(a) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this title an amendment is expressed
in terms of an amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that section or other
provision of the Social Security Act.
(b) References to OBRA.--In this title, the terms ``OBRA-1986'',
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
(a) In General.--Section 1876 (42 U.S.C. 1395mm) is amended by
adding at the end the following new subsection:
``(k)(1) Notwithstanding any other provision of this section, each
eligible organization with a risk-sharing contract (or which is
eligible to enter into such a contract, as determined by the Secretary)
that is the sponsor of a standard health plan under subtitle B of title
I of the Health Security Act shall provide each individual who meets
the requirements of paragraph (2) with the opportunity to elect (by
submitting an application at such time and in such manner as specified
by the Secretary) to continue enrollment in such plan (for the same
benefits as other individuals enrolled in the plan) and to have
payments made by the Secretary to the plan on the individual's behalf
in accordance with paragraph (3). The premium imposed with respect to
such an individual by the plan shall be in an amount (determined in
accordance with rules of the Secretary and notwithstanding other
provisions of such Act) which reflects the difference between the
premium otherwise established (adjusted by a factor to reflect the
actuarial difference between medicare beneficiaries and other plan
enrollees) and the amount payable under paragraph (3).
``(2) An individual meets the requirements of this paragraph if the
individual is--
``(A) enrolled in the health plan of an eligible
organization in a month in which the individual is either not
entitled to benefits under part A, or is an employee (as
defined in the Health Security Act) or the spouse or dependent
of an employee,
``(B) entitled to benefits under part A and enrolled under
part B in the succeeding month,
``(C) a community-rated individual under the Health
Security Act in that succeeding month, and
``(D) not an experience-rated employee (as defined in the
Health Security Act) or the spouse or dependent of an
experience-rated employee in that succeeding month.
``(3) The Secretary shall make a payment to an eligible
organization on behalf of each individual enrolled with the
organization for whom an election is in effect under this subsection in
an amount determined by the rate specified by subsection (a)(1)(C)
(notwithstanding the second sentence of paragraph (1)). Such payment
shall be made from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund as provided under
subsection (a)(5) (other than as provided under subparagraph (B) of
that paragraph).
``(4) The period for which payment may be made under paragraph
(3)--
``(A) begins with the first month for which the individual
meets the requirements of paragraph (2) (or a later month, in
the case of a late application, as may be specified by the
Secretary); and
``(B) ends with the earliest of--
``(i) the month following the month--
``(I) in which the individual notifies the
Secretary that the individual no longer wishes
to be enrolled in the health plan of the
eligible organization and to have payment made
on the individual's behalf under this
subsection; and
``(II) which is a month specified by the
Secretary as a uniform open enrollment period
under subsection (c)(3)(A)(i), or
``(ii) the month in which the individual ceases to
meet the requirements of paragraph (2).
``(5) Notwithstanding any other provision of this title, payments
to an eligible organization under this subsection on behalf of an
individual shall be the sole payments made with respect to items and
services furnished to the individual during the period for which the
individual's election under this subsection is in effect.''.
(b) Conforming Amendment.--Section 1838(b) (42 U.S.C. 1395q(b)) is
amended by inserting after ``section 1843(e)'' the following: ``,
1876(c)(3)(B) or 1876(k)(4)(B)''.
(a) Uniform Open Enrollment Periods.--
(1) For capitated plans.--The first sentence of section
1876(c)(3)(A)(i) (42 U.S.C. 1395mm(c)(3)(A)(i)) is amended by
inserting ``(which may be specified by the Secretary)'' after
``open enrollment period''.
(2) For medigap plans.--Section 1882(s) (42 U.S.C.
1395ss(s)) is amended--
(A) in paragraph (3), by striking ``paragraphs (1)
and (2)'' and inserting ``paragraph (1), (2), or (3)'',
(B) by redesignating paragraph (3) as paragraph
(4), and
(C) by inserting after paragraph (2) the following
new paragraph:
``(3) Each issuer of a medicare supplemental policy shall have an
open enrollment period (which shall be the period specified by the
Secretary under section 1876(c)(3)(A)(i)), of at least 30 days duration
every year, during which the issuer may not deny or condition the
issuance or effectiveness of a medicare supplemental policy, or
discriminate in the pricing of the policy, because of age, health
status, claims experience, receipt of health care, or medical
condition. The policy may not provide any time period applicable to
pre-existing conditions, waiting periods, elimination periods, and
probationary periods (except as provided by paragraph (2)(B)). The
Secretary may require enrollment through a third party designated under
section 1876(c)(3)(B).''.
(b) Enrollments for New Medicare Beneficiaries and Those Who
Move.--Section 1876(c)(3)(A) (42 U.S.C. 1395mm(c)(3)(A)) is amended--
(1) in clause (i), by striking ``clause (ii)'' and
inserting ``clauses (ii) through (iv)'', and
(2) by adding at the end the following:
``(iii) Each eligible organization shall have an open enrollment
period for each individual eligible to enroll under subsection (d)
during any enrollment period specified by section 1837 that applies to
that individual. Enrollment under this clause shall be effective as
specified by section 1838.
``(iv) Each eligible organization shall have an open enrollment
period for each individual eligible to enroll under subsection (d) who
has previously resided outside the geographic area which the
organization serves. The enrollment period shall begin with the
beginning of the month that precedes the month in which the individual
becomes a resident of that geographic area and shall end at the end of
the following month. Enrollment under this clause shall be effective as
of the first of the month following the month in which the individual
enrolls.''.
(c) Enrollment Through Third Party; Uniform Termination of
Enrollment.--The first sentence of section 1876(c)(3)(B) (42 U.S.C.
1395mm(c)(3)(B)) is amended--
(1) by inserting ``(including enrollment through a third
party)'' after ``regulations'', and
(2) by striking everything after ``with the eligible
organization'' and inserting ``during an annual period as
prescribed by the Secretary, and as specified by the Secretary
in the case of financial insolvency of the organization, if the
individual moves from the geographic area served by the
organization, or in other special circumstances that the
Secretary may prescribe.''.
(d) Effective Date.--The amendments made by the previous
subsections apply to enrollments and terminations of enrollments
occurring after 1995 (but only after the Secretary of Health and Human
Services has prescribed the relevant annual period), except that the
amendments made by subsection (a)(2) apply to enrollments for a
medicare supplemental policy made after 1995.
Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is
amended--
(1) by amending subclause (XII) to read as follows:
``(XII) for fiscal years 1997 through 2000, the market
basket percentage minus 2.0 percentage points for hospitals in
all areas, and''; and
(2) in subclause (XIII), by striking ``1998'' and inserting
``2001''.
INPATIENT HOSPITAL SERVICES.
(a) PPS Hospitals.--
(1) Reduction in base payment rates for pps hospitals.--
Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by
adding at the end the following new sentence: ``In addition to
the reduction described in the preceding sentence, for
discharges occurring after September 30, 1995, the Secretary
shall reduce by 7.31 percent the unadjusted standard Federal
capital payment rate (as described in 42 CFR 412.308(c), as in
effect on the date of the enactment of the Health Security Act)
and shall reduce by 10.41 percent the unadjusted hospital-
specific rate (as described in 42 CFR 412.328(e)(1), as in
effect on the date of the enactment of the Health Security
Act).''.
(2) Reduction in update.--Section 1886(g)(1) (42 U.S.C.
1395ww(g)(1)) is amended--
(A) in subparagraph (B)(i)--
(i) by striking ``and (II)'' and inserting
``(II)'', and
(ii) by striking the semicolon at the end
and inserting the following: ``, and (III) an
annual update factor established for the
prospective payment rates applicable to
discharges in a fiscal year which (subject to
reduction under subparagraph (C)) will be based
upon such factor as the Secretary determines
appropriate to take into account amounts
necessary for the efficient and effective
delivery of medically appropriate and necessary
care of high quality;'';
(B) by redesignating subparagraph (C) as
subparagraph (D); and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C)(i) With respect to payments attributable to portions
of cost reporting periods or discharges occurring during each
of the fiscal years 1996 through 2003, the Secretary shall
include a reduction in the annual update factor established
under subparagraph (B)(i)(III) for discharges in the year equal
to the applicable update reduction described in clause (ii) to
adjust for excessive increases in capital costs per discharge
for fiscal years prior to fiscal year 1992 (but in no event may
such reduction result in an annual update factor less than
zero).
``(ii) In clause (i), the term `applicable update
reduction' means, with respect to the update factor for a
fiscal year--
``(I) 4.9 percentage points; or
``(II) if the annual update factor for the previous
fiscal year was less than the applicable update
reduction for the previous year, the sum of 4.9
percentage points and the difference between the annual
update factor for the previous year and the applicable
update reduction for the previous year.''.
(b) PPS-Exempt Hospitals.--Section 1861(v)(1) (42 U.S.C.
1395x(v)(1)) is further amended by adding at the end the following new
subparagraph:
``(T) Such regulations shall provide that, in determining the
amount of the payments that may be made under this title with respect
to the capital-related costs of inpatient hospital services furnished
by a hospital that is not a subsection (d) hospital (as defined in
section 1886(d)(1)(B)) or a subsection (d) Puerto Rico hospital (as
defined in section 1886(d)(9)(A)), the Secretary shall reduce the
amounts of such payments otherwise established under this title by 15
percent for payments attributable to portions of cost reporting periods
occurring during each of the fiscal years 1996 through 2003.''.
(a) In General.--Section 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F))
is amended--
(1) in clause (ii), by striking ``The amount'' and
inserting ``Subject to clause (ix), the amount'';
(2) in clause (vi), by striking ``In'' and inserting
``Subject to clause (x), in''; and
(3) by adding at the end the following new clauses:
``(ix) Notwithstanding any other provision of this subparagraph,
the Secretary shall reduce the amount of any additional payment made to
a hospital under this subparagraph by an amount equal to the sum of--
``(I) for discharges occurring on or after the date on
which the State in which such hospital is located becomes a
participating State (as such term is defined in title I of the
Health Security Act), 33 percent of such additional payment.''.
LIMITS FOR SKILLED NURSING FACILITIES.
(a) Payments Based on Cost Limits.--Section 1888(a) (42 U.S.C.
1395yy(a)) is amended by striking ``112 percent'' each place it appears
and inserting ``100 percent (adjusted by such amount as the Secretary
determines to be necessary to preserve the savings resulting from the
enactment of section 13503(a)(1) of the Omnibus Budget Reconciliation
Act of 1993)''.
(b) Adjustments to Limits.--Section 1888(c) (42 U.S.C. 1395yy(c))
is amended by inserting the following sentence at the end: ``The effect
of the amendment made by section 4104(a) of the Health Security Act
shall not be considered by the Secretary in making adjustments pursuant
to this subsection.''
(c) Payments Determined on Prospective Basis.--Section
1888(d)(2)(B) (42 U.S.C. 1395yy(d)(2)(B)) is amended by striking ``105
percent'' and inserting ``100 percent (adjusted by such amount as the
Secretary determines to be necessary to preserve the savings resulting
from the enactment of section 13503(b) of the Omnibus Budget
Reconciliation Act of 1993)''.
(d) Effective Date.--The amendments made by subsections (a), (b),
and (c) shall apply to cost reporting periods beginning on or after
October 1, 1995.
(a) Clarification of Additional Payment.--Section
1886(d)(5)(G)(ii)(I) (42 U.S.C. 1395ww(d)(5)(G)(ii)(I)) is amended by
striking ``the first 3 12-month cost reporting periods that begin'' and
inserting ``the 36-month period beginning with the first day of the
cost reporting period that begins''.
(b) Special Treatment Extended.--Section 1886(d)(5)(G) (42 U.S.C.
1395ww(d)(5)(G)) is amended--
(1) in clause (i), by striking ``October 1, 1994'' and
inserting ``October 1, 1999''; and
(2) in clause (ii)(II), by striking ``October 1, 1994'' and
inserting ``October 1, 1999''.
(c) Extension of Target Amount.--Section 1886(b)(3)(D) (42 U.S.C.
1395ww(b)(3)(D)) is amended--
(1) in the matter preceding clause (i), by striking ``March
31, 1993'' and inserting ``September 30, 1999''; and
(2) by amending clause (iii) to read as follows:
``(iii) with respect to discharges occurring in fiscal
years 1994 through 1999, the target amount for the cost
reporting period beginning in the previous fiscal year
increased by the applicable percentage increase under
subparagraph (B)(iv).''.
PROGRAM.
(a) Eligibility of Rural Primary Care Hospitals for Grants.--
(1) In general.--Section 4005(e)(2) of the Omnibus Budget
Reconciliation Act of 1987 is amended in the matter preceding
subparagraph (A) by inserting ``any rural primary care hospital
as defined in section 1861(mm)(1), or'' after ``means''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to grants made on or after October 1, 1993.
(b) Extension of Authorization of Appropriations.--Section
4005(e)(9) of Omnibus Budget Reconciliation Act of 1987 is amended--
(1) by striking ``1989 and'' and inserting ``1989,''; and
(2) by striking ``1992'' and inserting ``1992 and
$30,000,000 for each of the fiscal years 1993 through 1999''.
(c) Frequency of Required Reports.--Section 4008(e)(8)(B) of the
Omnibus Budget Reconciliation Act of 1987 is amended by striking
``every 6 months'' and inserting ``every 12 months''.
AND MULTIHOSPITAL CAMPUSES.
(a) In General.--Section 1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D))
is amended by adding at the end the following new clause:
``(vi) The Secretary shall determine payment under clause (i) for a
sole-community hospital that is a part of a multi-campus hospital by
making the determination under such clause for each facility of the
multi-campus hospital if any facility of the hospital would have a
value of `r' greater than 0, as `r' is defined in subparagraph (B)(ii).
