SEC. 4401. PPS HOSPITAL PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended-- (1) by striking "and" at the end of subclause (XII), and (2) by striking subclause (XIII) and inserting the following: (XIII) for fiscal year 1998, 0 percent, (XIV) for fiscal year 1999, the market basket percentage increase minus 1.9 percentage points for hospitals in all areas, (XV) for fiscal year 2000, the market basket percentage increase minus 1.8 percentage points for hospitals in all areas, (XVI) for each of fiscal years 2001 and 2002, the market basket percentage increase minus 1.1 percentage point for hospitals in all areas, and (XVII) for fiscal year 2003 and each subsequent fiscal year, the market basket percentage increase for hospitals in all areas.".
(b) Temporary Relief for Certain Non-Teaching, Non-DSH Hospitals.-- (1) In general.--In the case of a hospital described in paragraph (2) for its cost reporting period-- (A) beginning in fiscal year 1998 the amount of payment made to the hospital under section 1886(d) of the Social Security Act for discharges occurring during such fiscal year only shall be increased as though the applicable percentage increase (otherwise applicable to discharges occurring during fiscal year 1998 under section 1886(b)(3)(B)(i)(XIII) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))) had been increased by 0.5 percentage points; and (B) beginning in fiscal year 1999 the amount of payment made to the hospital under section 1886(d) of the Social Security Act for discharges occurring during such fiscal year only shall be increased as though the applicable percentage increase (otherwise applicable to discharges occurring during fiscal year 1999 under section 1886(b)(3)(B)(i)(XIII) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))) had been increased by 0.3 percentage points.
Subparagraph (A) shall not apply in computing the increase under subparagraph (B) and neither subparagraph shall affect payment for discharges for any hospital occurring during a fiscal year after fiscal year 1999. Payment increases under this subsection for discharges occurring during a fiscal year are subject to settlement after the close of the fiscal year.
(2) Hospitals covered.--A hospital described in this paragraph for a cost reporting period is a hospital-- (A) that is described in paragraph (3) for such period; (B) that is located in a State in which the amount of the aggregate payments under section 1886(d) of such Act for hospitals located in the State and described in paragraph (3) for their cost reporting periods beginning during fiscal year 1995 is less than the aggregate allowable operating costs of inpatient hospital services (as defined in section 1886(a)(4) of such Act) for all such hospitals in such State with respect to such cost reporting periods; and (C) with respect to which the payments under section 1886(d) of such Act (42 U.S.C. 1395ww(d)) for discharges occurring in the cost reporting period involved, as estimated by the Secretary, is less than the allowable operating costs of inpatient hospital services (as defined in section 1886(a)(4) of such Act (42 U.S.C. 1395ww(a)(4)) for such hospital for such period, as estimated by the Secretary.
(3) Non-teaching, non-DSH hospitals described.--A hospital described in this paragraph for a cost reporting period is a subsection (d) hospital (as defined in section 1886(d)(1)(B) of such Act (42 U.S.C. 1395ww(d)(1)(B))) that-- (A) is not receiving any additional payment amount described in section 1886(d)(5)(F) of such Act (42 U.S.C.
1395ww(d)(5)(F)) for discharges occurring during the period; (B) is not receiving any additional payment under section 1886(d)(5)(B) of such Act (42 U.S.C. 1395ww(d)(5)(B)) or a payment under section 1886(h) of such Act (42 U.S.C. 1395ww(h)) for discharges occurring during the period; and (C) does not qualify for payment under section 1886(d)(5)(G) of such Act (42 U.S.C. 1395ww(d)(5)(G)) for the period.
Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by adding at the end the following: In addition to the reduction described in the preceding sentence, for discharges occurring on or after October 1, 1997, the Secretary shall apply the budget neutrality adjustment factor used to determine the Federal capital payment rate in effect on September 30, 1995 (as described in section 412.352 of title 42 of the Code of Federal Regulations), to (i) the unadjusted standard Federal capital payment rate (as described in section 412.308(c) of that title, as in effect on September 30, 1997), and (ii) the unadjusted hospital-specific rate (as described in section 412.328(e)(1) of that title, as in effect on September 30, 1997), and, for discharges occurring on or after October 1, 1997, and before September 30, 2002, reduce the rates described in clauses (i) and (ii) by 2.1 percent.".
(a) In General.--Section 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is amended-- (1) in clause (i) by inserting "and before October 1, 1997" after "May 1, 1986"; (2) in clause (ii), by striking "The amount" and inserting "Subject to clause (ix), the amount"; and (3) by adding at the end the following new clause: (ix) In the case of discharges occurring-- (I) during fiscal year 1998, the additional payment amount otherwise determined under clause (ii) shall be reduced by 1 percent; (II) during fiscal year 1999, such additional payment amount shall be reduced by 2 percent; (III) during fiscal year 2000, such additional payment amount shall be reduced by 3 percent; (IV) during fiscal year 2001, such additional payment amount shall be reduced by 4 percent; (V) during fiscal year 2002, such additional payment amount shall be reduced by 5 percent; and (VI) during fiscal year 2003 and each subsequent fiscal year, such additional payment amount shall be reduced by 0 percent.".
(b) Report on New Payment Formula.-- (1) Report.--Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report that contains a formula for determining additional payment amounts to hospitals under section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)).
(2) Factors in Determination of Formula.--In determining such formula the Secretary shall-- (A) establish a single threshold for costs incurred by hospitals in serving low-income patients, and (B) consider the costs described in paragraph (3).
(3) The costs described in this paragraph are as follows: (A) The costs incurred by the hospital during a period (as determined by the Secretary) of furnishing hospital services to individuals who are entitled to benefits under part A of title XVIII of the Social Security Act and who receive supplemental security income benefits under title XVI of such Act (excluding any supplementation of those benefits by a State under section 1616 of such Act (42 U.S.C. 1382e)).
(B) The costs incurred by the hospital during a period (as so determined) of furnishing hospital services to individuals who receive medical assistance under the State plan under title XIX of such Act and are not entitled to benefits under part A of title XVIII of such Act (including individuals enrolled in a managed care organization (as defined in section 1903(m)(1)(A) of such Act (42 U.S.C. 1396b(m)(1)(A)) or any other managed care plan under such title and individuals who receive medical assistance under such title pursuant to a waiver approved by the Secretary under section 1115 of such Act (42 U.S.C. 1315)).
(c) Data Collection.--In developing the formula described in subsection (b), the Secretary of Health and Human Services may require any subsection (d) hospital (as defined in section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B))) receiving additional payments by reason of section 1886(d)(5)(F) of such Act (42 U.S.C.
1395ww(d)(5)(F)) to submit to the Secretary any information that the Secretary determines is necessary to develop such formula.
(a) In General.--Section 1861(v)(1)(O) (42 U.S.C. 1395x(v)(1)(O)) is amended-- (1) in clause (i)-- (A) by striking "and (if applicable) a return on equity capital"; (B) by striking "hospital or skilled nursing facility" and inserting "provider of services"; (C) by striking "clause (iv)" and inserting "clause (iii)"; and (D) by striking "the lesser of the allowable acquisition cost" and all that follows and inserting "the historical cost of the asset, as recognized under this title, less depreciation allowed, to the owner of record as of the date of enactment of the Balanced Budget Act of 1997 (or, in the case of an asset not in existence as of that date, the first owner of record of the asset after that date)."; (2) by striking clause (ii); and (3) by redesignating clauses (iii) and (iv) as clauses (ii) and (iii), respectively.
(b) Effective Date.--The amendments made by subsection (a) apply to changes of ownership that occur after the third month beginning after the date of enactment of this section.
(a) Indirect Medical Education.--Section 1886(d)(5)(B)(i)(I) (42 U.S.C. 1395ww(d)(5)(B)(i)(I)) is amended by inserting ", for cases qualifying for additional payment under subparagraph (A)(i)," before "the amount paid to the hospital under subparagraph (A)".
(b) Disproportionate Share Adjustments.--Section 1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is amended by inserting ", for cases qualifying for additional payment under subparagraph (A)(i)," before "the amount paid to the hospital under subparagraph (A)".
(c) Cost Outlier Payments.--Section 1886(d)(5)(A)(ii) (42 U.S.C. 1395ww(d)(5)(A)(ii)) is amended by striking "exceed the applicable DRG prospective payment rate" and inserting "exceed the sum of the applicable DRG prospective payment rate plus any amounts payable under subparagraphs (B) and (F)".
(d) Effective Date.--The amendments made by this section apply to discharges occurring after September 30, 1997.
Section 1886(d)(9)(A) (42 U.S.C. 1395ww(d)(9)(A)) is amended-- (1) in the matter preceding clause (i), by striking "in a fiscal year beginning on or after October 1, 1987,", (2) in clause (i), by striking "75 percent" and inserting, for discharges beginning on or after October 1, 1997, 50 percent (and for discharges between October 1, 1987, and September 30, 1997, 75 percent)", and (3) in clause (ii), by striking "25 percent" and inserting, for discharges beginning in a fiscal year beginning on or after October 1, 1997, 50 percent (and for discharges between October 1, 1987 and September 30, 1997, 25 percent)".
Section 1886(d)(5) (42 U.S.C. 1395ww(d)(5)) is amended-- (1) in subparagraph (I)(ii) by inserting "not taking in account the effect of subparagraph (J)," after "in a fiscal year, "; and (2) by adding at the end the following new subparagraph: (J)(i) The Secretary shall treat the term 'transfer case' (as defined in subparagraph (I)(ii)) as including the case of a qualified discharge (as defined in clause (ii)), which is classified within a diagnosis-related group described in clause (iii), and which occurs on or after October 1, 1998. In the case of a qualified discharge for which a substantial portion of the costs of care are incurred in the early days of the inpatient stay (as defined by the Secretary), in no case may the payment amount otherwise provided under this subsection exceed an amount equal to the sum of-- (I) 50 percent of the amount of payment under this subsection for transfer cases (as established under subparagraph (I)(i)), and (II) 50 percent of the amount of payment which would have been made under this subsection with respect to the qualified discharge if no transfer were involved.
