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< Back to current issue of Immigration Daily < Back to current issue of Immigrant's Weekly
[Congressional Record: December 15, 2000 (House)]
[Page H12355-H12405]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr15de00-44]
[[pp. H12355-H12405]] CONFERENCE REPORT ON H.R. 4577, DEPARTMENTS OF LABOR, HEALTH AND HUMAN
SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2001
[[Continued from page H12354]]
[[Page H12355]]
Subtitle B--Adjustments to PPS Payments for Skilled Nursing Facilities
SEC. 311. ELIMINATION OF REDUCTION IN SKILLED NURSING
FACILITY (SNF) MARKET BASKET UPDATE IN 2001.
(a) In General.--Section 1888(e)(4)(E)(ii) (42 U.S.C.
1395yy(e)(4)(E)(ii)) is amended--
(1) by redesignating subclauses (II) and (III) as
subclauses (III) and (IV), respectively;
(2) in subclause (III), as so redesignated--
(A) by striking ``each of fiscal years 2001 and 2002'' and
inserting ``each of fiscal years 2002 and 2003''; and
(B) by striking ``minus 1 percentage point'' and inserting
``minus 0.5 percentage points''; and
(3) by inserting after subclause (I) the following new
subclause:
``(II) for fiscal year 2001, the rate computed for the
previous fiscal year increased by the skilled nursing
facility market basket percentage change for the fiscal
year;''.
(b) Special Rule for Payment for Fiscal Year 2001.--
Notwithstanding the amendments made by subsection (a), for
purposes of making payments for covered skilled nursing
facility services under section 1888(e) of the Social
Security Act (42 U.S.C. 1395yy(e)) for fiscal year 2001, the
Federal per diem rate referred to in paragraph (4)(E)(ii) of
such section--
(1) for the period beginning on October 1, 2000, and ending
on March 31, 2001, shall be the rate determined in accordance
with the law as in effect on the day before the date of the
enactment of this Act; and
(2) for the period beginning on April 1, 2001, and ending
on September 30, 2001, shall be the rate that would have been
determined under such section if ``plus 1 percentage point''
had been substituted for ``minus 1 percentage point'' under
subclause (II) of such paragraph (as in effect on the day
before the date of the enactment of this Act).
(c) Relation to Temporary Increase in BBRA.--The increases
provided under section 101 of BBRA (113 Stat. 1501A-325)
shall be in addition to any increase resulting from the
amendments made by subsection (a).
(d) GAO Report on Adequacy of SNF Payment Rates.--Not later
than July 1, 2002, the Comptroller General of the United
States shall submit to Congress a report on the adequacy of
medicare payment rates to skilled nursing facilities and the
extent to which medicare contributes to the financial
viability of such facilities. Such report shall take into
account the role of private payors, medicaid, and case mix on
the financial performance of these facilities, and shall
include an analysis (by specific RUG classification) of the
number and characteristics of such facilities.
(e) HCFA Study of Classification Systems for SNF
Residents.--
(1) Study.--The Secretary of Health and Human Services
shall conduct a study of the different systems for
categorizing patients in medicare skilled nursing facilities
in a manner that accounts for the relative resource
utilization of different patient types.
(2) Report.--Not later than January 1, 2005, the Secretary
shall submit to Congress a report on the study conducted
under subsection (a). Such report shall include such
recommendations regarding changes in law as may be
appropriate.
SEC. 312. INCREASE IN NURSING COMPONENT OF PPS FEDERAL RATE.
(a) In General.--The Secretary of Health and Human Services
shall increase by 16.66 percent the nursing component of the
case-mix adjusted Federal prospective payment rate specified
in Tables 3 and 4 of the final rule published in the Federal
Register by the Health Care Financing Administration on July
31, 2000 (65 Fed. Reg. 46770) and as subsequently updated,
effective for services furnished on or after April 1, 2001,
and before October 1, 2002.
(b) GAO Audit of Nursing Staff Ratios.--
(1) Audit.--The Comptroller General of the United States
shall conduct an audit of nursing staffing ratios in a
representative sample of medicare skilled nursing facilities.
Such sample shall cover selected States and shall include
broad representation with respect to size, ownership,
location, and medicare volume. Such audit shall include an
examination of payroll records and medicaid cost reports of
individual facilities.
(2) Report.--Not later than August 1, 2002, the Comptroller
General shall submit to Congress a report on the audits
conducted under paragraph (1). Such report shall include an
assessment of the impact of the increased payments under this
subtitle on increased nursing staff ratios and shall make
recommendations as to whether increased payments under
subsection (a) should be continued.
SEC. 313. APPLICATION OF SNF CONSOLIDATED BILLING REQUIREMENT
LIMITED TO PART A COVERED STAYS.
(a) In General.--Section 1862(a)(18) (42 U.S.C.
1395y(a)(18)) is amended by striking ``or of a part of a
facility that includes a skilled nursing facility (as
determined under regulations),'' and inserting ``during a
period in which the resident is provided covered post-
hospital extended care services (or, for services described
in section 1861(s)(2)(D), which are furnished to such an
individual without regard to such period),''.
(b) Conforming Amendments.--(1) Section 1842(b)(6)(E) (42
U.S.C. 1395u(b)(6)(E)) is amended--
(A) by inserting ``by, or under arrangements made by, a
skilled nursing facility'' after ``furnished'';
(B) by striking ``or of a part of a facility that includes
a skilled nursing facility (as determined under
regulations)''; and
(C) by striking ``(without regard to whether or not the
item or service was furnished by the facility, by others
under arrangement with them made by the facility, under any
other contracting or consulting arrangement, or otherwise)''.
(2) Section 1842(t) (42 U.S.C. 1395u(t)) is amended by
striking ``by a physician'' and ``or of a part of a facility
that includes a skilled nursing facility (as determined under
regulations),''.
(3) Section 1866(a)(1)(H)(ii)(I) (42 U.S.C.
1395cc(a)(1)(H)(ii)(I)) is amended by inserting after ``who
is a resident of the skilled nursing facility'' the
following: ``during a period in which the resident is
provided covered post-hospital extended care services (or,
for services described in section 1861(s)(2)(D), that are
furnished to such an individual without regard to such
period)''.
(c) Effective Date.--The amendments made by subsections (a)
and (b) shall apply to services furnished on or after January
1, 2001.
(d) Oversight.--The Secretary of Health and Human Services,
through the Office of the Inspector General in the Department
of Health and Human Services or otherwise, shall monitor
payments made under part B of the title XVIII of the Social
Security Act for items and services furnished to residents of
skilled nursing facilities during a time in which the
residents are not being provided medicare covered post-
hospital extended care services to ensure that there is not
duplicate billing for services or excessive services
provided.
SEC. 314. ADJUSTMENT OF REHABILITATION RUGS TO CORRECT
ANOMALY IN PAYMENT RATES.
(a) Adjustment for Rehabilitation RUGs.--
(1) In general.--For purposes of computing payments for
covered skilled nursing facility services under paragraph (1)
of section 1888(e) of the Social Security Act (42 U.S.C.
1395yy(e)) for such services furnished on or after April 1,
2001, and before the date described in section 101(c)(2) of
BBRA (113 Stat. 1501A-324), the Secretary of Health and Human
Services shall increase by 6.7 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 rehabilitation groups
described in paragraph (2) furnished to an individual during
the period in which such individual is classified in such a
RUG-III category.
(2) Rehabilitation groups described.--The RUG-III
rehabilitation groups for which the adjustment described in
paragraph (1) applies are RUC, RUB, RUA, RVC, RVB, RVA, RHC,
RHB, RHA, RMC, RMB, RMA, RLB, and RLA, as specified in Tables
3 and 4 of the final rule published in the Federal Register
by the Health Care Financing Administration on July 31, 2000
(65 Fed. Reg. 46770).
(b) Correction With Respect to Rehabilitation RUGs.--
(1) In general.--Section 101(b) of BBRA (113 Stat. 1501A-
324) is amended by striking ``CA1, RHC, RMC, and RMB'' and
inserting ``and CA1''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after April 1, 2001.
(c) Review by Office of Inspector General.--The Inspector
General of the Department of Health and Human Services shall
review the medicare payment structure for services classified
within rehabilitation resource utilization groups (RUGs) (as
in effect after the date of the enactment of the BBRA) to
assess whether payment incentives exist for the delivery of
inadequate care. Not later than October 1, 2001, the
Inspector General shall submit to Congress a report on such
review.
SEC. 315. ESTABLISHMENT OF PROCESS FOR GEOGRAPHIC
RECLASSIFICATION.
(a) In General.--The Secretary of Health and Human Services
may establish a procedure for the geographic reclassification
of a skilled nursing facility for purposes of payment for
covered skilled nursing facility services under the
prospective payment system established under section 1888(e)
of the Social Security Act (42 U.S.C. 1395yy(e)). Such
procedure may be based upon the method for geographic
reclassifications for inpatient hospitals established under
section 1886(d)(10) of the Social Security Act (42 U.S.C.
1395ww(d)(10)).
(b) Requirement for Skilled Nursing Facility Wage Data.--In
no case may the Secretary implement the procedure under
subsection (a) before such time as the Secretary has
collected data necessary to establish an area wage index for
skilled nursing facilities based on wage data from such
facilities.
Subtitle C--Hospice Care
SEC. 321. 5 PERCENT INCREASE IN PAYMENT BASE.
(a) In General.--Section 1814(i)(1)(C)(ii)(VI) (42 U.S.C.
1395f(i)(1)(C)(ii)(VI)) is amended by inserting ``, plus, in
the case of fiscal year 2001, 5.0 percentage points'' before
the semicolon at the end.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to hospice care furnished on or after April 1,
2001. In applying clause (ii) of section 1814(i)(1)(C) of the
Social Security Act (42 U.S.C. 1395f(i)(1)(C)) beginning with
fiscal year 2002, the payment rates in effect under such
section during the period beginning on April 1, 2001, and
ending on September 30, shall be treated as the payment rates
in effect during fiscal year 2001.
(c) No Effect on BBRA Temporary Increase.--The provisions
of this section shall have no effect on the application of
section 131 of BBRA.
(d) Application of Wage Index.--Notwithstanding section
1814(i) of the Social Security Act (42 U.S.C. 1395f(i)), the
Secretary of Health and Human Services shall use 1.0043 as
the hospice wage index value for the Wichita, Kansas
[[Page H12356]]
Metropolitan Statistical Area in calculating payments under
such section for a hospice program providing hospice care in
such area during fiscal year 2000. The Secretary may provide
for an appropriate timely lump sum payment to reflect the
application of the previous sentence.
(e) Technical Amendment.--Section 1814(a)(7)(A)(ii) (42
U.S.C. 1395f(a)(7)(A)(ii)) is amended by striking the period
at the end and inserting a semicolon.
SEC. 322. CLARIFICATION OF PHYSICIAN CERTIFICATION.
(a) Certification Based on Normal Course of Illness.--
(1) In general.--Section 1814(a) (42 U.S.C. 1395f(a)) is
amended by adding at the end the following new sentence:
``The certification regarding terminal illness of an
individual under paragraph (7) shall be based on the
physician's or medical director's clinical judgment regarding
the normal course of the individual's illness.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to certifications made on or after the date of
the enactment of this Act.
(b) Study and Report on Physician Certification Requirement
for Hospice Benefits.--
(1) Study.--The Secretary of Health and Human Services
shall conduct a study to examine the appropriateness of the
certification regarding terminal illness of an individual
under section 1814(a)(7) of the Social Security Act (42
U.S.C. 1395f(a)(7)) that is required in order for such
individual to receive hospice benefits under the medicare
program under title XVIII of such Act. In conducting such
study, the Secretary shall take into account the effect of
the amendment made by subsection (a).
(2) Report.--Not later than 2 years after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall submit to Congress a report on the study
conducted under paragraph (1), together with any
recommendations for legislation that the Secretary deems
appropriate.
SEC. 323. MEDPAC REPORT ON ACCESS TO, AND USE OF, HOSPICE
BENEFIT.
(a) In General.--The Medicare Payment Advisory Commission
shall conduct a study to examine the factors affecting the
use of hospice benefits under the medicare program under
title XVIII of the Social Security Act, including a delay in
the time (relative to death) of entry into a hospice program,
and differences in such use between urban and rural hospice
programs and based upon the presenting condition of the
patient.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under subsection
(a), together with any recommendations for legislation that
the Commission deems appropriate.
Subtitle D--Other Provisions
SEC. 331. RELIEF FROM MEDICARE PART A LATE ENROLLMENT PENALTY
FOR GROUP BUY-IN FOR STATE AND LOCAL RETIREES.
(a) In General.--Section 1818 (42 U.S.C. 1395i-2) is
amended--
(1) in subsection (c)(6), by inserting before the semicolon
at the end the following: ``and shall be subject to reduction
in accordance with subsection (d)(6)''; and
(2) by adding at the end of subsection (d) the following
new paragraph:
``(6)(A) In the case where a State, a political subdivision
of a State, or an agency or instrumentality of a State or
political subdivision thereof determines to pay, for the life
of each individual, the monthly premiums due under paragraph
(1) on behalf of each of the individuals in a qualified State
or local government retiree group who meets the conditions of
subsection (a), the amount of any increase otherwise
applicable under section 1839(b) (as applied and modified by
subsection (c)(6) of this section) with respect to the
monthly premium for benefits under this part for an
individual who is a member of such group shall be reduced by
the total amount of taxes paid under section 3101(b) of the
Internal Revenue Code of 1986 by such individual and under
section 3111(b) by the employers of such individual on behalf
of such individual with respect to employment (as defined in
section 3121(b) of such Code).
``(B) For purposes of this paragraph, the term `qualified
State or local government retiree group' means all of the
individuals who retire prior to a specified date that is
before January 1, 2002, from employment in 1 or more
occupations or other broad classes of employees of--
``(i) the State;
``(ii) a political subdivision of the State; or
``(iii) an agency or instrumentality of the State or
political subdivision of the State.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to premiums for months beginning with January 1,
2002.
TITLE IV--PROVISIONS RELATING TO PART B
Subtitle A--Hospital Outpatient Services
SEC. 401. REVISION OF HOSPITAL OUTPATIENT PPS PAYMENT UPDATE.
(a) In General.--Section 1833(t)(3)(C)(iii) (42 U.S.C.
1395l(t)(3)(C)(iii)) is amended by striking ``in each of
2000, 2001, and 2002'' and inserting ``in each of 2000 and
2002''.
(b) Adjustment for Case Mix Changes.--
(1) In general.--Section 1833(t)(3)(C) (42 U.S.C.
1395l(t)(3)(C)) is amended--
(A) by redesignating clause (iii) as clause (iv); and
(B) by inserting after clause (ii) the following new
clause:
``(iii) Adjustment for service mix changes.--Insofar as the
Secretary determines that the adjustments for service mix
under paragraph (2) for a previous year (or estimates that
such adjustments for a future year) did (or are likely to)
result in a change in aggregate payments under this
subsection during the year that are a result of changes in
the coding or classification of covered OPD services that do
not reflect real changes in service mix, the Secretary may
adjust the conversion factor computed under this subparagraph
for subsequent years so as to eliminate the effect of such
coding or classification changes.''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect as if included in the enactment of BBA.
(c) Special Rule for Payment for 2001.--Notwithstanding the
amendment made by subsection (a), for purposes of making
payments under section 1833(t) of the Social Security Act
(42 U.S.C. 1395l(t)) for covered OPD services furnished
during 2001, the medicare OPD fee schedule amount under
such section--
(1) for services furnished on or after January 1, 2001, and
before April 1, 2001, shall be the medicare OPD fee schedule
amount for 2001 as determined under the provisions of law in
effect on the day before the date of the enactment of this
Act; and
(2) for services furnished on or after April 1, 2001, and
before January 1, 2002, shall be the fee schedule amount (as
determined taking into account the amendment made by
subsection (a)), increased by a transitional percentage
allowance equal to 0.32 percent (to account for the timing of
implementation of the full market basket update).
SEC. 402. CLARIFYING PROCESS AND STANDARDS FOR DETERMINING
ELIGIBILITY OF DEVICES FOR PASS-THROUGH
PAYMENTS UNDER HOSPITAL OUTPATIENT PPS.
(a) In General.--Section 1833(t)(6) (42 U.S.C. 1395l(t)(6))
is amended--
(1) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively; and
(2) by striking subparagraph (B) and inserting the
following new subparagraphs:
``(B) Use of categories in determining eligibility of a
device for pass-through payments.--The following provisions
apply for purposes of determining whether a medical device
qualifies for additional payments under clause (ii) or (iv)
of subparagraph (A):
``(i) Establishment of initial categories.--
``(I) In general.--The Secretary shall initially establish
under this clause categories of medical devices based on type
of device by April 1, 2001. Such categories shall be
established in a manner such that each medical device that
meets the requirements of clause (ii) or (iv) of subparagraph
(A) as of January 1, 2001, is included in such a category and
no such device is included in more than one category. For
purposes of the preceding sentence, whether a medical device
meets such requirements as of such date shall be determined
on the basis of the program memoranda issued before such
date.
``(II) Authorization of implementation other than through
regulations.--The categories may be established under this
clause by program memorandum or otherwise, after consultation
with groups representing hospitals, manufacturers of medical
devices, and other affected parties.
``(ii) Establishing criteria for additional categories.--
``(I) In general.--The Secretary shall establish criteria
that will be used for creation of additional categories
(other than those established under clause (i)) through
rulemaking (which may include use of an interim final rule
with comment period).
``(II) Standard.--Such categories shall be established
under this clause in a manner such that no medical device is
described by more than one category. Such criteria shall
include a test of whether the average cost of devices that
would be included in a category and are in use at the time
the category is established is not insignificant, as
described in subparagraph (A)(iv)(II).
``(III) Deadline.--Criteria shall first be established
under this clause by July 1, 2001. The Secretary may
establish in compelling circumstances categories under this
clause before the date such criteria are established.
``(IV) Adding categories.--The Secretary shall promptly
establish a new category of medical devices under this clause
for any medical device that meets the requirements of
subparagraph (A)(iv) and for which none of the categories in
effect (or that were previously in effect) is appropriate.
``(iii) Period for which category is in effect.--A category
of medical devices established under clause (i) or (ii) shall
be in effect for a period of at least 2 years, but not more
than 3 years, that begins--
``(I) in the case of a category established under clause
(i), on the first date on which payment was made under this
paragraph for any device described by such category
(including payments made during the period before April 1,
2001); and
``(II) in the case of any other category, on the first date
on which payment is made under this paragraph for any medical
device that is described by such category.
``(iv) Requirements treated as met.--A medical device shall
be treated as meeting the requirements of subparagraph
(A)(iv), regardless of whether the device meets the
requirement of subclause (I) of such subparagraph, if--
``(I) the device is described by a category established and
in effect under clause (i); or
``(II) the device is described by a category established
and in effect under clause (ii) and an application under
section 515 of the Federal Food, Drug, and Cosmetic Act has
been approved with respect to the device, or the device has
been cleared for market under section 510(k) of such Act, or
the device is exempt from the requirements of section 510(k)
of such Act pursuant to subsection (l) or (m) of section 510
of such Act or section 520(g) of such Act.
[[Page H12357]]
Nothing in this clause shall be construed as requiring an
application or prior approval (other than that described in
subclause (II)) in order for a covered device described by a
category to qualify for payment under this paragraph.
``(C) Limited period of payment.--
``(i) Drugs and biologicals.--The payment under this
paragraph with respect to a drug or biological shall only
apply during a period of at least 2 years, but not more than
3 years, that begins--
``(I) on the first date this subsection is implemented in
the case of a drug or biological described in clause (i),
(ii), or (iii) of subparagraph (A) and in the case of a drug
or biological described in subparagraph (A)(iv) and for which
payment under this part is made as an outpatient hospital
service before such first date; or
``(II) in the case of a drug or biological described in
subparagraph (A)(iv) not described in subclause (I), on the
first date on which payment is made under this part for the
drug or biological as an outpatient hospital service.
``(ii) Medical devices.--Payment shall be made under this
paragraph with respect to a medical device only if such
device--
``(I) is described by a category of medical devices
established and in effect under subparagraph (B); and
``(II) is provided as part of a service (or group of
services) paid for under this subsection and provided during
the period for which such category is in effect under such
subparagraph.''.
(b) Conforming Amendments.--Section 1833(t) (42 U.S.C.
1395l(t)) is further amended--
(1) in paragraph (6)(A)(iv)(II), by striking ``the cost of
the device, drug, or biological'' and inserting ``the cost of
the drug or biological or the average cost of the category of
devices'';
(2) in paragraph (6)(D) (as redesignated by subsection
(a)(1)), by striking ``subparagraph (D)(iii)'' in the matter
preceding clause (i) and inserting ``subparagraph (E)(iii)'';
and
(3) in paragraph (12)(E), by striking ``additional payments
(consistent with paragraph (6)(B))'' and inserting
``additional payments, the determination and deletion of
initial and new categories (consistent with subparagraphs (B)
and (C) of paragraph (6))''.
(c) Effective Date.--The amendments made by this section
take effect on the date of the enactment of this Act.
(d) Transition.--
(1) In general.--In the case of a medical device provided
as part of a service (or group of services) furnished during
the period before initial categories are implemented under
subparagraph (B)(i) of section 1833(t)(6) of the Social
Security Act (as amended by subsection (a)), payment shall be
made for such device under such section in accordance with
the provisions in effect before the date of the enactment of
this Act. In addition, beginning on the date that is 30 days
after the date of the enactment of this Act, payment shall be
made for such a device that is not included in a program
memorandum described in such subparagraph if the Secretary of
Health and Human Services determines that the device
(including a device that would have been included in such
program memoranda but for the requirement of subparagraph
(A)(iv)(I) of that section) is likely to be described by such
an initial category.
(2) Application of current process.--Notwithstanding any
other provision of law, the Secretary shall continue to
accept applications with respect to medical devices under the
process established pursuant to paragraph (6) of section
1833(t) of the Social Security Act (as in effect on the day
before the date of the enactment of this Act) through
December 1, 2000, and any device--
(A) with respect to which an application was submitted
(pursuant to such process) on or before such date; and
(B) that meets the requirements of clause (ii) or (iv) of
subparagraph (A) of such paragraph (as determined pursuant to
such process),
shall be treated as a device with respect to which an initial
category is required to be established under subparagraph
(B)(i) of such paragraph (as amended by subsection (a)(2)).
SEC. 403. APPLICATION OF OPD PPS TRANSITIONAL CORRIDOR
PAYMENTS TO CERTAIN HOSPITALS THAT DID NOT
SUBMIT A 1996 COST REPORT.
(a) In General.--Section 1833(t)(7)(F)(ii)(I) (42 U.S.C.
1395l(t)(7)(F)(ii)(I)) is amended by inserting ``(or in the
case of a hospital that did not submit a cost report for such
period, during the first subsequent cost reporting period
ending before 2001 for which the hospital submitted a cost
report)'' after ``1996''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect as if included in the enactment of BBRA.
SEC. 404. APPLICATION OF RULES FOR DETERMINING PROVIDER-BASED
STATUS FOR CERTAIN ENTITIES.
(a) Grandfather.--Notwithstanding any other provision of
law, effective October 1, 2000, for purposes of provider-
based status under title XVIII of the Social Security Act--
(1) any facility or organization that is treated as
provider-based in relation to a hospital or critical access
hospital under such title as of such date shall continue to
be treated as provider-based in relation to such hospital or
critical access hospital under such title until October 1,
2002; and
(2) the requirements, limitations, and exclusions specified
in subsections (d), (e), (f), and (h) of section 413.65 of
title 42, Code of Federal Regulations, shall not apply to
such facility or organization in relation to such hospital or
critical access hospital until October 1, 2002.
(b) Continuing Criteria for Meeting Geographic Location
Requirement.--Except as provided in subsection (a), in making
determinations of provider-based status on or after October
1, 2000, the following rules shall apply:
(1) The facility or organization shall be treated as
satisfying any requirements and standards for geographic
location in relation to a hospital or a critical access
hospital if the facility or organization--
(A) satisfies the requirements of section 413.65(d)(7) of
title 42, Code of Federal Regulations; or
(B) is located not more than 35 miles from the main campus
of the hospital or critical access hospital.
(2) The facility or organization shall be treated as
satisfying any of the requirements and standards for
geographic location in relation to a hospital or a critical
access hospital if the facility or organization is owned and
operated by a hospital or critical access hospital that--
(A) is owned or operated by a unit of State or local
government, is a public or private nonprofit corporation that
is formally granted governmental powers by a unit of State or
local government, or is a private hospital that has a
contract with a State or local government that includes the
operation of clinics located off the main campus of the
hospital to assure access in a well-defined service area to
health care services for low-income individuals who are not
entitled to benefits under title XVIII (or medical assistance
under a State plan under title XIX) of the Social Security
Act; and
(B) has a disproportionate share adjustment percentage (as
determined under section 1886(d)(5)(F) of such Act (42 U.S.C.
1395ww(d)(5)(F))) greater than 11.75 percent or is described
in clause (i)(II) of such section.
(c) Temporary Criteria.--For purposes of title XVIII of the
Social Security Act, a facility or organization for which a
determination of provider-based status in relation to a
hospital or critical access hospital is requested on or after
October 1, 2000, and before October 1, 2002, shall be treated
as having provider-based status in relation to such a
hospital or a critical access hospital for any period before
a determination is made with respect to such status pursuant
to such request.
(d) Definitions.--For purposes of this section, the terms
``hospital'' and ``critical access hospital'' have the
meanings given such terms in subsections (e) and (mm)(1),
respectively, of section 1861 of the Social Security Act (42
U.S.C. 1395x).
SEC. 405. TREATMENT OF CHILDREN'S HOSPITALS UNDER PROSPECTIVE
PAYMENT SYSTEM.
(a) In General.--Section 1833(t) (42 U.S.C. 1395l(t)) is
amended--
(1) in the heading of paragraph (7)(D)(ii), by inserting
``and children's hospitals'' after ``cancer hospitals''; and
(2) in paragraphs (7)(D)(ii) and (11), by striking
``section 1886(d)(1)(B)(v)'' and inserting ``clause (iii) or
(v) of section 1886(d)(1)(B)''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply as if included in the enactment of section 202 of
BBRA (113 Stat. 1501A-342).
SEC. 406. INCLUSION OF TEMPERATURE MONITORED CRYOABLATION IN
TRANSITIONAL PASS-THROUGH FOR CERTAIN MEDICAL
DEVICES, DRUGS, AND BIOLOGICALS UNDER OPD PPS.
(a) In General.--Section 1833(t)(6)(A)(ii) (42 U.S.C.
1395l(t)(6)(A)(ii)) is amended by inserting ``or temperature
monitored cryoablation'' after ``device of brachytherapy''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to devices furnished on or after April 1, 2001.
Subtitle B--Provisions Relating to Physicians' Services
SEC. 411. GAO STUDIES RELATING TO PHYSICIANS' SERVICES.
(a) Study of Specialist Physicians' Services Furnished in
Physicians' Offices and Hospital Outpatient Department
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to examine the appropriateness of
furnishing in physicians' offices specialist physicians'
services (such as gastrointestinal endoscopic physicians'
services) which are ordinarily furnished in hospital
outpatient departments. In conducting this study, the
Comptroller General shall--
(A) review available scientific and clinical evidence about
the safety of performing procedures in physicians' offices
and hospital outpatient departments;
(B) assess whether resource-based practice expense relative
values established by the Secretary of Health and Human
Services under the medicare physician fee schedule under
section 1848 of the Social Security Act (42 U.S.C. 1395w-4)
for such specialist physicians' services furnished in
physicians' offices and hospital outpatient departments
create an incentive to furnish such services in physicians'
offices instead of hospital outpatient departments; and
(C) assess the implications for access to care for medicare
beneficiaries if the medicare program were not to cover such
services in physicians' offices.
(2) Report.--Not later than July 1, 2001, the Comptroller
General shall submit to Congress a report on such study and
include such recommendations as the Comptroller General
determines to be appropriate.
(b) Study of the Resource-Based Practice Expense System.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the refinements to the practice
expense relative value units during the transition to a
resource-based practice expense system for physician payments
under the medicare program under title XVIII of the Social
Security Act. Such study shall examine how the Secretary of
Health and Human Services has accepted and used the practice
expense data submitted under section 212 of BBRA (113 Stat.
1501A-350).
(2) Report.--Not later than July 1, 2001, the Comptroller
General shall submit to Congress a report on the study
conducted under paragraph (1) together with recommendations
regarding--
[[Page H12358]]
(A) improvements in the process for acceptance and use of
practice expense data under section 212 of BBRA;
(B) any change or adjustment that is appropriate to ensure
full access to a spectrum of care for beneficiaries under the
medicare program; and
(C) the appropriateness of payments to physicians.
SEC. 412. PHYSICIAN GROUP PRACTICE DEMONSTRATION.
(a) In General.--Title XVIII is amended by inserting after
section 1866 the following new sections:
``demonstration of application of physician volume increases to group
practices
``Sec. 1866A. (a) Demonstration Program Authorized.--
``(1) In general.--The Secretary shall conduct
demonstration projects to test and, if proven effective,
expand the use of incentives to health care groups
participating in the program under this title that--
``(A) encourage coordination of the care furnished to
individuals under the programs under parts A and B by
institutional and other providers, practitioners, and
suppliers of health care items and services;
``(B) encourage investment in administrative structures and
processes to ensure efficient service delivery; and
``(C) reward physicians for improving health outcomes.
Such projects shall focus on the efficiencies of furnishing
health care in a group-practice setting as compared to the
efficiencies of furnishing health care in other health care
delivery systems.
``(2) Administration by contract.--Except as otherwise
specifically provided, the Secretary may administer the
program under this section in accordance with section 1866B.
``(3) Definitions.--For purposes of this section, terms
have the following meanings:
``(A) Physician.--Except as the Secretary may otherwise
provide, the term `physician' means any individual who
furnishes services which may be paid for as physicians'
services under this title.
``(B) Health care group.--The term `health care group'
means a group of physicians (as defined in subparagraph (A))
organized at least in part for the purpose of providing
physicians' services under this title. As the Secretary finds
appropriate, a health care group may include a hospital and
any other individual or entity furnishing items or services
for which payment may be made under this title that is
affiliated with the health care group under an arrangement
structured so that such individual or entity participates in
a demonstration under this section and will share in any
bonus earned under subsection (d).
``(b) Eligibility Criteria.--
``(1) In general.--The Secretary is authorized to establish
criteria for health care groups eligible to participate in a
demonstration under this section, including criteria relating
to numbers of health care professionals in, and of patients
served by, the group, scope of services provided, and quality
of care.
``(2) Payment method.--A health care group participating in
the demonstration under this section shall agree with respect
to services furnished to beneficiaries within the scope of
the demonstration (as determined under subsection (c))--
``(A) to be paid on a fee-for-service basis; and
``(B) that payment with respect to all such services
furnished by members of the health care group to such
beneficiaries shall (where determined appropriate by the
Secretary) be made to a single entity.
``(3) Data reporting.--A health care group participating in
a demonstration under this section shall report to the
Secretary such data, at such times and in such format as the
Secretary requires, for purposes of monitoring and evaluation
of the demonstration under this section.
``(c) Patients Within Scope of Demonstration.--
``(1) In general.--The Secretary shall specify, in
accordance with this subsection, the criteria for identifying
those patients of a health care group who shall be considered
within the scope of the demonstration under this section for
purposes of application of subsection (d) and for assessment
of the effectiveness of the group in achieving the objectives
of this section.
``(2) Other criteria.--The Secretary may establish
additional criteria for inclusion of beneficiaries within a
demonstration under this section, which may include frequency
of contact with physicians in the group or other factors or
criteria that the Secretary finds to be appropriate.
``(3) Notice requirements.--In the case of each beneficiary
determined to be within the scope of a demonstration under
this section with respect to a specific health care group,
the Secretary shall ensure that such beneficiary is notified
of the incentives, and of any waivers of coverage or payment
rules, applicable to such group under such demonstration.
``(d) Incentives.--
``(1) Performance target.--The Secretary shall establish
for each health care group participating in a demonstration
under this section--
``(A) a base expenditure amount, equal to the average total
payments under parts A and B for patients served by the
health care group on a fee-for-service basis in a base period
determined by the Secretary; and
``(B) an annual per capita expenditure target for patients
determined to be within the scope of the demonstration,
reflecting the base expenditure amount adjusted for risk and
expected growth rates.
``(2) Incentive bonus.--The Secretary shall pay to each
participating health care group (subject to paragraph (4)) a
bonus for each year under the demonstration equal to a
portion of the medicare savings realized for such year
relative to the performance target.
``(3) Additional bonus for process and outcome
improvements.--At such time as the Secretary has established
appropriate criteria based on evidence the Secretary
determines to be sufficient, the Secretary shall also pay to
a participating health care group (subject to paragraph (4))
an additional bonus for a year, equal to such portion as the
Secretary may designate of the saving to the program under
this title resulting from process improvements made by and
patient outcome improvements attributable to activities of
the group.
``(4) Limitation.--The Secretary shall limit bonus payments
under this section as necessary to ensure that the aggregate
expenditures under this title (inclusive of bonus payments)
with respect to patients within the scope of the
demonstration do not exceed the amount which the Secretary
estimates would be expended if the demonstration projects
under this section were not implemented.
``provisions for administration of demonstration program
``Sec. 1866B. (a) General Administrative Authority.--
``(1) Beneficiary eligibility.--Except as otherwise
provided by the Secretary, an individual shall only be
eligible to receive benefits under the program under section
1866A (in this section referred to as the `demonstration
program') if such individual--
``(A) is enrolled under the program under part B and
entitled to benefits under part A; and
``(B) is not enrolled in a Medicare+Choice plan under part
C, an eligible organization under a contract under section
1876 (or a similar organization operating under a
demonstration project authority), an organization with an
agreement under section 1833(a)(1)(A), or a PACE program
under section 1894.
``(2) Secretary's discretion as to scope of program.--The
Secretary may limit the implementation of the demonstration
program to--
``(A) a geographic area (or areas) that the Secretary
designates for purposes of the program, based upon such
criteria as the Secretary finds appropriate;
``(B) a subgroup (or subgroups) of beneficiaries or
individuals and entities furnishing items or services
(otherwise eligible to participate in the program), selected
on the basis of the number of such participants that the
Secretary finds consistent with the effective and efficient
implementation of the program;
``(C) an element (or elements) of the program that the
Secretary determines to be suitable for implementation; or
``(D) any combination of any of the limits described in
subparagraphs (A) through (C).
``(3) Voluntary receipt of items and services.--Items and
services shall be furnished to an individual under the
demonstration program only at the individual's election.
``(4) Agreements.--The Secretary is authorized to enter
into agreements with individuals and entities to furnish
health care items and services to beneficiaries under the
demonstration program.
``(5) Program standards and criteria.--The Secretary shall
establish performance standards for the demonstration program
including, as applicable, standards for quality of health
care items and services, cost-effectiveness, beneficiary
satisfaction, and such other factors as the Secretary finds
appropriate. The eligibility of individuals or entities for
the initial award, continuation, and renewal of agreements to
provide health care items and services under the program
shall be conditioned, at a minimum, on performance that meets
or exceeds such standards.
``(6) Administrative review of decisions affecting
individuals and entities furnishing services.--An individual
or entity furnishing services under the demonstration program
shall be entitled to a review by the program administrator
(or, if the Secretary has not contracted with a program
administrator, by the Secretary) of a decision not to enter
into, or to terminate, or not to renew, an agreement with the
entity to provide health care items or services under the
program.
``(7) Secretary's review of marketing materials.--An
agreement with an individual or entity furnishing services
under the demonstration program shall require the individual
or entity to guarantee that it will not distribute materials
that market items or services under the program without the
Secretary's prior review and approval.
``(8) Payment in full.--
``(A) In general.--Except as provided in subparagraph (B),
an individual or entity receiving payment from the Secretary
under a contract or agreement under the demonstration program
shall agree to accept such payment as payment in full, and
such payment shall be in lieu of any payments to which the
individual or entity would otherwise be entitled under this
title.
``(B) Collection of deductibles and coinsurance.--Such
individual or entity may collect any applicable deductible or
coinsurance amount from a beneficiary.
``(b) Contracts for Program Administration.--
``(1) In general.--The Secretary may administer the
demonstration program through a contract with a program
administrator in accordance with the provisions of this
subsection.
``(2) Scope of program administrator contracts.--The
Secretary may enter into such contracts for a limited
geographic area, or on a regional or national basis.
``(3) Eligible contractors.--The Secretary may contract for
the administration of the program with--
``(A) an entity that, under a contract under section 1816
or 1842, determines the amount of
[[Page H12359]]
and makes payments for health care items and services
furnished under this title; or
``(B) any other entity with substantial experience in
managing the type of program concerned.
``(4) Contract award, duration, and renewal.--
``(A) In general.--A contract under this subsection shall
be for an initial term of up to three years, renewable for
additional terms of up to three years.
``(B) Noncompetitive award and renewal for entities
administering part a or part b payments.--The Secretary may
enter or renew a contract under this subsection with an
entity described in paragraph (3)(A) without regard to the
requirements of section 5 of title 41, United States Code.
``(5) Applicability of federal acquisition regulation.--The
Federal Acquisition Regulation shall apply to program
administration contracts under this subsection.
``(6) Performance standards.--The Secretary shall establish
performance standards for the program administrator
including, as applicable, standards for the quality and cost-
effectiveness of the program administered, and such other
factors as the Secretary finds appropriate. The eligibility
of entities for the initial award, continuation, and renewal
of program administration contracts shall be conditioned, at
a minimum, on performance that meets or exceeds such
standards.
``(7) Functions of program administrator.--A program
administrator shall perform any or all of the following
functions, as specified by the Secretary:
``(A) Agreements with entities furnishing health care items
and services.--Determine the qualifications of entities
seeking to enter or renew agreements to provide services
under the demonstration program, and as appropriate enter or
renew (or refuse to enter or renew) such agreements on behalf
of the Secretary.
``(B) Establishment of payment rates.--Negotiate or
otherwise establish, subject to the Secretary's approval,
payment rates for covered health care items and services.
``(C) Payment of claims or fees.--Administer payments for
health care items or services furnished under the program.
``(D) Payment of bonuses.--Using such guidelines as the
Secretary shall establish, and subject to the approval of the
Secretary, make bonus payments as described in subsection
(c)(2)(A)(ii) to entities furnishing items or services for
which payment may be made under the program.
``(E) Oversight.--Monitor the compliance of individuals and
entities with agreements under the program with the
conditions of participation.
``(F) Administrative review.--Conduct reviews of adverse
determinations specified in subsection (a)(6).
``(G) Review of marketing materials.--Conduct a review of
marketing materials proposed by an entity furnishing services
under the program.
``(H) Additional functions.--Perform such other functions
as the Secretary may specify.
``(8) Limitation of liability.--The provisions of section
1157(b) shall apply with respect to activities of contractors
and their officers, employees, and agents under a contract
under this subsection.
``(9) Information sharing.--Notwithstanding section 1106
and section 552a of title 5, United States Code, the
Secretary is authorized to disclose to an entity with a
program administration contract under this subsection such
information (including medical information) on individuals
receiving health care items and services under the program as
the entity may require to carry out its responsibilities
under the contract.
``(c) Rules Applicable to Both Program Agreements and
Program Administration Contracts.--
``(1) Records, reports, and audits.--The Secretary is
authorized to require entities with agreements to provide
health care items or services under the demonstration
program, and entities with program administration contracts
under subsection (b), to maintain adequate records, to afford
the Secretary access to such records (including for audit
purposes), and to furnish such reports and other materials
(including audited financial statements and performance data)
as the Secretary may require for purposes of implementation,
oversight, and evaluation of the program and of individuals'
and entities' effectiveness in performance of such agreements
or contracts.
``(2) Bonuses.--Notwithstanding any other provision of law,
but subject to subparagraph (B)(ii), the Secretary may make
bonus payments under the demonstration program from the
Federal Health Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund in amounts that do
not exceed the amounts authorized under the program in
accordance with the following:
``(A) Payments to program administrators.--The Secretary
may make bonus payments under the program to program
administrators.
``(B) Payments to entities furnishing services.--
``(i) In general.--Subject to clause (ii), the Secretary
may make bonus payments to individuals or entities furnishing
items or services for which payment may be made under the
demonstration program, or may authorize the program
administrator to make such bonus payments in accordance with
such guidelines as the Secretary shall establish and subject
to the Secretary's approval.
``(ii) Limitations.--The Secretary may condition such
payments on the achievement of such standards related to
efficiency, improvement in processes or outcomes of care, or
such other factors as the Secretary determines to be
appropriate.
``(3) Antidiscrimination limitation.--The Secretary shall
not enter into an agreement with an entity to provide health
care items or services under the demonstration program, or
with an entity to administer the program, unless such entity
guarantees that it will not deny, limit, or condition the
coverage or provision of benefits under the program, for
individuals eligible to be enrolled under such program, based
on any health status-related factor described in section
2702(a)(1) of the Public Health Service Act.
``(d) Limitations on Judicial Review.--The following
actions and determinations with respect to the demonstration
program shall not be subject to review by a judicial or
administrative tribunal:
``(1) Limiting the implementation of the program under
subsection (a)(2).
``(2) Establishment of program participation standards
under subsection (a)(5) or the denial or termination of, or
refusal to renew, an agreement with an entity to provide
health care items and services under the program.
``(3) Establishment of program administration contract
performance standards under subsection (b)(6), the refusal to
renew a program administration contract, or the
noncompetitive award or renewal of a program administration
contract under subsection (b)(4)(B).
``(4) Establishment of payment rates, through negotiation
or otherwise, under a program agreement or a program
administration contract.
``(5) A determination with respect to the program (where
specifically authorized by the program authority or by
subsection (c)(2))--
``(A) as to whether cost savings have been achieved, and
the amount of savings; or
``(B) as to whether, to whom, and in what amounts bonuses
will be paid.
``(e) Application Limited to Parts A and B.--None of the
provisions of this section or of the demonstration program
shall apply to the programs under part C.
``(f) Reports to Congress.--Not later than two years after
the date of the enactment of this section, and biennially
thereafter for six years, the Secretary shall report to
Congress on the use of authorities under the demonstration
program. Each report shall address the impact of the use of
those authorities on expenditures, access, and quality under
the programs under this title.''.
(b) GAO Report.--Not later than 2 years after the date on
which the demonstration project under section 1866A of the
Social Security Act, as added by subsection (a), is
implemented, the Comptroller General of the United States
shall submit to Congress a report on such demonstration
project. The report shall include such recommendations
with respect to changes to the demonstration project that
the Comptroller General determines appropriate.
SEC. 413. STUDY ON ENROLLMENT PROCEDURES FOR GROUPS THAT
RETAIN INDEPENDENT CONTRACTOR PHYSICIANS.
(a) In General.--The Comptroller General of the United
States shall conduct a study of the current medicare
enrollment process for groups that retain independent
contractor physicians with particular emphasis on hospital-
based physicians, such as emergency department staffing
groups. In conducting the evaluation, the Comptroller General
shall consult with groups that retain independent contractor
physicians and shall--
(1) review the issuance of individual medicare provider
numbers and the possible medicare program integrity
vulnerabilities of the current process;
(2) review direct and indirect costs associated with the
current process incurred by the medicare program and groups
that retain independent contractor physicians;
(3) assess the effect on program integrity by the
enrollment of groups that retain independent contractor
hospital-based physicians; and
(4) develop suggested procedures for the enrollment of
these groups.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a).
Subtitle C--Other Services
SEC. 421. 1-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS;
REPORT ON STANDARDS FOR SUPERVISION OF PHYSICAL
THERAPY ASSISTANTS.
(a) In General.--Section 1833(g)(4) (42 U.S.C. 1395l(g)(4))
is amended by striking ``2000 and 2001.'' and inserting
``2000, 2001, and 2002.''.
(b) Conforming Amendment To Continue Focused Medical
Reviews of Claims During Moratorium Period.--Section
221(a)(2) of BBRA (113 Stat. 1501A-351) is amended by
striking ``(under the amendment made by paragraph (1)(B))''.
(c) Study on Standards for Supervision of Physical
Therapist Assistants.--
(1) Study.--The Secretary of Health and Human Services
shall conduct a study of the implications--
(A) of eliminating the ``in the room'' supervision
requirement for medicare payment for services of physical
therapy assistants who are supervised by physical therapists;
and
(B) of such requirement on the cap imposed under section
1833(g) of the Social Security Act (42 U.S.C. 1395l(g)) on
physical therapy services.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary shall submit to Congress
a report on the study conducted under paragraph (1).
SEC. 422. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.
(a) Update.--
(1) In general.--The last sentence of section 1881(b)(7)
(42 U.S.C. 1395rr(b)(7)) is amended by striking ``for such
services furnished on or after January 1, 2001, by 1.2
percent'' and inserting
[[Page H12360]]
``for such services furnished on or after January 1, 2001, by
2.4 percent''.
