HR 1224 IH

To amend the Internal Revenue Code of 1986 and title XVIII of the Social Security Act to provide for comprehensive financing for graduate medical education.

March 23, 1999

Mr. CARDIN (for himself, Mr. STARK, Mr. KLECZKA, Mr. LEWIS of Georgia, Mr. LEVIN, and Mr. BENTSEN) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 and title XVIII of the Social Security Act to provide for comprehensive financing for graduate medical education.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `All-Payer Graduate Medical Education Act'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I--HEALTH CARE WORKFORCE TRUST FUND; PAYMENTS TO TEACHING HOSPITALS

Subtitle A--Establishment and Financing of Fund

Sec. 101. Establishment.

Sec. 102. Financing for fund; fees on insured and self-insured health plans.

Subtitle B--Additional Payments to Teaching Hospitals

Sec. 111. Formula payments regarding private-sector share of costs of graduate medical education.

Sec. 112. Application for payments.

Sec. 113. Annual amount of payments.

Sec. 114. Definitions.

Sec. 115. Study.

Subtitle C--Conforming Changes in Medicare Payment for Direct Costs of Graduate Medical Education

Sec. 121. Changes in medicare formula for payment of direct GME costs.

Sec. 122. Exception from limitation on number of residents for rural and underserved urban areas.

Sec. 123. Study on appropriate levels of documentation for professional services of teaching physicians.

TITLE II--HEALTH WORKFORCE PRIORITIES

Sec. 201. Plan to reduce residency training positions.

TITLE III--MODIFICATION IN MEDICARE PAYMENT FOR IME AND DSH

Sec. 301. Modification regarding payments for indirect costs of graduate medical education.

Sec. 302. Modification of DSH.

TITLE IV--ADDITIONAL PAYMENTS FOR GRADUATE EDUCATION FOR NON-PHYSICIAN HEALTH PROFESSIONALS

Sec. 401. Payments for graduate education for non-physician health professionals.

TITLE I--HEALTH CARE WORKFORCE TRUST FUND; PAYMENTS TO TEACHING HOSPITALS

Subtitle A--Establishment and Financing of Fund

SEC. 101. ESTABLISHMENT.

(a) IN GENERAL- Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to trust fund code) is amended by adding at the end the following new section:

`SEC. 9511. HEALTH CARE WORKFORCE TRUST FUND.

`(a) CREATION OF TRUST FUND- There is established in the Treasury of the United States a trust fund to be known as the `Health Care Workforce Trust Fund', consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section and section 9602(b).

`(b) TRANSFERS TO FUND-

`(1) IN GENERAL- There are hereby appropriated to the Health Care Workforce Trust Fund--

`(A) amounts equivalent to the net revenues received in the Treasury from the fees imposed under subchapter B of chapter 34 (relating to fees on health insurance and health-related administrative services);

`(B) subject to paragraph (2), from the Federal Hospital Insurance Trust Fund (established under section 1817 of the Social Security Act) amounts determined by the Secretary of Health and Human Services to be equivalent to the reductions in payments made from such Trust Fund by virtue of the amendments made by the All-Payer Graduate Medical Education Act; and

`(C) subject to paragraph (2), from the Federal Supplementary Medical Insurance Trust Fund (established under section 1841 of the Social Security Act) amounts determined by the Secretary of Health and Human Services to be equivalent to the reductions in payments made from such Trust Fund by virtue of the amendments made by the All-Payer Graduate Medical Education Act.

(2) LIMITATION ON TRANSFERS FROM MEDICARE TRUST FUNDS- If the sum of the amounts otherwise transferred (but for this paragraph) under subparagraph (B) and (C) of paragraph (1) for a fiscal year would exceed $300,000,000, the amounts so transferred under each respective subparagraph shall be reduced in a pro-rated manner so that the total so transferred is equal to $300,000,000.

`(c) EXPENDITURES FROM FUND- Amounts in the Health Care Workforce Trust Fund are available to the Secretary of Health and Human Services for making payments under sections 111 and 401 of the All-Payer Graduate Medical Education Act.

`(d) NET REVENUES- For purposes of this section, the term `net revenues' means the amount estimated by the Secretary based on the excess of--

`(1) the fees received in the Treasury under subchapter B of chapter 34, over

`(2) the decrease in the tax imposed by chapter 1 resulting from the fees imposed by such subchapter.'.

(b) CLERICAL AMENDMENT- The table of sections for such subchapter A is amended by adding at the end thereof the following new item:

`Sec. 9511. Health Care Workforce Trust Fund.'.

SEC. 102. FINANCING FOR FUND; FEES ON INSURED AND SELF-INSURED HEALTH PLANS.

(a) GENERAL RULE- Chapter 34 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter:

`Subchapter B--Insured and Self-Insured Health Plans

`Sec. 4375. Health insurance and health-related administrative services.

`Sec. 4376. Self-insured health plans.

`Sec. 4377. Definitions and special rules.

`SEC. 4375. HEALTH INSURANCE AND HEALTH-RELATED ADMINISTRATIVE SERVICES.

`(a) IMPOSITION OF FEE- There is hereby imposed--

`(1) on each specified health insurance policy, a fee equal to 1 percent of the premiums received under such policy, and

`(2) on each amount received for health-related administrative services, a fee equal to 1 percent of the amount so received.