(ii) For purposes of clause (i), subject to clause (iii), the term 'qualified discharge' means a discharge classified with a diagnosis-related group (described in clause (iii)) of an individual from a subsection (d) hospital, if upon such discharge the individual-- (I) is admitted as an inpatient to a hospital or hospital unit that is not a subsection (d) hospital for the provision of inpatient hospital services; (II) is admitted to a skilled nursing facility; (III) is provided home health services from a home health agency, if such services relate to the condition or diagnosis for which such individual received inpatient hospital services from the subsection (d) hospital, and if such services are provided within an appropriate period (as determined by the Secretary); or (IV) for discharges occurring on or after October 1, 2000, the individual receives post discharge services described in clause (iv)(I).
(iii) Subject to clause (iv), a diagnosis-related group described in this clause is-- (I) 1 of 10 diagnosis-related groups selected by the Secretary based upon a high volume of discharges classified within such groups and a disproportionate use of post discharge services described in clause (ii); and (II) a diagnosis-related group specified by the Secretary under clause (iv)(II).
(iv) The Secretary shall include in the proposed rule published under subsection (e)(5)(A) for fiscal year 2001, a description of the effect of this subparagraph. The Secretary may include in the proposed rule (and in the final rule published under paragraph (6)) for fiscal year 2001 or a subsequent fiscal year, a description of-- (I) post-discharge services not described in subclauses (I), (II), and (III) of clause (ii), the receipt of which results in a qualified discharge; and (II) diagnosis-related groups described in clause (iii)(I) in addition to the 10 selected under such clause.".
(a) In General.--For purposes of section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)), the large urban area of Charlotte- Gastonia-Rock Hill-North Carolina-South Carolina may be deemed to include Stanly County, North Carolina.
(b) Effective Date.--This section shall apply with respect to discharges occurring on or after October 1, 1997.
(a) New Guidelines for Reclassification.--Notwithstanding the guidelines published under section 1886(d)(10)(D)(i)(I) of the Social Security Act (42 U.S.C. 1395ww(d)(10)(D)(i)(I)), the Secretary of Health and Human Services shall publish and use alternative guidelines under which a hospital described in subsection (b) qualifies for geographic reclassification under such section for a fiscal year beginning with fiscal year 1998.
(b) Hospitals Covered.--A hospital described in this subsection is a hospital that demonstrates that-- (1) the average hourly wage paid by the hospital is not less than 108 percent of the average hourly wage paid by all other hospitals located in the Metropolitan Statistical Area (or the New England County Metropolitan Area) in which the hospital is located; (2) not less than 40 percent of the adjusted uninflated wages paid by all hospitals located in such Area is attributable to wages paid by the hospital; and (3) the hospital submitted an application requesting reclassification for purposes of wage index under section 1886(d)(10)(C) of such Act (42 U.S.C. 1395ww(d)(10)(C)) in each of fiscal years 1992 through 1997 and that such request was approved for each of such fiscal years.
(a) In General.--For purposes of section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) for discharges occurring on or after October 1, 1997, the area wage index applicable under such section to any hospital which is not located in a rural area (as defined in section 1886(d)(2)(D) of such Act (42 U.S.C.
1395ww(d)(2)(D)) may not be less than the area wage index applicable under such section to hospitals located in rural areas in the State in which the hospital is located.
(b) Implementation.--The Secretary of Health and Human Services shall adjust the area wage index referred to in subsection (a) for hospitals not described in such subsection in a manner which assures that the aggregate payments made under section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) in a fiscal year for the operating costs of inpatient hospital services are not greater or less than those which would have been made in the year if this section did not apply.
(c) Exclusion of Certain Wages.--In the case of a hospital that is owned by a municipality and that was reclassified as an urban hospital under section 1886(d)(10) of the Social Security Act for fiscal year 1996, in calculating the hospital's average hourly wage for purposes of geographic reclassification under such section for fiscal year 1998, the Secretary of Health and Human Services shall exclude the general service wages and hours of personnel associated with a skilled nursing facility that is owned by the hospital of the same municipality and that is physically separated from the hospital to the extent that such wages and hours of such personnel are not shared with the hospital and are separately documented. A hospital that applied for and was denied reclassification as an urban hospital for fiscal year 1998, but that would have received reclassification had the exclusion required by this section been applied to it, shall be reclassified as an urban hospital for fiscal year 1998.
Subchapter A--General Payment Provisions
SEC. 4411. PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)) is amended-- (1) in clause (ii)-- (A) by striking "and" at the end of subclause (V), (B) by redesignating subclause (VI) as subclause (VIII); and (C) by inserting after subclause (V), the following subclauses: (VI) for fiscal year 1998, is 0 percent; (VII) for fiscal years 1999 through 2002, is the applicable update factor specified under clause (vi) for the fiscal year; and"; and (2) by adding at the end the following new clause: (vi) For purposes of clause (ii)(VII) for a fiscal year, if a hospital's allowable operating costs of inpatient hospital services recognized under this title for the most recent cost reporting period for which information is available-- (I) is equal to, or exceeds, 110 percent of the hospital's target amount (as determined under subparagraph (A)) for such cost reporting period, the applicable update factor specified under this clause is the market basket percentage; (II) exceeds 100 percent, but is less than 110 percent, of such target amount for the hospital, the applicable update factor specified under this clause is 0 percent or, if greater, the market basket percentage minus 0.25 percentage points for each percentage point by which such allowable operating costs (expressed as a percentage of such target amount) is less than 110 percent of such target amount; (III) is equal to, or less than 100 percent, but exceeds \2/ 3\ of such target amount for the hospital, the applicable update factor specified under this clause is 0 percent or, if greater, the market basket percentage minus 2.5 percentage points; or (IV) does not exceed \2/3\ of such target amount for the hospital, the applicable update factor specified under this clause is 0 percent.".
(b) No Effect of Payment Reduction on Exceptions and Adjustments.-- Section 1886(b)(4)(A)(ii) (42 U.S.C. 1395ww(b)(4)(A)(ii)) is amended by adding at the end the following new sentence: In making such reductions, the Secretary shall treat the applicable update factor described in paragraph (3)(B)(vi) for a fiscal year as being equal to the market basket percentage for that year.".
Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding at the end the following new paragraph: (4) In determining the amount of the payments that are attributable to portions of cost reporting periods occurring during fiscal years 1998 through 2002 and that may be made under this title with respect to capital-related costs of inpatient hospital services of a hospital which is described in clause (i), (ii), or (iv) of subsection (d)(1)(B) or a unit described in the matter after clause (v) of such subsection, the Secretary shall reduce the amounts of such payments otherwise determined under this title by 15 percent.".
(a) Option of Rebasing for Hospitals In Operation Before 1990.-- Section 1886(b)(3)(42 U.S.C. 1395ww(b)(3)) is amended-- (1) in subparagraph (A) by striking "subparagraphs (C), (D), and (E)" and inserting "subparagraph (C) and succeeding subparagraphs", and (2) by adding at the end the following new subparagraph: (F)(i) In the case of a hospital (or unit described in the matter following clause (v) of subsection (d)(1)(B)) that received payment under this subsection for inpatient hospital services furnished during cost reporting periods beginning before October 1, 1990, that is within a class of hospital described in clause (iii), and that elects (in a form and manner determined by the Secretary) this subparagraph to apply to the hospital, the target amount for the hospital's 12-month cost reporting period beginning during fiscal year 1998 is equal to the average described in clause (ii).
(ii) The average described in this clause for a hospital or unit shall be determined by the Secretary as follows: (I) The Secretary shall determine the allowable operating costs for inpatient hospital services for the hospital or unit for each of the 5 cost reporting periods for which the Secretary has the most recent settled cost reports as of the date of the enactment of this subparagraph.
(II) The Secretary shall increase the amount determined under subclause (I) for each cost reporting period by the applicable percentage increase under subparagraph (B)(ii) for each subsequent cost reporting period up to the cost reporting period described in clause (i).
(III) The Secretary shall identify among such 5 cost reporting periods the cost reporting periods for which the amount determined under subclause (II) is the highest, and the lowest.
(IV) The Secretary shall compute the averages of the amounts determined under subclause (II) for the 3 cost reporting periods not identified under subclause (III).
(iii) For purposes of this subparagraph, each of the following shall be treated as a separate class of hospital: (I) Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(II) Hospitals described in clause (ii) of such subsection and rehabilitation units described in the matter following clause (v) of such subsection.
(III) Hospitals described in clause (iii) of such subsection.
(IV) Hospitals described in clause (iv) of such subsection.
(V) Hospitals described in clause (v) of such subsection.".
(b) Certain Long-Term Care Hospitals.--Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as amended by subsection (a), is amended by adding at the end the following new subparagraph: (G)(i) In the case of a qualified long-term care hospital (as defined in clause (ii)) that elects (in a form and manner determined by the Secretary) this subparagraph to apply to the hospital, the target amount for the hospital's 12-month cost reporting period beginning during fiscal year 1998 is equal to the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital for the 12-month cost reporting period beginning during fiscal year 1996, increased by the applicable percentage increase for the cost reporting period beginning during fiscal year 1997.
(ii) In clause (i), a 'qualified long-term care hospital' means, with respect to a cost reporting period, a hospital described in clause (iv) of subsection (d)(1)(B) during each of the 2 cost reporting periods for which the Secretary has the most recent settled cost reports as of the date of the enactment of this subparagraph for each of which-- (I) the hospital's allowable operating costs of inpatient hospital services recognized under this title exceeded 115 percent of the hospital's target amount, and (II) the hospital would have a disproportionate patient percentage of at least 70 percent (as determined by the Secretary under subsection (d)(5)(F)(vi)) if the hospital were a subsection (d) hospital.".
