare
payments will exceed the cost of providing outpatient
services--while other hospitals will experience losses. The
bill would reduce each hospital's loss during the first three
years of the PPS, temporarily exempt cancer hospitals from the
PPS, establish outlier adjustment payments for high-cost cases
and transitional payments for certain drugs, biologicals, and
medical devices under the PPS, and limit the beneficiary
copayment for an outpatient hospital procedure to the Medicare
Part A deductible. CBO estimates that those provisions would
increase Medicare expenditures by $0.1 billion in 2000 and by
$2.0 billion over the 2000-2004 period.
Skilled Nursing Facilities. The bill would amend several
policies enacted in the BBA regarding payment to skilled
nursing facilities (SNFs). During the transition to a fully
prospective payment system, H.R. 3075 would allow SNFs to elect
to be paid exclusively under the federal rate, rather than a
blend of federal and facility-specific rates. The bill would
increase the federal rates paid for cases assigned to the
extensive services, special care, or clinically complex
categories by 10 percent for services provided from April 1,
2000, through September 30, 2000. The bill would increase the
update to federal payment rates for 2001 by 1.8 percentage
points. It would exclude specified services--ambulance
services, certain prosthetic devices, chemotherapy, and
procedures using radiopharmaceuticals--from the SNF PPS and
permit separate billing for those services. The bill also would
enable SNFs that participated in the Nursing Home Case Mix and
Quality Demonstration to receive an additional payment for Part
B services in the facility-specific component of their payment
rates. The final provision would require Medicare to pay SNFs
that treat a large share of immuno-compromised patients a 50:50
blend of the federal and facility-specific rates for service
furnished through 2001. CBO estimates that those provisions
would increase Medicare expenditures by $0.2 billion in 2000
and by $1.9 billion over the 2000-2004 period.
Physician Update. The BBA established payment formulas that
tie the growth of per-enrollee expenditures for physician
services to the growth of gross domestic product. Those
formulas generate annual rate changes that oscillate widely
around a smooth trend. CBO projects stable growth rates,
however, because the timing of those oscillations is impossible
to predict.
The bill would modify the payment formulas to reduce the
oscillations around the smooth trend. CBO estimates this
provision would not change spending in 2000 and would not
change cumulative spending during the 2000-2004 period.
Compared to current law, however, payments to physicians would
be higher in 2001 and 2002 and lower in 2003 and 2004.
Home Health. The bill would amend three policies enacted in
the BBA regarding payment to home health agencies. First, it
would lower the surety bond requirement for some agencies,
eliminate the requirement that agencies have separate bonds for
Medicare and Medicaid, and no longer require agencies to hold
bonds after 4 years. Second, it would eliminate the contingency
reduction and delay the 15-percent cut mandated in BBA until
one year after the PPS for home health services is implemented.
Third, it would pay home health agencies $10 per beneficiary
served during their cost reporting period beginning in 2000.
Those policies would increase Medicare expenditures by less
than $50 million in 2000 and by $1.4 billion over the 2000-2004
period.
Rural Provisions. Sole community hospitals are paid the
highest of PPS payment rates or their average cost per patient
in 1982 or 1987, adjusted for inflation. The bill would allow
sole community hospitals that currently receive PPS payment
rates to choose between PPS rates and a blend of those rates
and their inflation-adjusted costs in 1996. CBO estimates that
provision would increase Medicare spending by $0.1 billion
during 2000 through 2004.
The BBA created a new classification of limited-service
hospitals, called Critical Access Hospitals (CAHs), which are
exempted from the PPS. Those hospitals are limited to providing
inpatient hospital stays no longer than 96 hours (with case-by-
case exceptions). The bill would allow longer inpatient stays
in CAHs, provided that stays average 96 hours; and it would
permit investor-owned and closed or converted facilities to
qualify as CAHs. CBO assumes those provisions would make it
more attractive for facilities that meet the size and
geographic eligibility requirements to obtain certification as
a CAH, and would increase Medicare outlays by exempting more
inpatient stays from the PPS. CBO estimates that those
provisions would increase Medicare outlays by less than $50
million in 2000 and by $0.3 billion over the 2000-2004 period.
The bill would extend for five years the Medicare-dependent
small rural hospital program (which will expire at the end of
2000), require the Secretary to permit certain hospitals
located in urban areas to be reclassified as rural, and make
other changes to the geographic classification system, which
would allow these hospitals to obtain higher payment rates. The
bill would enable all hospitals in rural areas with up to 100
beds to have swing beds, and also would expand access to
paramedic services in rural areas. Those provisions would not
affect spending in 2000, but would increase spending by $0.2
billion during 2001 through 2004.
Finally, the bill would allow rural teaching hospitals and
hospitals with accredited rural graduate medical education
programs to increase the number of residency positions above
the limits established by the BBA. Those provisions would
increase spending by less than $50 million a year, with a
cumulative increase in spending of $0.1 billion during the
2000-2004 period.
Managed Care. The bill would slow the implementation of
adjustment of Medicare+Choice payment rates to more accurately
reflect differences in cost per enrollee that are associated
with health status. CBO estimates that this provision would not
change spending in 2000, but would increase Medicare spending
by $1.1 billion over the 2001-2004 period.
H.R. 3075 would authorize $60 million a year for payments
to hospitals with nursing and allied health education programs
when they provide inpatient care to patients enrolled in a
Medicare+Choice plan, but would offset that spending with
reductions in payments to hospitals with graduate medical
education programs. Thus, CBO estimates that provision would
have no effect on Medicare spending.
Other provisions would make the administration of the
Medicare+Choice program more flexible by allowing beneficiaries
more time to enroll in Medicare+Choice or medigap plans when
plans withdraw from markets, increasing Medicare+Choice
payments for plans entering counties that had been without
Medicare+Choice plans since 1997, allowing cost contracts with
health maintenance organizations to be renewed until December
31, 2004, expanding the types of Medicare+Choice plans that may
be offered by religious fraternal benefit societies, and easing
certain requirements that limit how potential providers design
and market managed care products to offer to Medicare
beneficiaries. In addition, the bill would modify and extend a
number of demonstration projects. Those provisions would
increase federal spending by $0.6 billion during 2000 through
2004.
Other Medicare Provisions. The bill includes numerous other
modifications of Medicare law that are either technical in
nature--that is, they have no effect on federal spending--or
would result in relatively small changes in Medicare spending.
The additional provisions that would affect Medicare spending
are discussed below. In total, CBO estimates that these other
provisions would increase Medicare outlays by $1.2 billion over
the 2000-2004 period.
Outpatient Therapy Services. The BBA established annual
limits on per-beneficiary payments for outpatient therapy
services provided by independent therapists, comprehensive
outpatient rehabilitation facilities (CORFs), SNFs, and other
nonhospital providers. The limits are a $1,500 combined annual
cap on physical therapy and speech language pathology services,
and a $1,500 annual cap on occupational therapy services. The
bill would create separate $1,500 caps for physical therapy and
for speech language pathology, implement the caps on a per-
facility rather than a per-beneficiary basis, and authorize
transitional outlier payments for high-cost beneficiaries. We
estimate that this provision would increase Medicare
expenditures by $0.1 billion in 2000 and by $0.6 billion over
the 2000-2004 period.
Renal Dialysis. The bill would increase Medicare's
composite rate for renal dialysis by 1.2 percent beginning in
January 2000 and an additional 1.2 percent beginning in January
2001. That provision would increase Medicare expenditures by
less than $50 million in 2000 and by $0.3 billion over the
2000-2004 period.
Durable Medical Equipment and Oxygen. The bill would update
Medicare's payment rate for durable medical equipment and
oxygen by the consumer price index for all urban consumers less
2 percentage points in 2001 and 2002. That provision would have
no budgetary effect in 2000, but would increase Medicare
expenditures by $0.1 billion over the 2001-2004 period.
Pap Smears. The bill would increase Medicare's payment rate
for the clinical laboratory component of pap smear tests. That
provision would increase Medicare expenditures by less than $50
million in 2000 and $0.1 billion over the 2000-2004 period.
Inherent Reasonableness Authority. The BBA granted the
Secretary of HHS the authority to adjust Medicare Part B
payment rates when they are not ``inherently reasonable.'' The
bill would suspend the Secretary's authority to use the
inherent reasonableness provision until publication of a new
proposed rule and a final rule. That provision would increase
Medicare expenditures by less than $50 million over the 2000-
2004 period.
Ambulance Demonstration Project. The BBA authorized
demonstration projects under which units of local government
can contract directly with HHS to provide ambulance services
under Medicare at a capitated rate. The bill would modify the
capitated rate. That provision would increase Medicare
expenditures by less than $50 million over the 2000-2004
period.
Telemedicine Demonstration Project. The BBA established a
telemedicine demonstration project to improve primary care for
diabetics living in medically underserved areas. The bill would
direct the Secretary to make the award within three months of
enactment and would change certain specifications of the
project design. Modifications, such as altering the
reimbursement rates, would affect the pattern of federal
spending on the project over the 2000-2004 period. CBO
estimates that this provision would increase spending by less
than $5 million a year in 2000 and 2001, with offsetting
reductions in 2002 and 2003. Thus, the provision would not
change cumulative spending over the 2000-2004 period.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up-as-you-go procedures for
legislation affecting direct spending or receipts. The net
changes in outlays that would be subject to pay-as-you-go
procedures are shown in the following table. For the purposes
of enforcing pay-as-you-go procedures, only the effects in the
budget year and the succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars--
-------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.............. 500 4,000 2,900 2,100 1,050 1,150 1,200 1,300 1,450 1,550
Change in receipts.............. Not applicable
----------------------------------------------------------------------------------------------------------------
Estimated impact of state, local, and tribal governments:
H.R. 3075 contains no intergovernmental mandates as defined in
UMRA. However, the increases to the Medicare Part B premiums
would result in additional state expenditures for Medicaid
totaling about $70 million over the 2000-2004 period.
Estimated impact on the private Sector: The bill contains a
mandate on private-sector insurers who provide medigap coverage
to Medicare beneficiaries. Under current law, Medicare
beneficiaries who lose supplemental coverage because of the
termination or discontinuation of the employer-sponsored
supplemental plan or the HMO in which they are enrolled are
entitled to purchase medigap coverage on favorable terms if
they apply within 63 days of the termination of enrollment.
The bill would allow Medicare beneficiaries to obtain
medigap coverage under those same favorable terms if they
applied within 63 days of being notified of the pending
termination or discontinuation of their plan, effectively
giving them two windows of opportunity to apply. Because of
restrictions on the premiums that medigap insurers may charge
in these circumstances, this provision could impose costs that
insurers might not immediately recover from premiums. However,
because of the small additional number of beneficiaries that
the provision would affect, the costs that would be imposed on
medigap insurers would be well below the threshold specified in
UMRA ($100 million in 1996, adjusted annually for inflation).
Previous CBO Estimate: This estimate supersedes a previous
estimate that was transmitted earlier today (October 29). The
previous estimate included a cost of $0.2 billion over the
2000-2004 period for payments to hospitals with nursing and
allied health programs when they provide inpatient care to
patients enrolled in a Medicare+Choice plan. However, that
provision would have no cost. This revised estimate corrects
the error in the previous estimate.
Estimate prepared by: Federal Costs: Charles Betley,
Michael Brinbaum, Julia Christensen, Jeanne De Sa, Cyndi
Dudzinski, and Dorothy Rosenbaum. Impact on State, Local, and
Tribal Governments: Leo Lex. Impact on the Private Sector:
Bruce Vavrichek.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Finding and Recommendations
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports that the
need for this legislation was confirmed by the oversight
hearings of the Subcommittee on Health. The hearings were as
follows:
The Subcommittee on Health held a hearing on February 11,
1999, to examine the Health Care Financing Administration's
(HCFA) ability to administer the current Medicare program and
to manage the future needs of the program's growing number of
beneficiaries. Testimony at the hearing was presented by HCFA,
the General Accounting Office, and contractors who process and
audit claims for the Medicare program.
On March 2, 1999, the Subcommittee held a hearing on the
annual Medicare Payment Advisory Commission (MedPAC) Report to
the Congress on Medicare Payment Policy, with testimony from
the MedPAC Chair. In addition, on March 18, 1999, the
Subcommittee held a hearing on the Medicare+Choice program to
examine the Administration's proposed new risk adjustment
method, dissemination of health plan information to seniors,
and new plan requirements for quality measurement.
Finally, on October 1, 1999, the Subcommittee held a
hearing on Medicare Balanced Budget Act refinements. The
hearing included testimony from the Administration,
Congressional advisory bodies, and providers about the
implementation and impact of policy changes included in the
Balanced Budget Act of 1997, including changes in various
payment methodologies.
B. Summary of Findings and Recommendations of the Government Reform and
Oversight Committee
In compliance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
oversight findings or recommendations have been submitted to
the Committee on Governmental Reform regarding the subject of
the bill.
C. Constitutional Authority Statement
In compliance with clause 3(d)(1) of rule XIII of the Rules
of the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article I of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States * * * '').
VI. CHANGES IN EXISTING LAWS MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION
* * * * * * *
Part A--General Provisions
* * * * * * *
coordination of medicare and medicaid surety bond provisions
Sec. 1148. In the case of a home health agency that is
subject to a surety bond under title XVIII and title XIX, the
surety bond provided to satisfy the requirement under one such
title shall satisfy the requirement under the other such title
so long as the bond applies to guarantee return of overpayments
under both such titles.
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part A--Hospital Insurance Benefits for the Aged and Disabled
medicare payment advisory commission
Sec. 1805. (a) * * *
* * * * * * *
(b) Duties.--
(1) Review of payment policies and annual reports.--
The Commission shall--
(A) * * *
* * * * * * *
(D) by not later than June 1 of each year
(beginning with 1998), submit a report to
Congress containing an examination of issues
affecting the medicare program, including the
implications of changes in health care delivery
in the United States and in the market for
health care services on the medicare program
and including a review of the estimate of the
conversion factor submitted under section
1848(d)(1)(E)(ii).
* * * * * * *
medicare rural hospital flexibility program
Sec. 1820. (a) * * *
* * * * * * *
(c) Medicare Rural Hospital Flexibility Program Described.--
(1) * * *
* * * * * * *
(2) State designation of facilities.--
(A) In general.--A State may designate 1 or
more facilities as a critical access hospital
in accordance with [subparagraph (B)]
subparagraphs (B), (C), and (D).
(B) Criteria for designation as critical
access hospital.--A State may designate a
facility as a critical access hospital if the
facility--
(i) is a [nonprofit or public]
hospital and is located in a county (or
equivalent unit of local government) in
a rural area (as defined in section
1886(d)(2)(D)) or is treated as being
located in a rural area pursuant to
section 1886(d)(8)(E) that--
(I) * * *
* * * * * * *
(iii) provides not more than 15 (or,
in the case of a facility under an
agreement described in subsection (f),
25) acute care inpatient beds (meeting
such standards as the Secretary may
establish) for providing inpatient care
[for a period not to exceed 96 hours
(unless a longer period is required
because transfer to a hospital is
precluded because of inclement weather
or other emergency conditions), except
that a peer review organization or
equivalent entity may, on request,
waive the 96-hour restriction on a
case-by-case basis;] for a period that
does not exceed, as determined on an
annual, average basis, 96 hours per
patient;
(C) Recently closed facilities.--A State may
designate a facility as a critical access
hospital if the facility--
(i) was a hospital that ceased
operations on or after the date that is
10 years before the date of enactment
of this subparagraph; and
(ii) as of the effective date of such
designation, meets the criteria for
designation under subparagraph (B).
(D) Downsized facilities.--A State may
designate a health clinic or a health center
(as defined by the State) as a critical access
hospital if such clinic or center--
(i) is licensed by the State as a
health clinic or a health center;
(ii) was a hospital that was
downsized to a health clinic or health
center; and
(iii) as of the effective date of
such designation, meets the criteria
for designation under subparagraph (B).
* * * * * * *
(g) Grants.--
(1) * * *
* * * * * * *
(3) Upgrading data systems.--
(A) Grants to hospitals.--The Secretary may
award grants to hospitals that have submitted
applications in accordance with subparagraph
(C) to assist eligible small rural hospitals in
meeting the costs of implementing data systems
required to meet requirements established under
the medicare program pursuant to amendments
made by the Balanced Budget Act of 1997.