`(b) LIABILITY FOR FEE-

`(1) HEALTH INSURANCE- The fee imposed by subsection (a)(1) shall be paid by the issuer of the policy.

`(2) HEALTH-RELATED ADMINISTRATIVE SERVICES- The fee imposed by subsection (a)(2) shall be paid by the person providing the health-related administrative services.

`(c) SPECIFIED HEALTH INSURANCE POLICY- For purposes of this section--

`(1) IN GENERAL- Except as otherwise provided in this section, the term `specified health insurance policy' means any accident or health insurance policy issued with respect to individuals residing in the United States.

`(2) EXEMPTION OF CERTAIN POLICIES- The term `specified health insurance policy' does not include any insurance policy if substantially all of the coverage provided under such policy relates to--

`(A) liabilities incurred under workers' compensation laws,

`(B) tort liabilities,

`(C) liabilities relating to ownership or use of property,

`(D) credit insurance, or

`(E) such other similar liabilities as the Secretary may specify by regulations.

`(3) SPECIAL RULE WHERE POLICY PROVIDES OTHER COVERAGE- In the case of any specified health insurance policy under which amounts are payable other than for accident and health coverage, in determining the amount of the fee imposed by subsection (a)(1) on any premium received under such policy, there shall be excluded the amount of the charge for the non-accident and health coverage if--

`(A) the charge for such non-accident and health coverage is either separately stated in the policy, or furnished to the policyholder in a separate statement, and

`(B) such charge is reasonable in relation to the total charges under the policy.

In any other case, the entire amount of the premium received under such a policy shall be subject to the fees under subsection (a)(1).

`(4) TREATMENT OF PREPAID HEALTH COVERAGE ARRANGEMENTS-

`(A) IN GENERAL- In the case of any arrangement described in subparagraph (B)--

`(i) such arrangement shall be treated as a specified health insurance policy,

`(ii) the payments or premiums referred to in subparagraph (B)(i) shall be treated as premiums received for a specified health insurance policy, and

`(iii) the person referred to in subparagraph (B)(i) shall be treated as the issuer.

`(B) DESCRIPTION OF ARRANGEMENTS- An arrangement is described in this subparagraph if under such arrangement--

`(i) fixed payments or premiums are received as consideration for any person's agreement to provide or arrange for the provision of accident or health coverage to residents of the United States, regardless of how such coverage is provided or arranged to be provided, and

`(ii) substantially all of the risks of the rates of utilization of services is assumed by such person or the provider of such services.

`(d) HEALTH-RELATED ADMINISTRATIVE SERVICES- For purposes of this section, the term `health-related administrative services' means--

`(1) the processing of claims or performance of other administrative services in connection with accident or health coverage under a specified health insurance policy if the charge for such services is not included in the premiums under such policy, and

`(2) processing claims, arranging for provision of accident or health coverage, or performing other administrative services in connection with an applicable self-insured health plan (as defined in section 4376(c)) established or maintained by another person.

`SEC. 4376. SELF-INSURED HEALTH PLANS.

`(a) IMPOSITION OF FEE- In the case of any applicable self-insured health plan, there is hereby imposed a fee for each month equal to 1 percent of the sum of--

`(1) the accident and health coverage expenditures for such month under such plan, and

`(2) the direct administrative expenditures for such month under such plan.

`(b) LIABILITY FOR FEE-

`(1) IN GENERAL- The fee imposed by subsection (a) shall be paid by the plan sponsor.

`(2) PLAN SPONSOR- For purposes of paragraph (1) the term `plan sponsor' means--

`(A) the employer in the case of a plan established or maintained by a single employer,

`(B) the employee organization in the case of a plan established or maintained by an employee organization,

`(C) in the case of--

`(i) a plan established or maintained by 2 or more employers or jointly by 1 or

more employers and 1 or more employee organizations,

`(ii) a multiple employer welfare arrangement, or

`(iii) a voluntary employees' beneficiary association described in section 501(c)(9),

the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan, or

`(D) the cooperative or association described in subsection (c)(2)(F) in the case of a plan established or maintained by such a cooperative or association.

`(c) APPLICABLE SELF-INSURED HEALTH PLAN- For purposes of this section, the term `applicable self-insured health plan' means any plan for providing accident or health coverage if--

`(1) any portion of such coverage is provided other than through an insurance policy, and

`(2) such plan is established or maintained--

`(A) by one or more employers for the benefit of their employees or former employees,

`(B) by one or more employee organizations for the benefit of their members or former members,

`(C) jointly by 1 or more employers and 1 or more employee organizations for the benefit of employees or former employees,

`(D) by a voluntary employees' beneficiary association described in section 501(c)(9),

`(E) by any organization described in section 501(c)(6), or

`(F) in the case of a plan not described in the preceding subparagraphs, by a multiple employer welfare arrangement (as defined in section 3(40) of Employee Retirement Income Security Act of 1974), a rural electric cooperative (as defined in section 3(40)(B)(iv) of such Act), or a rural telephone cooperative association (as defined in section 3(40)(B)(v) of such Act).