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as amended by section 4413, is amended by adding at the end the following new subparagraph: (H)(i) In the case of a hospital or unit that is within a class of hospital described in clause (iv), the Secretary shall estimate the 75th percentile of the target amounts for such hospitals within such class for cost reporting periods ending during fiscal year 1996.
(ii) The Secretary shall update the amount determined under clause (i), for each cost reporting period after the cost reporting period described in such clause and up to the first cost reporting period beginning on or after October 1, 1997, by a factor equal to the market basket percentage increase.
(iii) For cost reporting periods beginning during each of fiscal years 1999 through 2002, the Secretary shall update such amount by a factor equal to the market basket percentage increase.
(iv) For purposes of this subparagraph, each of the following shall be treated as a separate class of hospital: (I) Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(II) Hospitals described in clause (ii) of such subsection and rehabilitation units described in the matter following clause (v) of such subsection.
(III) Hospitals described in clause (iv) of such subsection.".
(a) Change in Bonus Payment.--Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)) is amended in subparagraph (A) by striking "all that follows plus--" and inserting the following: (i) 15 percent of the amount by which the target amount exceeds the amount of the operating costs, or (ii) 2 percent of the target amount, whichever is less;".
(b) Continuous Improvement Bonus Payments.--Section 1886(b) (42 U.S.C. 1395ww(b)) is amended-- (1) in paragraph (1), by inserting "plus the amount, if any, provided under paragraph (2)" before "except that in no case"; and (2) by inserting after paragraph (1), the following new paragraph: (2)(A) In addition to the payment computed under paragraph (1), in the case of an eligible hospital (described in subparagraph (B)) for a cost reporting period beginning on or after October 1, 1997, the amount of payment on a per discharge basis under paragraph (1) shall be increased by the lesser of-- (i) 50 percent of the amount by which the operating costs are less than the expected costs (as defined in subparagraph (D)) for the period; or (ii) 1 percent of the target amount for the period.
(B) For purposes of this paragraph, an 'eligible hospital' means with respect to a cost reporting period, a hospital-- (i) that has received payments under this subsection for at least 3 full cost reporting periods before that cost reporting period, and (ii) whose operating costs for the period are less than the least of its target amount, its trended costs (as defined in subparagraph (C)), or its expected costs (as defined in subparagraph (D)) for the period.
(C) For purposes of subparagraph (B)(ii), the term 'trended costs' means for a hospital cost reporting period ending in a fiscal year-- (i) in the case of a hospital for which its cost reporting period ending in fiscal year 1996 was its third or subsequent full cost reporting period for which it receives payments under this subsection, the lesser of the operating costs or target amount for that hospital for its cost reporting period ending in fiscal year 1996, or (ii) in the case of any other hospital, the operating costs for that hospital for its third full cost reporting period for which it receives payments under this subsection, increased (in a compounded manner) for each succeeding fiscal year (through the fiscal year involved) by the market basket percentage increase for the fiscal year.
(D) For purposes of this paragraph, the term 'expected costs', with respect to the cost reporting period ending in a fiscal year, means the lesser of the operating costs of inpatient hospital services or target amount per discharge for the previous cost reporting period updated by the market basket percentage increase (as defined in paragraph (3)(B)(iii)) for the fiscal year.".
(c) Change in Relief Payments.--Section 1886(b)(1) (42 U.S.C. 1395ww(b)(1)), as amended in subsections (a) and (b), is further amended-- (1) by redesignating subparagraph (B) as subparagraph (C) (2) in subparagraph (C), as so redesignated-- (A) by striking "greater than the target amount" and inserting "greater than 110 percent of the target amount", and (B) by striking "exceed the target amount" and inserting "exceed 110 percent of the target amount", and (3) by inserting after subparagraph (A), the following new subparagraph: (B) are greater than the target amount but do not exceed 110 percent of the target amount, the amount of the payment with respect to those operating costs payable under part A on a per discharge basis shall equal the target amount; or".
(d) Report.--Not later than October 1, 1999, the Secretary of Health and Human Services shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report that describes the effect of the amendments to section 1886(b)(1) of the Social Security Act (42 U.S.C. 1395ww(b)(1)), made under this section, on psychiatric hospitals (as defined in section 1886(d)(1)(B)(i) of such Act (42 U.S.C. 1395ww(d)(1)(B)(i)) that have approved medical residency training programs under title XVIII of such Act (42 U.S.C. 1395 et seq.)).
(e) Effective Date.--The amendments made by subsections (a) and (c) shall apply with respect to cost reporting periods beginning on or after October 1, 1997.
Section 1886(b) (42 U.S.C. 1395ww(b)) is amended-- (1) by adding at the end the following new paragraph: (7)(A) Notwithstanding paragraph (1), in the case of a hospital or unit that is within a class of hospital described in subparagraph (B) which first receives payments under this section on or after October 1, 1997-- (i) for each of the first 2 cost reporting periods for which the hospital has a settled cost report, the amount of the payment with respect to operating costs described in paragraph (1) under part A on a per discharge or per admission basis (as the case may be) is equal to the lesser of-- (I) the amount of operating costs for such respective period, or (II) 110 percent of the national median of the target amount for hospitals in the same class as the hospital for cost reporting periods ending during fiscal year 1996, updated by the hospital market basket increase percentage to the fiscal year in which the hospital first received payments under this section, as adjusted under subparagraph (C); and (ii) for purposes of computing the target amount for the subsequent cost reporting period, the target amount for the preceding cost reporting period is equal to the amount determined under clause (i) for such preceding period.
(B) For purposes of this paragraph, each of the following shall be treated as a separate class of hospital: (i) Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection.
(ii) Hospitals described in clause (ii) of such subsection and rehabilitation units described in the matter following clause (v) of such subsection.
(iii) Hospitals described in clause (iv) of such subsection.
(C) In applying subparagraph (A)(i)(II) in the case of a hospital or unit, the Secretary shall provide for an appropriate adjustment to the labor-related portion of the amount determined under such subparagraph to take into account differences between average wage- related costs in the area of the hospital and the national average of such costs within the same class of hospital."; and (2) in paragraph (3)(A), as amended in sections 4413 and 4414, by inserting "and in paragraph (7)(A)(ii)," before "for purposes of".
(a) In General.--(1) Section 1886(d)(1)(B) (42 U.S.C.
1395ww(d)(1)(B)) is amended by adding at the end the following new sentence: A hospital that was classified by the Secretary on or before September 30, 1995, as a hospital described in clause (iv) shall continue to be so classified notwithstanding that it is located in the same building as, or on the same campus as, another hospital.".
(2) Effective date.--The amendment made by paragraph (1) shall apply to discharges occurring on or after October 1, 1995.
(b) Certain Long-Term Care Hospitals That Treat Cancer Patients.-- (1) Section 1886(d)(1)(B)(iv) (42 U.S.C. 1395ww(d)(1)(B)(iv)) is amended-- (A) by inserting "(I)" after "(iv)"; and (B) by adding at the end the following: (II) a hospital that first received payment under this subsection in 1986 which has an average inpatient length of stay (as determined by the Secretary) of greater than 20 days and that has 80 percent or more of its annual medicare inpatient discharges with a principal diagnosis that reflects a finding of neoplastic disease in the 12-month cost reporting period ending in fiscal year 1997, or".
(2) Effective date.--The amendment made by paragraph (1) shall apply to cost reporting periods beginning on or after the date of the enactment of this Act.
(a) In General.--Section 1886(d)(1) (42 U.S.C. 1395ww(d)(1)) is amended-- (1) in subparagraph (B)(v)-- (A) by inserting "(I)" after "(v)"; (B) by striking the semicolon at the end and inserting ", or"; and (C) by adding at the end the following: (II) a hospital that was recognized as a comprehensive cancer center or clinical cancer research center by the National Cancer Institute of the National Institutes of Health as of April 20, 1983, that is located in a State which, as of December 19, 1989, was not operating a demonstration project under section 1814(b), that applied and was denied, on or before December 31, 1990, for classification as a hospital involved extensively in treatment for or research on cancer under this clause (as in effect on the day before the date of the enactment of this subclause), that as of the date of the enactment of this subclause, is licensed for less than 50 acute care beds, and that demonstrates for the 4-year period ending on December 31, 1996, that at least 50 percent of its total discharges have a principal finding of neoplastic disease, as defined in subparagraph (E);" and (2) by adding at the end the following: (E) For purposes of subparagraph (B)(v)(II) only, the term 'principal finding of neoplastic disease' means the condition established after study to be chiefly responsible for occasioning the admission of a patient to a hospital, except that only discharges with ICD-9-CM principal diagnosis codes of 140 through 239, V58.0, V58.1, V66.1, V66.2, or 990 will be considered to reflect such a principal diagnosis.".
(b) Payment.-- (1) Application to cost reporting periods.--Any classification by reason of section 1886(d)(1)(B)(v)(II) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(v)(II)) (as added by subsection (a)) shall apply to all cost reporting periods beginning on or after January 1, 1991.
(2) Base year.--Notwithstanding the provisions of section 1886(b)(3)(E) of such Act (42 U.S.C. 1395ww(b)(3)(E)) or other provisions to the contrary, the base cost reporting period for purposes of determining the target amount for any hospital classified by reason of section 1886(d)(1)(B)(v)(II) of such Act shall be either-- (A) the hospital's cost reporting period beginning during fiscal year 1990, or (B) pursuant to an election under 1886(b)(3)(G) of such Act (42 U.S.C. 1395ww(b)(3)(G)), as added in section 4413(b), the period provided for under such section.