In making a determination for each such facility, the Secretary shall
determine the DRG-specific rate applicable to the facility based on its
location in accordance with paragraph (3)(D).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to discharges occurring on or after October 1, 1993, from multi-
campus hospitals that merged facilities on or after October 1, 1987.
Notwithstanding clause (iv) of section 1886(d)(1)(B) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B)), a hospital which has an
average inpatient length of stay (as determined by the Secretary of
Health and Human Services) of greater than 25 days shall not be treated
as a hospital described in such clause for purposes of such title
unless such hospital was treated as a hospital described in such clause
for purposes of such title as of the date of the enactment of this Act.
CARE HOSPITALS.
(a) Rehabilitation Hospitals and Distinct Part Units.--
(1) Definition.--Section 1886(d)(1)(B) (42 U.S.C.
1395ww(d)(1)(B)) is amended by adding at the end the following
new sentence: ``In defining a rehabilitation hospital and a
rehabilitation unit of a hospital which is a distinct part of a
hospital, the Secretary shall take into account the impact of
new technologies, survival rates, and changes in the practice
of rehabilitation medicine.''.
(2) Target amount calculation for rehabilitation hospitals
and distinct part units.--
(A) In general.--Section 1886(b)(3) (42 U.S.C.
1395ww(b)(3)) is amended--
(i) in subparagraph (A), by striking ``(D),
and (E)'' and inserting ``(D), (E), and (F)'';
(ii) in subparagraph (B)(ii), by striking
``and (E)'' and inserting ``(E), and (F)''; and
(iii) by adding at the end the following
new subparagraph:
``(F)(i) Subject to clause (ii), for cost reporting
periods beginning on or after October 1, 1994, in the
case of a hospital described in subsection
(d)(1)(B)(ii) or a rehabilitation unit described in
such subparagraph, the term `target amount' means--
``(I) with respect to the first 12-month
cost reporting period in which this
subparagraph is applied to the hospital or
unit--
``(aa) the allowable operating
costs of inpatient hospital services
(as defined in subsection (a)(4))
recognized under this title for the
hospital or unit for the 12-month cost
reporting period (in this subparagraph
referred to as the `base cost reporting
period') preceding the first cost
reporting period for which this
subparagraph was in effect with respect
to such hospital, increased (in a
compounded manner), by
``(bb) the applicable percentage
increases applied to such hospital or
unit under this paragraph for cost
reporting periods after the base cost
reporting period and up to and
including such first 12-month cost
reporting period, or
``(II) with respect to a later cost
reporting period, the target amount for the
preceding 12-month cost reporting period,
increased by the applicable percentage increase
under subparagraph (B).
There shall be substituted for the allowable average
costs of inpatient hospital services determined under
subclause (I)(aa), the average of the allowable average
costs of inpatient hospital services (as so defined)
recognized under this title for the hospital or unit
for cost reporting periods beginning during fiscal
years 1990 and 1991 (if any).
``(ii)(I) Notwithstanding the provisions of clause
(i), in the case of a hospital or unit to which the
last sentence of clause (i) applies, the hospital or
unit's target amount under such clause for a cost
reporting period shall be--
``(aa) not less than 70 percent of the
national weighted average of all target amounts
calculated under such clause for all hospitals
and units described in such clause (as
determined by the Secretary), and
``(bb) not less than the allowable
operating costs of inpatient hospital services
(as defined in subsection (a)(4) for such
hospital or unit in the base cost reporting
period (including any payments made to such
hospital or unit pursuant to paragraph (1)(A)),
multiplied by the applicable percentage
increase for such cost reporting period under
subparagraph (B).
``(II) Notwithstanding the provisions of clause
(i), in the case of a hospital or unit that is not
described in subclause (I), the hospital or unit's
target amount under such clause for a cost reporting
period shall be--
``(aa) not less than the amount described
in subclause (I)(aa), and
``(bb) not greater than 110 percent of the
national weighted average of all target amounts
calculated under clause (i) for all hospitals
and units described in such clause (as
determined by the Secretary).''.
(B) Effective date.--The amendments made by
subparagraph (A) shall apply with respect to cost
reporting periods beginning on or after October 1,
1994.
(3) Development of national prospective rates for
rehabilitation hospitals and distinct part units.--
(A) Development of proposal.--The Secretary of
Health and Human Services (hereafter in this section
referred to as the ``Secretary'') shall develop a
proposal to replace the current system under which
rehabilitation hospitals and rehabilitation units of a
hospital which are a distinct part of a hospital (as
described in section 1886(d)(1)(B) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B))) receive
payment for the operating and capital-related costs of
inpatient hospital services under part A of title XVIII
of such Act with a prospective payment system. In
developing any proposal under this paragraph to replace
the current system with a prospective payment system,
the Secretary shall develop a system that provides
for--
(i) a payment on a per-discharge basis, and
(ii) an appropriate weighting of such
payment amount as it relates to the
classification of the discharge.
(B) Reports.--Not later than October 1, 1996, the
Secretary shall submit the proposal developed under
subparagraph (A) to the Congress.
(b) Assignment of New Base Year for Certified Long-Stay Hospitals
That Also Serve a Significant Proportion of Low-Income Patients.--
(1) Rebasing for long-term hospitals.--
(A) In general.--Section 1886(b)(3) (42 U.S.C.
1395ww(b)(3)), as amended by subsection (a), is further
amended--
(i) in subparagraph (A), by striking ``(E),
and (F)'' and inserting ``(E), (F), and (G)'';
(ii) in subparagraph (B)(ii), by striking
``(E), and (F)'' and inserting ``(E), (F), and
(G)''; and
(iii) by inserting after subparagraph (F)
the following new subparagraph:
``(G)(i) For cost reporting periods beginning on or
after October 1, 1994, in the case of a hospital
described in subsection (d)(1)(B)(iv) that--
``(I) has not received the additional
payment amount described in paragraph (1)(A)
for at least the preceding 2 consecutive 12-
month cost reporting periods; and
``(II) for which the sum of the amounts
described in subclauses (I) and (II) of
subsection (d)(5)(F)(vi) during the period
described in clause (I) exceeds 25 percent,
the term `target amount' has the meaning given such
term by clause (ii).
``(ii) In the case of a hospital described in
clause (i), the term `target amount' means--
``(I) with respect to the first 12-month
cost reporting period in which this
subparagraph is applied to the hospital--
``(aa) the average allowable
operating costs of inpatient hospital
services (as defined in subsection
(a)(4)) recognized under this title for
the hospital during cost reporting
periods of the hospital beginning
during fiscal years 1990 and 1991 for
such hospital (in this subparagraph
referred to as the `base cost reporting
period'), increased (in a compounded
manner), by
``(bb) the applicable percentage
increases applied to such hospital or
under this paragraph for cost reporting
periods after the base cost reporting
period and up to and including such
first 12-month cost reporting periods,
or
``(II) with respect to a subsequent 12-
month cost reporting period, the target amount
for the preceding 12-month cost reporting
period, increased by the applicable percentage
increase under subparagraph (B).
``(iii) Notwithstanding clause (ii)(II), if, after
2 consecutive 12-month cost reporting periods, a
hospital continues to be described in subclauses (I)
and (II) of clause (i), there shall be substituted for
the base cost reporting period described in clause
(ii)(I)(aa) the most recent preceding 2 12-month cost
reporting periods of the hospital for which data is
available (as determined by the Secretary), but only if
such substituting results in an increase in the target
amount for the hospital. The substitution under the
preceding sentence may not occur more often than every
2 years.
``(iv) Effective October 1, 1994, the Secretary
shall take into account the enactment of this
subparagraph in making available to the hospital the
payments described in section 1815(e)(2), and, shall
increase such payments as if the target amount of the
hospital had been established pursuant to this
subparagraph as of such date.''.
(2) Effective date.--The amendments made by this subsection
shall be effective with respect to cost reporting periods
beginning on or after October 1, 1994.
(a) In General.--Section 1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B))
is amended in the matter preceding clause (i) by striking ``The
Secretary'' and inserting ``For discharges occurring before January 1,
1997, the Secretary''.
(b) Adjustment to Standardized Amounts.--Section 1886(d)(2)(C)(i)
(42 U.S.C. 1395ww(d)(2)(C)(i)) is amended by striking ``excluding'' and
inserting ``for discharges occurring before January 1, 1997,
excluding''.
(a) Limited Service Hospital Program.--Section 1820 (42 U.S.C.
13951-4) is amended to read as follows:
``limited service hospital program
``Sec. 1820. (a) Purpose.--The purpose of this section is to--
``(1) make available alternative hospital models to small
rural or isolated rural communities in which facilities are
relieved of the burden of selected regulatory requirements by
limiting the scope of inpatient acute services required to be
offered;
``(2) alter medicare reimbursement policy to support the
financial viability of alternative facilities by limiting the
financial risk faced by such small hospitals through the use of
reasonable cost reimbursement; and
``(3) promote linkages between facilities designated by the
State under this section and broader programs supporting the
development of and transition to integrated provider networks.
``(b) In General.--Any State that submits an application in
accordance with subsection (c) may establish a limited service hospital
program described in subsection (d).
``(c) Application.--A State may establish a limited service
hospital program described in subsection (d) if the State submits to
the Secretary at such time and in such form as the Secretary may
require an application containing--
``(1) assurances that the State--
``(A) has developed, or is in the process of
developing, a State rural health care plan that--
``(i) in the case of a State applying to
establish a rural primary care hospital program
(described in subsection (d)(1)(A)), provides
for the creation of one or more rural health
networks (as defined in subsection (e)) in the
State,
``(ii) promotes regionalization of rural
health services in the State, and
``(iii) improves access to hospital and
other health services for rural residents of
the State;
``(B) has developed the rural health care plan
described in subparagraph (A) in consultation with the
hospital association of the State, rural hospitals
located in the State, and the State Office of Rural
Health (or, in the case of a State in the process of
developing such plan, that assures the Secretary that
it will consult with its State hospital association,
rural hospitals located in the State, and the State
Office of Rural Health in developing such plan); and
``(2) assurances that the State has designated (consistent
with the rural health care plan described in paragraph (1)(A)),
or is in the process of designating, rural nonprofit or public
hospitals or facilities located in the State as rural primary
care hospitals facilities or medical assistance facilities; and
``(3) such other information and assurances as the
Secretary may require.
``(d) Limited Service Hospital Program Described.--
``(1) In general.--A State that has submitted an
application in accordance with subsection (c), may establish a
limited service hospital program that includes--
``(A) a rural primary care hospital program under
which--
``(i) at least one facility in the State
shall be designated as a rural primary care
hospital in accordance with paragraph (2), and
``(ii) the State shall develop at least one
rural health network (as defined in subsection
(e)) in the State;
``(B) a medical assistance facility program under
which at least one facility in the State shall be
designated as a medical assistance facility in
accordance with paragraph (2); or
``(C) both.
``(2) State designation of facilities.--A State may
designate one or more facilities as a rural primary care
hospital or medical assistance facility in accordance with
subparagraph (A) or (B).
``(A) Criteria for designation as rural primary
care hospital.--A State may designate a facility as a
rural primary care hospital only if the facility--
``(i) is located in a rural area (as
defined in section 1886(d)(2)(D)), or is
located in a county whose geographic area is
substantially larger than the average
geographic area for urban counties in the
United States and whose hospital service area
is characteristic of service areas of hospitals
located in rural areas;
``(ii) at the time such facility applies to
the State for designation as a rural primary
care hospital, is a hospital (or, in the case
of a facility that closed during the 12-month
period that ends on the date the facility
applies for such designation, at the time the
facility closed), with a participation
agreement in effect under section 1866(a);
``(iii) has in effect an agreement to
participate with other hospitals and facilities
in a rural health network;
``(iv) provides 24-hour emergency services
to ill or injured persons prior to admission to
the facility or prior to their transportation
to a full-service hospital;
``(v) provides not more than 15 inpatient
beds (meeting such conditions as the Secretary
may establish) for providing acute inpatient
care;
``(vi) provides inpatient care for a period
not to exceed an average length of 96 hours
(unless a longer period is required because
transfer to a hospital is precluded because of
inclement weather or other emergency
conditions);
``(vii) meets such staffing requirements as
would apply under section 1861(e), to a
hospital located in a rural area, except that--
``(I) the facility need not meet
hospital standards relating to the
number of hours during a day, or days
during a week, in which the facility
must be open and fully staffed, except
insofar as the facility is required to
provide emergency care on a 24-hour
basis under clause (v) and must have
nursing services available on a 24-hour
basis, but need not otherwise staff the
facility except when an inpatient is
present,
``(II) the facility may provide any
services otherwise required to be
provided by a full-time, onsite
dietician, pharmacist, laboratory
technician, medical technologist, and
radiological technologist on a part-
time, offsite basis under arrangements
as defined in section 1861(w)(1), and
``(III) the inpatient care
described in clause (vii) may be
provided by a physician's assistant,
nurse practitioner, or clinical nurse
specialist subject to the oversight of
a physician who need not be present in
the facility, and
``(viii) meets the requirements of
subparagraphs (C) through (I) of paragraph (2)
of section 1861(aa), and of clauses (ii) and
(iv) of the second sentence of that paragraph,
except that in determining whether a facility
meets the requirements of this subparagraph,
subparagraphs (E) and (F) of that paragraph
shall be applied as if any reference to
`physician' is a reference to a physician as
defined in section 1861(r)(1).