`(d) ACCIDENT AND HEALTH COVERAGE EXPENDITURES- For purposes of this section--

`(1) IN GENERAL- The accident and health coverage expenditures of any applicable self-insured health plan for any month is the aggregate expenditures for such month for accident and health coverage provided under such plan to the extent such expenditures are not subject to the fees under section 4375.

`(2) TREATMENT OF REIMBURSEMENTS- In determining accident and health coverage expenditures during any month of any applicable self-insured health plan, reimbursements (by insurance or otherwise) received during such month for accident and health coverage expenditures shall be taken into account as a reduction in accident and health coverage expenditures.

`(3) CERTAIN EXPENDITURES DISREGARDED- Paragraph (1) shall not apply to any expenditure for the acquisition or improvement of land or for the acquisition or improvement of any property to be used in connection with the provision of accident and health coverage which is subject to the allowance under section 167, except that, for purposes of paragraph (1), allowances under section 167 shall be considered as expenditures.

`(e) DIRECT ADMINISTRATIVE EXPENDITURES- For purposes of this section, the term `direct administrative expenditures' means the administrative expenditures under the plan to the extent such expenditures are not subject to the fees under section 4375. In determining the amount of such expenditures, rules similar to the rules of subsection (d)(3) shall apply.

`SEC. 4377. DEFINITIONS AND SPECIAL RULES.

`(a) DEFINITIONS- For purposes of this subchapter--

`(1) ACCIDENT AND HEALTH COVERAGE- The term `accident and health coverage' means any coverage which, if provided by an insurance policy, would cause such policy to be a specified health insurance policy (as defined in section 4375(c)).

`(2) INSURANCE POLICY- The term `insurance policy' means any policy or other instrument whereby a contract of insurance is issued, renewed, or extended.

`(3) PREMIUM- The term `premium' means the gross amount of premiums and other consideration (including advance premiums, deposits, fees, and assessments) arising from policies issued by a person acting as the primary insurer, adjusted for any return or additional premiums paid as a result of endorsements, cancellations, audits, or retrospective rating.

`(4) UNITED STATES- The term `United States' includes any possession of the United States.

`(b) TREATMENT OF GOVERNMENTAL ENTITIES-

`(1) IN GENERAL- For purposes of this subchapter--

`(A) the term `person' includes any governmental entity, and

`(B) notwithstanding any other law or rule of law, governmental entities shall not be exempt from the fees imposed by this subchapter except as provided in paragraph (2).

`(2) TREATMENT OF EXEMPT GOVERNMENTAL PROGRAMS- In the case of an exempt governmental program--

`(A) no fee shall be imposed under section 4375 on any premium received pursuant to such program or on any amount received for health-related administrative services pursuant to such program, and

`(B) no fee shall be imposed under section 4376 on any expenditures pursuant to such program.

`(3) EXEMPT GOVERNMENTAL PROGRAM DEFINED- For purposes of this subchapter, the term `exempt governmental program' means--

`(A) the insurance programs established by parts A, B, and C of title XVIII of the Social Security Act,

`(B) the medical assistance program established by title XIX or XXI of the Social Security Act,

`(C) any program established by Federal law for providing medical care (other than through insurance policies) to individuals (or the spouses and dependents thereof) by reason of such individuals being--

`(i) members of the Armed Forces of the United States, or

`(ii) veterans, and

`(D) any program established by Federal law for providing medical care (other than through insurance policies) to members of Indian tribes (as defined in section 4(d) of the Indian Health Care Improvement Act).

`(c) TREATMENT AS TAX- For purposes of subtitle F, the fees imposed by this subchapter shall be treated as if they were taxes.

`(d) NO COVER OVER TO POSSESSIONS- Notwithstanding any other provision of law, no amount collected under this subchapter shall be covered over to any possession of the United States.'

(b) CLERICAL AMENDMENT- Chapter 34 of such Code is amended by striking the chapter heading and inserting the following:

`CHAPTER 34--TAXES ON CERTAIN INSURANCE POLICIES

`Subchapter A. Policies issued by foreign insurers.

`Subchapter B. Insured and self-insured health plans.

`Subchapter A--Policies Issued By Foreign Insurers'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply with respect to premiums received and expenses incurred after December 31, 1999.

Subtitle B--Additional Payments to Teaching Hospitals

SEC. 111. FORMULA PAYMENTS REGARDING PRIVATE-SECTOR SHARE OF COSTS OF GRADUATE MEDICAL EDUCATION.

(a) IN GENERAL- In the case of each teaching hospital that in accordance with section 112 submits to the Secretary an application for calendar year 2002 or any subsequent calendar year (referred to in this title as an `eligible hospital' for the year involved), the Secretary shall in accordance with section 113 make payments for such year to the hospital.

(b) DEFINITIONS- For purposes of this subtitle, the term `teaching hospital' means any hospital that operates an approved medical residency training program (as defined in section 1886(h)(5)(A) of the Social Security Act).

SEC. 112. APPLICATION FOR PAYMENTS.

(a) IN GENERAL- For purposes of section 111(a), an application for payments under such section for a calendar year is in accordance with this section if--

(1) the application is submitted not later than the date specified by the Secretary;

(2) the application contains the agreements required in this subtitle; and

(3) the application is in such form, is made in such manner, and contains such agreements, assurances, and information as the Secretary determines to be necessary to carry out this subtitle, including the assurance described in subsection (b).