(3) Deadline for payments.--Any payments owed to a hospital by reason of this subsection shall be made expeditiously, but in no event later than 1 year after the date of the enactment of this Act.
(a) Reduction of Exemptions.-- (1) In general.--Section 1886(b)(4)(A)(i) (42 U.S.C. 1395ww(b)(4)(A)(i)) is amended in the first sentence by striking "The Secretary shall provide for an exemption from, or an exception and adjustment to, " and inserting "The Secretary shall provide for an exception and adjustment to (and in the case of a hospital or unit described in subsection (d)(1)(B)(iii), may provide an exemption from)".
(2) Effective date.--The amendment made by paragraph (1) shall apply to hospitals or units that first qualify as a hospital or unit described in section 1886(d)(1)(B) (42 U.S.C. 1395ww(d)(1)(B)) for cost reporting periods beginning on or after October 1, 1997.
(b) Report on Exceptions.--The Secretary of Health and Human Services shall publish annually in the Federal Register a report describing the total amount of payments made to hospitals by reason of section 1886(b)(4) of the Social Security Act (42 U.S.C. 1395ww(b)(4)), as amended by subsection (a), ending during the previous fiscal year.
SEC. 4421. PROSPECTIVE PAYMENT FOR INPATIENT REHABILITATION HOSPITAL SERVICES.
(a) In General.--Section 1886 (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection: (j) Prospective Payment for Inpatient Rehabilitation Services.-- (1) Payment during transition period.-- (A) In general.--Notwithstanding section 1814(b), but subject to the provisions of section 1813, the amount of the payment with respect to the operating and capital costs of inpatient hospital services of a rehabilitation hospital or a rehabilitation unit (in this subsection referred to as a 'rehabilitation facility'), in a cost reporting period beginning on or after October 1, 2000, and before October 1, 2002, is equal to the sum of-- (i) the TEFRA percentage (as defined in subparagraph (C)) of the amount that would have been paid under part A with respect to such costs if this subsection did not apply, and (ii) the prospective payment percentage (as defined in subparagraph (C)) of the product of (I) the per unit payment rate established under this subsection for the fiscal year in which the payment unit of service occurs, and (II) the number of such payment units occurring in the cost reporting period.
(B) Fully implemented system.--Notwithstanding section 1814(b), but subject to the provisions of section 1813, the amount of the payment with respect to the operating and capital costs of inpatient hospital services of a rehabilitation facility for a payment unit in a cost reporting period beginning on or after October 1, 2002, is equal to the per unit payment rate established under this subsection for the fiscal year in which the payment unit of service occurs.
(C) TEFRA and prospective payment percentages specified.--For purposes of subparagraph (A), for a cost reporting period beginning-- (i) on or after October 1, 2000, and before October 1, 2001, the 'TEFRA percentage' is 66\2/3\ percent and the 'prospective payment percentage' is 33\1/3\ percent; and (ii) on or after October 1, 2001, and before October 1, 2002, the 'TEFRA percentage' is 33\1/3\ percent and the 'prospective payment percentage' is 66\2/3\ percent.
(D) Payment unit.--For purposes of this subsection, the term 'payment unit' means a discharge, day of inpatient hospital services, or other unit of payment defined by the Secretary.
(2) Patient case mix groups.-- (A) Establishment.--The Secretary shall establish-- (i) classes of patients of rehabilitation facilities (each in this subsection referred to as a 'case mix group'), based on such factors as the Secretary deems appropriate, which may include impairment, age, related prior hospitalization, comorbidities, and functional capability of the patient; and (ii) a method of classifying specific patients in rehabilitation facilities within these groups.
(B) Weighting factors.--For each case mix group the Secretary shall assign an appropriate weighting which reflects the relative facility resources used with respect to patients classified within that group compared to patients classified within other groups.
(C) Adjustments for case mix.-- (i) In general.--The Secretary shall from time to time adjust the classifications and weighting factors established under this paragraph as appropriate to reflect changes in treatment patterns, technology, case mix, number of payment units for which payment is made under this title, and other factors which may affect the relative use of resources. Such adjustments shall be made in a manner so that changes in aggregate payments under the classification system are a result of real changes and are not a result of changes in coding that are unrelated to real changes in case mix.
(ii) Adjustment.--Insofar as the Secretary determines that such adjustments for a previous fiscal year (or estimates that such adjustments for a future fiscal year) did (or are likely to) result in a change in aggregate payments under the classification system during the fiscal year that are a result of changes in the coding or classification of patients that do not reflect real changes in case mix, the Secretary shall adjust the per payment unit payment rate for subsequent years so as to eliminate the effect of such coding or classification changes.
(D) Data collection.--The Secretary is authorized to require rehabilitation facilities that provide inpatient hospital services to submit such data as the Secretary deems necessary to establish and administer the prospective payment system under this subsection.
(3) Payment rate.-- (A) In general.--The Secretary shall determine a prospective payment rate for each payment unit for which such rehabilitation facility is entitled to receive payment under this title. Subject to subparagraph (B), such rate for payment units occurring during a fiscal year shall be based on the average payment per payment unit under this title for inpatient operating and capital costs of rehabilitation facilities using the most recent data available (as estimated by the Secretary as of the date of establishment of the system) adjusted-- (i) by updating such per-payment-unit amount to the fiscal year involved by the weighted average of the applicable percentage increases provided under subsection (b)(3)(B)(ii) (for cost reporting periods beginning during the fiscal year) covering the period from the midpoint of the period for such data through the midpoint of fiscal year 2000 and by an increase factor (described in subparagraph (C)) specified by the Secretary for subsequent fiscal years up to the fiscal year involved; (ii) by reducing such rates by a factor equal to the proportion of payments under this subsection (as estimated by the Secretary) based on prospective payment amounts which are additional payments described in paragraph (4) (relating to outlier and related payments); (iii) for variations among rehabilitation facilities by area under paragraph (6); (iv) by the weighting factors established under paragraph (2)(B); and (v) by such other factors as the Secretary determines are necessary to properly reflect variations in necessary costs of treatment among rehabilitation facilities.
(B) Budget neutral rates.--The Secretary shall establish the prospective payment amounts under this subsection for payment units during fiscal years 2001 and 2002 at levels such that, in the Secretary's estimation, the amount of total payments under this subsection for such fiscal years (including any payment adjustments pursuant to paragraphs (4) and (6)) shall be equal to 98 percent of the amount of payments that would have been made under this title during the fiscal years for operating and capital costs of rehabilitation facilities had this subsection not been enacted. In establishing such payment amounts, the Secretary shall consider the effects of the prospective payment system established under this subsection on the total number of payment units from rehabilitation facilities and other factors described in subparagraph (A).
(C) Increase factor.--For purposes of this subsection for payment units in each fiscal year (beginning with fiscal year 2001), the Secretary shall establish an increase factor. Such factor shall be based on an appropriate percentage increase in a market basket of goods and services comprising services for which payment is made under this subsection, which may be the market basket percentage increase described in subsection (b)(3)(B)(iii).
(4) Outlier and special payments.-- (A) Outliers.-- (i) In general.--The Secretary may provide for an additional payment to a rehabilitation facility for patients in a case mix group, based upon the patient being classified as an outlier based on an unusual length of stay, costs, or other factors specified by the Secretary.
(ii) Payment based on marginal cost of care.--The amount of such additional payment under clause (i) shall be determined by the Secretary and shall approximate the marginal cost of care beyond the cutoff point applicable under clause (i).
(iii) Total payments.--The total amount of the additional payments made under this subparagraph for payment units in a fiscal year may not exceed 5 percent of the total payments projected or estimated to be made based on prospective payment rates for payment units in that year.
(B) Adjustment.--The Secretary may provide for such adjustments to the payment amounts under this subsection as the Secretary deems appropriate to take into account the unique circumstances of rehabilitation facilities located in Alaska and Hawaii.
(5) Publication.--The Secretary shall provide for publication in the Federal Register, on or before August 1 before each fiscal year (beginning with fiscal year 2001), of the classification and weighting factors for case mix groups under paragraph (2) for such fiscal year and a description of the methodology and data used in computing the prospective payment rates under this subsection for that fiscal year.
(6) Area wage adjustment.--The Secretary shall adjust the proportion (as estimated by the Secretary from time to time) of rehabilitation facilities' costs which are attributable to wages and wage-related costs, of the prospective payment rates computed under paragraph (3) for area differences in wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the rehabilitation facility compared to the national average wage level for such facilities.
Not later than October 1, 2001 (and at least every 36 months thereafter), the Secretary shall update the factor under the preceding sentence on the basis of information available to the Secretary (and updated as appropriate) of the wages and wage- related costs incurred in furnishing rehabilitation services. Any adjustments or updates made under this paragraph for a fiscal year shall be made in a manner that assures that the aggregated payments under this subsection in the fiscal year are not greater or less than those that would have been made in the year without such adjustment.
(7) Limitation on review.--There shall be no administrative or judicial review under section 1869, 1878, or otherwise of the establishment of-- (A) case mix groups, of the methodology for the classification of patients within such groups, and of the appropriate weighting factors thereof under paragraph (2), (B) the prospective payment rates under paragraph (3), (C) outlier and special payments under paragraph (4), and (D) area wage adjustments under paragraph (6).".
(b) Conforming Amendments.--Section 1886(b) (42 U.S.C. 1395ww(b)) is amended-- (1) in paragraph (1), by inserting "and other than a rehabilitation facility described in subsection (j)(1)" after "subsection (d)(1)(B)", and (2) in paragraph (3)(B)(i), by inserting "and subsection (j)" after "For purposes of subsection (d)".
(c) Effective Date.--The amendments made by this section shall apply to cost reporting periods beginning on or after October 1, 2000, except that the Secretary of Health and Human Services may require the submission of data under section 1886(j)(2)(D) of the Social Security Act (as added by subsection (a)) on and after the date of the enactment of this section.