``(B) Criteria for designation as medical
assistance facility.--A State may designate a facility
as a medical assistance facility only if the facility--
``(i) is located in a county (or equivalent
unit of local government)--
``(I) with fewer than 6 residents
per square mile; or
``(II) in a rural area (as defined
in section 1886(d)(2)(D)) that is
located more than a 35-mile or 45-
minute drive from a hospital, a rural
primary care hospital, or another
facility described in this subsection;
``(ii) at the time such facility applies to
the State for designation as a medical
assistance facility--
``(I) is a hospital (or in the case
of a facility that closed during the
12-month period that ends on the date
the facility applies for such
designation, at the time the facility
closed), with a participation agreement
in effect under section 1866(a); or
``(II) is licensed in accordance
with applicable State and local laws
and regulations;
``(iii) meets the requirements of clauses
(iv), (vi), and (vii) of subparagraph (A); and
``(iv) meets the requirements of
subparagraph (I) of paragraph (2) of section
1861(aa).
``(e) Rural Health Network Defined.--For purposes of this section,
the term `rural health network' means, with respect to a State, an
organization--
``(1) consisting of--
``(A) at least 1 facility that the State has
designated or plans to designate as a rural primary
care hospital, and
``(B) at least 1 hospital that furnishes services
that a rural primary care hospital cannot furnish, and
``(2) the members of which have entered into agreements
regarding--
``(A) patient referral and transfer,
``(B) the development and use of communications
systems, including (where feasible) telemetry systems
and systems for electronic sharing of patient data,
``(C) the provision of emergency and non-emergency
transportation among the members, and
``(D) credentialing and quality assurance.
``(f) Certification by the Secretary.--The Secretary shall certify
a facility as a rural primary care hospital or medical assistance
facility (as the case may be) if the facility--
``(1) is located in a State that has established a limited
service hospital program in accordance with subsection (d);
``(2) is designated as a rural primary care hospital or
medical assistance facility by the State in which it is
located; and
``(3) meets such other criteria as the Secretary may
require.
``(g) Permitting Maintenance of Swing Beds.--Nothing in this
section shall be construed to prohibit a State from designating or the
Secretary from certifying a facility as a rural primary care hospital
or medical assistance facility solely because, at the time the facility
applies to the State for designation as a rural primary care hospital
or medical assistance facility, there is in effect an agreement between
the facility and the Secretary under section 1883 under which the
facility's inpatient hospital facilities are used for the furnishing of
extended care services, except that the number of beds used for the
furnishing of such services may not exceed the total number of licensed
inpatient beds at the time the facility applies to the State for such
designation (minus the number of inpatient beds used for providing
inpatient care in a rural primary care facility pursuant to subsection
(d)(2)(A)(vi)). The Secretary may establish additional conditions of
participation for rural primary care hospitals with a substantial
number of such beds. For purposes of the first sentence, the number of
beds of the facility used for the furnishing of extended care services
shall not include any beds of a unit of the facility that is licensed
as a distinct-part skilled nursing facility at the time the facility
applies to the State for designation as a rural primary care hospital
or medical assistance facility.
``(h) Grants.--
``(1) Limited service hospital program.--The Secretary may
award grants to States that have submitted applications in
accordance with subsection (c) for--
``(A) engaging in activities relating to planning
and implementing a rural health care plan;
``(B) in the case of a rural primary care hospital
program described in subsection (d)(1)(A), engaging in
activities relating to planning and implementing rural
health networks; and
``(C) designation of facilities as rural primary
care hospitals or medical assistance facilities.
``(2) Rural emergency medical services.--
``(A) In general.--The Secretary may award grants
to States that have submitted applications in
accordance with subparagraph (B) for the establishment
or expansion of a program for the provision of rural
emergency medical services.
``(B) Application.--An application is in accordance
with this subparagraph if the State submits to the
Secretary at such time and in such form as the
Secretary may require an application containing the
assurances described in subparagraphs (A)(ii),
(A)(iii), and (B) of subsection (c)(1) and paragraph
(3) of such subsection.
``(i) Study on Clinically Based Alternative to 96-Hour Rule.--The
Secretary shall conduct a study on the feasibility of admitting
patients to rural primary care hospitals and medical assistance
facilities on a limited DRG basis instead of using the 96-hour average
length of stay criteria described in subsection (d)(2)(A)(vii).
``(j) Waiver of Conflicting Part A Provisions.--The Secretary is
authorized to waive such provisions of this part and part C as are
necessary to conduct the program established under this section.
``(k) Authorization of Appropriations.--There are authorized to be
appropriated from the Federal Hospital Insurance Trust Fund--
``(1) for making grants under subsection (h)(1) to States
that have established a rural primary care hospital program in
the State under subsection (d)(1)(A), $15,000,000 for each of
fiscal years 1993 through 1995; and
``(2) for making grants to all States under subsection (h),
$25,000,000 in each of the fiscal years 1996 through 1999.''.
(b) Part A Amendments Relating to Rural Primary Care Hospitals and
Medical Assistance Facilities.--
(1) Definitions.--Section 1861 (42 U.S.C. 1395x) is amended
by adding at the end the following new subsection:
``medical assistance facility; medical assistance facility services
``(oo)(1) The term `medical assistance facility' means a facility
certified by the Secretary as a medical assistance facility under
section 1820(f).
``(2) The term `medical assistance facility services' means items
and services, furnished to an inpatient for a medical assistance
facility by such facility, that would be inpatient hospital services if
furnished to an inpatient of a hospital by a hospital.''.
(2) Coverage and payment.--(A)(i) Section 1812(a)(1) (42
U.S.C. 1395d(a)(1)) is amended by striking ``inpatient hospital
services'' the first place it appears and inserting ``,
inpatient hospital services and inpatient medical assistance
facility services''; and
(ii) by striking ``inpatient hospital services'' the second
place it appears and inserting ``such services''.
(B) Section 1814 (42 U.S.C. 1395f) is amended--
(i) in subsection (b), by striking ``inpatient
rural primary care hospital services,'' and inserting
``inpatient rural primary care hospital services, other
than a medical assistance facility providing inpatient
medical assistance facility services,''; and
(ii) by amending subsection (l) to read as follows:
``(l) Payment for Inpatient Rural Primary Care Services and
Inpatient Medical Assistance Facility Services.--The amount of payment
under this part for inpatient rural primary care services and inpatient
medical assistance facility services is the reasonable costs of the
rural primary care hospital or medical assistance facility in providing
such services.''.
(3) Treatment of medical assistance facilities as providers
of services.--(A) Section 1861(u) (42 U.S.C. 1395x(u)) is
amended by inserting ``medical assistance facility,''after
``rural primary care hospital,''.
(B) The first sentence of section 1864(a) (42 U.S.C.
1395aa(a)) is amended by inserting ``a medical assistance
facility, as defined in section 1861(oo)(1),'' after
``1861(mm)(1),''.
(C) The third sentence of section 1865(a) of such Act (42
U.S.C. 1395bb(a)) is amended by striking ``or 1861(mm)(1)'' and
inserting ``1861(mm)(1), or 1861(oo)(1),''.
(4) Conforming amendments.--(A) Section 1128A(b)(1) (42
U.S.C. 1320a-7a(b)(1)) is amended--
(i) by striking ``or a rural primary care
hospital'' the first place it appears and inserting ``,
a rural primary care hospital, or a medical assistance
facility''; and
(ii) by striking ``or a rural primary care
hospital'' the second place it appears and inserting
``, the rural primary care hospital, or the medical
assistance facility''.
(B) Section 1128B(c) (42 U.S.C. 1320a-7b(c)) is amended by
inserting ``medical assistance facility,'' after ``rural
primary care hospital,''.
(C) Section 1134 (42 U.S.C. 1320b-4) is amended by striking
``or rural primary care hospitals'' each place it appears and
inserting ``, rural primary care hospitals, or medical
assistance facilities''.
(D) Section 1138(a)(1) (42 U.S.C. 1320b-8(a)(1)) is
amended--
(i) in the matter preceding subparagraph (A), by
striking ``or rural primary care hospital'' and
inserting ``, rural primary care hospital, or medical
assistance facility'', and
(ii) in the matter preceding clause (i) of
subparagraph (A), by striking ``or rural primary care
hospital'' and inserting ``, rural primary care
hospital, or medical assistance facility''.
(E) Section 1164(e) (42 U.S.C. 1320c-13(e)) is amended by
inserting ``medical assistance facilities,'' after ``rural
primary care hospitals,''.
(F) Section 1816(c)(2)(C) (42 U.S.C. 1395h(c)(2)(C)) is
amended by inserting ``medical assistance facility,'' after
``rural primary care hospital,''.
(G) Section 1833 (42 U.S.C. 1395l) is amended--
(i) in subsection (h)(5)(A)(iii)--
(I) by striking ``or rural primary care
hospital'' and inserting ``rural primary care
hospital, or medical assistance facility''; and
(II) by striking ``to the hospital'' and
inserting ``to the hospital or the facility'';
(ii) in subsection (i)(1)(A), by inserting
``medical assistance facility,'' after ``rural primary
care hospital,'';
(iii) in subsection (i)(3)(A), by striking ``or
rural primary care hospital services'' and inserting
``rural primary care hospital services, or medical
assistance facility services'';
(iv) in subsection (l)(5)(A), by inserting
``medical assistance facility,'' after ``rural primary
care hospital,'' each place it appears; and
(v) in subsection (l)(5)(C), by striking ``or rural
primary care hospital'' each place it appears and
inserting ``, rural primary care hospital, or medical
assistance facility''.
(H) Section 1835(c) (42 U.S.C. 1395n(c)) is amended by
adding at the end the following: ``A medical assistance
facility shall be considered a hospital for purposes of this
subsection.''.
(I) Section 1842(b)(6)(A)(ii) (42 U.S.C.
1395u(b)(6)(A)(ii)) is amended by inserting ``medical
assistance facility,'' after ``rural primary care hospital,''.
(J) Section 1861 (42 U.S.C. 1395x) is amended--
(i) in the last sentence of subsection (e), by
striking ``1861(mm)(1))'' and inserting ``1861(mm)(1))
or a medical assistance facility (as defined in section
1861(oo)(1)).'',
(ii) in subsection (w)(1) by inserting ``medical
assistance facility,'' after ``rural primary care
hospital,'', and
(iii) in subsection (w)(2), by striking ``or rural
primary care hospital'' each place it appears and
inserting ``, rural primary care hospital, or medical
assistance facility''.
(K) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended
by striking ``or rural primary care hospital'' each place it
appears and inserting ``, rural primary care hospital, or
medical assistance facility''.
(L) Section 1866(a)(1) (42 U.S.C 1395cc(a)(1)) is amended--
(i) in subparagraph (F)(ii), by inserting ``medical
assistance facilities,'' after ``rural primary care
hospitals,'';
(ii) in subparagraph (H)--
(I) in the matter preceding clause (i), by
inserting ``and in the case of medical
assistance facilities which provide inpatient
medical assistance facility services'' after
``rural primary care hospital services''; and
(II) in clauses (i) and (ii), by striking
``hospital'' each place it appears and
inserting ``hospital or facility'';
(iii) in subparagraph (I)--
(I) in the matter preceding clause (i), by
striking ``or rural primary care hospital'' and
inserting ``, a rural primary care hospital, or
a medical assistance facility''; and
(II) in clause (ii), by striking ``the
hospital'' and inserting ``the hospital or the
facility''; and
(iv) in subparagraph (N)--
(I) in the matter preceding clause (i), by
striking ``and rural primary hospitals'' and
inserting ``, rural primary care hospitals, and
medical assistance facilities'';
(II) in clause (i), by striking ``or rural
primary care hospital,'' and inserting ``,
rural primary care hospital, or medical
assistance facility,''; and
(III) in clause (ii), by striking
``hospital'' and inserting ``hospital or
facility''.
(M) Section 1866(a)(3) (42 U.S.C 1395cc(a)(3)) is amended--
(i) by striking ``rural primary care hospital,''
each place it appears in subparagraphs (A) and (B) and
inserting ``rural primary care hospital, medical
assistance facility,'', and
(ii) in subparagraph (C)(ii)(II), by striking
``rural primary care hospitals,'' each place it appears
and inserting ``rural primary care hospitals, medical
assistance facilities''.
(N) Section 1867(e)(5) (42 U.S.C. 1395dd(e)(5)) is amended
by striking ``1861(mm)(1))'' and inserting ``1861(mm)(1)) or a
medical assistance facility (as defined in section
1861(oo)(1)).''.
(c) Part B Amendments Relating to Rural Primary Care Hospitals and
Medical Assistance Facilities.--
(1) Coverage.--(A) Section 1861(oo) (42 U.S.C. 1395x(oo))
as added by subsection (b)(1), is amended by adding at the end
the following new paragraph:
``(3) The term `outpatient medical assistance facility services'
means medical and other health services furnished by a medical
assistance facility on an outpatient basis.''.
(B) Section 1832(a)(2) (42 U.S.C. 1395k(a)(2)) is amended--
(i) in subparagraph (I), by striking ``and'' at the
end;
(ii) in subparagraph (J), by striking the period at
the end and inserting ``; and''; and
(iii) by adding at the end the following new
subparagraph:
``(K) outpatient medical assistance facility
services (as defined in section 1861(oo)(3)).''.
(2) Payment.--(A) Section 1833(a) (42 U.S.C. 1395l(a)) is
amended--
(i) in paragraph (2), in the matter preceding
subparagraph (A), by striking ``and (I)'' and inserting
``(I), and (K)'';
(ii) in paragraph (6), by striking ``and'' at the
end;
(iii) in paragraph (7), by striking the period at
the end and inserting ``; and''; and
(iv) by adding at the end the following new
paragraph:
``(8) in the case of outpatient medical assistance facility
services, the amounts described in section 1834(g).''.