(2) Prohibition on exceptions.--
(A) In general.--Subject to subparagraphs (B) and (C), the
Secretary of Health and Human Services may not provide for an
exception under section 1881(b)(7) of the Social Security Act
(42 U.S.C. 1395rr(b)(7)) on or after December 31, 2000.
(B) Deadline for new applications.--In the case of a
facility that during 2000 did not file for an exception rate
under such section, the facility may submit an application
for an exception rate by not later than July 1, 2001.
(C) Protection of approved exception rates.--Any exception
rate under such section in effect on December 31, 2000 (or,
in the case of an application under subparagraph (B), as
approved under such application) shall continue in effect so
long as such rate is greater than the composite rate as
updated by the amendment made by paragraph (1).
(b) Development of ESRD Market Basket.--
(1) Development.--The Secretary of Health and Human
Services shall collect data and develop an ESRD market basket
whereby the Secretary can estimate, before the beginning of a
year, the percentage by which the costs for the year of the
mix of labor and nonlabor goods and services included in the
ESRD composite rate under section 1881(b)(7) of the Social
Security Act (42 U.S.C. 1395rr(b)(7)) will exceed the costs
of such mix of goods and services for the preceding year. In
developing such index, the Secretary may take into account
measures of changes in--
(A) technology used in furnishing dialysis services;
(B) the manner or method of furnishing dialysis services;
and
(C) the amounts by which the payments under such section
for all services billed by a facility for a year exceed the
aggregate allowable audited costs of such services for such
facility for such year.
(2) Report.--The Secretary of Health and Human Services
shall submit to Congress a report on the index developed
under paragraph (1) no later than July 1, 2002, and shall
include in the report recommendations on the appropriateness
of an annual or periodic update mechanism for renal dialysis
services under the medicare program under title XVIII of the
Social Security Act based on such index.
(c) Inclusion of Additional Services in Composite Rate.--
(1) Development.--The Secretary of Health and Human
Services shall develop a system which includes, to the
maximum extent feasible, in the composite rate used for
payment under section 1881(b)(7) of the Social Security Act
(42 U.S.C. 1395rr(b)(7)), payment for clinical diagnostic
laboratory tests and drugs (including drugs paid under
section 1881(b)(11)(B) of such Act (42 U.S.C.
1395rr(b)(11)(B)) that are routinely used in furnishing
dialysis services to medicare beneficiaries but which are
currently separately billable by renal dialysis facilities.
(2) Report.--The Secretary shall include, as part of the
report submitted under subsection (b)(2), a report on the
system developed under paragraph (1) and recommendations on
the appropriateness of incorporating the system into medicare
payment for renal dialysis services.
(d) GAO Study on Access to Services.--
(1) Study.--The Comptroller General of the United States
shall study access of medicare beneficiaries to renal
dialysis services. Such study shall include whether there is
a sufficient supply of facilities to furnish needed renal
dialysis services, whether medicare payment levels are
appropriate, taking into account audited costs of facilities
for all services furnished, to ensure continued access to
such services, and improvements in access (and quality of
care) that may result in the increased use of long nightly
and short daily hemodialysis modalities.
(2) Report.--Not later than January 1, 2003, the
Comptroller General shall submit to Congress a report on the
study conducted under paragraph (1).
(e) Special Rule for Payment for 2001.--Notwithstanding the
amendment made by subsection (a)(1), for purposes of making
payments under section 1881(b) of the Social Security Act (42
U.S.C. 1395rr(b)) for dialysis services furnished during
2001, the composite rate payment under paragraph (7) of such
section--
(1) for services furnished on or after January 1, 2001, and
before April 1, 2001, shall be the composite rate payment
determined under the provisions of law in effect on the day
before the date of the enactment of this Act; and
(2) for services furnished on or after April 1, 2001, and
before January 1, 2002, shall be the composite rate payment
(as determined taking into account the amendment made by
subsection (a)(1)) increased by a transitional percentage
allowance equal to 0.39 percent (to account for the timing of
implementation of the CPI update).
SEC. 423. PAYMENT FOR AMBULANCE SERVICES.
(a) Restoration of Full CPI Increase for 2001.--
(1) In general.--Section 1834(l)(3) (42 U.S.C. 1395m(l)(3))
is amended by striking ``reduced in the case of 2001 and
2002'' each place it appears and inserting ``reduced in the
case of 2002''.
(2) Special rule for payment for 2001.--Notwithstanding the
amendment made by paragraph (1), for purposes of making
payments for ambulance services under part B of title XVIII
of the Social Security Act, for services furnished during
2001, the ``percentage increase in the consumer price index''
specified in section 1834(l)(3)(B) of such Act (42 U.S.C.
1395m(l)(3)(B))--
(A) for services furnished on or after January 1, 2001, and
before July 1, 2001, shall be the percentage increase for
2001 as determined under the provisions of law in effect on
the day before the date of the enactment of this Act; and
(B) for services furnished on or after July 1, 2001, and
before January 1, 2002, shall be equal to 4.7 percent.
(b) Mileage Payments.--
(1) In general.--Section 1834(l)(2)(E) (42 U.S.C.
1395m(l)(2)(E)) is amended by inserting before the period at
the end the following: ``, except that such phase-in shall
provide for full payment of any national mileage rate for
ambulance services provided by suppliers that are paid by
carriers in any of the 50 States where payment by a carrier
for such services for all such suppliers in such State did
not, prior to the implementation of the fee schedule, include
a separate amount for all mileage within the county from
which the beneficiary is transported''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to services furnished on or after July 1, 2001.
SEC. 424. AMBULATORY SURGICAL CENTERS.
(a) Delay in Implementation of Prospective Payment
System.--The Secretary of Health and Human Services may not
implement a revised prospective payment system for services
of ambulatory surgical facilities under section 1833(i) of
the Social Security Act (42 U.S.C. 1395l(i)) before January
1, 2002.
(b) Extending Phase-in to 4 Years.--Section 226 of the BBRA
(113 Stat. 1501A-354) is amended by striking paragraphs (1)
and (2) and inserting the following:
``(1) in the first year of its implementation, only a
proportion (specified by the Secretary and not to exceed \1/
4\) of the payment for such services shall be made in
accordance with such system and the remainder shall be made
in accordance with current regulations; and
``(2) in each of the following 2 years a proportion
(specified by the Secretary and not to exceed \1/2\, and \3/
4\, respectively) of the payment for such services shall be
made under such system and the remainder shall be made in
accordance with current regulations.''.
(c) Deadline for Use of 1999 or Later Cost Surveys.--
Section 226 of BBRA (113 Stat. 1501A-354) is amended by
adding at the end the following:
``By not later than January 1, 2003, the Secretary shall
incorporate data from a 1999 medicare cost survey or a
subsequent cost survey for purposes of implementing or
revising such system.''.
SEC. 425. FULL UPDATE FOR DURABLE MEDICAL EQUIPMENT.
(a) In General.--Section 1834(a)(14) (42 U.S.C.
1395m(a)(14)) is amended--
(1) by redesignating subparagraph (D) as subparagraph (F);
(2) in subparagraph (C)--
(A) by striking ``through 2002'' and inserting ``through
2000''; and
(B) by striking ``and'' at the end; and
(3) by inserting after subparagraph (C) the following new
subparagraphs:
``(D) for 2001, the percentage increase in the consumer
price index for all urban consumers (U.S. city average) for
the 12-month period ending with June 2000;
``(E) for 2002, 0 percentage points; and''.
(b) Special Rule for Payment for 2001.--Notwithstanding the
amendments made by subsection (a), for purposes of making
payments for durable medical equipment under section 1834(a)
of the Social Security Act (42 U.S.C. 1395m(a)), other than
for oxygen and oxygen equipment specified in paragraph (9) of
such section, the payment basis recognized for 2001 under
such section--
(1) for items furnished on or after January 1, 2001, and
before July 1, 2001, shall be the payment basis for 2001 as
determined under the provisions of law in effect on the day
before the date of the enactment of this Act (including the
application of section 228(a)(1) of BBRA); and
(2) for items furnished on or after July 1, 2001, and
before January 1, 2002, shall be the payment basis that is
determined under such section 1834(a) if such section
228(a)(1) did not apply and taking into account the amendment
made by subsection (a), increased by a transitional
percentage allowance equal to 3.28 percent (to account for
the timing of implementation of the CPI update).
SEC. 426. FULL UPDATE FOR ORTHOTICS AND PROSTHETICS.
(a) In General.--Section 1834(h)(4)(A) (42 U.S.C.
1395m(h)(4)(A)) is amended--
(1) by redesignating clause (vi) as clause (viii);
(2) in clause (v)--
(A) by striking ``through 2002'' and inserting ``through
2000''; and
(B) by striking ``and'' at the end; and
(3) by inserting after clause (v) the following new clause:
``(vi) for 2001, the percentage increase in the consumer
price index for all urban consumers (U.S. city average) for
the 12-month period ending with June 2000;
``(vii) for 2002, 1 percent; and''.
(b) Special Rule for Payment for 2001.--Notwithstanding the
amendments made by subsection (a), for purposes of making
payments for prosthetic devices and orthotics and prosthetics
(as defined in subparagraphs (B) and (C) of paragraph (4) of
section 1834(h) of the Social Security Act (42 U.S.C.
1395m(h)) under such section, the payment basis recognized
for 2001 under paragraph (2) of such section--
(1) for items furnished on or after January 1, 2001, and
before July 1, 2001, shall be the payment basis for 2001 as
determined under the provisions of law in effect on the day
before the date of the enactment of this Act; and
(2) for items furnished on or after July 1, 2001, and
before January 1, 2002, shall be the payment basis that is
determined under such section taking into account the
amendments made by subsection (a), increased by a
transitional percentage allowance equal to 2.6 percent (to
account for the timing of implementation of the CPI update).
[[Page H12361]]
SEC. 427. ESTABLISHMENT OF SPECIAL PAYMENT PROVISIONS AND
REQUIREMENTS FOR PROSTHETICS AND CERTAIN
CUSTOM-FABRICATED ORTHOTIC ITEMS.
(a) In General.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1))
is amended by adding at the end the following:
``(F) Special payment rules for certain prosthetics and
custom-fabricated orthotics.--
``(i) In general.--No payment shall be made under this
subsection for an item of custom-fabricated orthotics
described in clause (ii) or for an item of prosthetics unless
such item is--
``(I) furnished by a qualified practitioner; and
``(II) fabricated by a qualified practitioner or a
qualified supplier at a facility that meets such criteria as
the Secretary determines appropriate.
``(ii) Description of custom-fabricated item.--
``(I) In general.--An item described in this clause is an
item of custom-fabricated orthotics that requires education,
training, and experience to custom-fabricate and that is
included in a list established by the Secretary in subclause
(II). Such an item does not include shoes and shoe inserts.
``(II) List of items.--The Secretary, in consultation with
appropriate experts in orthotics (including national
organizations representing manufacturers of orthotics), shall
establish and update as appropriate a list of items to which
this subparagraph applies. No item may be included in such
list unless the item is individually fabricated for the
patient over a positive model of the patient.
``(iii) Qualified practitioner defined.--In this
subparagraph, the term `qualified practitioner' means a
physician or other individual who--
``(I) is a qualified physical therapist or a qualified
occupational therapist;
``(II) in the case of a State that provides for the
licensing of orthotics and prosthetics, is licensed in
orthotics or prosthetics by the State in which the item is
supplied; or
``(III) in the case of a State that does not provide for
the licensing of orthotics and prosthetics, is specifically
trained and educated to provide or manage the provision of
prosthetics and custom-designed or -fabricated orthotics, and
is certified by the American Board for Certification in
Orthotics and Prosthetics, Inc. or by the Board for
Orthotist/Prosthetist Certification, or is credentialed and
approved by a program that the Secretary determines, in
consultation with appropriate experts in orthotics and
prosthetics, has training and education standards that are
necessary to provide such prosthetics and orthotics.
``(iv) Qualified supplier defined.--In this subparagraph,
the term `qualified supplier' means any entity that is
accredited by the American Board for Certification in
Orthotics and Prosthetics, Inc. or by the Board for
Orthotist/Prosthetist Certification, or accredited and
approved by a program that the Secretary determines has
accreditation and approval standards that are essentially
equivalent to those of such Board.''.
(b) Effective Date.--Not later than 1 year after the date
of the enactment of this Act, the Secretary of Health and
Human Services shall promulgate revised regulations to carry
out the amendment made by subsection (a) using a negotiated
rulemaking process under subchapter III of chapter 5 of title
5, United States Code.
(c) GAO Study and Report.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on HCFA Ruling 96-1, issued on
September 1, 1996, with respect to distinguishing orthotics
from durable medical equipment under the medicare program
under title XVIII of the Social Security Act. The study shall
assess the following matters:
(A) The compliance of the Secretary of Health and Human
Services with the Administrative Procedures Act (under
chapter 5 of title 5, United States Code) in making such
ruling.
(B) The potential impact of such ruling on the health care
furnished to medicare beneficiaries under the medicare
program, especially those beneficiaries with degenerative
musculoskeletal conditions.
(C) The potential for fraud and abuse under the medicare
program if payment were provided for orthotics used as a
component of durable medical equipment only when made under
the special payment provision for certain prosthetics and
custom-fabricated orthotics under section 1834(h)(1)(F) of
the Social Security Act, as added by subsection (a) and
furnished by qualified practitioners under that section.
(D) The impact on payments under titles XVIII and XIX of
the Social Security Act if such ruling were overturned.
(2) Report.--Not later than 6 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1).
SEC. 428. REPLACEMENT OF PROSTHETIC DEVICES AND PARTS.
(a) In General.--Section 1834(h)(1) (42 U.S.C.
1395m(h)(1)), as amended by section 427(a), is further
amended by adding at the end the following new subparagraph:
``(G) Replacement of prosthetic devices and parts.--
``(i) In general.--Payment shall be made for the
replacement of prosthetic devices which are artificial limbs,
or for the replacement of any part of such devices, without
regard to continuous use or useful lifetime restrictions if
an ordering physician determines that the provision of a
replacement device, or a replacement part of such a device,
is necessary because of any of the following:
``(I) A change in the physiological condition of the
patient.
``(II) An irreparable change in the condition of the
device, or in a part of the device.
``(III) The condition of the device, or the part of the
device, requires repairs and the cost of such repairs would
be more than 60 percent of the cost of a replacement device,
or, as the case may be, of the part being replaced.
``(ii) Confirmation may be required if device or part being
replaced is less than 3 years old.--If a physician determines
that a replacement device, or a replacement part, is
necessary pursuant to clause (i)--
``(I) such determination shall be controlling; and
``(II) such replacement device or part shall be deemed to
be reasonable and necessary for purposes of section
1862(a)(1)(A);
except that if the device, or part, being replaced is less
than 3 years old (calculated from the date on which the
beneficiary began to use the device or part), the Secretary
may also require confirmation of necessity of the replacement
device or replacement part, as the case may be.''.
(b) Preemption of Rule.--The provisions of section
1834(h)(1)(G) as added by subsection (a) shall supersede
any rule that as of the date of the enactment of this Act
may have applied a 5-year replacement rule with regard to
prosthetic devices.
(c) Effective Date.--The amendment made by subsection (a)
shall apply to items replaced on or after April 1, 2001.
SEC. 429. REVISED PART B PAYMENT FOR DRUGS AND BIOLOGICALS
AND RELATED SERVICES.
(a) Recommendations for Revised Payment Methodology for
Drugs and Biologicals.--
(1) Study.--
(A) In general.--The Comptroller General of the United
States shall conduct a study on the reimbursement for drugs
and biologicals under the current medicare payment
methodology (provided under section 1842(o) of the Social
Security Act (42 U.S.C. 1395u(o))) and for related services
under part B of title XVIII of such Act. In the study, the
Comptroller General shall--
(i) identify the average prices at which such drugs and
biologicals are acquired by physicians and other suppliers;
(ii) quantify the difference between such average prices
and the reimbursement amount under such section; and
(iii) determine the extent to which (if any) payment under
such part is adequate to compensate physicians, providers of
services, or other suppliers of such drugs and biologicals
for costs incurred in the administration, handling, or
storage of such drugs or biologicals.
(B) Consultation.--In conducting the study under
subparagraph (A), the Comptroller General shall consult with
physicians, providers of services, and suppliers of drugs and
biologicals under the medicare program under title XVIII of
such Act, as well as other organizations involved in the
distribution of such drugs and biologicals to such
physicians, providers of services, and suppliers.
(2) Report.--Not later than 9 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress and to the Secretary of Health and Human Services
a report on the study conducted under this subsection, and
shall include in such report recommendations for revised
payment methodologies described in paragraph (3).
(3) Recommendations for revised payment methodologies.--
(A) In general.--The Comptroller General shall provide
specific recommendations for revised payment methodologies
for reimbursement for drugs and biologicals and for related
services under the medicare program. The Comptroller General
may include in the recommendations--
(i) proposals to make adjustments under subsection (c) of
section 1848 of the Social Security Act (42 U.S.C. 1395w-4)
for the practice expense component of the physician fee
schedule under such section for the costs incurred in the
administration, handling, or storage of certain categories of
such drugs and biologicals, if appropriate; and
(ii) proposals for new payments to providers of services or
suppliers for such costs, if appropriate.
(B) Ensuring patient access to care.--In making
recommendations under this paragraph, the Comptroller General
shall ensure that any proposed revised payment methodology is
designed to ensure that medicare beneficiaries continue to
have appropriate access to health care services under the
medicare program.
(C) Matters considered.--In making recommendations under
this paragraph, the Comptroller General shall consider--
(i) the method and amount of reimbursement for similar
drugs and biologicals made by large group health plans;
(ii) as a result of any revised payment methodology, the
potential for patients to receive inpatient or outpatient
hospital services in lieu of services in a physician's
office; and
(iii) the effect of any revised payment methodology on the
delivery of drug therapies by hospital outpatient
departments.
(D) Coordination with bbra study.--In making
recommendations under this paragraph, the Comptroller General
shall conclude and take into account the results of the study
provided for under section 213(a) of BBRA (113 Stat. 1501A-
350).
(b) Implementation of New Payment Methodology.--
(1) In general.--Notwithstanding any other provision of
law, based on the recommendations contained in the report
under subsection (a), the Secretary of Health and Human
Services, subject to paragraph (2), shall revise the payment
methodology under section 1842(o) of the Social Security Act
(42 U.S.C. 1395u(o)) for drugs and biologicals furnished
under part B of the medicare program. To the extent the
Secretary determines appropriate, the Secretary may provide
for the adjustments to payments amounts referred to in
subsection (a)(3)(A)(i) or additional payments referred to in
subsection (a)(2)(A)(ii).
[[Page H12362]]
(2) Limitation.--In revising the payment methodology under
paragraph (1), in no case may the estimated aggregate
payments for drugs and biologicals under the revised system
(including additional payments referred to in subsection
(a)(3)(A)(ii)) exceed the aggregate amount of payment for
such drugs and biologicals, as projected by the Secretary,
that would have been made under the payment methodology in
effect under such section 1842(o).
(c) Moratorium on Decreases in Payment Rates.--
Notwithstanding any other provision of law, effective for
drugs and biologicals furnished on or after January 1, 2001,
the Secretary may not directly or indirectly decrease the
rates of reimbursement (in effect as of such date) for drugs
and biologicals under the current medicare payment
methodology (provided under section 1842(o) of the Social
Security Act (42 U.S.C. 1395u(o))) until such time as the
Secretary has reviewed the report submitted under subsection
(a)(2).
SEC. 430. CONTRAST ENHANCED DIAGNOSTIC PROCEDURES UNDER
HOSPITAL PROSPECTIVE PAYMENT SYSTEM.
(a) Separate Classification.--Section 1833(t)(2) (42 U.S.C.
1395l(t)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (E);
(2) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(3) by inserting after subparagraph (F) the following new
subparagraph:
``(G) the Secretary shall create additional groups of
covered OPD services that classify separately those
procedures that utilize contrast agents from those that do
not.''.
(b) Conforming Amendment.--Section 1861(t)(1) (42 U.S.C.
1395x(t)(1)) is amended by inserting ``(including contrast
agents)'' after ``only such drugs''.
(c) Effective Date.--The amendments made by this section
apply to items and services furnished on or after July 1,
2001.
SEC. 431. QUALIFICATIONS FOR COMMUNITY MENTAL HEALTH CENTERS.
(a) Medicare Program.--Section 1861(ff)(3)(B) (42 U.S.C.
1395x(ff)(3)(B)) is amended by striking ``entity'' and all
that follows and inserting the following: ``entity that--
``(i)(I) provides the mental health services described in
section 1913(c)(1) of the Public Health Service Act; or
``(II) in the case of an entity operating in a State that
by law precludes the entity from providing itself the service
described in subparagraph (E) of such section, provides for
such service by contract with an approved organization or
entity (as determined by the Secretary);
``(ii) meets applicable licensing or certification
requirements for community mental health centers in the State
in which it is located; and
``(iii) meets such additional conditions as the Secretary
shall specify to ensure (I) the health and safety of
individuals being furnished such services, (II) the effective
and efficient furnishing of such services, and (III) the
compliance of such entity with the criteria described in
section 1931(c)(1) of the Public Health Service Act.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to community mental health centers
with respect to services furnished on or after the first day
of the third month beginning after the date of the enactment
of this Act.
SEC. 432. PAYMENT OF PHYSICIAN AND NONPHYSICIAN SERVICES IN
CERTAIN INDIAN PROVIDERS.
(a) In General.--Section 1880 (42 U.S.C. 1395qq) is
amended--
(1) by redesignating subsection (e), as added by section
3(b)(1) of the Alaska Native and American Indian Direct
Reimbursement Act of 2000 (Public Law 106-417), as subsection
(f); and
(2) by inserting after subsection (d) the following new
subsection:
``(e)(1)(A) Notwithstanding section 1835(d), subject to
subparagraph (B), the Secretary shall make payment under part
B to a hospital or an ambulatory care clinic (whether
provider-based or freestanding) that is operated by the
Indian Health Service or by an Indian tribe or tribal
organization (as defined for purposes of subsection (a)) for
services described in paragraph (2) furnished in or at the
direction of the hospital or clinic under the same
situations, terms, and conditions as would apply if the
services were furnished in or at the direction of such a
hospital or clinic that was not operated by such Service,
tribe, or organization.
``(B) Payment shall not be made for services under
subparagraph (A) to the extent that payment is otherwise made
for such services under this title.
``(2) The services described in this paragraph are the
following:
``(A) Services for which payment is made under section
1848.
``(B) Services furnished by a practitioner described in
section 1842(b)(18)(C) for which payment under part B is made
under a fee schedule.
``(C) Services furnished by a physical therapist or
occupational therapist as described in section 1861(p) for
which payment under part B is made under a fee schedule.
``(3) Subsection (c) shall not apply to payments made under
this subsection.''.
(b) Conforming Amendments.--
(1) Coverage amendment.--Section 1862(a)(3) (42 U.S.C.
1395y(a)(3)) is amended--
(A) by striking the second comma after ``1861(aa)(1)''; and
(B) by inserting ``in the case of services for which
payment may be made under section 1880(e),'' after ``as
defined in section 1861(aa)(3),''.
(2) Direct payment amendment.--The first sentence of
section 1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended--
(A) by striking ``and (F)'' and inserting ``(F)''; and
(B) by inserting before the period the following: ``, and
(G) in the case of services in a hospital or clinic to which
section 1880(e) applies, payment shall be made to such
hospital or clinic''.
(c) Effective Date.--The amendments made by this section
shall apply to services furnished on or after July 1, 2001.
SEC. 433. GAO STUDY ON COVERAGE OF SURGICAL FIRST ASSISTING
SERVICES OF CERTIFIED REGISTERED NURSE FIRST
ASSISTANTS.
(a) Study.--The Comptroller General of the United States
shall conduct a study on the effect on the medicare program
under title XVIII of the Social Security Act and on medicare
beneficiaries of coverage under the program of surgical first
assisting services of certified registered nurse first
assistants. The Comptroller General shall consider the
following when conducting the study:
(1) Any impact on the quality of care furnished to medicare
beneficiaries by reason of such coverage.
(2) Appropriate education and training requirements for
certified registered nurse first assistants who furnish such
first assisting services.
(3) Appropriate rates of payment under the program to such
certified registered nurse first assistants for furnishing
such services, taking into account the costs of compensation,
overhead, and supervision attributable to certified
registered nurse first assistants.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a).
SEC. 434. MEDPAC STUDY AND REPORT ON MEDICARE REIMBURSEMENT
FOR SERVICES PROVIDED BY CERTAIN PROVIDERS.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study on the appropriateness of the current payment
rates under the medicare program under title XVIII of the
Social Security Act for services provided by a--
(1) certified nurse-midwife (as defined in subsection
(gg)(2) of section 1861 of such Act (42 U.S.C. 1395x));
(2) physician assistant (as defined in subsection
(aa)(5)(A) of such section);
(3) nurse practitioner (as defined in such subsection); and
(4) clinical nurse specialist (as defined in subsection
(aa)(5)(B) of such section).
The study shall separately examine the appropriateness of
such payment rates for orthopedic physician assistants,
taking into consideration the requirements for accreditation,
training, and education.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under subsection
(a), together with any recommendations for legislation that
the Commission determines to be appropriate as a result of
such study.
SEC. 435. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF
SERVICES PROVIDED BY CERTAIN NONPHYSICIAN
PROVIDERS.
(a) Study.--
(1) In general.--The Medicare Payment Advisory Commission
shall conduct a study to determine the appropriateness of
providing coverage under the medicare program under title
XVIII of the Social Security Act for services provided by a--
(A) surgical technologist;
(B) marriage counselor;
(C) marriage and family therapist;
(D) pastoral care counselor; and
(E) licensed professional counselor of mental health.
(2) Costs to program.--The study shall consider the short-
term and long-term benefits, and costs to the medicare
program, of providing the coverage described in paragraph
(1).
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under subsection
(a), together with any recommendations for legislation that
the Commission determines to be appropriate as a result of
such study.
SEC. 436. GAO STUDY AND REPORT ON THE COSTS OF EMERGENCY AND
MEDICAL TRANSPORTATION SERVICES.
(a) Study.--The Comptroller General of the United States
shall conduct a study on the costs of providing emergency and
medical transportation services across the range of acuity
levels of conditions for which such transportation services
are provided.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a), together with recommendations for any changes in
methodology or payment level necessary to fairly compensate
suppliers of emergency and medical transportation services
and to ensure the access of beneficiaries under the medicare
program under title XVIII of the Social Security Act.
SEC. 437. GAO STUDIES AND REPORTS ON MEDICARE PAYMENTS.
(a) GAO Study on HCFA Post-Payment Audit Process.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the post-payment audit process under
the medicare program under title XVIII of the Social Security
Act as such process applies to physicians, including the
proper level of resources that the Health Care Financing
Administration should devote to educating physicians
regarding--
(A) coding and billing;
(B) documentation requirements; and
(C) the calculation of overpayments.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report
[[Page H12363]]
on the study conducted under paragraph (1) together with
specific recommendations for changes or improvements in the
post-payment audit process described in such paragraph.
(b) GAO Study on Administration and Oversight.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on the aggregate effects of regulatory,
audit, oversight, and paperwork burdens on physicians and
other health care providers participating in the medicare
program under title XVIII of the Social Security Act.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1) together with recommendations regarding any area in
which--
(A) a reduction in paperwork, an ease of administration, or
an appropriate change in oversight and review may be
accomplished; or
(B) additional payments or education are needed to assist
physicians and other health care providers in understanding
and complying with any legal or regulatory requirements.
SEC. 438. MEDPAC STUDY ON ACCESS TO OUTPATIENT PAIN
MANAGEMENT SERVICES.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study on the barriers to coverage and payment for
outpatient interventional pain medicine procedures under the
medicare program under title XVIII of the Social Security
Act. Such study shall examine--
(1) the specific barriers imposed under the medicare
program on the provision of pain management procedures in
hospital outpatient departments, ambulatory surgery centers,
and physicians' offices; and
(2) the consistency of medicare payment policies for pain
management procedures in those different settings.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study.
TITLE V--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 501. 1-YEAR ADDITIONAL DELAY IN APPLICATION OF 15
PERCENT REDUCTION ON PAYMENT LIMITS FOR HOME
HEALTH SERVICES.
(a) In General.--Section 1895(b)(3)(A)(i) (42 U.S.C.
1395fff(b)(3)(A)(i)) is amended--
(1) by redesignating subclause (II) as subclause (III);
(2) in subclause (III), as redesignated, by striking
``described in subclause (I)'' and inserting ``described in
subclause (II)''; and
(3) by inserting after subclause (I) the following new
subclause:
``(II) For the 12-month period beginning after the period
described in subclause (I), such amount (or amounts) shall be
equal to the amount (or amounts) determined under subclause
(I), updated under subparagraph (B).''.
(b) Change in Report.--Section 302(c) of BBRA (113 Stat.
1501A-360) is amended--
(1) by striking ``Not later than'' and all that follows
through ``(42 U.S.C. 1395fff)'' and inserting ``Not later
than April 1, 2002''; and
(2) by striking ``Secretary'' and inserting ``Comptroller
General of the United States''.
(c) Case Mix Adjustment Corrections.--
(1) In general.--Section 1895(b)(3)(B) (42 U.S.C.
1395fff(b)(3)(B)) is amended by adding at the end the
following new clause:
``(iv) Adjustment for case mix changes.--Insofar as the
Secretary determines that the adjustments under paragraph
(4)(A)(i) for a previous fiscal year (or estimates that such
adjustments for a future fiscal year) did (or are likely to)
result in a change in aggregate payments under this
subsection during the fiscal year that are a result of
changes in the coding or classification of different units of
services that do not reflect real changes in case mix, the
Secretary may adjust the standard prospective payment amount
(or amounts) under paragraph (3) for subsequent fiscal years
so as to eliminate the effect of such coding or
classification changes.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to episodes concluding on or after October 1,
2001.
SEC. 502. RESTORATION OF FULL HOME HEALTH MARKET BASKET
UPDATE FOR HOME HEALTH SERVICES FOR FISCAL YEAR
2001.
(a) In General.--Section 1861(v)(1)(L)(x) (42 U.S.C.
1395x(v)(1)(L)(x)) is amended--
(1) by striking ``2001,''; and
(2) by adding at the end the following: ``With respect to
cost reporting periods beginning during fiscal year 2001, the
update to any limit under this subparagraph shall be the home
health market basket index.''.
(b) Special Rule for Payment for Fiscal Year 2001 Based on
Adjusted Prospective Payment Amounts.--
(1) In general.--Notwithstanding the amendments made by
subsection (a), for purposes of making payments under section
1895(b) of the Social Security Act (42 U.S.C. 1395fff(b)) for
home health services furnished during fiscal year 2001, the
Secretary of Health and Human Services shall--
(A) with respect to episodes and visits ending on or after
October 1, 2000, and before April 1, 2001, use the final
standardized and budget neutral prospective payment amounts
for 60-day episodes and standardized average per visit
amounts for fiscal year 2001 as published by the Secretary in
the Federal Register on July 3, 2000 (65 Fed. Reg. 41128-
41214); and
(B) with respect to episodes and visits ending on or after
April 1, 2001, and before October 1, 2001, use such amounts
increased by 2.2 percent.
(2) No effect on other payments or determinations.--The
Secretary shall not take the provisions of paragraph (1) into
account for purposes of payments, determinations, or budget
neutrality adjustments under section 1895 of the Social
Security Act.
SEC. 503. TEMPORARY TWO-MONTH PERIODIC INTERIM PAYMENT.
(a) In General.--Notwithstanding the amendments made by
section 4603(b) of BBA (42 U.S.C. 1395fff note), in the case
of a home health agency that was receiving periodic interim
payments under section 1815(e)(2) of the Social Security Act
(42 U.S.C. 1395g(e)(2)) as of September 30, 2000, and that is
not described in subsection (b), the Secretary of Health and
Human Services shall, as soon as practicable, make a single
periodic interim payment to such agency in an amount equal to
four times the last full fortnightly periodic interim payment
made to such agency under the payment system in effect prior
to the implementation of the prospective payment system under
section 1895(b) of such Act (42 U.S.C. 1395fff(b)). Such
amount of such periodic interim payment shall be included in
the tentative settlement of the last cost report for the home
health agency under the payment system in effect prior to the
implementation of such prospective payment system, regardless
of the ending date of such cost report.
(b) Exceptions.--The Secretary shall not make an additional
periodic interim payment under subsection (a) in the case of
a home health agency (determined as of the day that such
payment would otherwise be made) that--
(1) notifies the Secretary that such agency does not want
to receive such payment;
(2) is not receiving payments pursuant to section 405.371
of title 42, Code of Federal Regulations;
(3) is excluded from the medicare program under title XI of
the Social Security Act;
(4) no longer has a provider agreement under section 1866
of such Act (42 U.S.C. 1395cc);
(5) is no longer in business; or
(6) is subject to a court order providing for the
withholding of medicare payments under title XVIII of such
Act.
SEC. 504. USE OF TELEHEALTH IN DELIVERY OF HOME HEALTH
SERVICES.
Section 1895 (42 U.S.C. 1395fff) is amended by adding at
the end the following new subsection:
``(e) Construction Related to Home Health Services.--
``(1) Telecommunications.--Nothing in this section shall be
construed as preventing a home health agency furnishing a
home health unit of service for which payment is made under
the prospective payment system established by this section
for such units of service from furnishing services via a
telecommunication system if such services--
``(A) do not substitute for in-person home health services
ordered as part of a plan of care certified by a physician
pursuant to section 1814(a)(2)(C) or 1835(a)(2)(A); and
``(B) are not considered a home health visit for purposes
of eligibility or payment under this title.
``(2) Physician certification.--Nothing in this section
shall be construed as waiving the requirement for a physician
certification under section 1814(a)(2)(C) or 1835(a)(2)(A) of
such Act (42 U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) for the
payment for home health services, whether or not furnished
via a telecommunications system.''.
SEC. 505. STUDY ON COSTS TO HOME HEALTH AGENCIES OF
PURCHASING NONROUTINE MEDICAL SUPPLIES.
(a) Study.--The Comptroller General of the United States
shall conduct a study on variations in prices paid by home
health agencies furnishing home health services under the
medicare program under title XVIII of the Social Security Act
in purchasing nonroutine medical supplies, including ostomy
supplies, and volumes of such supplies used, shall determine
the effect (if any) of variations on prices and volumes in
the provision of such services.
(b) Report.--Not later than August 15, 2001, the
Comptroller General shall submit to Congress a report on the
study conducted under subsection (a), and shall include in
the report recommendations respecting whether payment for
nonroutine medical supplies furnished in connection with home
health services should be made separately from the
prospective payment system for such services.
SEC. 506. TREATMENT OF BRANCH OFFICES; GAO STUDY ON
SUPERVISION OF HOME HEALTH CARE PROVIDED IN
ISOLATED RURAL AREAS.
(a) Treatment of Branch Offices.--
(1) In general.--Notwithstanding any other provision of
law, in determining for purposes of title XVIII of the Social
Security Act whether an office of a home health agency
constitutes a branch office or a separate home health agency,
neither the time nor distance between a parent office of the
home health agency and a branch office shall be the sole
determinant of a home health agency's branch office status.
(2) Consideration of forms of technology in definition of
supervision.--The Secretary of Health and Human Services may
include forms of technology in determining what constitutes
``supervision'' for purposes of determining a home heath
agency's branch office status under paragraph (1).
(b) GAO Study.--
(1) Study.--The Comptroller General of the United States
shall conduct a study of the provision of adequate
supervision to maintain quality of home health services
delivered under the medicare program under title XVIII of the
Social Security Act in isolated rural areas. The study shall
evaluate the methods that home health agency branches and
subunits use to maintain adequate supervision in the delivery
of services to clients residing in those areas, how these
methods of supervision compare to requirements that subunits
independently meet medicare conditions of participation, and
the resources utilized by subunits to meet such conditions.
[[Page H12364]]
(2) Report.--Not later than January 1, 2002, the
Comptroller General shall submit to Congress a report on the
study conducted under paragraph (1). The report shall include
recommendations on whether exceptions are needed for subunits
and branches of home health agencies under the medicare
program to maintain access to the home health benefit or
whether alternative policies should be developed to assure
adequate supervision and access and recommendations on
whether a national standard for supervision is appropriate.
SEC. 507. CLARIFICATION OF THE HOMEBOUND DEFINITION UNDER THE
MEDICARE HOME HEALTH BENEFIT.
(a) Clarification.--
(1) In general.--Sections 1814(a) and 1835(a) (42 U.S.C.
1395f(a) and 1395n(a)) are each amended--
(A) in the last sentence, by striking ``, and that absences
of the individual from home are infrequent or of relatively
short duration, or are attributable to the need to receive
medical treatment''; and
(B) by adding at the end the following new sentences: ``Any
absence of an individual from the home attributable to the
need to receive health care treatment, including regular
absences for the purpose of participating in therapeutic,
psychosocial, or medical treatment in an adult day-care
program that is licensed or certified by a State, or
accredited, to furnish adult day-care services in the State
shall not disqualify an individual from being considered to
be `confined to his home'. Any other absence of an individual
from the home shall not so disqualify an individual if
the absence is of infrequent or of relatively short
duration. For purposes of the preceding sentence, any
absence for the purpose of attending a religious service
shall be deemed to be an absence of infrequent or short
duration.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to home health services furnished on or after the
date of the enactment of this Act.
(b) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct an evaluation of the effect of the
amendment on the cost of and access to home health services
under the medicare program under title XVIII of the Social
Security Act.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1).
SEC. 508. TEMPORARY INCREASE FOR HOME HEALTH SERVICES
FURNISHED IN A RURAL AREA.
(a) 24-Month Increase Beginning April 1, 2001.--In the case
of home health services furnished in a rural area (as defined
in section 1886(d)(2)(D) of the Social Security Act (42
U.S.C. 1395ww(d)(2)(D))) on or after April 1, 2001, and
before April 1, 2003, the Secretary of Health and Human
Services shall increase the payment amount otherwise made
under section 1895 of such Act (42 U.S.C. 1395fff) for such
services by 10 percent.
(b) Waiving Budget Neutrality.--The Secretary shall not
reduce the standard prospective payment amount (or amounts)
under section 1895 of the Social Security Act (42 U.S.C.
1395fff) applicable to home health services furnished during
a period to offset the increase in payments resulting from
the application of subsection (a).
Subtitle B--Direct Graduate Medical Education
SEC. 511. INCREASE IN FLOOR FOR DIRECT GRADUATE MEDICAL
EDUCATION PAYMENTS.
Section 1886(h)(2)(D)(iii) (42 U.S.C. 1395ww(h)(2)(D)(iii))
is amended--
(1) in the heading, by striking ``in fiscal year 2001 at 70
percent of'' and inserting ``for''; and
(2) by inserting after ``70 percent'' the following: ``,
and for the cost reporting period beginning during fiscal
year 2002 shall not be less than 85 percent,''.
SEC. 512. CHANGE IN DISTRIBUTION FORMULA FOR MEDICARE+CHOICE-
RELATED NURSING AND ALLIED HEALTH EDUCATION
COSTS.
(a) In General.--Section 1886(l)(2)(C) (42 U.S.C.
1395ww(l)(2)(C)) is amended by striking all that follows
``multiplied by'' and inserting the following: ``the ratio
of--
``(i) the product of (I) the Secretary's estimate of the
ratio of the amount of payments made under section 1861(v) to
the hospital for nursing and allied health education
activities for the hospital's cost reporting period ending in
the second preceding fiscal year, to the hospital's total
inpatient days for such period, and (II) the total number of
inpatient days (as established by the Secretary) for such
period which are attributable to services furnished to
individuals who are enrolled under a risk sharing contract
with an eligible organization under section 1876 and who are
entitled to benefits under part A or who are enrolled with a
Medicare+Choice organization under part C; to
``(ii) the sum of the products determined under clause (i)
for such cost reporting periods.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to portions of cost reporting periods occurring
on or after January 1, 2001.
Subtitle C--Changes in Medicare Coverage and Appeals Process
SEC. 521. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Conduct of Reconsiderations of Determinations by
Independent Contractors.--Section 1869 (42 U.S.C. 1395ff) is
amended to read as follows:
``determinations; appeals
``Sec. 1869. (a) Initial Determinations.--
``(1) Promulgations of regulations.--The Secretary shall
promulgate regulations and make initial determinations with
respect to benefits under part A or part B in accordance with
those regulations for the following:
``(A) The initial determination of whether an individual is
entitled to benefits under such parts.
``(B) The initial determination of the amount of benefits
available to the individual under such parts.
``(C) Any other initial determination with respect to a
claim for benefits under such parts, including an initial
determination by the Secretary that payment may not be made,
or may no longer be made, for an item or service under such
parts, an initial determination made by a utilization and
quality control peer review organization under section
1154(a)(2), and an initial determination made by an entity
pursuant to a contract (other than a contract under section
1852) with the Secretary to administer provisions of this
title or title XI.
``(2) Deadlines for making initial determinations.--
``(A) In general.--Subject to subparagraph (B), in
promulgating regulations under paragraph (1), initial
determinations shall be concluded by not later than the 45-
day period beginning on the date the fiscal intermediary or
the carrier, as the case may be, receives a claim for
benefits from an individual as described in paragraph (1).
Notice of such determination shall be mailed to the
individual filing the claim before the conclusion of such 45-
day period.
``(B) Clean claims.--Subparagraph (A) shall not apply with
respect to any claim that is subject to the requirements of
section 1816(c)(2) or 1842(c)(2).
``(3) Redeterminations.--
``(A) In general.--In promulgating regulations under
paragraph (1) with respect to initial determinations, such
regulations shall provide for a fiscal intermediary or a
carrier to make a redetermination with respect to a claim for
benefits that is denied in whole or in part.
``(B) Limitations.--
``(i) Appeal rights.--No initial determination may be
reconsidered or appealed under subsection (b) unless the
fiscal intermediary or carrier has made a redetermination of
that initial determination under this paragraph.
``(ii) Decisionmaker.--No redetermination may be made by
any individual involved in the initial determination.
``(C) Deadlines.--
``(i) Filing for redetermination.--A redetermination under
subparagraph (A) shall be available only if notice is filed
with the Secretary to request the redetermination by not
later than the end of the 120-day period beginning on the
date the individual receives notice of the initial
determination under paragraph (2).
``(ii) Concluding redeterminations.--Redeterminations shall
be concluded by not later than the 30-day period beginning on
the date the fiscal intermediary or the carrier, as the case
may be, receives a request for a redetermination. Notice of
such determination shall be mailed to the individual filing
the claim before the conclusion of such 30-day period.
``(D) Construction.--For purposes of the succeeding
provisions of this section a redetermination under this
paragraph shall be considered to be part of the initial
determination.
``(b) Appeal Rights.--
``(1) In general.--
``(A) Reconsideration of initial determination.--Subject to
subparagraph (D), any individual dissatisfied with any
initial determination under subsection (a)(1) shall be
entitled to reconsideration of the determination, and,
subject to subparagraphs (D) and (E), a hearing thereon by
the Secretary to the same extent as is provided in section
205(b) and to judicial review of the Secretary's final
decision after such hearing as is provided in section 205(g).
For purposes of the preceding sentence, any reference to the
`Commissioner of Social Security' or the `Social Security
Administration' in subsection (g) or (l) of section 205 shall
be considered a reference to the `Secretary' or the
`Department of Health and Human Services', respectively.
``(B) Representation by provider or supplier.--
``(i) In general.--Sections 206(a), 1102, and 1871 shall
not be construed as authorizing the Secretary to prohibit an
individual from being represented under this section by a
person that furnishes or supplies the individual, directly or
indirectly, with services or items, solely on the basis that
the person furnishes or supplies the individual with such a
service or item.
``(ii) Mandatory waiver of right to payment from
beneficiary.--Any person that furnishes services or items to
an individual may not represent an individual under this
section with respect to the issue described in section
1879(a)(2) unless the person has waived any rights for
payment from the beneficiary with respect to the services or
items involved in the appeal.
``(iii) Prohibition on payment for representation.--If a
person furnishes services or items to an individual and
represents the individual under this section, the person may
not impose any financial liability on such individual in
connection with such representation.
``(iv) Requirements for representatives of a beneficiary.--
The provisions of section 205(j) and of section 206 (other
than subsection (a)(4) of such section) regarding
representation of claimants shall apply to representation of
an individual with respect to appeals under this section in
the same manner as they apply to representation of an
individual under those sections.
``(C) Succession of rights in cases of assignment.--The
right of an individual to an appeal under this section with
respect to an item
[[Page H12365]]
or service may be assigned to the provider of services or
supplier of the item or service upon the written consent of
such individual using a standard form established by the
Secretary for such an assignment.