(b) ASSURANCE REGARDING USE OF DIRECT GRADUATE MEDICAL EDUCATION FUNDS IN SUPPORT OF TEACHING PHYSICIANS- The assurance described in this subsection is an assurance that at least 20 percent of the funds provided to the hospital under section 113(a)(1) (relating to direct graduate medical education funding) is expended to compensate physicians for their time spent in teaching residents in an approved medical residency training program.

SEC. 113. ANNUAL AMOUNT OF PAYMENTS.

(a) IN GENERAL- From amounts in the Health Care Workforce Trust Fund under section 9511 of the Internal Revenue Code of 1986, the Secretary shall make payments under section 111 to an eligible hospital for a calendar year as follows:

(1) Payments, made on a periodic basis, whose sum is equal to the amount determined under subsection (c) for the hospital for the year (which amount relates to the direct costs for graduate medical education attributable to certain individuals).

(2) Payments (in addition to payments under paragraph (1)), made on a periodic basis, whose sum is equal to the amount determined under subsection (d) for the hospital for the year (which amount relates to the per-discharge indirect costs of the hospital for graduate medical education attributable to certain individuals).

(b) EFFECTIVE DATES FOR PAYMENTS- Payments under paragraph (1) of subsection (a) are effective for portions of cost reporting periods occurring on or after January 1, 2001. Payments under paragraph (2) of such subsection are effective for patient discharges occurring on or after such date.

(c) AMOUNT OF PAYMENTS; DIRECT COSTS-

(1) IN GENERAL- For purposes of paragraph (1) of subsection (a), the amount determined under this subsection for an eligible hospital for a calendar year is the product of--

(A) the aggregate nonmedicare training amount for the hospital, as defined in paragraph (2); and

(B) the direct-cost Fund payout percentage, as defined in paragraph (4).

(2) AGGREGATE NONMEDICARE TRAINING AMOUNT- For purposes of this subtitle, the term `aggregate nonmedicare training amount', with respect to the eligible hospital involved, means (subject to paragraph (3)(D)) an amount equal to the product of subparagraphs (A) and (B), as follows:

(A) The number of full-time-equivalent training participants in the approved physician training programs of the hospital for the academic year in which the calendar year begins, not to exceed the maximum total number permitted under section 1886(h)(4)(F) of the Social Security Act.

(B) An amount equal to the product of--

(i) the national average FTE wage-related compensation, as defined in paragraph (3); and

(ii) a percentage equal to the fraction of the total inpatient hospital and outpatient hospital revenues (as established by the Secretary) during the cost reporting period which are attributable to patients with respect to whom payment may be made under health insurance coverage (whether through a group health plan or otherwise) or under a group health plan.

For purposes of clause (ii), payment made under the medicare or medicaid programs (under titles XVIII or XIX of the Social Security Act) shall not be treated as payment under health insurance coverage.

(3) NATIONAL AVERAGE FTE WAGE-RELATED COMPENSATION-

(A) IN GENERAL- For purposes of this subtitle, the term `national average FTE wage-related compensation' means the national average of the costs of resident salaries and related fringe benefits per training participant for all approved physician training programs and all medical specialities, as adjusted under subparagraphs (B) and (C). Such national average shall be based upon a national resident wage survey for salaries and related fringe benefits as of July 1, 1998, as determined by the Secretary and shall not include costs of overhead or supervision.

(B) ANNUAL ADJUSTMENTS PER CONSUMER PRICE INDEX- The national average applicable under subparagraph (A) for a calendar year for such programs is, subject to subparagraph (C), the amount determined under subparagraph (A) increased by the estimated percentage change in the consumer price index from January 1999 through the midpoint of the year involved, with appropriate adjustments to reflect previous under- or over-estimations under this subparagraph in the projected percentage change in the consumer price index.

(C) INDIVIDUAL ADJUSTMENTS PER AREA WAGE INDEX- The national average determined under subparagraph (A) and adjusted under subparagraph (B) for a calendar year shall, in the case of the approved physician training programs of the eligible hospital involved, be adjusted by a factor to reflect regional differences in wage and wage-related costs, as determined in accordance with the area wage index applicable (as of the beginning of such year) to hospitals in the labor-market area involved, as determined under section 1886(d)(3)(E) of the Social Security Act.

(D) ALTERNATIVE RULE FOR CERTAIN HOSPITALS-

(i) ELECTION FOR APPLICABILITY OF RULE- In the case of an eligible hospital for which the election under section 1861(b)(7) of the Social Security Act was in effect on July 1, 1998, and has remained in effect continuously from such date, the following applies:

(I) The hospital may, with respect to the determination under paragraph (2) of the aggregate nonmedicare training amount for the hospital, elect to have the alternative rule described in clause (ii) applied to the hospital.

(II) If the election under such section 1861(b)(7) ceases to be in effect, any election made by the hospital under subclause (I) is terminated.

(III) If the hospital has made the election under subclause (I) and subsequently requests that the election be terminated, the Secretary shall approve the request. Upon the approval of the request, the hospital may not subsequently elect to have the alternative rule applied to the hospital.