(B) Section 1834(g) (42 U.S.C. 1395m(g)) is amended--
(i) in the subsection heading by inserting ``and
Outpatient Medical Assistance Facility Services'' after
``Services'';
(ii) in paragraph (1), by striking ``provided
during a year before 1993 in a rural primary care
hospital under this part shall be determined by one of
the following methods as elected by the rural primary
care hospital'' and inserting ``in a rural primary care
hospital or medical assistance facility under this part
shall be determined by one of the following methods as
elected by the rural primary care hospital or medical
assistance facility'';
(iii) in paragraph (1)(A)(ii), by striking
``outpatient rural primary care hospital services''
each place it appears and inserting ``outpatient rural
primary care hospital services or outpatient medical
assistance facility services''; and
(iv) in paragraph (1)(B), by striking ``hospital''
and inserting ``hospital or facility''.
(d) Payment Continued to Designated EACHs.--
(1) Termination of each designation.--Section 1820(i)(1)(A)
(42 U.S.C. 1395l(4)(i)(1)(A)) is amended by inserting at the
end the following new flush sentence:
``The Secretary shall not designate any hospital as an
essential access community hospital on or after July 1,
1994.''.
(2) Permitting payment to prior designated eachs.--Section
1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D)) is amended--
(A) in clause (iii)(III), by inserting ``as such
section was in effect as of July 1, 1994'' before the
period at the end; and
(B) in clause (v), by inserting ``as such section
was in effect as of July 1, 1994'' after
``1820(i)(1).''
(3) Effective date.--The amendments made by this subsection
shall take effect on July 1, 1994.
(e) Technical Amendment Relating to Part A Deductible, Coinsurance
and Spell of Illness.--(1) Section 1812(a)(1) (42 U.S.C. 1395d(a)(1)),
as amended by subsection (b)(2)(A), is amended--
(A) by striking ``inpatient medical assistance facility
services'' and inserting ``inpatient medical assistance
facility services, inpatient rural primary care hospital
services, or inpatient medical assistance facility services'';
and
(B) by striking ``and inpatient rural primary care hospital
services''.
(2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C. 1395e(a),
1395e(b)(3)(A)) are each amended by striking ``inpatient hospital
services'' each place it appears and inserting ``inpatient hospital
services, inpatient rural primary care hospital services, or inpatient
medical assistance facility services,''.
(3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended by
striking ``inpatient hospital services'' and inserting ``inpatient
hospital services, inpatient rural primary care hospital services,
inpatient medical assistance facility services,''.
(4) Section 1861(a) (42 U.S.C. 1395x(a)) is amended--
(A) in paragraph (1), by striking ``inpatient hospital
services'' and inserting ``inpatient hospital services,
inpatient rural primary care hospital services, inpatient
medical assistance facility services,''; and
(B) in paragraph (2), by striking ``hospital'' and
inserting ``hospital, rural primary care hospital, or medical
assistance facility''.
(f) Repeal of Development of PPS System For Inpatient Rural Primary
Care Hospital Services.--
(1) In general.--Section 1814(l) (42 U.S.C. 1395f(l)) is
amended by striking paragraph (2).
(2) Conforming amendments.--Section 1814(l)(1) (42 U.S.C.
1395F(l)(1)) is amended--
(A) by striking ``(l)(1)'' and inserting ``(l)'';
(B) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively;
(C) in paragraph (2), as redesignated, by striking
``paragraph'' and inserting ``subsection''; and
(D) in the last sentence, by striking ``paragraph''
and inserting ``subsection''.
(g) Repeal of Development and Implementation of All Inclusive PPS
System for Outpatient Rural Primary Care Services.--
(1) In general.--Section 1834(g) (42 U.S.C. 1395m(g)), as
amended by subsection (c)(2)(B), is amended by striking
paragraph (2).
(2) Conforming amendments.--Section 1834(g)(1) (42 U.S.C.
1395m(g)(1)) is amended--
(A) by striking ``(1) In general.--''
(B) by redesignating subparagraph (A) and clauses
(i) and (ii) of such subparagraph as paragraph (1) and
subparagraphs (A) and (B) of such paragraph,
respectively;
(C) by redesignating subparagraph (B) as paragraph
(2);
(D) in paragraph (1)(A), as redesignated, by
striking ``subparagraph (B)''; and
(E) in paragraph (1)(B), as so redesignated, by
striking ``subparagraph'' and inserting ``paragraph''.
(h) Effective Date.--Except as otherwise provided, the amendments
made by this section shall apply to services furnished on or after
October 1, 1994.
(a) Study.--The Secretary of Health and Human Services (hereafter
in this section referred to as the ``Secretary'') shall--
(1) define the level and type of care that should
constitute subacute care;
(2) determine the appropriateness of furnishing subacute
care in different settings by evaluating the quality of care
and patient outcomes;
(3) determine the cost and effectiveness of providing
subacute care under the medicare program under title XVIII of
such Act to individuals who are eligible for benefits under
part A of such title;
(4) determine the extent to which hospital DRG prospective
payment rates under section 1886(d) of such Act (42 U.S.C.
1395ww(d)) are appropriate for the less restrictive
institutional settings that provide subacute care; and
(5) study the relationships between institutions and their
payment methodologies in order to develop ways in which to
maximize the continuity of care for each patient episode in
which subacute care is furnished.
(b) Report.--Not later than October 1, 1996, the Secretary shall
submit to the Congress a report on the matters studied under subsection
(a).
Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)) is amended--
(1) in subparagraph (A), by inserting after ``subparagraph
(B)'' the following: ``and, in the case of 1995, specified in
subparagraph (C)'';
(2) by redesignating subparagraph (C) as subparagraph (D);
and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Special provision for 1995.--For purposes of
subparagraph (A), the conversion factor specified in
this subparagraph for 1995 is--
``(i) in the case of physicians' services
included in the category of primary care
services (as defined for purposes of subsection
(j)(1)), the conversion factor established
under this subsection for 1994 reduced by 1
percent and adjusted by the update established
under paragraph (3) for 1995; and
``(ii) in the case of any other physicians'
services, the conversion factor established
under this subsection for 1994 reduced by 4.0
percent and adjusted by the update established
under paragraph (3) for 1995.''.
REPEAL OF RESTRICTION ON MAXIMUM REDUCTION PERMITTED IN
DEFAULT UPDATE.
(a) Use of Real GDP To Adjust for Volume and Intensity.--Section
1848(f)(2)(A)(iii) (42 U.S.C. 1395w-4(f)(2)(A)(iii)) is amended to read
as follows:
``(iii) 1 plus the average per capita
growth in the real gross domestic product
(divided by 100) for the 5-fiscal-year period
ending with the previous fiscal year (increased
by 1.5 percentage points for the category of
services consisting of primary care services),
and''.
(b) Repeal of Restriction on Maximum Reduction.--Section
1848(d)(3)(B)(ii) (42 U.S.C. 1395w-4(d)(3)(B)(ii)) is amended--
(1) in the heading, by inserting ``in certain years'' after
``adjustment'';
(2) in the matter preceding subclause (I), by striking
``for a year'';
(3) in subclause (I), by adding ``and'' at the end;
(4) in subclause (II), by striking ``, and'' and inserting
a period; and
(5) by striking subclause (III).
(c) Repeal of Performance Standard Factor.--
(1) In general.--Section 1848(f)(2) is amended by striking
subparagraph (B) and redesignating subparagraph (C) as
subparagraph (B).
(2) Conforming amendment.--Section 1848(f)(2)(A) is amended
in the matter following clause (iv) by striking ``1, multiplied
by 100'' and all that follows through ``subparagraph (B))'' and
inserting ``1 and multiplied by 100''.
(d) Effective Date.--
(1) Volume performance standards.--The amendments made by
subsections (a) and (c) shall apply with respect to volume
performance standards established beginning with fiscal year
1995.
(2) Repeal of restriction on maximum reduction.--The
amendments made by subsection (b) shall apply to services
furnished on or after January 1, 1997.
IN CERTAIN HOSPITALS.
(a) In General.--
(1) Limitations described.--Part B of title XVIII (42
U.S.C. 1831 et seq.) is amended by inserting after section 1848
the following new section:
``limitations on payment for physicians' services relating to inpatient
stays in certain hospitals
``Sec. 1849. (a) Definitions.--In this section, the following
definitions apply:
``(1) Hospital.--The term `hospital' means a subsection (d)
hospital as defined in section 1886(d)(1)(B).
``(2) Medical staff.--An individual furnishing a
physician's service is considered to be on the medical staff of
a hospital--
``(A) if (in accordance with requirements for
hospitals established by the Joint Commission on
Accreditation of Health Organizations)--
``(i) the individual is subject to bylaws,
rules, and regulations established by the
hospital to provide a framework for the self-
governance of medical staff activities;
``(ii) subject to such bylaws, rules, and
regulations, the individual has clinical
privileges granted by the hospital's governing
body; and
``(iii) under such clinical privileges, the
individual may provide physicians' services
independently within the scope of the
individual's clinical privileges, or
``(B) if such physician provides at least one
service to a medicare beneficiary in such hospital.
``(3) Rural area; urban area.--The terms `rural area' and
`urban area' have the meaning given such terms under section
1886(d)(2)(D).
``(4) Teaching hospital.--The term `teaching hospital'
means a hospital which has a teaching program approved as
specified in section 1861(b)(6).
``(b) Services Subject to Reduction.--
``(1) Determination of hospital-specific per admission
relative value.--Not later than October 1 of each year
(beginning with 1997), the Secretary shall determine for each
hospital--
``(A) the hospital-specific per admission relative
value under subsection (c)(2) for the following year;
and
``(B) whether such hospital-specific relative value
is projected to exceed the allowable average per
admission relative value applicable to the hospital for
the following year under subsection (c)(1).
``(2) Reduction for services at hospitals exceeding
allowable average per admission relative value.--If the
Secretary determines (under paragraph (1)) that a medical
staff's hospital-specific per admission relative value for a
year (beginning with 1998) is projected to exceed the allowable
average per admission relative value applicable to the medical
staff for the year, the Secretary shall reduce (in accordance
with subsection (d)) the amount of payment otherwise determined
under this part for each physician's service furnished during
the year to an inpatient of the hospital by an individual who
is a member of the hospital's medical staff.
``(3) Timing of determination; notice to hospitals and
carriers.--Not later than October 1 of each year (beginning
with 1997), the Secretary shall notify the medical executive
committee of each hospital (as set forth in the Standards of
the Joint Commission on the Accreditation of Health
Organizations) of the determinations made with respect to the
medical staff of such hospital under paragraph (1).
``(c) Determination of Allowable Average per Admission Relative
Value and Hospital-Specific per Admission Relative Values.--
``(1) Allowable average per admission relative value.--
``(A) Urban hospitals.--In the case of a hospital
located in an urban area, the allowable average per
admission relative value established under this
subsection for a year is equal to 125 percent (or 120
percent for years after 1999) of the median of 1996
hospital-specific per admission relative values
determined under paragraph (2) for all hospital medical
staffs.
``(B) Rural hospitals.--In the case of a hospital
located in a rural area, the allowable average per
admission relative value established under this
subsection for 1998 and each succeeding year, is equal
to 140 percent of the median of the 1996 hospital-
specific per admission relative values determined under
paragraph (2) for all hospital medical staffs.
``(2) Hospital-specific per admission relative value.--
``(A) In general.--The hospital-specific per
admission relative value projected for a hospital
(other than a teaching hospital) for a calendar year
shall be equal to the average per admission relative
value (as determined under section 1848(c)(2)) for
physicians' services furnished to inpatients of the
hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding
such calendar year, adjusted for variations in case-mix
and disproportionate share status among hospitals (as
determined by the Secretary under subparagraph (C)).
``(B) Special rule for teaching hospitals.--The
hospital-specific per admission relative value
projected for a teaching hospital in a calendar year
shall be equal to the sum of--
``(i) the average per admission relative
value (as determined under section 1848(c)(2))
for physicians' services furnished to
inpatients of the hospital by the hospital's
medical staff (excluding interns and residents)
during the second year preceding such calendar
year adjusted for variations in case-mix,
disproportionate share status, and teaching
status among hospitals (as determined by the
Secretary under subparagraph (C)); and
``(ii) the equivalent per admission
relative value (as determined under section
1848(c)(2)) for physicians' services furnished
to inpatients of the hospital by interns and
residents of the hospital during the second
calendar year preceding such calendar year,
adjusted for variations in case-mix,
disproportionate share status, and teaching
status among hospitals (as determined by the
Secretary under subparagraph (C)). The
Secretary shall determine such equivalent
relative value unit per admission for interns
and residents based on the best available data
for teaching hospitals and may make such
adjustment in the aggregate.
``(C) Adjustment for teaching and disproportionate
share hospitals.--The Secretary shall adjust the
allowable per admission relative values otherwise
determined under this paragraph to take into account
the needs of teaching hospitals and hospitals receiving
additional payments under subparagraphs (F) and (G) of
section 1886(d)(5). The adjustment for teaching status
or disproportionate share shall not be less than zero.
``(d) Amount of Reduction.--The amount of payment otherwise made
under this part for a physician's service that is subject to a
reduction under subsection (b) during a year shall be reduced by 15
percent, in the case of a service furnished by a member of the medical
staff of the hospital for which the Secretary determines under
subsection (b)(1) that the hospital medical staff's projected relative
value per admission exceeds the allowable average per admission
relative value.