(B) Eligible small rural hospital defined.--
For purposes of this paragraph, the term
``eligible small rural hospital'' means a non-
Federal, short-term general acute care hospital
that--
(i) is located in a rural area (as
defined for purposes of section
1886(d)); and
(ii) has less than 50 beds.
(C) Application.--A hospital seeking a grant
under this paragraph shall submit an
application to the Secretary on or before such
date and in such form and manner as the
Secretary specifies.
(D) Amount of grant.--A grant to a hospital
under this paragraph may not exceed $50,000.
(E) Use of funds.--A hospital receiving a
grant under this paragraph may use the funds
for the purchase of computer software and
hardware and for the education and training of
hospital staff on computer information systems
and costs related to the implementation of
prospective payment systems.
(F) Report.--
(i) Information.--A hospital
receiving a grant under this section
shall furnish the Secretary with such
information as the Secretary may
require to evaluate the project for
which the grant is made and to ensure
that the grant is expended for the
purposes for which it is made.
(ii) Reporting.--
(I) Interim reports.--The
Secretary shall report to the
Committee on Ways and Means of
the House of Representatives
and the Committee on Finance of
the Senate at least annually on
the grant program established
under this section, including
in such report information on
the number of grants made, the
nature of the projects
involved, the geographic
distribution of grant
recipients, and such other
matters as the Secretary deems
appropriate.
(II) Final report.--The
Secretary shall submit a final
report to such committees not
later than 180 days after the
completion of all of the
projects for which a grant is
made under this section.
* * * * * * *
Part B--Supplementary Medical Insurance Benefits for the Aged and
Disabled
* * * * * * *
PAYMENT OF BENEFITS
Sec. 1833. (a) Except as provided in section 1876, and
subject to the succeeding provisions of this section, there
shall be paid from the Federal Supplementary Medical Insurance
Trust Fund, in the case of each individual who is covered under
the insurance program established by this part and incurs
expenses for services with respect to which benefits are
payable under this part, amounts equal to--
(1) in the case of services described in section
1832(a)(1)--80 percent of the reasonable charges for
the services; except that (A) an organization which
provides medical and other health services (or arranges
for their availability) on a prepayment basis (and
either is sponsored by a union or employer, or does not
provide, or arrange for the provision of, any inpatient
hospital services) may elect to be paid 80 percent of
the reasonable cost of services for which payment may
be made under this part on behalf of individuals
enrolled in such organization in lieu of 80 percent of
the reasonable charges for such services if the
organization undertakes to charge such individuals no
more than 20 percent of such reasonable cost plus any
amounts payable by them as a result of subsection (b),
(B) with respect to items and services described in
section 1861(s)(10)(A), the amounts paid shall be 100
percent of the reasonable charges for such items and
services, (C) with respect to expenses incurred for
those physicians' services for which payment may be
made under this part that are described in section
1862(a)(4), the amounts paid shall be subject to such
limitations as may be prescribed by regulations, (D)
with respect to clinical diagnostic laboratory tests
for which payment is made under this part (i) on the
basis of a fee schedule under subsection (h)(1) or
section 1834(d)(1), the amount paid shall be equal to
80 percent (or 100 percent, in the case of such tests
for which payment is made on an assignment-related
basis or which are furnished on an outpatient basis by
a critical access hospital) of the lesser of the amount
determined under such fee schedule, the limitation
amount for that test determined under subsection
(h)(4)(B), or the amount of the charges billed for the
tests, or (ii) on the basis of a negotiated rate
established under subsection (h)(6), the amount paid
shall be equal to 100 percent of such negotiated rate,
(E) with respect to services furnished to individuals
who have been determined to have end stage renal
disease, the amounts paid shall be determined subject
to the provisions of section 1881, (F) with respect to
clinical social worker services under section
1861(s)(2)(N), the amounts paid shall be 80 percent of
the lesser of (i) the actual charge for the services or
(ii) 75 percent of the amount determined for payment of
a psychologist under clause (L), (H) with respect to
services of a certified registered nurse anesthetist
under section 1861(s)(11), the amounts paid shall be 80
percent of the least of the actual charge, the
prevailing charge that would be recognized (or, for
services furnished on or after January 1, 1992, the fee
schedule amount provided under section 1848) if the
services had been performed by an anesthesiologist, or
the fee schedule for such services established by the
Secretary in accordance with subsection (l), (I) with
respect to covered items (described in section
1834(a)(13)), the amounts paid shall be the amounts
described in section 1834(a)(1), and (J) with respect
to expenses incurred for radiologist services (as
defined in section 1834(b)(6)), subject to section
1848, the amounts paid shall be 80 percent of the
lesser of the actual charge for the services or the
amount provided under the fee schedule established
under section 1834(b), (K) with respect to certified
nurse-midwife services under section 1861(s)(2)(L), the
amounts paid shall be 80 percent of the lesser of the
actual charge for the services or the amount determined
by a fee schedule established by the Secretary for the
purposes of this subparagraph (but in no event shall
such fee schedule exceed 65 percent of the prevailing
charge that would be allowed for the same service
performed by a physician, or, for services furnished on
or after January 1, 1992, 65 percent of the fee
schedule amount provided under section 1848 for the
same service performed by a physician), (L) with
respect to qualified psychologist services under
section 1861(s)(2)(M), the amounts paid shall be 80
percent of the lesser of the actual charge for the
services or the amount determined by a fee schedule
established by the Secretary for the purposes of this
subparagraph, (M) with respect to prosthetic devices
and orthotics and prosthetics (as defined in section
1834(h)(4)), the amounts paid shall be the amounts
described in section 1834(h)(1), (N) with respect to
expenses incurred for physicians' services (as defined
in section 1848(j)(3)), the amounts paid shall be 80
percent of the payment basis determined under section
1848(a)(1), (O) with respect to services described in
section 1861(s)(2)(K) (relating to services furnished
by physician assistants, nurse practitioners, or clinic
nurse specialists), the amounts paid shall be equal to
80 percent of (i) the lesser of the actual charge or 85
percent of the fee schedule amount provided under
section 1848, or (ii) in the case of services as an
assistant at surgery, the lesser of the actual charge
or 85 percent of the amount that would otherwise be
recognized if performed by a physician who is serving
as an assistant at surgery; (P) with respect to
surgical dressings, the amounts paid shall be the
amounts determined under section 1834(i), (Q) with
respect to items or services for which fee schedules
are established pursuant to section 1842(s), the
amounts paid shall be 80 percent of the lesser of the
actual charge or the fee schedule established in such
section, (R) with respect to ambulance service, the
amounts paid shall be 80 percent of the lesser of the
actual charge for the services or the amount determined
by a fee schedule established by the Secretary under
section 1834(l), and (S) with respect to drugs and
biologicals not paid on a cost or prospective payment
basis as otherwise provided in this part (other than
items and services described in subparagraph (B)), the
amounts paid shall be 80 percent of the lesser of the
actual charge or the payment amount established in
section 1842(o);
* * * * * * *
(g)(1)(A) In the case of physical therapy services of the
type described in section 1861(p), but not described in section
1833(a)(8)(B), and physical therapy services of such type which
are furnished by a physician or as incident to physicians'
services, with respect to expenses incurred in any calendar
year, no more than the amount specified in paragraph (2) for
the year shall be considered as incurred expenses for purposes
of subsections (a) and (b).
(B) Subparagraph (A) shall be applied separately for speech-
language pathology services described in the fourth sentence of
section 1861(p) and for other outpatient physical therapy
services.
* * * * * * *
(4) The limitations of this subsection apply to the services
involved on a per beneficiary, per facility (or provider)
basis.
(5)(A) The Secretary shall establish a process under which a
facility or provider that is providing therapy services to
which the limitation of this subsection applies to a
beneficiary may apply to the Secretary for an increase in such
limitation under this paragraph for services furnished in 2000
or in 2001.
(B) Such process shall take into account the clinical
diagnosis and shall provide that the aggregate amount of
additional payments resulting from the application of this
paragraph--
(i) during fiscal year 2000 may not exceed
$40,000,000;
(ii) during fiscal year 2001 may not exceed
$60,000,000; and
(iii) during fiscal year 2002 may not exceed
$20,000,000.
* * * * * * *
(h)(1) * * *
* * * * * * *
(7) Notwithstanding paragraphs (1) and (4), the Secretary
shall establish a minimum payment amount under this subsection
for all areas for a diagnostic or screening pap smear
laboratory test (including all cervical cancer screening
technologies that have been approved by the Food and Drug
Administration) of not less than $14.60.
(l)(1) * * *
* * * * * * *
(4)(A) Except as provided in subparagraphs (C) and (D), in
determining the amount paid under the fee schedule under this
subsection for services furnished on or after January 1, 1991,
by a certified registered nurse anesthetist who is not
medically directed--
(i) the conversion factor shall be--
(I) * * *
* * * * * * *
(VII) for services furnished in calendar
years after 1996, the previous year's
conversion factor increased by the update
determined under section [1848(d)(3)] 1848(d)
for physician anesthesia services for that
year;
* * * * * * *
(t) Prospective Payment System for Hospital Outpatient
Department Services.--
(1) Amount of payment.--
(A) * * *
(B) Definition of covered opd services.--For
purposes of this subsection, the term ``covered
OPD services''--
(i) * * *
(ii) subject to [clause (iii)] clause
(iv), includes inpatient hospital
services designated by the Secretary
that are covered under this part and
furnished to a hospital inpatient who
(I) is entitled to benefits under part
A but has exhausted benefits for
inpatient hospital services during a
spell of illness, or (II) is not so
entitled; [but]
(iii) includes medical devices (such
as implantable medical devices); but
[(iii)] (iv) does not include any
therapy services described in
subsection (a)(8) or ambulance
services, for which payment is made
under a fee schedule described in
section 1834(k) or section 1834(l).
(2) System requirements.--Under the payment system--
(A) * * *
(B) the Secretary may establish groups of
covered OPD services, within the classification
system described in subparagraph (A), so that
services classified within each group are
comparable clinically and with respect to the
use of resources and so that a device is
classified to the group that includes the
service to which the device relates;
(C) the Secretary shall, using data on claims
from 1996 and using data from the most recent
available cost reports, establish relative
payment weights for covered OPD services (and
any groups of such services described in
subparagraph (B)) based on median (or, at the
election of the Secretary, mean) hospital costs
and shall determine projections of the
frequency of utilization of each such service
(or group of services) in 1999;
* * * * * * *
(E) the Secretary shall establish [other
adjustments, in a budget neutral manner, as
determined to be necessary to ensure equitable
payments, such as outlier adjustments or], in a
budget neutral manner, outlier adjustments
under paragraph (5) and transitional pass-
through payments under paragraph (6) and other
adjustments as determined to be necessary to
ensure equitable payments, such as adjustments
for certain classes of hospitals; and
(F) the Secretary shall develop a method for
controlling unnecessary increases in the volume
of covered OPD services.
For purposes of subparagraph (B), items and services
within a group shall not be treated as `comparable with
respect to the use of resources' if the highest median
cost (or mean cost, if elected by the Secretary under
subparagraph (C)) for an item or service within the
group is more than 2 times greater than the lowest
median cost (or mean cost, if so elected) for an item
or service within the group; except that the Secretary
may make exceptions in unusual cases, such as low
volume items and services.
* * * * * * *
(4) Medicare payment amount.--The amount of payment
made from the Trust Fund under this part for a covered
OPD service (and such services classified within a
group) furnished in a year is determined, subject to
paragraph (7), as follows:
(A) * * *
* * * * * * *
(C) Apply payment proportion to remainder.--
The amount of payment is the amount so
determined under subparagraph (B) multiplied by
the pre-deductible payment percentage (as
determined under paragraph (3)(E)) for the
service or group and year involved, plus the
amount of any reduction in the copayment amount
attributable to paragraph (5)(C).
(5) Outlier adjustment.--
(A) In general.--The Secretary shall provide
for an additional payment for each covered OPD
service (or group of services) for which a
hospital's charges, adjusted to cost, exceed--
(i) a fixed multiple of the sum of--
(I) the applicable Medicare
OPD fee schedule amount
determined under paragraph
(3)(D), as adjusted under
paragraph (4)(A) (other than
for adjustments under this
paragraph or paragraph (6));
and
(II) any transitional pass-
through payment under paragraph
(6); and
(ii) at the option of the Secretary,
such fixed dollar amount as the
Secretary may establish.
(B) Amount of adjustment.--The amount of the
additional payment under subparagraph (A) shall
be determined by the Secretary and shall
approximate the marginal cost of care beyond
the applicable cutoff point under such
subparagraph.
(C) Limit on aggregate outlier adjustments.--
(i) In general.--The total of the
additional payments made under this
paragraph for covered OPD services
furnished in a year (as projected or
estimated by the Secretary before the
beginning of the year) may not exceed
the applicable percentage (specified in
clause (ii)) of the total program
payments projected or estimated to be
made under this subsection for all
covered OPD services furnished in that
year. If this paragraph is first
applied to less than a full year, the
previous sentence shall apply only to
the portion of such year.
(ii) Applicable percentage.--For
purposes of clause (i), the term
``applicable percentage'' means a
percentage specified by the Secretary
up to (but not to exceed)--
(I) for a year (or portion of
a year) before 2004, 2.5
percent; and
(II) for 2004 and thereafter,
3.0 percent.
(6) Transitional pass-through for additional costs of
innovative medical devices, drugs, and biologicals.--
(A) In general.--The Secretary shall provide
for an additional payment under this paragraph
for any of the following that are provided as
part of a covered OPD service (or group of
services):
(i) Current orphan drugs.--A drug or
biological that is used for a rare
disease or condition with respect to
which the drug or biological has been
designated as an orphan drug under
section 526 of the Federal Food, Drug
and Cosmetic Act if payment for the
drug or biological as an outpatient
hospital service under this part was
being made on the first date that the
system under this subsection is
implemented.
(ii) Current cancer therapy drugs and
biologicals.--A drug or biological that
is used in cancer therapy if payment
for the drug or biological as an
outpatient hospital service under this
part was being made on such first date.
(iii) New medical devices, drugs, and
biologicals.--A medical device, drug,
or biological not described in clause
(i) or (ii) if--
(I) payment for the device,
drug, or biological as an
outpatient hospital services
under this part was not being
made as of December 31, 1996;
and
(II) the cost of the device,
drug, or biological is not
insignificant in relation to
the OPD fee schedule amount (as
calculated under paragraph
(3)(D)) payable for the service
(or group of services)
involved.
(B) Limited period of payment.--The payment
under this paragraph with respect to a medical
device, drug, or biological shall only apply
during a period of at least 2 years, but not
more than 3 years, that begins--
(i) on the first date this subsection
is implemented in the case of a drug or
biological described in clause (i) or
(ii) of subparagraph (A) and in the
case of a device, drug, or biological
described in subparagraph (A)(iii) for
which payment under this part is made
as an outpatient hospital service
before such first date; or
(ii) in the case of a device, drug,
or biological described in subparagraph
(A)(iii) not described in clause (i),
on the first date on which payment is
made under this part for the device,
drug, or biological as an outpatient
hospital service.
(C) Amount of additional payment.--Subject to
subparagraph (D)(iii), the amount of the
payment under this paragraph with respect to a
device, drug, or biological provided as part of
a covered OPD service is--
(i) in the case of a drug or
biological, the amount by which the
amount determined under section 1842(o)
for the drug or biological exceeds the
portion of the otherwise applicable
medicare OPD fee schedule that the
Secretary determines is associated with
the drug or biological; or
(ii) in the case of a medical device,
the amount by which the hospital's
charges for the device, adjusted to
cost, exceeds the portion of the
otherwise applicable medicare OPD fee
schedule that the Secretary determines
is associated with the device.
(D) Limit on aggregate annual adjustment.--
(i) In general.--The total of the
additional payments made under this
paragraph for covered OPD services
furnished in a year (as projected or
estimated by the Secretary before the
beginning of the year) may not exceed
the applicable percentage (specified in
clause (ii)) of the total program
payments projected or estimated to be
made under this subsection for all
covered OPD services furnished in that
year. If this paragraph is first
applied to less than a full year, the
previous sentence shall apply only to
the portion of such year.
(ii) Applicable percentage.--For
purposes of clause (i), the term
``applicable percentage'' means--
(I) for a year (or portion of
a year) before 2004, 2.5
percent; and
(II) for 2004 and thereafter,
a percentage specified by the
Secretary up to (but not to
exceed) 2.0 percent.