``(D) Time limits for filing appeals.--
``(i) Reconsiderations.--Reconsideration under subparagraph
(A) shall be available only if the individual described in
subparagraph (A) files notice with the Secretary to request
reconsideration by not later than the end of the 180-day
period beginning on the date the individual receives notice
of the redetermination under subsection (a)(3), or within
such additional time as the Secretary may allow.
``(ii) Hearings conducted by the secretary.--The Secretary
shall establish in regulations time limits for the filing of
a request for a hearing by the Secretary in accordance with
provisions in sections 205 and 206.
``(E) Amounts in controversy.--
``(i) In general.--A hearing (by the Secretary) shall not
be available to an individual under this section if the
amount in controversy is less than $100, and judicial review
shall not be available to the individual if the amount in
controversy is less than $1,000.
``(ii) Aggregation of claims.--In determining the amount in
controversy, the Secretary, under regulations, shall allow
two or more appeals to be aggregated if the appeals involve--
``(I) the delivery of similar or related services to the
same individual by one or more providers of services or
suppliers, or
``(II) common issues of law and fact arising from services
furnished to two or more individuals by one or more providers
of services or suppliers.
``(F) Expedited proceedings.--
``(i) Expedited determination.--In the case of an
individual who has received notice from a provider of
services that such provider plans--
``(I) to terminate services provided to an individual and a
physician certifies that failure to continue the provision of
such services is likely to place the individual's health at
significant risk, or
``(II) to discharge the individual from the provider of
services,
the individual may request, in writing or orally, an
expedited determination or an expedited reconsideration of an
initial determination made under subsection (a)(1), as the
case may be, and the Secretary shall provide such expedited
determination or expedited reconsideration.
``(ii) Expedited hearing.--In a hearing by the Secretary
under this section, in which the moving party alleges that no
material issues of fact are in dispute, the Secretary shall
make an expedited determination as to whether any such facts
are in dispute and, if not, shall render a decision
expeditiously.
``(G) Reopening and revision of determinations.--The
Secretary may reopen or revise any initial determination or
reconsidered determination described in this subsection under
guidelines established by the Secretary in regulations.
``(c) Conduct of Reconsiderations by Independent
Contractors.--
``(1) In general.--The Secretary shall enter into contracts
with qualified independent contractors to conduct
reconsiderations of initial determinations made under
subparagraphs (B) and (C) of subsection (a)(1). Contracts
shall be for an initial term of three years and shall be
renewable on a triennial basis thereafter.
``(2) Qualified independent contractor.--For purposes of
this subsection, the term `qualified independent contractor'
means an entity or organization that is independent of any
organization under contract with the Secretary that makes
initial determinations under subsection (a)(1), and that
meets the requirements established by the Secretary
consistent with paragraph (3).
``(3) Requirements.--Any qualified independent contractor
entering into a contract with the Secretary under this
subsection shall meet all of the following requirements:
``(A) In general.--The qualified independent contractor
shall perform such duties and functions and assume such
responsibilities as may be required by the Secretary to carry
out the provisions of this subsection, and shall have
sufficient training and expertise in medical science and
legal matters to make reconsiderations under this subsection.
``(B) Reconsiderations.--
``(i) In general.--The qualified independent contractor
shall review initial determinations. Where an initial
determination is made with respect to whether an item or
service is reasonable and necessary for the diagnosis or
treatment of illness or injury (under section 1862(a)(1)(A)),
such review shall include consideration of the facts and
circumstances of the initial determination by a panel of
physicians or other appropriate health care professionals and
any decisions with respect to the reconsideration shall be
based on applicable information, including clinical
experience and medical, technical, and scientific evidence.
``(ii) Effect of national and local coverage
determinations.--
``(I) National coverage determinations.--If the Secretary
has made a national coverage determination pursuant to the
requirements established under the third sentence of section
1862(a), such determination shall be binding on the qualified
independent contractor in making a decision with respect to a
reconsideration under this section.
``(II) Local coverage determinations.--If the Secretary has
made a local coverage determination, such determination shall
not be binding on the qualified independent contractor in
making a decision with respect to a reconsideration under
this section. Notwithstanding the previous sentence, the
qualified independent contractor shall consider the local
coverage determination in making such decision.
``(III) Absence of national or local coverage
determination.--In the absence of such a national coverage
determination or local coverage determination, the qualified
independent contractor shall make a decision with respect to
the reconsideration based on applicable information,
including clinical experience and medical, technical, and
scientific evidence.
``(C) Deadlines for decisions.--
``(i) Reconsiderations.--Except as provided in clauses
(iii) and (iv), the qualified independent contractor shall
conduct and conclude a reconsideration under subparagraph
(B), and mail the notice of the decision with respect to the
reconsideration by not later than the end of the 30-day
period beginning on the date a request for reconsideration
has been timely filed.
``(ii) Consequences of failure to meet deadline.--In the
case of a failure by the qualified independent contractor to
mail the notice of the decision by the end of the period
described in clause (i) or to provide notice by the end of
the period described in clause (iii), as the case may be, the
party requesting the reconsideration or appeal may request a
hearing before the Secretary, notwithstanding any
requirements for a reconsidered determination for purposes of
the party's right to such hearing.
``(iii) Expedited reconsiderations.--The qualified
independent contractor shall perform an expedited
reconsideration under subsection (b)(1)(F) as follows:
``(I) Deadline for decision.--Notwithstanding section
216(j) and subject to clause (iv), not later than the end of
the 72-hour period beginning on the date the qualified
independent contractor has received a request for such
reconsideration and has received such medical or other
records needed for such reconsideration, the qualified
independent contractor shall provide notice (by telephone and
in writing) to the individual and the provider of services
and attending physician of the individual of the results of
the reconsideration. Such reconsideration shall be conducted
regardless of whether the provider of services or supplier
will charge the individual for continued services or whether
the individual will be liable for payment for such continued
services.
``(II) Consultation with beneficiary.--In such
reconsideration, the qualified independent contractor shall
solicit the views of the individual involved.
``(III) Special rule for hospital discharges.--A
reconsideration of a discharge from a hospital shall be
conducted under this clause in accordance with the provisions
of paragraphs (2), (3), and (4) of section 1154(e) as in
effect on the date that precedes the date of the enactment of
this subparagraph.
``(iv) Extension.--An individual requesting a
reconsideration under this subparagraph may be granted such
additional time as the individual specifies (not to exceed 14
days) for the qualified independent contractor to conclude
the reconsideration. The individual may request such
additional time orally or in writing.
``(D) Limitation on individual reviewing determinations.--
``(i) Physicians and health care professional.--No
physician or health care professional under the employ of a
qualified independent contractor may review--
``(I) determinations regarding health care services
furnished to a patient if the physician or health care
professional was directly responsible for furnishing such
services; or
``(II) determinations regarding health care services
provided in or by an institution, organization, or agency, if
the physician or any member of the family of the physician or
health care professional has, directly or indirectly, a
significant financial interest in such institution,
organization, or agency.
``(ii) Family described.--For purposes of this paragraph,
the family of a physician or health care professional
includes the spouse (other than a spouse who is legally
separated from the physician or health care professional
under a decree of divorce or separate maintenance), children
(including stepchildren and legally adopted children),
grandchildren, parents, and grandparents of the physician or
health care professional.
``(E) Explanation of decision.--Any decision with respect
to a reconsideration of a qualified independent contractor
shall be in writing, and shall include a detailed explanation
of the decision as well as a discussion of the pertinent
facts and applicable regulations applied in making such
decision, and in the case of a determination of whether an
item or service is reasonable and necessary for the diagnosis
or treatment of illness or injury (under section
1862(a)(1)(A)) an explanation of the medical and scientific
rationale for the decision.
``(F) Notice requirements.--Whenever a qualified
independent contractor makes a decision with respect to a
reconsideration under this subsection, the qualified
independent contractor shall promptly notify the entity
responsible for the payment of claims under part A or part B
of such decision.
``(G) Dissemination of decisions on reconsiderations.--Each
qualified independent contractor shall make available all
decisions with respect to reconsiderations of such qualified
independent contractors to fiscal intermediaries (under
section 1816), carriers (under section 1842), peer review
organizations (under part B of title XI), Medicare+Choice
organizations offering Medicare+Choice plans under part C,
other entities under contract with the Secretary to make
initial determinations under part A or part B or title XI,
and to the public. The Secretary shall establish a
methodology under which qualified independent contractors
shall carry out this subparagraph.
``(H) Ensuring consistency in decisions.--Each qualified
independent contractor shall
[[Page H12366]]
monitor its decisions with respect to reconsiderations to
ensure the consistency of such decisions with respect to
requests for reconsideration of similar or related matters.
``(I) Data collection.--
``(i) In general.--Consistent with the requirements of
clause (ii), a qualified independent contractor shall collect
such information relevant to its functions, and keep and
maintain such records in such form and manner as the
Secretary may require to carry out the purposes of this
section and shall permit access to and use of any such
information and records as the Secretary may require for such
purposes.
``(ii) Type of data collected.--Each qualified independent
contractor shall keep accurate records of each decision made,
consistent with standards established by the Secretary for
such purpose. Such records shall be maintained in an
electronic database in a manner that provides for
identification of the following:
``(I) Specific claims that give rise to appeals.
``(II) Situations suggesting the need for increased
education for providers of services, physicians, or
suppliers.
``(III) Situations suggesting the need for changes in
national or local coverage policy.
``(IV) Situations suggesting the need for changes in local
medical review policies.
``(iii) Annual reporting.--Each qualified independent
contractor shall submit annually to the Secretary (or
otherwise as the Secretary may request) records maintained
under this paragraph for the previous year.
``(J) Hearings by the secretary.--The qualified independent
contractor shall (i) prepare such information as is required
for an appeal of a decision of the contractor with respect to
a reconsideration to the Secretary for a hearing, including
as necessary, explanations of issues involved in the decision
and relevant policies, and (ii) participate in such hearings
as required by the Secretary.
``(4) Number of qualified independent contractors.--The
Secretary shall enter into contracts with not fewer than 12
qualified independent contractors under this subsection.
``(5) Limitation on qualified independent contractor
liability.--No qualified independent contractor having a
contract with the Secretary under this subsection and no
person who is employed by, or who has a fiduciary
relationship with, any such qualified independent contractor
or who furnishes professional services to such qualified
independent contractor, shall be held by reason of the
performance of any duty, function, or activity required or
authorized pursuant to this subsection or to a valid contract
entered into under this subsection, to have violated any
criminal law, or to be civilly liable under any law of the
United States or of any State (or political subdivision
thereof) provided due care was exercised in the performance
of such duty, function, or activity.
``(d) Deadlines for Hearings by the Secretary.--
``(1) Hearing by administrative law judge.--
``(A) In general.--Except as provided in subparagraph (B),
an administrative law judge shall conduct and conclude a
hearing on a decision of a qualified independent contractor
under subsection (c) and render a decision on such hearing by
not later than the end of the 90-day period beginning on the
date a request for hearing has been timely filed.
``(B) Waiver of deadline by party seeking hearing.--The 90-
day period under subparagraph (A) shall not apply in the case
of a motion or stipulation by the party requesting the
hearing to waive such period.
``(2) Departmental appeals board review.--
``(A) In general.--The Departmental Appeals Board of the
Department of Health and Human Services shall conduct and
conclude a review of the decision on a hearing described in
paragraph (1) and make a decision or remand the case to the
administrative law judge for reconsideration by not later
than the end of the 90-day period beginning on the date a
request for review has been timely filed.
``(B) DAB hearing procedure.--In reviewing a decision on a
hearing under this paragraph, the Departmental Appeals Board
shall review the case de novo.
``(3) Consequences of failure to meet deadlines.--
``(A) Hearing by administrative law judge.--In the case of
a failure by an administrative law judge to render a decision
by the end of the period described in paragraph (1), the
party requesting the hearing may request a review by the
Departmental Appeals Board of the Department of Health and
Human Services, notwithstanding any requirements for a
hearing for purposes of the party's right to such a review.
``(B) Departmental appeals board review.--In the case of a
failure by the Departmental Appeals Board to render a
decision by the end of the period described in paragraph (2),
the party requesting the hearing may seek judicial review,
notwithstanding any requirements for a hearing for purposes
of the party's right to such judicial review.
``(e) Administrative Provisions.--
``(1) Limitation on review of certain regulations.--A
regulation or instruction that relates to a method for
determining the amount of payment under part B and that was
initially issued before January 1, 1981, shall not be subject
to judicial review.
``(2) Outreach.--The Secretary shall perform such outreach
activities as are necessary to inform individuals entitled to
benefits under this title and providers of services and
suppliers with respect to their rights of, and the process
for, appeals made under this section. The Secretary shall use
the toll-free telephone number maintained by the Secretary
under section 1804(b) to provide information regarding appeal
rights and respond to inquiries regarding the status of
appeals.
``(3) Continuing education requirement for qualified
independent contractors and administrative law judges.--The
Secretary shall provide to each qualified independent
contractor, and, in consultation with the Commissioner of
Social Security, to administrative law judges that decide
appeals of reconsiderations of initial determinations or
other decisions or determinations under this section, such
continuing education with respect to coverage of items and
services under this title or policies of the Secretary with
respect to part B of title XI as is necessary for such
qualified independent contractors and administrative law
judges to make informed decisions with respect to appeals.
``(4) Reports.--
``(A) Annual report to congress.--The Secretary shall
submit to Congress an annual report describing the number of
appeals for the previous year, identifying issues that
require administrative or legislative actions, and
including any recommendations of the Secretary with
respect to such actions. The Secretary shall include in
such report an analysis of determinations by qualified
independent contractors with respect to inconsistent
decisions and an analysis of the causes of any such
inconsistencies.
``(B) Survey.--Not less frequently than every 5 years, the
Secretary shall conduct a survey of a valid sample of
individuals entitled to benefits under this title who have
filed appeals of determinations under this section, providers
of services, and suppliers to determine the satisfaction of
such individuals or entities with the process for appeals of
determinations provided for under this section and education
and training provided by the Secretary with respect to that
process. The Secretary shall submit to Congress a report
describing the results of the survey, and shall include any
recommendations for administrative or legislative actions
that the Secretary determines appropriate.''.
(b) Applicability of Requirements and Limitations on
Liability of Qualified Independent Contractors to
Medicare+Choice Independent Appeals Contractors.--Section
1852(g)(4) (42 U.S.C. 1395w-22(g)(4)) is amended by adding at
the end the following: ``The provisions of section 1869(c)(5)
shall apply to independent outside entities under contract
with the Secretary under this paragraph.''.
(c) Conforming Amendment.--Section 1154(e) (42 U.S.C.
1320c-3(e)) is amended by striking paragraphs (2), (3), and
(4).
(d) Effective Date.--The amendments made by this section
shall apply with respect to initial determinations made on or
after October 1, 2002.
SEC. 522. REVISIONS TO MEDICARE COVERAGE PROCESS.
(a) Review of Determinations.--Section 1869 (42 U.S.C.
1395ff), as amended by section 521, is further amended by
adding at the end the following new subsection:
``(f) Review of Coverage Determinations.--
``(1) National coverage determinations.--
``(A) In general.--Review of any national coverage
determination shall be subject to the following limitations:
``(i) Such a determination shall not be reviewed by any
administrative law judge.
``(ii) Such a determination shall not be held unlawful or
set aside on the ground that a requirement of section 553 of
title 5, United States Code, or section 1871(b) of this
title, relating to publication in the Federal Register or
opportunity for public comment, was not satisfied.
``(iii) Upon the filing of a complaint by an aggrieved
party, such a determination shall be reviewed by the
Departmental Appeals Board of the Department of Health and
Human Services. In conducting such a review, the Departmental
Appeals Board--
``(I) shall review the record and shall permit discovery
and the taking of evidence to evaluate the reasonableness of
the determination, if the Board determines that the record is
incomplete or lacks adequate information to support the
validity of the determination;
``(II) may, as appropriate, consult with appropriate
scientific and clinical experts; and
``(III) shall defer only to the reasonable findings of
fact, reasonable interpretations of law, and reasonable
applications of fact to law by the Secretary.
``(iv) The Secretary shall implement a decision of the
Departmental Appeals Board within 30 days of receipt of such
decision.
``(v) A decision of the Departmental Appeals Board
constitutes a final agency action and is subject to judicial
review.
``(B) Definition of national coverage determination.--For
purposes of this section, the term `national coverage
determination' means a determination by the Secretary with
respect to whether or not a particular item or service is
covered nationally under this title, but does not include a
determination of what code, if any, is assigned to a
particular item or service covered under this title or a
determination with respect to the amount of payment made for
a particular item or service so covered.
``(2) Local coverage determination.--
``(A) In general.--Review of any local coverage
determination shall be subject to the following limitations:
``(i) Upon the filing of a complaint by an aggrieved party,
such a determination shall be reviewed by an administrative
law judge of the Social Security Administration. The
administrative law judge--
``(I) shall review the record and shall permit discovery
and the taking of evidence to evaluate the reasonableness of
the determination, if the administrative law judge determines
that the record is incomplete or lacks adequate information
to support the validity of the determination;
``(II) may, as appropriate, consult with appropriate
scientific and clinical experts; and
``(III) shall defer only to the reasonable findings of
fact, reasonable interpretations of law, and reasonable
applications of fact to law by the Secretary.
[[Page H12367]]
``(ii) Upon the filing of a complaint by an aggrieved
party, a decision of an administrative law judge under clause
(i) shall be reviewed by the Departmental Appeals Board of
the Department of Health and Human Services.
``(iii) The Secretary shall implement a decision of the
administrative law judge or the Departmental Appeals Board
within 30 days of receipt of such decision.
``(iv) A decision of the Departmental Appeals Board
constitutes a final agency action and is subject to judicial
review.
``(B) Definition of local coverage determination.--For
purposes of this section, the term `local coverage
determination' means a determination by a fiscal intermediary
or a carrier under part A or part B, as applicable,
respecting whether or not a particular item or service is
covered on an intermediary- or carrier-wide basis under such
parts, in accordance with section 1862(a)(1)(A).
``(3) No material issues of fact in dispute.--In the case
of a determination that may otherwise be subject to review
under paragraph (1)(A)(iii) or paragraph (2)(A)(i), where the
moving party alleges that--
``(A) there are no material issues of fact in dispute, and
``(B) the only issue of law is the constitutionality of a
provision of this title, or that a regulation, determination,
or ruling by the Secretary is invalid,
the moving party may seek review by a court of competent
jurisdiction without filing a complaint under such paragraph
and without otherwise exhausting other administrative
remedies.
``(4) Pending national coverage determinations.--
``(A) In general.--In the event the Secretary has not
issued a national coverage or noncoverage determination with
respect to a particular type or class of items or services,
an aggrieved person (as described in paragraph (5)) may
submit to the Secretary a request to make such a
determination with respect to such items or services. By not
later than the end of the 90-day period beginning on the date
the Secretary receives such a request (notwithstanding the
receipt by the Secretary of new evidence (if any) during such
90-day period), the Secretary shall take one of the following
actions:
``(i) Issue a national coverage determination, with or
without limitations.
``(ii) Issue a national noncoverage determination.
``(iii) Issue a determination that no national coverage or
noncoverage determination is appropriate as of the end of
such 90-day period with respect to national coverage of such
items or services.
``(iv) Issue a notice that states that the Secretary has
not completed a review of the request for a national coverage
determination and that includes an identification of the
remaining steps in the Secretary's review process and a
deadline by which the Secretary will complete the review and
take an action described in subclause (I), (II), or (III).
``(B) Deemed action by the secretary.--In the case of an
action described in clause (i)(IV), if the Secretary fails to
take an action referred to in such clause by the deadline
specified by the Secretary under such clause, then the
Secretary is deemed to have taken an action described in
clause (i)(III) as of the deadline.
``(C) Explanation of determination.--When issuing a
determination under clause (i), the Secretary shall include
an explanation of the basis for the determination. An action
taken under clause (i) (other than subclause (IV)) is deemed
to be a national coverage determination for purposes of
review under subparagraph (A).
``(5) Standing.--An action under this subsection seeking
review of a national coverage determination or local coverage
determination may be initiated only by individuals entitled
to benefits under part A, or enrolled under part B, or both,
who are in need of the items or services that are the subject
of the coverage determination.
``(6) Publication on the internet of decisions of hearings
of the secretary.--Each decision of a hearing by the
Secretary with respect to a national coverage determination
shall be made public, and the Secretary shall publish each
decision on the Medicare Internet site of the Department of
Health and Human Services. The Secretary shall remove from
such decision any information that would identify any
individual, provider of services, or supplier.
``(7) Annual report on national coverage determinations.--
``(A) In general.--Not later than December 1 of each year,
beginning in 2001, the Secretary shall submit to Congress a
report that sets forth a detailed compilation of the actual
time periods that were necessary to complete and fully
implement national coverage determinations that were made in
the previous fiscal year for items, services, or medical
devices not previously covered as a benefit under this title,
including, with respect to each new item, service, or medical
device, a statement of the time taken by the Secretary to
make and implement the necessary coverage, coding, and
payment determinations, including the time taken to complete
each significant step in the process of making and
implementing such determinations.
``(B) Publication of reports on the internet.--The
Secretary shall publish each report submitted under clause
(i) on the medicare Internet site of the Department of Health
and Human Services.
``(8) Construction.--Nothing in this subsection shall be
construed as permitting administrative or judicial review
pursuant to this section insofar as such review is explicitly
prohibited or restricted under another provision of law.''.
(b) Establishment of a Process for Coverage
Determinations.--Section 1862(a) (42 U.S.C. 1395y(a)) is
amended by adding at the end the following new sentence: ``In
making a national coverage determination (as defined in
paragraph (1)(B) of section 1869(f)) the Secretary shall
ensure that the public is afforded notice and opportunity to
comment prior to implementation by the Secretary of the
determination; meetings of advisory committees established
under section 1114(f) with respect to the determination are
made on the record; in making the determination, the
Secretary has considered applicable information (including
clinical experience and medical, technical, and scientific
evidence) with respect to the subject matter of the
determination; and in the determination, provide a clear
statement of the basis for the determination (including
responses to comments received from the public), the
assumptions underlying that basis, and make available to the
public the data (other than proprietary data) considered in
making the determination.''.
(c) Improvements to the Medicare Advisory Committee
Process.--Section 1114 (42 U.S.C. 1314) is amended by adding
at the end the following new subsection:
``(i)(1) Any advisory committee appointed under subsection
(f) to advise the Secretary on matters relating to the
interpretation, application, or implementation of section
1862(a)(1) shall assure the full participation of a nonvoting
member in the deliberations of the advisory committee, and
shall provide such nonvoting member access to all information
and data made available to voting members of the advisory
committee, other than information that--
``(A) is exempt from disclosure pursuant to subsection (a)
of section 552 of title 5, United States Code, by reason of
subsection (b)(4) of such section (relating to trade
secrets); or
``(B) the Secretary determines would present a conflict of
interest relating to such nonvoting member.
``(2) If an advisory committee described in paragraph (1)
organizes into panels of experts according to types of items
or services considered by the advisory committee, any such
panel of experts may report any recommendation with respect
to such items or services directly to the Secretary without
the prior approval of the advisory committee or an executive
committee thereof.''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to--
(1) a review of any national or local coverage
determination filed,
(2) a request to make such a determination made, and
(3) a national coverage determination made,
on or after October 1, 2001.
Subtitle D--Improving Access to New Technologies
SEC. 531. REIMBURSEMENT IMPROVEMENTS FOR NEW CLINICAL
LABORATORY TESTS AND DURABLE MEDICAL EQUIPMENT.
(a) Payment Rule for New Laboratory Tests.--Section
1833(h)(4)(B)(viii) (42 U.S.C. 1395l(h)(4)(B)(viii)) is
amended by inserting before the period at the end the
following: ``(or 100 percent of such median in the case of a
clinical diagnostic laboratory test performed on or after
January 1, 2001, that the Secretary determines is a new test
for which no limitation amount has previously been
established under this subparagraph)''.
(b) Establishment of Coding and Payment Procedures for New
Clinical Diagnostic Laboratory Tests and Other Items on a Fee
Schedule.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall establish procedures for coding and payment
determinations for the categories of new clinical
diagnostic laboratory tests and new durable medical
equipment under part B of title XVIII of the Social
Security Act that permit public consultation in a manner
consistent with the procedures established for
implementing coding modifications for ICD-9-CM.
(c) Report on Procedures Used for Advanced, Improved
Technologies.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall submit to Congress a report that identifies
the specific procedures used by the Secretary under part B of
title XVIII of the Social Security Act to adjust payments for
clinical diagnostic laboratory tests and durable medical
equipment which are classified to existing codes where,
because of an advance in technology with respect to the test
or equipment, there has been a significant increase or
decrease in the resources used in the test or in the
manufacture of the equipment, and there has been a
significant improvement in the performance of the test or
equipment. The report shall include such recommendations for
changes in law as may be necessary to assure fair and
appropriate payment levels under such part for such improved
tests and equipment as reflects increased costs necessary to
produce improved results.
SEC. 532. RETENTION OF HCPCS LEVEL III CODES.
(a) In General.--The Secretary of Health and Human Services
shall maintain and continue the use of level III codes of the
HCPCS coding system (as such system was in effect on August
16, 2000) through December 31, 2003, and shall make such
codes available to the public.
(b) Definition.--For purposes of this section, the term
``HCPCS Level III codes'' means the alphanumeric codes for
local use under the Health Care Financing Administration
Common Procedure Coding System (HCPCS).
SEC. 533. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER
INPATIENT HOSPITAL PPS.
(a) Expediting Recognition of New Technologies Into
Inpatient PPS Coding System.--
(1) Report.--Not later than April 1, 2001, the Secretary of
Health and Human Services shall
[[Page H12368]]
submit to Congress a report on methods of expeditiously
incorporating new medical services and technologies into the
clinical coding system used with respect to payment for
inpatient hospital services furnished under the medicare
program under title XVIII of the Social Security Act,
together with a detailed description of the Secretary's
preferred methods to achieve this purpose.
(2) Implementation.--Not later than October 1, 2001, the
Secretary shall implement the preferred methods described in
the report transmitted pursuant to paragraph (1).
(b) Ensuring Appropriate Payments for Hospitals
Incorporating New Medical Services and Technologies.--
(1) Establishment of mechanism.--Section 1886(d)(5) (42
U.S.C. 1395ww(d)(5)) is amended by adding at the end the
following new subparagraphs:
``(K)(i) Effective for discharges beginning on or after
October 1, 2001, the Secretary shall establish a mechanism to
recognize the costs of new medical services and technologies
under the payment system established under this subsection.
Such mechanism shall be established after notice and
opportunity for public comment (in the publications required
by subsection (e)(5) for a fiscal year or otherwise).
``(ii) The mechanism established pursuant to clause (i)
shall--
``(I) apply to a new medical service or technology if,
based on the estimated costs incurred with respect to
discharges involving such service or technology, the DRG
prospective payment rate otherwise applicable to such
discharges under this subsection is inadequate;
``(II) provide for the collection of data with respect to
the costs of a new medical service or technology described in
subclause (I) for a period of not less than two years and not
more than three years beginning on the date on which an
inpatient hospital code is issued with respect to the service
or technology;
``(III) subject to paragraph (4)(C)(iii), provide for
additional payment to be made under this subsection with
respect to discharges involving a new medical service or
technology described in subclause (I) that occur during the
period described in subclause (II) in an amount that
adequately reflects the estimated average cost of such
service or technology; and
``(IV) provide that discharges involving such a service or
technology that occur after the close of the period described
in subclause (II) will be classified within a new or existing
diagnosis-related group with a weighting factor under
paragraph (4)(B) that is derived from cost data collected
with respect to discharges occurring during such period.
``(iii) For purposes of clause (ii)(II), the term
`inpatient hospital code' means any code that is used with
respect to inpatient hospital services for which payment may
be made under this subsection and includes an alphanumeric
code issued under the International Classification of
Diseases, 9th Revision, Clinical Modification (`ICD-9-CM')
and its subsequent revisions.
``(iv) For purposes of clause (ii)(III), the term
`additional payment' means, with respect to a discharge for a
new medical service or technology described in clause
(ii)(I), an amount that exceeds the prospective payment rate
otherwise applicable under this subsection to discharges
involving such service or technology that would be made but
for this subparagraph.
``(v) The requirement under clause (ii)(III) for an
additional payment may be satisfied by means of a new-
technology group (described in subparagraph (L)), an add-on
payment, a payment adjustment, or any other similar mechanism
for increasing the amount otherwise payable with respect to a
discharge under this subsection. The Secretary may not
establish a separate fee schedule for such additional payment
for such services and technologies, by utilizing a
methodology established under subsection (a) or (h) of
section 1834 to determine the amount of such additional
payment, or by other similar mechanisms or methodologies.
``(vi) For purposes of this subparagraph and subparagraph
(L), a medical service or technology will be considered a
`new medical service or technology' if the service or
technology meets criteria established by the Secretary after
notice and an opportunity for public comment.
``(L)(i) In establishing the mechanism under subparagraph
(K), the Secretary may establish new-technology groups into
which a new medical service or technology will be classified
if, based on the estimated average costs incurred with
respect to discharges involving such service or technology,
the DRG prospective payment rate otherwise applicable to such
discharges under this subsection is inadequate.
``(ii) Such groups--
``(I) shall not be based on the costs associated with a
specific new medical service or technology; but
``(II) shall, in combination with the applicable
standardized amounts and the weighting factors assigned to
such groups under paragraph (4)(B), reflect such cost cohorts
as the Secretary determines are appropriate for all new
medical services and technologies that are likely to be
provided as inpatient hospital services in a fiscal year.
``(iii) The methodology for classifying specific hospital
discharges within a diagnosis-related group under paragraph
(4)(A) or a new-technology group shall provide that a
specific hospital discharge may not be classified within both
a diagnosis-related group and a new-technology group.''.
(2) Prior consultation.--The Secretary of Health and Human
Services shall consult with groups representing hospitals,
physicians, and manufacturers of new medical technologies
before publishing the notice of proposed rulemaking
required by section 1886(d)(5)(K)(i) of the Social
Security Act (as added by paragraph (1)).
(3) Conforming amendment.--Section 1886(d)(4)(C)(i) (42
U.S.C. 1395ww(d)(4)(C)(i)) is amended by striking
``technology,'' and inserting ``technology (including a new
medical service or technology under paragraph (5)(K)),''.
Subtitle E--Other Provisions
SEC. 541. INCREASE IN REIMBURSEMENT FOR BAD DEBT.
Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is
amended--
(1) in clause (ii), by striking ``and'' at the end;
(2) in clause (iii)--
(A) by striking ``during a subsequent fiscal year'' and
inserting ``during fiscal year 2000''; and
(B) by striking the period at the end and inserting ``,
and''; and
(3) by adding at the end the following new clause:
``(iv) for cost reporting periods beginning during a
subsequent fiscal year, by 30 percent of such amount
otherwise allowable.''.
SEC. 542. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES
UNDER MEDICARE.
(a) In General.--When an independent laboratory furnishes
the technical component of a physician pathology service to a
fee-for-service medicare beneficiary who is an inpatient or
outpatient of a covered hospital, the Secretary of Health and
Human Services shall treat such component as a service for
which payment shall be made to the laboratory under section
1848 of the Social Security Act (42 U.S.C. 1395w-4) and not
as an inpatient hospital service for which payment is made to
the hospital under section 1886(d) of such Act (42 U.S.C.
1395ww(d)) or as an outpatient hospital service for which
payment is made to the hospital under section 1833(t) of such
Act (42 U.S.C. 1395l(t)).
(b) Definitions.--For purposes of this section:
(1) Covered hospital.--The term ``covered hospital'' means,
with respect to an inpatient or an outpatient, a hospital
that had an arrangement with an independent laboratory that
was in effect as of July 22, 1999, under which a laboratory
furnished the technical component of physician pathology
services to fee-for-service medicare beneficiaries who were
hospital inpatients or outpatients, respectively, and
submitted claims for payment for such component to a medicare
carrier (that has a contract with the Secretary under section
1842 of the Social Security Act, 42 U.S.C. 1395u) and not to
such hospital.
(2) Fee-for-service medicare beneficiary.--The term ``fee-
for-service medicare beneficiary'' means an individual who--
(A) is entitled to benefits under part A, or enrolled under
part B, or both, of such title; and
(B) is not enrolled in any of the following:
(i) A Medicare+Choice plan under part C of such title.
(ii) A plan offered by an eligible organization under
section 1876 of such Act (42 U.S.C. 1395mm).
(iii) A program of all-inclusive care for the elderly
(PACE) under section 1894 of such Act (42 U.S.C. 1395eee).
(iv) A social health maintenance organization (SHMO)
demonstration project established under section 4018(b) of
the Omnibus Budget Reconciliation Act of 1987 (Public Law
100-203).
(c) Effective Date.--This section shall apply to services
furnished during the 2-year period beginning on January 1,
2001.
(d) GAO Report.--
(1) Study.--The Comptroller General of the United States
shall conduct a study of the effects of the previous
provisions of this section on hospitals and laboratories and
access of fee-for-service medicare beneficiaries to the
technical component of physician pathology services.
(2) Report.--Not later than April 1, 2002, the Comptroller
General shall submit to Congress a report on such study. The
report shall include recommendations about whether such
provisions should be extended after the end of the period
specified in subsection (c) for either or both inpatient and
outpatient hospital services, and whether the provisions
should be extended to other hospitals.
SEC. 543. EXTENSION OF ADVISORY OPINION AUTHORITY.
Section 1128D(b)(6) (42 U.S.C. 1320a-7d(b)(6)) is amended
by striking ``and before the date which is 4 years after such
date of enactment''.
SEC. 544. CHANGE IN ANNUAL MEDPAC REPORTING.
(a) Revision of Deadlines for Submission of Reports.--
(1) In general.--Section 1805(b)(1)(D) (42 U.S.C. 1395b-
6(b)(1)(D)) is amended by striking ``June 1 of each year
(beginning with 1998),'' and inserting ``June 15 of each
year,''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply beginning with 2001.
(b) Requirement for on the Record Votes on
Recommendations.--Section 1805(b) (42 U.S.C. 1395b-6(b)) is
amended by adding at the end the following new paragraph:
``(7) Voting and reporting requirements.--With respect to
each recommendation contained in a report submitted under
paragraph (1), each member of the Commission shall vote on
the recommendation, and the Commission shall include, by
member, the results of that vote in the report containing the
recommendation.''.
SEC. 545. DEVELOPMENT OF PATIENT ASSESSMENT INSTRUMENTS.
(a) Development.--
(1) In general.--Not later than January 1, 2005, the
Secretary of Health and Human Services shall submit to the
Committee on Ways and Means and the Committee on Commerce of
the House of Representatives and the Committee on Finance of
the Senate a report on the development of standard
instruments for the assessment of the health and functional
status of patients,
[[Page H12369]]
for whom items and services described in subsection (b) are
furnished, and include in the report a recommendation on the
use of such standard instruments for payment purposes.
(2) Design for comparison of common elements.--The
Secretary shall design such standard instruments in a manner
such that--
(A) elements that are common to the items and services
described in subsection (b) may be readily comparable and are
statistically compatible;
(B) only elements necessary to meet program objectives are
collected; and
(C) the standard instruments supersede any other assessment
instrument used before that date.
(3) Consultation.--In developing an assessment instrument
under paragraph (1), the Secretary shall consult with the
Medicare Payment Advisory Commission, the Agency for
Healthcare Research and Quality, and qualified organizations
representing providers of services and suppliers under title
XVIII.
(b) Description of Services.--For purposes of subsection
(a), items and services described in this subsection are
those items and services furnished to individuals entitled to
benefits under part A, or enrolled under part B, or both of
title XVIII of the Social Security Act for which payment is
made under such title, and include the following:
(1) Inpatient and outpatient hospital services.
(2) Inpatient and outpatient rehabilitation services.
(3) Covered skilled nursing facility services.
(4) Home health services.
(5) Physical or occupational therapy or speech-language
pathology services.
(6) Items and services furnished to such individuals
determined to have end stage renal disease.
(7) Partial hospitalization services and other mental
health services.
(8) Any other service for which payment is made under such
title as the Secretary determines to be appropriate.
SEC. 546. GAO REPORT ON IMPACT OF THE EMERGENCY MEDICAL
TREATMENT AND ACTIVE LABOR ACT (EMTALA) ON
HOSPITAL EMERGENCY DEPARTMENTS.
(a) Report.--The Comptroller General of the United States
shall submit a report to the Committee on Commerce and the
Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate by May 1, 2001, on
the effect of the Emergency Medical Treatment and Active
Labor Act on hospitals, emergency physicians, and physicians
covering emergency department call throughout the United
States.
(b) Report Requirements.--The report should evaluate--
(1) the extent to which hospitals, emergency physicians,
and physicians covering emergency department call provide
uncompensated services in relation to the requirements of
EMTALA;
(2) the extent to which the regulatory requirements and
enforcement of EMTALA have expanded beyond the legislation's
original intent;
(3) estimates for the total dollar amount of EMTALA-related
care uncompensated costs to emergency physicians, physicians
covering emergency department call, hospital emergency
departments, and other hospital services;
(4) the extent to which different portions of the United
States may be experiencing different levels of uncompensated
EMTALA-related care;
(5) the extent to which EMTALA would be classified as an
unfunded mandate if it were enacted today;
(6) the extent to which States have programs to provide
financial support for such uncompensated care;
(7) possible sources of funds, including medicare hospital
bad debt accounts, that are available to hospitals to assist
with the cost of such uncompensated care; and
(8) the financial strain that illegal immigration
populations, the uninsured, and the underinsured place on
hospital emergency departments, other hospital services,
emergency physicians, and physicians covering emergency
department call.
(c) Definition.--In this section, the terms ``Emergency
Medical Treatment and Active Labor Act'' and ``EMTALA'' mean
section 1867 of the Social Security Act (42 U.S.C. 1395dd).
SEC. 547. CLARIFICATION OF APPLICATION OF TEMPORARY PAYMENT
INCREASES FOR 2001.
(a) Inpatient Hospital Services.--The payment increase
provided under the following sections shall not apply to
discharges occurring after fiscal year 2001 and shall not be
taken into account in calculating the payment amounts
applicable for discharges occurring after such fiscal year:
(1) Section 301(b)(2)(A) (relating to acute care hospital
payment update).
(2) Section 302(b) (relating to IME percentage adjustment).
(3) Section 303(b)(2) (relating to DSH payments).
(b) Skilled Nursing Facility Services.--The payment
increase provided under section 311(b)(2) (relating to
covered skilled nursing facility services) shall not apply to
services furnished after fiscal year 2001 and shall not be
taken into account in calculating the payment amounts
applicable for services furnished after such fiscal year.
(c) Home Health Services.--
(1) Transitional allowance for full marketbasket
increase.--The payment increase provided under section
502(b)(1)(B) shall not apply to episodes and visits ending
after fiscal year 2001 and shall not be taken into account in
calculating the payment amounts applicable for subsequent
episodes and visits.
(2) Temporary increase for rural home health services.--The
payment increase provided under section 508(a) for the period
beginning on April 1, 2001, and ending on September 30, 2002,
shall not apply to episodes and visits ending after such
period, and shall not be taken into account in calculating
the payment amounts applicable for episodes and visits
occurring after such period.
(d) Calendar Year 2001 Provisions.--The payment increase
provided under the following sections shall not apply after
calendar year 2001 and shall not be taken into account in
calculating the payment amounts applicable for items and
services furnished after such year:
(1) Section 401(c)(2) (relating to covered OPD services).
(2) Section 422(e)(2) (relating to renal dialysis services
paid for on a composite rate basis).
(3) Section 423(a)(2)(B) (relating to ambulance services).
(4) Section 425(b)(2) (relating to durable medical
equipment).
(5) Section 426(b)(2) (relating to prosthetic devices and
orthotics and prosthetics).
TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND
OTHER MEDICARE MANAGED CARE PROVISIONS
Subtitle A--Medicare+Choice Payment Reforms
SEC. 601. INCREASE IN MINIMUM PAYMENT AMOUNT.
(a) In General.--Section 1853(c)(1)(B) (42 U.S.C. 1395w-
23(c)(1)(B)) is amended--
(1) by redesignating clause (ii) as clause (iv);
(2) by inserting after clause (i) the following new
clauses:
``(ii) For 1999 and 2000, the minimum amount determined
under clause (i) or this clause, respectively, for the
preceding year, increased by the national per capita
Medicare+Choice growth percentage described in paragraph
(6)(A) applicable to 1999 or 2000, respectively.
``(iii)(I) Subject to subclause (II), for 2001, for any
area in a Metropolitan Statistical Area with a population of
more than 250,000, $525, and for any other area $475.
``(II) In the case of an area outside the 50 States and the
District of Columbia, the amount specified in this clause
shall not exceed 120 percent of the amount determined under
clause (ii) for such area for 2000.''; and
(3) in clause (iv), as so redesignated--
(A) by striking ``a succeeding year'' and inserting ``2002
and each succeeding year''; and
(B) by striking ``clause (i)'' and inserting ``clause
(iii)''.
(b) Special Rule for January and February of 2001.--
(1) In general.--Notwithstanding the amendments made by
subsection (a), for purposes of making payments under section
1853 of the Social Security Act (42 U.S.C. 1395w-23) for
January and February 2001, the annual Medicare+Choice
capitation rate for a Medicare+Choice payment area shall be
calculated, and the excess amount under section 1854(f)(1)(B)
of such Act (42 U.S.C. 1395w-24(f)(1)(B)) shall be
determined, as if such amendments had not been enacted.
(2) Construction.--Paragraph (1) shall not be taken into
account in computing such capitation rate for 2002 and
subsequent years.
SEC. 602. INCREASE IN MINIMUM PERCENTAGE INCREASE.
(a) In General.--Section 1853(c)(1)(C) (42 U.S.C. 1395w-
23(c)(1)(C)) is amended--
(1) by redesignating clause (ii) as clause (iv);
(2) by inserting after clause (i) the following new
clauses:
``(ii) For 1999 and 2000, 102 percent of the annual
Medicare+Choice capitation rate under this paragraph for the
area for the previous year.
``(iii) For 2001, 103 percent of the annual Medicare+Choice
capitation rate under this paragraph for the area for
2000.''; and
(3) in clause (iv), as so redesignated, by striking ``a
subsequent year'' and inserting ``2002 and each succeeding
year''.
(b) Application of Special Rule for January and February of
2001.--The provisions of section 601(b) shall apply with
respect to the amendments made by subsection (a) in the same
manner as they apply to the amendments made by section
601(a).
SEC. 603. PHASE-IN OF RISK ADJUSTMENT.
Section 1853(a)(3)(C) (42 U.S.C. 1395w-23(a)(3)(C)) is
amended--
(1) in clause (ii)--
(A) in subclause (I), by striking ``and 2001'' and
inserting ``and each succeeding year through 2003'' and by
striking ``and'' at the end; and
(B) by striking subclause (II) and inserting the following
new subclauses:
``(II) 30 percent of such capitation rate in 2004;
``(III) 50 percent of such capitation rate in 2005;
``(IV) 75 percent of such capitation rate in 2006; and
``(V) 100 percent of such capitation rate in 2007 and
succeeding years.''; and
(2) by adding at the end the following new clause:
``(iii) Data for risk adjustment methodology.--Such risk
adjustment methodology for 2004 and each succeeding year,
shall be based on data from inpatient hospital and ambulatory
settings.''.
SEC. 604. TRANSITION TO REVISED MEDICARE+CHOICE PAYMENT
RATES.
(a) Announcement of Revised Medicare+Choice Payment
Rates.--Within 2 weeks after the date of the enactment of
this Act, the Secretary of Health and Human Services shall
determine, and shall announce (in a manner intended to
provide notice to interested parties) Medicare+Choice
capitation rates under section 1853 of the Social Security
Act (42 U.S.C. 1395w-23) for 2001, revised in accordance with
the provisions of this Act.
[[Page H12370]]
(b) Reentry Into Program Permitted for Medicare+Choice
Programs.--A Medicare+Choice organization that provided
notice to the Secretary of Health and Human Services before
the date of the enactment of this Act that it was terminating
its contract under part C of title XVIII of the Social
Security Act or was reducing the service area of a
Medicare+Choice plan offered under such part shall be
permitted to continue participation under such part, or to
maintain the service area of such plan, for 2001 if it
submits the Secretary with the information described in
section 1854(a)(1) of the Social Security Act (42 U.S.C.
1395w-24(a)(1)) within 2 weeks after the date revised rates
are announced by the Secretary under subsection (a).
(c) Revised Submission of Proposed Premiums and Related
Information.--If--
(1) a Medicare+Choice organization provided notice to the
Secretary of Health and Human Services as of July 3, 2000,
that it was renewing its contract under part C of title XVIII
of the Social Security Act for all or part of the service
area or areas served under its current contract, and
(2) any part of the service area or areas addressed in such
notice includes a payment area for which the Medicare+Choice
capitation rate under section 1853(c) of such Act (42 U.S.C.