``(e) Reconciliation of Reductions Based on Hospital-Specific
Relative Value per Admission With Actual Relative Values.--
``(1) Determination of actual average per admission
relative value.--Not later than October 1 of each year
(beginning with 1999), the Secretary shall determine the actual
average per admission relative value (as determined pursuant to
section 1848(c)(2)) for the physicians' services furnished by
members of a hospital's medical staff to inpatients of the
hospital during the previous year, on the basis of claims for
payment for such services that are submitted to the Secretary
not later than 90 days after the last day of such previous
year. The actual average per admission relative value shall be
adjusted by the appropriate case-mix, disproportionate share
factor, and teaching factor for the hospital medical staff (as
determined by the Secretary under subsection (c)(2)(C)).
``(2) Reconciliation with reductions taken.--
``(A) Reimbursement.--In the case of a hospital for
which the payment amounts for physicians' services
furnished by members of the hospital's medical staff to
inpatients of the hospital were reduced under this
section for a year--
``(i) if the actual average per admission
relative value for such hospital's medical
staff during the year (as determined by the
Secretary under paragraph (1)) did not exceed
the allowable average per admission relative
value applicable to the hospital's medical
staff under subsection (c)(1) for the year, the
Secretary shall reimburse the fiduciary agent
for the medical staff by the amount by which
payments for such services were reduced for the
year under subsection (d), including interest
at an appropriate rate determined by the
Secretary; and
``(ii) if the actual average per admission
relative value for such hospital's medical
staff during the year (as determined by the
Secretary under paragraph (1)) exceeded the
allowable average per admission relative value
applicable to the hospital's medical staff
under subsection (c)(1) for the year, the
Secretary shall reimburse the fiduciary agent
for the medical staff, as a percent of the
total amount of payment otherwise determined
under this part for physicians' services
furnished during the year to inpatients of the
hospital by the hospital's medical staff (prior
to the reduction under subsection (d)), the
difference between 15 percentage points and the
actual number of percentage points that the
medical staff exceeded the allowable average
per admission relative value, including
interest at any appropriate rate determined by
the Secretary.
``(B) No reimbursement.--The Secretary shall not
pay the fiduciary agent for the medical staff of a
hospital any amounts by which payments for physicians'
services provided by the medical staff were reduced for
a year under this section if the actual average per
admission relative value for such hospital's medical
staff during the year (as determined by the Secretary
under paragraph (1)) exceeded the allowable average per
admission relative value applicable to the hospital's
medical staff under subsection (c)(1) for the year by
15 percentage points or more.
``(3) Medical executive committee of a hospital.--Each
medical executive committee of a hospital whose medical staff
is projected to exceed the allowable relative value per
admission for a year, shall have 1 year from the date of
notification that such medical staff is projected to exceed the
allowable relative value per admission to designate a fiduciary
agent for the medical staff to receive and disburse any
appropriate amounts withheld made by the carrier.
``(4) Alternative reimbursement to members of staff.--At
the request of a fiduciary agent for the medical staff, if the
fiduciary agent for the medical staff is owed the reimbursement
described in paragraph (2)(A)(ii) for excess reductions in
payments during a year, the Secretary shall make such
reimbursement to the members of the hospital's medical staff,
on a pro-rata basis according to the proportion of physicians'
services furnished to inpatients of the hospital during the
year that were furnished by each member of the medical staff.
``(f) Claims To Be Submitted Not Later Than 90 Days After End of
Year.--Notwithstanding any other provision of law, no payment may be
made under this part for any physician's service furnished by a member
of the medical staff of a hospital to an inpatient of the hospital
during a year unless the hospital submits a claim to the Secretary for
the payment for such service not later than 90 days after the last day
of the year.''.
(2) Conforming amendments.--(A) Section 1833(a)(1)(N) (42
U.S.C. 1395l(a)(1)(N)) is amended by inserting ``(subject to
reduction under section 1849)'' after ``1848(a)(1)''.
(B) Section 1848(a)(1)(B) (42 U.S.C. 1395w-4(a)(1)(B)) is
amended by striking ``this subsection,'' and inserting ``this
subsection and section 1849,''.
(b) Requiring Physicians To Identify Hospital at Which Service
Furnished.--Section 1848(g)(4)(A)(i) (42 U.S.C. 1395w-4(g)(4)(A)(i)) is
amended by striking ``beneficiary,'' and inserting ``beneficiary (and,
in the case of a service furnished to an inpatient of a hospital,
report the hospital identification number on such claim form),''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 1998.
(a) In General.--Section 1833(m) (42 U.S.C. 1395l(m)) is amended--
(1) by inserting ``(1)'' after ``(m)'',
(2) by inserting ``described in paragraph (2)'' after
``physicians' services'',
(3) by striking ``10 percent'' and inserting ``the
applicable percent'',
(4) by striking ``service'' the last place it appears and
inserting ``services'', and
(5) by adding at the end the following new paragraph:
``(2)(A) The applicable percent referred to in paragraph (1) is 20
percent in the case of primary care services, as defined in section
1842(i)(4), and 10 percent for services other than primary care
services furnished in health professional shortage areas located in
rural areas as defined in section 1886(d)(2)(D).
``(B) The Secretary shall reduce payments for all services (other
than primary care services) for which payment may be made under this
section by such percentage as the Secretary determines necessary so
that, beginning on the date of the enactment of the Health Security
Act, the amendments made by section 4204(e) of such Act would not
result in expenditures under this section that exceed the amount of
such expenditures that would have been made if such amendment had not
been made.''.
(b) Effective Date.--The amendments made by paragraph (1) are
effective for services furnished on or after January 1, 1995.
(a) In General.--Section 1848(f)(2)(A)(iv) (42 U.S.C. 1395w-
4(f)(2)(A)(iv)) is amended by striking ``including changes in law and
regulations affecting the percentage increase described in clause (i)''
and inserting ``excluding anticipated responses to such changes''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply with respect to performance standard rates of increase determined
for fiscal year 1995 and succeeding fiscal years.
STANDARD RATE OF INCREASE.
Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended by adding at the
end the following new paragraph:
``(6) State-based performance standard rates of increase
demonstration projects.--The Secretary shall establish
demonstration projects in not more than 3 States under which a
State elects State-based performance standard rates of increase
to substitute for the national performance standard rates of
increase established for the year under paragraph (2). The
Secretary shall develop criteria for the establishment of such
demonstration projects which shall include the requirement of
budget-neutrality for payments made under this part with
respect to physicians' services furnished in a State
participating in the demonstration project.''.
OUTPATIENT HOSPITAL SERVICES.
(a) Ambulatory Surgical Center Procedures.--Section
1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is amended--
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A).''.
(b) Radiology Services and Diagnostic Procedures.--Section
1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is amended--
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A).''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished during portions of cost reporting periods
occurring on or after July 1, 1994.
Section 1833(i)(4)(A) (42 U.S.C. 1395l(i)(4)(A)) is amended in the
matter following clause (iii) by striking ``January 1, 1995'' and
inserting ``September 30, 1997''.
(a) In General.--Paragraphs (1)(D) and (2)(D) of section 1833(a)
(42 U.S.C. 1395l(a)) are each amended--
(1) by striking ``(or 100 percent'' and all that follows
through ``the first opinion))''; and
(2) by striking ``100 percent of such negotiated rate'' and
inserting ``80 percent of such negotiated rate''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to tests furnished on or after January 1, 1995.
(a) General Rule.--Part B of title XVIII is amended by inserting
after section 1846 the following:
``competition acquisition for items and services
``Sec. 1847. (a) Establishment of Bidding Areas.--
``(1) In general.--The Secretary shall establish
competitive acquisition areas for the purpose of awarding a
contract or contracts for the furnishing under this part of the
items and services described in subsection (c) on or after
January 1, 1995. The Secretary may establish different
competitive acquisition areas under this subsection for
different classes of items and services under this part.
``(2) Criteria for establishment.--The competitive
acquisition areas established under paragraph (1) shall--
``(A) initially be, or be within, metropolitan
statistical areas; and
``(B) be chosen based on the availability and
accessibility of suppliers and the probable savings to
be realized by the use of competitive bidding in the
furnishing of items and services in the area.
``(b) Awarding of Contracts in Areas.--
``(1) In general.--The Secretary shall conduct a
competition among individuals and entities supplying items and
services under this part for each competitive acquisition area
established under subsection (a) for each class of items and
services.
``(2) Conditions for awarding contract.--The Secretary may
not award a contract to any individual or entity under the
competition conducted pursuant to paragraph (1) to furnish an
item or service under this part unless the Secretary finds that
the individual or entity meets quality standards specified by
the Secretary for the furnishing of such item or service.
``(3) Contents of contract.--A contract entered into with
an individual or entity under the competition conducted
pursuant to paragraph (1) shall specify (for all of the items
and services within a class)--
``(A) the quantity of items and services the entity
shall provide; and
``(B) such other terms and conditions as the
Secretary may require.
``(c) Services Described.--The items and services to which the
provisions of this section shall apply are as follows:
``(1) Magnetic resonance imaging tests and computerized
axial tomography scans, including a physician's interpretation
of the results of such tests and scans.
``(2) Enteral and parenteral nutrients and supplies.''.
(b) Items and Services To Be Furnished Only Through Competitive
Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph (15);
(2) by striking the period at the end of paragraph (16) and
inserting ``; or''; and
(3) by inserting after paragraph (16) the following new
paragraph:
``(17) where such expenses are for an item or service
furnished in a competitive acquisition area (as established by
the Secretary under section 1847(a)) by an individual or entity
other than the supplier with whom the Secretary has entered
into a contract under section 1847(b) for the furnishing of
such item or service in that area, unless the Secretary finds
that such expenses were incurred in a case of urgent need.''.
(c) Reduction in Payment Amounts if Competitive Acquisition Fails
To Achieve Minimum Reduction in Payments.--Notwithstanding any other
provision of title XVIII of the Social Security Act, if the
establishment of competitive acquisition areas under section 1847 of
such Act (as added by subsection (a)) and the limitation of coverage
for items and services under part B of such title to items and services
furnished by providers with competitive acquisition contracts under
such section during 1996 does not result in a reduction of at least 10
percent in the projected payment amount that would have applied to the
items or services under part B if the items or services had not been
furnished through competitive acquisition under such section in such
year, the Secretary shall reduce for such year the payment amount for
all such services by such percentage as the Secretary determines
necessary to result in such a reduction for such year.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished under part B of title XVIII of
the Social Security Act on or after January 1, 1995.
LABORATORY SERVICES.
(a) In General.--Section 1847(c), as added by section 4210, is
amended by inserting after paragraph (2) the following new paragraph:
``(3) Clinical diagnostic laboratory tests.''.
(b) Reduction in Fee Schedule Amounts if Competitive Acquisition
Fails To Achieve Savings.--Section 1833(h) (42 U.S.C. 1395l(h)) is
amended by adding at the end the following new paragraph:
``(7) Notwithstanding any other provision of this subsection, if
the Secretary applies the authority provided under section 1847 to
establish competitive acquisition areas for the furnishing of clinical
diagnostic laboratory tests during 1996 and the application of such
authority does not result in a reduction of at least 10 percent in the
projected payment amount that would have applied to such tests under
this section in such year if the tests had not been furnished through
competitive acquisition under section 1847, the Secretary shall reduce
for such year each payment amount for all such tests otherwise
determined under the fee schedules and negotiated rates established
under this subsection by such percentage as the Secretary determines
necessary to result in such a reduction for such year.''.
PRACTITIONERS.
(a) Coverage in Outpatient Settings.--Section 1861(s)(2)(K) (42
U.S.C. 1395x(s)(2)(K)) is amended--
(1) in clause (i)--
(A) by striking ``or'' at the end of subclause
(II); and
(B) by inserting ``or (IV) in an outpatient setting
as defined by the Secretary'' following ``shortage
area,''; and
(2) in clause (ii), by striking ``section 1919(a)'' and
inserting ``section 1919(a) or in an outpatient setting as
defined by the Secretary''.
(b) Payment Based on Physician Fee Schedule.--
(1) Section 1833(a)(1)(O) (42 U.S.C. 1395l(a)(1)(O)) is
amended--
(A) by striking ``section 1861(s)(2)(K)(iii)
(relating to nurse practitioner and clinical nurse
specialist services provided in a rural area)'' and
inserting ``section 1861(s)(2)(K)'';
(B) by striking ``for services furnished on or
after January 1, 1992,'' and inserting ``for services
described in section 1861(s)(2)(K)(iii) furnished on or
after January 1, 1992, and for services described in
clauses (i), (ii), and (iv) of section 1861(s)(2)(K)
furnished on or after January 1, 1997,''; and
(C) by striking ``subsection (r)(2)'' and inserting
``subsection (r)(2) or subparagraph (A) or (B) of
section 1842(b)(12)''.
(2) Section 1842(b)(12)(A) (42 U.S.C. 1395u(b)(12)(A)) is
amended--
(A) by striking ``and'' at the end of clause (i);
(B) in clause (ii)(II), by inserting ``and before
January 1, 1997,'' after ``January 1, 1992,'';
(C) by striking the period at the end of clause
(ii)(II) and inserting ``; and''; and
(D) by inserting at the end the following clause:
``(iii) in the case of services furnished
on or after January 1, 1997--
``(I) in the case of services
performed as an assistant at surgery,
65 percent of the amount that would
otherwise be recognized if performed by
a physician who is serving as an
assistant at surgery, and
``(II) in the case of other
services, 85 percent of the fee
schedule amount provided under section
1848.''.