(a) In General.-- (1) Legislative proposal.--The Secretary of Health and Human Services shall develop a legislative proposal for establishing a case-mix adjusted prospective payment system for payment of long- term care hospitals described in section 1886(d)(1)(B)(iv) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iv)) under the medicare program. Such system shall include an adequate patient classification system that reflects the differences in patient resource use and costs among such hospitals.
(2) Collection of data and evaluation.--In developing the legislative proposal described in paragraph (1), the Secretary-- (A) may require such long-term care hospitals to submit such information to the Secretary as the Secretary may require to develop the proposal; and (B) shall consider several payment methodologies, including the feasibility of expanding the current diagnosis-related groups and prospective payment system established under section 1886(d) of the Social Security Act to apply to payments under the medicare program to long-term care hospitals.
(b) Report.--Not later than October 1, 1999, the Secretary shall submit to the appropriate committees of Congress a report that includes the legislative proposal developed under subsection (a)(1).
SEC. 4431. EXTENSION OF COST LIMITS.
The last sentence of section 1888(a) (42 U.S.C. 1395yy(a)) is amended by striking "subsection" the last place it appears and all that follows and inserting "subsection, except that the limits effective for cost reporting periods beginning on or after October 1, 1997, shall be based on the limits effective for cost reporting periods beginning on or after October 1, 1996.".
(a) In General.--Section 1888 (42 U.S.C. 1395yy) is amended by adding at the end the following new subsection: (e) Prospective Payment.-- (1) Payment provision.--Notwithstanding any other provision of this title, subject to paragraph (7), the amount of the payment for all costs (as defined in paragraph (2)(B)) of covered skilled nursing facility services (as defined in paragraph (2)(A)) for each day of such services furnished-- (A) in a cost reporting period during the transition period (as defined in paragraph (2)(E)), is equal to the sum of-- (i) the non-Federal percentage of the facility- specific per diem rate (computed under paragraph (3)), and (ii) the Federal percentage of the adjusted Federal per diem rate (determined under paragraph (4)) applicable to the facility; and (B) after the transition period is equal to the adjusted Federal per diem rate applicable to the facility.
(2) Definitions.--For purposes of this subsection: (A) Covered skilled nursing facility services.-- (i) In general.--The term 'covered skilled nursing facility services'--
(I) means post-hospital extended care services as defined in section 1861(i) for which benefits are provided under part A; and (II) includes all items and services (other than services described in clause (ii)) for which payment may be made under part B and which are furnished to an individual who is a resident of a skilled nursing facility during the period in which the individual is provided covered post-hospital extended care services.
(ii) Services excluded.--Services described in this clause are physicians' services, services described by clauses (i) through (iii) of section 1861(s)(2)(K), certified nurse-midwife services, qualified psychologist services, services of a certified registered nurse anesthetist, items and services described in subparagraphs (F) and (O) of section 1861(s)(2), and, only with respect to services furnished during 1998, the transportation costs of electrocardiogram equipment for electrocardiogram test services (HCPCS Code R0076). Services described in this clause do not include any physical, occupational, or speech-language therapy services regardless of whether or not the services are furnished by, or under the supervision of, a physician or other health care professional.
(B) All costs.--The term 'all costs' means routine service costs, ancillary costs, and capital-related costs of covered skilled nursing facility services, but does not include costs associated with approved educational activities.
(C) Non-federal percentage; federal percentage.--For-- (i) the first cost reporting period (as defined in subparagraph (D)) of a facility, the 'non-Federal percentage' is 75 percent and the 'Federal percentage' is 25 percent; (ii) the next cost reporting period of such facility, the 'non-Federal percentage' is 50 percent and the 'Federal percentage' is 50 percent; and (iii) the subsequent cost reporting period of such facility, the 'non-Federal percentage' is 25 percent and the 'Federal percentage' is 75 percent.
(D) First cost reporting period.--The term 'first cost reporting period' means, with respect to a skilled nursing facility, the first cost reporting period of the facility beginning on or after July 1, 1998.
(E) Transition period.-- (i) In general.--The term 'transition period' means, with respect to a skilled nursing facility, the 3 cost reporting periods of the facility beginning with the first cost reporting period.
(ii) Treatment of new skilled nursing facilities.--In the case of a skilled nursing facility that first received payment for services under this title on or after October 1, 1995, payment for such services shall be made under this subsection as if all services were furnished after the transition period.
(3) Determination of facility specific per diem rates.--The Secretary shall determine a facility-specific per diem rate for each skilled nursing facility not described in paragraph (2)(E)(ii) for a cost reporting period as follows: (A) Determining base payments.--The Secretary shall determine, on a per diem basis, the total of-- (i) the allowable costs of extended care services for the facility for cost reporting periods beginning in fiscal year 1995, including costs associated with facilities described in subsection (d), with appropriate adjustments (as determined by the Secretary) to non-settled cost reports, and (ii) an estimate of the amounts that would be payable under part B (disregarding any applicable deductibles, coinsurance, and copayments) for covered skilled nursing facility services described in paragraph (2)(A)(i)(II) furnished during such period to an individual who is a resident of the facility, regardless of whether or not the payment was made to the facility or to another entity.
In making appropriate adjustments under clause (i), the Secretary shall take into account exceptions and shall take into account exemptions but, with respect to exemptions, only to the extent that routine costs do not exceed 150 percent of the routine cost limits otherwise applicable but for the exemption.
(B) Update to first cost reporting period.-- (i) In general.--Subject to clause (ii), the Secretary shall update the amount determined under subparagraph (A), for each cost reporting period after the cost reporting period described in subparagraph (A)(i) and up to the first cost reporting period by a factor equal to the skilled nursing facility market basket percentage increase minus 1 percentage point.
(ii) Certain demonstration projects.--In the case of a facility participating in the Nursing Home Case-Mix and Quality Demonstration (RUGS-III), there shall be substituted for the amount described in clause (i) the RUGS-III rate received by the facility for 1997.
(C) Updating to applicable cost reporting period.--The Secretary shall update the amount determined under subparagraph (B) for each cost reporting period beginning with the first cost reporting period and up to and including the cost reporting period involved by a factor equal to the facility- specific update factor.
(D) Facility-specific update factor.--For purposes of this paragraph, the 'facility-specific update factor' for cost reporting periods beginning during-- (i) during each of fiscal years 1998 and 1999, is equal to the skilled nursing facility market basket percentage increase for such fiscal year minus 1 percentage point, and (ii) during each subsequent fiscal year is equal to the skilled nursing facility market basket percentage increase for such fiscal year.
(4) Federal per diem rate.-- (A) Determination of historical per diem for facilities.--For each skilled nursing facility that received payments for post-hospital extended care services during a cost reporting period beginning in fiscal year 1995 and that was subject to (and not exempted from) the per diem limits referred to in paragraph (1) or (2) of subsection (a) (and facilities described in subsection (d)), the Secretary shall estimate, on a per diem basis for such cost reporting period, the total of-- (i) the allowable costs of extended care services (excluding exceptions payments) for the facility for cost reporting periods beginning in 1995 with appropriate adjustments (as determined by the Secretary) to non-settled cost reports, and (ii) an estimate of the amounts that would be payable under part B (disregarding any applicable deductibles, coinsurance, and copayments) for covered skilled nursing facility services described in paragraph (2)(A)(i)(II) furnished during such period to an individual who is a resident of the facility, regardless of whether or not the payment was made to the facility or to another entity.
(B) Update to first fiscal year.--The Secretary shall update the amount determined under subparagraph (A), for each cost reporting period after the cost reporting period described in subparagraph (A)(i) and up to the first cost reporting period by a factor equal to the skilled nursing facility market basket percentage increase reduced (on an annualized basis) by 1 percentage point.
(C) Computation of standardized per diem rate.--The Secretary shall standardize the amount updated under subparagraph (B) for each facility by-- (i) adjusting for variations among facilities by area in the average facility wage level per diem, and (ii) adjusting for variations in case mix per diem among facilities.
(D) Computation of weighted average per diem rates.-- (i) All facilities.--The Secretary shall compute a weighted average per diem rate for all facilities by computing an average of the standardized amounts computed under subparagraph (C), weighted for each facility by the number of days of extended care services furnished during the cost reporting period referred to in subparagraph (A).
(ii) Freestanding facilities.--The Secretary shall compute a weighted average per diem rate for freestanding facilities by computing an average of the standardized amounts computed under subparagraph (C) only for such facilities , weighted for each facility by the number of days of extended care services furnished during the cost reporting period referred to in subparagraph (A).
(iii) Separate computation.--The Secretary may compute and apply such averages separately for facilities located in urban and rural areas (as defined in section 1886(d)(2)(D)).
(E) Updating.-- (i) Initial period.--For the initial period beginning on July 1, 1998, and ending on September 30, 1999, the Secretary shall compute for skilled nursing facilities an unadjusted federal per diem rate equal to the average of the weighted average per diem rates computed under clauses (i) and (ii) of subparagraph (D), increased by skilled nursing facility market basket percentage change for such period minus 1 percentage point.
(ii) Subsequent fiscal years.--The Secretary shall compute an unadjusted federal per diem rate equal to the federal per diem rate computed under this subparagraph--
(I) for fiscal year 2000, the rate computed for the initial period described in clause (i), increased by the skilled nursing facility market basket percentage change for the initial period minus 1 percentage point; (II) for each of fiscal years 2001 and 2002, the rate computed for the previous fiscal year increased by the skilled nursing facility market basket percentage change for the fiscal year involved minus 1 percentage point; and (III) for each subsequent fiscal year, the rate computed for the previous fiscal year increased by the skilled nursing facility market basket percentage change for the fiscal year involved.