(ii) DESCRIPTION OF ALTERNATIVE RULE- With respect to a determination under paragraph (2) of the aggregate nonmedicare training amount for an eligible hospital that has made the election under clause (i), the alternative rule described in this clause is as follows:

(I) In lieu of the applicability of the national FTE training amount (for purposes of paragraph (2)(B)(i)), the Secretary shall apply an amount equal to the approved FTE resident amount in effect for the hospital

under section 1886(h)(2) of the Social Security Act.

(II) Subject to the modification applied under subclause (I), the Secretary shall determine an amount under paragraph (2).

(III) The Secretary shall determine an amount equal to the product of the fraction determined under paragraph (2)(B)(ii) and the amount of the physician costs of services recognized under section 1861(v)(1) of the Social Security Act pursuant to the election of the hospital under section 1861(b)(7) of such Act.

(IV) In lieu of the applicability of the aggregate nonmedicare training amount (for purposes of paragraph (1)(A)), the Secretary shall apply an amount equal to the sum of the amount determined under subclause (II) and the amount determined under subclause (III).

(4) DIRECT-COST FUND PAYOUT PERCENTAGE- For purposes of this subtitle, the term `direct-cost Fund payout percentage', with respect to the calendar year involved, means a percentage equal to the ratio of--

(A) the amount available in the Health Care Workforce Trust Fund for such year (as estimated by the Secretary); to

(B) an amount equal to the total amount of payments under subsection (a)(1) that would be made to eligible hospitals for such year if each hospital received, pursuant to paragraph (1), 100 percent of the aggregate nonmedicare training amount determined for the hospital.

(d) AMOUNT OF PAYMENTS; INDIRECT COSTS-

(1) IN GENERAL- For purposes of paragraph (2) of subsection (a), the amount determined under this subsection for an eligible hospital for a calendar year is the product of--

(A) an amount equal to the sum of the nonmedicare per-discharge supplemental payments, as defined in paragraph (2); and

(B) the indirect-cost Fund payout percentage, as defined in paragraph (3).

(2) NONMEDICARE PER-DISCHARGE SUPPLEMENTAL PAYMENT-

(A) IN GENERAL- For purposes of this subtitle, the term `nonmedicare per-discharge supplemental payment', with respect to a calendar year, means a payment made to an eligible hospital for a discharge during the year of a patient described in subparagraph (B), the amount of which payment is determined in accordance with subparagraph (C).

(B) RELEVANT PATIENTS- For purposes of subparagraph (A), a patient described in this subparagraph is a patient who is not--

(i) entitled to benefits under part A of title XVIII of the Social Security Act; or

(ii) eligible for medical assistance under title XIX of such Act.

(C) AMOUNT OF PER-DISCHARGE PAYMENT- For purposes of subparagraph (A), the amount of the payment under such subparagraph for the discharge of a patient described in subparagraph (B) is the product of--

(i) the amount which would be determined with respect to the discharge under section 1886(d)(1)(A)(iii) of the Social Security Act if the patient were entitled to benefits under part A of title XVIII of such Act, adjusted by the Secretary to take into account differences in health status, utilization of services, and other demographic characteristics among individuals entitled to benefits under part A of title XVIII of such Act and individuals who are not so entitled; and

(ii) the percentage applicable to the hospital under section 1886(d)(5)(B)(ii) of such Act.

(D) SPECIAL RULE FOR CERTAIN HOSPITALS- In the case of a hospital that is located in a State for which a demonstration program under section 1814(b)(3) of the Social Security Act is in effect, the Secretary shall, for purposes of applying subparagraph (C) to discharges from the hospital, make determinations under such subparagraph as if paragraphs (1)(A)(iii) and (5)(B)(ii) of section 1886(d) of such Act applied to the hospital.

(3) INDIRECT-COST FUND PAYOUT PERCENTAGE- For purposes of this subtitle, the term `indirect-cost Fund payout percentage', with respect the calendar year involved, means a percentage equal to the ratio of--

(A) the amount available in the Health Care Workforce Trust Fund for such year remaining after payments for the year have been made under subsection (a)(1) (as such amount is estimated by the Secretary); to

(B) the total amount of payments under subsection (a)(2) that would be made to eligible hospitals for such year if each hospital received, pursuant to paragraph (1), 100 percent of an amount equal to the sum of the nonmedicare per-discharge supplemental payments determined for the hospital.

(e) DEFINITIONS- For purposes of this subtitle, the term `full-time-equivalent training participant' means a full-time equivalent resident of the hospital as determined under section 1886(h)(4) of the Social Security Act for the cost reporting period involved.

SEC. 114. DEFINITIONS.

For purposes of this subtitle:

(1) The term `aggregate nonmedicare training amount' has the meaning given such term in section 113(c)(2).

(2) The term `direct-cost Fund payout percentage' has the meaning given such term in section 113(c)(4).

(3) The term `full-time-equivalent training participant' has the meaning given such term in section 113(e).

(4) The term `indirect-cost Fund payout percentage' has the meaning given such term in section 113(d)(3).

(5) The term `national average FTE wage-related compensation' has the meaning given such term in section 113(c)(3).