1395w-23(c)) for 2001, as determined under subsection (a), is
higher than the rate previously determined for such year,
such organization shall revise its submission of the
information described in section 1854(a)(1) of the Social
Security Act (42 U.S.C. 1395w-24(a)(1)), and shall submit
such revised information to the Secretary, within 2 weeks
after the date revised rates are announced by the Secretary
under subsection (a). In making such submission, the
organization may only reduce beneficiary premiums, reduce
beneficiary cost-sharing, enhance benefits, utilize the
stabilization fund described in section 1854(f)(2) of such
Act (42 U.S.C. 1395w-24(f)(2)), or stabilize or enhance
beneficiary access to providers (so long as such
stabilization or enhancement does not result in increased
beneficiary premiums, increased beneficiary cost-sharing, or
reduced benefits).
(d) Waiver of Limits on Stabilization Fund.--Any regulatory
provision that limits the proportion of the excess amount
that can be withheld in such stabilization fund for a
contract period shall not apply with respect to submissions
described in subsections (b) and (c).
(e) Disregard of New Rate Announcement in Applying Pass-
Through for New National Coverage Determinations.--For
purposes of applying section 1852(a)(5) of the Social
Security Act (42 U.S.C. 1395w-22(a)(5)), the announcement of
revised rates under subsection (a) shall not be treated as an
announcement under section 1853(b) of such Act (42 U.S.C.
1395w-23(b)).
SEC. 605. REVISION OF PAYMENT RATES FOR ESRD PATIENTS
ENROLLED IN MEDICARE+CHOICE PLANS.
(a) In General.--Section 1853(a)(1)(B) (42 U.S.C. 1395w-
23(a)(1)(B)) is amended by adding at the end the following:
``In establishing such rates, the Secretary shall provide for
appropriate adjustments to increase each rate to reflect the
demonstration rate (including the risk adjustment methodology
associated with such rate) of the social health maintenance
organization end-stage renal disease capitation
demonstrations (established by section 2355 of the Deficit
Reduction Act of 1984, as amended by section 13567(b) of the
Omnibus Budget Reconciliation Act of 1993), and shall compute
such rates by taking into account such factors as renal
treatment modality, age, and the underlying cause of the end-
stage renal disease.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to payments for months beginning with January
2002.
(c) Publication.--Not later than 6 months after the date of
the enactment of this Act, the Secretary of Health and Human
Services shall publish for public comment a description of
the appropriate adjustments described in the last sentence of
section 1853(a)(1)(B) of the Social Security Act (42 U.S.C.
1395w-23(a)(1)(B)), as added by subsection (a). The Secretary
shall publish such adjustments in final form by not later
than July 1, 2001, so that the amendment made by subsection
(a) is implemented on a timely basis consistent with
subsection (b).
SEC. 606. PERMITTING PREMIUM REDUCTIONS AS ADDITIONAL
BENEFITS UNDER MEDICARE+CHOICE PLANS.
(a) In General.--
(1) Authorization of part b premium reductions.--Section
1854(f)(1) (42 U.S.C. 1395w-24(f)(1)) is amended--
(A) by redesignating subparagraph (E) as subparagraph (F);
and
(B) by inserting after subparagraph (D) the following new
subparagraph:
``(E) Premium reductions.--
``(i) In general.--Subject to clause (ii), as part of
providing any additional benefits required under subparagraph
(A), a Medicare+Choice organization may elect a reduction in
its payments under section 1853(a)(1)(A) with respect to a
Medicare+Choice plan and the Secretary shall apply such
reduction to reduce the premium under section 1839 of each
enrollee in such plan as provided in section 1840(i).
``(ii) Amount of reduction.--The amount of the reduction
under clause (i) with respect to any enrollee in a
Medicare+Choice plan--
``(I) may not exceed 125 percent of the premium described
under section 1839(a)(3); and
``(II) shall apply uniformly to each enrollee of the
Medicare+Choice plan to which such reduction applies.''.
(2) Conforming amendments.--
(A) Adjustment of payments to medicare+choice
organizations.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-
23(a)(1)(A)) is amended by inserting ``reduced by the amount
of any reduction elected under section 1854(f)(1)(E) and''
after ``for that area,''.
(B) Adjustment and payment of part b premiums.--
(i) Adjustment of premiums.--Section 1839(a)(2) (42 U.S.C.
1395r(a)(2)) is amended by striking ``shall'' and all that
follows and inserting the following: ``shall be the amount
determined under paragraph (3), adjusted as required in
accordance with subsections (b), (c), and (f), and to reflect
80 percent of any reduction elected under section
1854(f)(1)(E).''.
(ii) Payment of premiums.--Section 1840 (42 U.S.C. 1395s)
is amended by adding at the end the following new subsection:
``(i) In the case of an individual enrolled in a
Medicare+Choice plan, the Secretary shall provide for
necessary adjustments of the monthly beneficiary premium to
reflect 80 percent of any reduction elected under section
1854(f)(1)(E). To the extent to which the Secretary
determines that such an adjustment is appropriate, with the
concurrence of any agency responsible for the administration
of such benefits, such premium adjustment may be provided
directly, as an adjustment to any social security, railroad
retirement, or civil service retirement benefits, or, in the
case of an individual who receives medical assistance under
title XIX for medicare costs described in section
1905(p)(3)(A)(ii), as an adjustment to the amount otherwise
owed by the State for such medical assistance.''.
(C) Information comparing plan premiums under part c.--
Section 1851(d)(4)(B) (42 U.S.C. 1395w-21(d)(4)(B)) is
amended--
(i) by striking ``Premiums.--The'' and inserting
``Premiums.--
``(i) In general.--The''; and
(ii) by adding at the end the following new clause:
``(ii) Reductions.--The reduction in part B premiums, if
any.''.
(D) Treatment of reduction for purposes of determining
government contribution under part b.--Section 1844 (42
U.S.C. 1395w) is amended by adding at the end the following
new subsection:
``(c) The Secretary shall determine the Government
contribution under subparagraphs (A) and (B) of subsection
(a)(1) without regard to any premium reduction resulting from
an election under section 1854(f)(1)(E).''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to years beginning with 2003.
SEC. 607. FULL IMPLEMENTATION OF RISK ADJUSTMENT FOR
CONGESTIVE HEART FAILURE ENROLLEES FOR 2001.
(a) In General.--Section 1853(a)(3)(C) (42 U.S.C. 1395w-
23(a)(3)(C)) is amended--
(1) in clause (ii), by striking ``Such risk adjustment''
and inserting ``Except as provided in clause (iii), such risk
adjustment''; and
(2) by adding at the end the following new clause:
``(iii) Full implementation of risk adjustment for
congestive heart failure enrollees for 2001.--
``(I) Exemption from phase-in.--Subject to subclause (II),
the Secretary shall fully implement the risk adjustment
methodology described in clause (i) with respect to each
individual who has had a qualifying congestive heart failure
inpatient diagnosis (as determined by the Secretary under
such risk adjustment methodology) during the period beginning
on July 1, 1999, and ending on June 30, 2000, and who is
enrolled in a coordinated care plan that is the only
coordinated care plan offered on January 1, 2001, in the
service area of the individual.
``(II) Period of application.--Subclause (I) shall only
apply during the 1-year period beginning on January 1,
2001.''.
(b) Exclusion From Determination of the Budget Neutrality
Factor.--Section 1853(c)(5) (42 U.S.C. 1395w-23(c)(5)) is
amended by striking ``subsection (i)'' and inserting
``subsections (a)(3)(C)(iii) and (i)''.
SEC. 608. EXPANSION OF APPLICATION OF MEDICARE+CHOICE NEW
ENTRY BONUS.
(a) In General.--Section 1853(i)(1) (42 U.S.C. 1395w-
23(i)(1)) is amended in the matter preceding subparagraph (A)
by inserting ``, or filed notice with the Secretary as of
October 3, 2000, that they will not be offering such a plan
as of January 1, 2001'' after ``January 1, 2000''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply as if included in the enactment of BBRA.
SEC. 609. REPORT ON INCLUSION OF CERTAIN COSTS OF THE
DEPARTMENT OF VETERANS AFFAIRS AND MILITARY
FACILITY SERVICES IN CALCULATING
MEDICARE+CHOICE PAYMENT RATES.
The Secretary of Health and Human Services shall report to
Congress by not later than January 1, 2003, on a method to
phase-in the costs of military facility services furnished by
the Department of Veterans Affairs, and the costs of military
facility services furnished by the Department of Defense, to
medicare-eligible beneficiaries in the calculation of an
area's Medicare+Choice capitation payment. Such report shall
include on a county-by-county basis--
(1) the actual or estimated cost of such services to
medicare-eligible beneficiaries;
(2) the change in Medicare+Choice capitation payment rates
if such costs are included in the calculation of payment
rates;
(3) one or more proposals for the implementation of payment
adjustments to Medicare+Choice plans in counties where the
payment rate has been affected due to the failure to
calculate the cost of such services to medicare-eligible
beneficiaries; and
(4) a system to ensure that when a Medicare+Choice enrollee
receives covered services through a facility of the
Department of Veterans Affairs or the Department of Defense
[[Page H12371]]
there is an appropriate payment recovery to the medicare
program under title XVIII of the Social Security Act.
Subtitle B--Other Medicare+Choice Reforms
SEC. 611. PAYMENT OF ADDITIONAL AMOUNTS FOR NEW BENEFITS
COVERED DURING A CONTRACT TERM.
(a) In General.--Section 1853(c)(7) (42 U.S.C. 1395w-
23(c)(7)) is amended to read as follows:
``(7) Adjustment for national coverage determinations and
legislative changes in benefits.--If the Secretary makes a
determination with respect to coverage under this title or
there is a change in benefits required to be provided under
this part that the Secretary projects will result in a
significant increase in the costs to Medicare+Choice of
providing benefits under contracts under this part (for
periods after any period described in section 1852(a)(5)),
the Secretary shall adjust appropriately the payments to such
organizations under this part. Such projection and adjustment
shall be based on an analysis by the Chief Actuary of the
Health Care Financing Administration of the actuarial costs
associated with the new benefits.''.
(b) Conforming Amendment.--Section 1852(a)(5) (42 U.S.C.
1395w-22(a)(5)) is amended--
(1) in the heading, by inserting ``and legislative changes
in benefits'' after ``National coverage determinations'';
(2) by inserting ``or legislative change in benefits
required to be provided under this part'' after ``national
coverage determination'';
(3) in subparagraph (A), by inserting ``or legislative
change in benefits'' after ``such determination'';
(4) in subparagraph (B), by inserting ``or legislative
change'' after ``if such coverage determination''; and
(5) by adding at the end the following:
``The projection under the previous sentence shall be based
on an analysis by the Chief Actuary of the Health Care
Financing Administration of the actuarial costs associated
with the coverage determination or legislative change in
benefits.''.
(c) Effective Date.--The amendments made by this section
are effective on the date of the enactment of this Act and
shall apply to national coverage determinations and
legislative changes in benefits occurring on or after such
date.
SEC. 612. RESTRICTION ON IMPLEMENTATION OF SIGNIFICANT NEW
REGULATORY REQUIREMENTS MIDYEAR.
(a) In General.--Section 1856(b) (42 U.S.C. 1395w-26(b)) is
amended by adding at the end the following new paragraph:
``(4) Prohibition of midyear implementation of significant
new regulatory requirements.--The Secretary may not
implement, other than at the beginning of a calendar year,
regulations under this section that impose new, significant
regulatory requirements on a Medicare+Choice organization or
plan.''.
(b) Effective Date.--The amendment made by subsection (a)
takes effect on the date of the enactment of this Act.
SEC. 613. TIMELY APPROVAL OF MARKETING MATERIAL THAT FOLLOWS
MODEL MARKETING LANGUAGE.
(a) In General.--Section 1851(h) (42 U.S.C. 1395w-21(h)) is
amended--
(1) in paragraph (1)(A), by inserting ``(or 10 days in the
case described in paragraph (5))'' after ``45 days''; and
(2) by adding at the end the following new paragraph:
``(5) Special treatment of marketing material following
model marketing language.--In the case of marketing material
of an organization that uses, without modification, proposed
model language specified by the Secretary, the period
specified in paragraph (1)(A) shall be reduced from 45 days
to 10 days.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to marketing material submitted on or after
January 1, 2001.
SEC. 614. AVOIDING DUPLICATIVE REGULATION.
(a) In General.--Section 1856(b)(3)(B) (42 U.S.C. 1395w-
26(b)(3)(B)) is amended--
(1) in clause (i), by inserting ``(including cost-sharing
requirements)'' after ``Benefit requirements''; and
(2) by adding at the end the following new clause:
``(iv) Requirements relating to marketing materials and
summaries and schedules of benefits regarding a
Medicare+Choice plan.''.
(b) Effective Date.--The amendments made by subsection (a)
take effect on the date of the enactment of this Act.
SEC. 615. ELECTION OF UNIFORM LOCAL COVERAGE POLICY FOR
MEDICARE+CHOICE PLAN COVERING MULTIPLE
LOCALITIES.
Section 1852(a)(2) (42 U.S.C. 1395w-22(a)(2)) is amended by
adding at the end the following new subparagraph:
``(C) Election of uniform coverage policy.--In the case of
a Medicare+Choice organization that offers a Medicare+Choice
plan in an area in which more than one local coverage policy
is applied with respect to different parts of the area, the
organization may elect to have the local coverage policy for
the part of the area that is most beneficial to
Medicare+Choice enrollees (as identified by the Secretary)
apply with respect to all Medicare+Choice enrollees enrolled
in the plan.''.
SEC. 616. ELIMINATING HEALTH DISPARITIES IN MEDICARE+CHOICE
PROGRAM.
(a) Quality Assurance Program Focus on Racial and Ethnic
Minorities.--Subparagraphs (A) and (B) of section 1852(e)(2)
(42 U.S.C. 1395w-22(e)(2)) are each amended by adding at the
end the following:
``Such program shall include a separate focus (with respect
to all the elements described in this subparagraph) on racial
and ethnic minorities.''.
(b) Report.--Section 1852(e) (42 U.S.C. 1395w-22(e)) is
amended by adding at the end the following new paragraph:
``(5) Report to congress.--
``(A) In general.--Not later than 2 years after the date of
the enactment of this paragraph, and biennially thereafter,
the Secretary shall submit to Congress a report regarding how
quality assurance programs conducted under this subsection
focus on racial and ethnic minorities.
``(B) Contents of report.--Each such report shall include
the following:
``(i) A description of the means by which such programs
focus on such racial and ethnic minorities.
``(ii) An evaluation of the impact of such programs on
eliminating health disparities and on improving health
outcomes, continuity and coordination of care, management of
chronic conditions, and consumer satisfaction.
``(iii) Recommendations on ways to reduce clinical outcome
disparities among racial and ethnic minorities.''.
SEC. 617. MEDICARE+CHOICE PROGRAM COMPATIBILITY WITH EMPLOYER
OR UNION GROUP HEALTH PLANS.
(a) In General.--Section 1857 (42 U.S.C. 1395w-27) is
amended by adding at the end the following new subsection:
``(i) Medicare+Choice Program Compatibility With Employer
or Union Group Health Plans.--To facilitate the offering of
Medicare+Choice plans under contracts between Medicare+Choice
organizations and employers, labor organizations, or the
trustees of a fund established by 1 or more employers or
labor organizations (or combination thereof) to furnish
benefits to the entity's employees, former employees (or
combination thereof) or members or former members (or
combination thereof) of the labor organizations, the
Secretary may waive or modify requirements that hinder the
design of, the offering of, or the enrollment in such
Medicare+Choice plans.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to years beginning with 2001.
SEC. 618. SPECIAL MEDIGAP ENROLLMENT ANTIDISCRIMINATION
PROVISION FOR CERTAIN BENEFICIARIES.
(a) Disenrollment Window in Accordance With Beneficiary's
Circumstance.--Section 1882(s)(3) (42 U.S.C. 1395ss(s)(3)) is
amended--
(1) in subparagraph (A), in the matter following clause
(iii), by striking ``, subject to subparagraph (E), seeks to
enroll under the policy not later than 63 days after the date
of the termination of enrollment described in such
subparagraph'' and inserting ``seeks to enroll under the
policy during the period specified in subparagraph (E)''; and
(2) by striking subparagraph (E) and inserting the
following new subparagraph:
``(E) For purposes of subparagraph (A), the time period
specified in this subparagraph is--
``(i) in the case of an individual described in
subparagraph (B)(i), the period beginning on the date the
individual receives a notice of termination or cessation of
all supplemental health benefits (or, if no such notice is
received, notice that a claim has been denied because of such
a termination or cessation) and ending on the date that is 63
days after the applicable notice;
``(ii) in the case of an individual described in clause
(ii), (iii), (v), or (vi) of subparagraph (B) whose
enrollment is terminated involuntarily, the period beginning
on the date that the individual receives a notice of
termination and ending on the date that is 63 days after the
date the applicable coverage is terminated;
``(iii) in the case of an individual described in
subparagraph (B)(iv)(I), the period beginning on the earlier
of (I) the date that the individual receives a notice of
termination, a notice of the issuer's bankruptcy or
insolvency, or other such similar notice, if any, and (II)
the date that the applicable coverage is terminated, and
ending on the date that is 63 days after the date the
coverage is terminated;
``(iv) in the case of an individual described in clause
(ii), (iii), (iv)(II), (iv)(III), (v), or (vi) of
subparagraph (B) who disenrolls voluntarily, the period
beginning on the date that is 60 days before the effective
date of the disenrollment and ending on the date that is 63
days after such effective date; and
``(v) in the case of an individual described in
subparagraph (B) but not described in the preceding
provisions of this subparagraph, the period beginning on the
effective date of the disenrollment and ending on the date
that is 63 days after such effective date.''.
(b) Extended Medigap Access for Interrupted Trial
Periods.--Section 1882(s)(3) (42 U.S.C. 1395ss(s)(3)), as
amended by subsection (a), is further amended by adding at
the end the following new subparagraph:
``(F)(i) Subject to clause (ii), for purposes of this
paragraph--
``(I) in the case of an individual described in
subparagraph (B)(v) (or deemed to be so described, pursuant
to this subparagraph) whose enrollment with an organization
or provider described in subclause (II) of such subparagraph
is involuntarily terminated within the first 12 months of
such enrollment, and who, without an intervening enrollment,
enrolls with another such organization or provider, such
subsequent enrollment shall be deemed to be an initial
enrollment described in such subparagraph; and
``(II) in the case of an individual described in clause
(vi) of subparagraph (B) (or deemed to be so described,
pursuant to this subparagraph) whose enrollment with a plan
or in a program described in such clause is involuntarily
terminated within the first 12 months of such enrollment, and
who, without an intervening enrollment, enrolls in another
such plan or program, such subsequent enrollment shall be
deemed to be an initial enrollment described in such clause.
[[Page H12372]]
``(ii) For purposes of clauses (v) and (vi) of subparagraph
(B), no enrollment of an individual with an organization or
provider described in clause (v)(II), or with a plan or in a
program described in clause (vi), may be deemed to be an
initial enrollment under this clause after the 2-year period
beginning on the date on which the individual first enrolled
with such an organization, provider, plan, or program.''.
SEC. 619. RESTORING EFFECTIVE DATE OF ELECTIONS AND CHANGES
OF ELECTIONS OF MEDICARE+CHOICE PLANS.
(a) Open Enrollment.--Section 1851(f)(2) (42 U.S.C. 1395w-
21(f)(2)) is amended by striking ``, except that if such
election or change is made after the 10th day of any calendar
month, then the election or change shall not take effect
until the first day of the second calendar month following
the date on which the election or change is made''.
(b) Effective Date.--The amendment made by this section
shall apply to elections and changes of coverage made on or
after June 1, 2001.
SEC. 620. PERMITTING ESRD BENEFICIARIES TO ENROLL IN ANOTHER
MEDICARE+CHOICE PLAN IF THE PLAN IN WHICH THEY
ARE ENROLLED IS TERMINATED.
(a) In General.--Section 1851(a)(3)(B) (42 U.S.C. 1395w-
21(a)(3)(B)) is amended by striking ``except that'' and all
that follows and inserting the following: ``except that--
``(i) an individual who develops end-stage renal disease
while enrolled in a Medicare+Choice plan may continue to be
enrolled in that plan; and
``(ii) in the case of such an individual who is enrolled in
a Medicare+Choice plan under clause (i) (or subsequently
under this clause), if the enrollment is discontinued under
circumstances described in section 1851(e)(4)(A), then the
individual will be treated as a `Medicare+Choice eligible
individual' for purposes of electing to continue enrollment
in another Medicare+Choice plan.''.
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
apply to terminations and discontinuations occurring on or
after the date of the enactment of this Act.
(2) Application to prior plan terminations.--Clause (ii) of
section 1851(a)(3)(B) of the Social Security Act (as inserted
by subsection (a)) shall also apply to individuals whose
enrollment in a Medicare+Choice plan was terminated or
discontinued after December 31, 1998, and before the date of
the enactment of this Act. In applying this paragraph, such
an individual shall be treated, for purposes of part C of
title XVIII of the Social Security Act, as having
discontinued enrollment in such a plan as of the date of the
enactment of this Act.
SEC. 621. PROVIDING CHOICE FOR SKILLED NURSING FACILITY
SERVICES UNDER THE MEDICARE+CHOICE PROGRAM.
(a) In General.--Section 1852 (42 U.S.C. 1395w-22) is
amended by adding at the end the following new subsection:
``(l) Return to Home Skilled Nursing Facilities for Covered
Post-Hospital Extended Care Services.--
``(1) Ensuring return to home snf.--
``(A) In general.--In providing coverage of post-hospital
extended care services, a Medicare+Choice plan shall provide
for such coverage through a home skilled nursing facility if
the following conditions are met:
``(i) Enrollee election.--The enrollee elects to receive
such coverage through such facility.
``(ii) SNF agreement.--The facility has a contract with the
Medicare+Choice organization for the provision of such
services, or the facility agrees to accept substantially
similar payment under the same terms and conditions that
apply to similarly situated skilled nursing facilities that
are under contract with the Medicare+Choice organization
for the provision of such services and through which the
enrollee would otherwise receive such services.
``(B) Manner of payment to home snf.--The organization
shall provide payment to the home skilled nursing facility
consistent with the contract or the agreement described in
subparagraph (A)(ii), as the case may be.
``(2) No less favorable coverage.--The coverage provided
under paragraph (1) (including scope of services, cost-
sharing, and other criteria of coverage) shall be no less
favorable to the enrollee than the coverage that would be
provided to the enrollee with respect to a skilled nursing
facility the post-hospital extended care services of which
are otherwise covered under the Medicare+Choice plan.
``(3) Rule of construction.--Nothing in this subsection
shall be construed to do the following:
``(A) To require coverage through a skilled nursing
facility that is not otherwise qualified to provide benefits
under part A for medicare beneficiaries not enrolled in a
Medicare+Choice plan.
``(B) To prevent a skilled nursing facility from refusing
to accept, or imposing conditions upon the acceptance of, an
enrollee for the receipt of post-hospital extended care
services.
``(4) Definitions.--In this subsection:
``(A) Home skilled nursing facility.--The term `home
skilled nursing facility' means, with respect to an enrollee
who is entitled to receive post-hospital extended care
services under a Medicare+Choice plan, any of the following
skilled nursing facilities:
``(i) SNF residence at time of admission.--The skilled
nursing facility in which the enrollee resided at the time of
admission to the hospital preceding the receipt of such post-
hospital extended care services.
``(ii) SNF in continuing care retirement community.--A
skilled nursing facility that is providing such services
through a continuing care retirement community (as defined in
subparagraph (B)) which provided residence to the enrollee at
the time of such admission.
``(iii) SNF residence of spouse at time of discharge.--The
skilled nursing facility in which the spouse of the enrollee
is residing at the time of discharge from such hospital.
``(B) Continuing care retirement community.--The term
`continuing care retirement community' means, with respect to
an enrollee in a Medicare+Choice plan, an arrangement under
which housing and health-related services are provided (or
arranged) through an organization for the enrollee under an
agreement that is effective for the life of the enrollee or
for a specified period.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to contracts entered into or renewed
on or after the date of the enactment of this Act.
(c) MedPAC Study.--
(1) Study.--The Medicare Payment Advisory Commission shall
conduct a study analyzing the effects of the amendment made
by subsection (a) on Medicare+Choice organizations. In
conducting such study, the Commission shall examine the
effects (if any) such amendment has had--
(A) on the scope of additional benefits provided under the
Medicare+Choice program;
(B) on the administrative and other costs incurred by
Medicare+Choice organizations; and
(C) on the contractual relationships between such
organizations and skilled nursing facilities.
(2) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under paragraph (1).
SEC. 622. PROVIDING FOR ACCOUNTABILITY OF MEDICARE+CHOICE
PLANS.
(a) Mandatory Review of ACR Submissions by the Chief
Actuary of the Health Care Financing Administration.--Section
1854(a)(5)(A) (42 U.S.C. 1395w-24(a)(5)(A)) is amended--
(1) by striking ``value'' and inserting ``values''; and
(2) by adding at the end the following: ``The Chief Actuary
of the Health Care Financing Administration shall review the
actuarial assumptions and data used by the Medicare+Choice
organization with respect to such rates, amounts, and values
so submitted to determine the appropriateness of such
assumptions and data.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to submissions made on or after May 1, 2001.
SEC. 623. INCREASED CIVIL MONEY PENALTY FOR MEDICARE+CHOICE
ORGANIZATIONS THAT TERMINATE CONTRACTS MID-
YEAR.
(a) In General.--Section 1857(g)(3) (42 U.S.C. 1395w-
27(g)(3)) is amended by adding at the end the following new
subparagraph:
``(D) Civil monetary penalties of not more than $100,000,
or such higher amount as the Secretary may establish by
regulation, where the finding under subsection (c)(2)(A) is
based on the organization's termination of its contract under
this section other than at a time and in a manner provided
for under subsection (a).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to terminations occurring after the date of the
enactment of this Act.
Subtitle C--Other Managed Care Reforms
SEC. 631. 1-YEAR EXTENSION OF SOCIAL HEALTH MAINTENANCE
ORGANIZATION (SHMO) DEMONSTRATION PROJECT.
Section 4018(b)(1) of the Omnibus Budget Reconciliation Act
of 1987, as amended by section 531(a)(1) of BBRA (113 Stat.
1501A-388), is amended by striking ``18 months'' and
inserting ``30 months''.
SEC. 632. REVISED TERMS AND CONDITIONS FOR EXTENSION OF
MEDICARE COMMUNITY NURSING ORGANIZATION (CNO)
DEMONSTRATION PROJECT.
(a) In General.--Section 532 of BBRA (113 Stat. 1501A-388)
is amended--
(1) in subsection (a), by striking the second sentence; and
(2) by striking subsection (b) and inserting the following
new subsection:
``(b) Terms and Conditions.--
``(1) January through september 2000.--For the 9-month
period beginning with January 2000, any such demonstration
project shall be conducted under the same terms and
conditions as applied to such demonstration during 1999.
``(2) October 2000 through december 2001.--For the 15-month
period beginning with October 2000, any such demonstration
project shall be conducted under the same terms and
conditions as applied to such demonstration during 1999,
except that the following modifications shall apply:
``(A) Basic capitation rate.--The basic capitation rate
paid for services covered under the project (other than case
management services) per enrollee per month and furnished
during--
``(i) the period beginning with October 1, 2000, and ending
with December 31, 2000, shall be determined by actuarially
adjusting the actual capitation rate paid for such
services in 1999 for inflation, utilization, and other
changes to the CNO service package, and by reducing such
adjusted capitation rate by 10 percent in the case of the
demonstration sites located in Arizona, Minnesota, and
Illinois, and 15 percent for the demonstration site
located in New York; and
``(ii) 2001 shall be determined by actuarially adjusting
the capitation rate determined under clause (i) for
inflation, utilization, and other changes to the CNO service
package.
``(B) Targeted case management fee.--Effective October 1,
2000--
``(i) the case management fee per enrollee per month for--
``(I) the period described in subparagraph (A)(i) shall be
determined by actuarially adjusting the case management fee
for 1999 for inflation; and
[[Page H12373]]
``(II) 2001 shall be determined by actuarially adjusting
the amount determined under subclause (I) for inflation; and
``(ii) such case management fee shall be paid only for
enrollees who are classified as moderately frail or frail
pursuant to criteria established by the Secretary.
``(C) Greater uniformity in clinical features among
sites.--Each project shall implement for each site--
``(i) protocols for periodic telephonic contact with
enrollees based on--
``(I) the results of such standardized written health
assessment; and
``(II) the application of appropriate care planning
approaches;
``(ii) disease management programs for targeted diseases
(such as congestive heart failure, arthritis, diabetes, and
hypertension) that are highly prevalent in the enrolled
populations;
``(iii) systems and protocols to track enrollees through
hospitalizations, including pre-admission planning,
concurrent management during inpatient hospital stays, and
post-discharge assessment, planning, and follow-up; and
``(iv) standardized patient educational materials for
specified diseases and health conditions.
``(D) Quality improvement.--Each project shall implement at
each site once during the 15-month period--
``(i) enrollee satisfaction surveys; and
``(ii) reporting on specified quality indicators for the
enrolled population.
``(c) Evaluation.--
``(1) Preliminary report.--Not later than July 1, 2001, the
Secretary of Health and Human Services shall submit to the
Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate a
preliminary report that--
``(A) evaluates such demonstration projects for the period
beginning July 1, 1997, and ending December 31, 1999, on a
site-specific basis with respect to the impact on per
beneficiary spending, specific health utilization measures,
and enrollee satisfaction; and
``(B) includes a similar evaluation of such projects for
the portion of the extension period that occurs after
September 30, 2000.
``(2) Final report.--The Secretary shall submit a final
report to such Committees on such demonstration projects not
later than July 1, 2002. Such report shall include the same
elements as the preliminary report required by paragraph (1),
but for the period after December 31, 1999.
``(3) Methodology for spending comparisons.--Any evaluation
of the impact of the demonstration projects on per
beneficiary spending included in such reports shall include a
comparison of--
``(A) data for all individuals who--
``(i) were enrolled in such demonstration projects as of
the first day of the period under evaluation; and
``(ii) were enrolled for a minimum of 6 months thereafter;
with
``(B) data for a matched sample of individuals who are
enrolled under part B of title XVIII of the Social Security
Act and are not enrolled in such a project, or in a
Medicare+Choice plan under part C of such title, a plan
offered by an eligible organization under section 1876 of
such Act, or a health care prepayment plan under section
1833(a)(1)(A) of such Act.''.
(b) Effective Date.--The amendments made by subsection (a)
shall be effective as if included in the enactment of section
532 of BBRA (113 Stat. 1501A-388).
SEC. 633. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES
DEMONSTRATION PROJECTS.
Section 9215(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (42 U.S.C. 1395b-1 note), as
amended by section 6135 of the Omnibus Budget Reconciliation
Act of 1989, section 13557 of the Omnibus Budget
Reconciliation Act of 1993, section 4017 of BBA, and section
534 of BBRA (113 Stat. 1501A-390), is amended by striking
``December 31, 2002'' and inserting ``December 31, 2004''.
SEC. 634. SERVICE AREA EXPANSION FOR MEDICARE COST CONTRACTS
DURING TRANSITION PERIOD.
Section 1876(h)(5) (42 U.S.C. 1395mm(h)(5)) is amended--
(1) by redesignating subparagraph (B) as subparagraph (C);
and
(2) by inserting after subparagraph (A), the following new
subparagraph:
``(B) Subject to subparagraph (C), the Secretary shall
approve an application for a modification to a reasonable
cost contract under this section in order to expand the
service area of such contract if--
``(i) such application is submitted to the Secretary on or
before September 1, 2003; and
``(ii) the Secretary determines that the organization with
the contract continues to meet the requirements applicable to
such organizations and contracts under this section.''.
TITLE VII--MEDICAID
SEC. 701. DSH PAYMENTS.
(a) Modifications to DSH Allotments.--
(1) Increased allotments for fiscal years 2001 and 2002.--
(A) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is
amended--
(i) in paragraph (2), by striking ``The DSH allotment'' and
inserting ``Subject to paragraph (4), the DSH allotment'';
(ii) by redesignating paragraph (4) as paragraph (6); and
(iii) by inserting after paragraph (3) the following new
paragraph:
``(4) Special rule for fiscal years 2001 and 2002.--
``(A) In general.--Notwithstanding paragraph (2), the DSH
allotment for any State for--
``(i) fiscal year 2001, shall be the DSH allotment
determined under paragraph (2) for fiscal year 2000
increased, subject to subparagraph (B) and paragraph (5), by
the percentage change in the consumer price index for all
urban consumers (all items; U.S. city average) for fiscal
year 2000; and
``(ii) fiscal year 2002, shall be the DSH allotment
determined under clause (i) increased, subject to
subparagraph (B) and paragraph (5), by the percentage change
in the consumer price index for all urban consumers (all
items; U.S. city average) for fiscal year 2001.
``(B) Limitation.--Subparagraph (B) of paragraph (3) shall
apply to subparagraph (A) of this paragraph in the same
manner as that subparagraph (B) applies to paragraph (3)(A).
``(C) No application to allotments after fiscal year
2002.--The DSH allotment for any State for fiscal year 2003
or any succeeding fiscal year shall be determined under
paragraph (3) without regard to the DSH allotments determined
under subparagraph (A) of this paragraph.''.
(2) Special rule for medicaid dsh allotment for extremely
low dsh states.--
(A) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)), as
amended by paragraph (1), is amended by inserting after
paragraph (4) the following new paragraph:
``(5) Special rule for extremely low dsh states.--In the
case of a State in which the total expenditures under the
State plan (including Federal and State shares) for
disproportionate share hospital adjustments under this
section for fiscal year 1999, as reported to the
Administrator of the Health Care Financing Administration as
of August 31, 2000, is greater than 0 but less than 1 percent
of the State's total amount of expenditures under the State
plan for medical assistance during the fiscal year, the DSH
allotment for fiscal year 2001 shall be increased to 1
percent of the State's total amount of expenditures under
such plan for such assistance during such fiscal year. In
subsequent fiscal years, such increased allotment is subject
to an increase for inflation as provided in paragraph
(3)(A).''.
(B) Conforming amendment.--Section 1923(f)(3)(A) (42 U.S.C.
1396r-4(f)(3)(A)) is amended by inserting ``and paragraph
(5)'' after ``subparagraph (B)''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) take effect on the date the final regulation required
under section 705(a) (relating to the application of an
aggregate upper payment limit test for State medicaid
spending for inpatient hospital services, outpatient hospital
services, nursing facility services, intermediate care
facility services for the mentally retarded, and clinic
services provided by government facilities that are not
State-owned or operated facilities) is published in the
Federal Register.
(b) Assuring Identification of Medicaid Managed Care
Patients.--
(1) In general.--Section 1932 (42 U.S.C. 1396u-2) is
amended by adding at the end the following new subsection:
``(g) Identification of Patients for Purposes of Making DSH
Payments.--Each contract with a managed care entity under
section 1903(m) or under section 1905(t)(3) shall require the
entity either--
``(1) to report to the State information necessary to
determine the hospital services provided under the contract
(and the identity of hospitals providing such services) for
purposes of applying sections 1886(d)(5)(F) and 1923; or
``(2) to include a sponsorship code in the identification
card issued to individuals covered under this title in order
that a hospital may identify a patient as being entitled to
benefits under this title.''.
(2) Clarification of counting managed care medicaid
patients.--Section 1923 (42 U.S.C. 1396r-4) is amended--
(A) in subsection (a)(2)(D), by inserting after ``the
proportion of low-income and medicaid patients'' the
following: ``(including such patients who receive benefits
through a managed care entity)'';
(B) in subsection (b)(2), by inserting after ``a State plan
approved under this title in a period'' the following:
``(regardless of whether such patients receive medical
assistance on a fee-for-service basis or through a managed
care entity)''; and
(C) in subsection (b)(3)(A)(i), by inserting after ``under
a State plan under this title'' the following: ``(regardless
of whether the services were furnished on a fee-for-service
basis or through a managed care entity)''.
(3) Effective dates.--
(A) The amendment made by paragraph (1) shall apply to
contracts as of January 1, 2001.
(B) The amendments made by paragraph (2) shall apply to
payments made on or after January 1, 2001.
(c) Application of Medicaid DSH Transition Rule to Public
Hospitals in All States.--
(1) In general.--During the period described in paragraph
(3), with respect to a State, section 4721(e) of the Balanced
Budget Act of 1997 (Public Law 105-33; 111 Stat. 514), as
amended by section 607 of BBRA (113 Stat. 1501A-396), shall
be applied as though--
(A) ``September 30, 2002'' were substituted for ``July 1,
1997'' each place it appears;
(B) ``hospitals owned or operated by a State (as defined
for purposes of title XIX of such Act), or by an
instrumentality or a unit of government within a State (as so
defined)'' were substituted for ``the State of California'';
(C) paragraph (3) were redesignated as paragraph (4);
(D) ``and'' were omitted from the end of paragraph (2); and
(E) the following new paragraph were inserted after
paragraph (2):
[[Page H12374]]
``(3) `(as defined in subparagraph (B) but without regard
to clause (ii) of that subparagraph and subject to subsection
(d))' were substituted for `(as defined in subparagraph (B))'
in subparagraph (A) of such section; and''.
(2) Special rule.--With respect to California, section
4721(e) of the Balanced Budget Act of 1997 (Public Law 105-
33; 111 Stat. 514), as so amended, shall be applied without
regard to paragraph (1).
(3) Period described.--The period described in this
paragraph is the period that begins, with respect to a State,
on the first day of the first State fiscal year that begins
after September 30, 2002, and ends on the last day of the
succeeding State fiscal year.
(4) Application to waivers.--With respect to a State
operating under a waiver of the requirements of title XIX of
the Social Security Act (42 U.S.C. 1396 et seq.) under
section 1115 of such Act (42 U.S.C. 1315), the amount by
which any payment adjustment made by the State under title
XIX of such Act (42 U.S.C. 1396 et seq.), after the
application of section 4721(e) of the Balanced Budget Act of
1997 under paragraph (1) to such State, exceeds the costs of
furnishing hospital services provided by hospitals described
in such section shall be fully reflected as an increase in
the baseline expenditure limit for such waiver.
(d) Assistance for Certain Public Hospitals.--
(1) In general.--Beginning with fiscal year 2002,
notwithstanding section 1923(f) of the Social Security Act
(42 U.S.C. 1396r-4(f)) and subject to paragraph (3), with
respect to a State, payment adjustments made under title XIX
of the Social Security Act (42 U.S.C. 1396 et seq.) to a
hospital described in paragraph (2) shall be made without
regard to the DSH allotment limitation for the State
determined under section 1923(f) of that Act (42 U.S.C.
1396r-4(f)).
(2) Hospital described.--A hospital is described in this
paragraph if the hospital--
(A) is owned or operated by a State (as defined for
purposes of title XIX of the Social Security Act), or by an
instrumentality or a unit of government within a State (as so
defined);
(B) as of October 1, 2000--
(i) is in existence and operating as a hospital described
in subparagraph (A); and
(ii) is not receiving disproportionate share hospital
payments from the State in which it is located under title
XIX of such Act; and
(C) has a low-income utilization rate (as defined in
section 1923(b)(3) of the Social Security Act (42 U.S.C.
1396r-4(b)(3))) in excess of 65 percent.
(3) Limitation on expenditures.--
(A) In general.--With respect to any fiscal year, the
aggregate amount of Federal financial participation that may
be provided for payment adjustments described in paragraph
(1) for that fiscal year for all States may not exceed the
amount described in subparagraph (B) for the fiscal year.
(B) Amount described.--The amount described in this
subparagraph for a fiscal year is as follows:
(i) For fiscal year 2002, $15,000,000.
(ii) For fiscal year 2003, $176,000,000.
(iii) For fiscal year 2004, $269,000,000.
(iv) For fiscal year 2005, $330,000,000.
(v) For fiscal year 2006 and each fiscal year thereafter,
$375,000,000.
(e) DSH Payment Accountability Standards.--Not later than
September 30, 2002, the Secretary of Health and Human
Services shall implement accountability standards to ensure
that Federal funds provided with respect to disproportionate
share hospital adjustments made under section 1923 of the
Social Security Act (42 U.S.C. 1396r-4) are used to reimburse
States and hospitals eligible for such payment adjustments
for providing uncompensated health care to low-income
patients and are otherwise made in accordance with the
requirements of section 1923 of that Act.
SEC. 702. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-
QUALIFIED HEALTH CENTERS AND RURAL HEALTH
CLINICS.
(a) In General.--Section 1902(a) (42 U.S.C. 1396a(a)) is
amended--
(1) in paragraph (13)--
(A) in subparagraph (A), by adding ``and'' at the end;
(B) in subparagraph (B), by striking ``and'' at the end;
and
(C) by striking subparagraph (C); and
(2) by inserting after paragraph (14) the following new
paragraph:
``(15) provide for payment for services described in clause
(B) or (C) of section 1905(a)(2) under the plan in accordance
with subsection (aa);''.
(b) New Prospective Payment System.--Section 1902 (42
U.S.C. 1396a) is amended by adding at the end the following:
``(aa) Payment for Services Provided by Federally-Qualified
Health Centers and Rural Health Clinics.--
``(1) In general.--Beginning with fiscal year 2001 with
respect to services furnished on or after January 1, 2001,
and each succeeding fiscal year, the State plan shall provide
for payment for services described in section 1905(a)(2)(C)
furnished by a Federally-qualified health center and services
described in section 1905(a)(2)(B) furnished by a rural
health clinic in accordance with the provisions of this
subsection.
``(2) Fiscal year 2001.--Subject to paragraph (4), for
services furnished on and after January 1, 2001, during
fiscal year 2001, the State plan shall provide for payment
for such services in an amount (calculated on a per visit
basis) that is equal to 100 percent of the average of the
costs of the center or clinic of furnishing such services
during fiscal years 1999 and 2000 which are reasonable and
related to the cost of furnishing such services, or based on
such other tests of reasonableness as the Secretary
prescribes in regulations under section 1833(a)(3), or, in
the case of services to which such regulations do not apply,
the same methodology used under section 1833(a)(3), adjusted
to take into account any increase or decrease in the scope of
such services furnished by the center or clinic during fiscal
year 2001.
``(3) Fiscal year 2002 and succeeding fiscal years.--
Subject to paragraph (4), for services furnished during
fiscal year 2002 or a succeeding fiscal year, the State plan
shall provide for payment for such services in an amount
(calculated on a per visit basis) that is equal to the amount
calculated for such services under this subsection for the
preceding fiscal year--
``(A) increased by the percentage increase in the MEI (as
defined in section 1842(i)(3)) applicable to primary care
services (as defined in section 1842(i)(4)) for that fiscal
year; and
``(B) adjusted to take into account any increase or
decrease in the scope of such services furnished by the
center or clinic during that fiscal year.
``(4) Establishment of initial year payment amount for new
centers or clinics.--In any case in which an entity first
qualifies as a Federally-qualified health center or rural
health clinic after fiscal year 2000, the State plan shall
provide for payment for services described in section
1905(a)(2)(C) furnished by the center or services described
in section 1905(a)(2)(B) furnished by the clinic in the first
fiscal year in which the center or clinic so qualifies in an
amount (calculated on a per visit basis) that is equal to 100
percent of the costs of furnishing such services during such
fiscal year based on the rates established under this
subsection for the fiscal year for other such centers or
clinics located in the same or adjacent area with a similar
case load or, in the absence of such a center or clinic, in
accordance with the regulations and methodology referred to
in paragraph (2) or based on such other tests of
reasonableness as the Secretary may specify. For each fiscal
year following the fiscal year in which the entity first
qualifies as a Federally-qualified health center or rural
health clinic, the State plan shall provide for the payment
amount to be calculated in accordance with paragraph (3).
``(5) Administration in the case of managed care.--
``(A) In general.--In the case of services furnished by a
Federally-qualified health center or rural health clinic
pursuant to a contract between the center or clinic and a
managed care entity (as defined in section 1932(a)(1)(B)),
the State plan shall provide for payment to the center or
clinic by the State of a supplemental payment equal to the
amount (if any) by which the amount determined under
paragraphs (2), (3), and (4) of this subsection exceeds the
amount of the payments provided under the contract.
``(B) Payment schedule.--The supplemental payment required
under subparagraph (A) shall be made pursuant to a payment
schedule agreed to by the State and the Federally-qualified
health center or rural health clinic, but in no case less
frequently than every 4 months.