(iii) Uniform prospective reduction
if aggregate limit projected to be
exceeded.--If the Secretary projects or
estimates before the beginning of a
year that the amount of the additional
payments under this paragraph for the
year (or portion thereof) as determined
under clause (i) without regard to this
clause) will exceed the limit
established under such clause, the
Secretary shall reduce pro rata the
amount of each of the additional
payments under this paragraph for that
year (or portion thereof) in order to
ensure that the aggregate additional
payments under this paragraph (as so
projected or estimated) do not exceed
such limit.
(7) Transitional adjustment to limit decline in
payment.--
(A) Before 2002.--For covered OPD services
furnished before January 1, 2002, for which the
PPS amount (as defined in subparagraph (D)(i))
is--
(i) at least 90 percent, but less
than 100 percent, of the pre-BBA amount
(as defined in subparagraph (D)(ii)),
the amount of payment under this
subsection shall be increased by 80
percent of the amount of such
difference;
(ii) at least 80 percent, but less
than 90 percent, of the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
amount by which (I) the product of 0.71
and the pre-BBA amount, exceeds (II)
the product of 0.70 and the PPS amount;
(iii) at least 70 percent, but less
than 80 percent, of the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
amount by which (I) the product of 0.63
and the pre-BBA amount, exceeds (II)
the product of 0.60 and the PPS amount;
(iv) less than 70 percent of the pre-
BBA amount, the amount of payment under
this subsection shall be increased by
21 percent of the pre-BBA amount.
(B) 2002.--For covered OPD services furnished
during 2002, for which the PPS amount is--
(i) at least 90 percent, but less
than 100 percent, of the pre-BBA
amount, the amount of payment under
this subsection shall be increased by
70 percent of the amount of such
difference;
(ii) at least 80 percent, but less
than 90 percent, of the pre-BBA amount,
the amount of payment under this
subsection shall be increased by the
amount by which (I) the product of 0.61
and the pre-BBA amount, exceeds (II)
the product of 0.60 and the PPS amount;
(iii) less than 80 percent of the
pre-BBA amount, the amount of payment
under this subsection shall be
increased by 13 percent of the pre-BBA
amount.
(C) 2003.--For covered OPD services furnished
during 2003, for which the PPS amount is--
(i) at least 90 percent, but less
than 100 percent, of the pre-BBA
amount, the amount of payment under
this subsection shall be increased by
60 percent of the amount of such
difference; or
(ii) less than 90 percent of the pre-
BBA amount, the amount of payment under
this subsection shall be increased by 6
percent of the pre-BBA amount.
(D) Definitions.--For purposes of this
subparagraph:
(i) PPS amount.--The term ``PPS
amount'' means, with respect to a
covered OPD service, the amount of
payment under this title for such
service (determined without regard to
this paragraph).
(ii) Pre-bba amount.--The term ``pre-
BBA amount'' means, with respect to a
covered OPD service, the amount that
would have been paid under this title
for such service if this subsection did
not apply.
(E) Construction.--Nothing in this paragraph
shall be construed to affect the copayment
amount under paragraph (8).
[(5)] (8) Copayment amount.--
(A) In general.--Except as provided in
[subparagraph (B)] subparagraphs (B) and (C),
the copayment amount under this subsection is
the amount by which the amount described in
paragraph (4)(B) exceeds the amount of payment
determined under paragraph (4)(C).
(B) Election to offer reduced copayment
amount.--The Secretary shall establish a
procedure under which a hospital, before the
beginning of a year (beginning with 1999), may
elect to reduce the copayment amount otherwise
established under subparagraph (A) for some or
all covered OPD services to an amount that is
not less than 20 percent of the medicare OPD
fee schedule amount (computed under paragraph
(3)(D)) for the service involved. Under such
procedures, such reduced copayment amount may
not be further reduced or increased during the
year involved and the hospital may disseminate
information on the reduction of copayment
amount effected under this subparagraph.
(C) Limiting copayment amount to inpatient
hospital deductible amount.--In no case shall
the copayment amount for a procedure performed
in a year exceed the amount of the inpatient
hospital deductible established under section
1813(b) for that year.
[(C)] (D) No impact on deductibles.--Nothing
in this paragraph shall be construed as
affecting a hospital's authority to waive the
charging of a deductible under section 1833(b).
(E) Computation ignoring outlier and pass-
through adjustments.--The copayment amount
shall be computed under subparagraph (A) as if
the adjustments under paragraphs (5) and (6)
(and any adjustment made under paragraph (2)(E)
in relation to such adjustments) had not
occurred.
[(6)] (9) Periodic review and adjustments components
of prospective payment system.--
(A) Periodic review.--The Secretary [may
periodically review] shall review not less
often than annually and revise the groups, the
relative payment weights, and the wage and
other adjustments described in paragraph (2) to
take into account changes in medical practice,
changes in technology, the addition of new
services, new cost data, and other relevant
information and factors.
* * * * * * *
[(7)] (10) Special rule for ambulance services.--The
Secretary shall pay for hospital outpatient services
that are ambulance services on the basis described in
[the matter in subsection (a)(1) preceding subparagraph
(A)] section 1961(v)(1)(U), or, if applicable, the fee
schedule established under section 1834(l).
[(8)] (11) Special rules for certain hospitals.--In
the case of hospitals described in section
1886(d)(1)(B)(v)--
(A) the system under this subsection shall
not apply to covered OPD services furnished
before [January 1, 2000] the first day of the
first year that begins 2 years after the date
the prospective payment system under this
section is first implemented; and
* * * * * * *
[(9)] (12) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of--
(A) the development of the classification
system under paragraph (2), including the
establishment of groups and relative payment
weights for covered OPD services, of wage
adjustment factors, other adjustments, and
methods described in paragraph (2)(F);
(B) the calculation of base amounts under
paragraph (3);
(C) periodic adjustments made under paragraph
(6); [and]
(D) the establishment of a separate
conversion factor under paragraph (8)(B)[.];
and
(E) the determination of the fixed multiple,
or a fixed dollar cutoff amount, the marginal
cost of care, or applicable percentage under
paragraph (5) or the determination of
insignificance of cost, the duration of the
additional payments (consistent with paragraph
(6)(B)), the portion of the Medicare OPD fee
schedule amount associated with particular
devices, drugs, or biologicals, and the
application of any pro rata reduction under
paragraph (6).
(13) Miscellaneous provisions.--
(A) Application of reclassification of
certain hospitals.--If a hospital is being
treated as being located a rural area under
section 1886(d)(8)(E), that hospital shall be
treated under this subsection as being located
in that rural area.
* * * * * * *
SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES
Sec. 1834. (a) Payment for Durable Medical Equipment.--
(1) * * *
* * * * * * *
(9) Monthly payment amount recognized with respect to
oxygen and oxygen equipment.--For purposes of paragraph
(5), the amount that is recognized under this paragraph
for payment for oxygen and oxygen equipment is the
monthly payment amount described in subparagraph (C) of
this paragraph. Such amount shall be computed
separately (i) for all items of oxygen and oxygen
equipment (other than portable oxygen equipment) and
(ii) for portable oxygen equipment (each such group
referred to in this paragraph as an ``item'').
(A) * * *
* * * * * * *
(B) Computation of national limited monthly
payment rate.--With respect to the furnishing
of an item in a year, the Secretary shall
compute a national limited monthly payment rate
equal to--
(i) * * *
* * * * * * *
(v) for 1998, 75 percent of the
amount determined under this
subparagraph for 1997; [and]
(vi) for 1999 and [each subsequent
year] 2000, 70 percent of the amount
determined under this subparagraph for
1997[.]; and
(vii) for 2001 and each subsequent
year, the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year.
* * * * * * *
(14) Covered item update.--In this subsection, the
term ``covered item update'' means, with respect to a
year--
(A) * * *
* * * * * * *
[(C) for each of the years 1998 through 2002,
0 percentage points; and]
(C) for each of the years 1998 through 2000,
0 percentage points;
(D) for each of the years 2001 and 2002, the
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year minus 2 percentage points; and
[(D)] (E) for a subsequent year, the
percentage increase in the consumer price index
for all urban consumers (U.S. urban average)
for the 12-month period ending with June of the
previous year.
* * * * * * *
[(g) Payment for Outpatient Critical Access Hospital
Services.--The amount of payment under this part for outpatient
critical access hospital services is the reasonable costs of
the critical access hospital in providing such services.]
(g) Payment for Outpatient Critical Access Hospital
Services.--
(1) Election of cah.--At the election of a critical
access hospital, the amount of payment for outpatient
critical access hospital services under this part shall
be determined under paragraph (2) or (3), such amount
determined under either paragraph without regard to the
amount of the customary or other charge.
(2) Cost-based hospital outpatient service payment
plus fee schedule for professional services.--If a
hospital elects this paragraph to apply, there shall be
paid amounts equal to the sum of the following:
(A) Facility fee.--With respect to facility
services, not including any services for which
payment may be made under subparagraph (B), the
reasonable costs of the critical access
hospital in providing such services, less the
amount that such hospital may charge as
described in section 1866(a)(2)(A).
(B) Fee schedule for professional services.--
With respect to professional services otherwise
included within outpatient critical access
hospital services, such amounts as would
otherwise be paid under this part if such
services were not included in outpatient
critical access hospital services.
(3) All-inclusive rate.--If a hospital elects this
paragraph to apply, with respect to both facility
services and professional services, there shall be paid
amounts equal to the reasonable costs of the critical
access hospital in providing such services, less the
amount that such hospital may charge as described in
section 1866(a)(2)(A).
* * * * * * *
SEC. 1847. DEMONSTRATION PROJECTS FOR COMPETITIVE ACQUISITION OF ITEMS
AND SERVICES.
(a) * * *
* * * * * * *
(b) Awarding of Contracts in Areas.--
(1) * * *
(2) Conditions for awarding contract.--The Secretary
may not award a contract to any entity under the
competition conducted pursuant to paragraph (1) to
furnish an item or service unless the Secretary finds
that the entity meets quality standards specified by
the Secretary and that the total amounts to be paid
under the contract are expected to be less than the
total amounts that would otherwise be paid.
* * * * * * *
PAYMENT FOR PHYSICIANS' SERVICES
Sec. 1848. (a) * * *
* * * * * * *
(d) Conversion Factors.--
(1) Establishment.--
(A) In general.--The conversion factor for
each year shall be the conversion factor
established under this subsection for the
previous year (or, in the case of 1992,
specified in subparagraph (B)) adjusted by the
update (established under paragraph (3)) for
the year involved (for years before 2001) and,
for years beginning with 2001, multiplied by
the update (established under paragraph (4))
for the year involved.
* * * * * * *
[(E) Publication.--The Secretary shall cause
to have published in the Federal Register,
during the last 15 days of October of--
[(i) 1991, the conversion factor
which will apply to physicians'
services for 1992, and the update
determined under paragraph (3) for 1992
and
[(ii) each succeeding year, the
conversion factor which will apply to
physicians' services for the following
year and the update determined under
paragraph (3) for such year.]
(E) Publication and dissemination of
information.--The Secretary shall--
(i) cause to have published in the
Federal Register not later than
November 1 of each year (beginning with
2000) the conversion factor which will
apply to physicians' services for the
succeeding year, the update determined
under paragraph (4) for such succeeding
year, and the allowed expenditures
under such paragraph for such
succeeding year; and
(ii) make available to the Medicare
Payment Advisory Commission and the
public by March 1 of each year
(beginning with 2000) an estimate of
the conversion factor which will apply
to physicians' services for the
succeeding year and data used in making
such estimate.
* * * * * * *
(3) Update for 1999 and 2000.--
(A) In general.--Unless otherwise provided by
law, subject to subparagraph (D) and the
budget-neutrality factor determined by the
Secretary under subsection (c)(2)(B)(ii), the
update to the single conversion factor
established in paragraph (1)(C) for [a year
beginning with 1999] 1999 and 2000 is equal to
the product of--
(i) * * *
* * * * * * *
(C) Determination of allowed expenditures.--
For purposes of this paragraph and paragraph
(4), the allowed expenditures for physicians'
services for the 12-month period ending with
March 31 of--
(i) * * *
* * * * * * *
(4) Update for years beginning with 2001.--
(A) In general.--Unless otherwise provided by
law, subject to the budget-neutrality factor
determined by the Secretary under subsection
(c)(2)(B)(ii) and subject to adjustment under
subparagraph (F), the update to the single
conversion factor established in paragraph
(1)(C) for a year beginning with 2001 is equal
to the product of--
(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
(as defined in section 1842(i)(3)) for
the year (divided by 100), and
(ii) 1 plus the Secretary's estimate
of the update adjustment factor under
subparagraph (B) for the year.
(B) Update adjustment factor.--For purposes
of subparagraph (A)(ii), subject to
subparagraph (D), the ``update adjustment
factor'' for a year is equal (as estimated by
the Secretary) to the sum of the following:
(i) Prior year adjustment
component.--An amount determined by--
(I) computing the difference
(which may be positive or
negative) between the amount of
the allowed expenditures for
physicians' services for the
prior year (as determined under
subparagraph (C)) and the
amount of the actual
expenditures for such services
for that year;
(II) dividing that difference
by the amount of the actual
expenditures for such services
for that year; and
(III) multiplying that
quotient by 0.75.
(ii) Cumulative adjustment
component.--An amount determined by--
(I) computing the difference
(which may be positive or
negative) between the amount of
the allowed expenditures for
physicians' services (as
determined under subparagraph
(C)) from April 1, 1996,
through the end of the prior
year and the amount of the
actual expenditures for such
services during that period;
(II) dividing that difference
by actual expenditures for such
services for the prior year as
increased by the sustainable
growth rate under subsection
(f) for the year for which the
update adjustment factor is to
be determined; and
(III) multiplying that
quotient by 0.33.
(C) Determination of allowed expenditures.--
For purposes of this paragraph:
(i) Period up to april 1, 1999.--The
allowed expenditures for physicians'
services for a period before April 1,
1999, shall be the amount of the
allowed expenditures for such period as
determined under paragraph (3)(C).
(ii) Transition to calendar year
allowed expenditures.--Subject to
subparagraph (E), the allowed
expenditures for--
(I) the 9-month period
beginning April 1, 1999, shall
be the Secretary's estimate of
the amount of the allowed
expenditures that would be
permitted under paragraph
(3)(C) for such period; and
(II) the year of 1999, shall
be the Secretary's estimate of
the amount of the allowed
expenditures that would be
permitted under paragraph
(3)(C) for such year.
(iii) Years beginning with 2000.--The
allowed expenditures for a year
(beginning with 2000) is equal to the
allowed expenditures for physicians'
services for the previous year,
increased by the sustainable growth
rate under subsection (f) for the year
involved.
(D) Restriction on update adjustment
factor.--The update adjustment factor
determined under subparagraph (B) for a year
may not be less than -0.07 or greater than
0.03.
(E) Recalculation of allowed expenditures for
updates beginning with 2001.--For purposes of
determining the update adjustment factor for a
year beginning with 2001, the Secretary shall
recompute the allowed expenditures for previous
periods beginning on or after April 1, 1999,
consistent with subsection (f)(3).
(F) Transitional adjustment designed to
provide for budget neutrality.--Under this
subparagraph the Secretary shall provide for an
adjustment to the update under subparagraph
(A)--
(i) for each of 2001, 2002, 2003, and
2004, of -0.2 percent; and
(ii) for 2005 of +0.8 percent.
* * * * * * *
(f) Sustainable Growth Rate.--
[(1) Publication.--The Secretary shall cause to have
published in the Federal Register the sustainable
growth rate for each fiscal year beginning with fiscal
year 1998. Such publication shall occur by not later
than August 1 before each fiscal year, except that such
rate for fiscal year 1998 shall be published not later
than November 1, 1997.]
(1) Publication.--The Secretary shall cause to have
published in the Federal Register not later than--
(A) November 1, 2000, the sustainable growth
rate for 2000 and 2001; and
(B) November 1 of each succeeding year the
sustainable growth rate for such succeeding
year and each of the preceding 2 years.