(c) Rural Nurse Practitioners as Assistants at Surgery in Urban
Areas.--Section 1861(s)(2)(K)(ii) (42 U.S.C. 1395x(s)(2)(K)(ii)), as
amended by subsection (a)(2), is further amended by adding ``or
services as an assistant at surgery furnished by a nurse practitioner
whose primary practice location (as defined by the Secretary) is in a
rural area (as defined in section 1886(d)(2)(D)) to an individual who
resides in a rural area when the service is furnished to such
individual in an urban area by such practitioner when such practitioner
refers such individual to an urban area for the furnishing of
services'' after ``as defined by the Secretary''.
(d) Conforming Amendments.--
(1) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is amended
by striking ``subsection (s)(2)(K)(i)'' and inserting
``subsection (s)(2)(K)''.
(2) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)), as
amended by section4108(b)(4)(K), is amended by striking
``section 1861(s)(2)(K)(i)'' and inserting ``section
1861(s)(2)(K)''.
(3) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(1)(H)), as
amended by section 4108(b)(4)(L)(ii), is further amended by
striking ``section 1861(s)(2)(K)(i)'' and inserting ``section
1861(s)(2)(K)''.
(e) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 1997.
Effective January 1, 1996, notwithstanding any provision of title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), a
nonparticipating physician, or nonparticipating supplier or other
person (as such terms are defined in section 1842(i)(2) of such Act (42
U.S.C. 1395u(i)(2)) may not receive payment for services or items under
such title.
FOR PRACTICE EXPENSES.
(a) Development.--
(1) In general.--The Secretary of Health and Human Services
shall develop a methodology for implementing in 1997 a
resource-based system for determining practice expense relative
value units for each physician's service. The methodology
utilized shall recognize the staff, equipment, and supplies
used in the provision of various medical and surgical services
in various settings.
(2) Report.--The Secretary shall transmit a report by
January 1, 1996, on the methodology developed under paragraph
(1) to the Committee on Ways and Means and the Committee on
Energy and Commerce of the House of Representatives and the
Committee on Finance of the Senate. The report shall include a
presentation of data utilized in developing the methodology and
an explanation of the methodology.
(b) Implementation.--
(1) In general.--Section 1848(c)(2)(C)(ii) (42 U.S.C.
1395w-4(c)(2)(C)(ii)) is amended--
(A) by inserting ``for the service for years before
1997'' before ``equal to'',
(B) by striking the period at the end of subclause
(II) and inserting a comma, and
(C) by adding after and below subclause (II) the
following:
``and for years beginning with 1997 based on
the relative practice expense resources
involved in furnishing the service.''.
(2) Conforming amendment.--Section 1848(c)(3)(C)(ii) (42
U.S.C. 1395w-4(c)(3)(C)(ii)) is amended by striking ``The
practice'' and inserting ``For years before 1997, the
practice''.
(3) Application of certain provisions.--In implementing the
amendment made by paragraph (1)(C), the provisions of clauses
(ii)(II) and (iii) of section 1848(c)(2)(B) of the Social
Security Act shall apply in the same manner as they apply to
adjustments under clause (ii)(I) of such section.
(a) In General.--Subparagraph (B) of section 1834(a)(14) (42 U.S.C.
1395m(a)(14)) is amended by striking the period at the end and
inserting ``, except that such percentage increase shall--
``(i) be reduced by 2 percentage points for
each of years 1995 and 1996;
``(ii) be reduced by 1.5 percentage points
for 1997;
``(iii) be reduced by 2 percentage points
for 1998; and
``(iv) be reduced by 1 percentage points
for 1999.''.
(b) Effective Date.--The amendment made by this section shall be
effective on the date of the enactment of this Act.
Section 1839(e) (42 U.S.C. 1395r(e)) is amended--
(1) in paragraph (1)(A), by striking ``and prior to January
1999''; and
(2) in paragraph (2), by striking ``prior to January
1998''.
(a) Extension of Data Match.--
(1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is
amended by striking clause (iii).
(2) Section 6103(l)(12) of the Internal Revenue Code of
1986 is amended by striking subparagraph (F).
(b) Repeal of Sunset on Application to Disabled Employees of
Employers With More Than 100 Employees.--Section 1862(b)(1)(B)(iii) (42
U.S.C. 1395y(b)(1)(B)(iii)) is amended--
(1) in the heading, by striking ``Sunset'' and inserting
``Effective date''; and
(2) by striking ``, and before October 1, 1998''.
(c) Extension of Period for End Stage Renal Disease
Beneficiaries.--Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is
amended in the second sentence by striking ``and on or before October
1, 1998,''.
RENAL DISEASE SERVICES TO 24 MONTHS.
(a) In General.--Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)),
as amended by section 4301(c), is amended by striking the last sentence
and inserting: ``Effective for items and services furnished on or after
January 1, 1996 (with respect to periods beginning on or after July 1,
1994), this subparagraph shall be applied by substituting `24-month'
for `12-month' each place it appears.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to items and services provided on or after January 1, 1996.
(a) In General.--The Secretary of Health and Human Services shall
use a competitive process to contract with centers of excellence for
cataract surgery, coronary artery by-pass surgery, and such other
services as the Secretary determines to be appropriate. Payment under
title XVIII of the Social Security Act will be made for services
subject to such contracts on the basis of negotiated or all-inclusive
rates as follows:
(1) The center shall cover services provided in an urban
area (as defined in section 1886(d)(2)(D) of the Social
Security Act) for years beginning with fiscal year 1995.
(2) The amount of payment made by the Secretary to the
center under title XVIII of the Social Security Act for
services covered under the contract shall be less than the
aggregate amount of the payments that the Secretary would have
made to the center for such services had the contract not been
in effect.
(3) The Secretary shall make payments to the center on such
a basis for the following services furnished to individuals
entitled to benefits under such title:
(A) Facility, professional, and related services
relating to cataract surgery.
(B) Coronary artery bypass surgery and related
services.
(C) Such other services as the Secretary and the
center may agree to cover under the contract.
(b) Rebate of Portion of Savings.--In the case of any services
provided under a contract conducted under subsection (a), the Secretary
shall make a payment to each individual to whom such services are
furnished (at such time and in such manner as the Secretary may
provide) in an amount equal to 10 percent of the amount by which--
(1) the amount of payment that would have been made by the
Secretary under title XVIII of the Social Security Act to the
center for such services if the services had not been provided
under the contract, exceeds
(2) the amount of payment made by the Secretary under such
title to the center for such services.
(a) Reduction in Update To Maintain Freeze in 1996.--Section
1861(v)(1)(L)(i) (42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
(1) in subclause (II), by striking ``or'' at the end;
(2) in subclause (III), by striking ``112 percent,'' and
inserting ``and before July 1, 1996, 112 percent, or''; and
(3) by inserting after subclause (III) the following new
subclause:
``(IV) July 1, 1996, 100 percent (adjusted by such amount
as the Secretary determines to be necessary to preserve the
savings resulting from the enactment of section 13564(a)(1) of
the Omnibus Budget Reconciliation Act of 1993),''.
(b) Basing Limits in Subsequent Years on Median of Costs.--
(1) In general.--Section 1861(v)(1)(L)(i) (42 U.S.C.
1395x(v)(1)(L)(i)), as amended by subsection (a), is amended in
the matter following subclause (IV) by striking ``the mean''
and inserting ``the median''.
(2) Adjustment to limits.--Section 1861(v)(1)(L)(ii) (42
U.S.C. 1395x(v)(1)(L)(ii)) is amended by adding at the end the
following new sentence: ``The effect of the amendments made by
656(b) of the Health Security Act shall not be considered by
the Secretary in making adjustments pursuant to this clause.''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall apply to cost reporting periods beginning on or
after July 1, 1997.
UNDER MEDICARE.
(a) Part A.--Section 1813(a) (42 U.S.C. 1395e(a)) is amended by
adding at the end the following new paragraph:
``(5) The amount payable for a home health service furnished to an
individual under this part shall be reduced by a copayment amount equal
to 20 percent of the average of all the per visit costs for such
service furnished under this title determined under section
1861(v)(1)(L) (as determined by the Secretary on a prospective basis
for services furnished during a calendar year).''.
(b) Part B.--Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)), as amended
by section 4108(c)(2), is amended--
(1) in subparagraph (A), by striking ``to home health
services,'' and by striking the comma after ``opinion)'';
(2) in subparagraph (E), by striking ``and'' at the end;
(3) in subparagraph (F), by striking the semicolon at the
end and inserting ``; and''; and
(4) by adding at the end the following new subparagraph:
``(G) with respect to any home health service--
``(i) the lesser of --
``(I) the reasonable cost of such
service, as determined under section
1861(v), or
``(II) the customary charges with
respect to such service,
less the amount a provider may charge as
described in clause (ii) of section
1866(a)(2)(A), or
``(ii) if such service is furnished by a
public provider of services, or by another
provider which demonstrates to the satisfaction
of the Secretary that a significant portion of
its patients are low-income (and requests that
payment be made under this clause), free of
charge or at nominal charges to the public, the
amount determined in accordance with section
1814(b)(2),
less a copayment amount equal to 20 percent of the
average of all per visit costs for such service
furnished under this title determined under section
1861(v)(1)(L) (as determined by the Secretary on a
prospective basis for services furnished during a
calendar year);''.
(c) Provider Charges.--Section 1866(a)(2)(A)(i) (42 U.S.C.
1395cc(a)(2)(A)(i)) is amended--
(1) by striking ``deduction or coinsurance'' and inserting
``deduction, coinsurance, or copayment''; and
(2) by striking ``or (a)(4)'' and inserting ``(a)(4), or
(a)(5)''.
(d) Effective Date.--The amendments made by this section shall
apply to services furnished on or after July 1, 1995.
(a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)) is amended
by adding at the end the following new paragraph:
``(6) Termination of payments attributable to costs of
training physicians.--Notwithstanding any other provision of
this section or section 1861(v), no payment may be made under
this title for direct graduate medical education costs
attributable to an approved medical residency training program
for any cost reporting period (or portion thereof) beginning on
or after January 1, 1997.''.
(b) Prohibition Against Recognition of Costs.--Section 1861(v)(1)
(42 U.S.C. 1395x(v)(1)), as amended by section 4102(b), is amended by
adding at the end the following new subparagraph:
``(U) Such regulations shall not include any provision for specific
recognition of the costs of graduate medical education for hospitals
for any cost reporting period (or portion thereof) beginning on or
after January 1, 1997. Nothing in the previous sentence shall be
construed to affect in any way payments to hospitals for the costs of
any approved educational activities that are not described in such
sentence.''.
(a) Amendments to Provisions Relating to Medicare Select
Policies.--
(1) Permitting medicare select policies in all states.--
Subsection (c) of section 4358 of the Omnibus Budget
Reconciliation Act of 1990 is hereby repealed.
(2) Requirements of medicare select policies.--Section
1882(t)(1) (42 U.S.C. 1395ss(t)(1)) is amended to read as
follows:
``(1)(A) If a medicare supplemental policy meets the requirements
of the 1991 NAIC Model Regulation or 1991 Federal Regulation and
otherwise complies with the requirements of this section except that--
``(i) the benefits under such policy are restricted to
items and services furnished by certain entities (or reduced
benefits are provided when items or services are furnished by
other entities), and
``(ii) in the case of a policy described in subparagraph
(C)(i)--
``(I) the benefits under such policy are not one of
the groups or packages of benefits described in
subsection (p)(2)(A),
``(II) except for nominal copayments imposed for
services covered under part B of this title, such
benefits include at least the core group of basic
benefits described in subsection (p)(2)(B), and
``(III) an enrollee's liability under such policy
for physician's services covered under part B of this
title is limited to the nominal copayments described in
subclause (II),
the policy shall nevertheless be treated as meeting those
requirements if the policy meets the requirements of
subparagraph (B).
``(B) A policy meets the requirements of this subparagraph if--
``(i) full benefits are provided for items and services
furnished through a network of entities which have entered into
contracts or agreements with the issuer of the policy,
``(ii) full benefits are provided for items and services
furnished by other entities if the services are medically
necessary and immediately required because of an unforeseen
illness, injury, or condition and it is not reasonable given
the circumstances to obtain the services through the network,
``(iii) the network offers sufficient access,
``(iv) the issuer of the policy has arrangements for an
ongoing quality assurance program for items and services
furnished through the network,
``(v)(I) the issuer of the policy provides to each enrollee
at the time of enrollment an explanation of--
``(aa) the restrictions on payment under the policy
for services furnished other than by or through the
network,
``(bb) out of area coverage under the policy,
``(cc) the policy's coverage of emergency services
and urgently needed care, and
``(dd) the availability of a policy through the
entity that meets the 1991 Model NAIC Regulation or
1991 Federal Regulation without regard to this
subsection and the premium charged for such policy, and
``(II) each enrollee prior to enrollment acknowledges
receipt of the explanation provided under subclause (I), and
``(vi) the issuer of the policy makes available to
individuals, in addition to the policy described in this
subsection, any policy (otherwise offered by the issuer to
individuals in the State) that meets the 1991 Model NAIC
Regulation or 1991 Federal Regulation and other requirements of
this section without regard to this subsection.
``(C)(i) A policy described in this subparagraph--
``(I) is offered by an eligible organization (as defined in
section 1876(b)),
``(II) is not a policy or plan providing benefits pursuant
to a contract under section 1876 or an approved demonstration
project described in section 603(c) of the Social Security
Amendments of 1983, section 2355 of the Deficit Reduction Act
of 1984, or section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, and
``(III) provides benefits which, when combined with
benefits which are available under this title, are
substantially similar to benefits under policies offered to
individuals who are not entitled to benefits under this title.
``(ii) In making a determination under subclause (III) of clause
(i) as to whether certain benefits are substantially similar, there
shall not be taken into account, except in the case of preventive
services, benefits provided under policies offered to individuals who
are not entitled to benefits under this title which are in addition to
the benefits covered by this title and which are benefits an entity
must provide in order to meet the definition of an eligible
organization under section 1876(b)(1).''.