(F) Adjustment for case mix creep.--Insofar as the Secretary determines that the adjustments under subparagraph (G)(i) for a previous fiscal year (or estimates that such adjustments for a future fiscal year) did (or are likely to) result in a change in aggregate payments under this subsection during the fiscal year that are a result of changes in the coding or classification of residents that do not reflect real changes in case mix, the Secretary may adjust unadjusted Federal per diem rates for subsequent fiscal years so as to eliminate the effect of such coding or classification changes.
(G) Determination of federal rate.--The Secretary shall compute for each skilled nursing facility for each fiscal year (beginning with the initial period described in subparagraph (E)(i)) an adjusted Federal per diem rate equal to the unadjusted Federal per diem rate determined under subparagraph (E), as adjusted under subparagraph (F), and as further adjusted as follows: (i) Adjustment for case mix.--The Secretary shall provide for an appropriate adjustment to account for case mix. Such adjustment shall be based on a resident classification system, established by the Secretary, that accounts for the relative resource utilization of different patient types. The case mix adjustment shall be based on resident assessment data and other data that the Secretary considers appropriate.
(ii) Adjustment for geographic variations in labor costs.--The Secretary shall adjust the portion of such per diem rate attributable to wages and wage-related costs for the area in which the facility is located compared to the national average of such costs using an appropriate wage index as determined by the Secretary. Such adjustment shall be done in a manner that does not result in aggregate payments under this subsection that are greater or less than those that would otherwise be made if such adjustment had not been made.
(H) Publication of information on per diem rates.--The Secretary shall provide for publication in the Federal Register, before May 1, 1998 (with respect to fiscal period described in subparagraph (E)(i)) and before the August 1 preceding each succeeding fiscal year (with respect to that succeeding fiscal year), of-- (i) the unadjusted Federal per diem rates to be applied to days of covered skilled nursing facility services furnished during the fiscal year, (ii) the case mix classification system to be applied under subparagraph (G)(i) with respect to such services during the fiscal year, and (iii) the factors to be applied in making the area wage adjustment under subparagraph (G)(ii) with respect to such services.
(5) Skilled nursing facility market basket index and percentage.--For purposes of this subsection: (A) Skilled nursing facility market basket index.--The Secretary shall establish a skilled nursing facility market basket index that reflects changes over time in the prices of an appropriate mix of goods and services included in covered skilled nursing facility services.
(B) Skilled nursing facility market basket percentage.-- The term 'skilled nursing facility market basket percentage' means, for a fiscal year or other annual period and as calculated by the Secretary, the percentage change in the skilled nursing facility market basket index (established under subparagraph (A)) from the midpoint of the prior fiscal year (or period) to the midpoint of the fiscal year (or other period) involved.
(6) Submission of resident assessment data.--A skilled nursing facility, or a facility described in paragraph (7)(B), shall provide the Secretary, in a manner and within the timeframes prescribed by the Secretary, the resident assessment data necessary to develop and implement the rates under this subsection. For purposes of meeting such requirement, a skilled nursing facility, or a facility described in paragraph (7), may submit the resident assessment data required under section 1819(b)(3), using the standard instrument designated by the State under section 1819(e)(5).
(7) Transition for medicare swing bed hospitals.-- (A) In general.--The Secretary shall determine an appropriate manner in which to apply this subsection to the facilities described in subparagraph (B), taking into account the purposes of this subsection, and shall provide that at the end of the transition period (as defined in paragraph (2)(E)) such facilities shall be paid only under this subsection.
Payment shall not be made under this subsection to such facilities for cost reporting periods beginning before such date (not earlier than July 1, 1999) as the Secretary specifies.
(B) Facilities described.--The facilities described in this subparagraph are facilities that have in effect an agreement described in section 1883, for which payment is made for the furnishing of extended care services on a reasonable cost basis under section 1814(l) (as in effect on and after such date).
(8) Limitation on review.--There shall be no administrative or judicial review under section 1869, 1878, or otherwise of-- (A) the establishment of Federal per diem rates under paragraph (4), including the computation of the standardized per diem rates under paragraph (4)(C), adjustments and corrections for case mix under paragraphs (4)(F) and (4)(G)(i), and adjustments for variations in labor-related costs under paragraph (4)(G)(ii); (B) the establishment of facility specific rates before January 1, 1999, (except any determination of costs paid under part A of this title); and (C) the establishment of transitional amounts under paragraph (7).".
(b) Consolidated Billing.-- (1) For snf services.--Section 1862(a) (42 U.S.C. 1395y(a)), as amended by 4319(b), is amended-- (A) by striking "or" at the end of paragraph (16), (B) by striking the period at the end of paragraph (17) and inserting "; or", and (C) by inserting after paragraph (17) the following new paragraph: (18) which are covered skilled nursing facility services described in section 1888(e)(2)(A)(i) and which are furnished to an individual who is a resident of a skilled nursing facility or of a part of a facility that includes a skilled nursing facility (as determined under regulations), by an entity other than the skilled nursing facility, unless the services are furnished under arrangements (as defined in section 1861(w)(1)) with the entity made by the skilled nursing facility.".
(2) Requiring payment for all part b items and services to be made to facility.--The first sentence of section 1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended-- (A) by striking "and (D)" and inserting "(D)"; and (B) by striking the period at the end and inserting the following: , and (E) in the case of an item or service (other than services described in section 1888(e)(2)(A)(ii)) furnished to an individual who (at the time the item or service is furnished) is a resident of a skilled nursing facility or of a part of a facility that includes a skilled nursing facility (as determined under regulations), payment shall be made to the facility (without regard to whether or not the item or service was furnished by the facility, by others under arrangement with them made by the facility, under any other contracting or consulting arrangement, or otherwise).".
(3) Payment rules.--Section 1888(e) (42 U.S.C. 1395yy(e)), as added by subsection (a), is amended by adding at the end the following: (9) Payment for certain services.--In the case of an item or service furnished to a resident of a skilled nursing facility or a part of a facility that includes a skilled nursing facility (as determined under regulations) for which payment would (but for this paragraph) be made under part B in an amount determined in accordance with section 1833(a)(2)(B), the amount of the payment under such part shall be the amount provided under the fee schedule for such item or service.
(10) Required coding.--No payment may be made under part B for items and services (other than services described in paragraph (2)(A)(ii)) furnished to an individual who is a resident of a skilled nursing facility or of a part of a facility that includes a skilled nursing facility (as determined under regulations), unless the claim for such payment includes a code (or codes) under a uniform coding system specified by the Secretary that identifies the items or services furnished.".
(4) Facility provider number required on claims submitted by physicians.--Section 1842 (42 U.S.C. 1395u) is amended by adding at the end the following new section: (t) Each request for payment, or bill submitted, for an item or service furnished by a physician to an individual who is a resident of a skilled nursing facility or of a part of a facility that includes a skilled nursing facility (as determined under regulations), for which payment may be made under this part shall include the facility's medicare provider number.".
(5) Conforming amendments.-- (A) Section 1819(b)(3)(C)(i) (42 U.S.C. 1395i- 3(b)(3)(C)(i)) is amended by striking "Such" and inserting "Subject to the timeframes prescribed by the Secretary under section 1888(e)(6), such".
(B) Section 1832(a)(1) (42 U.S.C. 1395k(a)(1)) is amended by striking "(2);" and inserting "(2) and section 1842(b)(6)(E);".
(C) Section 1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) is amended by inserting "or section 1888(e)(9)" after "section 1886".
(D) Section 1861(h) (42 U.S.C 1395x(h)) is amended-- (i) in the opening paragraph, by striking "paragraphs (3) and (6)" and inserting "paragraphs (3), (6), and (7)", and (ii) in paragraph (7), after "skilled nursing facilities", by inserting ", or by others under arrangements with them made by the facility".
(E) Section 1861(v)(7)(D) (42 U.S.C. 1395x(v)(7)(D)) is amended by inserting "subsections (a) through (c) of" before "section 1888.".
(F) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(1)(H)) is amended-- (i) by redesignating clauses (i) and (ii) as subclauses (I) and (II) respectively, (ii) by inserting "(i)" after "(H)", and (iii) by adding after clause (i), as so redesignated, the following new clause: (ii) in the case of skilled nursing facilities which provide covered skilled nursing facility services-- (I) that are furnished to an individual who is a resident of the skilled nursing facility, and (II) for which the individual is entitled to have payment made under this title, to have items and services (other than services described in section 1888(e)(2)(A)(ii)) furnished by the skilled nursing facility or otherwise under arrangements (as defined in section 1861(w)(1)) made by the skilled nursing facility,".
(G) Section 1883(a)(2)(B)(ii)(II) (42 U.S.C. 1395tt(a)(2)(B)(ii)(II)) is amended by inserting "subsections (a) through (d) of" before "section 1888".
(H) Section 1888(d)(1) (42 U.S.C. 1395yy(d)(1)) is amended by striking "Any skilled nursing facility" and inserting "Subject to subsection (e), any skilled nursing facility".
(c) Medical Review Process.--In order to ensure that medicare beneficiaries are furnished appropriate services in skilled nursing facilities, the Secretary of Health and Human Services shall establish and implement a thorough medical review process to examine the effects of the amendments made by this section on the quality of covered skilled nursing facility services furnished to medicare beneficiaries.
In developing such a medical review process, the Secretary shall place a particular emphasis on the quality of non-routine covered services and physicians' services for which payment is made under title XVIII of the Social Security Act.
(d) Effective Date.--The amendments made by this section are effective for cost reporting periods beginning on or after July 1, 1998; except that the amendments made by subsection (b) shall apply to items and services furnished on or after July 1, 1998.
SEC. 4441. PAYMENTS FOR HOSPICE SERVICES.
(a) Payment Update.--Section 1814(i)(1)(C)(ii) (42 U.S.C.