(2) Specification of growth rate.--The sustainable
growth rate for all physicians' services for a fiscal
year (beginning with [fiscal year 1998)] fiscal year
1998 and ending with fiscal year 2000) and a year
beginning with 2000 shall be equal to the product of--
(A) 1 plus the Secretary's estimate of the
weighted average percentage increase (divided
by 100) in the fees for all physicians'
services in the [fiscal year] applicable period
involved,
(B) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in the
average number of individuals enrolled under
this part (other than Medicare+Choice plan
enrollees) from the previous [fiscal year]
applicable period to the [fiscal year]
applicable period involved,
(C) 1 plus the Secretary's estimate of the
projected percentage growth in real gross
domestic product per capita (divided by 100)
from the previous [fiscal year] applicable
period to the [fiscal year] applicable period
involved, and
(D) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in
expenditures for all physicians' services in
the [fiscal year] applicable period (compared
with the previous [fiscal year] applicable
period) which will result from changes in law
and regulations, determined without taking into
account estimated changes in expenditures
resulting from the update adjustment factor
determined under subsection (d)(3)(B) or
(d)(4)(B), as the case may be,
minus 1 and multiplied by 100.
(3) Data to be used.--For purposes of determining the
update adjustment factor under subsection (d)(4)(B) for
a year beginning with 2001, the sustainable growth
rates taken into consideration in the determination
under paragraph (2) shall be determined as follows:
(A) For 2001.--For purposes of such
calculations for 2001, the sustainable growth
rates for fiscal year 2000 and the years 2000
and 2001 shall be determined on the basis of
the best data available to the Secretary as of
September 1, 2000.
(B) For 2002.--For purposes of such
calculations for 2002, the sustainable growth
rates for fiscal year 2000 and for years 2000,
2001, and 2002 shall be determined on the basis
of the best data available to the Secretary as
of September 1, 2001.
(C) For 2003 and succeeding years.--For
purposes of such calculations for a year after
2002--
(i) the sustainable growth rates for
that year and the preceding 2 years
shall be determined on the basis of the
best data available to the Secretary as
of September 1 of the year preceding
the year for which the calculation is
made; and
(ii) the sustainable growth rate for
any year before a year described in
clause (i) shall be the rate as most
recently determined for that year under
this subsection.
Nothing in this paragraph shall be construed as
affecting the sustainable growth rates established for
fiscal year 1998 or fiscal year 1999.
[(3)] (4) Definitions.--In this subsection:
(A) Services included in physicians'
services.--The term ``physicians' services''
includes other items and services (such as
clinical diagnostic laboratory tests and
radiology services), specified by the
Secretary, that are commonly performed or
furnished by a physician or in a physician's
office, but does not include services furnished
to a Medicare+Choice plan enrollee.
(B) Medicare+choice plan enrollee.--The term
``Medicare+Choice plan enrollee'' means, with
respect to a fiscal year, an individual
enrolled under this part who has elected to
receive benefits under this title for the
fiscal year through a Medicare+Choice plan
offered under part C, and also includes an
individual who is receiving benefits under this
part through enrollment with an eligible
organization with a risk-sharing contract under
section 1876.
(C) Applicable period.--The term ``applicable
period'' means--
(i) a fiscal year, in the case of
fiscal year 1998, fiscal year 1999, and
fiscal year 2000; or
(ii) a calendar year with respect to
a year beginning with 2000;
as the case may be.
Part C--Medicare+Choice Program
eligibility, election, and enrollment
Sec. 1851. (a) * * *
* * * * * * *
(b) Special Rules.--
(1) Residence requirement.--
(A) In general.--Except as the Secretary may
otherwise provide and except as provided in
subparagraph (C), an individual is eligible to
elect a Medicare+Choice plan offered by a
Medicare+Choice organization only if the plan
serves the geographic area in which the
individual resides.
* * * * * * *
(C) Continuation of enrollment permitted
where service changed.--Notwithstanding
subparagraph (B), if a Medicare+Choice
organization eliminates from its service area a
geographic area that was previously within its
service area, the organization may elect to
offer individuals residing in the affected
geographic area who would otherwise be
ineligible to continue enrollment the option to
continue enrollment in a Medicare+Choice plan
it offers so long as--
(i) the enrollee agrees to receive
the full range of basic benefits
(excluding emergency and urgently
needed care) exclusively at facilities
designated by the organization within
the plan service area; and
(ii) there is no other
Medicare+Choice plan offered in the
area in which the enrollee resides at
the time of the organization's
election.
* * * * * * *
(d) Providing Information To Promote Informed Choice.--
(1) * * *
(2) Provision of notice.--
(A) Open season notification.--At least 15
days before the beginning of each annual,
coordinated election period (as defined in
subsection (e)(3)(B)), the Secretary shall mail
to each Medicare+Choice eligible individual
residing in an area the following:
(i) * * *
(ii) List of plans and comparison of
plan options.--A list identifying the
Medicare+Choice plans that are (or will
be) available to residents of the area
and information described in paragraph
(4) concerning such plans, to the
extent such information is available at
the time of preparation of the material
for mailing. Such information shall be
presented in a comparative form.
* * * * * * *
(e) Coverage Election Periods.--
(1) * * *
(2) Open enrollment and disenrollment
opportunities.--Subject to paragraph (5)--
(A) * * *
(B) Continuous open enrollment and
disenrollment for first 6 months during 2002.--
(i) In general.--Subject to clause
(ii) and subparagraph (D), at any time
during the first 6 months of 2002, or,
if the individual first becomes a
Medicare+Choice eligible individual
during 2002, during the first 6 months
during 2002 in which the individual is
a Medicare+Choice eligible individual,
a Medicare+Choice eligible individual
may change the election under
subsection (a)(1).
* * * * * * *
(C) Continuous open enrollment and
disenrollment for first 3 months in subsequent
years.--
(i) In general.--Subject to clause
(ii) and subparagraph (D), at any time
during the first 3 months of a year
after 2002, or, if the individual first
becomes a Medicare+Choice eligible
individual during a year after 2002,
during the first 3 months of such year
in which the individual is a
Medicare+Choice eligible individual, a
Medicare+Choice eligible individual may
change the election under subsection
(a)(1).
* * * * * * *
(D) Continuous open enrollment for
institutionalized individuals.--At any time
after 2001 in the case of a Medicare+Choice
eligible individual who is institutionalized,
the individual may change the election under
subsection (a)(1).
* * * * * * *
(4) Special election periods.--Effective as of
January 1, 2002, an individual may discontinue an
election of a Medicare+Choice plan offered by a
Medicare+Choice organization other than during an
annual, coordinated election period and make a new
election under this section if--
[(A) the organization's or plan's
certification under this part has been
terminated or the organization has terminated
or otherwise discontinued providing the plan in
the area in which the individual resides;]
(A)(i) the certification of the organization
or plan under this part has been terminated, or
the organization or plan has notified the
individual or the Secretary of an impending
termination of such certification; or
(ii) the organization has terminated or
otherwise discontinued providing the plan in
the area in which the individual resides, or
has notified the individual or Secretary of an
impending termination or discontinuation of
such plan;
* * * * * * *
payments to medicare+choice organizations
Sec. 1853. (a) Payments to Organizations.--
(1) Monthly payments.--
(A) In general.--Under a contract under
section 1857 and subject to [subsections (e)
and (f)] subsections (e), (g), and (i) and
section 1859(e)(4), the Secretary shall make
monthly payments under this section in advance
to each Medicare+Choice organization, with
respect to coverage of an individual under this
part in a Medicare+Choice payment area for a
month, in an amount equal to \1/12\ of the
annual Medicare+Choice capitation rate (as
calculated under subsection (c)) with respect
to that individual for that area, adjusted for
such risk factors as age, disability status,
gender, institutional status, and such other
factors as the Secretary determines to be
appropriate, so as to ensure actuarial
equivalence. The Secretary may add to, modify,
or substitute for such factors, if such changes
will improve the determination of actuarial
equivalence.
* * * * * * *
(3) Establishment of risk adjustment factors.--
(A) * * *
* * * * * * *
(C) Initial implementation.--
(i) In general.--The Secretary shall
first provide for implementation of a
risk adjustment methodology that
accounts for variations in per capita
costs based on health status and other
demographic factors for payments by no
later than January 1, 2000.
(ii) Phase-in.--Such risk adjustment
methodology shall be implemented in a
phased-in manner so that the new
methodology applies only to--
(I) 10 percent of the payment
amount in 2000 and 2001;
(II) 20 percent of such
amount in 2002;
(III) 30 percent of such
amount in 2003; and
(IV) 100 percent of such
amount in any subsequent year
(at which time the risk
adjustment methodology should
reflect data from multiple
settings).
* * * * * * *
(b) Annual Announcement of Payment Rates.--
(1) * * *
* * * * * * *
(4) Continued computation and publication of county-
specific per capita fee-for-service expenditure
information.--The Secretary, through the Chief Actuary
of the Health Care Financing Administration, shall
provide for the computation and publication, on an
annual basis at the time of publication of the annual
Medicare+Choice capitation rates, of information on the
level of the average annual per capita costs (described
in section 1876(a)(4)) for each Medicare+Choice payment
area.
* * * * * * *
(c) Calculation of Annual Medicare+Choice Capitation Rates.--
(1) * * *
* * * * * * *
(5) Payment adjustment budget neutrality factor.--For
purposes of paragraph (1)(A), for each year, the
Secretary shall determine a budget neutrality
adjustment factor so that the aggregate of the payments
under this part (other than those attributable to
subsection (i)) shall equal the aggregate payments that
would have been made under this part if payment were
based entirely on area-specific capitation rates.
* * * * * * *
(d) Providing Information To Promote Informed Choice.--
(1) * * *
(2) Provision of notice.--
(A) Open season notification.--At least 15
days before the beginning of each annual,
coordinated election period (as defined in
subsection (e)(3)(B)), the Secretary shall mail
to each Medicare+Choice eligible individual
residing in an area the following:
(i) * * *
(ii) List of plans and comparison of
plan options.--A list identifying the
Medicare+Choice plans that are (or will
be) available to residents of the area
and information described in paragraph
(4) concerning such plans, to the
extent such information is available at
the time of preparation of the material
for mailing. Such information shall be
presented in a comparative form.
* * * * * * *
(i) New Entry Bonus.--
(1) In general.--Subject to paragraphs (2) and (3),
in the case of Medicare+Choice payment area in which a
Medicare+Choice plan has not been offered since 1997
(or in which any organization that offered a plan since
such date has announced, as of October 13, 1999, that
it will not be offering such plan as of January 1,
2000), the amount of the monthly payment otherwise made
under this subsection shall be increased--
(A) only for the first 12 months in which any
Medicare+Choice plan is offered in the area, by
5 percent of the payment rate otherwise
computed; and
(B) only for the subsequent 12 months, by 3
percent of the payment rate otherwise computed.
If such 12 months are not a calendar year, the
Secretary shall provide for an appropriate blend of
such percentage increases for the second and third
calendar years in which months described in
subparagraph (B) occur to reflect the proportion of
such months in each such year.
(2) Period of application.--Paragraph (1) shall only
apply to payment for Medicare+Choice plans which are
first offered in a Medicare+Choice payment area during
the 2-year period beginning with January 1, 2000.
(3) Limitation to organization offering first plan in
an area.--Paragraph (1) shall only apply to payment to
the first Medicare+Choice organization that offers a
Medicare+Choice plan in each Medicare+Choice payment
area, except that if more than one such organization
first offers such a plan in an area on the same date,
paragraph (1) shall apply to payment for such
organizations.
(4) Construction.--Nothing in paragraph (1) shall be
construed as affecting the Medicare+Choice capitation
rate for any area or as applying to payment for any
period not described in such paragraph.
(5) Offered defined.--In this subsection, the term
`offered' means, with respect to a Medicare+Choice plan
as of a date, that a Medicare+Choice eligible
individual may enroll with the plan on that date,
regardless of when the enrollment takes effect or the
individual obtain benefits under the plan.
premiums
Sec. 1854. (a) Submission of Proposed Premiums and Related
Information.--
(1) In general.--Not later than [May 1] July 1 of
each year, each Medicare+Choice organization shall
submit to the Secretary, in a form and manner specified
by the Secretary and for each Medicare+Choice plan for
the service area in which it intends to be offered in
the following year--
* * * * * * *
(c) Uniform Premium.--[The]
(1) In general.--Subject to paragraph (2), the
Medicare+Choice monthly basic and supplemental
beneficiary premium, the Medicare+Choice monthly MSA
premium charged under subsection (b) of a
Medicare+Choice organization under this part may not
vary among individuals enrolled in the plan.
(2) Variation in premium waiver permitted.--A
Medicare+Choice organization may waive part or all of a
premium described in paragraph (1) for one or more
Medicare+Choice payment areas within its service area
if the annual Medicare+Choice capitation rates under
section 1853(c) vary between such payment area and
other payment areas within such service area.
* * * * * * *
contracts with medicare+choice organizations
Sec. 1857. (a) * * *
* * * * * * *
(c) Contract Period and Effectiveness.--
(1) * * *
* * * * * * *
(4) Previous terminations.--
(A) In general.--The Secretary may not enter
into a contract with a Medicare+Choice
organization if a previous contract with that
organization under this section was terminated
at the request of the organization within the
preceding 5-year period, except as provided in
paragraph (2) and except in circumstances which
warrant special consideration, as determined by
the Secretary.
(B) Earlier re-entry permitted where change
in payment policy and no more than one other
plan available.--Subparagraph (A) shall not
apply with respect to the offering by a
Medicare+Choice organization of a
Medicare+Choice plan in a Medicare+Choice
payment area if--
(i) during the 6-month period
beginning on the date the organization
notified the Secretary of the intention
to terminate the most recent previous
contract, there was a legislative
change enacted (or a regulatory change
adopted) that has the effect of
increasing payment rates under section
1853 for that Medicare+Choice payment
area; and
(ii) at the time the organization
notifies the Secretary of its intent to
enter into a contract to offer such a
plan in the area, there is no more than
one Medicare+Choice plan offered in the
area.
* * * * * * *
definitions; miscellaneous provisions
Sec. 1859. (a) * * *
* * * * * * *
(e) Restriction on Enrollment for Certain Medicare+Choice
Plans.--
(1) * * *
(2) Medicare+choice religious fraternal benefit
society plan described.--For purposes of this
subsection, a Medicare+Choice religious fraternal
benefit society plan described in this paragraph is a
Medicare+Choice plan described in section
[1851(a)(2)(A)] 1851(a)(2) that--
(A) * * *
* * * * * * *
Part D--Miscellaneous Provisions
definitions of services, institutions, etc.
Sec. 1861. For purposes of this title--
Spell of Illness
(a) * * *
* * * * * * *
Home Health Agency
(o) The term ``home health agency'' means a public agency or
private organization, or a subdivision of such an agency or
organization, which--
(1) * * *
* * * * * * *
(7) provides the Secretary with a surety bond--
(A) effective for a period of 4 years (as
specified by the Secretary) or in the case of a
change in the ownership or control of the
agency (as determined by the Secretary) during
or after such 4-year period, an additional
period of time that the Secretary determines
appropriate, such additional period not to
exceed 4 years from the date of such change in
ownership or control;
(B) in a form specified by the Secretary; and
(C) for a year in the period described in
subparagraph (A) in an amount that is equal to
the lesser of $50,000 or 10 percent of the
aggregate amount of payments to the agency
under this title and title XIX for that year,
as estimated by the Secretary; and
* * * * * * *
Discharge Planning Process
(ee)(1) * * *
(2) The Secretary shall develop guidelines and standards for
the discharge planning process in order to ensure a timely and
smooth transition to the most appropriate type of and setting
for post-hospital or rehabilitative care. The guidelines and
standards shall include the following:
(A) * * *
* * * * * * *
(H) Consistent with section 1802, the discharge plan
shall--
(i) subject to clause (iii), not specify or
otherwise limit the qualified provider which
may provide post-hospital home health services,
[and]
(ii) identify (in a form and manner specified
by the Secretary) any entity to whom the
individual is referred in which the hospital
has a disclosable financial interest (as
specified by the Secretary consistent with
section 1866(a)(1)(S)) or which has such an
interest in the hospital[.], and
(iii) for individuals enrolled under a
Medicare+Choice plan, under a contract with the
Secretary under section 1857, for whom a
hospital furnishes inpatient hospital services,
the hospital may specify with respect to such
individual the provider of post-hospital home
health services or other post-hospital services
under the plan.
* * * * * * *
payments to health maintenance organizations and competitive medical
plans
Sec. 1876. (a) * * *
* * * * * * *
(h)(1) * * *
* * * * * * *
(5)(A) * * *
(B) The Secretary may not extend or renew a reasonable cost
reimbursement contract under this subsection for any period
beyond December 31, [2002] 2004.