``(6) Alternative payment methodologies.--Notwithstanding
any other provision of this section, the State plan may
provide for payment in any fiscal year to a Federally-
qualified health center for services described in section
1905(a)(2)(C) or to a rural health clinic for services
described in section 1905(a)(2)(B) in an amount which is
determined under an alternative payment methodology that--
``(A) is agreed to by the State and the center or clinic;
and
``(B) results in payment to the center or clinic of an
amount which is at least equal to the amount otherwise
required to be paid to the center or clinic under this
section.''.
(c) Conforming Amendments.--
(1) Section 4712 of the BBA (Public Law 105-33; 111 Stat.
508) is amended by striking subsection (c).
(2) Section 1915(b) (42 U.S.C. 1396n(b)) is amended by
striking ``1902(a)(13)(C)'' and inserting ``1902(a)(15),
1902(aa),''.
(d) GAO Study of Future Rebasing.--The Comptroller General
of the United States shall provide for a study on the need
for, and how to, rebase or refine costs for making payment
under the medicaid program for services provided by
Federally-qualified health centers and rural health clinics
(as provided under the amendments made by this section). The
Comptroller General shall provide for submittal of a report
on such study to Congress by not later than 4 years after the
date of the enactment of this Act.
(e) Effective Date.--The amendments made by this section
take effect on January 1, 2001, and shall apply to services
furnished on or after such date.
SEC. 703. STREAMLINED APPROVAL OF CONTINUED STATE-WIDE
SECTION 1115 MEDICAID WAIVERS.
(a) In General.--Section 1115 (42 U.S.C. 1315) is amended
by adding at the end the following new subsection:
``(f) An application by the chief executive officer of a
State for an extension of a waiver project the State is
operating under an extension under subsection (e) (in this
subsection referred to as the `waiver project') shall be
submitted and approved or disapproved in accordance with the
following:
``(1) The application for an extension of the waiver
project shall be submitted to the Secretary at least 120 days
prior to the expiration of the current period of the waiver
project.
``(2) Not later than 45 days after the date such
application is received by the Secretary, the Secretary shall
notify the State if the Secretary intends to review the terms
and conditions of the waiver project. A failure to provide
such notification shall be deemed to be an approval of the
application.
[[Page H12375]]
``(3) Not later than 45 days after the date a notification
is made in accordance with paragraph (2), the Secretary shall
inform the State of proposed changes in the terms and
conditions of the waiver project. A failure to provide such
information shall be deemed to be an approval of the
application.
``(4) During the 30-day period that begins on the date
information described in paragraph (3) is provided to a
State, the Secretary shall negotiate revised terms and
conditions of the waiver project with the State.
``(5)(A) Not later than 120 days after the date an
application for an extension of the waiver project is
submitted to the Secretary (or such later date agreed to by
the chief executive officer of the State), the Secretary
shall--
``(i) approve the application subject to such modifications
in the terms and conditions--
``(I) as have been agreed to by the Secretary and the
State; or
``(II) in the absence of such agreement, as are determined
by the Secretary to be reasonable, consistent with the
overall objectives of the waiver project, and not in
violation of applicable law; or
``(ii) disapprove the application.
``(B) A failure by the Secretary to approve or disapprove
an application submitted under this subsection in accordance
with the requirements of subparagraph (A) shall be deemed to
be an approval of the application subject to such
modifications in the terms and conditions as have been agreed
to (if any) by the Secretary and the State.
``(6) An approval of an application for an extension of a
waiver project under this subsection shall be for a period
not to exceed 3 years.
``(7) An extension of a waiver project under this
subsection shall be subject to the final reporting and
evaluation requirements of paragraphs (4) and (5) of
subsection (e) (taking into account the extension under this
subsection with respect to any timing requirements imposed
under those paragraphs).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to requests for extensions of demonstration
projects pending or submitted on or after the date of the
enactment of this Act.
SEC. 704. MEDICAID COUNTY-ORGANIZED HEALTH SYSTEMS.
(a) In General.--Section 9517(c)(3)(C) of the Comprehensive
Omnibus Budget Reconciliation Act of 1985 is amended by
striking ``10 percent'' and inserting ``14 percent''.
(b) Effective Date.--The amendment made by subsection (a)
takes effect on the date of the enactment of this Act.
SEC. 705. DEADLINE FOR ISSUANCE OF FINAL REGULATION RELATING
TO MEDICAID UPPER PAYMENT LIMITS.
(a) In General.--Not later than December 31, 2000, the
Secretary of Health and Human Services (in this section
referred to as the ``Secretary''), notwithstanding any
requirement of the Administrative Procedures Act under
chapter 5 of title 5, United States Code, or any other
provision of law, shall issue under sections 447.272,
447.304, and 447.321 of title 42, Code of Federal Regulations
(and any other section of part 447 of title 42, Code of
Federal Regulations that the Secretary determines is
appropriate), a final regulation based on the proposed rule
announced on October 5, 2000, that--
(1) modifies the upper payment limit test applied to State
medicaid spending for inpatient hospital services, outpatient
hospital services, nursing facility services, intermediate
care facility services for the mentally retarded, and clinic
services by applying an aggregate upper payment limit to
payments made to government facilities that are not State-
owned or operated facilities; and
(2) provides for a transition period in accordance with
subsection (b).
(b) Transition Period.--
(1) In general.--The final regulation required under
subsection (a) shall provide that, with respect to a State
described in paragraph (3), the State shall be considered to
be in compliance with the final regulation required under
subsection (a) so long as, for each State fiscal year during
the period described in paragraph (4), the State reduces
payments under a State medicaid plan payment provision or
methodology described in paragraph (3) (including a payment
provision or methodology described in that paragraph that was
approved under a waiver of such plan), or reduces the actual
dollar payment levels described in paragraph (3)(B), so that
the amount of the payments that would otherwise have been
made under such provision, methodology, or payment levels by
the State for any State fiscal year during such period is
reduced by 15 percent in the first such State fiscal year,
and by an additional 15 percent in each of the next 5 State
fiscal years.
(2) Requirement.--Notwithstanding paragraph (1), the final
regulation required under subsection (a) shall provide that,
for any period (or portion of a period) that occurs on or
after October 1, 2008, medicaid payments made by a State
described in paragraph (3) shall comply with such final
regulation.
(3) State described.--A State described in this paragraph
is a State with a State medicaid plan payment provision or
methodology (including a payment provision or methodology
approved under a waiver of such plan) which--
(A) was approved, deemed to have been approved, or was in
effect on or before October 1, 1992 (including any subsequent
amendments or successor provisions or methodologies and
whether or not a State plan amendment was made to carry
out such provision or methodology after such date) or
under which claims for Federal financial participation
were filed and paid on or before such date; and
(B) provides for payments that are in excess of the upper
payment limit test established under the final regulation
required under subsection (a) (or which would be noncompliant
with such final regulation if the actual dollar payment
levels made under the payment provision or methodology in the
State fiscal year which begins during 1999 were continued).
(4) Period described.--The period described in this
paragraph is the period that begins on the first State fiscal
year that begins after September 30, 2002, and ends on
September 30, 2008.
SEC. 706. ALASKA FMAP.
Notwithstanding the first sentence of section 1905(b) of
the Social Security Act (42 U.S.C. 1396d(b)), only with
respect to each of fiscal years 2001 through 2005, for
purposes of titles XIX and XXI of the Social Security Act,
the State percentage used to determine the Federal medical
assistance percentage for Alaska shall be that percentage
which bears the same ratio to 45 percent as the square of the
adjusted per capita income of Alaska (determined by dividing
the State's 3-year average per capita income by 1.05) bears
to the square of the per capita income of the 50 States.
SEC. 707. 1-YEAR EXTENSION OF WELFARE-TO-WORK TRANSITION.
(a) In General.--Section 1925(f) (42 U.S.C. 1396r-6(f)) is
amended by striking ``2001'' and inserting ``2002''.
(b) Conforming Amendment.--Section 1902(e)(1)(B) (42 U.S.C.
1396a(e)(1)(B)) is amended by striking ``2001'' and inserting
``2002''.
SEC. 708. ADDITIONAL ENTITIES QUALIFIED TO DETERMINE MEDICAID
PRESUMPTIVE ELIGIBILITY FOR LOW-INCOME
CHILDREN.
(a) In General.--Section 1920A(b)(3)(A)(i) (42 U.S.C.
1396r-1a(b)(3)(A)(i)) is amended--
(1) by striking ``or (II)'' and inserting ``, (II)''; and
(2) by inserting ``eligibility of a child for medical
assistance under the State plan under this title, or
eligibility of a child for child health assistance under the
program funded under title XXI, (III) is an elementary school
or secondary school, as such terms are defined in section
14101 of the Elementary and Secondary Education Act of 1965
(20 U.S.C. 8801), an elementary or secondary school operated
or supported by the Bureau of Indian Affairs, a State or
tribal child support enforcement agency, an organization that
is providing emergency food and shelter under a grant under
the Stewart B. McKinney Homeless Assistance Act, or a State
or tribal office or entity involved in enrollment in the
program under this title, under part A of title IV, under
title XXI, or that determines eligibility for any assistance
or benefits provided under any program of public or assisted
housing that receives Federal funds, including the program
under section 8 or any other section of the United States
Housing Act of 1937 (42 U.S.C. 1437 et seq.) or under the
Native American Housing Assistance and Self-Determination Act
of 1996 (25 U.S.C. 4101 et seq.), or (IV) any other entity
the State so deems, as approved by the Secretary'' before the
semicolon.
(b) Technical Amendments.--Section 1920A (42 U.S.C. 1396r-
1a) is amended--
(1) in subsection (b)(3)(A)(i), by striking ``42 U.S.C.
9821'' and inserting ``42 U.S.C. 9831'';
(2) in subsection (b)(3)(A)(ii), by striking ``paragraph
(1)(A)'' and inserting ``paragraph (2)''; and
(3) in subsection (c)(2), in the matter preceding
subparagraph (A), by striking ``subsection (b)(1)(A)'' and
inserting ``subsection (b)(2)''.
SEC. 709. DEVELOPMENT OF UNIFORM QMB/SLMB APPLICATION FORM.
(a) In General.--Section 1905(p) (42 U.S.C. 1396d(p)) is
amended by adding at the end the following new paragraph:
``(5)(A) The Secretary shall develop and distribute to
States a simplified application form for use by individuals
(including both qualified medicare beneficiaries and
specified low-income medicare beneficiaries) in applying for
medical assistance for medicare cost-sharing under this title
in the States which elect to use such form. Such form shall
be easily readable by applicants and uniform nationally.
``(B) In developing such form, the Secretary shall consult
with beneficiary groups and the States.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect 1 year after the date of the enactment of
this Act, regardless of whether regulations have been
promulgated to carry out such amendment by such date. The
Secretary of Health and Human Services shall develop the
uniform application form under such amendment by not later
than 9 months after the date of the enactment of this Act.
SEC. 710. TECHNICAL CORRECTIONS.
(a) In General.--Section 1903(f)(4) (42 U.S.C. 1396b(f)(4))
is amended--
(1) by inserting ``1902(a)(10)(A)(ii)(XVII),'' after
``1902(a)(10)(A)(ii)(XVI),''; and
(2) by inserting ``1902(a)(10)(A)(ii)(XVIII),'' after
``1902(a)(10)(A)(ii)(XVII),''.
(b) Effective Dates.--(1) The amendment made by subsection
(a)(1) shall be effective as if included in the enactment of
section 121 of the Foster Care Independence Act of 1999
(Public Law 106-169).
(2) The amendment made by subsection (a)(2) shall be
effective as if included in the enactment of the Breast and
Cervical Cancer Prevention and Treatment Act of 2000 (Public
Law 106-354).
TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
SEC. 801. SPECIAL RULE FOR REDISTRIBUTION AND AVAILABILITY OF
UNUSED FISCAL YEAR 1998 AND 1999 SCHIP
ALLOTMENTS.
(a) Change in Rules for Redistribution and Retention of
Unused SCHIP Allotments for Fiscal Years 1998 and 1999.--
Section 2104 (42 U.S.C. 1397dd) is amended by adding at the
end the following new subsection:
``(g) Rule for Redistribution and Extended Availability of
Fiscal Years 1998 and 1999 Allotments.--
[[Page H12376]]
``(1) Amount redistributed.--
``(A) In general.--In the case of a State that expends all
of its allotment under subsection (b) or (c) for fiscal year
1998 by the end of fiscal year 2000, or for fiscal year 1999
by the end of fiscal year 2001, the Secretary shall
redistribute to the State under subsection (f) (from the
fiscal year 1998 or 1999 allotments of other States,
respectively, as determined by the application of paragraphs
(2) and (3) with respect to the respective fiscal year) the
following amount:
``(i) State.--In the case of 1 of the 50 States or the
District of Columbia, with respect to--
``(I) the fiscal year 1998 allotment, the amount by which
the State's expenditures under this title in fiscal years
1998, 1999, and 2000 exceed the State's allotment for fiscal
year 1998 under subsection (b); or
``(II) the fiscal year 1999 allotment, the amount by which
the State's expenditures under this title in fiscal years
1999, 2000, and 2001 exceed the State's allotment for fiscal
year 1999 under subsection (b).
``(ii) Territory.--In the case of a commonwealth or
territory described in subsection (c)(3), an amount that
bears the same ratio to 1.05 percent of the total amount
described in paragraph (2)(B)(i)(I) as the ratio of the
commonwealth's or territory's fiscal year 1998 or 1999
allotment under subsection (c) (as the case may be) bears
to the total of all such allotments for such fiscal year
under such subsection.
``(B) Expenditure rules.--An amount redistributed to a
State under this paragraph with respect to fiscal year 1998
or 1999--
``(i) shall not be included in the determination of the
State's allotment for any fiscal year under this section;
``(ii) notwithstanding subsection (e), shall remain
available for expenditure by the State through the end of
fiscal year 2002; and
``(iii) shall be counted as being expended with respect to
a fiscal year allotment in accordance with applicable
regulations of the Secretary.
``(2) Extension of availability of portion of unexpended
fiscal years 1998 and 1999 allotments.--
``(A) In general.--Notwithstanding subsection (e):
``(i) Fiscal year 1998 allotment.--Of the amounts allotted
to a State pursuant to this section for fiscal year 1998 that
were not expended by the State by the end of fiscal year
2000, the amount specified in subparagraph (B) for fiscal
year 1998 for such State shall remain available for
expenditure by the State through the end of fiscal year 2002.
``(ii) Fiscal year 1999 allotment.--Of the amounts allotted
to a State pursuant to this subsection for fiscal year 1999
that were not expended by the State by the end of fiscal year
2001, the amount specified in subparagraph (B) for fiscal
year 1999 for such State shall remain available for
expenditure by the State through the end of fiscal year 2002.
``(B) Amount remaining available for expenditure.--The
amount specified in this subparagraph for a State for a
fiscal year is equal to--
``(i) the amount by which (I) the total amount available
for redistribution under subsection (f) from the allotments
for that fiscal year, exceeds (II) the total amounts
redistributed under paragraph (1) for that fiscal year;
multiplied by
``(ii) the ratio of the amount of such State's unexpended
allotment for that fiscal year to the total amount described
in clause (i)(I) for that fiscal year.
``(C) Use of up to 10 percent of retained 1998 allotments
for outreach activities.--Notwithstanding section
2105(c)(2)(A), with respect to any State described in
subparagraph (A)(i), the State may use up to 10 percent of
the amount specified in subparagraph (B) for fiscal year 1998
for expenditures for outreach activities approved by the
Secretary.
``(3) Determination of amounts.--For purposes of
calculating the amounts described in paragraphs (1) and (2)
relating to the allotment for fiscal year 1998 or fiscal year
1999, the Secretary shall use the amounts reported by the
States not later than December 15, 2000, or November 30,
2001, respectively, on HCFA Form 64 or HCFA Form 21, as
approved by the Secretary.''.
(b) Effective Date.--The amendments made by this section
shall take effect as if included in the enactment of section
4901 of BBA (111 Stat. 552).
SEC. 802. AUTHORITY TO PAY MEDICAID EXPANSION SCHIP COSTS
FROM TITLE XXI APPROPRIATION.
(a) Authority To Pay Medicaid Expansion SCHIP Costs From
Title XXI Appropriation.--Section 2105(a) (42 U.S.C.
1397ee(a)) is amended--
(1) by redesignating subparagraphs (A) through (D) of
paragraph (2) as clauses (i) through (iv), respectively, and
indenting appropriately;
(2) by redesignating paragraph (1) as subparagraph (C), and
indenting appropriately;
(3) by redesignating paragraph (2) as subparagraph (D), and
indenting appropriately;
(4) by striking ``(a) In General.--'' and the remainder of
the text that precedes subparagraph (C), as so redesignated,
and inserting the following:
``(a) Payments.--
``(1) In general.--Subject to the succeeding provisions of
this section, the Secretary shall pay to each State with a
plan approved under this title, from its allotment under
section 2104, an amount for each quarter equal to the
enhanced FMAP (or, in the case of expenditures described in
subparagraph (B), the Federal medical assistance percentage
(as defined in the first sentence of section 1905(b))) of
expenditures in the quarter--
``(A) for child health assistance under the plan for
targeted low-income children in the form of providing medical
assistance for which payment is made on the basis of an
enhanced FMAP under the fourth sentence of section 1905(b);
``(B) for the provision of medical assistance on behalf of
a child during a presumptive eligibility period under section
1920A;''; and
(5) by adding after subparagraph (D), as so redesignated,
the following new paragraph:
``(2) Order of payments.--Payments under paragraph (1) from
a State's allotment shall be made in the following order:
``(A) First, for expenditures for items described in
paragraph (1)(A).
``(B) Second, for expenditures for items described in
paragraph (1)(B).
``(C) Third, for expenditures for items described in
paragraph (1)(C).
``(D) Fourth, for expenditures for items described in
paragraph (1)(D).''.
(b) Elimination of Requirement To Reduce Title XXI
Allotment by Medicaid Expansion SCHIP Costs.--Section 2104
(42 U.S.C. 1397dd) is amended by striking subsection (d).
(c) Authority To Transfer Title XXI Appropriations to Title
XIX Appropriation Account as Reimbursement for Medicaid
Expenditures for Medicaid Expansion SCHIP Services.--
Notwithstanding any other provision of law, all amounts
appropriated under title XXI and allotted to a State pursuant
to subsection (b) or (c) of section 2104 of the Social
Security Act (42 U.S.C. 1397dd) for fiscal years 1998 through
2000 (including any amounts that, but for this provision,
would be considered to have expired) and not expended in
providing child health assistance or related services for
which payment may be made pursuant to subparagraph (C) or (D)
of section 2105(a)(1) of such Act (42 U.S.C. 1397ee(a)(1))
(as amended by subsection (a)), shall be available to
reimburse the Grants to States for Medicaid account in an
amount equal to the total payments made to such State under
section 1903(a) of such Act (42 U.S.C. 1396b(a)) for
expenditures in such years for medical assistance described
in subparagraphs (A) and (B) of section 2105(a)(1) of such
Act (42 U.S.C. 1397ee(a)(1)) (as so amended).
(d) Conforming Amendments.--
(1) Section 1905(b) (42 U.S.C. 1396d(b)) is amended in the
fourth sentence by striking ``the State's allotment under
section 2104 (not taking into account reductions under
section 2104(d)(2)) for the fiscal year reduced by the amount
of any payments made under section 2105 to the State from
such allotment for such fiscal year'' and inserting ``the
State's available allotment under section 2104''.
(2) Section 1905(u)(1)(B) (42 U.S.C. 1396d(u)(1)(B)) is
amended by striking ``and section 2104(d)''.
(3) Section 2104 (42 U.S.C. 1397dd), as amended by
subsection (b), is further amended--
(A) in subsection (b)(1), by striking ``and subsection
(d)''; and
(B) in subsection (c)(1), by striking ``subject to
subsection (d),''.
(4) Section 2105(c) (42 U.S.C. 1397ee(c)) is amended--
(A) in paragraph (2)(A), by striking all that follows
``Except as provided in this paragraph,'' and inserting ``the
amount of payment that may be made under subsection (a) for a
fiscal year for expenditures for items described in paragraph
(1)(D) of such subsection shall not exceed 10 percent of the
total amount of expenditures for which payment is made under
subparagraphs (A), (C), and (D) of paragraph (1) of such
subsection.'';
(B) in paragraph (2)(B), by striking ``described in
subsection (a)(2)'' and inserting ``described in subsection
(a)(1)(D)''; and
(C) in paragraph (6)(B), by striking ``Except as otherwise
provided by law,'' and inserting ``Except as provided in
subparagraph (A) or (B) of subsection (a)(1) or any other
provision of law,''.
(5) Section 2110(a) (42 U.S.C. 1397jj(a)) is amended by
striking ``section 2105(a)(2)(A)'' and inserting ``section
2105(a)(1)(D)(i)''.
(e) Technical Amendment.--Section 2105(d)(2)(B)(ii) (42
U.S.C. 1397ee(d)(2)(B)(ii)) is amended by striking ``enhanced
FMAP under section 1905(u)'' and inserting ``enhanced FMAP
under the fourth sentence of section 1905(b)''.
(f) Effective Date.--The amendments made by this section
shall be effective as if included in the enactment of section
4901 of the BBA (111 Stat. 552).
SEC. 803. APPLICATION OF MEDICAID CHILD PRESUMPTIVE
ELIGIBILITY PROVISIONS.
Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)) is amended by
adding at the end the following new subparagraph:
``(D) Section 1920A (relating to presumptive eligibility
for children).''.
TITLE IX--OTHER PROVISIONS
Subtitle A--PACE Program
SEC. 901. EXTENSION OF TRANSITION FOR CURRENT WAIVERS.
Section 4803(d)(2) of BBA is amended--
(1) in subparagraph (A), by striking ``24 months'' and
inserting ``36 months'';
(2) in subparagraph (A), by striking ``the initial
effective date of regulations described in subsection (a)''
and inserting ``July 1, 2000''; and
(3) in subparagraph (B), by striking ``3 years'' and
inserting ``4 years''.
SEC. 902. CONTINUING OF CERTAIN OPERATING ARRANGEMENTS
PERMITTED.
(a) In General.--Section 1894(f)(2) (42 U.S.C.
1395eee(f)(2)) is amended by adding at the end the following
new subparagraph:
``(C) Continuation of modifications or waivers of
operational requirements under demonstration status.--If a
PACE program operating under demonstration authority has
contractual or other operating arrangements which are not
otherwise recognized in regulation and which were in effect
on July 1, 2000,
[[Page H12377]]
the Secretary (in close consultation with, and with the
concurrence of, the State administering agency) shall permit
any such program to continue such arrangements so long as
such arrangements are found by the Secretary and the State to
be reasonably consistent with the objectives of the PACE
program.''.
(b) Conforming Amendment.--Section 1934(f)(2) (42 U.S.C.
1396u-4(f)(2)) is amended by adding at the end the following
new subparagraph:
``(C) Continuation of modifications or waivers of
operational requirements under demonstration status.--If a
PACE program operating under demonstration authority has
contractual or other operating arrangements which are not
otherwise recognized in regulation and which were in effect
on July 1 2000, the Secretary (in close consultation with,
and with the concurrence of, the State administering agency)
shall permit any such program to continue such arrangements
so long as such arrangements are found by the Secretary and
the State to be reasonably consistent with the objectives of
the PACE program.''.
(c) Effective Date.--The amendments made by this section
shall be effective as included in the enactment of BBA.
SEC. 903. FLEXIBILITY IN EXERCISING WAIVER AUTHORITY.
In applying sections 1894(f)(2)(B) and 1934(f)(2)(B) of the
Social Security Act (42 U.S.C. 1395eee(f)(2)(B), 1396u-
4(f)(2)(B)), the Secretary of Health and Human Services--
(1) shall approve or deny a request for a modification or a
waiver of provisions of the PACE protocol not later than 90
days after the date the Secretary receives the request; and
(2) may exercise authority to modify or waive such
provisions in a manner that responds promptly to the needs of
PACE programs relating to areas of employment and the use of
community-based primary care physicians.
Subtitle B--Outreach to Eligible Low-Income Medicare Beneficiaries
SEC. 911. OUTREACH ON AVAILABILITY OF MEDICARE COST-SHARING
ASSISTANCE TO ELIGIBLE LOW-INCOME MEDICARE
BENEFICIARIES.
(a) Outreach.--
(1) In general.--Title XI (42 U.S.C. 1301 et seq.) is
amended by inserting after section 1143 the following new
section:
``outreach efforts to increase awareness of the availability of
medicare cost-sharing
``Sec. 1144. (a) Outreach.--
``(1) In general.--The Commissioner of Social Security (in
this section referred to as the `Commissioner') shall conduct
outreach efforts to--
``(A) identify individuals entitled to benefits under the
medicare program under title XVIII who may be eligible for
medical assistance for payment of the cost of medicare cost-
sharing under the medicaid program pursuant to sections
1902(a)(10)(E) and 1933; and
``(B) notify such individuals of the availability of such
medical assistance under such sections.
``(2) Content of notice.--Any notice furnished under
paragraph (1) shall state that eligibility for medicare cost-
sharing assistance under such sections is conditioned upon--
``(A) the individual providing to the State information
about income and resources (in the case of an individual
residing in a State that imposes an assets test for such
eligibility); and
``(B) meeting the applicable eligibility criteria.
``(b) Coordination With States.--
``(1) In general.--In conducting the outreach efforts under
this section, the Commissioner shall--
``(A) furnish the agency of each State responsible for the
administration of the medicaid program and any other
appropriate State agency with information consisting of the
name and address of individuals residing in the State that
the Commissioner determines may be eligible for medical
assistance for payment of the cost of medicare cost-sharing
under the medicaid program pursuant to sections
1902(a)(10)(E) and 1933; and
``(B) update any such information not less frequently than
once per year.
``(2) Information in periodic updates.--The periodic
updates described in paragraph (1)(B) shall include
information on individuals who are or may be eligible for the
medical assistance described in paragraph (1)(A) because such
individuals have experienced reductions in benefits under
title II.''.
(2) Amendment to title xix.--Section 1905(p) (42 U.S.C.
1396d(p)), as amended by section 710(a), is amended by adding
at the end the following new paragraph:
``(6) For provisions relating to outreach efforts to
increase awareness of the availability of medicare cost-
sharing, see section 1144.''.
(b) GAO Report.--The Comptroller General of the United
States shall conduct a study of the impact of section 1144 of
the Social Security Act (as added by subsection (a)(1)) on
the enrollment of individuals for medicare cost-sharing under
the medicaid program. Not later than 18 months after the date
that the Commissioner of Social Security first conducts
outreach under section 1144 of such Act, the Comptroller
General shall submit to Congress a report on such study. The
report shall include such recommendations for legislative
changes as the Comptroller General deems appropriate.
(c) Effective Date.--The amendments made by subsection (a)
shall take effect one year after the date of the enactment of
this Act.
Subtitle C--Maternal and Child Health Block Grant
SEC. 921. INCREASE IN AUTHORIZATION OF APPROPRIATIONS FOR THE
MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT.
(a) In General.--Section 501(a) (42 U.S.C. 701(a)) is
amended in the matter preceding paragraph (1) by striking
``$705,000,000 for fiscal year 1994'' and inserting
``$850,000,000 for fiscal year 2001''.
(b) Effective Date.--The amendment made by subsection (a)
takes effect on October 1, 2000.
Subtitle D--Diabetes
SEC. 931. INCREASE IN APPROPRIATIONS FOR SPECIAL DIABETES
PROGRAMS FOR TYPE I DIABETES AND INDIANS.
(a) Special Diabetes Programs for Type I Diabetes.--Section
330B(b) of the Public Health Service Act (42 U.S.C. 254c-
2(b)) is amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(1) Transferred funds.--Notwithstanding''; and
(2) by adding at the end the following:
``(2) Appropriations.--For the purpose of making grants
under this section, there is appropriated, out of any funds
in the Treasury not otherwise appropriated--
``(A) $70,000,000 for each of fiscal years 2001 and 2002
(which shall be combined with amounts transferred under
paragraph (1) for each such fiscal years); and
``(B) $100,000,000 for fiscal year 2003.''.
(b) Special Diabetes Programs for Indians.--Section 330C(c)
of such Act (42 U.S.C. 254c-3(c)) is amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
``(1) Transferred funds.--Notwithstanding''; and
(2) by adding at the end the following:
``(2) Appropriations.--For the purpose of making grants
under this section, there is appropriated, out of any money
in the Treasury not otherwise appropriated--
``(A) $70,000,000 for each of fiscal years 2001 and 2002
(which shall be combined with amounts transferred under
paragraph (1) for each such fiscal years); and
``(B) $100,000,000 for fiscal year 2003.''.
(c) Extension of Final Report on Grant Programs.--Section
4923(b)(2) of BBA is amended by striking ``2002'' and
inserting ``2003''.
SEC. 932. APPROPRIATIONS FOR RICKY RAY HEMOPHILIA RELIEF
FUND.
Section 101(e) of the Ricky Ray Hemophilia Relief Fund Act
of 1998 (42 U.S.C. 300c-22 note) is amended by adding at the
end the following: ``There is appropriated to the Fund
$475,000,000 for fiscal year 2001, to remain available until
expended.''.
Subtitle E--Information on Nurse Staffing
SEC. 941. POSTING OF INFORMATION ON NURSING FACILITY
STAFFING.
(a) Medicare.--Section 1819(b) (42 U.S.C. 1395i-3(b)) is
amended by adding at the end the following new paragraph:
``(8) Information on nurse staffing.--
``(A) In general.--A skilled nursing facility shall post
daily for each shift the current number of licensed and
unlicensed nursing staff directly responsible for resident
care in the facility. The information shall be displayed in a
uniform manner (as specified by the Secretary) and in a
clearly visible place.
``(B) Publication of data.--A skilled nursing facility
shall, upon request, make available to the public the nursing
staff data described in subparagraph (A).''.
(b) Medicaid.--Section 1919(b) (42 U.S.C. 1395r(b)) is
amended by adding at the end the following new paragraph:
``(8) Information on nurse staffing.--
``(A) In general.--A nursing facility shall post daily for
each shift the current number of licensed and unlicensed
nursing staff directly responsible for resident care in the
facility. The information shall be displayed in a uniform
manner (as specified by the Secretary) and in a clearly
visible place.
``(B) Publication of data.--A nursing facility shall, upon
request, make available to the public the nursing staff data
described in subparagraph (A).''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 2003.
Subtitle F--Adjustment of Multiemployer Plan Benefits Guaranteed
SEC. 951. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.
(a) In General.--Section 4022A(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1322a(c))
is amended--
(1) by striking ``$5'' each place it appears in paragraph
(1) and inserting ``$11'';
(2) by striking ``$15'' in paragraph (1)(A)(i) and
inserting ``$33''; and
(3) by striking paragraphs (2), (5), and (6) and by
redesignating paragraphs (3) and (4) as paragraphs (2) and
(3), respectively.
(b) Effective Date.--The amendments made by this section
shall apply to any multiemployer plan that has not received
financial assistance (within the meaning of section 4261 of
the Employee Retirement Income Security Act of 1974) within
the 1-year period ending on the date of the enactment of this
Act.
MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT
OF 2000
Following is explanatory language on H.R. 5661, as
introduced on December 14, 2000. The conferees on H.R. 4577
agree with the matter included in H.R. 5661 and enacted in
this conference report by references and the following
description of it.
TITLE I--MEDICARE BENEFICIARY IMPROVEMENTS
SUBTITLE A--IMPROVED PREVENTIVE BENEFITS
Section 101. Coverage of biennial screening pap smear and
pelvic exams
The provision modifies current law to provide Medicare
coverage for biennial screening pap smears and pelvic exams,
effective July 1, 2001.
[[Page H12378]]
Section 102. Coverage of screening for glaucoma
The provision would add Medicare coverage for annual
glaucoma screenings, beginning January 1, 2002, for persons
determined to be at high risk for glaucoma, individuals with
a family history of glaucoma, and individuals with diabetes.
The service would have to be furnished by or under the
supervision of an optometrist or ophthalmologist who is
legally authorized to perform such services in the state
where the services are furnished.
Section 103. Coverage of screening colonoscopy for average
risk individuals
The provision would authorize coverage for screening
colonscopies, beginning July 1, 2001, for all individuals,
not just those at high risk. For persons not at high risk,
payments could not be made for such procedures if performed
within 10 years of a previous screening colonscopy or within
4 years of a screening flexible sigmoidoscopy.
Section 104. Modernization of screening mammography benefit
Beginning in 2002, the provision would eliminate the
statutorily prescribed payment rate for screening mammography
payments and specify that the services are to be paid under
the physician fee schedule. The provision would specify two
new payment rates for mammographies that utilize advanced new
technology for the period April 1, 2001 to December 31, 2001.
Payment for technologies that directly take digital images
would equal 150% of what otherwise be paid for a bilateral
diagnostic mammography. For technologies that convert
standards film images to digital form, an additional payment
of fifteen dollars would be authorized. The Secretary would
be required to determine whether a new code is required for
tests furnished after 2001.
Section 105. Coverage of medical nutrition therapy services
for beneficiaries within diabetes or a renal disease
The provision would establish, effective January 1, 2002,
Medicare coverage for medical nutrition therapy services for
beneficiaries who have diabetes or a renal disease. Medical
nutrition therapy services would be defined as nutritional
diagnostic, therapy and counseling services for the purpose
of disease management which are furnished by a registered
dietitian or nutrition professional, pursuant to a referral
by a physician. The provision would specify that the amount
paid for medical nutrition therapy services would equal the
lesser of the actual charge for the service or 85% of the
amount that would be paid under the physician fee schedule if
such services were provided by a physician. Assignment would
be required for all claims. The Secretary would be required
to submit a report to Congress that contains an evaluation of
the effectiveness of services furnished under this provision.
subtitle b--other beneficiary improvements
Section 111. Acceleration of reduction of beneficiary
copayment for hospital outpatient department services
Effective April 1, 2000, the provision would modify current
law by limiting the amount of a beneficiary copayment for a
procedure in a hospital outpatient department to the hospital
inpatient deductible applicable in that year.
In addition, starting in April 2001, the provisions would
require the Secretary of HHS to reduce the effective
copayment rate for outpatient services to a maximum rate of
57% for the remainder of 2001, 55% in 2002 and 2003, 50% in
2004, 45% in 2005, and 40% in 2006 and subsequent years. As
stated in BBA 97, hospitals may waive any increase in
coinsurance that may have arisen from the implementation of
the outpatient prospective payment system (PPS).
The Comptroller General would be required to work with the
National Association of Insurance Commissioners (NAIC) to
evaluate the extent to which premiums for supplemental
policies reflect the acceleration of the reduction in
beneficiary coinsurance of hospital outpatient services and
result in saving to beneficiaries and to report to the
Congress by April 1, 2004.
Section 112. Preservation of coverage of drugs and
biologicials under part B of the Medicare Program
The provision would clarify policy with regard to coverage
of drugs, provided incident to physicians services, that
cannot be self-administered. The provision would specify that
such drugs are covered when they are not usually self-
administered by the patient.
Section 113. Elimination of time limitation on Medicare
benefits for immunosuppressive drugs
The provision would eliminate the current time limitations
on the coverage of immunosuppressive drugs for beneficiaries
would have received a covered organ transplant. The provision
would apply to drugs furnished, on or after the date
enactment.
Section 114. Imposition of billings limits on drugs
The provision would specify that payment for drugs under
Part B must be made on the basis of assignment.
Section 115. Waiver of 24-month waiting period for Medicare
coverage of individuals disabled with amyotrophic lateral
sclerosis (ALS)
The provision would waive the 24-month waiting period
(otherwise required for an individual to establish Medicare
eligibility on the basis of a disability) for persons
medically determined to have amyotrophic lateral sclerosis
(ALS). The provision would be effective July 1, 2001.
subtitle C--demonstration projects and studies
Section 121. Demonstration project for disease management for
severely chronically ill Medicare beneficiaries
The Secretary would be required to conduct a demonstration
project to illustrate the impact on costs and health outcomes
of applying disease management to Medicare beneficiaries with
diagnosed, advanced-stage congestive heart failure, diabetes,
or coronary heart disease. Up to 30,000 beneficiaries would
be able to enroll, on a voluntary basis, for disease
management services related to their chronic health
condition. In addition, contractors providing disease
management services would be responsible for providing
beneficiaries enrolled in the project with prescription
drugs.
Section 122. Cancer prevention and treatment demonstration
for ethnic and racial minorities
The provision would require the Secretary to conduct
demonstration projects for the purpose of developing models
and evaluating methods that improve the quality of cancer
prevention services, improve clinical outcomes, eliminates
disparities in the rate of preventative screening measures,
and promote collaboration and community-based organizations
for ethnic and racial minorities.
Section 123. Study on Medicare coverage of routine tyroid
screening
The provision would require the Secretary to request the
National Academy of Sciences, and as appropriate in
conjunction with the United States Preventive Services Task
Force, to analyze the addition of routine thyroid screening
under Medicare. The analysis would consider the short term
and long term benefits, and cost to Medicare, of adding such
coverage for some or all beneficiaries.
Section 124. MedPAC study on consumer coalitions
The provision would require MedPAC to conduct a study that
examines the use of consumer coalitions in the marketing of
Medicare+Choice plans. A consumer coalition would be defined
as a non-profit community-based organization that provides
information to beneficiaries about their health options under
Medicare and negotiates with Medicare+Choice plans on
benefits and premiums for beneficiaries who are members of
the coalition or otherwise affiliated with it.
Section 125. Study on limitation on State payment for
Medicare cost-sharing affecting access to services for
qualified Medicare beneficiaries
The provision would require the Secretary of HHS to conduct
a study to determine if access to certain services (including
mental health services) has been affected by a specific
provision in law. The provision specifies that states are not
required to pay Medicare cost-sharing charges for QMBs to the
extent these payments would result in a total payment in
excess of the Medicaid level.
Section 126. Studies on preventive interventions in primary
care for older Americans
The provision would require the Secretary, acting through
the United States Preventive Services Task Force, to conduct
a series of studies designed to identify preventive
interventions in primary care for older Americans.
Section 127. MedPAC study and report on Medicare coverage of
cardiac and pulmonary rehabilitation and therapy services
The provision would require MedPAC to conduct a study on
coverage of cardiac and pulmonary rehabilitation therapy
services under Medicare.
Section 128. Lifestyle modification program demonstration
The provision modifies the current medicare demonstration
project, known as the Lifestyle Modification Program. It
would extent the project to 4 years and to assure 1,800
beneficiaries complete the Program in order to provide a
statistically valid sample. The provision requires a study of
its cost-effectiveness and provides for an initial report
after 900 beneficiaries complete the Program and a final
report after 1,800 beneficiaries complete the Program.
TITLE II--RURAL HEALTH CARE IMPROVEMENTS
subtitle A--critical access hospital provisions
Section 201. Clarification of no beneficiary cost-sharing for
clinical diagnostic laboratory tests furnished by
critical access hospitals
Effective for services furnished on or after the enactment
of BBRA99, Medicare beneficiaries would not be liable for any
coinsurance deductible, copayment, or other cost sharing
amount with respect to clinical diagnostic laboratory
services furnished as an outpatient critical access hospital
(CAH) service. Conforming changes that clarify that CAHs are
reimbursed on a reasonable cost basis for outpatient clinical
diagnostic laboratory services are also included.
Section 202. Assistance with fee schedule payment for
professional services under all-inclusive rate
Effective for items and services furnished on or after July
1, 2001, Medicare would pay a CAH for outpatient services
based on reasonable costs or, at the election of an entity,
[[Page H12379]]
would pay the CAH a facility fee based on reasonable costs
plus an amount based on 115% of Medicare's fee schedule
for professional services.
Section 203. Exemption of critical access hospital swing beds
from SNF PPS
Swing beds in critical access hospitals (CAHs) would be
exempt from the SNF prospective payment system. CAHs would be
paid for covered SNF services on a reasonable cost basis.
Section 204. Payment in critical access hospitals for
emergency room on-call physicians
When determining the allowable, reasonable cost of
outpatient CAH services, the Secretary would recognize
amounts for the compensation and related costs for on-call
emergency room physicians who are not present on the
premises, are not otherwise furnishing services, and are not
on-call at any other provider or facility. The Secretary
would define the reasonable payment amounts and the meaning
of the term ``on-call.'' The provision would be effective for
cost reporting periods beginning on or after October 1, 2001.
Section 205. Treatment of ambulance services furnished by
certain critical access hospitals
Ambulance services provided by a critical access hospital
(CAH) or provided by an entity that is owned or operated by a
CAH would be paid on a reasonable cost basis if the CAH or
entity is the only provider or supplier of ambulance services
that is located within a 35-mile drive of the CAH. The
provision would be effective for services furnished on or
after enactment.
Section 206. GAO study on certain eligibility requirements
for critical access hospitals
Within one year of enactment, GAO would be required to
conduct a study on the eligibility requirements for critical
access hospitals (CAHs) with respect to limitations on
average length of stay and number of beds, including an
analysis of the feasibility of having a distinct part unit as
part of a CAH and the effect of seasonal variations in CAH
eligibility requirements. GAO also would be required to
analyze the effect of seasonal variations in patient
admissions on critical access hospital eligibility
requirements with respect to limits on average annual length
of stay and number of beds.
subtitle b--other rural hospitals provisions
Section 211. Treatment of rural disproportionate share
hospitals
For discharges occurring on or after April 1, 2001, all
hospitals would be eligible to receive DSH payments when
their DSH percentage (threshold amount) exceeds 15%. The DSH
payment formulas for sole community hospitals (SCHs), rural
referral centers (RRCs), rural hospitals that are both SCHs
and RRCs, small rural hospitals and urban hospitals with less
than 100 beds would be modified.
Section 212. Option to base eligibility for Medicare
dependent, small rural hospital program on discharges
during 2 of the 3 most recent audited cost reporting
periods
An otherwise qualifying small rural hospital would be able
to be classified as an MDH if at least 60% of its days or
discharges were attributable to Medicare Part A beneficiaries
in at least two of the three most recent audited cost
reporting periods for which the Secretary has a settled cost
report.
Section 213. Extension of option to use rebased target
amounts to all sole community hospitals
Any SCH would be able to elect payment based on hospital
specific, updated FY1996 costs if this target amount resulted
in higher Medicare payments. There would be a transition
period with Medicare payment based completely on updated
FY1996 hospital specific costs for discharges occurring after
FY2003.
Section 214. MedPAC analysis of impact of volume on per unit
cost of rural hospitals with psychiatric units
MedPAC would be required to report on the impact of volume
on the per unit cost of rural hospitals with psychiatric
units and include in its report a recommendation on whether
special treatment is warranted.
subtitle c--other rural provisions
Section 221. Assistance for providers of ambulance services
in rural areas
The provision would make additional payments to providers
of ground ambulance services for trips, originating in rural
areas, that are greater than 17 miles and up to 50 miles. The
payments would be made for services furnished on or after
July 1, 2001 and before January 1, 2004. The provision would
require the Comptroller General to conduct a study to examine
both the costs of efficiently providing ambulance services
for trips originating in rural areas and the means by which
rural areas with low population densities can be identified
for the purpose of designating areas in which the costs of
ambulance services would be expected to be higher. The
Comptroller General would submit a report to Congress by June
30, 2002 on the results of the study, together with
recommendations on steps that should be taken to assure
access to ambulance services for trips originating in rural
areas. The Secretary would be required to take these findings
into account when establishing the fee schedule, beginning
with 2004.
Section 222. Payment for certain physician assistant services
This provision would give permanent authority to physician
assistants who owned rural health clinics that lost their
designation as such to bill Medicare directly.
Section 223. Expansion of Medicare payment for telehealth
services
The provision would establish revised payment provisions,
effective no later than October 1, 2001, for services that
are provided via a telecommunications system by a physician
or practitioner to an eligible beneficiary in a rural area.
The Secretary would be required to make payments for
telehealth services to the physician or practitioner at the
distant site in an amount equal to the amount that would have
been paid to such physician or practitioner if the service
had been furnished to the beneficiary without the use of a
telecommunications system. A facility fee would be paid to
the originating site. Originating sites would include a
physician or practitioner office, a critical access hospital,
a rural health clinic, a Federally qualified health center or
a hospital. The Secretary would be required to conduct a
study, and submit recommendations to Congress, that identify
additional settings, sites, practitioners and geographic
areas that would be appropriate for telehealth services.
Entities participating in Federal demonstration projects
approved by, or receiving funding from, the Secretary as of
December 31, 2000 would be qualified sites.
Section 224. Expanding access to rural health clinics
All hospitals of less than 50 beds that own rural health
clinics would be exempt from the per visit limit.
Section 225. MedPAC study on low-volume, isolated rural
health providers
MedPAC would be required to study the effect of low patient
and procedure volume on the financial status and Medicare
payment methods for hospital outpatient services, ambulance
services, hospital inpatient services, skilled nursing
facility services, and home health services in isolated rural
health care providers.