(6) The term `nonmedicare per-discharge supplemental payment' has the meaning given such term in section 113(d)(2).

(7) The term `Secretary' means the Secretary of Health and Human Services, unless the context of usage indicates otherwise.

(8) The term `teaching hospital' has the meaning given such term in section 111(b).

SEC. 115. STUDY.

(a) STUDY- The Secretary of Health and Human Services shall conduct a study of the impact of this subtitle.

(b) REPORT- Not later than 5 years after the date that payments are first made under this subtitle, the Secretary shall submit to Congress a report on such study and shall include such recommendations on the continuation of payments under this subtitle, and such changes in such payments, as the Secretary deems appropriate.

Subtitle C--Conforming Changes in Medicare Payment for Direct Costs of Graduate Medical Education

SEC. 121. CHANGES IN MEDICARE FORMULA FOR PAYMENT OF DIRECT GME COSTS.

(a) USE OF NATIONAL AVERAGE FTE WAGE-RELATED COMPENSATION AS BASIS FOR PAYMENT- Section 1886(h)(3)(B)(i) of the Social Security Act (42 U.S.C. 1395ww(h)(3)(B)(i)) is amended by inserting `(or, for portions of cost reporting periods occurring on or after January 1, 2001, in the case of a hospital that does not have in effect the election described in section 113(c)(3)(D)(i) of the All-Payer Graduate Medical Education Act, the applicable national average FTE wage-related compensation, as determined under section 113(c)(3) of such Act)' after `for that period'.

(b) ALLOCATION BASED ON MEDICARE REVENUES- Section 1886(h)(3) of such Act (42 U.S.C. 1395ww(h)(3)) is amended--

(1) in subparagraph (C), by inserting before the period at the end the following: `, or, for portions of a cost reporting period occurring on or after January 1, 2001, in the case of a hospital that does not have in effect the election described in section 113(c)(3)(D)(i) of the All-Payer Graduate Medical Education Act, the fraction of the total inpatient hospital and outpatient hospital revenues (as established by the Secretary) during the reporting period which is attributable to patients with respect to whom payment may be made under this title'; and

(2) in subparagraph (D)(i)(II), by inserting before the period at the end the following: `or, for portions of a cost reporting period occurring on or after January 1, 2001, in the case of a hospital that does not have in effect the election described in section 113(c)(3)(D)(i) of the All-Payer Graduate Medical Education Act, the fraction of the total inpatient hospital and outpatient hospital revenues (as established by the Secretary) during the reporting period which is attributable to such enrolled individuals'.

(c) REQUIREMENT FOR ASSURANCE REGARDING USE OF DIRECT GRADUATE MEDICAL EDUCATION FUNDS IN SUPPORT OF TEACHING PHYSICIANS- Section 1886(h)(1) of the Social Security Act (42 U.S.C. 1395ww(h)(1)) is amended by adding at the end the following: `The Secretary shall not make any payments to a hospital under this subsection unless the Secretary receives satisfactory assurances that at least 20 percent of the payments so made are expended to compensate physicians for their time spent in teaching residents.'.

(d) EFFECTIVE DATE- The amendments made by this section apply to portions of cost reporting periods occurring on or after January 1, 2001.

SEC. 122. EXCEPTION FROM LIMITATION ON NUMBER OF RESIDENTS FOR RURAL AND UNDERSERVED URBAN AREAS.

(a) IN GENERAL- Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended--

(1) in subsection (d)(5)(B), by adding at the end the following: `The Secretary shall provide for reasonable exemptions and exceptions from the previous sentence in the case of a hospital that has residents who are assigned to serve a rural area or an urban underserved area.'; and

(2) in subsection (h)(4)(F), by adding at the end the following: `The Secretary shall provide for reasonable exemptions and exceptions from the previous sentence in the case of a hospital that has residents who are assigned to serve a rural area or an urban underserved area.'.

(b) EFFECTIVE DATES- The amendments made by--

(1) subsection (a)(1) apply to discharges occurring on or after January 1, 2000; or

(2) subsection (a)(2) apply to cost reporting periods beginning on or after January 1, 2000.

SEC. 123. STUDY ON APPROPRIATE LEVELS OF DOCUMENTATION FOR PROFESSIONAL SERVICES OF TEACHING PHYSICIANS.

(a) IN GENERAL- The Secretary of Health and Human Services shall, in collaboration with the Institute of Medicine and the Association of American Medical Colleges, conduct a study of the appropriateness of the level of documentation that should be required, as a condition of payment under part B of the medicare program for professional services of a teaching physician, in a patient's medical record of the services provided by that physician.

(b) REPORT- Not later than 2 years after the date of the enactment of this Act, the Secretary shall submit a report on the study under subsection (a) to the Committees on Ways and Means and Commerce of the House of Representatives and the Committee on Finance of the Senate.

TITLE II--HEALTH WORKFORCE PRIORITIES

SEC. 201. PLAN TO REDUCE RESIDENCY TRAINING POSITIONS.

(a) IN GENERAL- Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall develop a plan to reduce, beginning with the residency year that begins July 1, 2005, the number of first year training positions in medical residency training programs in the United States to 110 percent of the annual number of students graduating from a medical school in the United States.