* * * * * * *
medicare coverage for end stage renal disease patients
Sec. 1881. (a) * * *
(b)(1) * * *
* * * * * * *
(7) The Secretary shall provide by regulation for a method
(or methods) for determining prospectively the amounts of
payments to be made for dialysis services furnished by
providers of services and renal dialysis facilities to
individuals in a facility and to such individuals at home. Such
method (or methods) shall provide for the prospective
determination of a rate (or rates) for each mode of care based
on a single composite weighted formula (which takes into
account the mix of patients who receive dialysis services at a
facility or at home and the relative costs of providing such
services in such settings) for hospital-based facilities and
such a single composite weighted formula for other renal
dialysis facilities, or based on such other method or
combination of methods which differentiate between hospital-
based facilities and other renal dialysis facilities and which
the Secretary determines, after detailed analysis, will more
effectively encourage the more efficient delivery of dialysis
services and will provide greater incentives for increased use
of home dialysis than through the single composite weighted
formulas. The amount of a payment made under any method other
than a method based on a single composite weighted formula may
not exceed the amount (or, in the case of continuous cycling
peritoneal dialysis, 130 percent of the amount) of the median
payment that would have been made under the formula for
hospital-based facilities. The Secretary shall provide for such
exceptions to such methods as may be warranted by unusual
circumstances (including the special circumstances of sole
facilities located in isolated, rural areas and of pediatric
facilities). Each application for such an exception shall be
deemed to be approved unless the Secretary disapproves it by
not later than 60 working days after the date the application
is filed. The Secretary may provide that such method will serve
in lieu of any target reimbursement rate that would otherwise
be established under paragraph (6). The Secretary shall reduce
the amount of each composite rate payment under this paragraph
for each treatment by 50 cents (subject to such adjustments as
may be required to reflect modes of dialysis other than
hemodialysis) and provide for payment of such amount to the
organizations (designated under subsection (c)(1)(A)) for such
organizations' necessary and proper administrative costs
incurred in carrying out the responsibilities described in
subsection (c)(2). The Secretary shall provide that amounts
paid under the previous sentence shall be distributed to the
organizations described in subsection (c)(1)(A) to ensure
equitable treatment of all such network organizations. The
Secretary in distributing any such payments to network
organizations shall take into account--
(A) * * *
* * * * * * *
(D) the proportion of the aggregate administrative
funds collected in the network area.
The Secretary shall increase the amount of each composite rate
payment for dialysis services furnished on or after January 1,
2000, and on or before December 31, 2000, by 1.2 percent above
such composite rate payment amounts for such services furnished
on December 31, 1999, and for such services furnished on or
after January 1, 2001, by 1.2 percent above such composite rate
payment amounts for such services furnished on December 31,
2000.
* * * * * * *
certification of medicare supplemental health insurance policies
Sec. 1882. (a) * * *
* * * * * * *
(s)(1) * * *
* * * * * * *
(3)(A) The issuer of a medicare supplemental policy--
(i) * * *
* * * * * * *
(iii) may not impose an exclusion of benefits based
on a pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who
seeks to enroll under the policy not later than 63 days after
the date of the termination of enrollment described in such
subparagraph (or, if elected by the individual, the date of
notification of the individual or the Secretary by the plan or
organization of the impending termination or discontinuance of
the plan in the area in which the individual resides) and who
submits evidence of the date of termination or disenrollment
(or the date of such notification) along with the application
for such medicare supplemental policy.
* * * * * * *
HOSPITAL PROVIDERS OF EXTENDED CARE SERVICES
Sec. 1883. (a)(1) Any hospital [(other than a hospital which
has in effect a waiver under subparagraph (A) of the last
sentence of section 1861(e))] which has an agreement under
section 1866 may (subject to subsection (b)) enter into an
agreement with the Secretary under which its inpatient hospital
facilities may be used for the furnishing of services of the
type which, if furnished by a skilled nursing facility, would
constitute extended care services.
* * * * * * *
[(b) The Secretary may not enter into an agreement under this
section with any hospital unless--
[(1) except as provided under subsection (g), the
hospital is located in a rural area and has less than
100 beds, and
[(2) the hospital has been granted a certificate of
need for the provision of long-term care services from
the State health planning and development agency
(designated under section 1521 of the Public Health
Service Act) for the State in which the hospital is
located.]
(b) The Secretary may not enter into an agreement under this
section with any hospital unless, except as provided under
subsection (g), the hospital is located in a rural area and has
less than 100 beds.
(c) An agreement with a hospital under this section shall,
except as otherwise provided under regulations of the
Secretary, be of the same duration and subject to termination
on the same conditions as are agreements with skilled nursing
facilities under section 1866 and shall, where not inconsistent
with any provision of this section, impose the same duties,
responsibilities, conditions, and limitations, as those imposed
under such agreements entered into under section 1866; except
that no such agreement with any hospital shall be in effect for
any period during which the hospital does not have in effect an
agreement under section 1866[, or during which there is in
effect for the hospital a waiver under subparagraph (A) of the
last sentence of section 1861(e)]. A hospital with respect to
which an agreement under this section has been terminated shall
not be eligible to enter into a new agreement until a two-year
period has elapsed from the termination date.
(d)[(1)] Any agreement with a hospital under this section
shall provide that payment for services will be made only for
services for which payment would be made as post-hospital
extended care services if those services had been furnished by
a skilled nursing facility under an agreement entered into
under section 1866; and any individual who is furnished
services, for which payment may be made under an agreement
under this section, shall, for purposes of this title (other
than this section), be deemed to have received post-hospital
extended care services in like manner and to the same extent as
if the services furnished to him had been post-hospital
extended care services furnished by a skilled nursing facility
under an agreement under section 1866.
[(2)(A) Any agreement under this section with a hospital with
more than 49 beds shall provide that no payment may be made for
extended care services which are furnished to an extended care
patient after the end of the 5-day period (excluding weekends
and holidays) beginning on an availability date for a skilled
nursing facility, unless the patient's physician certifies,
within such 5-day period, that the transfer of that patient to
that facility is not medically appropriate on the availability
date. The Secretary shall prescribe regulations to provide for
notice by skilled nursing facilities of availability dates to
hospitals which have agreements under this section and which
are located within the same geographic region (as defined by
the Secretary).
[(B) In this paragraph:
[(i) The term ``availability date'' means, with
respect to an extended care patient at a hospital, any
date on which a bed is available for the patient in a
skilled nursing facility located within the geographic
region in which the hospital is located.
[(ii) The term ``extended care patient'' means an
individual being furnished extended care services at a
hospital pursuant to an agreement with the Secretary
under this section.
[(3) In the case of an agreement for a cost reporting period
under this section with a hospital that has more than 49 beds,
payment may not be made in the period for patient-days of
extended care services that exceed 15 percent of the product of
the number of days in the period and the average number of
licensed beds in the hospital in the period, except that such
payment shall continue to be made in the period for those
patients who are receiving extended care services at the time
the hospital reaches the limit specified in this paragraph.]
* * * * * * *
payment to hospitals for inpatient hospital services
Sec. 1886. (a) * * *
* * * * * * *
(b)(1) * * *
* * * * * * *
(2)(A) [In addition to] Except as provided in subparagraph
(E), in addition to the payment computed under paragraph (1),
in the case of an eligible hospital (described in subparagraph
(B)) for a cost reporting period beginning on or after October
1, 1997, the amount of payment on a per discharge basis under
paragraph (1) shall be increased by the lesser of--
* * * * * * *
(E)(i) In the case of an eligible hospital that is a hospital
or unit that is within a class of hospital described in clause
(ii) with a 12-month cost reporting period beginning before the
enactment of this subparagraph, in determining the amount of
the increase under subparagraph (A), the Secretary shall
substitute for the percentage of the target amount applicable
under subparagraph (A)(ii)--
(I) for a cost reporting period beginning on or after
October 1, 2000, and before September 30, 2001, 1.5
percent; and
(II) for a cost reporting period beginning on or
after October 1, 2001, and before September 30, 2002, 2
percent.
(ii) For purposes of clause (i), each of the following shall
be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (iv) of such
subsection.
* * * * * * *
(3)(A) * * *
* * * * * * *
(C) In the case of a hospital that is a sole community
hospital (as defined in subsection (d)(5)(D)(iii)), subject to
subparagraph (I) the term ``target amount'' means--
(i) * * *
* * * * * * *
(D) For cost reporting periods ending on or before September
30, 1994, [and for cost reporting periods beginning on or after
October 1, 1997, and before October 1, 2001,] and for
discharges beginning on or after October 1, 1997, and before
October 1, 2006, in the case of a hospital that is a medicare-
dependent, small rural hospital (as defined in subsection
(d)(5)(G)), the term ``target amount'' means--
(i) * * *
* * * * * * *
(iv) with respect to discharges occurring during
fiscal year 1998 through fiscal year [2000] 2005, the
target amount for the preceding year increased by the
applicable percentage increase under subparagraph
(B)(iv).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
* * * * * * *
(H)(i) In the case of a hospital or unit that is within a
class of hospital described in clause (iv), for a cost
reporting period beginning during fiscal years 1998 through
2002, the target amount for such a hospital or unit may not
exceed the amount as updated up to or for such cost reporting
period under clause (ii).
[(H)(i)] (ii)(I) In the case of a hospital or unit that is
within a class of hospital described in clause (iv), the
Secretary shall estimate the 75th percentile of the target
amounts for such hospitals within such class for cost reporting
periods ending during fiscal year 1996, as adjusted under
clause (iii).
[(ii)] (II) The Secretary shall update the amount determined
under [clause (i)] subclause (I), for each cost reporting
period after the cost reporting period described in [such
clause] such subclause and up to the first cost reporting
period beginning on or after October 1, 1997, by a factor equal
to the market basket percentage increase.
[(iii)] (III) For cost reporting periods beginning during
each of fiscal years 1999 through 2002, the Secretary shall
update such amount by a factor equal to the market basket
percentage increase.
(iii) In applying clause (ii)(I) in the case of a hospital or
unit, the Secretary shall provide for an appropriate adjustment
to the labor-related portion of the amount determined under
such subparagraph to take into account differences between
average wage-related costs in the area of the hospital and the
national average of such costs within the same class of
hospital.
* * * * * * *
(I)(i) For cost reporting periods beginning on or after
October 1, 2000, in the case of a sole community hospital that
for its cost reporting period beginning during 1999 is paid on
the basis of the target amount applicable to the hospital under
subparagraph (C) and that elects (in a form and manner
determined by the Secretary) this subparagraph to apply to the
hospital, there shall be substituted for the base cost
reporting period described subparagraph (C) the rebased target
amount determined under this subparagraph.
(ii) For purposes of clause (i), the rebased target amount
applicable to a hospital making an election under this
subparagraph is equal to the sum of the following:
(I) With respect to discharges occurring in fiscal
year 2001, 75 percent of the target amount applicable
to the hospital under subparagraph (C) (hereinafter in
this subparagraph referred to as the ``subparagraph (C)
target amount'') and 25 percent of the amount of the
allowable operating costs of inpatient hospital
services (as defined in subsection (a)(4)) recognized
under this title for the hospital for the 12-month cost
reporting period beginning during fiscal year 1996
(hereinafter in this subparagraph referred to as the
``rebase target amount''), increased by the applicable
percentage increase under subparagraph (B)(iv).
(II) With respect to discharges occurring in fiscal
year 2002, 50 percent of the subparagraph (C) target
amount and 50 percent of the rebase target amount,
increased by the applicable percentage increase under
subparagraph (B)(iv).
(III) With respect to discharges occurring in fiscal
year 2003, 25 percent of the subparagraph (C) target
amount and 75 percent of the rebase target amount,
increased by the applicable percentage increase under
subparagraph (B)(iv).
(IV) With respect to discharges occurring in fiscal
year 2003 or any subsequent fiscal year, 100 percent of
the rebase target amount, increased by the applicable
percentage increase under subparagraph (B)(iv).
(4)(A)(i) The Secretary shall provide for an exception and
adjustment to (and in the case of a hospital [or unit]
described in subsection (d)(1)(B)(iii), may provide an
exemption from) the method under this subsection for
determining the amount of payment to a hospital where events
beyond the hospital's control or extraordinary circumstances,
including changes in the case mix of such hospital, create a
distortion in the increase in costs for a cost reporting period
(including any distortion in the costs for the base period
against which such increase is measured). The Secretary may
provide for such other exemptions from, and exceptions and
adjustments to, such method as the Secretary deems appropriate,
including the assignment of a new base period which is more
representative, as determined by the Secretary, of the
reasonable and necessary cost of inpatient services and
including those which he deems necessary to take into account a
decrease in the inpatient hospital services that a hospital
provides and that are customarily provided directly by similar
hospitals which results in a significant distortion in the
operating costs of inpatient hospital services. The Secretary
shall announce a decision on any request for an exemption,
exception, or adjustment under this paragraph not later than
180 days after receiving a completed application from the
intermediary for such exemption, exception, or adjustment, and
shall include in such decision a detailed explanation of the
grounds on which such request was approved or denied.
* * * * * * *
(d)(1) * * *
* * * * * * *
(2) The Secretary shall determine a national adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in fiscal year 1984 involving inpatient hospital services of a
subsection (d) hospital in the United States, and shall
determine a regional adjusted DRG prospective payment rate for
such discharges in each region, for which payment may be made
under part A of this title. Each such rate shall be determined
for hospitals located in urban or rural areas within the United
States or within each such region, respectively, as follows:
(A) * * *
* * * * * * *
(C) Standardizing amounts.--The Secretary shall
standardize the amount updated under subparagraph (B)
for each hospital by--
(i) excluding an estimate of indirect medical
education costs (taking into account, for
discharges occurring after September 30, 1986,
the amendments made by section 9104(a) of the
Medicare and Medicaid Budget Reconciliation
Amendments of 1985), except that the Secretary
shall not take into account any reduction in
the amount of additional payments under
paragraph (5)(B)(ii) resulting from the
amendment made by section 4621(a)(1) of the
Balanced Budget Act of 1997 or any additional
payments under such paragraph resulting from
the amendment made by section 101(a) of
Medicare Balanced Budget Refinement Act of
1999,
* * * * * * *
(5)(A) * * *
* * * * * * *
(B) The Secretary shall provide for an additional payment
amount for subsection (d) hospitals with indirect costs of
medical education, in an amount computed in the same manner as
the adjustment for such costs under regulations (in effect as
of January 1, 1983) under subsection (a)(2), except as follows:
(i) * * *
(ii) For purposes of clause (i)(II), the indirect
teaching adjustment factor is equal to c
(((1+r) to the nth power) - 1), where ``r'' is the
ratio of the hospital's full-time equivalent interns
and residents to beds and ``n'' equals .405. For
discharges occurring--
(I) * * *
* * * * * * *
(IV) during fiscal year 2000 and 2001, ``c''
is equal to 1.47; and
(V) on or after October 1, [2000] 2001, ``c''
is equal to 1.35.
* * * * * * *
(v) In determining the adjustment with respect to a
hospital for discharges occurring on or after October
1, 1997, the total number of full-time equivalent
interns and residents in the fields of allopathic and
osteopathic medicine in either a hospital or
nonhospital setting may not exceed the number (or, 130
percent of such number in the case of a hospital
located in a rural area) of such full-time equivalent
interns and residents in the hospital with respect to
the hospital's most recent cost reporting period ending
on or before December 31, 1996.
* * * * * * *
(F)(i) * * *
* * * * * * *
(ix) In the case of discharges occurring--
(I) * * *
* * * * * * *
(III) [during fiscal year 2000] during each of fiscal
years 2000 and 2001, such additional payment amount
shall be reduced by 3 percent;
[(IV) during fiscal year 2001, such additional
payment amount shall be reduced by 4 percent;]
[(V)] (IV) during fiscal year 2002, such additional
payment amount shall be reduced by [5] 4 percent; and
[(VI)] (V) during fiscal year 2003 and each
subsequent fiscal year, such additional payment amount
shall be reduced by 0 percent.
* * * * * * *
(G)(i) For any cost reporting period beginning on or after
April 1, 1990, and before October 1, 1994, [or beginning on or
after October 1, 1997, and before October 1, 2001,] or
discharges on or after October 1, 1997, and before October 1,
2006, in the case of a subsection (d) hospital which is a
medicare-dependent, small rural hospital, payment under
paragraph (1)(A) shall be equal to the sum of the amount
determined under clause (ii) and the amount determined under
paragraph (1)(A)(iii).