(b) Renewability of Medicare Select Policies.--Section 1882(q)(1)
(42 U.S.C. 1395ss(q)(1)) is amended--
(1) by striking ``(1) Each'' and inserting ``(1)(A) Except
as provided in subparagraph (B), each'';
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively; and
(3) by adding at the end the following new subparagraph:
``(B)(i) In the case of a policy that meets the
requirements of subsection (t), an issuer may cancel or
nonrenew such policy with respect to an individual who leaves
the service area of such policy; except that, if such
individual moves to a geographic area where such issuer, or
where an affiliate of such issuer, is issuing medicare
supplemental policies, such individual must be permitted to
enroll in any medicare supplemental policy offered by such
issuer or affiliate that provides benefits comparable to or
less than the benefits provided in the policy being canceled or
nonrenewed. An individual whose coverage is canceled or
nonrenewed under this subparagraph shall, as part of the notice
of termination or nonrenewal, be notified of the right to
enroll in other medicare supplemental policies offered by the
issuer or its affiliates.
``(ii) For purposes of this subparagraph, the term
`affiliate' shall have the meaning given such term by the 1991
NAIC Model Regulation.''.
(c) Civil Penalty.--Section 1882(t)(2) (42 U.S.C. 1395ss(t)(2)) is
amended--
(1) by striking ``(2)'' and inserting ``(2)(A)'';
(2) by redesignating subparagraphs (A), (B), (C), and (D)
as clauses (i), (ii), (iii), and (iv), respectively;
(3) in clause (iv), as redesignated--
(A) by striking ``paragraph (1)(E)(i)'' and
inserting ``paragraph (1)(B)(v)(I); and
(B) by striking ``paragraph (1)(E)(ii)'' and
inserting ``paragraph (1)(B)(v)(II)'';
(4) by striking ``the previous sentence'' and inserting
``this subparagraph''; and
(5) by adding at the end the following new subparagraph:
``(B) If the Secretary determines that an issuer of a policy
approved under paragraph (1) has made a misrepresentation to the
Secretary or has provided the Secretary with false information
regarding such policy, the issuer is subject to a civil money penalty
in an amount not to exceed $100,000 for each such determination. The
provisions of section 1128A (other than the first sentence of
subsection (a) and other than subsection (b)) shall apply to a civil
money penalty under this subparagraph in the same manner as such
provisions apply to a penalty or proceeding under section 1128A(a).''.
(d) Effective Dates.--
(1) NAIC standards.--If, within 9 months after the date of
the enactment of this Act, the National Association of
Insurance Commissioners (hereafter in this subsection referred
to as the ``NAIC'') makes changes in the 1991 NAIC Model
Regulation (as defined in section 1882(p)(1)(A) of the Social
Security Act) to incorporate the additional requirements
imposed by the amendments made by this section, section
1882(g)(2)(A) of such Act shall be applied in each State,
effective for policies issued to policyholders on and after the
date specified in paragraph (3), as if the reference to the
Model Regulation adopted on June 6, 1979, were a reference to
the 1991 NAIC Model Regulation (as so defined) as changed under
this paragraph (such changed Regulation referred to in this
subsection as the ``1995 NAIC Model Regulation'').
(2) Secretary standards.--If the NAIC does not make changes
in the 1991 NAIC Model Regulation (as so defined) within the 9-
month period specified in paragraph (1), the Secretary of
Health and Human Services (hereafter in this subsection
referred to as the ``Secretary'') shall promulgate a regulation
and section 1882(g)(2)(A) of the Social Security Act shall be
applied in each State, effective for policies issued to
policyholders on and after the date specified in paragraph (3),
as if the reference to the Model Regulation adopted on June 6,
1979, were a reference to the 1991 NAIC Model Regulation (as so
defined) as changed by the Secretary under this paragraph (such
changed Regulation referred to in this subsection as the ``1995
Federal Regulation'').
(3) Date specified.--
(A) In general.--Subject to subparagraph (B), the
date specified in this paragraph for a State is the
earlier of--
(i) the date the State adopts the 1995 NAIC
Model Regulation or the 1995 Federal
Regulation, or
(ii) 1 year after the date the NAIC or the
Secretary first adopts such regulations.
(B) Additional legislative action required.--In the
case of a State which the Secretary identifies, in
consultation with the NAIC, as--
(i) requiring State legislation (other than
legislation appropriating funds) in order for
medicare supplemental policies to meet the 1995
NAIC Model Regulation or the 1995 Federal
Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1995 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first day
of the first calendar quarter beginning after the close
of the first legislative session of the State
legislature that begins on or after January 1, 1996.
For purposes of the previous sentence, in the case of a
State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate
regular session of the State legislature.
COVERED UNDER STANDARD BENEFIT PACKAGE.
(a) In General.--Title XIX (42 U.S.C. 1396 et seq.) is amended by
redesignating section 1931 as section 1932 and by inserting after
section 1930 the following new section:
``treatment of items and services in the standard benefit package
``Sec. 1931. (a) Items and Services Covered Under Standard Benefit
Package.--Except as provided in subsection (c), a State plan under this
part shall not provide medical assistance consisting of payment for
items and services in the standard benefit package described in section
1201(a) of the Health Security Act.
``(b) Medical Assistance Not Affected.--Subsection (a) shall not be
construed as--
``(1) affecting the eligibility of any individual for
medical assistance consisting of payment for items and services
not covered under the standard benefits package;
``(2) affecting the amount, duration, and scope of any
medical assistance consisting of payment for the items and
services described in paragraph (1); or
``(3) prohibiting payment of medical assistance for items
and services covered under the standard benefits package to the
extent that the items and services under this part exceed the
items and services covered under such package with respect to
amount, duration, and scope.
``(c) Exceptions.--Subsection (a) shall not affect the provision of
medical assistance consisting of payment for items and services in the
standard benefits package--
``(1) which are provided to--
``(A) an individual eligible for medical assistance
under the State plan who is not a premium subsidy
eligible individual (as defined in 6002(a)(2) of the
Health Security Act);
``(B) an individual with respect to whom
supplemental security income benefits are being paid
under title XVI; and
``(C) an individual who is eligible for benefits
under part A of title XVIII; or
``(2) which consist of emergency services to certain aliens
under section 1903(v)(2).
``(d) State Maintenance of Effort.--
``(1) In general.--
``(A) Reduction in quarterly payments.--For any
calendar quarter in an applicable year (as defined in
subparagraph (B)), the amount otherwise payable to a
State under section 1903 for the quarter shall be
reduced by the State maintenance of effort amount for
the quarter determined under paragraph (2).
``(B) Applicable year.--For purposes of this
paragraph, the term `applicable year' means 1997 and
any succeeding year.
``(2) Maintenance of effort amount.--
``(A) In general.--The maintenance of effort amount
for a State for a calendar quarter in an applicable
year shall be equal to 25 percent of the sum of--
``(i) the State's AFDC eligibles payment
amount for the year determined under paragraph
(3); and
``(ii) the State's non-cash eligibles
payment amount for the year determined under
paragraph (4).
``(3) State afdc eligibles payment amount.--
``(A) In general.--The AFDC eligibles payment
amount for a State for a year is an amount equal to the
product of--
``(i) the adjusted State per capita amount
for the year determined under subparagraph (B);
multiplied by
``(ii) the number of AFDC eligible
individuals receiving premium assistance under
section 6002 of the Health Security Act during
the year (as estimated by the Secretary).
``(B) Adjusted state per capita amount.--
``(i) In general.--The adjusted State per
capita amount for a year is the base State per
capita amount determined under clause (ii)
updated by the percentage change in per capita
health expenditures index (as described in
paragraph (5)(B)) during the period beginning
on October 1, 1994, and ending on December 31
of the year preceding the applicable year (as
determined by the Secretary).
``(ii) Base state per capita amount.--The
base per capita amount for a State shall be an
amount, as determined by the Secretary, equal
to the quotient of--
``(I) the total expenditures from
State funds made under the State plan
during fiscal year 1994 with respect to
medical assistance consisting of items
and services of the type included in
the standard benefit package for AFDC
eligible individuals; divided by
``(II) the average total number of
AFDC eligible individuals who received
such medical assistance under the State
plan in any month during fiscal year
1994.
``(iii) Disproportionate share payments not
included.--In applying clause (ii), payments
made under section 1923 shall not be counted in
the gross amount of payments.
``(C) AFDC eligible defined.--For purposes of this
paragraph, the term `AFDC eligible' means an individual
who receives aid or assistance under any plan of the
State approved under part A or part E of title IV.
``(4) Non-cash eligibles payment amount.--
``(A) In general.--The non-cash eligibles payment
amount for a State for a year is an amount equal to the
State's base payment amount (determined under
subparagraph (B)) for the applicable year updated by
the percentage change in the health expenditures index
(as described in paragraph (5)(A)) and the State
population index (as described in paragraph (5)(C))
during the period beginning on October 1, 1994, and
ending on December 31 of the year preceding the
applicable year (as determined by the Secretary).
``(B) State base payment amount.--
``(i) In general.--The base payment amount
for a State for an applicable year shall be an
amount, as determined by the Secretary, equal
to the total expenditures from State funds made
under the State plan during fiscal year 1994
with respect to medical assistance consisting
of items and services of the type included in
the standard benefit package for non-cash
eligible individuals who would not have
received such medical assistance if the
provisions of this section and subtitle A of
title VI of the Health Security Act had been in
effect in fiscal year 1994.
``(ii) Disproportionate share payments
included.--In applying clause (i), payments
made under section 1923 shall be counted in the
gross amount of payments.
``(C) Non-cash eligible defined.--For purposes of
this paragraph, the term `non-cash eligible' means any
individual who received medical assistance under the
State plan during fiscal year 1994 other than an AFDC
eligible individual or an individual described in
subsection (b).
``(5) Indexes.--
``(A) Health expenditures index.--The Secretary
shall establish a health expenditures index which
measures the change in national health expenditures
from year to year.
``(B) Per capita health expenditures index.--The
Secretary shall establish a per capita health
expenditures index which measures the change in
national per capita health expenditures from year to
year.
``(C) State population index.--The Secretary shall
establish a State population index which measures the
change in the number of individuals residing in a State
from year to year.''.
(b) No Federal Financial Participation.--Section 1903(i) (42 U.S.C.
1396b(i)) is amended--
(1) by striking ``or'' at the end of paragraph (14),
(2) by striking the period at the end of paragraph (15) and
inserting ``; or'', and
(3) by inserting after paragraph (15) the following new
paragraph:
``(16) with respect to items and services covered under the
standard benefit package described in section 1201(a) of the
Health Security Act for individuals to whom section 1931(a)
applies.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to items or services furnished in a State on or
after January 1, 1997.
(a) State Expenditures Limited to Certified Health Plans.--Section
1903(m) (42 U.S.C. 1396b) is amended by adding at the end the following
new paragraph:
``(7) No payment shall be made under this part to a State
with respect to expenditures incurred by the State for payment
for services provided by an entity with a contract under this
subsection unless such entity is a standard health plan (as
defined in section 1011(2)(B) of the Health Security Act).''.
(b) Modification to 75/25 Rule.--Section 1903(m)(2)(A)(ii) (42
U.S.C. 1396b(m)(2)(A)(ii)) is amended by striking ``75 percent'' and
inserting ``50 percent''.
(c) Effective Date.--The amendments made by this section shall
become effective with respect to payments for calendar quarters
beginning on or after January 1, 1997.
RELATING TO PAYMENTS TO HOSPITALS SERVING VULNERABLE
POPULATIONS.
(a) Amendments to Provisions Requiring States to Make DSH Payment
Adjustments.--
(1) Adjustments to national dsh payment limit.--Section
1923(f)(1)(B) (42 U.S.C. 1396r-4(f)(1)(B)) is amended to read
as follows:
``(B) National dsh payment limit.--
``(i) In general.--Except as provided in
clause (ii), the national DSH payment limit for
a fiscal year is equal to 12 percent of the
total amount of expenditures under the State
plans under this part for medical assistance
during the fiscal year.
``(ii) Reduction in limit.--For fiscal
years ending in a calendar year during which
the percentage of individuals covered by
insurance, as determined by the National Health
Care Cost and Coverage Commission established
under section 10001 of the Health Security
Act--
``(I) equals or exceeds 85 percent
but is less than 88 percent, `10
percent' shall be substituted for `12
percent' in clause (i);
``(II) equals or exceeds 88 percent
but is less than 90 percent, `8
percent' shall be substituted for `12
percent' in clause (i);
``(III) equals or exceeds 90
percent but is less than 92 percent, `6
percent' shall be substituted for `12
percent' in clause (i); and
``(IV) equals or exceeds 92
percent, `4 percent' shall be
substituted for `12 percent' in clause
(i).
(2) Adjustments to state allotment limits.--Section
1923(f)(2)(B) (42 U.S.C. 1396r-4(f)(2)(B)) is amended to read
as follows:
``(B) Exceptions.--
``(i) In general.--Except as provided in
clause (ii), a State DSH allotment under
subparagraph (A) for a fiscal year shall not
exceed 12 percent of the total amount of
expenditures under the State plan for medical
assistance during the fiscal year.