(b) MONITORING DISTRIBUTION- In implementing the plan under this section, the Secretary shall monitor the distribution of resident specialties in order to assure that there is an adequate proportion of primary care physicians to fulfill the country's needs and to ensure access to health care for underserved populations.

(c) IMPLEMENTATION- In implementing the plan under this section, the Secretary shall take into consideration the reduced revenues to affected hospitals and shall develop a formula to restore to such hospitals a portion of the funds that would have been expended had the plan under this section not been in effect.

(d) CONSULTATION- The plan under this section shall be developed in conjunction with the Institute of Medicine, the Council on Graduate Medical Education, the Association of American Medical Colleges, the American Hospital Association, the American Medical Association, the American Osteopathic Association, and other organizations deemed appropriate by the Secretary.

(e) REPORT TO CONGRESS- Not later than 1 year after the date of the enactment of this Act, the Secretary shall submit to the Committee on Ways and Means in the House of Representatives, and to the Committee on Finance in the Senate, a report on the plan developed under this section.

(f) ENFORCEMENT-

(1) IN GENERAL- Notwithstanding any other provision of law, but subject to paragraph (2), for purposes of computing the amount of payment to be made under subsection (d)(5)(B) or (h) of section 1886 of the Social Security Act (42 U.S.C. 1395ww) for any hospital that the Secretary determines has a medical residency training program in which the number of first year residents exceeds the maximum number permitted for such program under the plan implemented under subsection (a), the number of residents counted shall be reduced by 5 multiplied by the number of such excess.

(2) EXCEPTION FOR HOSPITALS ELECTIVE ALTERNATIVE TREATMENT- Paragraph (1) does not apply to a hospital for which the election under section 1861(b)(7) of the Social Security Act was in effect on July 1, 1998.

TITLE III--MODIFICATION IN MEDICARE PAYMENT FOR IME AND DSH

SEC. 301. MODIFICATION REGARDING PAYMENTS FOR INDIRECT COSTS OF GRADUATE MEDICAL EDUCATION.

(a) MODIFICATION FROM 5.5% TO 4.8%- Section 1886(d)(5)(B)(ii) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended--

(1) by striking `and' at the end of subclause (IV),

(2) by amending subclause (V) to read as follows:

`(V) during fiscal year 2001, `c' is equal to 1.35; and'; and

(3) by adding at the end the following:

`(VI) on or after October 1, 2001, `c' is equal to 1.18.'.

(B) REPORTING OF IME PAYMENTS- The Secretary of Health and Human Services, in collaboration with the Institute of Medicine, the Council on Graduate Medical Education, the Association of American Medical Colleges, the American Hospital Association, and other organizations deemed appropriate by the Secretary, shall develop and implement a plan for hospitals that receive additional payments under section 1886(d)(5)(B) of the Social Security Act to report annually to the Secretary information on how such hospitals contributed to education, improvements in clinical services and research infrastructure, and community services operated by or in such hospitals. The first such report shall be submitted for cost reporting periods beginning during fiscal year 2002.

SEC. 302. MODIFICATION OF DSH.

(a) COLLECTION OF CHARGE DATA- Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended by adding at the end the following new clause:

`(x) The Secretary shall collect from all subsection (d) hospitals annual data on inpatient and outpatient charges, including all such charges--

`(I) for all patients;

`(II) for patients who are eligible for benefits (excluding any State supplementation) under the

supplemental security income program under title XVI and entitled to benefits under part A;

`(III) for patients who are entitled to (or, if they applied, would be eligible for) medical assistance under title XIX;

`(IV) for patients who are beneficiaries of indigent care programs sponsored by State or local governments; and

`(V) to the extent that payment is not made because of an inability of the patient to pay (or have payment made on the patient's behalf for) such charges.'.

(b) REVISION OF FORMULA FOR DISPROPORTIONATE PATIENT PERCENTAGE- Clause (vi) of such section is amended to read as follows:

`(vi) In this subparagraph, the term `disproportionate patient percentage' means, with respect to a cost reporting period of a hospital--

`(I) the charges described in subclauses (II) through (V) of clause (x) for such period; divided by

(II) the charges described in clause (x)(I) for such period.'.

(c) ESTABLISHING GENERAL QUALIFYING DISPROPORTIONATE PATIENT PERCENTAGE THRESHOLD TO COVER HALF OF PPS HOSPITALS- Clause (v) of such section is amended by striking `equals, or exceeds--' and all that follows and inserting `equals or exceeds a threshold percentage, which is established by the Secretary in a manner so that, if the amendments made by section 302 of the All-Payer Graduate Medical Education Act had been in effect for cost reporting periods ending in fiscal year 2000, 50 percent of subsection (d) hospitals would have been eligible for an additional payment under this subparagraph for such periods. The Secretary shall establish such threshold percentage based upon data collected by the Secretary under clause (x) for such cost reporting periods.'.