(ii) The amount determined under this clause is--
(I) * * *
(II) for discharges occurring during any subsequent
cost reporting period (or portion thereof) and before
October 1, 1994, [or beginning on or after October 1,
1997, and before October 1, 2001,] or discharges on or
after October 1, 1997, and before October 1, 2006, 50
percent of the amount by which the hospital's target
amount for the cost reporting period (as defined in
subsection (b)(3)(D)) exceeds the amount determined
under paragraph (1)(A)(iii).
* * * * * * *
(8)(A) * * *
* * * * * * *
(B)(i) For purposes of this subsection, the Secretary shall
treat a hospital located in a rural county adjacent to one or
more urban areas as being located in the urban metropolitan
statistical area to which the greatest number of workers in the
county commute, if the rural county would otherwise be
considered part of an urban area, under the standards for
designating Metropolitan Statistical Areas (and for designating
New England County Metropolitan Areas) [published in the
Federal Register on January 3, 1980] described in clause (ii),
if the commuting rates used in determining outlying counties
(or, for New England, similar recognized areas) were determined
on the basis of the aggregate number of resident workers who
commute to (and, if applicable under the standards, from) the
central county or counties of all contiguous Metropolitan
Statistical Areas (or New England County Metropolitan Areas).
(ii) The standards described in this clause for cost
reporting periods beginning in a fiscal year--
(I) before fiscal year 2003, are the standards
published in the Federal Register on January 3, 1980,
or, at the election of the hospital with respect to
fiscal years 2001 and 2002, standards so published on
March 30, 1990; and
(II) after fiscal year 2002, are the standards
published in the Federal Register by the Director of
the Office of Management and Budget based on the most
recent available decennial population data.
Subparagraphs (C) and (D) shall not apply with respect to the
application of subclause (I).
* * * * * * *
(E)(i) For purposes of this subsection and section 1833(t),
not later than 60 days after the receipt of an application from
a subsection (d) hospital described in clause (ii), the
Secretary shall treat the hospital as being located in the
rural area (as defined in such paragraph (2)(D)) of the State
in which the hospital is located.
(ii) For purposes of clause (i), a subsection (d) hospital
described in this clause is a subsection (d) hospital that is
located in an urban area (as defined in paragraph (2)(D)) and
satisfies any of the following criteria:
(I) The hospital is located in a rural census tract
of a metropolitan statistical area (as determined under
the Goldsmith Modification, as published in the Federal
Register on February 27, 1992 (57 FR 6725)).
(II) The hospital is located in an area designated by
any law or regulation of such State as a rural area (or
is designated by such State as a rural hospital).
(III) The hospital would qualify as a sole community
hospital under paragraph (5)(D) if the hospital were
located in a rural area.
(IV) The hospital meets such other criteria as the
Secretary may specify.
* * * * * * *
(11) Additional payments for managed care
enrollees.--
(A) In general.--(i) For portions of cost
reporting periods occurring on or after January
1, 1998, the Secretary shall provide for an
additional payment amount for each applicable
discharge of any subsection (d) hospital that
has an approved medical residency training
program.
(ii) For portions of cost reporting periods
occurring on or after January 1, 2000, the
Secretary shall provide for an additional
payment amount for each applicable discharge of
any subsection (d) hospital that has direct
costs of approved education activities for
nurse and allied health professional training.
* * * * * * *
(C) Determination of amount.--(i) The amount
of the payment [under this paragraph] under
subparagraph (A)(i) with respect to any
applicable discharge shall be equal to the DGME
portion of the applicable percentage (as
defined in subsection (h)(3)(D)(ii)) of the
estimated average per discharge amount that
would otherwise have been paid under paragraph
(5)(B) if the individuals had not been enrolled
as described in subparagraph (B).
(ii) The amount of the payment under
subparagraph (A)(ii) with respect to any
applicable discharge shall be equal to an
amount, specified by the Secretary, in a manner
consistent with the following:
(I) The total payments under such
subparagraph in a year are equal to
$60,000,000.
(II) The payments to different
hospitals are proportional to the
direct costs of each hospital described
in such subparagraph.
(iii) For purposes of this subparagraph, the
``DGME portion'' means, for a year, the ratio
of--
(I) the amount by which (aa) the
Secretary's estimate of the total
additional payments that would be
payable under this paragraph for the
year if subparagraph (A)(ii) and clause
(ii) of this subparagraph did not
apply, exceeds (bb) $60,000,000; to
(II) the total additional payments
estimated under subclause (I)(aa) for
the year.
* * * * * * *
(g)(1)(A) Notwithstanding section 1861(v), instead of any
amounts that are otherwise payable under this title with
respect to the reasonable costs of subsection (d) hospitals and
subsection (d) Puerto Rico hospitals for capital-related costs
of inpatient hospital services, the Secretary shall, for
hospital cost reporting periods beginning on or after October
1, 1991, provide for payments for such costs in accordance with
a prospective payment system established by the Secretary.
Aggregate payments made under subsection (d) and this
subsection during fiscal years 1992 through 1995 shall be
reduced in a manner that results in a reduction (as estimated
by the Secretary) in the amount of such payments equal to a 10
percent reduction in the amount of payments attributable to
capital-related costs that would otherwise have been made
during such fiscal year had the amount of such payments been
based on reasonable costs (as defined in section 1861(v)). For
discharges occurring after September 30, 1993, the Secretary
shall reduce by 7.4 percent the unadjusted standard Federal
capital payment rate (as described in 42 CFR 412.308(c), as in
effect on the date of the enactment of the Omnibus Budget
Reconciliation Act of 1993) and shall (for hospital cost
reporting periods beginning on or after October 1, 1993)
redetermine which payment methodology is applied to the
hospital under such system to take into account such reduction.
In addition to the reduction described in the preceding
sentence, for discharges occurring on or after October 1, 1997,
the Secretary shall apply the budget neutrality adjustment
factor used to determine the Federal capital payment rate in
effect on September 30, 1995 (as described in section 412.352
of title 42 of the Code of Federal Regulations), to (i) the
unadjusted standard Federal capital payment rate (as described
in section 412.308(c) of that title, as in effect on September
30, 1997), and (ii) the unadjusted hospital-specific rate (as
described in section 412.328(e)(1) of that title, as in effect
on September 30, 1997), and, for discharges occurring on or
after October 1, 1997, and before [September 30, 2002,] October
1, 2002, reduce the rates described in clauses (i) and (ii) by
2.1 percent.
* * * * * * *
(h) Payments for Direct Graduate Medical Education Costs.--
(1) * * *
* * * * * * *
(3) Hospital payment amount per resident.--
(A) * * *
* * * * * * *
(B) Aggregate approved amount.--As used in
subparagraph (A), the term ``aggregate approved
amount'' means, for a hospital cost reporting
period, the product of--
[(i) the hospital's approved FTE
resident amount (determined under
paragraph (2)) for that period, and]
(i)(I) for a cost reporting period
beginning before October 1, 2000, the
hospital's approved FTE resident amount
(determined under paragraph (2)) for
that period;
(II) for a cost reporting period
beginning on or after October 1, 2000,
and before October 1, 2004, the
national average per resident amount
determined under paragraph (7) or, if
greater, the sum of the hospital-
specific percentage (as defined in
subparagraph (E)) of the hospital's
approved FTE resident amount
(determined under paragraph (2)) for
the period and the national percentage
(as defined in such subparagraph) of
the national average per resident
amount determined under paragraph (7);
and
(III) for a cost reporting period
beginning on or after October 1, 2004,
the national average per resident
amount determined under paragraph (7);
and
* * * * * * *
(E) Transition to national average per
resident payment system.--For purposes of
subparagraph (B)(i)(II), for the cost reporting
period of a hospital beginning--
(i) during fiscal year 2001, the
hospital-specific percentage is 80
percent and the national percentage is
20 percent;
(ii) during fiscal year 2002, the
hospital-specific percentage is 60
percent and the national percentage is
40 percent;
(iii) during fiscal year 2003, the
hospital-specific percentage is 40
percent and the national percentage is
60 percent; and
(iv) during fiscal year 2004, the
hospital-specific percentage is 20
percent and the national percentage is
80 percent.
(4) Determination of full-time-equivalent
residents.--
(A) * * *
* * * * * * *
(F) Limitation on number of residents in
allopathic and osteopathic medicine.--Such
rules shall provide that for purposes of a cost
reporting period beginning on or after October
1, 1997, the total number of full-time
equivalent residents before application of
weighting factors (as determined under this
paragraph) with respect to a hospital's
approved medical residency training program in
the fields of allopathic medicine and
osteopathic medicine may not exceed the number
(or, 130 percent of such number in the case of
a hospital located in a rural area) of such
full-time equivalent residents for the
hospital's most recent cost reporting period
ending on or before December 31, 1996.
* * * * * * *
(H) Special rules for application of
subparagraphs (f) and (g).--
(i) * * *
(iv) Non-rural hospitals operating
training programs in underserved rural
areas.--In the case of a hospital that
is not located in a rural area but
establishes separately accredited
approved medical residency training
programs (or rural tracks) in an
underserved rural area or has an
accredited training program with an
integrated rural track, the Secretary
shall adjust the limitation under
subparagraph (F) in an appropriate
manner insofar as it applies to such
programs in such underserved rural
areas in order to encourage the
training of physicians in underserved
rural areas.
* * * * * * *
(7) National average per resident amount.--The
national average per resident amount for a hospital for
a cost reporting period beginning in a fiscal year is
an amount determined as follows:
(A) Determination of hospital single per
resident amount.--The Secretary shall compute
for each hospital operating an approved
graduate medical education program a single per
resident amount equal to the average (weighted
by number of full-time equivalent residents) of
the primary care per resident amount and the
non-primary care per resident amount computed
under paragraph (2) for cost reporting periods
ending during fiscal year 1997.
(B) Determination of wage and non-wage-
related proportion of the single per resident
amount.--The Secretary shall estimate the
average proportion of the single per resident
amounts computed under subparagraph (A) that is
attributable to wages and wage-related costs.
(C) Standardizing per resident amounts.--The
Secretary shall establish a standardized per
resident amount for each such hospital--
(i) by dividing the single per
resident amount computed under
subparagraph (A) into a wage-related
portion and a non-wage-related portion
by applying the proportion determined
under subparagraph (B);
(ii) by dividing the wage-related
portion by the factor applied under
subsection (d)(3)(E) for discharges
occurring during fiscal year 1999 for
the hospital's area; and
(iii) by adding the non-wage-related
portion to the amount computed under
clause (ii).
(D) Determination of national average.--The
Secretary shall compute a national average per
resident amount equal to the average of the
standardized per resident amounts computed
under subparagraph (C) for such hospitals, with
the amount for each hospital weighted by the
average number of full-time equivalent
residents at such hospital.
(E) Application to individual hospitals.--The
Secretary shall compute for each such hospital
a per resident amount--
(i) by dividing the national average
per resident amount computed under
subparagraph (D) into a wage-related
portion and a non-wage-related portion
by applying the proportion determined
under subparagraph (B);
(ii) by multiplying the wage-related
portion by the factor described in
subparagraph (C)(ii) for the hospital's
area; and
(iii) by adding the non-wage-related
portion to the amount computed under
clause (ii).
(F) Initial updating rate.--The Secretary
shall update such per resident amount for the
hospital's cost reporting period that begins
during fiscal year 2001 for each such hospital
by the estimated percentage increase in the
consumer price index for all urban consumers
during the period beginning October 1997 and
ending with the midpoint of the hospital's cost
reporting period that begins during fiscal year
2001.
(G) Subsequent updating.--For each subsequent
cost reporting period, subject to subparagraph
(H), the national average per resident amount
for a hospital is equal to the amount
determined under this paragraph for the
previous cost reporting period updated, through
the midpoint of the period, by projecting the
estimated percentage change in the consumer
price index during the 12-month period ending
at that midpoint, with appropriate adjustments
to reflect previous under-or over-estimations
under this subparagraph in the projected
percentage change in the consumer price index.
(H) Transitional budget neutrality
adjustment.--
(i) In general.--If the Secretary
estimates that, as a result of the
amendments made by section 311 of the
Medicare Balanced Budget Refinement Act
of 1999, the post-MBBRA expenditures
for fiscal year 2005 will be greater or
less than the pre-MBBRA expenditures
for that fiscal year--
(I) the Secretary shall
adjust the update applied under
subparagraph (G) in determining
the national average per
resident amount for cost
reporting periods beginning
during fiscal year 2005 so that
the amount of the post-MBBRA
expenditures for those cost
reporting periods is equal to
the amount of the pre-MBBRA
expenditures for such periods;
and
(II) the Secretary shall,
taking into account the
adjustment made under subclause
(I), adjust the national
average per resident amount, as
applied for the portion of a
cost reporting period beginning
during fiscal year 2004 that
occur in fiscal year 2005, so
that the amount of the post-
MBBRA expenditures made during
fiscal year 2005 is equal to
the amount of the pre-MBBRA
expenditures during such fiscal
year.
(ii) Definitions.--In this
subparagraph:
(I) Aggregate subsection (h)-
related expenditures.--The term
``aggregate subsection (h)-
related expenditures'' means,
with respect to cost reporting
periods beginning during a
fiscal year or with respect to
a fiscal year, the aggregate
expenditures under this title
for such periods or fiscal
year, respectively, which are
attributable to the operation
of this subsection.
(II) Pre-mbbra
expenditures.--The term ``pre-
MBBRA expenditures'' means
aggregate subsection (h)-
related expenditures determined
as if the amendments made by
section 311 of the Medicare
Balanced Budget Refinement Act
of 1999 had not been enacted.
(III) Post-mbbra
expenditures.--The term ``post-
MBBRA expenditures'' means
aggregate subsection (h)-
related expenditures determined
taking into account the
amendments made by section 311
of the Medicare Balanced Budget
Refinement Act of 1999.
* * * * * * *
(j) Prospective Payment for Inpatient Rehabilitation
Services.--
(1) Payment during transition period.--
(A) * * *
* * * * * * *
(C) TEFRA and prospective payment percentages
specified.--For purposes of subparagraph (A),
subject to subparagraph (E), for a cost
reporting period beginning--
(i) * * *
* * * * * * *
(D) Payment unit.--For purposes of this
subsection, the term ``payment unit'' means a
discharge[, day of inpatient hospital services,
or other unit of payment defined by the
Secretary].
(E) Election to apply full prospective
payment system.--A rehabilitation facility may
elect for either or both cost reporting periods
described in subparagraph (C) to have the TEFRA
percentage and prospective payment percentage
set at 0 percent and 100 percent, respectively,
for the facility.
(F) Construction relating transfer
authority.--Nothing in this subsection shall be
construed as preventing the Secretary from
providing for an adjustment to payments to take
into account the early transfer of a patient
from a rehabilitation facility to another site
of care.
* * * * * * *
(2) Patient case mix groups.--
(A) Establishment.--The Secretary shall
establish--
[(i) classes of patients of
rehabilitation facilities (each in this
subsection referred to as a ``case mix
group''), based on such factors as the
Secretary deems appropriate, which may
include impairment, age, related prior
hospitalization, comorbidities, and
functional capability of the patient;
and]
(i) classes of patient discharges of
rehabilitation facilities (each in this
subsection referred to as a `case mix
group'), based on impairment, age,
comorbidities, and functional
capability of the patient and such
other factors as the Secretary deems
appropriate to improve the explanatory
power of functional independence
measure-function related groups; and
* * * * * * *
(3) Payment rate.--
(A) * * *
* * * * * * *
(B) Budget neutral rates.--The Secretary
shall establish the prospective payment amounts
under this subsection for payment units during
fiscal years 2001 and 2002 at levels such that,
in the Secretary's estimation and taking into
account the election permitted under paragraph
(1)(E), the amount of total payments under this
subsection for such fiscal years (including any
payment adjustments pursuant to paragraphs (4)
and (6)) shall be equal to 98 percent of the
amount of payments that would have been made
under this title during the fiscal years for
operating and capital costs of rehabilitation
facilities had this subsection not been
enacted. In establishing such payment amounts,
the Secretary shall consider the effects of the
prospective payment system established under
this subsection on the total number of payment
units from rehabilitation facilities and other
factors described in subparagraph (A).