TITLE III--PROVISIONS RELATING TO PART A
SUBTITLE A--INPATIENT HOSPITAL SERVICES
Section 301. Revision of acute care hospital payment update
for 2001
All hospitals would receive the full market basket index
(MBI) as an update for FY2001. In order to implement this
increase for hospitals other than sole community hospitals
(SCH), those hospitals would receive the MBI minus 1.1
percentage points (the current statutory provision) for
discharges occurring on or after October 1, 2000 and before
April 1, 2001; these non-SCH hospitals would receive the MBI
plus 1.1 percentage points for discharges occurring on or
after April 1, 2001 and before October 1, 2001. As indicated
by section 547(a), this payment increase would not apply to
discharges occurring after FY2001. For FY2002 and FY2003,
hospitals would receive the MBI minus .55 percentage points.
For FY2004 and subsequently, hospitals would receive the MBI.
The Secretary is directed to consider the prices of blood
and blood products purchased by hospitals in the next
rebasing and revision of the hospital market basket to
determine whether those prices are adequately reflected in
the market basket index. MedPAC is directed to conduct a
study on increased hospital costs attributable to complying
with new blood safety measures and providing such services
using new technologies among other issues.
For discharges occurring on or after October 1, 2001, the
Secretary would be able to adjust the standardized amount in
future fiscal years to correct for changes in the aggregate
Medicare payments caused by adjustments to the DRG weighting
factors in a previous fiscal year (or estimates that such
adjustments for a future fiscal year) that did not take into
account coding improvements or changes in discharge
classifications and did not accurately represent increases in
the resource intensity of patients treated by PPS hospitals.
Section 302. Additional modification in transition for
indirect medical education (IME) percentage adjustment
Teaching hospitals would receive 6.25% IME payment
adjustment (for each 10% increase in teaching intensity) for
discharges occurring on or after October 1, 2001 and before
April 1, 2001. The IME adjustment would increase to 6.75% for
discharges on or after April 1, 2001 and before October 1,
2001. As indicated in Section 547(a), the payment increase
would not apply to discharges after FY2001. The IME
adjustment would be 6.5% in FY2002 and 5.5% in FY2003 and in
subsequent years.
Section 303. Decrease in reductions for disproportionate
share hospital (DSH) payments
Reductions in the DSH payment formula amounts would be 2%
in FY2001, 3% in FY2002, and 0% in FY2003 and subsequently.
To implement the FY2001 provision, DSH amounts for discharges
occurring on or after October 1, 2000 and before April 1,
2001, would be reduced by 3% which was the reduction in
effect prior to enactment of this provision. DSH amounts for
discharges occurring on or after April 1, 2001 and before
October 1, 2001 would be reduced by only 1 percentage point.
As indicated by Section 547(a), this payment adjustment would
not apply to discharges after FY2001.
[[Page H12380]]
Section 304. Wage index improvements
For FY2001 or any fiscal year thereafter, a Medicare
Geographic Classification Review Board (MGCRB) decision to
reclassify a prospective payment system hospital for use of a
different area's wage index would be effective for 3 fiscal
years. The Secretary would establish procedures whereby a
hospital could elect to terminate this reclassification
decision before the end of such period. For FY2003 and
subsequently, MGCRB would base any comparison of the average
hourly wage of the hospital with the average hourly wage for
hospitals in the area using data from the each of the two
immediately preceding surveys as well as data from the most
recently published hospital wage survey.
The Secretary would establish a process which would first
be available for discharges occurring on or after October 1,
2001 where a single wage index would be computed for all
geographic areas in the state. If the Secretary applies a
statewide geographic index, an application by an individual
hospital would not be considered. The Secretary would also
collect occupational data every three years in order to
construct an occupational mix adjustment for the hospital
area wage index. The first complete data collection effort
would occur no later than September 30, 2003 for application
beginning October 1, 2004.
Section 305. Payment for inpatient services in rehabilitation
hospitals
Total payments for rehabilitation hospitals in FY2002 would
equal the amounts of payments that would have been made if
the rehabilitation prospective payment system (PPS) had not
been enacted. A rehabilitation facility would be able to make
a one-time election before the start of the PPS to be paid
based on a fully phased-in PPS rate.
Section 306. Payment for inpatient services of psychiatric
hospitals
The provision would increase the incentive payments for
psychiatric hospitals and distinct part units of 3% for cost
reporting periods beginning on or after October 1, 2000.
Section 307. Payment for inpatient services of long-term care
hospitals
For cost reporting periods beginning during FY2001, long
term hospitals would have the national cap increased by 2%
and the target amount increased by 25%. Neither these
payments nor the increased bonus payments provided by BBRA 99
would be factored into the development of the prospective
payment system (PPS) for long term hospitals. When developing
the PPS for inpatient long term hospitals, the Secretary
would be required to examine the feasibility and impact of
basing payment on the existing (or refined) acute hospital
DRGs and using the most recently available hospital discharge
data. If the Secretary is unable to implement a long term
hospital PPS by October 1, 2002, the Secretary would be
required to implement a PPS for these hospitals using the
existing acute hospital DRGs that have been modified where
feasible.
subtitle b--adjustments to pps payments for skilled nursing facilities
Section 311. Elimination of reduction in skilled nursing
facility (SNF) market basket update in 2001
The provision would modify the schedule and rates according
to which federal per diem payments are updated. In FY2002 and
FY2003 the updates would be the market basket index increase
minus 0.5 percentage point. The update rate for the period
October 1, 2000, through March 31, 2001, would be the market
basket index increase minus 1 percentage point; the update
rate for the period April 1, 2001, through September 30,
2001, would be the market basket index increase plus one
percentage point (this increase would not be included when
determining payment rates for the subsequent period).
Temporary increases in the federal per diem rates provided by
BBRA 99 would be in addition to the increases in this
provision. By July 1, 2002, the Comptroller General would be
required to submit a report to Congress on the adequacy of
Medicare payments to SNFs, taking into account the role of
private payers, medicaid, and case mix on the financial
performance of SNFs and including an analysis, by RUG
classification, of the number and characteristics of such
facilities. By January 1, 2005, the Secretary would be
required to submit a report to Congress on alternatives for
classification of SNF patients.
Section 312. Increase in nursing component of PPS Federal
rate
The provision would increase the nursing component of each
RUG by 16.66 percent over current law for SNF care furnished
after April 1, 2001, and before October 1, 2002.
The Comptroller General would be required to conduct an
audit of nurse staffing ratios in a sample of SNFs and to
report to Congress by August 1, 2002, on the results of the
audit of nurse staffing ratios and recommend whether the
additional 16.66 percent payment should be continued.
Section 313. Application of SNF consolidated billing
requirement limited to part A covered stays
Effective January 1, 2001, the provision would limit the
current law consolidated billing requirement to services and
items furnished to SNF residents in a Medicare part A covered
stay and to therapy services furnished in part A and part B
covered stays.
The Inspector General of HHS would be required to monitor
part B payments to SNFs on behalf of residents who are not in
a part A covered stay.
Section 314. Adjustment of rehabilitation RUGS to correct
anomaly in payment rates
Effective for skilled nursing facility (SNF) services
furnished on or after April 1, 2002, the provision would
increase by 6.7 percent certain federal per diem payments to
ensure that Medicare payments for SNF residents with ``ultra
high'' and ``high'' rehabilitation therapy needs are
appropriate in relation to payments for residents needing
``medium'' or ``low'' levels of therapy. The 20 percent
additional payment that was provided in BBRA 99 for certain
RUGS is removed to make this provision budget neutral.
The Inspector General of HHS would be required to review
and report to Congress by October 1, 2001, regarding whether
the RUG payment structure as in effect under the BBRA 99
includes incentives for the delivery of inadequate care.
Section 315. Establishment of process for geographic
reclassification
The provision would permit the Secretary to establish a
process for geographic reclassification of skilled nursing
facilities based upon the method used for inpatient
hospitals. The Secretary may implement the process upon
completion of the data collection necessary to calculate an
area wage index for workers in skilled nursing facilities.
subtitle c--hospice care
Section 321. 5 Percent increase in payment base
The provision would increase, effective April 1, 2001, the
base Medicare daily payment rates for hospice care for fiscal
year 2001 by 5 percentage points over the rates otherwise in
effect. This increase would continue to apply after fiscal
year 2001. The temporary increase in payment rates provided
in BBRA 99 for FY2001 and FY2002 (.5 percent and .75 percent,
respectively) would not be affected. In addition, the hospice
wage index for one Metropolitan Statistical Area for fiscal
year 2000 would be adjusted.
Section 322. Clarification of physician certification
Effective for certifications of terminal illness made on or
after the date of enactment, the provision would modify
current law to specify that the physician's or hospice
medical director's certification of terminal illness would be
based on his/her clinical judgment regarding the normal
course of the individual's illness. The Secretary would be
required to study and report to Congress within 2 years of
enactment on the appropriateness of certification of
terminally ill individuals and the effect of this provision
on such certification.
Section 323. MedPAC report on access to, and use of, hospice
benefit
The provision would require MedPAC to examine the factors
affecting the use of Medicare hospice benefits, including
delay of entry into the hospice program and urban and rural
differences in utilization rates. The provision would require
a report on the study to be submitted to Congress 18 months
after enactment.
subtitle d--other provisions
Section 331. Relief from Medicare Part A late enrollment
penalty for group buy-in for state and local retirees
The provision would exempt certain state and local
retirees, retiring prior to January 1, 2002, from the Part A
delayed enrollment penalties. These would be groups of
persons for whom the state or local government elected to pay
the delayed Part A enrollment penalty for life. The amount of
the delayed enrollment penalty which would otherwise be
assessed would be reduced by an amount equal to the total
amount of Medicare payroll taxes paid by the employee and the
employer on behalf of the employee. The provision would apply
to premiums for months beginning with January 1, 2002.
TITLE IV--PROVISIONS RELATING TO PART B
subtitle a--hospital outpatient services
Section 401. Revision of hospital outpatient PPS payment
update
The provision would modify the current law update rates
applicable to the hospital outpatient PPS by providing in
FY2001 an update equal to the full rate of increase in the
market basket index. As under current law, the increase in FY
2002 would be the market basket index increase minus one
percentage point.
A special rule applies to the OPD PPS rates in 2001: For
the period January 2, 2001 through March 31, 2001, the PPS
amounts shall be those in effect on the day before
implementation of the new law. For the periods April 2001,
through December 31, 2001, the PPS amounts in effect during
the prior period shall be increased by 0.32%.
Effective as if enacted with BBA 97, if the Secretary
determines that updates to the adjustment factor used to
convert the relative utilization weights under the PPS into
payment amounts have, or are likely to, result in hospitals'
changing their coding or classification of covered services,
thereby changing aggregate payments, the Secretary would be
authorized to adjust the conversion factor in later years to
eliminate the effect of coding or classification changes.
Section 402. Clarifying process and standards for determining
eligibility of devices for pass-through payments under
hospital outpatient PPS
The provision would modify the procedures and standards by
which certain medical devices are categorized and determined
eligible
[[Page H12381]]
for pass-through payments under the PPS. Through public rule-
making procedures, the Secretary would be required to
establish criteria for defining special payment categories
under the PPS for new medical devices. The Secretary would be
required to promulgate, through the use of a program
memorandum, initial categories that would encompass each of
the individual devices that the Secretary had designated as
qualifying for the pass-through payments to date. In
addition, similar devices not so designated because they were
payable under Medicare prior to December 31, 1996, would also
be included in initial categories. The Secretary would be
required to create additional new categories in the future to
acommodate new technologies meeting the ``not insignificant
cost'' test established in BBRA 99.
Once the categories were established, pass-through payments
currently authorized under section 1833(t)(b) of the Social
Security Act would proceed on a category-specific, rather
than device-specific basis. These payments would be
designated as ``category-based pass-through payments.'' These
payments would be continued to be made for the 2 to 3 years
payment period originally specified in BBRA 99, and, for each
given category, would begin when the first such payment is
made for any device included in a specified category. At the
conclusion of this transitional payment period, categories
would sunset and payment for the device would be included in
the underlying PPS payment for the related service.
Section 403. Application of OPD PPS transitional corridor
payments to certain hospitals that did not submit a 1996
cost report
Effective as if enacted with BBRA 99, the provision would
modify current law as enacted in BBA 99 to enable all
hospitals, not just those hospitals filing 1996 cost reports,
to be eligible for transitional payments under the PPS.
Section 404. Application of rules for determining provider-
based status for certain entities
The provision would grandfather existing arrangements
whereby certain entities (such as outpatient clinics, skilled
nursing facilities, etc.) are considered ``provider-based''
entities, meaning they are affiliated financially and
clinically with a hospital. Existing provider-based status
designations would continue for two years beginning October
1, 2000. If a facility or organization requests approval for
provider-based status during the period October 1, 2000,
through September 31, 2002, it could not be treated as if
it did not have such status during the period of time the
determination is pending. In making such a status
determination on or after October 1, 2000, HCFA would
treat the applicant as satisfying any requirements or
standards for geographic location if it satisfied
geographic location requirements in regulations or is
located not more than 35 miles from the main campus of the
hospital.
An applicant facility or organization would be treated as
satisfying all requirements for provider-based status if it
is owned or operated by a unit of State or local government
or is a public or private nonprofit corporation that is
formally granted governmental powers by a unit of State or
local government, or is a private hospital that, under
contract, serves certain low income households or has a
certain disproportionate share adjustment.
These provisions are in effect during a two-year period
beginning on October 1, 2000.
Section 405. Treatment of children's hospitals under
prospective payment system
The BBRA 99 provides special ``hold harmless'' payments to
ensure that cancer hospitals would receive no less under the
hospital outpatient PPS than they would have received, in
aggregate, under the ``pre-BBA'' system, that is, the pre-PPS
payment system. Effective as if included in the BBRA 99, the
provision would extend this hold harmless protection to
children's hospitals.
Section 406. Inclusion of temperature monitored cryoablation
The provision would include temperature monitored
cryoablation as part of the transitional pass-through for
certain medical devices, drugs, and biologicals under the
hospital outpatient prospective payment system, effective
April 1, 2001.
subtitle b--provisions relating to physicians services
Section 411. GAO studied relating to physicians' services
The provision would require the GAO to conduct a study on
the appropriateness of furnishing in physicians offices
specialist services (such as gastrointestinal endoscopic
physicians services) which are ordinarily furnished in
hospital outpatient departments. The GAO would not be
required to study the refinements to the practice expense
relative value made during the transition to the resource-
based system.
Section 412. Physician group practice demonstration
The provision would require the Secretary to conduct
demonstration projects to test, and if proven effective,
expand the use of incentives to health care groups
participating under Medicare. Such incentives would be
designed to encourage coordination of care furnished under
Medicare Parts A and B by institutional and other providers
and practitioners; to encourage investment in administrative
structures and processes to encourage efficient service
delivery; and to reward physicians for improving health
outcomes. The Secretary would establish for each group
participating in a demonstration, a base expenditure amount
and an expenditure target (reflecting base expenditures
adjusted for risk and expected growth rates). The Secretary
would pay each group a bonus for each year equal to a portion
of the savings for the year relative to the target. In
addition, at such time as the Secretary had developed
appropriate criteria, the Secretary would pay an additional
bonus related to process and outcome improvements. Total
payments under demonstrations could not exceed what the
Secretary estimates would be paid in the absence of the
demonstration program.
Section 413. Study on enrollment procedures for groups that
retain independent contractor physicians.
The provision would require the Comptroller General to
conduct a study of the current Medicare enrollment process
for groups that retain independent contractor physicians;
particular emphasis would be placed on hospital-based
physicians, such as emergency department staffing groups.
subtitle c--other services
Section 421. One-year extension of moratorium on therapy
caps; report on standards for supervision of physical
therapy assistants
The provision would extend the moratorium on the physical
therapy and occupational therapy caps for 1 year through
2002; it would also extend the requirement for focused
reviews of therapy claims for the same period. The Secretary
would be required to conduct a study on the implications of
eliminating the ``in the room'' supervision requirements for
Medicare payment for physical therapy assistants who are
supervised by physical therapists and the implications of
this requirement on the physical therapy cap.
Section 422. Update in renal dialysis composite rate
The provision would specify that the composite rate payment
for renal dialysis service would be increased by 2.4% for
2001. The provision would require the Secretary to collect
data and develop an end-stage renal disease (ESRD) market
basket whereby the Secretary could estimate before the
beginning of a year the percentage increase in costs for the
mix of labor and non-labor goods and services included in the
composite rate. The Secretary would report to Congress on the
index together with recommendations on the appropriateness of
an annual or periodic update mechanism for dialysis services.
The Comptroller General would be required to study the access
of beneficiaries to dialysis services. There is a hotel
harmless provision for facilities who received exceptions for
their 2000 rates. In addition, facilities which did not apply
for an exception in 2000 would have the opportunity to apply
during the first 6 months of 2001. Exceptions granted under
the hold harmless or granted during the extension period,
would continue to apply so long as they provide for higher
payment rates. The provision would specify that for the
period January 1, 2001-March 31, 2001, the applicable
composite rate is the rate in effect before enactment of this
provision. The rate in effect for the period April 1, 2001-
December 31, 2001 is the rate established under this section
increased by a transitional percentage allowance equal to
0.39 percent.
Section 423. Payment for ambulance services
The provision would provide for the full inflation update
in ambulance payments for 2001. It would also specify that
any phase-in of the ambulance fee schedule would provide for
full payment of national mileage rates in states where
separate mileage payments were not made prior to
implementation of the fee schedule. The provision would
specify that for the period January 1, 2001-June 30, 2001,
the inflation update would be that determined prior to
enactment of this provision. For services furnished from July
1, 2001-December 31, 2001, the update would be 4.7%. The
provision relating to mileage payments would be effective
July 1, 2001.
Section 424. Ambulatory surgical centers
The provision would delay implementation of proposed
regulatory changes to the ambulatory payment classification
system, which are based on 1994 cost data, until January 1,
2002. At that time, such changes would be phased in over 4
years: in the first year the payment amounts would be 25
percent of the revised rates and 75 percent of the prior
system rates; in the second year payments would be 50 percent
of the revised rate and 50 percent of the prior system rates,
etc. The provision also requires that the revised system,
based on 1999 (or later) cost data, be implemented January 1,
2003. (The phase-in of the revised system and 1994 data would
end when the system with 1999 or later data was implemented.)
Section 425. Full updated for durable medical equipment
The provision would modify updates to payments for durable
medical equipment. For 2001, the payments for covered DME
would be increased by the full increase in the consumer price
index for urban consumers (CPI-U) during the 12-month period
ending June 2000. In general, in 2002 and thereafter, the
annual update would equal the full increase in the CPI-U for
the 12 months ending the previous June. The provision specify
that fir the period January 1, 2001, through June 30 2000,
the applicable amounts paid for DME are the amounts in effect
before enactment of the provision. The amounts in effect for
[[Page H12382]]
the period July 1, 2001. through December 31, 2001 would be
the amounts established under this section increased by a
transitional allowance of 3.28%.
Section 426. Full update for orthotics and prosthetics
The provision would modify updates to payments for
orthotics and prosthetics. In 2000, the rates would be
increased by one percent. In 2001, the increase would be
equal to the percentage increase in the CPI-U during the 12-
month period ending with June, 2000. For 2002, payments would
be increased by one percent over the prior year's amounts.
The provision would specify that for the period January 1,
2001, through June 30, 2001, the applicable amounts paid for
these items would be the amounts in effect before enactment
of this provision. The amounts in effect for the period July
1, 2001, through December 31, 2001, would be amounts
established under this section increased by a transitional
allowance of 2.6%.
Section 427. Establishment of special payment provisions and
requirement for prosthetics and certain custom fabricated
orthotic items
Under the provision, certain prosthetics or custom
fabricated orthotics would be covered by Medicare if
furnished by a qualified practitioner and fabricated by a
qualified practitioner or qualified supplier. The Secretary
would be required to establish a list of such items in
consultation with experts. Within one year of enactment, the
Secretary would be required to promulgate regulations to
provide these items, using negotiated rulemaking procedures.
Not later than 6 months from enactment, the Comptroller
General would be required to submit to Congress a report on
the Secretary's compliance with the Administrative Procedures
Act with regard to HCFA Ruling 96-1; certain impacts of that
ruling; the potential for fraud and abuse in provision of
prosthetics and orthotics under special payment rules and for
custom fabricated items; and the effect on Medicare payments
if that ruling were overturned.
Section 428. Replacement of prosthetic devices and parts
The provision would authorize Medicare coverage for
replacement of artificial limbs, or replacement parts for
such devices, if ordered by a physician for specified
reasons. Effective for items furnished on or after enactment,
coverage would apply to prosthetic items 3 or more years old,
and would supersede any 5-year age rules for such item under
current law.
Section 429. Revised part B payment for drugs and
bioliogicals and related services
The provision would require the Comptroller General to
study and submit a report to Congress and the Secretary on
the reimbursement for drugs and biologicals and for related
services under Medicare; the report would include specific
recommendations for revised payment methodologies. The
Secretary would revise the current payment methodologies for
covered drugs and biologicals and related services based on
these recommendations; however, total payments under the
revised methodologies could not exceed the aggregate payments
the Secretary estimates would have been made under the
current law. The provision would establish a moratorium on
reductions in payment rates, in effect on January 1, 2001,
until the Secretary reviewed the GAO report.
Section 430. Contrast enhanced diagnostic procedures under
hospital prospective Payment system
The provision would require the Secretary to create under
the hospital outpatient PPS additional and separate groups of
covered services which include procedures that utilize
contrast agents and would include contrast agents within the
definition of ``drugs'' for purposes of the medicare title.
The provision would apply to items and services furnished on
or after July 1, 2001.
Section 431. Qualification for community mental health
centers
The provision would clarify the qualifications for
community mental health centers providing partial
hospitalization services under Medicare.
Section 432. Modification of Medicare billing requirements
for certain Indian providers
The provision would authorize hospitals and free-standing
ambulatory care clinics of the Indian Health Service or
operated by a tribe or tribal organization to bill Medicare
Part B for certain services furnished at the direction of the
hospital or clinic. Services covered under the provision
are those furnished under the physician fee schedule, and
services furnished by a practitioner or therapist under a
fee schedule. The provision would be effective July 1,
2001.
Section 433. GAO study on coverage of surgical first
assisting services of certified registered nurse first
assistants
The provision would require the Comptroller General to
conduct a study on the effect on both the program and
beneficiaries of covering surgical first assisting services
of certified registered nurse first assistants.
Section 434. MedPAC study and report on Medicare
reimbursement for services provided by certain providers
The provision would require MedPAC to conduct a study on
the appropriateness of current payment rates for services
provided by a certified nurse midwife, physician assistant,
nurse practitioner, and clinical nurse specialist, including
specifically for orthopedic physician assistants.
Section 435. MedPAC study and report on Medicare coverage of
services provided by certain non-physician providers
The provision would require MedPAC to conduct a study to
determine the appropriateness of Medicare coverage of the
services provided by a surgical technologist, marriage
counselor, pastoral care counselor, and licensed professional
counselor of mental health.
Section 436. GAO study and report on the costs of emergency
and medical transportation services
The provision would require the Comptroller General to
conduct a study of the costs of providing emergency and
medical transportation services across the range of acuity
levels of conditions for which such transportation services
are provided.
Section 437. GAO studies and reports on Medicare payments
The provision would require the Comptroller General to
conduct a study on the post-payment audit process for
physicians services. The study would include the proper level
of resources HCFA should devote to educating physicians
regarding coding and billing, documentation requirements, and
calculation of overpayments. The Comptroller General would
also be required to conduct a study of the aggregate effects
of regulatory, audit, oversight and paperwork burdens on
physicians and other health care providers participating in
Medicare.
Section 438. MedPAC study on access to outpatient plan
management services
The provision would require MedPAC to conduct a study on
the barriers to coverage and payment for outpatient
intervention pain medicine procedures under Medicare.
TITLE V--PROVISION RELATING TO PARTS A AND B
subtitle a--home health services
Section 501. 1-Year additional delay in application of 15
percent reduction on payment limits of home health
services
The provision would require that the aggregate amount of
Medicare payments to home health agencies in the second year
of the PPS (FY 2002) shall be the aggregate payments in the
first year of the PPS, updated by the market basket index
(MBI) increase minus 1.1 percentage points. The 15 percent
reduction to aggregate PPS amounts, which, under current law,
would go into effect October 1, 2001, would be delayed until
October 1, 2002.
The Comptroller General (rather than the Secretary) would
be required to submit, by April 1, 2002, a report analyzing
the need for the 15 percent or other reduction.
If the Secretary determines that updates to the PPS system
for a previous fiscal year (or estimates of such adjustments
for a future fiscal year) did (or are likely to) result in a
change in aggregate payments due to changes in coding or
classification of beneficiaries' service needs that do not
reflect real changes in case mix, effective for home health
episodes concluding on or after October 1, 2001, the
Secretary may adjust PPS amounts to eliminate the effect of
such coding or classification changes.
Section 502. Restoration of full home health market basket
update for home health services for fiscal year 2001
The provision would modify the home health PPS updates.
During the period October 1, 2000, through March 31, 2001,
the rates promulgated in the home health PPS regulations on
July 3, 2000, would apply for 60-day episodes of care (or
visits) ending in that period. For the period April 1, 2001,
through September 31, 2001, those rates would be increased by
2.2 percent for 60-day episodes (or visits) ending in that
time period. This increase would be included in determining
subsequent payment amounts.
Section 503. Temporary two-month periodic interim payment
The provision would provide for a one-time payment for
certain home health agencies that were receiving periodic
interim payments under current law. Home health agencies that
were receiving such payments as of September 30, 2000,
receive a one-time payment equal to four times the last 2-
week payment the agency received before implementation of the
home health PPS on October 1, 2000. The amounts would be
included in the agency's last settled cost report before
implementation of the PPS.
Section 504. Use of telehealth in delivery of home health
services
The provision would clarify that the telecommunications
provisions should not be construed as preventing a home
health agency from providing a service, for which payment is
made under the prospective payment system, via a
telecommunications system, provided that the services do not
substitute for ``in-person'' home health services ordered by
a physician as part of a plan of care or are not considered a
home health visit for purposes of eligibility or payment.
Section 505. Study on costs to home health agencies of
purchasing nonroutine medical supplies
The provision would require that, not later than August 15,
2001, the Comptroller General shall submit to Congress a
report regarding the variation in prices home health agencies
pay for nonroutine supplies, the volume of supplies used, and
what effect the variations have on the provision of services.
[[Page H12383]]
The Secretary would be required to make recommendations on
whether Medicare payment for those supplies should be made
separately from the home health PPS.
Section 506. Treatment of branch offices; GAO study on
supervision of home health care provided in isolated
rural areas
The provision would clarify that neither time nor distance
between a home health agency parent office and a branch
office shall be the sole determinant of a home health
agency's branch office status. The Secretary would be
authorized to include forms of technology in determining
``supervision'' for purposes of determining a home health
agency's branch office status.
Not later than January 1, 2002, the Comptroller General
would be required to submit to Congress a report regarding
the adequacy of supervision and quality of home health
services provided by home health agency branch offices and
submits in isolated rural areas and to make recommendations
on whether national standards for supervision would be
appropriate in assuring quality.
Section 507. Clarification of the homebound benefit
The provision clarifies that the need for adult day care
for a patient's plan of treatment does not preclude
appropriate coverage for home health care for other medical
conditions. The provision also clarifies the ability of
homebound beneficiaries to attend religious services without
being disqualified from receiving home health benefits.
Section 508. Temporary increase for home health services
furnished in a rural area
For home health services furnished in certain rural areas
during the 2-year period beginning April 1, 2001, Medicare
payments are increased by 10%, without regard to budget
neutrality for the overall home health prospective payment
system. This temporary increase would not be included in
determining subsequent payments.
subtitle b--direct graduate medical education
Section 511. Increase in floor for direct graduate medical
education payments
A hospital's approved per resident amount for cost
reporting periods beginning during FY 2002 would not be less
than 85% of the locality adjusted national average per
resident amount.
Section 512. Change in distribution formula for
Medicare+Choice related nursing and allied health
education costs
A hospital would receive nursing and allied health payments
for Medicare managed care enrollees based on its per day cost
of allied and nursing health programs and number of days
attributed to Medicare enrollees in comparison to that in all
other hospitals. The provision would be effective for
portions of cost reporting periods occurring on or after
January 1, 2001.
subtitle c--changes in medicare coverage and appeals process
Section 521. Revisions to Medicare appeals process
The provision would modify the Medicare appeals process.
Generally, initial determinations by the Secretary would be
concluded no later than 45 days from the date the Secretary
received a claim for benefits. Any individual dissatisfied
with the initial determination would be entitled to a
redetermination by the carrier or fiscal intermediary would
made the initial determination. Such redetermination would be
required to be completed within 30 days of a beneficiary's
request. Beneficiaries could appeal the outcome of a
redetermination by seeking a reconsideration. Generally, a
request for a reconsideration must be initiated no later than
180 days after the date the individual receives the notice of
an adverse redetermination. In addition, if contested amounts
are greater than $100, an individual would be able to appeal
an adverse reconsideration decision by requesting a hearing
by the Secretary (for a hearing by an administrative law
judge, then in certain circumstances, for a hearing before
the Department of Appeals Board). If the dispute is not
satisfactorily resolved through this administrative process,
and if contested amounts are greater than $1,000, the
individual would be able to request judicial review of the
Secretary's final decision. Aggregation of claims to meet
these thresholds would be permitted.
An expedited determination would be available for a
beneficiary who receive notice: 1) that a provider plans to
terminate services and a physician certifies that failure to
continue the provisions of the services is likely to place
the beneficiary's health at risk; or 2) that the provider
plans to discharge the beneficiary.
The Secretary would enter into 3-year contracts with at
least 12 qualified independent contractors (QICs) to conduct
reconsiderations. A QIC would promptly notify beneficiaries
and Medicare claims processing contractors of its
determinations. A beneficiary could appeal the decision of a
QIC to an ALJ. In cases where the ALJ decision is not
rendered within the 90-day deadline, the appealing party
would be able to request a DAB hearing.
The Secretary would perform outreach activities to inform
beneficiaries, providers, and suppliers of their appeal
rights and procedures. The Secretary would submit to Congress
an annual report including information on the number of
appeals for the previous year, identifying issues that
require administrative or legislative actions, and
including recommendations for change as necessary. The
report would also contain an analysis of the consistency
of the QIC determinations as well as the cause for any
identified inconsistencies.
Section 522. Revisions to Medicare coverage process
The provision would clarify when and under what
circumstances Medicare coverage policy could be challenged.
An aggrieved party could file a complaint concerning a
national coverage decision. Such complaint would be reviewed
by the Department Appeals Board (DAB) of HHS. The provision
would also permit an aggrieved party to file a complaint
concerning a local coverage determination. In this case, the
determination would be reviewed by an administrative law
judge. If unsatisfied, complainants could subsequently seek
review of such a local policy by the DAB. In both cases, a
DAB decision would constitute final HHS action, and would be
subject to judicial review. The Secretary would be required
to implement DAB decisions and ALJ decisions (in the case of
a local coverage policy) within 30 days. The provision would
also permit an affected party to submit a request to the
Secretary to issue a national coverage or noncoverage
determination if one has not been issued. The Secretary would
have 90 days to respond. HHS would be required to prepare an
annual report on national coverage determinations.
subtitle d--improving access to new technologies
Section 531. Reimbursement improvements for new clinical
laboratory tests and durable medical equipment
The provision would specify that the national limitation
amount for a new clinical laboratory test would equal 100% of
the national median for such test. The Secretary would be
required to establish procedures that permit public
consultation for coding and payment determinations for new
clinical diagnostic laboratory tests and new durable medical
equipment. The Secretary would be required to report to
Congress on specific procedures used to adjust payments for
advanced technologies; the report would include
recommendations for legislative changes needed to assure fair
and appropriate payments.
Section 532. Retention of HCPCS level III codes
The provision would extend the time for the use of local
codes (known as HCPCS level III codes) through December 21,
2003; the Secretary would be required to make the codes
available to the public.
Section 533. Recognition of new medical technologies under
Medicare inpatient hospital PPS
The Secretary would be required to submit a report to
Congress no later than April 1, 2001, on potential methods
for more rapidly incorporating new medical services and
technologies used in the inpatient setting in the clinical
coding system used with respect to payment for inpatient
services. The Secretary would be required to identify the
preferred methods for expediting these coding modifications
in her report, and to implement such method by October 1,
2001. Additional hospital payments could be made by means of
a new technology group (DRG), an add-on payment, payment
adjustment or other mechanism. However, separate fee
schedules for additional new technology payments would not be
permitted. The Secretary would implement the new mechanism on
a budget neutral basis. The total amount of projected
additional payments under the mechanism would be limited to
an amount not greater than the Secretary's annual estimation
of the costs attributable to the introduction of new
technology in the hospital sector as a whole (as estimated
for purposes of the annual hospital update calculation).
subtitle e--other provisions
Section 541. Increase in reimbursement for bad debt
Effective beginning with cost reports starting in FY2001,
the provision would increase the percentage of the reasonable
costs associated with beneficiaries' bad debt in hospitals
that Medicare would reimburse to 70%.
Section 542. Treatment of certain physician pathology
services under Medicare
The provision would permit independent laboratories, under
a grandfather arrangement to continue, for a 2-year period
(2001-2002), direct billing for the technical component of
pathology services provided to hospital inpatients and
hospital outpatients. The Comptroller General would be
required to conduct a study of the effect of these provisions
on hospitals and laboratories and access of fee-for-service
beneficiaries to the technical component of physician
pathology services. The report would include recommendations
on whether the provisions should continue after the 2-year
period for either (or both) inpatient and outpatient hospital
services and whether the provision should be extended to
other hospitals.
Section 543. Extension of advisory opinion authority
The Office of the Inspector General's authority to issue
advisory opinions to outside parties who request guidance on
the applicability of the anti-kickback statute, safe harbor
provisions and other OIG health care fraud and abuse
sanctions would be made permanent.
[[Page H12384]]
Section 544. Change in annual MedPAC reporting
The provision would delay the reporting date for the MedPAC
report on issues affecting the Medicare program by 15 days to
June 15. The provision would also require record votes on
recommendations contained both in this report and the March
report on payment policies.
Section 545. Development of patient assessment instruments
The provision would require the Secretary to report to the
Congress on the development of standard instruments for the
assessment of the health and functional status of patients
and make recommendations on the use of such standard
instruments for payment purposes.
Section 546. GAO report on impact of the Emergency Medical
Treatment and Active Labor Act (EMTALA) on hospital
emergency departments
GAO would be required to evaluate the impact of the
Emergency Medical Treatment and Active Labor Act on
hospitals, emergency physicians, and on-call physicians
covering emergency departments and to submit a report to
Congress by May 1, 2001.
Section 547. Clarification of application of temporary
payment increases for 2001
The special increases and adjustments of the acute hospital
payment update, the indirect medical education adjustment,
and the disproportionate share hospital adjustment that are
in effect between April and October 2001 do not apply to
discharges after FY 2001 and are not included in determining
subsequent payments.
Special update payments under the skilled nursing facility
prospective payment system between April and October 2001
would not apply to SNF services furnished after that period
and would not be included when determining payments for the
subsequent period.
Special market basket update payments under the home health
prospective payment system between April and October 2001
would not be included in determining subsequent payments.
Also, temporary payments to certain rural home health
agencies from April 1, 2001, through September 30, 2002,
would not be included in determining subsequent payments.
TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND
OTHER MEDICARE MANAGED CARE PROVISIONS
subtitle a--medicare+choice payment reforms
Section 601. Increase in minimum payment amount
The provision would set the minimum payment amount for aged
enrollees within the 50 states and the District of Columbia
in a Metropolitan Statistical Area with a population of more
than 250,000 at $525 in 2001. For all other areas within the
50 States and the District of Columbia, the minimum would be
$475. For any area outside the 50 States and the District of
Columbia, the $525 and $475 minimum amounts would also be
applied, except that the 2001 minimum payment amount could
not exceed 120% of the 2000 minimum payment amount. This
increase would go into effect March 1, 2001.
Section 602. Increase in minimum percentage increase
This provision would apply a 3% minimum update in 2001 and
return to the current law minimum update of 2% thereafter.
This increase would go into effect March 1, 2001.
Section 603. Phase in of risk adjustment
The current risk adjustment methodology (in which 10% of
payments would be based on risk-adjusted inpatient data built
on the 15 principal inpatient diagnostic cost groups (PIP-
DCGs) and 90% would be adjusted solely using the older
demographic method) would continue through 2003. Beginning in
2004, the risk adjustment would be based on data from
inpatient hospital and ambulatory settings and the risk
adjustment would be phased in at 30% for 2004, 50% for 2005,
75% for 2006, and 100% for 2007 and subsequent years.
Section 604. Transition to revised Medicare+Choice payment
rates
Within 2 weeks after the date of enactment of the Act, the
Secretary must announce revised M+C capitation rates for
2001, due to changes from this Act. Plans that previously
provided notice of their intention to terminate contracts or
reduce their service area for 2001 would have 2 weeks after
announcement of the revised rates to rescind their notice and
submit ACR information. Further, any M+C organization that
would receive higher capitation payments as a result of this
Act must submit revised ACR information within 2 weeks after
announcement of the revised rates. Plans may only reduce
premiums, reduce cost sharing, enhance benefits, or utilize
stabilization funds. Any regulations that limit stabilization
fund amounts would be waived, with respect to ACR submissions
under this section of the bill. Notwithstanding the issuance
of revised rates, M+C organizations would continue to be paid
on a fee-for-service basis for costs associated with new
national coverage determinations that are made mid-year.
Section 605. Revision of payment rates for ESRD patients
enrolled in Medicare+Choice plans
This provision would require that the Secretary increase
the M+C payment rates for enrollees with ESRD. The revised
rates would reflect the demonstration rate (including the
risk-adjustment methodology) of social health maintenance
organizations' ESRD capitation demonstrations. The revised
rates would include adjustments for factors such as renal
treatment modality, age, and underlying cause of the disease.
These revised rates would be effective beginning in January
2002, and the Secretary of HHS would be required to publish
the adjustments in final form by July 1, 2001.
Section 606. Permitting premium reductions as additional
benefits under Medicare+Choice plans
This provision would permit M+C plans to offer reduced
Medicare Part B premiums to their enrollees as part of
providing any required additional benefits or reduced cost-
sharing. An M+C organization could elect a reduction in its
M+C payment up to 125% of the annual Part B premium. However,
only 80% of this amount could be used to reduce an enrollee's
actual Part B premium. This would have the effect of
returning up to 100% of the beneficiary's Part B premium. The
reduction would apply uniformly to each enrollee of the M+C
plan. Plans would include information about Part B premium
reductions as part of the required information that is
provided to enrollees for comparing plan options. This
provision would be effective beginning in 2003.
Section 607. Full implementation of risk adjustment for
congestive heart failure enrollees for 2001
This provision would fully implement risk adjustment based
on inpatient hospital diagnoses for an individual who had a
qualifying congestive heart failure inpatient diagnosis
between July 1, 1999 and June 30, 2000, if that individual
was enrolled in a coordinated care plan offered on January 1,
2001. This would apply for only 1 year, beginning on January
1, 2001. This payment amount would be excluded from the
determination of the budget neutrality factor.
Section 608. Expansion of application of Medicare+Choice new
entry bonus
This provision would expand the application of the new
entry bonus for M+C plans to include areas for which
notification had been provided, as of October 3, 2000, that
no plans would be available January 1, 2001.
Section 609. Report on inclusion of certain costs of the
Department of Veterans Affairs and Military Facility
Services in calculating Medicare+Choice payment rates
The Secretary shall report to Congress by January 1, 2003,
on a method to phase-in the costs of military facility
services furnished by the Department of Veterans Affairs or
the Department of Defense to Medicare-eligible beneficiaries
in the calculation of an area's M+C capitation payment. This
report would include, on a county-by-county basis: the actual
or estimated costs of such services to Medicare-eligible
beneficiaries; the change in M+C capitation payment rates if
such costs were included in the calculation of payment rates;
one or more proposals for the implementation of payment
adjustments to M+C plans in counties where the payment rate
has been affected due to failure to account for the cost of
such services; and a system to ensure that when a M+C
enrollee receives covered services through a facility of
these Departments, there is an appropriate payment recovery
to the Medicare program.
Subtitle B--Other Medicare+Choice Reforms
Section 611. Payments of additional amounts for new benefits
covered during a contract term
The provision would require payment adjustments to M+C
plans if a legislative change resulted in significant
increased costs, similar to the current law requirements for
adjusting payments due to significant increased costs
resulting from National Coverage Determination (NCDs). In
addition, this provision would require that cost projections
and payment adjustments be based on actuarial estimates
provided by the Chief Actuary of the Health Care Financing
Administration.
Section 612. Restriction on implementation of significant new
regulatory requirements mid-year
The provision would preclude the Secretary from
implementing, other than at the beginning of a calendar year,
regulations that impose new, significant regulatory
requirements on M+C organizations.
Section 613. Timely approval of marketing material that
follows model marketing language
The provision would require the Secretary to make
decisions, within 10 days, approving or modifying marketing
material used by M+C organizations, provided that the
organization uses model language specified by the Secretary.
This provision would apply to marketing material submitted on
or after January 1, 2001.
Section 614. Avoiding duplicative regulation
This provision would further stipulate when Medicare law
preempts State law or regulation from applying to M+C plans,
by specifying that the term benefit requirements includes
cost-sharing requirements. Second, the provision would
stipulate that State laws and regulations affecting marketing
materials, and summaries and schedules of benefits regarding
an M+C plan, would also be preempted by Medicare law.
Section 615. Election of uniform local coverage policy for
Medicare+Choice plan covering multiple localities
An M+C organization offering a plan in an area with more
than one local coverage policy would be able to elect to have
the local coverage policy for the part of the area that
[[Page H12385]]
is most beneficial to M+C enrollees (as identified by the
Secretary) apply to all M+C enrollees enrolled in the plan.
Section 616. Eliminating health disparities in
Medicare+Choice Program
This provision would expand the M+C quality assurance
programs for M+C plans to include a separate focus on racial
and ethnic minorities. The Secretary would also be required
to report to Congress how the quality assurance programs
focus on racial and ethnic minorities, within 2 years after
enactment and biennially thereafter.
Section 617. Medicare+Choice Program compatibility with
employer or union group health plans
In order to make the M+C program compatible with employer
or union group health plans, this provision would allow the
Secretary to waive or modify requirements that hinder the
design of, offering of, or enrollment in certain M+C plans.
Plans included in the category are M+C plans under contract
between M+C organizations and employers, labor organizations,
or trustees of a fund established by employers and/or labor
organizations.
Section 618. Special Medigap enrollment anti-discrimination
provision for certain beneficiaries
This provision would extend the period for Medigap
enrollment for certain M+C enrollees affected by termination
of coverage. For individuals enrolled in an M+C plan during a
12-month trial period, their trial period would begin again
if they re-enrolled in another M+C plan because of an
involuntary termination. During this new trial period, they
would retain their rights to enroll in a Medigap policy;
however, the total time for a trial period could not exceed 2
years from the time they first enrolled in an M+C plan.
Section 619. Restoring effective date of elections and
changes of elections of Medicare+Choice plans
This provision would allow individuals who enroll in an M+C
plan after the 10th day of the month to receive coverage
beginning on the first day of the next calendar month,
effective June 1, 2001.
Section 620. Permitting ESRD beneficiaries to enroll in
another Medicare+Choice plan if the plan in which they
are enrolled is terminated
This provision would permit ESRD beneficiaries to enroll in
another M+C plan if they lost coverage when their plan
terminated its contract or reduced its service area. This
provision would also be retroactive, to include individuals
whose enrollment in an M+C plan was terminated involuntarily
on or after December 31, 1998.
Section 621. Providing Choice for skilled nursing facility
services under the Medicare+Choice Program
Effective for M+C contracts entered into or renewed on or
after the date of enactment, the provision would require an
M+C plan to cover post-hospitalization skilled nursing care
through an enrollee's ``home skilled nursing facility'' if
the plan has a contract with the facility or if the home
facility agrees to accept substantially similar payment under
the same terms and conditions that apply to similarly
situated SNFs that are under contract with the plan. A ``home
skilled nursing facility'' is defined as (a) one in which the
enrollee resided at the time of the hospital admission that
triggered eligibility for SNF care upon discharge, or (b) is
the facility that is providing such services through the
continuing care retirement community in which the enrollee
resided at the time of hospital admission, or (c) is the
facility in which the spouse of the enrollee is residing at
the time of the enrollee's hospital discharge. The
beneficiary would be required to receive coverage for SNF
care at the home facility that is no less favorable than he
or she would receive otherwise in another SNF that has a
contract with the plan.
Home skilled nursing facilities are permitted to refuse to
accept Medicare+Choice enrollees or to impose conditions on
their acceptance of such an enrollee.