``(ii) Reduction in limit.--For fiscal
years ending in a calendar year during which
the percentage of individuals covered by
insurance, as determined by the National Health
Care Cost and Coverage Commission established
under section 10001 of the Health Security
Act--
``(I) equals or exceeds 85 percent
but is less than 88 percent, `10
percent' shall be substituted for `12
percent' in clause (i);
``(II) equals or exceeds 88 percent
but is less than 90 percent, `8
percent' shall be substituted for `12
percent' in clause (i);
``(III) equals or exceeds 90
percent but is less than 92 percent, `6
percent' shall be substituted for `12
percent' in clause (i); and
``(IV) equals or exceeds 92
percent, `4 percent' shall be
substituted for `12 percent' in clause
(i).
(3) Elimination of high dsh states and state supplemental
amounts.--
(A) In general.--Section 1923(f)(2)(A) (42 U.S.C.
1396r-4(f)(2)(A)) is amended to read as follows:
``(A) In general.--Subject to subparagraph (B), the
State DSH allotment for a fiscal year is equal to the
State DSH allotment for the previous fiscal year
increased by the State growth factor (as defined in
paragraph (3)(B)) for the fiscal year.''.
(B) Conforming amendments.--(i) Section 1923(f) (42
U.S.C. 1396r-4(f)) is amended by striking paragraph (3)
and redesignating paragraph (4) as paragraph (3).
(ii) Section 1923(f)(3) (42 U.S.C. 1396r-4(f)(3)),
as redesignated by clause (i), is amended by striking
subparagraphs (A) and (C) and redesignating
subparagraphs (B), (D), and (E) as subparagraphs (A),
(B), and (C).
(iii) Section 1923(f)(3)(B) (42 U.S.C. 1396r-
4(f)(3)(B)), as redesignated by clauses (i) and (ii),
is amended to read as follows:
``(B) State growth amount.--The term `State growth
amount' means, with respect to a State for a fiscal
year, the product of the State growth factor and the
State DSH payment limit for the previous fiscal
year.''.
(iv) Section 1923(f)(1)(A) (42 U.S.C. 1396r-
4(f)(1)(A) is amended by striking ``(as defined in
paragraph (4)(B))'' and inserting ``(as defined in
paragraph (3)(A))''.
(3) Termination of requirement on states to make dsh
payment adjustments.--Section 1923 (42 U.S.C. 1396r-4) is
amended by adding at the end the following new subsection:
``(h) Termination of Requirement to Make Payment Adjustments.--
``(1) In general.--Any requirement imposed by this section
on a State to increase the rate or amount of payment for
inpatient hospital services provided by a hospital which serves
a disproportionate number of low income patients with special
needs shall terminate in the year described in paragraph (2).
``(2) Year described.--The year described in this paragraph
is the first year beginning after the year during which the
percentage of individuals covered by insurance, as determined
by the National Health Care Cost and Coverage Commission
established under section 100001 of the Health Security Act,
equals or exceeds 92 percent.''.
(4) No federal financial participation.--Section 1903(i)
(42 U.S.C. 1396b(i)), as amended by section 4601(b), is
amended--
(A) by striking ``or'' at the end of paragraph
(15),
(B) by striking the period at the end of paragraph
(16) and inserting ``; or'', and
(C) by inserting after paragraph (16) the following
new paragraph:
``(17) during or after the year described in section
1923(h)(2) with respect to any payment made by a State to a
hospital which serves a disproportionate number of low income
patients with special needs that is in excess of the payment
otherwise required under this part.''.
(5) Effective date.--The amendments made by this section
shall be effective for calendar quarters beginning on or after
January 1, 1997.
(b) Payments to Hospitals Serving Vulnerable Populations.--Title
XIX (42 U.S.C. 1396 et seq.) is amended by adding at the end the
following new part:
``PART B--PAYMENTS TO HOSPITALS SERVING VULNERABLE POPULATIONS
``SEC. 1951. PAYMENTS TO HOSPITALS.
``(a) Entitlement Status.--The Secretary shall make payments in
accordance with this part to eligible hospitals described in section
1952. The preceding sentence constitutes budget authority in advance of
appropriations Acts and represents the obligation of the Federal
Government to provide funding for such payments in the amounts, and for
the fiscal years, specified in subsection (b).
``(b) Amount of Entitlement.--For purposes of subsection (a), the
amounts and fiscal years specified in this subsection are (in the
aggregate for all eligible hospitals) $2,500,000,000 for the first
applicable fiscal year (as defined in section 1954) and for each
subsequent fiscal year.
``(c) Payments Made on Quarterly Basis.--Payments to an eligible
hospital under this section for a year shall be made on a quarterly
basis during the year.
``SEC. 1952. IDENTIFICATION OF ELIGIBLE HOSPITALS.
``(a) Hospitals in Participating States.--In order to be an
eligible hospital under this part, a hospital must be located in a
State that is a participating State under title I of the Health
Security Act.
``(b) State Identification.--In accordance with the criteria
described in subsection (c) and such procedures as the Secretary may
require, each State shall identify the hospitals in the State that meet
such criteria and provide the Secretary with a list of such hospitals.
``(c) Criteria for Eligibility.--A hospital meets the criteria
described in this subsection if the hospital's low-income utilization
rate for the base year under section 1923(b)(3) (as such section is in
effect on the day before the date of the enactment of this part) is not
less than 25 percent.
``SEC. 1953. AMOUNT OF PAYMENTS.
``(a) In General.--The total amount available for payments under
this part in a year shall be allocated to hospitals for low-income
assistance in accordance with this subsection.
``(b) Determination of Hospital Payment Amount.--The amount of
payment to an eligible hospital during a year shall be the equal to the
hospital's low-income percentage (as defined in subsection (c)) of the
total amount available for payments under this part for the year.
``(c) Low-Income Percentage Defined.--
``(1) In general.--For purposes of this section, an
eligible hospital's `low-income percentage' for a year is equal
to the amount (expressed as a percentage) of the total low-
income days for all eligible hospitals for the year that are
attributable to the hospital.
``(2) Low-income days described.--For purposes of paragraph
(1), an eligible hospital's low-income days for a year shall be
equal to the product of--
``(A) the total number of inpatient days for the
hospital for the year (as reported to the Secretary by
the State in which the hospital is located, in
accordance with a reporting schedule and procedures
established by the Secretary); and
``(B) the hospital's low-income utilization rate
for the base year under section 1923(b)(3) (as such
section is in effect on the day before the date of the
enactment of this part).
``SEC. 1954. DEFINITIONS.
``For purposes of this part:
``(1) Base year.--The term `base year' means 1996.
``(2) First applicable fiscal year--The term `first
applicable fiscal year' means first fiscal year that begins
after the fiscal year ending in the calendar year during which
the percentage of individuals covered by insurance, as
determined by the National Health Care Cost and Coverage
Commission established under section 10001 of the Health
Security Act, equals or exceeds 92 percent.''.
(c) Conforming Amendments.--(1) Title XIX (42 U.S.C. 1396 et seq.)
is amended by striking the title and inserting the following:
``TITLE XIX--MEDICAL ASSISTANCE PROGRAMS AND PAYMENTS TO HOSPITALS
SERVING VULNERABLE POPULATIONS''
``PART A--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS''.
(2) Title XIX (42 U.S.C. 1396 et seq.) is amended by striking each
reference to ``this title'' and inserting ``this part''.
CERTAIN SERVICES.
(a) In general.--Section 1902(a)(10) (42 U.S.C. 1396a(a)(10)) is
amended--
(1) by striking ``and'' at the end of subparagraph (E);
(2) by adding ``and'' at the end of subparagraph (F); and
(3) by adding at the end the following new subparagraph:
``(G) provide that, in determining the eligibility
of any unmarried individual who has applied for or is
receiving medical assistance consisting of community-
based services furnished under a waiver under
subsection (c) or (d) of section 1915, personal care
services described in section 1905(a)(24), or home and
community care for functionally disabled elderly
individuals under section 1929, the first $4,000 of
resources may, at the option of the State, be
disregarded.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to payments for medical assistance for calendar quarters
beginning on or after January 1, 1995.
(a) Expansion of Number of Waivers.--Section 9412(b)(1) of the
Omnibus Budget Reconciliation Act of 1986 is amended by striking ``15''
and inserting ``40''.
(b) Development of Protocols and Model Certification Guidelines.--
Section 9412(b) of the Omnibus Budget Reconciliation Act of 1986 is
amended by adding at the end the following new paragraphs:
``(5) The Secretary, in consultation with the States and
organizations operating projects in accordance with waivers
under this subsection shall develop and publish a waiver
protocol that will establish minimum standard requirements that
an organization must meet to be eligible for a waiver under
this subsection. In developing the protocol under the preceding
sentence, the Secretary shall incorporate standards for
organizations to deliver integrated acute and long-term care
services for the elderly, children, and young adults.
``(6) The Secretary shall develop model guidelines that
shall be available to States that choose to establish a
comprehensive procedure for the licensure and certification of
an organization operating a demonstration project under a
waiver granted pursuant to this subsection. Such guidelines
shall encompass the range of services provided by such an
organization.''.
(c) Evaluations and Reports.--Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, as amended by subsection (b), is amended by
adding at the end the following new paragraph:
``(7)(A) The Secretary shall develop standard evaluation
protocols to assess the cost-effectiveness and quality of
service provided under--
``(i) demonstration projects operating on the date
of the enactment of this paragraph under waivers
granted pursuant to this subsection; and
``(ii) demonstration projects granted waivers after
the date of the enactment of this paragraph.
``(B) The Secretary shall conduct evaluations of the
demonstration projects in accordance with the protocols
developed under subparagraph (A) and based on the results of
such evaluations, report to the Committee on Finance of the
Senate, the Committee on Ways and Means of the House of
Representatives, and the Subcommittee on Health and the
Environment of the Committee on Energy and Commerce of the
House of Representatives by--
``(i) not later than January 1, 1998, with respect
to demonstration projects described in subparagraph
(A)(i); and
``(ii) not later than January 1, 2003, with respect
to demonstration projects described in subparagraph
(A)(ii);
on the desirability of granting permanent status under titles
XVIII and XIX of the Social Security Act to such demonstration
projects that the Secretary has determined to be successful.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
WITH RESPECT TO HABILITATION SERVICES FURNISHED UNDER A
WAIVER FOR HOME OR COMMUNITY-BASED SERVICES.
(a) In General.--Section 1915(c)(5) (42 U.S.C. 1396n(c)(5)) is
amended in the matter preceding subparagraph (A) by striking ``, with
respect to individuals who receive such services after discharge from a
nursing facility or intermediate care facility for the mentally
retarded''.
(b) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 1995.
CERTAIN INSTITUTIONS.
(a) In General.--The first sentence of section 1915(c)(1) (42
U.S.C. 1396n(c)(1)) is amended by inserting the following before the
end period: ``(at the option of the State, such determination may be
made without regard to the availability of beds in such a hospital,
nursing facility, or intermediate care facility for the mentally
retarded located in the State)''.
(b) Effective Date.--The amendment made by subsection (a) shall be
effective with respect to waivers granted or renewed on or after
January 1, 1995.
(a) In General.--Section 1919(b)(3)(F)(ii) (42 U.S.C.
1396r(b)(3)(F)(ii)) is amended by striking ``that, because'' and all
that follows through the period at the end and inserting ``that the
individual's primary need is for medical services that are at the level
provided by the nursing facility and that the nursing facility has the
capability to provide any specialized services necessary for
habilitation of the individual.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to admissions on or after July 1, 1995.
CLINICAL NURSE SPECIALIST SERVICES.
(a) In General.--Paragraph (21) of section 1905(a) (42 U.S.C.
1396d(a)) is amended to read as follows:
``(21) services furnished by all certified nurse
practitioners (as defined by the Secretary) or clinical nurse
specialists (as defined in subsection (t)) which the certified
nurse practitioner or clinical nurse specialist is legally
authorized to perform under State law (or the State regulatory
mechanism provided by State law), whether or not the certified
nurse practitioner or clinical nurse specialist is under the
supervision of, or associated with, a physician or other health
care provider;''.
(b) Clinical Nurse Specialist Defined.--Section 1905 (42 U.S.C.
1396) is amended by adding at the end the following new subsection:
``(t) The term `clinical nurse specialist' means an individual
who--
``(1) is a registered nurse and is licensed to practice
nursing in the State in which the clinical nurse specialist
services are performed; and
``(2) holds a master's degree in a defined clinical area of
nursing from an accredited educational institution.''.
(c) Effective Date.--The amendments made by this section shall
become effective with respect to payments for calendar quarters
beginning on or after January 1, 1995.
(a) In General.--Section 1902(a)(25)(B) (42 U.S.C. 1396a(a)(25)(B))
is amended to read as follows--
``(B) that in any case where such a legal liability is
found to exist after medical assistance has been made
available, the State or local agency will seek reimbursement
for such assistance to the extent of such legal liability,
unless--
``(i) the amount of reimbursement the State can
reasonably expect to recover for medical assistance
furnished to an individual does not exceed the costs of
such recovery, or
``(ii) with respect to case management services (as
defined in section 1915(g)(2)), the State demonstrates
to the satisfaction of the Secretary (using the methods
specified by the Secretary under subsection (aa)) that
it is not cost-effective in the aggregate to seek such
recovery with respect to such services furnished to
individuals covered under the State plan;''.
(b) Methods for Demonstration.--Section 1902(a) (42 U.S.C.
1396a(a)) is amended by adding at the end the following new subsection:
``(aa) The Secretary shall specify in regulations the methods by
which a State may demonstrate that it is not cost-effective in the
aggregate to seek reimbursement for medical assistance paid for case
management services under subsection (a)(25)(B)(ii). The methods
specified by the Secretary under the preceding sentence shall include
allowing a State to demonstrate that case management services are not
generally covered by health insurers in the State.''.
(c) Effective Date.--The amendments made by this section shall
apply to payments for medical assistance for calendar quarters
beginning on or after January 1, 1995.
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