* * * * * * *
payment to skilled nursing facilities for routine service costs
Sec. 1888. (a) * * *
* * * * * * *
(e) Prospective Payment.--
(1) Payment provision.--Notwithstanding any other
provision of this title, subject to [paragraph (7)]
paragraphs (7), (11), and (12), the amount of the
payment for all costs (as defined in paragraph (2)(B))
of covered skilled nursing facility services (as
defined in paragraph (2)(A)) for each day of such
services furnished--
(A) * * *
* * * * * * *
(2) Definitions.--For purposes of this subsection:
(A) Covered skilled nursing facility
services.--
(i) In general.--The term ``covered
skilled nursing facility services''--
(I) * * *
(II) includes all items and
services (other than [services
described in clause (ii)] items
and services described in
clauses (ii) and (iii)) for
which payment may be made under
part B and which are furnished
to an individual who is a
resident of a skilled nursing
facility during the period in
which the individual is
provided covered post-hospital
extended care services.
* * * * * * *
(iii) Exclusion of certain additional
items.--Items described in this clause
are the following:
(I) Ambulance services
furnished to an individual in
conjunction with renal dialysis
services described in section
1861(s)(2)(F).
(II) Chemotherapy items
(identified as of July 1, 1999,
by HCPCS codes J9000-J9020;
J9040-J9151; J9170-J9185;
J9200-J9201; J9206-J9208;
J9211; J9230-J9245; and J9265-
J9600 (and as subsequently
modified by the Secretary)).
(III) Chemotherapy
administration services
(identified as of July 1, 1999,
by HCPCS codes 36260-36262;
36489; 36530-36535; 36640;
36823; and 96405-96542 (and as
subsequently modified by the
Secretary)).
(IV) Radioisotope services
(identified as of July 1, 1999,
by HCPCS codes 79030-79440 (and
as subsequently modified by the
Secretary)).
(V) Customized prosthetic
devices (commonly known as
artificial limbs or components
or artifical limbs) under the
following HCPCS codes (as of
July 1, 1999 (and as
subsequently modified by the
Secretary)) if delivered to an
inpatient for use during the
stay in the extended care
facility and intended to be
used by the patient after
discharge from the facility:
L5050-L5340; L5500-L5610;
L5613-L5986; L5988; L6050-
L6370; L6400-L6880; L6920-
L7274; and L7362-7366.
* * * * * * *
(3) Determination of facility specific per diem
rates.--The Secretary shall determine a facility-
specific per diem rate for each skilled nursing
facility not described in paragraph (2)(E)(ii) for a
cost reporting period as follows:
(A) Determining base payments.--The Secretary
shall determine, on a per diem basis, the total
of--
(i) the allowable costs of extended
care services for the facility for cost
reporting periods beginning in fiscal
year 1995, including costs associated
with facilities described in subsection
(d), with appropriate adjustments (as
determined by the Secretary) to non-
settled cost reports or, in the case of
a facility participating in the Nursing
Home Case-Mix and Quality Demonstration
(RUGS-III), the RUGS-III rate received
by the facility during the cost
reporting period beginning in 1997, and
(ii) an estimate of the amounts that
would be payable under part B
(disregarding any applicable
deductibles, coinsurance, and
copayments) for covered skilled nursing
facility services described in
paragraph (2)(A)(i)(II) [furnished
during such period] furnished during
the applicable cost reporting period
described in clause (i) to an
individual who is a resident of the
facility, regardless of whether or not
the payment was made to the facility or
to another entity.
* * * * * * *
[(B) Update to first cost reporting period.--
[(i) In general.--Subject to clause
(ii), the Secretary shall update the
amount determined under subparagraph
(A), for each cost reporting period
after the cost reporting period
described in subparagraph (A)(i) and up
to the first cost reporting period by a
factor equal to the skilled nursing
facility market basket percentage
increase minus 1 percentage point.
[(ii) Certain demonstration
projects.--In the case of a facility
participating in the Nursing Home Case-
Mix and Quality Demonstration (RUGS-
III), there shall be substituted for
the amount described in clause (i) the
RUGS-III rate received by the facility
for 1997.]
(B) Update to first cost reporting period.--
The Secretary shall update the amount
determined under subparagraph (A), for each
cost reporting period after the applicable cost
reporting period described in subparagraph
(A)(i) and up to the first cost reporting
period by a factor equal to the skilled nursing
facility market basket percentage increase
minus 1 percentage point (except that for the
cost reporting period beginning in fiscal year
2001, the factor shall be equal to such market
basket percentage plus 0.8 percentage point).
* * * * * * *
(4) Federal per diem rate.--
(A) * * *
(E) Updating.--
(i) * * *
(ii) Subsequent fiscal years.--The
Secretary shall compute an unadjusted
federal per diem rate equal to the
federal per diem rate computed under
this subparagraph--
(I) for fiscal year 2000, the
rate computed for the initial
period described in clause (i),
increased by the skilled
nursing facility market basket
percentage change for the
initial period minus 1
percentage point;
[(II) for each of fiscal
years 2001 and 2002, the rate
computed for the previous
fiscal year increased by the
skilled nursing facility market
basket percentage change for
the fiscal year involved minus
1 percentage point; and]
(II) for fiscal year 2001,
the rate computed for fiscal
year 2000 (determined without
regard to section 121 of the
Medicare Balanced Budget
Refinement Act of 1999)
increased by the skilled
nursing facility market basket
percentage change for the
fiscal year involved plus 0.8
percentage point;
(III) for fiscal year 2002,
the rate computed for the
previous fiscal year increased
by the skilled nursing facility
market basket percentage change
for the fiscal year involved
minus 1 percentage point; and
[(III)] (IV) for each
subsequent fiscal year, the
rate computed for the previous
fiscal year increased by the
skilled nursing facility market
basket percentage change for
the fiscal year involved.
* * * * * * *
(G) Determination of federal rate.--The
Secretary shall compute for each skilled
nursing facility for each fiscal year
(beginning with the initial period described in
subparagraph (E)(i)) an adjusted Federal per
diem rate equal to the unadjusted Federal per
diem rate determined under subparagraph (E), as
adjusted under subparagraph (F), and as further
adjusted as follows:
(i) * * *
* * * * * * *
(iii) Adjustment for exclusion of
certain additional items.--The
Secretary shall provide for an
appropriate proportional reduction in
payments so that beginning with fiscal
year 2001, the aggregate amount of such
reductions is equal to the aggregate
increase in payments attributable to
the exclusion effected under clause
(iii) of paragraph (2)(A).
* * * * * * *
(9) Payment for certain services.--In the case of an
item or service furnished to a resident of a skilled
nursing facility or a part of a facility that includes
a skilled nursing facility (as determined under
regulations) for which payment would (but for this
paragraph) be made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the amount of
the payment under such part shall be the amount
provided under the fee schedule for such item or
service. In the case of an item or service described in
clause (iii) of paragraph (2)(A) that would be payable
under part A but for the exclusion of such item or
service under such clause, payment shall be made for
the item or service, in an amount otherwise determined
under part B of this title for such item or service,
from the Federal Hospital Insurance Trust Fund under
section 1817 (rather than from the Federal
Supplementary Medical Insurance Trust Fund under
section 1841).
* * * * * * *
(11) Permitting facilities to waive 3-year
transition.--Notwithstanding paragraph (1)(A), a
facility may elect to have the amount of the payment
for all costs of covered skilled nursing facility
services for each day of such services furnished in
cost reporting periods beginning after the date of such
election determined pursuant to subparagraph (B) of
paragraph (1).
(12) Payment rule for certain facilities.--
(A) In general.--In the case of a qualified
acute skilled nursing facility described in
subparagraph (B), the per diem amount of
payment shall be determined by applying the
non-Federal percentage and Federal percentage
specified in paragraph (2)(C)(ii).
(B) Facility described.--For purposes of
subparagraph (A), a qualified acute skilled
nursing facility is a facility that--
(i) was certified by the Secretary as
a skilled nursing facility eligible to
furnish services under this title
before July 1, 1992;
(ii) is a hospital-based facility;
and
(iii) for the cost reporting period
beginning in fiscal year 1998, the
facility had more than 60 percent of
total patient days comprised of
patients who are described in
subparagraph (C).
(C) Description of patients.--For purposes of
subparagraph (B), a patient described in this
subparagraph is an individual who--
(i) is entitled to benefits under
part A; and
(ii) is immuno-compromised secondary
to an infectious disease, with specific
diagnoses as specified by the
Secretary.
* * * * * * *
prospective payment for home health services
Sec. 1895. (a) * * *
* * * * * * *
(b) System of Prospective Payment for Home Health Services.--
(1) * * *
* * * * * * *
(3) Payment basis.--
(A) Initial basis.--
[(i) In general.--Under such system
the Secretary shall provide for
computation of a standard prospective
payment amount (or amounts). Such
amount (or amounts) shall initially be
based on the most current audited cost
report data available to the Secretary
and shall be computed in a manner so
that the total amounts payable under
the system for fiscal year 2001 shall
be equal to the total amount that would
have been made if the system had not
been in effect but if the reduction in
limits described in clause (ii) had
been in effect. Such amount shall be
standardized in a manner that
eliminates the effect of variations in
relative case mix and wage levels among
different home health agencies in a
budget neutral manner consistent with
the case mix and wage level adjustments
provided under paragraph (4)(A). Under
the system, the Secretary may recognize
regional differences or differences
based upon whether or not the services
or agency are in an urbanized area.]
(i) In general.--Under such system
the Secretary shall provide for
computation of a standard prospective
payment amount (or amounts). Such
amount (or amounts) shall initially be
based on the most current audited cost
report data available to the Secretary
and shall be computed in a manner so
that the total amounts payable under
the system--
(I) for the 12-month period
beginning on the date the
Secretary implements the
system, shall be equal to the
total amount that would have
been made if the system had not
been in effect; and
(II) for periods beginning
after the period described in
subclause (I), shall be equal
to the total amount that would
have been made for fiscal year
2001 if the system had not been
in effect but if the reduction
in limits described in clause
(ii) had been in effect, and
updated under subparagraph (B).
Each such amount shall be standardized
in a manner that eliminates the effect
of variations in relative case mix and
wage levels among different home health
agencies in a budget neutral manner
consistent with the case mix and wage
level adjustments provided under
paragraph (4)(A). Under the system, the
Secretary may recognize regional
differences or differences based upon
whether or not the services or agency
are in an urbanized area.
* * * * * * *
(B) Annual update.--
(i) * * *
(ii) Home health applicable increase
percentage.--For purposes of this
subparagraph, the term ``home health
applicable increase percentage'' means,
with respect to--
(I) [fiscal year 2002 or
2003] each of fiscal years 2002
and 2003, the home health
market basket percentage
increase (as defined in clause
(iii)) minus 1.1 percentage
points; or
* * * * * * *
----------
TITLE IV OF THE BALANCED BUDGET ACT OF 1997
TITLE IV--MEDICARE, MEDICAID, AND CHILDREN'S HEALTH PROVISIONS
* * * * * * *
Subtitle A--Medicare+Choice Program
* * * * * * *
CHAPTER 2--DEMONSTRATIONS
Subchapter A--Medicare+Choice Competitive Pricing Demonstration Project
SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.
(a) Establishment of Project.--[The Secretary]
(1) In general.--Subject to the succeeding provisions
of this subsection, the Secretary of Health and Human
Services (in this subchapter referred to as the
``Secretary'') shall establish a demonstration project
(in this subchapter referred to as the ``project'')
under which payments to Medicare+Choice organizations
in medicare payment areas in which the project is being
conducted are determined in accordance with a
competitive pricing methodology established under this
subchapter.
(2) Delay in implementation.--The Secretary shall not
implement the project until January 1, 2002, or, if
later, 6 months after the date the Competitive Pricing
Advisory Committee has submitted to Congress a report
on each of the following topics:
(A) Incorporation of original fee-for-service
medicare program into project.--What changes
would be required in the project to feasibly
incorporate the original fee-for-service
medicare program into the project in the areas
in which the project is operational.
(B) Quality activities.--The nature and
extent of the quality reporting and monitoring
activities that should be required of plans
participating in the project, the estimated
costs that plans will incur as a result of
these requirements, and the current ability of
the Health Care Financing Administration to
collect and report comparable data, sufficient
to support comparable quality reporting and
monitoring activities with respect to
beneficiaries enrolled in the original fee-for-
service medicare program generally.
(C) Rural project.--The current viability of
initiating a project site in a rural area,
given the site specific budget neutrality
requirements of the project, and insofar as the
Committee decides that the addition of such a
site is not viable, recommendations on how the
project might best be changed so that such a
site is viable.
(D) Benefit structure.--The nature and extent
of the benefit structure that should be
required of plans participating in the project,
the rationale for such benefit structure, the
potential implications that any benefit
standardization requirement may have on the
number of plan choices available to a
beneficiary in an area designated under the
project, the potential implications of
requiring participating plans to offer
variations on any standardized benefit package
the committee might recommend, such that a
beneficiary could elect to pay a higher
percentage of out-of-pocket costs in exchange
for a lower premium (or premium rebate as the
case may be), and the potential implications of
expanding the project (in conjunction with the
potential inclusion of the original fee-for-
service medicare program) to require medicare
supplemental insurance plans operating in an
area designated under the project to offer a
coordinated and comparable standardized benefit
package.
(3) Conforming deadlines.--Any dates specified in the
succeeding provisions of this section shall be delayed
(as specified by the Secretary) in a manner consistent
with the delay effected under paragraph (2).
* * * * * * *
(c) Project Implementation.--
(1) In general.--Subject to paragraph (2), the
Secretary shall for each medicare payment area
designated under subsection (b)--
(A) in accordance with the recommendations of
the Competitive Pricing Advisory Committee--
(i) establish the benefit design
among plans offered in such area, [and]
* * * * * * *
(iii) establish beneficiary premiums
for plans offered in such area in a
manner such that a beneficiary who
enrolls in an offered plan with a below
average price (as established by the
competitive pricing methodology
established for such area) may, at the
plan's election, be offered a rebate of
some or all of the medicare part B
premium that such individual must
otherwise pay in order to participate
in a Medicare+Choice plan under the
Medicare+Choice program; and
* * * * * * *
Subtitle B--Prevention Initiatives
* * * * * * *
SEC. 4205. RURAL HEALTH CLINIC SERVICES.
(a) Per-Visit Payment Limits for Provider-Based Clinics.--
(1) Extension of limit.--
(A) * * *
(B) Effective date.--The amendment made by
subparagraph (A) applies to [services
furnished] cost reporting periods beginning on
or after January 1, 1998.
* * * * * * *
SEC. 4207. INFORMATICS, TELEMEDICINE, AND EDUCATION DEMONSTRATION
PROJECT.
(a) Purpose and Authorization.--
(1) In general.--Not later than 9 months after the
date of enactment of this section, the Secretary of
Health and Human Services shall provide for a
demonstration project described in paragraph (2). The
Secretary shall make an award for such project not
later than 3 months after the date of the enactment of
the Medicare Balanced Budget Refinement Act of 1999.
The Secretary shall accept the proposal adjudged to be
the best technical proposal as of such date of
enactment without the need for additional review or
resubmission of proposals.
(2) Description of project.--
(A) In general.--The demonstration project
described in this paragraph is a single
demonstration project to use eligible health
care provider telemedicine networks to apply
high-capacity computing and advanced networks
to improve primary care (and prevent health
care complications) to medicare beneficiaries
with diabetes mellitus who are residents of
medically underserved rural areas or residents
of medically underserved inner-city areas that
qualify as Federally designated medically
underserved areas or health professional
shortage areas at the time of enrollment of
beneficiaries under the project.
* * * * * * *
(c) Eligible Health Care Provider Telemedicine Network
Defined.--For purposes of this section, the term ``eligible
health care provider telemedicine network'' means a consortium
that includes at least one tertiary care hospital (but no more
than 2 such hospitals), at least one medical school, no more
than 4 facilities in rural or urban areas, and at least one
regional telecommunications provider and that meets the
following requirements:
(1) * * *
(2) The consortium submits to the Secretary an
application at such time, in such manner, and
containing such information as the Secretary may
require, including a description of the use to which
the consortium would apply any amounts received under
the project [and the source and amount of non-Federal
funds used in the project].
* * * * * * *
(d) Coverage as Medicare Part B Services.--
(1) * * *
(2) Payments.--
(A) In general.--Subject to paragraph (3),
payment for such services shall be made [at a
rate of 50 percent of the costs that are
reasonable and] for the costs that are related
related to the provision of such services. In
computing such costs, the Secretary shall
include costs described in subparagraph (B),
but may not include costs described in
subparagraph (C).