The provision would require the Medicare Payment Advisory
Commission (MedPAC) to analyze and, within 2 years of
enactment, report to Congress on the effects of this
provision on the scope of benefits, administrative and other
costs incurred by M+C organizations, and the contractual
relationships between those plans and SNFs.
Section 622. Providing for accountability of Medicare+Choice
plans
The provision would mandate review of ACR submissions by
the HCFA Chief Actuary with respect to submissions for ACRs
filed on or after May 1, 2001.
Section 623. Increased civil money penalties for
Medicare+Choice organizations that terminate contracts
mid-year
The provision would increase to $100,000 (or such higher
level as the Secretary of Health and Human Services) the
maximum civil money penalty that could be imposed for a
Medicare+Choice organization that terminates its
Medicare+Choice contract, other than at an appropriate time
after providing appropriate notice.
SUBTITLE C--OTHER MANAGED CARE REFORMS
Section 631. 1-Year extension of social health maintenance
organization (SHMO) demonstration project
The provision would extend SHMO waivers until 30 months
after the Secretary submits a report with a plan for
integration and transition of SHMOs into an option under the
M+C program. This 30-month extension would supersede the 18-
month extension in BBRA 99.
Section 632. Revised terms and conditions for extension of
Medicare community nursing organization (CNO)
demonstration project
Effective as if enacted with BBRA99, the provision would
eliminate the requirement that CNO capitated payments be
reduced to ensure budget neutrality. Through December 2001,
the projects would operate under the same terms and
conditions applicable during 1999, but with modification to
the capitation rates. From October 1, 2000, through December
31, 2000, the capitation rates would be adjusted for
inflation since 1999 and for changes in service packages, but
reduced by 10 percent for in projects in Arizona, Minnesota,
and Illinois and by 15 percent in New York. In 2001, the
rates would be determined by actuarially adjusting the rates
in the prior period for inflation, utilization, and changes
to the service package. Adjustments would be made to case
management fees for certain frail enrollees, and requirements
would be imposed to create greater uniformity in clinical
features among participating sites and to improve quality and
enrollee satisfaction.
By July 1, 2001, the Secretary would be required to submit
to the House Committees on Ways and Means and Commerce and
the Senate Committee on Finance a report evaluating the
projects for the period July 1997 through December 1999 and
for the extension period after September 30, 2000. A final
report would be required by July 1, 2002. The provision would
require certain methods to be used to compare spending per
beneficiary under the projects.
Section 633. Extension of Medicare municipal health services
demonstration projects
The provision would extend the Medicare municipal health
services demonstration projects for 2 additional years,
through December 31, 2004.
Section 634. Service area expansion for Medicare cost
contracts during transition period
This provision would allow service area expansion for
Medicare cost contracts, if the request was submitted to the
Secretary before September 1, 2003.
TITLE VII--MEDICAID
Section 701. DSH payments
(a) Modifications to DSH allotments
For FY2001, the provision would set each state's DSH
allotment equal to its allotment for FY2000 increased by the
percentage change in the consumer price index for that year,
subject to a ceiling that would be equal to 12% of that
state's total medical assistance payments in that year.
For FY2002, the provision would set each state's DSH
allotment equal to its allotment for 2001 as determined
above, increased by the percentage change in the consumer
price index for FY2001, subject to a ceiling equal to 12% of
that state's total medical assistance payments in that year.
For extremely low DSH states, states whose FY1999 federal
and state DSH expenditures (as reported to HCFA on August 31,
2000) are greater than zero but less than one percent of the
state's total medical assistance expenditures during that
fiscal year, the DSH allotments for FY2001 would be equal to
1 percent of the state's total amount of expenditures under
their plan for such assistance during that fiscal year. For
subsequent fiscal years, the allotments for extremely low DSH
states would be equal to their allotment for the previous
year, increased by the percentage change in the consumer
price index for the previous year, subject to a ceiling of
12% of that state's total medical assistance payments in that
year.
Effective on the date that the final regulation for
Medicaid upper payment limits is published in the Federal
Register.
(b) Assuring identification of Medicaid managed care
patients
Effective for Medicaid managed care contracts in effect on
January 1, 2000, the provision would clarify that Medicaid
enrollees of managed care organizations and primary care case
management organizations are to be included for the purposes
of calculating the Medicaid impatient utilization rate and
the low-income utilization rate. Also effective January 1,
2001, states must include in their MCO contracts information
that allows the state to determine which hospital services
are provided to Medicaid beneficiaries through managed care,
and would also require states to include a sponsorship code
for the managed care entity on the Medicaid beneficiary's
identification card.
(c) Application of Medicaid DSH transition rule to public
hospitals in all states
The provision would revise BBA97, as modified by BBRA 99,
so that the 175% hospital-specific DSH limit would apply to
qualifying public hospitals in all states. (The limit
currently applies only to certain public hospitals in
California.) The limit, allowing DSH payments of up to 175%
of each hospital's cost of unreimbursed care, would apply for
two state fiscal years beginning on the first day of the
state fiscal year that begins after September 30, 2002, and
ends on the last day of the succeeding state fiscal year.
Hospitals that would qualify for the higher hospital-specific
limit would be those owned or operated by a state and meet
the minimum federal requirements for disproportionate share
hospitals. The permanent ceiling for California would not be
affected.
For states operating under waivers approved under section
1115 of the Social Security Act, increase payments for public
hospitals under this provision would be included
[[Page H12386]]
in the baseline expenditure limit for the purposes of
determining budget neutrality.
(d) Assistance for certain public hospitals
The provision would provide additional funds for certain
public hospitals that are: owned or operated by a state (or
by an instrumentality or unit of government within a state);
are not receiving DSH payments as of October 1, 2000; and
have a lot-income utilization rate in excess of 65% as of the
same date. Funds provided under this section to states with
eligible hospitals are in addition to DSH allotments. The
total assistance under this section for all states cannot
exceed the following amounts: $15 million for FY2002; $176
million for 2003; $269 million for 2004; $330 million for
2005 and for FY 2006 and each fiscal year thereunder, $375
million.
(e) DSH payment accountability standards
The provision would require the Secretary to implement
accountability standards to ensure that DSH payments are used
to reimburse States and hospitals that are eligible for such
payments and are otherwise in accordance with Medicaid
statutory requirements.
Section 702. New prospective payment system for Federally-
qualified health centers and rural health clinics
The provision would create a new Medicaid prospective
payment system for federally qualified health centers (FQHCs)
and rural health centers (RHCs) beginning in January of
FY2001. Existing FQHCs and RHCs would be paid per visit
payments equal to 100% of the average costs incurred during
1999 and 2000 adjusted to take into account any increase or
decrease in the scope of services furnished. For entities
first qualifying as FQHCs or RHCs after 2000, the year visit
payments would begin in the first year that the center or
clinic attains qualification and would be based on 100% of
the costs incurred during that year based on the rates
established for similar centers or clinics with similar
caseloads in the same or adjacent geographic area. In the
absence of such similar centers or clinics, the methodology
would be based on that used for developing rates for
established FQHCs or RHCs or such methodology or reasonable
specifications as established by the Secretary. For each
fiscal year thereafter, per visit payments for all FQHCs and
RHCs would be equal to amounts for the preceding fiscal year
increased by the percentage increase in the Medicare Economic
Index applicable to primary care services for that fiscal
year, and adjusted for any increase or decrease in the scope
of Services furnished during the fiscal year. In managed care
contracts, States must make supplemental payments to the
center or clinic that would be equal to the difference
between contracted amounts and the cost-based amounts. Those
payments would be paid on a schedule mutually agreed to by
the State and the FQHC or RHC. Alternative payment methods
would be permitted only when payments are at least equal to
amounts otherwise provided.
The provision would also direct the Comptroller General to
provide for a study on how to rebase or refine cost payment
methods for the services of FQHCs and RHCs. The report would
be due to Congress no later than 4 years after the date of
enactment.
Section 703. Streamlined approval of continued state-wide
1115 Medicaid waivers
The provision would define the process for submitting
requests for and receiving extensions of Medicaid
demonstration waivers authorized under Section 1115 of the
Social Security Act that have already received initial 3-year
extensions. It would require each state requesting such an
extension to submit an application at least 120 days prior to
the expiration date of the existing extension to submit an
application at least 120 days prior to the expiration date of
the existing waiver. No later than 45 days after the
Secretary receives such application, the Secretary would be
required to notify the State if she intends to review the
existing terms and conditions of the project and would inform
the State of proposed changes in the terms and conditions of
the waiver. If the Secretary fails to provide such
notification, the request would be deemed approved. During
the 30-day period beginning after the Secretary provides the
proposed terms and conditions to the state, those terms and
conditions would be negotiated. No later than 120 days after
the date that the request for extension was submitted (or
such later date as agreed to by the chief executive officer
of the State) the Secretary would be required to approve the
application subject to the agreed upon terms and conditions
or, in the absence of an agreement, such terms and conditions
that are determined by the Secretary to be reasonably
consistent with the overall objective of the waiver, or
disapprove the application. If the waiver is not approved or
disapproved during this period, the request would be deemed
approved in the terms and conditions as have been agreed to
(if any) by the Secretary and the State. Approvals would be
for periods not to exceed 3 year and would be subject to the
final reporting and evaluation requirements in current law.
Section 704. Medicaid county-organized health systems
The provision would allow the current exemption for certain
Health Insuring Organizations (HIOs) from certain Medicaid
HMO contracting requirements to apply as long as no more than
14% of all Medicaid beneficiaries in the state are enrolled
in those HIOs. This provision would be effective as if
included in the enactment of the Consolidated Omnibus Budget
Reconciliation Act of 1985.
Section 705. Deadline for issuance of final regulation
relating to Medicaid upper payment limits
The provision would require the Secretary to issue final
regulations governing upper payment limits (UPLs) for
inpatient and outpatient services provided by certain types
of facilities no later than December 31, 2000. It would also
require that the final regulation establish a separate UPL
for non-state-owned or operated government facilities based
on a proposed rule announced in October, 2000.
The proposed rule would specify two transition periods for
states with payment arrangements that are noncompliant, one
for states with such arrangements effective on or after
October 1, 1999 and the other for those states with
arrangements that were effective before that date. The
starting point of the phase-out of existing payment
arrangements, the percentage reduction in payments each year,
and the overall length of time permitted for full phase-out
would vary for the two transition periods.
The provision also requires the final regulation to
stipulate a third set of rules governing the transition
period for certain states. This additional set of rules would
apply to states with payment arrangements approved or in
effect on or before October 1, 1992, or under which claims
for federal matching were paid on or before that date, and
for which such payments exceed the UPLs established under the
final regulation. For these states, a 6-year transition
period would apply, beginning with the period that begins on
the first state fiscal year that starts after September 30,
2002 and ends on September 30, 2008. For each year during the
transition period, applicable states must reduce excess
payments by 15%. Full compliance with final regulations is
required by October 1, 2008.
Section 706. Alaska FMAP
The provision would change the formula for calculating the
state percentage and thus the federal matching percentage for
Alaska for fiscal years 2001 through 2005. The state
percentage for Alaska would be calculated by using an
adjusted per capita income calculation instead of the state-
wide average per capita income calculation generally used.
The adjusted per capita income for Alaska would be calculated
as the three year average per capita income for the state
divided by 1.05.
Section 707. 1-Year extension of welfare-to-work transition
This provision extends by 1 year the sunset on transitional
medical assistance for families no longer eligible for
welfare from September 30, 2001 to September 30, 2002.
Section 708. Additional entities qualified to determine
Medicaid presumptive eligibility for low-income children
Under Medicaid presumptive eligibility rules, States are
allowed to temporarily enroll children whose family income
appears to be below Medicaid income standards, until a final
formal determination of eligibility is made.
The provision adds several entities to the list of those
qualified to make Medicaid presumptive eligibility
determinations for children. These new entities include
agencies that determine eligibility for Medicaid or the State
Children's Health Insurance program; or certain elementary
and secondary schools, including those operated or supported
by the Bureau of Indian Affairs.
Section 709. Development of uniform QMB/SLMB application form
This provision requires the secretary of Health and Human
Services to develop a simplified national application form
for States, at their option, to use for individuals who apply
for medical assistance for medicare cost-sharing under the
medicaid program.
Section 710. Technical corrections
This provision makes technical medicaid amendments that
exempt from certain upper income limitations individuals made
eligible for medical assistance, at a State's option, under
the Foster Care Independence Act of 1999 and under the Breast
and Cervical Cancer Prevention and Treatment Act of 2000.
TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
Section 801. Special rule for redistribution and availability
of unused fiscal year 1998 and 1999 SCHIP allotments
The provision would establish a new method for distributing
unspent FY1998 and FY1999 allotments. States that use all
their SCHIP allotments (for each of those years) would
receive an amount equal to estimated spending in excess of
their original exhausted allotment. Each territory that
spends its original allotment would receive an amount that
bears the same ratio to 1.05% of the total amount available
for redistribution as the ratio of its original allotment to
the total allotment for all territories.
States that do not use all their SCHIP allotment would
receive an amount equal to the total amount of unspent funds,
less amounts distributed to states that fully exhausted their
original allotments, multiplied by the ratio of a state's
unspent original allotment to the total amount of unspent
funds. States may use up to 10% of the retained FY1998 funds
for outreach activities.
To calculate the amounts available for redistribution in
each formula described above,
[[Page H12387]]
the Secretary would use amounts reported by states not later
than December 15, 2000 for the FY1998 redistribution and
November 30, 2001 for the FY1999 redistribution as reported
on HCFA Form 64 or HCFA Form 21, as approved by the
Secretary. Redistributed funds would be available through the
end of FY2002.
Section 802. Authority to pay Medicaid expansion SCHIP costs
from title XXI appropriation
This provision provides a technical accounting
clarification requested by the Health Care Financing
Administration. It would authorize the payment of the costs
of SCHIP Medicaid expansions and costs of benefits provided
during periods of presumptive eligibility from the SCHIP
appropriation rather than from the Medicaid appropriation,
with a subsequent offset. In addition, the provision would
codify proposed rules regarding the order of payments for
benefits and administrative costs from state-specific SCHIP
allotments.
Section 803. Application of Medicaid child presumptive
eligibility provisions
Under Medicaid presumptive eligibility rules, states are
allowed to temporarily enroll children whose family income
appears to be below Medicaid income standards, until a final
formal determination of eligibility is made. There is no
express provision for presumptive eligibility under separate
(non-Medicaid) SCHIP programs. However, the Secretary of HHS
permits states to develop, for separate (non-Medicaid) SCHIP
programs, procedures that are similar to those permitted
under Medicaid.
The provision clarifies states' authority to conduct
presumptive eligibility determinations, as defined in
Medicaid law, under separate (non-Medicaid) SCHIP programs.
TITLE IX--OTHER PROVISIONS
SUBTITLE A--PACE PROGRAM
Section 901. Extension of transition for current waivers
The provision would permit the Secretary to continue to
operate the Program of All-Inclusive Care for the Elderly
(PACE) under waivers for a period of 36 months (rather than
24 months), and States may do so for 4 years (rather than 3
years). OBRA 86 required the Secretary to grant waivers of
certain Medicare and Medicaid requirements to not more than
10 public or non-profit private community-based organizations
to provide health and long-term care services on a capitated
basis to frail elderly persons at risk of
institutionalization. BBA 97 established PACE as a permanent
provider under Medicare and as a special benefit under
Medicaid.
Section 902. Continuing of certain operating arrangements
permitted
If prior to becoming a permanent component of Medicare, a
PACE demonstration project had contractual or other operating
arrangements that are not recognized under permanent program
regulations, the provision would require the Secretary, in
consultation with the state agency, to permit it to continue
under such arrangements as long as it is consistent with the
objectives of the PACE program.
Section 903. Flexibility in exercising waiver authority
The provision would enable the Secretary to exercise
authority to modify or waive Medicare or Medicaid
requirements to respond to the needs of PACE programs related
to employment and the use of community care physicians. The
Secretary must approve requests for such waivers within 90
days of the date the request for waiver is received.
subtitle b--outreach to eligible low-income medicare beneficiaries
Section 911. Outreach on availability of Medicare cost-
sharing assistance to eligible low-income Medicare
beneficiaries
The provision would require the Commissioner of the Social
Security Administration to conduct outreach efforts to
identify individuals who may be eligible for Medicaid payment
of Medicare cost sharing and to notify these persons of the
availability of such assistance. The Commissioner would also
be required to furnish, at least annually, a list of such
individuals who reside in each state to that state's agency
responsible for administering the Medicaid program as well as
to any other appropriate state agency. The list should
include the name and address, and whether such individuals
have experienced reductions in Social Security benefits. The
provision would also require the General Accounting Office to
conduct a study of the impact of the outreach activities of
the Commissioner to submit to Congress no later than 18
months after such outreach begins. The provision would be
effective one year after date of enactment.
subtitle C--maternal and child health block grant
Section 921. Increase in authorization of appropriations for
the maternal and child health services block grant
The provision would increase the authorization of
appropriations for the Maternal and Child Health Services
Block Grant under Title V from $705,000,000 to $850,000,000
for fiscal year 2001 and each fiscal year thereafter.
subtitle d--diabetes
Section 931. Increase in appropriations for special diabetes
programs for type I diabetes and Indians
The provision would extend for 1 year, to FY2003, the
authority for grants to be made for both the Special Diabetes
Program for Type I Diabetes and for the Special Diabetes
Programs for Indians under the Public Health Service Act. The
provision would also expand funding available for these
programs. For each grant program, the provision would
increase total funding to $100 million each for FY2001,
FY2002 and FY2003. For FY2001 and FY2002, $30 million of the
$100 million for each program would be transferred from SCHIP
as set forth in the Balanced Budget Act of 1997; the
remaining $70 million would be drawn from the Treasury out of
funds not otherwise appropriated. In FY2003, the entire $100
million would be drawn from the Treasury out of funds not
otherwise appropriated. In addition, the provision would
extend the due date on final evaluation reports for these two
grant programs from January 1, 2002 to January 1, 2003.
Section 932. Appropriations for Ricky Ray Hemophilia Relief
Fund
This provision provides for a direct appropriation of $475
million for FY2001. Funds would be available until expended.
subtitle E--information on nursing facility staffing
Section 941. Posting of information on nursing facility
staffing
The provision would require medicare skilled nursing
facilities and medicaid nursing facilities to post nurse
staffing information daily for each shift in the facility,
effective January 1, 2003.
subtitle F--adjustment of multiemployer plan benefits guaranteed
Section 951. Adjustment of multiemployer plan benefits
guaranteed
The provision adjusts the level of multiemployer pension
plan benefits guaranteed under title IV of ERISA.
COMMUNITY RENEWAL TAX RELIEF ACT OF 2000
The conference agreement would enact the provisions of H.R.
5662, as introduced on December 14, 2000. The text of that
bill follows:
A BILL To amend the Internal Revenue Code of 1986 to provide
for community revitalization and a 2-year extension of
medical saving accounts, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``Community
Renewal Tax Relief Act of 2000''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal 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 a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--
TITLE I--COMMUNITY RENEWAL AND NEW MARKETS
Subtitle A--Tax Incentives for Renewal Communities
Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Work opportunity credit for hiring youth residing in renewal
communities.
Subtitle B--Extension and Expansion of Empowerment Zone Incentives
Sec. 111. Authority to designate 9 additional empowerment zones.
Sec. 112. Extension of empowerment zone treatment through 2009.
Sec. 113. 20 percent employment credit for all empowerment zones.
Sec. 114. Increased expensing under section 179.
Sec. 115. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 116. Nonrecognition of gain on rollover of empowerment zone
investments.
Sec. 117. Increased exclusion of gain on sale of empowerment zone
stock.
Subtitle C--New Markets Tax Credit
Sec. 121. New markets tax credit.
Subtitle D--Improvements in Low-Income Housing Credit
Sec. 131. Modification of State ceiling on low-income housing credit.
Sec. 132. Modification of criteria for allocating housing credits among
projects.
Sec. 133. Additional responsibilities of housing credit agencies.
Sec. 134. Modifications to rules relating to basis of building which is
eligible for credit.
Sec. 135. Other modifications.
Sec. 136. Carryforward rules.
Sec. 137. Effective date.
Subtitle E--Other Community Renewal and New Markets Assistance
Part I--Provisions relating to housing and substance abuse prevention
and treatment
Sec. 141. Transfer of unoccupied and substandard HUD-held housing to
local governments and community development corporations.
Sec. 142. Transfer of HUD assets in revitalization areas.
Sec. 143. Risk-sharing demonstration.
Sec. 144. Prevention and treatment of substance abuse; services
provided through religious organizations.
Part II--Advisory Council on Community Renewal
Sec. 151. Short title.
Sec. 152. Establishment.
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Sec. 153. Duties of Advisory Council.
Sec. 154. Membership.
Sec. 155. Powers of Advisory Council.
Sec. 156. Reports.
Sec. 157. Termination.
Sec. 158. Applicability of Federal Advisory Committee Act.
Sec. 159. Resources.
Sec. 160. Effective date.
Subtitle F--Other Provisions
Sec. 161. Acceleration of phase-in of increase in volume cap on private
activity bonds.
Sec. 162. Modifications to expensing of environmental remediation
costs.
Sec. 163. Extension of DC homebuyer tax credit.
Sec. 164. Extension of DC Zone through 2003.
Sec. 165. Extension of enhanced deduction for corporate donations of
computer technology.
Sec. 166. Treatment of Indian tribal governments under Federal
Unemployment Tax Act.
TITLE II--2-YEAR EXTENSION OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS
Sec. 201. 2-year extension of availability of medical savings accounts.
Sec. 202. Medical savings accounts renamed as Archer MSAs.
TITLE III--ADMINISTRATIVE AND TECHNICAL PROVISIONS
Subtitle A--Administrative Provisions
Sec. 301. Exemption of certain reporting requirements.
Sec. 302. Extension of deadlines for IRS compliance with certain notice
requirements.
Sec. 303. Extension of authority for undercover operations.
Sec. 304. Confidentiality of certain documents relating to closing and
similar agreements and to agreements with foreign
governments.
Sec. 305. Increase in threshold for Joint Committee reports on refunds
and credits.
Sec. 306. Treatment of missing children with respect to certain tax
benefits.
Sec. 307. Amendments to statutes referencing yield on 52-week Treasury
bills.
Sec. 308. Adjustments for Consumer Price Index error.
Sec. 309. Prevention of duplication of loss through assumption of
liabilities giving rise to a deduction.
Sec. 310. Disclosure of certain information to Congressional Budget
Office.
Subtitle B--Technical Corrections
Sec. 311. Amendments related to Ticket to Work and Work Incentives
Improvement Act of 1999.
Sec. 312. Amendments related to Tax and Trade Relief Extension Act of
1998.
Sec. 313. Amendments related to Internal Revenue Service Restructuring
and Reform Act of 1998.
Sec. 314. Amendments related to Taxpayer Relief Act of 1997.
Sec. 315. Amendments related to Balanced Budget Act of 1997.
Sec. 316. Amendments related to Small Business Job Protection Act of
1996.
Sec. 317. Amendment related to Revenue Reconciliation Act of 1990.
Sec. 318. Other technical corrections.
Sec. 319. Clerical changes.
TITLE IV--TAX TREATMENT OF SECURITIES FUTURES CONTRACTS
Sec. 401. Tax treatment of securities futures contracts.
TITLE I--COMMUNITY RENEWAL AND NEW MARKETS
Subtitle A--Tax Incentives for Renewal Communities
SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL
COMMUNITIES.
(a) In General.--Chapter 1 is amended by adding at the end
the following new subchapter:
``Subchapter X--Renewal Communities
``Part I. Designation.
``Part II. Renewal community capital gain; renewal community business.
``Part III. Additional incentives.
``PART I--DESIGNATION
``Sec. 1400E. Designation of renewal communities.
``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.
``(a) Designation.--
``(1) Definitions.--For purposes of this title, the term
`renewal community' means any area--
``(A) which is nominated by 1 or more local governments and
the State or States in which it is located for designation as
a renewal community (hereafter in this section referred to
as a `nominated area'), and
``(B) which the Secretary of Housing and Urban Development
designates as a renewal community, after consultation with--
``(i) the Secretaries of Agriculture, Commerce, Labor, and
the Treasury; the Director of the Office of Management and
Budget, and the Administrator of the Small Business
Administration, and
``(ii) in the case of an area on an Indian reservation, the
Secretary of the Interior.
``(2) Number of designations.--
``(A) In general.--Not more than 40 nominated areas may be
designated as renewal communities.
``(B) Minimum designation in rural areas.--Of the areas
designated under paragraph (1), at least 12 must be areas--
``(i) which are within a local government jurisdiction or
jurisdictions with a population of less than 50,000,
``(ii) which are outside of a metropolitan statistical area
(within the meaning of section 143(k)(2)(B)), or
``(iii) which are determined by the Secretary of Housing
and Urban Development, after consultation with the Secretary
of Commerce, to be rural areas.
``(3) Areas designated based on degree of poverty, etc.--
``(A) In general.--Except as otherwise provided in this
section, the nominated areas designated as renewal
communities under this subsection shall be those nominated
areas with the highest average ranking with respect to the
criteria described in subparagraphs (B), (C), and (D) of
subsection (c)(3). For purposes of the preceding sentence, an
area shall be ranked within each such criterion on the basis
of the amount by which the area exceeds such criterion, with
the area which exceeds such criterion by the greatest amount
given the highest ranking.
``(B) Exception where inadequate course of action, etc.--An
area shall not be designated under subparagraph (A) if the
Secretary of Housing and Urban Development determines that
the course of action described in subsection (d)(2) with
respect to such area is inadequate.
``(C) Preference for enterprise communities and empowerment
zones.--With respect to the first 20 designations made under
this section, a preference shall be provided to those
nominated areas which are enterprise communities or
empowerment zones (and are otherwise eligible for designation
under this section).
``(4) Limitation on designations.--
``(A) Publication of regulations.--The Secretary of Housing
and Urban Development shall prescribe by regulation no later
than 4 months after the date of the enactment of this
section, after consultation with the officials described in
paragraph (1)(B)--
``(i) the procedures for nominating an area under paragraph
(1)(A),
``(ii) the parameters relating to the size and population
characteristics of a renewal community, and
``(iii) the manner in which nominated areas will be
evaluated based on the criteria specified in subsection (d).
``(B) Time limitations.--The Secretary of Housing and Urban
Development may designate nominated areas as renewal
communities only during the period beginning on the first day
of the first month following the month in which the
regulations described in subparagraph (A) are prescribed and
ending on December 31, 2001.
``(C) Procedural rules.--The Secretary of Housing and Urban
Development shall not make any designation of a nominated
area as a renewal community under paragraph (2) unless--
``(i) the local governments and the States in which the
nominated area is located have the authority--
``(I) to nominate such area for designation as a renewal
community,
``(II) to make the State and local commitments described in
subsection (d), and
``(III) to provide assurances satisfactory to the Secretary
of Housing and Urban Development that such commitments will
be fulfilled,
``(ii) a nomination regarding such area is submitted in
such a manner and in such form, and contains such
information, as the Secretary of Housing and Urban
Development shall by regulation prescribe, and
``(iii) the Secretary of Housing and Urban Development
determines that any information furnished is reasonably
accurate.
``(5) Nomination process for indian reservations.--For
purposes of this subchapter, in the case of a nominated area
on an Indian reservation, the reservation governing body (as
determined by the Secretary of the Interior) shall be treated
as being both the State and local governments with respect to
such area.
``(b) Period for Which Designation Is in Effect.--
``(1) In general.--Any designation of an area as a renewal
community shall remain in effect during the period beginning
on January 1, 2002, and ending on the earliest of--
``(A) December 31, 2009,
``(B) the termination date designated by the State and
local governments in their nomination, or
``(C) the date the Secretary of Housing and Urban
Development revokes such designation.
``(2) Revocation of designation.--The Secretary of Housing
and Urban Development may revoke the designation under this
section of an area if such Secretary determines that the
local government or the State in which the area is located--
``(A) has modified the boundaries of the area, or
``(B) is not complying substantially with, or fails to make
progress in achieving, the State or local commitments,
respectively, described in subsection (d).
``(3) Earlier termination of certain benefits if earlier
termination of designation.--If the designation of an area as
a renewal community terminates before December 31, 2009, the
day after the date of such termination shall be substituted
for `January 1, 2010' each place it appears in sections 1400F
and 1400J with respect to such area.
``(c) Area and Eligibility Requirements.--
``(1) In general.--The Secretary of Housing and Urban
Development may designate a nominated area as a renewal
community under subsection (a) only if the area meets the
requirements of paragraphs (2) and (3) of this subsection.
``(2) Area requirements.--A nominated area meets the
requirements of this paragraph if--
``(A) the area is within the jurisdiction of one or more
local governments,
``(B) the boundary of the area is continuous, and
[[Page H12389]]
``(C) the area--
``(i) has a population of not more than 200,000 and at
least--
``(I) 4,000 if any portion of such area (other than a rural
area described in subsection (a)(2)(B)(i)) is located within
a metropolitan statistical area (within the meaning of
section 143(k)(2)(B)) which has a population of 50,000 or
greater, or
``(II) 1,000 in any other case, or
``(ii) is entirely within an Indian reservation (as
determined by the Secretary of the Interior).
``(3) Eligibility requirements.--A nominated area meets the
requirements of this paragraph if the State and the local
governments in which it is located certify in writing (and
the Secretary of Housing and Urban Development, after such
review of supporting data as he deems appropriate, accepts
such certification) that--
``(A) the area is one of pervasive poverty, unemployment,
and general distress,
``(B) the unemployment rate in the area, as determined by
the most recent available data, was at least 1\1/2\ times the
national unemployment rate for the period to which such data
relate,
``(C) the poverty rate for each population census tract
within the nominated area is at least 20 percent, and
``(D) in the case of an urban area, at least 70 percent of
the households living in the area have incomes below 80
percent of the median income of households within the
jurisdiction of the local government (determined in the same
manner as under section 119(b)(2) of the Housing and
Community Development Act of 1974).
``(4) Consideration of other factors.--The Secretary of
Housing and Urban Development, in selecting any nominated
area for designation as a renewal community under this
section--
``(A) shall take into account--
``(i) the extent to which such area has a high incidence of
crime, or
``(ii) if such area has census tracts identified in the May
12, 1998, report of the General Accounting Office regarding
the identification of economically distressed areas, and
``(B) with respect to 1 of the areas to be designated under
subsection (a)(2)(B), may, in lieu of any criteria described
in paragraph (3), take into account the existence of
outmigration from the area.
``(d) Required State and Local Commitments.--
``(1) In general.--The Secretary of Housing and Urban
Development may designate any nominated area as a renewal
community under subsection (a) only if--
``(A) the local government and the State in which the area
is located agree in writing that, during any period during
which the area is a renewal community, such governments will
follow a specified course of action which meets the
requirements of paragraph (2) and is designed to reduce the
various burdens borne by employers or employees in such area,
and
``(B) the economic growth promotion requirements of
paragraph (3) are met.
``(2) Course of action.--
``(A) In general.--A course of action meets the
requirements of this paragraph if such course of action is a
written document, signed by a State (or local government) and
neighborhood organizations, which evidences a partnership
between such State or government and community-based
organizations and which commits each signatory to specific
and measurable goals, actions, and timetables. Such course of
action shall include at least 4 of the following:
``(i) A reduction of tax rates or fees applying within the
renewal community.
``(ii) An increase in the level of efficiency of local
services within the renewal community.
``(iii) Crime reduction strategies, such as crime
prevention (including the provision of crime prevention
services by nongovernmental entities).
``(iv) Actions to reduce, remove, simplify, or streamline
governmental requirements applying within the renewal
community.
``(v) Involvement in the program by private entities,
organizations, neighborhood organizations, and community
groups, particularly those in the renewal community,
including a commitment from such private entities to provide
jobs and job training for, and technical, financial, or other
assistance to, employers, employees, and residents from the
renewal community.
``(vi) The gift (or sale at below fair market value) of
surplus real property (such as land, homes, and commercial or
industrial structures) in the renewal community to
neighborhood organizations, community development
corporations, or private companies.
``(B) Recognition of past efforts.--For purposes of this
section, in evaluating the course of action agreed to by any
State or local government, the Secretary of Housing and Urban
Development shall take into account the past efforts of such
State or local government in reducing the various burdens
borne by employers and employees in the area involved.
``(3) Economic growth promotion requirements.--The economic
growth promotion requirements of this paragraph are met with
respect to a nominated area if the local government and the
State in which such area is located certify in writing that
such government and State (respectively) have repealed or
reduced, will not enforce, or will reduce within the
nominated area at least 4 of the following:
``(A) Licensing requirements for occupations that do not
ordinarily require a professional degree.
``(B) Zoning restrictions on home-based businesses which do
not create a public nuisance.
``(C) Permit requirements for street vendors who do not
create a public nuisance.
``(D) Zoning or other restrictions that impede the
formation of schools or child care centers.
``(E) Franchises or other restrictions on competition for
businesses providing public services, including taxicabs,
jitneys, cable television, or trash hauling.
This paragraph shall not apply to the extent that such
regulation of businesses and occupations is necessary for and
well-tailored to the protection of health and safety.
``(e) Coordination With Treatment of Empowerment Zones and
Enterprise Communities.--For purposes of this title, the
designation under section 1391 of any area as an empowerment
zone or enterprise community shall cease to be in effect as
of the date that the designation of any portion of such area
as a renewal community takes effect.
``(f) Definitions and Special Rules.--For purposes of this
subchapter--
``(1) Governments.--If more than one government seeks to
nominate an area as a renewal community, any reference to, or
requirement of, this section shall apply to all such
governments.
``(2) Local government.--The term `local government'
means--
``(A) any county, city, town, township, parish, village, or
other general purpose political subdivision of a State, and
``(B) any combination of political subdivisions described
in subparagraph (A) recognized by the Secretary of Housing
and Urban Development.
``(3) Application of rules relating to census tracts.--The
rules of section 1392(b)(4) shall apply.
``(4) Census data.--Population and poverty rate shall be
determined by using 1990 census data.
``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS
``Sec. 1400F. Renewal community capital gain.
``Sec. 1400G. Renewal community business defined.
``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.
``(a) General Rule.--Gross income does not include any
qualified capital gain from the sale or exchange of a
qualified community asset held for more than 5 years.
``(b) Qualified Community Asset.--For purposes of this
section--
``(1) In general.--The term `qualified community asset'
means--
``(A) any qualified community stock,
``(B) any qualified community partnership interest, and
``(C) any qualified community business property.
``(2) Qualified community stock.--
``(A) In general.--Except as provided in subparagraph (B),
the term `qualified community stock' means any stock in a
domestic corporation if--
``(i) such stock is acquired by the taxpayer after December
31, 2001, and before January 1, 2010, at its original issue
(directly or through an underwriter) from the corporation
solely in exchange for cash,
``(ii) as of the time such stock was issued, such
corporation was a renewal community business (or, in the case
of a new corporation, such corporation was being organized
for purposes of being a renewal community business), and
``(iii) during substantially all of the taxpayer's holding
period for such stock, such corporation qualified as a
renewal community business.
``(B) Redemptions.--A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this paragraph.
``(3) Qualified community partnership interest.--The term
`qualified community partnership interest' means any capital
or profits interest in a domestic partnership if--
``(A) such interest is acquired by the taxpayer after
December 31, 2001, and before January 1, 2010, from the
partnership solely in exchange for cash,
``(B) as of the time such interest was acquired, such
partnership was a renewal community business (or, in the case
of a new partnership, such partnership was being organized
for purposes of being a renewal community business), and
``(C) during substantially all of the taxpayer's holding
period for such interest, such partnership qualified as a
renewal community business.
A rule similar to the rule of paragraph (2)(B) shall apply
for purposes of this paragraph.
``(4) Qualified community business property.--
``(A) In general.--The term `qualified community business
property' means tangible property if--
``(i) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after December 31,
2001, and before January 1, 2010,
``(ii) the original use of such property in the renewal
community commences with the taxpayer, and
``(iii) during substantially all of the taxpayer's holding
period for such property, substantially all of the use of
such property was in a renewal community business of the
taxpayer.
``(B) Special rule for substantial improvements.--The
requirements of clauses (i) and (ii) of subparagraph (A)
shall be treated as satisfied with respect to--
``(i) property which is substantially improved by the
taxpayer before January 1, 2010, and
``(ii) any land on which such property is located.
The determination of whether a property is substantially
improved shall be made under clause (ii) of section
1400B(b)(4)(B), except that `December 31, 2001' shall be
substituted for `December 31, 1997' in such clause.
``(c) Qualified Capital Gain.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `qualified capital gain' means any gain
recognized on the sale or exchange of--
``(A) a capital asset, or
``(B) property used in the trade or business (as defined in
section 1231(b)).
[[Page H12390]]
``(2) Gain before 2002 or after 2014 not qualified.--The
term `qualified capital gain' shall not include any gain
attributable to periods before January 1, 2002, or after
December 31, 2014.
``(3) Certain rules to apply.--Rules similar to the rules
of paragraphs (3), (4), and (5) of section 1400B(e) shall
apply for purposes of this subsection.
``(d) Certain Rules To Apply.--For purposes of this
section, rules similar to the rules of paragraphs (5), (6),
and (7) of subsection (b), and subsections (f) and (g), of
section 1400B shall apply; except that for such purposes
section 1400B(g)(2) shall be applied by substituting `January
1, 2002' for `January 1, 1998' and `December 31, 2014' for
`December 31, 2008'.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of this section, including regulations to prevent the abuse
of the purposes of this section.
``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.
``For purposes of this subchapter, the term `renewal
community business' means any entity or proprietorship which
would be a qualified business entity or qualified
proprietorship under section 1397C if references to renewal
communities were substituted for references to empowerment
zones in such section.
``PART III--ADDITIONAL INCENTIVES
``Sec. 1400H. Renewal community employment credit.
``Sec. 1400I. Commercial revitalization deduction.
``Sec. 1400J. Increase in expensing under section 179.
``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.
``(a) In General.--Subject to the modification in
subsection (b), a renewal community shall be treated as an
empowerment zone for purposes of section 1396 with respect to
wages paid or incurred after December 31, 2001.
``(b) Modification.--In applying section 1396 with respect
to renewal communities--
``(1) the applicable percentage shall be 15 percent, and
``(2) subsection (c) thereof shall be applied by
substituting `$10,000' for `$15,000' each place it appears.
``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.
``(a) General Rule.--At the election of the taxpayer,
either--
``(1) one-half of any qualified revitalization expenditures
chargeable to capital account with respect to any qualified
revitalization building shall be allowable as a deduction for
the taxable year in which the building is placed in service,
or
``(2) a deduction for all such expenditures shall be
allowable ratably over the 120-month period beginning with
the month in which the building is placed in service.
``(b) Qualified Revitalization Buildings and
Expenditures.--For purposes of this section--
``(1) Qualified revitalization building.--The term
`qualified revitalization building' means any building (and
its structural components) if--
``(A) the building is placed in service by the taxpayer in
a renewal community and the original use of the building
begins with the taxpayer, or
``(B) in the case of such building not described in
subparagraph (A), such building--
``(i) is substantially rehabilitated (within the meaning of
section 47(c)(1)(C)) by the taxpayer, and
``(ii) is placed in service by the taxpayer after the
rehabilitation in a renewal community.
``(2) Qualified revitalization expenditure.--
``(A) In general.--The term `qualified revitalization
expenditure' means any amount properly chargeable to capital
account for property for which depreciation is allowable
under section 168 (without regard to this section) and which
is--
``(i) nonresidential real property (as defined in section
168(e)), or
``(ii) section 1250 property (as defined in section
1250(c)) which is functionally related and subordinate to
property described in clause (i).
``(B) Certain expenditures not included.--
``(i) Acquisition cost.--In the case of a building
described in paragraph (1)(B), the cost of acquiring the
building or interest therein shall be treated as a qualified
revitalization expenditure only to the extent that such cost
does not exceed 30 percent of the aggregate qualified
revitalization expenditures (determined without regard to
such cost) with respect to such building.
``(ii) Credits.--The term `qualified revitalization
expenditure' does not include any expenditure which the
taxpayer may take into account in computing any credit
allowable under this title unless the taxpayer elects to take
the expenditure into account only for purposes of this
section.
``(c) Dollar Limitation.--The aggregate amount which may be
treated as qualified revitalization expenditures with respect
to any qualified revitalization building shall not exceed the
lesser of--
``(1) $10,000,000, or
``(2) the commercial revitalization expenditure amount
allocated to such building under this section by the
commercial revitalization agency for the State in which the
building is located.
``(d) Commercial Revitalization Expenditure Amount.--
``(1) In general.--The aggregate commercial revitalization
expenditure amount which a commercial revitalization agency
may allocate for any calendar year is the amount of the State
commercial revitalization expenditure ceiling determined
under this paragraph for such calendar year for such agency.
``(2) State commercial revitalization expenditure
ceiling.--The State commercial revitalization expenditure
ceiling applicable to any State--
``(A) for each calendar year after 2001 and before 2010 is
$12,000,000 for each renewal community in the State, and
``(B) for each calendar year thereafter is zero.
``(3) Commercial revitalization agency.--For purposes of
this section, the term `commercial revitalization agency'
means any agency authorized by a State to carry out this
section.
``(4) Time and manner of allocations.--Allocations under
this section shall be made at the same time and in the same
manner as under paragraphs (1) and (7) of section 42(h).
``(e) Responsibilities of Commercial Revitalization
Agencies.--
``(1) Plans for allocation.--Notwithstanding any other
provision of this section, the commercial revitalization
expenditure amount with respect to any building shall be zero
unless--
``(A) such amount was allocated pursuant to a qualified
allocation plan of the commercial revitalization agency which
is approved (in accordance with rules similar to the rules of
section 147(f )(2) (other than subparagraph (B)(ii) thereof))
by the governmental unit of which such agency is a part, and
``(B) such agency notifies the chief executive officer (or
its equivalent) of the local jurisdiction within which the
building is located of such allocation and provides such
individual a reasonable opportunity to comment on the
allocation.
``(2) Qualified allocation plan.--For purposes of this
subsection, the term `qualified allocation plan' means any
plan--
``(A) which sets forth selection criteria to be used to
determine priorities of the commercial revitalization agency
which are appropriate to local conditions,
``(B) which considers--
``(i) the degree to which a project contributes to the
implementation of a strategic plan that is devised for a
renewal community through a citizen participation process,
``(ii) the amount of any increase in permanent, full-time
employment by reason of any project, and
``(iii) the active involvement of residents and nonprofit
groups within the renewal community, and
``(C) which provides a procedure that the agency (or its
agent) will follow in monitoring compliance with this
section.
``(f) Special Rules.--
``(1) Deduction in lieu of depreciation.--The deduction
provided by this section for qualified revitalization
expenditures shall--
``(A) with respect to the deduction determined under
subsection (a)(1), be in lieu of any depreciation deduction
otherwise allowable on account of one-half of such
expenditures, and
``(B) with respect to the deduction determined under
subsection (a)(2), be in lieu of any depreciation deduction
otherwise allowable on account of all of such expenditures.
``(2) Basis adjustment, etc.--For purposes of sections 1016
and 1250, the deduction under this section shall be treated
in the same manner as a depreciation deduction. For purposes
of section 1250(b)(5), the straight line method of adjustment
shall be determined without regard to this section.
``(3) Substantial rehabilitations treated as separate
buildings.--A substantial rehabilitation (within the meaning
of section 47(c)(1)(C)) of a building shall be treated as a
separate building for purposes of subsection (a).
``(4) Clarification of allowance of deduction under minimum
tax.--Notwithstanding section 56(a)(1), the deduction under
this section shall be allowed in determining alternative
minimum taxable income under section 55.
``(g) Termination.--This section shall not apply to any
building placed in service after December 31, 2009.
``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.
``(a) In General.--For purposes of section 1397A--
``(1) a renewal community shall be treated as an
empowerment zone,
``(2) a renewal community business shall be treated as an
enterprise zone business, and
``(3) qualified renewal property shall be treated as
qualified zone property.
``(b) Qualified Renewal Property.--For purposes of this
section--
``(1) In general.--The term `qualified renewal property'
means any property to which section 168 applies (or would
apply but for section 179) if--
``(A) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after December 31,
2001, and before January 1, 2010, and
``(B) such property would be qualified zone property (as
defined in section 1397D) if references to renewal
communities were substituted for references to empowerment
zones in section 1397D.
``(2) Certain rules to apply.--The rules of subsections
(a)(2) and (b) of section 1397D shall apply for purposes of
this section.''.
(b) Exception for Commercial Revitalization Deduction From
Passive Loss Rules.--
(1) Paragraph (3) of section 469(i) is amended by
redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) Exception for commercial revitalization deduction.--
Subparagraph (A) shall not apply to any portion of the
passive activity loss for any taxable year which is
attributable to the commercial revitalization deduction under
section 1400I.''.