1395f(i)(1)(C)(ii)) is amended-- (1) in subclause (V), by striking "and" at the end; (2) by redesignating subclause (VI) as subclause (VII); and (3) by inserting after subclause (V) the following new subclause: (VI) for each of fiscal years 1998 through 2002, the market basket percentage increase for the fiscal year involved minus 1.0 percentage points; and".
(b) Collection of Data.--Section 1814(i) (42 U.S.C. 1395f(i)) is amended by adding at the end the following new paragraph: (3) Hospice programs providing hospice care for which payment is made under this subsection shall submit to the Secretary such data with respect to the costs for providing such care for each fiscal year, beginning with fiscal year 1999, as the Secretary determines necessary.".
(a) In General.--Section 1814(i)(2) (42 U.S.C. 1395f(i)(2)) is amended by adding at the end the following: (D) A hospice program shall submit claims for payment for hospice care furnished in an individual's home under this title only on the basis of the geographic location at which the service is furnished, as determined by the Secretary.".
(b) Effective Date.--The amendment made by subsection (a) applies to cost reporting periods beginning on or after October 1, 1997.
(a) Restructuring of Benefit Period.--Section 1812 (42 U.S.C.
1395d) is amended in subsections (a)(4) and (d)(1) by striking ", a subsequent period of 30 days, and a subsequent extension period" and inserting "and an unlimited number of subsequent periods of 60 days each".
(b) Conforming Amendments.--(1) Section 1812 (42 U.S.C. 1395d) is amended in subsection (d)(2)(B) by striking "90- or 30-day period or a subsequent extension period" and inserting "90-day period or a subsequent 60-day period".
(2) Section 1814(a)(7)(A) (42 U.S.C. 1395f(a)(7)(A)) is amended-- (A) in clause (i), by inserting "and" at the end; (B) in clause (ii)-- (i) by striking "30-day" and inserting "60-day"; and (ii) by striking ", and" at the end and inserting a period; and (C) by striking clause (iii).
(a) In General.--Section 1861(dd)(1) (42 U.S.C. 1395x(dd)(1)) is amended-- (1) in subparagraph (G), by striking "and" at the end; (2) in subparagraph (H), by striking the period at the end and inserting ", and"; and (3) by inserting after subparagraph (H) the following: (I) any other item or service which is specified in the plan and for which payment may otherwise be made under this title.".
(b) Effective Date.--The amendment made by subsection (a) shall apply with respect to items or services furnished on or after April 1, 1998.
Section 1861(dd)(2) (42 U.S.C. 1395x(dd)(2)) is amended-- (1) in subparagraph (A)(ii)(I), by striking "(F),"; and (2) in subparagraph (B)(i), by inserting "or, in the case of a physician described in subclause (I), under contract with" after "employed by".
Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5)) is amended-- (1) in subparagraph (B), by inserting "or (C)" after "subparagraph (A)" each place it appears; and (2) by adding at the end the following: (C) The Secretary may waive the requirements of paragraph (2)(A)(i) and (2)(A)(ii) for an agency or organization with respect to the services described in paragraph (1)(B) and, with respect to dietary counseling, paragraph (1)(H), if such agency or organization-- (i) is located in an area which is not an urbanized area (as defined by the Bureau of Census), and (ii) demonstrates to the satisfaction of the Secretary that the agency or organization has been unable, despite diligent efforts, to recruit appropriate personnel.".
Section 1879(g) (42 U.S.C. 1395pp(g)) is amended-- (1) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and moving such subparagraphs 2 ems to the right; (2) by striking "is," and inserting "is--"; (3) by making the remaining text of subsection (g), as amended, that follows is--" a new paragraph (1) and indenting such paragraph 2 ems to the right; (4) by striking the period at the end and inserting "; and"; and (5) by adding at the end the following new paragraph: (2) with respect to the provision of hospice care to an individual, a determination that the individual is not terminally ill.".
Section 1814(a)(7)(A)(i) (42 U.S.C. 1395f(a)(7)(A)(i)) is amended in the matter following subclause (II) by striking ", not later than 2 days after hospice care is initiated (or, if each certify verbally not later than 2 days after hospice care is initiated, not later than 8 days after such care is initiated)" and inserting "at the beginning of the period".
Except as otherwise provided in this chapter, the amendments made by this chapter apply to benefits provided on or after the date of the enactment of this chapter, regardless of whether or not an individual has made an election under section 1812(d) of the Social Security Act (42 U.S.C. 1395d(d)) before such date.
SEC. 4451. REDUCTIONS IN PAYMENTS FOR ENROLLEE BAD DEBT.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the following new subparagraph: (T) In determining such reasonable costs for hospitals, no reduction in copayments under section 1833(t)(5)(B) shall be treated as a bad debt and the amount of bad debts otherwise treated as allowable costs which are attributable to the deductibles and coinsurance amounts under this title shall be reduced-- (i) for cost reporting periods beginning during fiscal year 1998, by 25 percent of such amount otherwise allowable, (ii) for cost reporting periods beginning during fiscal year 1999, by 40 percent of such amount otherwise allowable, and (iii) for cost reporting periods beginning during a subsequent fiscal year, by 45 percent of such amount otherwise allowable.".
Section 6011(d) of OBRA-1989 (as amended by section 13505 of OBRA- 1993) is amended by striking "and shall expire September 30, 1994." and inserting "and on or before September 30, 1994, and on or after October 1, 1997.".
(a) In General.--Section 1818(d) (42 U.S.C. 1395i-2(d)) is amended-- (1) in paragraph (2), by striking "paragraph (4)" and inserting "paragraphs (4) and (5)"; and (2) by adding at the end the following new paragraph: (5)(A) The amount of the monthly premium shall be zero in the case of an individual who is a person described in subparagraph (B) for a month, if-- (i) the individual's premium under this section for the month is not (and will not be) paid for, in whole or in part, by a State (under title XIX or otherwise), a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions thereof; and (ii) in each of 84 months before such month, the individual was enrolled in this part under this section and the payment of the individual's premium under this section for the month was not paid for, in whole or in part, by a State (under title XIX or otherwise), a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions thereof.
(B) A person described in this subparagraph for a month is a person who establishes to the satisfaction of the Secretary that, as of the last day of the previous month-- (i)(I) the person was receiving cash benefits under a qualified State or local government retirement system (as defined in subparagraph (C)) on the basis of the person's employment in one or more positions covered under any such system, and (II) the person would have at least 40 quarters of coverage under title II if remuneration for medicare qualified government employment (as defined in paragraph (1) of section 210(p), but determined without regard to paragraph (3) of such section) paid to such person were treated as wages paid to such person and credited for purposes of determining quarters of coverage under section 213; (ii)(I) the person was married (and had been married for the previous 1-year period) to an individual who is described in clause (i), or (II) the person met the requirement of clause (i)(II) and was married (and had been married for the previous 1-year period) to an individual described in clause (i)(I); (iii) the person had been married to an individual for a period of at least 1 year (at the time of such individual's death) if (I) the individual was described in clause (i) at the time of the individual's death, or (II) the person met the requirement of clause (i)(II) and the individual was described in clause (i)(I) at the time of the individual's death; or (iv) the person is divorced from an individual and had been married to the individual for a period of at least 10 years (at the time of the divorce) if (I) the individual was described in clause (i) at the time of the divorce, or (II) the person met the requirement of clause (i)(II) and the individual was described in clause (i)(I) at the time of the divorce.
(C) For purposes of subparagraph (B)(i)(I), the term 'qualified State or local government retirement system' means a retirement system that-- (i) is established or maintained by a State or political subdivision thereof, or an agency or instrumentality of one or more States or political subdivisions thereof; (ii) covers positions of some or all employees of such a State, subdivision, agency, or instrumentality; and (iii) does not adjust cash retirement benefits based on eligibility for a reduction in premium under this paragraph.".
(b) Effective Date.--The amendments made by subsection (a) shall apply to premiums for months beginning with January 1998, and months before such month may be taken into account for purposes of meeting the requirement of section 1818(d)(5)(B)(iii) of the Social Security Act, as added by subsection (a).
(a) Medicare Coverage.-- (1) In general.--Section 1861 (42 U.S.C. 1395x) (as amended by sections 4103 and 4106) is amended-- (A) in the sixth sentence of subsection (e)-- (i) by striking "includes" and all that follows up to but only" and inserting "includes a religious nonmedical health care institution (as defined in subsection (ss)(1)),", and (ii) by inserting "consistent with section 1821" before the period; (B) in subsection (y)-- (i) by amending the heading to read as follows:
Extended Care in Religious Nonmedical Health Care Institutions",
(ii) in paragraph (1), by striking "includes" and all that follows up to but only" and inserting "includes a religious nonmedical health care institution (as defined in subsection (ss)(1)),", and (iii) by inserting "consistent with section 1821" before the period; and (C) by adding at the end the following:
Religious Nonmedical Health Care Institution
(ss)(1) The term 'religious nonmedical health care institution' means an institution that-- (A) is described in subsection (c)(3) of section 501 of the Internal Revenue Code of 1986 and is exempt from taxes under subsection (a) of such section; (B) is lawfully operated under all applicable Federal, State, and local laws and regulations; (C) provides only nonmedical nursing items and services exclusively to patients who choose to rely solely upon a religious method of healing and for whom the acceptance of medical health services would be inconsistent with their religious beliefs; (D) provides such nonmedical items and services exclusively through nonmedical nursing personnel who are experienced in caring for the physical needs of such patients; (E) provides such nonmedical items and services to inpatients on a 24-hour basis; (F) on the basis of its religious beliefs, does not provide through its personnel or otherwise medical items and services (including any medical screening, examination, diagnosis, prognosis, treatment, or the administration of drugs) for its patients; (G)(i) is not owed by, under common ownership with, or has an ownership interest in, a provider of medical treatment of services; (ii) is not affiliated with-- (I) a provider of medical treatment or services, or (II) an individual who has an ownership interest in a provider of medical treatment or services; (H) has in effect a utilization review plan which-- (i) provides for the review of admissions to the institution, of the duration of stays therein, of cases of continuous extended duration, and of the items and services furnished by the institution, (ii) requires that such reviews be made by an appropriate committee of the institution that includes the individuals responsible for overall administration and for supervision of nursing personnel at the institution, (iii) provides that records be maintained of the meetings, decisions, and actions of such committee, and (iv) meets such other requirements as the Secretary finds necessary to establish an effective utilization review plan; (I) provides the Secretary with such information as the Secretary may require to implement section 1821, including information relating to quality of care and coverage determinations; and (J) meets such other requirements as the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services in the institution.