(B) Costs that may be included.--The costs
described in this subparagraph are the
permissible costs (as recognized by the
Secretary) for the following:
(i) The acquisition of telemedicine
equipment for use in patients' homes
[(but only in the case of patients
located in medically underserved
areas)] or at sites providing health
care to patients located in medically
underserved areas.
* * * * * * *
(C) Costs not included.--The costs described
in this subparagraph are costs for any of the
following:
(i) The purchase or installation of
transmission equipment (other than such
equipment used by health professionals
[to deliver medical informatics
services under] for activities related
to the project).
(ii) The establishment or operation
of a telecommunications common carrier
network.
(iii) Construction (except for minor
renovations related to the installation
of reimbursable equipment) or the
acquisition or building of real
property.
* * * * * * *
[(4) Limitation on cost-sharing.--The project may not
impose cost sharing on a medicare beneficiary for the
receipt of services under the project in excess of 20
percent of the costs that are reasonable and related to
the provision of such services.]
(4) Cost-sharing.--The project may not impose cost
sharing on a medicare beneficiary for the receipt of
services under the project. Project costs will cover
all costs to patients and providers related to
participation in the project.
* * * * * * *
Subtitle E--Provisions Relating to Part A Only
CHAPTER 1--PAYMENT OF PPS HOSPITALS
SEC. 4401. PPS HOSPITAL PAYMENT UPDATE.
(a) * * *
* * * * * * *
(b) Temporary Relief for Certain Non-Teaching, Non-DSH
Hospitals.--
(1) In general.--In the case of a hospital described
in paragraph (2) for its cost reporting period--
(A) * * *
(B) beginning in fiscal year 1999 the amount
of payment made to the hospital under section
1886(d) of the Social Security Act for
discharges occurring during such fiscal year
only shall be increased as though the
applicable percentage increase (otherwise
applicable to discharges occurring during
fiscal year 1999 under section
[1886(b)(3)(B)(i)(XIII) of the Social Security
Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII)))]
section 1886(b)(3)(B)(i)(XIV) of the Social
Security Act (42 U.S.C.
1395ww(b)(3)(B)(i)(XIV))) had been increased by
0.3 percentage points.
* * * * * * *
CHAPTER 4--PROVISIONS RELATED TO HOSPICE SERVICES
* * * * * * *
SEC. 4442. PAYMENT FOR HOME HOSPICE CARE BASED ON LOCATION WHERE CARE
IS FURNISHED.
(a) * * *
(b) Effective Date.--The amendment made by subsection (a)
[applies to cost reporting periods beginning] applies to items
and services furnished on or after October 1, 1997.
Subtitle F--Provisions Relating to Part B Only
* * * * * * *
CHAPTER 3--AMBULANCE SERVICES
SEC. 4531. PAYMENTS FOR AMBULANCE SERVICES.
(a) * * *
* * * * * * *
(c) Authorizing Payment for Paramedic Intercept Service
Providers in Rural Communities.--In promulgating regulations to
carry out section 1861(s)(7) of the Social Security Act (42
U.S.C. 1395x(s)(7)) with respect to the coverage of ambulance
service, the Secretary of Health and Human Services may include
coverage of advanced life support services (in this subsection
referred to as ``ALS intercept services'') provided by a
paramedic intercept service provider in a rural area if the
following conditions are met:
(1) * * *
* * * * * * *
For purposes of this subsection, an area shall be treated as a
rural area if it is designated as a rural area by any law or
regulation of the State or if it is located in a rural census
tract of a metropolitan statistical area (as determined under
the Goldsmith Modification, as published in the Federal
Register on February 27, 1992 (57 FR 6725)).
SEC. 4532. DEMONSTRATION OF COVERAGE OF AMBULANCE SERVICES UNDER
MEDICARE THROUGH CONTRACTS WITH UNITS OF LOCAL
GOVERNMENT.
(a) Demonstration Project Contracts with Local Governments.--
The Secretary of Health and Human Services shall establish up
to 3 demonstration projects under which, at the request of a
unit of local government, the Secretary enters into a contract
with the unit of local government under which--
(1) * * *
* * * * * * *
The projects may extend over a period of not to exceed 3 years
each. The Secretary shall publish by not later than July 1,
2000, a request for proposals for such projects.
(b) Amount of Payment.--
(1) * * *
[(2) Capitated payment rate defined.--In this
subsection, the ``capitated payment rate'' applicable
to a contract under this subsection for a calendar year
is equal to 95 percent of--
[(A) for the first calendar year for which
the contract is in effect, the average annual
per capita payment made under part B of title
XVIII of the Social Security Act with respect
to ambulance services furnished to such
individuals during the 3 most recent calendar
years for which data on the amount of such
payment is available; and
[(B) for a subsequent year, the amount
provided under this paragraph for the previous
year increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the 12-month
period ending with June of the previous year.]
(2) Capitated payment rate defined.--In this
subsection, the ``capitated payment rate'' means, with
respect to a demonstration project--
(A) in its first year, a rate established for
the project by the Secretary, using the most
current available data, in a manner that
ensures that aggregate payments under the
project will not exceed the aggregate payment
that would have been made for ambulance
services under part B of title XVIII of the
Social Security Act in the local area of
government's jurisdiction; and
(B) in a subsequent year, the capitated
payment rate established for the previous year
increased by an appropriate inflation
adjustment factor.
* * * * * * *
Subtitle G--Provisions Relating to Parts A and B
CHAPTER 1--HOME HEALTH SERVICES AND BENEFITS
Subchapter A--Payments For Home Health Services
* * * * * * *
SEC. 4603. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
(a) * * *
* * * * * * *
(e) Contingency.--If the Secretary of Health and Human
Services for any reason does not establish and implement the
prospective payment system for home health services described
in section 1895(b) of the Social Security Act (as added by
subsection (a)) for portions of cost reporting periods
described in subsection (d), for such portions the Secretary
shall provide for a reduction by 15 percent in the cost limits
and per beneficiary limits described in section 1861(v)(1)(L)
of such Act, as those limits would otherwise be in effect on
[September 30, 2000] on the date that is 12 months after the
date the Secretary implements such system.
* * * * * * *
----------
SECTION 9335 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1986
* * * * * * *
SEC. 9335. PAYMENT RATES FOR RENAL SERVICES AND IMPROVEMENTS IN
ADMINISTRATION OF END STAGE RENAL DISEASE NETWORKS
AND PROGRAMS.
(a) Composite Rates for Dialysis Services.--
[(1) In general.--Effective with respect to dialysis
services provided on or after December 1, 1990, and
before October 1, 1998, the Secretary of Health and
Human Services shall establish the base rate for
routine dialysis treatment in a free-standing facility
and in a hospital-based facility under section
1881(b)(7) of the Social Security Act, at a level equal
to the respective rate in effect as of May 13, 1986,
reduced by $2.00. With respect to services furnished on
or after January 1, 1991, such base rate shall be equal
to the respective rate in effect as of September 30,
1990 (determined without regard to any reductions
imposed pursuant to section 6201 of the Omnibus Budget
Reconciliation Act of 1989), increased by $1.00. No
change may be made in the base rate in effect as of
September 30, 1990, unless the Secretary makes such
change in accordance with notice and comment
requirements set forth in section 1871(b)(1) of such
Act.]
* * * * * * *
----------
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
CHAPTER 2--HEALTH CARE, HUMAN RESOURCES, INCOME SECURITY, AND CUSTOMS
AND TRADE PROVISIONS
Subchapter A--Medicare
* * * * * * *
PART I--PROVISIONS RELATING TO PART A
SEC. 13501. PAYMENTS FOR PPS HOSPITALS.
(a) * * *
* * * * * * *
(e) Extension for Medicare-Dependent, Small Rural
Hospitals.--
(1) * * *
(2) Permitting hospitals to decline
reclassification.--If any hospital fails to qualify as
a medicare-dependent, small rural hospital under
section 1886(d)(5)(G)(i) of the Social Security Act as
a result of a decision by the Medicare Geographic
Classification Review Board under section 1886(d)(10)
of such Act to reclassify the hospital as being located
in an urban area for fiscal year 1993, fiscal year
1994, fiscal year 1998, fiscal year 1999, [or fiscal
year 2000] or fiscal year 2000 through fiscal year
2005, the Secretary of Health and Human Services
shall--
(A) * * *
* * * * * * *
PART III--PROVISIONS RELATING TO PARTS A AND B
SEC. 13567. EXTENSION OF SOCIAL HEALTH MAINTENANCE ORGANIZATION
DEMONSTRATIONS.
(a) * * *
[(c) Expansion of Number of Members Per Site.--The Secretary
of Health and Human Services may not impose a limit of less
than 36,000 on the number of individuals that may participate
in a project conducted under section 2355 of the Deficit
Reduction Act of 1984.]
(c) Aggregate Limit on Number of Members.--The Secretary of
Health and Human Services may not impose a limit on the number
of individuals that may participate in a project conducted
under section 2355 of the Deficit Reduction Act of 1984
(including under any subsequent expansion under such section),
other than an aggregate limit of not less than 324,000 for all
sites.
* * * * * * *
----------
SECTION 4018 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1987
SEC. 4018. SPECIAL RULES.
(a) * * *
(b) Extension of Waivers for Social Health Maintenance
Organizations.--
(1) The Secretary of Health and Human Services shall
extend without interruption, through December 30,
[2000] the date that is 18 months after the date that
the Secretary submits to Congress the report described
in section 4014(c) of the Balanced Budget Act of 1997,
the approval of waivers granted under subsection (a) of
section 2355 of the Deficit Reduction Act of 1984 for
the demonstration project described in subsection (b)
of that section, subject to the terms and conditions
(other than duration of the project) established under
that section (as amended by paragraph (2) of this
subsection).
* * * * * * *
(4) The Secretary of Health and Human Services shall
submit a final report to the Congress on the project
referred to in paragraph (1) not later than March 31,
2001. Not later than 6 months after the date the
Secretary submits such final report, the Medicare
Payment Advisory Commission shall submit to Congress a
report containing recommendations regarding such
project.
* * * * * * *
VII. ADDITIONAL VIEWS
This bill has many needed, good features and long-term
reforms (such as psychiatric and long-term care hospital
prospective payment systems) that caused a number of us to vote
to report it to the House. Except for the fact that the bill is
not paid for, most of us would have voted for the package.
We commend Health Subcommittee Chairman Bill Thomas for
significant improvements in the bill between the Subcommittee
markup and the full Committee's consideration. Extra help was
provided for disproportionate share/safety net hospitals,
teaching hospitals, and home health agencies. Of particular
note is help for beneficiaries under-going expensive, high-tech
medical procedures in hospital outpatient departments.\1\ The
bill limits a beneficiaries' out-of-pocket expense for these
procedures to no more than the cost of the hospital deductible
($776 in the year 2000). This provision is estimated to save
beneficiaries half a billion dollars over the next 10 years.
The provision reaffirms our commitment to provide beneficiary
relief in the hospital outpatient sector, where beneficiaries
are today paying about 50 percent of the total cost, instead of
Medicare's normal 20 percent-80 percent split.
---------------------------------------------------------------------------
\1\ For example, the beneficiary payment for the implantation of a
hearing device can run over $3,000.
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the need to do more
In other areas, the bill misses an opportunity to do more
for Medicare providers in distress--particularly our nation's
hospitals serving the poor and uninsured, our academic teaching
hospitals, rural hospital outpatient departments, and home
health agencies. Democratic amendments to provide more help in
these areas were all rejected. The bill also does not do enough
to offer relief from the arbitrary $1,500 therapy caps, which
is causing some of our sicker seniors (for example, stroke
patients) to be denied continuity of treatment.\2\ Another area
of concern, raised in a colloquy by Representative Cardin and
Portman, is hospice care, where soaring pharmaceutical costs
coupled with the BBA cuts have created severe pressures on
these important end-of-life caregivers. We believe more
assistance is needed for these providers.
---------------------------------------------------------------------------
\2\ The bill provides an ``outlier'' pool of about 1 percent for
difficult cases, but data indicates that over 10 percent of seniors
needing rehab are likely to reach the cap.
---------------------------------------------------------------------------
republicans reject rx price relief for seniors
The bill also misses a golden opportunity to provide major
help for seniors in meeting the costs of pharmaceuticals. The
Republican majority voted unanimously against Representative
Karen Thurman's amendment to give seniors prescription drug
discounts. Her amendment, a variation of the Allen-Turner-
Waxman-Berry bill (H.R. 664), would require that Medicare
providers (like hospitals) must only purchase drugs from
manufacturers who also make available to pharmacies (for sale
to seniors) drugs at the best available discount price.
Today, seniors who pay out-of-pocket for their medications
are frequently charged more than twice as much as favored
customers, such as large group health plans. This Medicare
legislation is our best hope this year to provide prescription
drug price relief to seniors and disabled. We look forward to
debating this issue on the floor of the House.
In the area of drugs, the Republicans also opposed an
amendment by Representative Neal to allow a State to require
HMO's operating in the State to offer a drug benefit (the BBA
pre-empted Massachusetts's program ensuring a drug benefit for
its managed care enrollees). The Majority also rejected
Representative Cardin's proposal that when a Medicare+Choice
managed care plan leaves an area, enrollees should have the
right of guaranteed issue of medi-gap policies that offer a
prescription drug benefit (plans H, I, and J). Beneficiaries
abandoned by their managed care plans often lose a valuable
drug benefit, and we should ensure that they have the right to
convert to a medi-gap plan that also offers prescription drug
coverage.
(On the bright side, Chairman Thomas and the Majority
responded to a request by Representative Thurman for more
Medicare coverage of immuno-suppressive drugs (so that
transplant patients don't reject or lose their expensive,
transplanted organs) by offering to discuss and work on the
issue in the coming days. Medicare drug expansion in this area
could save money and improve the quality of life for many very
vulnerable citizens. Two hundred and fifty-eight Members of the
House are co-sponsoring legislation in this area.)
republicans reject paying for relief: shrink the solvency of medicare
The bill's major fault is that it is not paid for, and thus
chops off a year's solvency from the Medicare Part A Trust Fund
and raises beneficiary's Part B premiums.
All of the Committee Democrats voted to pay for the cost of
this bill. All of the Republicans voted against our effort to
be financially responsible. They voted to spend another $10.6
billion of the surpluses which do not exist, thus making it
harder to save Medicare in the long run--and thus further
dipping into the Social Security surplus.
In voting for Medicare relief to health care providers
without paying for it, we must remember that every dollar we
give back in Part A reduces the solvency of the Part A Trust
Fund. Every dollar we give back to the providers in Part B
results in higher Part B premiums on beneficiaries. Over the
next 5 years Medicare will spend about $1.2 trillion dollars.
Surely in this 5 year budget window we can find zero point
seven percent (0.7 percent) in savings. Surely, working with
the Republican Majority, we can find tax loopholes and
unjustified tax subsidies to offset the cost of this bill.
If we cannot pay for this bill now, before we face the
crisis of the Baby Boomers retiring, it calls into serious
question Congress's ability to govern.\3\
---------------------------------------------------------------------------
\3\ Senator Bob Graham, offering a similar pay-for amendment in the
Senate Finance Committee last week, noted that it would be ``ironic''
in a year which started with a Commission on how to extend the life of
the Medicare Trust Fund to meet the needs of the Baby Boomers, if we
ended up reducing the Fund's solvency. More than ironic, we would say
it is tragic.
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Because of the failure to pay for the bill, eleven of us
voted against final passage. We will all continue to work to
find a way to finance this needed relief from the excessive
cuts in the Balanced Budget Act of 1997.
the need to support the health care financing administration's budget
We make one other point: this bill piles major new tasks on
the Health Care Financing Administration. Unless all of us in
Congress work together to protect HCFA's budget and find new
ways to pay for Medicare's administrative costs, the agency
will be unable to carry out the tasks we gave it in 1997, let
alone these major new assignments.
Robert T. Matsui.
Sander Levin.
Pete Stark.
William J. Coyne.
John Lewis.
Lloyd Doggett.
Ben Cardin.
Richard E. Neal.
Charles B. Rangel.
Michael R. McNulty.
Karen L. Thurman.
John Tanner.
Xavier Becerra.
Jim McDermott.
William J. Jefferson.
Jerry Kleczka.