[[Page H12391]]
(2) Subparagraph (E) of section 469(i)(3), as redesignated
by subparagraph (A), is amended to read as follows:
``(E) Ordering rules to reflect exceptions and separate
phase-outs.--If subparagraph (B), (C), or (D) applies for a
taxable year, paragraph (1) shall be applied--
``(i) first to the portion of the passive activity loss to
which subparagraph (C) does not apply,
``(ii) second to the portion of the passive activity credit
to which subparagraph (B) or (D) does not apply,
``(iii) third to the portion of such credit to which
subparagraph (B) applies,
``(iv) fourth to the portion of such loss to which
subparagraph (C) applies, and
``(v) then to the portion of such credit to which
subparagraph (D) applies.''.
(3)(A) Subparagraph (B) of section 469(i)(6) is amended by
striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and
by adding at the end the following new clause:
``(iii) any deduction under section 1400I (relating to
commercial revitalization deduction).''.
(B) The heading for such subparagraph (B) is amended by
striking ``or rehabilitation credit'' and inserting ``,
rehabilitation credit, or commercial revitalization
deduction''.
(c) Audit and Report.--Not later than January 31 of 2004,
2007, and 2010, the Comptroller General of the United States
shall, pursuant to an audit of the renewal community program
established under section 1400E of the Internal Revenue Code
of 1986 (as added by subsection (a)) and the empowerment zone
and enterprise community program under subchapter U of
chapter 1 of such Code, report to Congress on such program
and its effect on poverty, unemployment, and economic growth
within the designated renewal communities, empowerment zones,
and enterprise communities.
(d) Clerical Amendment.--The table of subchapters for
chapter 1 is amended by adding at the end the following new
item:
``Subchapter X. Renewal Communities.''.
SEC. 102. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING
IN RENEWAL COMMUNITIES.
(a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of
section 51(d)(5) are each amended by striking ``empowerment
zone or enterprise community'' and inserting ``empowerment
zone, enterprise community, or renewal community''.
(b) Qualified Summer Youth Employee.--Clause (iv) of
section 51(d)(7)(A) is amended by striking ``empowerment zone
or enterprise community'' and inserting ``empowerment zone,
enterprise community, or renewal community''.
(c) Headings.--Paragraphs (5)(B) and (7)(C) of section
51(d) are each amended by inserting ``or community'' in the
heading after ``zone''.
(d) Effective Date.--The amendments made by this section
shall apply to individuals who begin work for the employer
after December 31, 2001.
Subtitle B--Extension and Expansion of Empowerment Zone Incentives
SEC. 111. AUTHORITY TO DESIGNATE 9 ADDITIONAL EMPOWERMENT
ZONES.
Section 1391 is amended by adding at the end the following
new subsection:
``(h) Additional Designations Permitted.--
``(1) In general.--In addition to the areas designated
under subsections (a) and (g), the appropriate Secretaries
may designate in the aggregate an additional 9 nominated
areas as empowerment zones under this section, subject to the
availability of eligible nominated areas. Of that number, not
more than seven may be designated in urban areas and not more
than 2 may be designated in rural areas.
``(2) Period designations may be made and take effect.--A
designation may be made under this subsection after the date
of the enactment of this subsection and before January 1,
2002. Subject to subparagraphs (B) and (C) of subsection
(d)(1), such designations shall remain in effect during the
period beginning on January 1, 2002, and ending on December
31, 2009.
``(3) Modifications to eligibility criteria, etc.--The
rules of subsection (g)(3) shall apply to designations under
this subsection.
``(4) Empowerment zones which become renewal communities.--
The number of areas which may be designated as empowerment
zones under this subsection shall be increased by 1 for each
area which ceases to be an empowerment zone by reason of
section 1400E(e). Each additional area designated by reason
of the preceding sentence shall have the same urban or rural
character as the area it is replacing.''
SEC. 112. EXTENSION OF EMPOWERMENT ZONE TREATMENT THROUGH
2009.
Subparagraph (A) of section 1391(d)(1) (relating to period
for which designation is in effect) is amended to read as
follows:
``(A)(i) in the case of an empowerment zone, December 31,
2009, or
``(ii) in the case of an enterprise community, the close of
the 10th calendar year beginning on or after such date of
designation,''.
SEC. 113. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT
ZONES.
(a) 20 Percent Credit.--Subsection (b) of section 1396
(relating to empowerment zone employment credit) is amended
to read as follows:
``(b) Applicable Percentage.--For purposes of this section,
the applicable percentage is 20 percent.''.
(b) All Empowerment Zones Eligible for Credit.--Section
1396 is amended by striking subsection (e).
(c) Conforming Amendment.--Subsection (d) of section 1400
is amended to read as follows:
``(d) Special Rule for Application of Employment Credit.--
With respect to the DC Zone, section 1396(d)(1)(B) (relating
to empowerment zone employment credit) shall be applied by
substituting `the District of Columbia' for `such empowerment
zone'.''.
(d) Effective Date.--The amendments made by this section
shall apply to wages paid or incurred after December 31,
2001.
SEC. 114. INCREASED EXPENSING UNDER SECTION 179.
(a) In General.--Subparagraph (A) of section 1397A(a)(1) is
amended by striking ``$20,000'' and inserting ``$35,000''.
(b) Expensing for Property Used in Developable Sites.--
Section 1397A is amended by striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 115. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE
FACILITY BONDS.
(a) In General.--Paragraph (3) of section 1394(f) (relating
to bonds for empowerment zones designated under section
1391(g)) is amended to read as follows:
``(3) Empowerment zone facility bond.--For purposes of this
subsection, the term `empowerment zone facility bond' means
any bond which would be described in subsection (a) if--
``(A) in the case of obligations issued before January 1,
2002, only empowerment zones designated under section 1391(g)
were taken into account under sections 1397C and 1397D, and
``(B) in the case of obligations issued after December 31,
2001, all empowerment zones (other than the District of
Columbia Enterprise Zone) were taken into account under
sections 1397C and 1397D.''.
(b) Effective Date.--The amendments made by this section
shall apply to obligations issued after December 31, 2001.
SEC. 116. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT
ZONE INVESTMENTS.
(a) In General.--Part III of subchapter U of chapter 1 is
amended--
(1) by redesignating subpart C as subpart D,
(2) by redesignating sections 1397B and 1397C as sections
1397C and 1397D, respectively, and
(3) by inserting after subpart B the following new subpart:
``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone
Investments
``Sec. 1397B. Nonrecognition of gain on rollover of empowerment zone
investments.
``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF
EMPOWERMENT ZONE INVESTMENTS.
``(a) Nonrecognition of Gain.--In the case of any sale of a
qualified empowerment zone asset held by the taxpayer for
more than 1 year and with respect to which such taxpayer
elects the application of this section, gain from such sale
shall be recognized only to the extent that the amount
realized on such sale exceeds--
``(1) the cost of any qualified empowerment zone asset
(with respect to the same zone as the asset sold) purchased
by the taxpayer during the 60-day period beginning on the
date of such sale, reduced by
``(2) any portion of such cost previously taken into
account under this section.
``(b) Definitions and Special Rules.--For purposes of this
section--
``(1) Qualified empowerment zone asset.--
``(A) In general.--The term `qualified empowerment zone
asset' means any property which would be a qualified
community asset (as defined in section 1400F) if in section
1400F--
``(i) references to empowerment zones were substituted for
references to renewal communities,
``(ii) references to enterprise zone businesses (as defined
in section 1397C) were substituted for references to renewal
community businesses, and
``(iii) the date of the enactment of this paragraph were
substituted for `December 31, 2001' each place it appears.
``(B) Treatment of dc zone.--The District of Columbia
Enterprise Zone shall not be treated as an empowerment zone
for purposes of this section.
``(2) Certain gain not eligible for rollover.--This section
shall not apply to--
``(A) any gain which is treated as ordinary income for
purposes of this subtitle, and
``(B) any gain which is attributable to real property, or
an intangible asset, which is not an integral part of an
enterprise zone business.
``(3) Purchase.--A taxpayer shall be treated as having
purchased any property if, but for paragraph (4), the
unadjusted basis of such property in the hands of the
taxpayer would be its cost (within the meaning of section
1012).
``(4) Basis adjustments.--If gain from any sale is not
recognized by reason of subsection (a), such gain shall be
applied to reduce (in the order acquired) the basis for
determining gain or loss of any qualified empowerment zone
asset which is purchased by the taxpayer during the 60-day
period described in subsection (a). This paragraph shall not
apply for purposes of section 1202.
``(5) Holding period.--For purposes of determining whether
the nonrecognition of gain under subsection (a) applies to
any qualified empowerment zone asset which is sold--
``(A) the taxpayer's holding period for such asset and the
asset referred to in subsection (a)(1) shall be determined
without regard to section 1223, and
``(B) only the first year of the taxpayer's holding period
for the asset referred to in subsection (a)(1) shall be taken
into account for purposes of paragraphs (2)(A)(iii), (3)(C),
and (4)(A)(iii) of section 1400F(b).''.
(b) Conforming Amendments.--
(1) Paragraph (23) of section 1016(a) is amended--
(A) by striking ``or 1045'' and inserting ``1045, or
1397B'', and
(B) by striking ``or 1045(b)(4)'' and inserting
``1045(b)(4), or 1397B(b)(4)''.
(2) Paragraph (15) of section 1223 is amended to read as
follows:
[[Page H12392]]
``(15) Except for purposes of sections 1202(a)(2),
1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the
period for which the taxpayer has held property the
acquisition of which resulted under section 1045 or 1397B in
the nonrecognition of any part of the gain realized on the
sale of other property, there shall be included the period
for which such other property has been held as of the date of
such sale.''.
(3) Paragraph (2) of section 1394(b) is amended--
(A) by striking ``section 1397C'' and inserting ``section
1397D'', and
(B) by striking ``section 1397C(a)(2)'' and inserting
``section 1397D(a)(2)''.
(4) Paragraph (3) of section 1394(b) is amended--
(A) by striking ``section 1397B'' each place it appears and
inserting ``section 1397C'', and
(B) by striking ``section 1397B(d)'' and inserting
``section 1397C(d)''.
(5) Sections 1400(e) and 1400B(c) are each amended by
striking ``section 1397B'' each place it appears and
inserting ``section 1397C''.
(6) The table of subparts for part III of subchapter U of
chapter 1 is amended by striking the last item and inserting
the following new items:
``Subpart C. Nonrecognition of gain on rollover of empowerment zone
investments.
``Subpart D. General provisions.''.
(7) The table of sections for subpart D of such part III is
amended to read as follows:
``Sec. 1397C. Enterprise zone business defined.
``Sec. 1397D. Qualified zone property defined.''.
(c) Effective Date.--The amendments made by this section
shall apply to qualified empowerment zone assets acquired
after the date of the enactment of this Act.
SEC. 117. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT
ZONE STOCK.
(a) In General.--Subsection (a) of section 1202 is amended
to read as follows:
``(a) Exclusion.--
``(1) In general.--In the case of a taxpayer other than a
corporation, gross income shall not include 50 percent of any
gain from the sale or exchange of qualified small business
stock held for more than 5 years.
``(2) Empowerment zone businesses.--
``(A) In general.--In the case of qualified small business
stock acquired after the date of the enactment of this
paragraph in a corporation which is a qualified business
entity (as defined in section 1397C(b)) during
substantially all of the taxpayer's holding period for
such stock, paragraph (1) shall be applied by substituting
`60 percent' for `50 percent'.
``(B) Certain rules to apply.--Rules similar to the rules
of paragraphs (5) and (7) of section 1400B(b) shall apply for
purposes of this paragraph.
``(C) Gain after 2014 not qualified.--Subparagraph (A)
shall not apply to gain attributable to periods after
December 31, 2014.
``(D) Treatment of dc zone.--The District of Columbia
Enterprise Zone shall not be treated as an empowerment zone
for purposes of this paragraph.''.
(b) Conforming Amendments.--
(1) Paragraph (8) of section 1(h) is amended by striking
``means'' and all that follows and inserting ``means the
excess of--
``(A) the gain which would be excluded from gross income
under section 1202 but for the percentage limitation in
section 1202(a), over
``(B) the gain excluded from gross income under section
1202.''.
(2) The section heading for section 1202 is amended by
striking ``50-percent'' and inserting ``partial''.
(3) The table of sections for part I of subchapter P of
chapter 1 is amended by striking ``50-percent'' and inserting
``Partial''.
(c) Effective Date.--The amendments made by this section
shall apply to stock acquired after the date of the enactment
of this Act.
Subtitle C--New Markets Tax Credit
SEC. 121. NEW MARKETS TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business-related credits) is amended
by adding at the end the following new section:
``SEC. 45D. NEW MARKETS TAX CREDIT.
``(a) Allowance of Credit.--
``(1) In general.--For purposes of section 38, in the case
of a taxpayer who holds a qualified equity investment on a
credit allowance date of such investment which occurs during
the taxable year, the new markets tax credit determined under
this section for such taxable year is an amount equal to the
applicable percentage of the amount paid to the qualified
community development entity for such investment at its
original issue.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is--
``(A) 5 percent with respect to the first 3 credit
allowance dates, and
``(B) 6 percent with respect to the remainder of the credit
allowance dates.
``(3) Credit allowance date.--For purposes of paragraph
(1), the term `credit allowance date' means, with respect to
any qualified equity investment--
``(A) the date on which such investment is initially made,
and
``(B) each of the 6 anniversary dates of such date
thereafter.
``(b) Qualified Equity Investment.--For purposes of this
section--
``(1) In general.--The term `qualified equity investment'
means any equity investment in a qualified community
development entity if--
``(A) such investment is acquired by the taxpayer at its
original issue (directly or through an underwriter) solely in
exchange for cash,
``(B) substantially all of such cash is used by the
qualified community development entity to make qualified low-
income community investments, and
``(C) such investment is designated for purposes of this
section by the qualified community development entity.
Such term shall not include any equity investment issued by a
qualified community development entity more than 5 years
after the date that such entity receives an allocation under
subsection (f). Any allocation not used within such 5-year
period may be reallocated by the Secretary under subsection
(f).
``(2) Limitation.--The maximum amount of equity investments
issued by a qualified community development entity which may
be designated under paragraph (1)(C) by such entity shall not
exceed the portion of the limitation amount allocated under
subsection (f) to such entity.
``(3) Safe harbor for determining use of cash.--The
requirement of paragraph (1)(B) shall be treated as met if at
least 85 percent of the aggregate gross assets of the
qualified community development entity are invested in
qualified low-income community investments.
``(4) Treatment of subsequent purchasers.--The term
`qualified equity investment' includes any equity investment
which would (but for paragraph (1)(A)) be a qualified equity
investment in the hands of the taxpayer if such investment
was a qualified equity investment in the hands of a prior
holder.
``(5) Redemptions.--A rule similar to the rule of section
1202(c)(3) shall apply for purposes of this subsection.
``(6) Equity investment.--The term `equity investment'
means--
``(A) any stock (other than nonqualified preferred stock as
defined in section 351(g)(2)) in an entity which is a
corporation, and
``(B) any capital interest in an entity which is a
partnership.
``(c) Qualified Community Development Entity.--For purposes
of this section--
``(1) In general.--The term `qualified community
development entity' means any domestic corporation or
partnership if--
``(A) the primary mission of the entity is serving, or
providing investment capital for, low-income communities or
low-income persons,
``(B) the entity maintains accountability to residents of
low-income communities through their representation on any
governing board of the entity or on any advisory board to the
entity, and
``(C) the entity is certified by the Secretary for purposes
of this section as being a qualified community development
entity.
``(2) Special rules for certain organizations.--The
requirements of paragraph (1) shall be treated as met by--
``(A) any specialized small business investment company (as
defined in section 1044(c)(3)), and
``(B) any community development financial institution (as
defined in section 103 of the Community Development Banking
and Financial Institutions Act of 1994 (12 U.S.C. 4702)).
``(d) Qualified Low-Income Community Investments.--For
purposes of this section--
``(1) In general.--The term `qualified low-income community
investment' means--
``(A) any capital or equity investment in, or loan to, any
qualified active low-income community business,
``(B) the purchase from another qualified community
development entity of any loan made by such entity which is a
qualified low-income community investment,
``(C) financial counseling and other services specified in
regulations prescribed by the Secretary to businesses located
in, and residents of, low-income communities, and
``(D) any equity investment in, or loan to, any qualified
community development entity.
``(2) Qualified active low-income community business.--
``(A) In general.--For purposes of paragraph (1), the term
`qualified active low-income community business' means, with
respect to any taxable year, any corporation (including a
nonprofit corporation) or partnership if for such year--
``(i) at least 50 percent of the total gross income of such
entity is derived from the active conduct of a qualified
business within any low-income community,
``(ii) a substantial portion of the use of the tangible
property of such entity (whether owned or leased) is within
any low-income community,
``(iii) a substantial portion of the services performed for
such entity by its employees are performed in any low-income
community,
``(iv) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is
attributable to collectibles (as defined in section
408(m)(2)) other than collectibles that are held primarily
for sale to customers in the ordinary course of such
business, and
``(v) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is
attributable to nonqualified financial property (as defined
in section 1397C(e)).
``(B) Proprietorship.--Such term shall include any business
carried on by an individual as a proprietor if such business
would meet the requirements of subparagraph (A) were it
incorporated.
``(C) Portions of business may be qualified active low-
income community business.--The term `qualified active low-
income community business' includes any trades or businesses
which would qualify as a qualified active low-income
community business if such trades or businesses were
separately incorporated.
``(3) Qualified business.--For purposes of this subsection,
the term `qualified business' has the meaning given to such
term by section 1397C(d); except that--
``(A) in lieu of applying paragraph (2)(B) thereof, the
rental to others of real property located in any low-income
community shall be treated as a qualified business if there
are substantial improvements located on such property, and
[[Page H12393]]
``(B) paragraph (3) thereof shall not apply.
``(e) Low-Income Community.--For purposes of this section--
``(1) In general.--The term `low-income community' means
any population census tract if--
``(A) the poverty rate for such tract is at least 20
percent, or
``(B)(i) in the case of a tract not located within a
metropolitan area, the median family income for such tract
does not exceed 80 percent of statewide median family income,
or
``(ii) in the case of a tract located within a metropolitan
area, the median family income for such tract does not exceed
80 percent of the greater of statewide median family income
or the metropolitan area median family income.
Subparagraph (B) shall be applied using possessionwide median
family income in the case of census tracts located within a
possession of the United States.
``(2) Targeted areas.--The Secretary may designate any area
within any census tract as a low-income community if--
``(A) the boundary of such area is continuous,
``(B) the area would satisfy the requirements of paragraph
(1) if it were a census tract, and
``(C) an inadequate access to investment capital exists in
such area.
``(3) Areas not within census tracts.--In the case of an
area which is not tracted for population census tracts, the
equivalent county divisions (as defined by the Bureau of the
Census for purposes of defining poverty areas) shall be used
for purposes of determining poverty rates and median family
income.
``(f) National Limitation on Amount of Investments
Designated.--
``(1) In general.--There is a new markets tax credit
limitation for each calendar year. Such limitation is--
``(A) $1,000,000,000 for 2001,
``(B) $1,500,000,000 for 2002 and 2003,
``(C) $2,000,000,000 for 2004 and 2005, and
``(D) $3,500,000,000 for 2006 and 2007.
``(2) Allocation of limitation.--The limitation under
paragraph (1) shall be allocated by the Secretary among
qualified community development entities selected by the
Secretary. In making allocations under the preceding
sentence, the Secretary shall give priority to any entity--
``(A) with a record of having successfully provided capital
or technical assistance to disadvantaged businesses or
communities, or
``(B) which intends to satisfy the requirement under
subsection (b)(1)(B) by making qualified low-income community
investments in 1 or more businesses in which persons
unrelated to such entity (within the meaning of section
267(b) or 707(b)(1)) hold the majority equity interest.
``(3) Carryover of unused limitation.--If the new markets
tax credit limitation for any calendar year exceeds the
aggregate amount allocated under paragraph (2) for such year,
such limitation for the succeeding calendar year shall be
increased by the amount of such excess. No amount may be
carried under the preceding sentence to any calendar year
after 2014.
``(g) Recapture of Credit In Certain Cases.--
``(1) In general.--If, at any time during the 7-year period
beginning on the date of the original issue of a qualified
equity investment in a qualified community development
entity, there is a recapture event with respect to such
investment, then the tax imposed by this chapter for the
taxable year in which such event occurs shall be increased by
the credit recapture amount.
``(2) Credit recapture amount.--For purposes of paragraph
(1), the credit recapture amount is an amount equal to the
sum of--
``(A) the aggregate decrease in the credits allowed to the
taxpayer under section 38 for all prior taxable years which
would have resulted if no credit had been determined under
this section with respect to such investment, plus
``(B) interest at the underpayment rate established under
section 6621 on the amount determined under subparagraph (A)
for each prior taxable year for the period beginning on the
due date for filing the return for the prior taxable year
involved.
No deduction shall be allowed under this chapter for interest
described in subparagraph (B).
``(3) Recapture event.--For purposes of paragraph (1),
there is a recapture event with respect to an equity
investment in a qualified community development entity if--
``(A) such entity ceases to be a qualified community
development entity,
``(B) the proceeds of the investment cease to be used as
required of subsection (b)(1)(B), or
``(C) such investment is redeemed by such entity.
``(4) Special rules.--
``(A) Tax benefit rule.--The tax for the taxable year shall
be increased under paragraph (1) only with respect to credits
allowed by reason of this section which were used to reduce
tax liability. In the case of credits not so used to reduce
tax liability, the carryforwards and carrybacks under section
39 shall be appropriately adjusted.
``(B) No credits against tax.--Any increase in tax under
this subsection shall not be treated as a tax imposed by this
chapter for purposes of determining the amount of any credit
under this chapter or for purposes of section 55.
``(h) Basis Reduction.--The basis of any qualified equity
investment shall be reduced by the amount of any credit
determined under this section with respect to such
investment. This subsection shall not apply for purposes of
sections 1202, 1400B, and 1400F.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out this section,
including regulations--
``(1) which limit the credit for investments which are
directly or indirectly subsidized by other Federal tax
benefits (including the credit under section 42 and the
exclusion from gross income under section 103),
``(2) which prevent the abuse of the purposes of this
section,
``(3) which provide rules for determining whether the
requirement of subsection (b)(1)(B) is treated as met,
``(4) which impose appropriate reporting requirements, and
``(5) which apply the provisions of this section to newly
formed entities.''.
(b) Credit Made Part of General Business Credit.--
(1) In general.--Subsection (b) of section 38 is amended by
striking ``plus'' at the end of paragraph (11), by striking
the period at the end of paragraph (12) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(13) the new markets tax credit determined under section
45D(a).''.
(2) Limitation on carryback.--Subsection (d) of section 39
is amended by adding at the end the following new paragraph:
``(9) No carryback of new markets tax credit before january
1, 2001.--No portion of the unused business credit for any
taxable year which is attributable to the credit under
section 45D may be carried back to a taxable year ending
before January 1, 2001.''.
(c) Deduction for Unused Credit.--Subsection (c) of section
196 is amended by striking ``and'' at the end of paragraph
(7), by striking the period at the end of paragraph (8) and
inserting ``, and'', and by adding at the end the following
new paragraph:
``(9) the new markets tax credit determined under section
45D(a).''.
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by
adding at the end the following new item:
``Sec. 45D. New markets tax credit.''.
(e) Effective Date.--The amendments made by this section
shall apply to investments made after December 31, 2000.
(f) Guidance on Allocation of National Limitation.--Not
later than 120 days after the date of the enactment of this
Act, the Secretary of the Treasury or the Secretary's
delegate shall issue guidance which specifies--
(1) how entities shall apply for an allocation under
section 45D(f)(2) of the Internal Revenue Code of 1986, as
added by this section;
(2) the competitive procedure through which such
allocations are made; and
(3) the actions that such Secretary or delegate shall take
to ensure that such allocations are properly made to
appropriate entities.
(g) Audit and Report.--Not later than January 31 of 2004,
2007, and 2010, the Comptroller General of the United States
shall, pursuant to an audit of the new markets tax credit
program established under section 45D of the Internal Revenue
Code of 1986 (as added by subsection (a)), report to Congress
on such program, including all qualified community
development entities that receive an allocation under the new
markets credit under such section.
Subtitle D--Improvements in Low-Income Housing Credit
SEC. 131. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING
CREDIT.
(a) In General.--Clauses (i) and (ii) of section
42(h)(3)(C) (relating to State housing credit ceiling) are
amended to read as follows:
``(i) the unused State housing credit ceiling (if any) of
such State for the preceding calendar year,
``(ii) the greater of--
``(I) $1.75 ($1.50 for 2001) multiplied by the State
population, or
``(II) $2,000,000,''.
(b) Adjustment of State Ceiling for Increases in Cost-of-
Living.--Paragraph (3) of section 42(h) (relating to housing
credit dollar amount for agencies) is amended by adding at
the end the following new subparagraph:
``(H) Cost-of-living adjustment.--
``(i) In general.--In the case of a calendar year after
2002, the $2,000,000 and $1.75 amounts in subparagraph (C)
shall each be increased by an amount equal to--
``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
`calendar year 2001' for `calendar year 1992' in subparagraph
(B) thereof.
``(ii) Rounding.--
``(I) In the case of the $2,000,000 amount, any increase
under clause (i) which is not a multiple of $5,000 shall be
rounded to the next lowest multiple of $5,000.
``(II) In the case of the $1.75 amount, any increase under
clause (i) which is not a multiple of 5 cents shall be
rounded to the next lowest multiple of 5 cents.''.
(c) Conforming Amendments.--
(1) Section 42(h)(3)(C), as amended by subsection (a), is
amended--
(A) by striking ``clause (ii)'' in the matter following
clause (iv) and inserting ``clause (i)''; and
(B) by striking ``clauses (i)'' in the matter following
clause (iv) and inserting ``clauses (ii)''.
(2) Section 42(h)(3)(D)(ii) is amended--
(A) by striking ``subparagraph (C)(ii)'' and inserting
``subparagraph (C)(i)''; and
(B) by striking ``clauses (i)'' in subclause (II) and
inserting ``clauses (ii)''.
(d) Effective Date.--The amendments made by this section
shall apply to calendar years after 2000.
SEC. 132. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING
CREDITS AMONG PROJECTS.
(a) Selection Criteria.--Subparagraph (C) of section
42(m)(1) (relating to certain selection criteria must be
used) is amended--
(1) by inserting ``, including whether the project includes
the use of existing housing as part of a community
revitalization plan'' before the comma at the end of clause
(iii); and
[[Page H12394]]
(2) by striking clauses (v), (vi), and (vii) and inserting
the following new clauses:
``(v) tenant populations with special housing needs,
``(vi) public housing waiting lists,
``(vii) tenant populations of individuals with children,
and
``(viii) projects intended for eventual tenant
ownership.''.
(b) Preference for Community Revitalization Projects
Located in Qualified Census Tracts.--Clause (ii) of section
42(m)(1)(B) is amended by striking ``and'' at the end of
subclause (I), by adding ``and'' at the end of subclause
(II), and by inserting after subclause (II) the following new
subclause:
``(III) projects which are located in qualified census
tracts (as defined in subsection (d)(5)(C)) and the
development of which contributes to a concerted community
revitalization plan,''.
SEC. 133. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT
AGENCIES.
(a) Market Study; Public Disclosure of Rationale for Not
Following Credit Allocation Priorities.--Subparagraph (A) of
section 42(m)(1) (relating to responsibilities of housing
credit agencies) is amended by striking ``and'' at the end of
clause (i), by striking the period at the end of clause (ii)
and inserting a comma, and by adding at the end the following
new clauses:
``(iii) a comprehensive market study of the housing needs
of low-income individuals in the area to be served by the
project is conducted before the credit allocation is made and
at the developer's expense by a disinterested party who is
approved by such agency, and
``(iv) a written explanation is available to the general
public for any allocation of a housing credit dollar amount
which is not made in accordance with established priorities
and selection criteria of the housing credit agency.''.
(b) Site Visits.--Clause (iii) of section 42(m)(1)(B)
(relating to qualified allocation plan) is amended by
inserting before the period ``and in monitoring for
noncompliance with habitability standards through regular
site visits''.
SEC. 134. MODIFICATIONS TO RULES RELATING TO BASIS OF
BUILDING WHICH IS ELIGIBLE FOR CREDIT.
(a) Adjusted Basis To Include Portion of Certain Buildings
Used by Low-Income Individuals Who Are Not Tenants and by
Project Employees.--Paragraph (4) of section 42(d) (relating
to special rules relating to determination of adjusted basis)
is amended--
(1) by striking ``subparagraph (B)'' in subparagraph (A)
and inserting ``subparagraphs (B) and (C)'';
(2) by redesignating subparagraph (C) as subparagraph (D);
and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Inclusion of basis of property used to provide
services for certain nontenants.--
``(i) In general.--The adjusted basis of any building
located in a qualified census tract (as defined in paragraph
(5)(C)) shall be determined by taking into account the
adjusted basis of property (of a character subject to the
allowance for depreciation and not otherwise taken into
account) used throughout the taxable year in providing any
community service facility.
``(ii) Limitation.--The increase in the adjusted basis of
any building which is taken into account by reason of clause
(i) shall not exceed 10 percent of the eligible basis of the
qualified low-income housing project of which it is a part.
For purposes of the preceding sentence, all community service
facilities which are part of the same qualified low-income
housing project shall be treated as one facility.
``(iii) Community service facility.--For purposes of this
subparagraph, the term `community service facility' means any
facility designed to serve primarily individuals whose income
is 60 percent or less of area median income (within the
meaning of subsection (g)(1)(B)).''.
(b) Certain Native American Housing Assistance Disregarded
in Determining Whether Building Is Federally Subsidized for
Purposes of the Low-Income Housing Credit.--Subparagraph (E)
of section 42(i)(2) (relating to determination of whether
building is federally subsidized) is amended--
(1) in clause (i), by inserting ``or the Native American
Housing Assistance and Self-Determination Act of 1996 (25
U.S.C. 4101 et seq.) (as in effect on October 1, 1997)''
after ``this subparagraph)''; and
(2) in the subparagraph heading, by inserting ``or native
american housing assistance'' after ``home assistance''.
SEC. 135. OTHER MODIFICATIONS.
(a) Allocation of Credit Limit to Certain Buildings.--
(1) The first sentence of section 42(h)(1)(E)(ii) is
amended by striking ``(as of'' the first place it appears and
inserting ``(as of the later of the date which is 6 months
after the date that the allocation was made or''.
(2) The last sentence of section 42(h)(3)(C) is amended by
striking ``project which'' and inserting ``project which
fails to meet the 10 percent test under paragraph (1)(E)(ii)
on a date after the close of the calendar year in which the
allocation was made or which''.
(b) Determination of Whether Buildings Are Located in High
Cost Areas.--The first sentence of section 42(d)(5)(C)(ii)(I)
is amended--
(1) by inserting ``either'' before ``in which 50 percent'';
and
(2) by inserting before the period ``or which has a poverty
rate of at least 25 percent''.
SEC. 136. CARRYFORWARD RULES.
(a) In General.--Clause (ii) of section 42(h)(3)(D)
(relating to unused housing credit carryovers allocated among
certain States) is amended by striking ``the excess'' and all
that follows and inserting ``the excess (if any) of--
``(I) the unused State housing credit ceiling for the year
preceding such year, over
``(II) the aggregate housing credit dollar amount allocated
for such year.''.
(b) Conforming Amendment.--The second sentence of section
42(h)(3)(C) (relating to State housing credit ceiling) is
amended by striking ``clauses (i) and (iii)'' and inserting
``clauses (i) through (iv)''.
SEC. 137. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the
amendments made by this subtitle shall apply to--
(1) housing credit dollar amounts allocated after December
31, 2000; and
(2) buildings placed in service after such date to the
extent paragraph (1) of section 42(h) of the Internal Revenue
Code of 1986 does not apply to any building by reason of
paragraph (4) thereof, but only with respect to bonds issued
after such date.
Subtitle E--Other Community Renewal and New Markets Assistance
PART I--PROVISIONS RELATING TO HOUSING AND SUBSTANCE ABUSE PREVENTION
AND TREATMENT
SEC. 141. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD
HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY
DEVELOPMENT CORPORATIONS.
Section 204 of the Departments of Veterans Affairs and
Housing and Urban Development, and Independent Agencies
Appropriations Act, 1997 (12 U.S.C. 1715z-11a) is amended--
(1) by striking ``Flexible Authority.--'' and inserting
``Disposition of HUD-Owned Properties. (a) Flexible Authority
for Multifamily Projects.--''; and
(2) by adding at the end the following new subsection:
``(b) Transfer of Unoccupied and Substandard Housing to
Local Governments and Community Development Corporations.--
``(1) Transfer authority.--Notwithstanding the authority
under subsection (a) and the last sentence of section 204(g)
of the National Housing Act (12 U.S.C. 1710(g)), the
Secretary of Housing and Urban Development shall transfer
ownership of any qualified HUD property, subject to the
requirements of this section, to a unit of general local
government having jurisdiction for the area in which the
property is located or to a community development corporation
which operates within such a unit of general local government
in accordance with this subsection, but only to the extent
that units of general local government and community
development corporations consent to transfer and the
Secretary determines that such transfer is practicable.
``(2) Qualified hud properties.--For purposes of this
subsection, the term `qualified HUD property' means any
property for which, as of the date that notification of the
property is first made under paragraph (3)(B), not less than
6 months have elapsed since the later of the date that the
property was acquired by the Secretary or the date that the
property was determined to be unoccupied or substandard, that
is owned by the Secretary and is--
``(A) an unoccupied multifamily housing project;
``(B) a substandard multifamily housing project; or
``(C) an unoccupied single family property that--
``(i) has been determined by the Secretary not to be an
eligible asset under section 204(h) of the National Housing
Act (12 U.S.C. 1710(h)); or
``(ii) is an eligible asset under such section 204(h),
but--
``(I) is not subject to a specific sale agreement under
such section; and
``(II) has been determined by the Secretary to be
inappropriate for continued inclusion in the program under
such section 204(h) pursuant to paragraph (10) of such
section.
``(3) Timing.--The Secretary shall establish procedures
that provide for--
``(A) time deadlines for transfers under this subsection;
``(B) notification to units of general local government and
community development corporations of qualified HUD
properties in their jurisdictions;
``(C) such units and corporations to express interest in
the transfer under this subsection of such properties;
``(D) a right of first refusal for transfer of qualified
HUD properties to units of general local government and
community development corporations, under which--
``(i) the Secretary shall establish a period during which
the Secretary may not transfer such properties except to such
units and corporations;
``(ii) the Secretary shall offer qualified HUD properties
that are single family properties for purchase by units of
general local government at a cost of $1 for each property,
but only to the extent that the costs to the Federal
Government of disposal at such price do not exceed the costs
to the Federal Government of disposing of property subject to
the procedures for single family property established by the
Secretary pursuant to the authority under the last sentence
of section 204(g) of the National Housing Act (12 U.S.C.
1710(g));
``(iii) the Secretary may accept an offer to purchase a
property made by a community development corporation only if
the offer provides for purchase on a cost recovery basis; and
``(iv) the Secretary shall accept an offer to purchase such
a property that is made during such period by such a unit or
corporation and that complies with the requirements of this
paragraph; and
``(E) a written explanation, to any unit of general local
government or community development corporation making an
offer to purchase a
[[Page H12395]]
qualified HUD property under this subsection that is not
accepted, of the reason that such offer was not acceptable.
``(4) Other disposition.--With respect to any qualified HUD
property, if the Secretary does not receive an acceptable
offer to purchase the property pursuant to the procedure
established under paragraph (3), the Secretary shall dispose
of the property to the unit of general local government in
which property is located or to community development
corporations located in such unit of general local government
on a negotiated, competitive bid, or other basis, on such
terms as the Secretary deems appropriate.
``(5) Satisfaction of indebtedness.--Before transferring
ownership of any qualified HUD property pursuant to this
subsection, the Secretary shall satisfy any indebtedness
incurred in connection with the property to be transferred,
by canceling the indebtedness.
``(6) Determination of status of properties.--To ensure
compliance with the requirements of this subsection, the
Secretary shall take the following actions:
``(A) Upon enactment.--Upon the enactment of this
subsection, the Secretary shall promptly assess each
residential property owned by the Secretary to determine
whether such property is a qualified HUD property.
``(B) Upon acquisition.--Upon acquiring any residential
property, the Secretary shall promptly determine whether the
property is a qualified HUD property.
``(C) Updates.--The Secretary shall periodically reassess
the residential properties owned by the Secretary to
determine whether any such properties have become qualified
HUD properties.
``(7) Tenant leases.--This subsection shall not affect the
terms or the enforceability of any contract or lease entered
into with respect to any residential property before the date
that such property becomes a qualified HUD property.
``(8) Use of property.--Property transferred under this
subsection shall be used only for appropriate neighborhood
revitalization efforts, including homeownership, rental
units, commercial space, and parks, consistent with local
zoning regulations, local building codes, and subdivision
regulations and restrictions of record.
``(9) Inapplicability to properties made available for
homeless.--Notwithstanding any other provision of this
subsection, this subsection shall not apply to any properties
that the Secretary determines are to be made available for
use by the homeless pursuant to subpart E of part 291 of
title 24, Code of Federal Regulations, during the period that
the properties are so available.
``(10) Protection of existing contracts.--This subsection
may not be construed to alter, affect, or annul any legally
binding obligations entered into with respect to a qualified
HUD property before the property becomes a qualified HUD
property.
``(11) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Community development corporation.--The term
`community development corporation' means a nonprofit
organization whose primary purpose is to promote community
development by providing housing opportunities for low-income
families.
``(B) Cost recovery basis.--The term `cost recovery basis'
means, with respect to any sale of a residential property by
the Secretary, that the purchase price paid by the purchaser
is equal to or greater than the sum of: (i) the appraised
value of the property, as determined in accordance with such
requirements as the Secretary shall establish; and (ii) the
costs incurred by the Secretary in connection with such
property during the period beginning on the date on which the
Secretary acquires title to the property and ending on the
date on which the sale is consummated.
``(C) Multifamily housing project.--The term `multifamily
housing project' has the meaning given the term in section
203 of the Housing and Community Development Amendments of
1978.
``(D) Residential property.--The term `residential
property' means a property that is a multifamily housing
project or a single family property.
``(E) Secretary.--The term `Secretary' means the Secretary
of Housing and Urban Development.
``(F) Severe physical problems.--The term `severe physical
problems' means, with respect to a dwelling unit, that the
unit--
``(i) lacks hot or cold piped water, a flush toilet, or
both a bathtub and a shower in the unit, for the exclusive
use of that unit;
``(ii) on not less than three separate occasions during the
preceding winter months, was uncomfortably cold for a period
of more than 6 consecutive hours due to a malfunction of the
heating system for the unit;
``(iii) has no functioning electrical service, exposed
wiring, any room in which there is not a functioning
electrical outlet, or has experienced three or more blown
fuses or tripped circuit breakers during the preceding 90-day
period;
``(iv) is accessible through a public hallway in which
there are no working light fixtures, loose or missing steps
or railings, and no elevator; or
``(v) has severe maintenance problems, including water
leaks involving the roof, windows, doors, basement, or pipes
or plumbing fixtures, holes or open cracks in walls or
ceilings, severe paint peeling or broken plaster, and signs
of rodent infestation.
``(G) Single family property.--The term `single family
property' means a 1- to 4-family residence.
``(H) Substandard.--The term `substandard' means, with
respect to a multifamily housing project, that 25 percent or
more of the dwelling units in the project have severe
physical problems.
``(I) Unit of general local government.--The term `unit of
general local government' has the meaning given such term in
section 102(a) of the Housing and Community Development Act
of 1974.
``(J) Unoccupied.--The term `unoccupied' means, with
respect to a residential property, that the unit of general
local government having jurisdiction over the area in which
the project is located has certified in writing that the
property is not inhabited.
``(12) Regulations.--
``(A) Interim.--Not later than 30 days after the date of
the enactment of this subsection, the Secretary shall issue
such interim regulations as are necessary to carry out this
subsection.
``(B) Final.--Not later than 60 days after the date of the
enactment of this subsection, the Secretary shall issue such
final regulations as are necessary to carry out this
subsection.''.
SEC. 142. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.
In carrying out the program under section 204(h) of the
National Housing Act (12 U.S.C. 1710(h)), upon the request of
the chief executive officer of a county or the government of
appropriate jurisdiction and not later than 60 days after
such request is made, the Secretary of Housing and Urban
Development shall designate as a revitalization area all
portions of such county that meet the criteria for such
designation under paragraph (3) of such section.
SEC. 143. RISK-SHARING DEMONSTRATION.
Section 249 of the National Housing Act (12 U.S.C. 1715z-
14) is amended--
(1) by striking the section heading and inserting the
following:
``risk-sharing demonstration'';
(2) by striking ``reinsurance'' each place such term
appears and insert ``risk-sharing'';
(3) in subsection (a)--
(A) in the first sentence, by inserting ``and with insured
community development financial institutions'' after
``private mortgage insurers'';
(B) in the second sentence--
(i) by striking ``two'' and inserting ``four''; and
(ii) by striking ``March 15, 1988'' and inserting ``the
expiration of the 5-year period beginning on the date of the
enactment of the Community Renewal Tax Relief Act of 2000'';
and
(C) in the third sentence--
(i) by striking ``insured'' and inserting ``for which risk
of nonpayment is shared''; and
(ii) by striking ``10 percent'' and inserting ``20
percent'';
(4) in subsection (b)--
(A) in the first sentence--
(i) by striking ``to provide'' and inserting ``, in
providing'';
(ii) by striking ``through'' and inserting ``, to enter
into''; and
(iii) by inserting ``and with insured community development
financial institutions'' before the period at the end;
(B) in the second sentence, by inserting ``and insured
community development financial institutions'' after
``private mortgage insurance companies'';
(C) by striking paragraph (1) and inserting the following
new paragraph:
``(1) assume a secondary percentage of loss on any mortgage
insured pursuant to section 203(b), 234, or 245 covering a
one- to four-family dwelling, which percentage of loss shall
be set forth in the risk-sharing contract, with the first
percentage of loss to be borne by the Secretary;''; and
(D) in paragraph (2)--
(i) by striking ``carry out (under appropriate delegation)
such'' and inserting ``perform or delegate underwriting,'';
(ii) by striking ``function as the Secretary pursuant to
regulations,'' and inserting ``functions as the Secretary'';
and
(iii) by inserting before the period at the end the
following: ``and shall set forth in the risk-sharing
contract'';
(5) in subsection (c)--
(A) in the first sentence--
(i) by striking ``of'' the first place it appears and
inserting ``for'';
(ii) by inserting ``received by the Secretary with a
private mortgage insurer or insured community development
financial institution'' after ``sharing of premiums'';
(iii) by striking ``insurance reserves'' and inserting
``loss reserves'';
(iv) by striking ``such insurance'' and inserting ``such
risk-sharing contract''; and
(v) by striking ``right'' and inserting ``rights''; and
(B) in the second sentence--
(i) by inserting ``or insured community development
financial institution'' after ``private mortgage insurance
company''; and
(ii) by striking ``for insurance'' and inserting ``for
risk-sharing'';
(6) in subsection (d), by inserting ``or insured community
development financial institution'' after ``private mortgage
insurance company''; and
(7) by adding at the end the following new subsection:
``(e) Insured Community Development Financial
Institution.--For purposes of this section, the term `insured
community development financial institution' means a
community development financial institution, as such term is
defined in section 103 of Reigle Community Development and
Regulatory Improvement Act of 1994 (12 U.S.C. 4702) that is
an insured depository institution (as such term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) or an insured credit union (as such term is defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752)).''.
SEC. 144. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE;
SERVICES PROVIDED THROUGH RELIGIOUS
ORGANIZATIONS.
Title V of the Public Health Service Act (42 U.S.C. 290aa
et seq.) is amended by adding at the end the following part:
[[Page H12396]]
``Part G--Services Provided Through Religious Organizations
``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.
``(a) Designated Programs.--Subject to subsection (b), this
part applies to discretionary and formula grant programs
administered by the Substance Abuse and Mental Health
Services Administration that make awards of financial
assistance to public or private entities for the purpose of
carrying out activities to prevent or treat substance abuse
(in this part referred to as a `designated program').
Designated programs include the program under subpart II of
part B of title XIX (relating to formula grants to the
States).
``(b) Limitation.--This part does not apply to any award of
financial assistance under a designated program for a purpose
other than the purpose specified in subsection (a).
``(c) Definitions.--For purposes of this part (and subject
to subsection (b)):
``(1) The term `designated program' has the meaning given
such term in subsection (a).
``(2) The term `financial assistance' means a grant,
cooperative agreement, or contract.
``(3) The term `program beneficiary' means an individual
who receives program services.
``(4) The term `program participant' means a public or
private entity that has received financial assistance under a
designated program.
``(5) The term `program services' me
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