(2) To the extent that the Secretary finds that the accreditation of an institution by a State, regional, or national agency or association provides reasonable assurances that any or all of the requirements of paragraph (1) are met or exceeded, the Secretary may treat such institution as meeting the condition or conditions with respect to which the Secretary made such finding.
(3)(A)(i) In administering this subsection and section 1821, the Secretary shall not require any patient of a religious nonmedical health care institution to undergo medical screening, examination, diagnosis, prognosis, or treatment or to accept any other medical health care service, if such patient (or legal representative of the patient) objects thereto on religious grounds.
(ii) Clause (i) shall not be construed as preventing the Secretary from requiring under section 1821(a)(2) the provision of sufficient information regarding an individual's condition as a condition for receipt of benefits under part A for services provided in such an institution.
(B)(i) In administering this subsection and section 1821, the Secretary shall not subject a religious nonmedical health care institution or its personnel to any medical supervision, regulation, or control, insofar as such supervision, regulation, or control would be contrary to the religious beliefs observed by the institution or such personnel.
(ii) Clause (i) shall not be construed as preventing the Secretary from reviewing items and services billed by the institution to the extent the Secretary determines such review to be necessary to determine whether such items and services were not covered under part A, are excessive, or are fraudulent.
(4)(A) For purposes of paragraph (1)(G)(i), an ownership interest of less than 5 percent shall not be taken into account.
(B) For purposes of paragraph (1)(G)(ii), none of the following shall be considered to create an affiliation: (i) An individual serving as an uncompensated director, trustee, officer, or other member of the governing body of a religious nonmedical health care institution.
(ii) An individual who is a director, trustee, officer, employee, or staff member of a religious nonmedical health care institution having a family relationship with an individual who is affiliated with (or has an ownership interest in) a provider of medical treatment or services.
(iii) An individual or entity furnishing goods or services as a vendor to both providers of medical treatment or services and religious nonmedical health care institutions.".
(2) Conditions of coverage.--Part A of title XVIII is amended by adding at the end the following new section:
conditions for coverage of religious nonmedical health care institutional services
Sec. 1821. (a) In General.--Subject to subsections (c) and (d), payment under this part may be made for inpatient hospital services or post-hospital extended care services furnished an individual in a religious nonmedical health care institution only if-- (1) the individual has an election in effect for such benefits under subsection (b); and (2) the individual has a condition such that the individual would qualify for benefits under this part for inpatient hospital services or extended care services, respectively, if the individual were an inpatient or resident in a hospital or skilled nursing facility that was not such an institution.
(b) Election.-- (1) In general.--An individual may make an election under this subsection in a form and manner specified by the Secretary consistent with this subsection. Unless otherwise provided, such an election shall take effect immediately upon its execution. Such an election, once made, shall continue in effect until revoked.
(2) Form.--The election form under this subsection shall include the following: (A) A written statement, signed by the individual (or such individual's legal representative), that-- (i) the individual is conscientiously opposed to acceptance of nonexcepted medical treatment; and (ii) the individual's acceptance of nonexcepted medical treatment would be inconsistent with the individual's sincere religious beliefs.
(B) A statement that the receipt of nonexcepted medical services shall constitute a revocation of the election and may limit further receipt of services described in subsection (a).
(3) Revocation.--An election under this subsection by an individual may be revoked by voluntarily notifying the Secretary in writing of such revocation and shall be deemed to be revoked if the individual receives nonexcepted medical treatment for which reimbursement is made under this title.
(4) Limitation on subsequent elections.--Once an individual's election under this subsection has been made and revoked twice-- (A) the next election may not become effective until the date that is 1 year after the date of most recent previous revocation, and (B) any succeeding election may not become effective until the date that is 5 years after the date of the most recent previous revocation.
(5) Excepted medical treatment.--For purposes of this subsection: (A) Excepted medical treatment.--The term 'excepted medical treatment' means medical care or treatment (including medical and other health services)-- (i) received involuntarily, or (ii) required under Federal or State law or law of a political subdivision of a State.
(B) Nonexcepted medical treatment.--The term 'nonexcepted medical treatment' means medical care or treatment (including medical and other health services) other than excepted medical treatment.
(c) Monitoring and Safeguard Against Excessive Expenditures.-- (1) Estimate of expenditures.--Before the beginning of each fiscal year (beginning with fiscal year 2000), the Secretary shall estimate the level of expenditures under this part for services described in subsection (a) for that fiscal year.
(2) Adjustment in payments.-- (A) Proportional adjustment.--If the Secretary determines that the level estimated under paragraph (1) for a fiscal year will exceed the trigger level (as defined in subparagraph (C)) for that fiscal year, the Secretary shall, subject to subparagraph (B), provide for such a proportional reduction in payment amounts under this part for services described in subsection (a) for the fiscal year involved as will assure that such level (taking into account any adjustment under subparagraph (B)) does not exceed the trigger level for that fiscal year.
(B) Alternative adjustments.--The Secretary may, instead of making some or all of the reduction described in subparagraph (A), impose such other conditions or limitations with respect to the coverage of covered services (including limitations on new elections of coverage and new facilities) as may be appropriate to reduce the level of expenditures described in paragraph (1) to the trigger level.
(C) Trigger level.--For purposes of this subsection-- (i) In general.--Subject to adjustment under paragraph (3)(B), the 'trigger level' for a year is the unadjusted trigger level described in clause (ii).
(ii) Unadjusted trigger level.--The 'unadjusted trigger level' for--
(I) fiscal year 1998, is $20,000,000, or (II) a succeeding fiscal year is the amount specified under this clause for the previous fiscal year increased by the percentage increase in the consumer price index for all urban consumers (all items; United States city average) for the 12-month period ending with July preceding the beginning of the fiscal year.
(D) Prohibition of administrative and judicial review.-- There shall be no administrative or judicial review under section 1869, 1878, or otherwise of the estimation of expenditures under subparagraph (A) or the application of reduction amounts under subparagraph (B).
(E) Effect on billing.--Notwithstanding any other provision of this title, in the case of a reduction in payment provided under this subsection for services of a religious nonmedical health care institution provided to an individual, the amount that the institution is otherwise permitted to charge the individual for such services is increased by the amount of such reduction.
(3) Monitoring expenditure level.-- (A) In general.--The Secretary shall monitor the expenditure level described in paragraph (2)(A) for each fiscal year (beginning with fiscal year 1999).
(B) Adjustment in trigger level.-- (i) In general.--If the Secretary determines that such level for a fiscal year exceeded, or was less than, the trigger level for that fiscal year, then, subject to clause (ii), the trigger level for the succeeding fiscal year shall be reduced, or increased, respectively, by the amount of such excess or deficit.
(ii) Limitation on carryforward.--In no case may the increase effected under clause (i) for a fiscal year exceed $50,000,000.
(d) Sunset.--If the Secretary determines that the level of expenditures described in subsection (c)(1) for 3 consecutive fiscal years (with the first such year being not earlier than fiscal year 2002) exceeds the trigger level for such expenditures for such years (as determined under subsection (c)(2)), benefits shall be paid under this part for services described in subsection (a) and furnished on or after the first January 1 that occurs after such 3 consecutive years only with respect to an individual who has an election in effect under subsection (b) as of such January 1 and only during the duration of such election.
(e) Annual Report.--At the beginning of each fiscal year (beginning with fiscal year 1999), the Secretary shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate an annual report on coverage and expenditures for services described in subsection (a) under this part and under State plans under title XIX. Such report shall include-- (1) level of expenditures described in subsection (c)(1) for the previous fiscal year and estimated for the fiscal year involved; (2) trends in such level; and (3) facts and circumstances of any significant change in such level from the level in previous fiscal years.".
(b) Medicaid.-- (1) The third sentence of section 1902(a) (42 U.S.C. 1396a(a)) is amended by striking "all that follows shall not apply" and inserting "to a religious nonmedical health care institution (as defined in section 1861(ss)(1)).".
(2) Section 1908(e)(1) (42 U.S.C. 1396g-1(e)(1)) is amended by striking "all that follows does not include" and inserting "a religious nonmedical health care institution (as defined in section 1861(ss)(1)).".
(c) Conforming Amendments.-- (1) Section 1122(h) (42 U.S.C. 1320a-1(h)) is amended by striking "all that follows shall not apply to" and inserting "a religious nonmedical health care institution (as defined in section 1861(ss)(1)).".
(2) Section 1162 (42 U.S.C. 1320c-11) is amended-- (A) by amending the heading to read as follows:
exemptions for religious nonmedical health care institutions"; and
(B) by striking "all that follows shall not apply with respect to a" and inserting "religious nonmedical health care institution (as defined in section 1861(ss)(1)).".
(d) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply to items and services furnished on or after such date. By not later than July 1, 1998, the Secretary of Health and Human Services shall first issue regulations to carry out such amendments. Such regulations may be issued so they are effective on an interim basis pending notice and opportunity for public comment. For periods before the effective date of such regulations, such regulations shall recognize elections entered into in good faith in order to comply with the requirements of section 1821(b) of the Social Security Act.