(d) ESTABLISHING UNIFORM GENERAL PAYMENT FORMULA- Such section is further amended--

(1) in clause (iv), by striking `and that--' and all that follows and inserting `is equal to (P-T)(CF), where--

`(I) `P' is the hospital's disproportionate patient percentage (as defined in clause (vi));

`(II) `T' is equal to the threshold percentage established by the Secretary under clause (v); and

`(III) `CF' is equal to such conversion factor as the Secretary may establish so that, applying such conversion factor as if the amendments made by section 302 of the All-Payer Graduate Medical Education Act had been in effect for cost reporting periods ending in fiscal year 2000, the total of the additional payments that would have been made under this subparagraph is equal to the total of the payments actually made under this subparagraph (not taking into account such amendments).

The Secretary shall establish the conversion factor under subclause (III) based upon data collected by the Secretary under clause (x) for cost reporting periods ending in fiscal year 2000.'; and

(2) by striking clauses (vii) and (viii).

(e) CARVING OUT DSH PAYMENTS FROM PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS AND PAYING THE AMOUNTS DIRECTLY TO DSH HOSPITALS TREATING MEDICARE+CHOICE ENROLLEES-

(1) IN GENERAL- Section 1853(c)(3) of the Social Security Act (42 U.S.C. 1395w-23(c)(3)) is amended--

(A) in subparagraph (A), by striking `subparagraph (B)' and inserting `subparagraphs (B) and (D)';

(B) by redesignating subparagraph (D) as subparagraph (E); and

(C) by inserting after subparagraph (C) the following new subparagraph:

`(D) REMOVAL OF PAYMENTS ATTRIBUTABLE TO DISPROPORTIONATE SHARE PAYMENTS FROM CALCULATION OF ADJUSTED AVERAGE PER CAPITA COST-

`(i) IN GENERAL- In determining the area-specific Medicare+Choice capitation rate under subparagraph (A) for a year (beginning with 2002), the annual per capita rate of payment for 1998 determined under section 1876(a)(1)(C) shall be adjusted, subject to clause (ii) to exclude from the rate the additional payments that the Secretary estimates were payment during 1997 for additional payments described in section 1886(d)(5)(F).

`(ii) TREATMENT OF PAYMENTS COVERED UNDER STATE HOSPITAL REIMBURSEMENT SYSTEM- To the extent that the Secretary estimates that an annual per capita rate of payment for 1997 described in clause (i) reflects payments to hospitals reimbursed under section 1814(b)(3), the Secretary shall estimate a payment adjustment that is comparable to the payment adjustment that would have been made

under clause (i) if the hospitals had not been reimbursed under such section.'.

(2) ADDITIONAL PAYMENTS FOR MANAGED CARE ENROLLEES- Section 1886(d)(5)(F) of such Act ((42 U.S.C. 1395ww(d)(5)(F)) is amended--

(A) in clause (ii), by striking `clause (ix)' and inserting `clauses (ix) and (x)', and

(B) by adding at the end the following:

`(ix)(I) For portions of cost reporting periods occurring on or after January 1, 2002, the Secretary shall provide for an additional payment amount for each applicable discharge of any subsection (d) hospital that is a disproportionate share hospital (as described in clause (i)).

`(II) For purposes of this clause, the term `applicable discharge' means the discharge of any individual who is enrolled under a risk-sharing contract with an eligible organization under section 1876 and who is entitled to benefits under part A or any individual who is enrolled with a Medicare+Choice organization under part C.

`(III) The amount of the payment under this clause with respect to any applicable discharge shall be equal to the estimated average per discharge amount that would otherwise have been paid under this subparagraph if the individuals had not been enrolled as described in subclause (II).

`(IV) The Secretary shall establish rules for an additional payment amount, for any hospital reimbursed under a reimbursement system authorized under section 1814(b)(3) if such hospital would qualify as a disproportionate share hospital under clause (i) were it not so reimbursed. Such payment shall be determined in the same manner as the amount of payment is determined under this clause for disproportionate share hospitals.'.

(e) EFFECTIVE DATE- The amendments made by subsections (a) through (d) of this section apply to payments for discharges occurring on or after January 1, 2002.

TITLE IV--ADDITIONAL PAYMENTS FOR GRADUATE EDUCATION FOR NON-PHYSICIAN HEALTH PROFESSIONALS

SEC. 401. PAYMENTS FOR GRADUATE EDUCATION FOR NON-PHYSICIAN HEALTH PROFESSIONALS.

(a) DEVELOPMENT OF PLAN-

(1) IN GENERAL- Not later than 3 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall develop (and submit to Congress a report on) a plan to provide support to institutions that provide graduate health care education for non-physician health professionals.

(2) CONSULTATION- The Secretary shall develop the plan in consultation with the Council on Graduate Medical Education, the Institute of Medicine, the American Hospital Association, the Association of American Medical Colleges, the American Association of Colleges of Nursing, the American Nurses Association, the American Physical Therapy Association, the American Occupational Therapy Association, the American Speech-Language-Hearing Association, and other organizations as deemed appropriate by the Secretary.

(b) PAYMENTS- For each fiscal year, beginning with first fiscal year that begins after the report under subsection (a) has been submitted to Congress, the Secretary of Health and Human Services shall provide from the Health Care Workforce Trust Fund (established under section 9511 of the Internal Revenue Code of 1986) for support in the aggregate amount of $300,000,000 for institutions providing graduate health care education for non-physician health professionals. Such support shall be provided under such terms and conditions as the Secretary establishes in order to carry out the plan developed under subsection (a).

END