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SEC. 105. GRADUATE MEDICAL EDUCATION TECHNICAL AMENDMENTS.

(a) INDIRECT GRADUATE MEDICAL EDUCATION ADJUSTMENT-

(1) IN GENERAL- Section 1886(d)(5)(B)(v) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(v)) is amended to read as follows:

`(v)(I) In determining the adjustment with respect to a hospital that sponsors more than one allopathic or osteopathic residency training program for discharges occurring on or after October 1, 1997, the total number of full-time equivalent interns and residents in the fields of allopathic and osteopathic medicine in either a hospital or nonhospital setting may not exceed the number of such full-time equivalent interns and residents who participated, or who but for an approved leave would have participated, in the hospital's approved medical residency training programs for the hospital's most recent cost reporting period ending on or before December 31, 1996.

`(II) In determining the adjustment with respect to a hospital that sponsors only one allopathic or osteopathic residency program for discharges occurring on or after October 1, 1997, the total number of full-time equivalent interns and residents in the fields of allopathic and osteopathic medicine who participated, or who but for an approved leave would have participated, in the hospital's medical residency training program may be increased by not more than one for any calendar year, and may not exceed a total of three more than the number appointed in either a hospital or nonhospital setting for the hospital's most recent cost reporting period ending on or before December 31, 1996.'.

(2) TECHNICAL AMENDMENTS- Section 1886(d)(5)(B) of such Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by moving clauses (ii) and (vi) two ems to the left.

(b) DIRECT GRADUATE MEDICAL EDUCATION ADJUSTMENT-

(1) LIMITATION ON NUMBER OF RESIDENTS- Section 1886(h)(4)(F) of the Social Security Act (42 U.S.C. 1395ww(h)(4)(F)) is amended by inserting `who participated, or who but for an approved leave would have participated, in the hospital's medical residency training programs' after `may not exceed the number of such full-time equivalent residents'.

(2) FUNDING-

(A) NEW PROGRAMS- The first sentence of section 1886(h)(4)(H)(i) of such Act (42 U.S.C. 1935ww(h)(4)(H)(i)) is amended by inserting `and before September 30, 1999' after `January 1, 1995'.

(B) PROGRAMS MEETING RURAL NEEDS- The second sentence of such section is amended by striking the period at the end and inserting `, including facilities that are not located in an underserved rural area but have established separately accredited approved medical residency training programs in such an area.'.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect as if included in the enactment of the Balanced Budget Act of 1997.

SEC. 106. MEDICARE-DEPENDENT SMALL RURAL HOSPITALS.

(a) REDUCTION IN ELIGIBILITY DISCHARGE PERCENTAGE- Section 1886(d)(5)(G)(iv)(IV) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(G)(iv)(IV)) is amended by striking `60' and inserting `50'.

(b) REBASING FOR DISCHARGES DURING THE MOST CURRENT AUDITED FISCAL YEAR- Section 1886(b)(3)(D) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(D) is amended--

(1) in the second sentence, by striking `beginning during fiscal year 1987' and inserting `ending during fiscal year 1998'; and

(2) by adding at the end the following new sentence: `An increase in the target amount by reason of the previous sentence shall have no effect on the classification of a hospital as a medicare-dependent, small rural hospital.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply with respect to discharges occurring on or after October 1, 1999.

SEC. 107. GEOGRAPHIC RECLASSIFICATION FOR PURPOSES OF DSH PAYMENTS.

(a) IN GENERAL- Section 1886(d)(10)(C)(i) of the Social Security Act (42 U.S.C. 1395ww(d)(10)(C)(i)) is amended--

(1) by striking `or' at the end of subclause (I);

(2) by striking the period at the end of subclause (II) and inserting `, or'; and

(3) by adding at the end the following new subclause:

`(III) eligibility for and amount of additional payments under paragraph (5)(F).

In the case of a hospital with an application approved under subclause (I) to change the hospital's geographic classification for a fiscal year, such change in the hospital's geographic classification for that fiscal year shall apply to such hospital for purposes of subclause (III).'.

(b) APPLICABLE GUIDELINES- Section 1886(d)(10)(D) of such Act (42 U.S.C. 1395ww(d)(10)(D)) is amended--

(1) in clause (i), by adding at the end the following new subclause:

`(V) Guidelines for considering applications under subparagraph (C)(i)(III) of determining eligibility for and amount of additional payments under paragraph (5)(F).';

(2) by redesignating clause (iv) as clause (v);

(3) by inserting after clause (iii) the following new clause:

`(iv) Under the guidelines published by the Secretary under clause (i)(V), the Board shall not reject an application to change a hospital's geographic classification under subparagraph (C)(i)(I) because the change in the hospital's geographic classification for that fiscal year does not result in an increase in the average standardized amount for that hospital.'; and

(4) in clause (v), as so redesignated by paragraph (2)--

(A) by inserting `(I)' after `(v)';

(B) by striking `The' and inserting `Except as provided in subclause (II), the'; and

(C) by adding at the end the following new subclause:

`(II) The Secretary shall publish the guidelines described in subclause (V) of clause (i) by January 1, 2000.'.

(c) EFFECTIVE DATE- The amendments made by subsection (a) take effect on January 1, 2000, and apply with respect to applications for geographic reclassification submitted for cost reporting periods beginning on or after such date.

SEC. 108. REVISION OF GUIDELINES FOR GEOGRAPHIC RECLASSIFICATION BY WAGE INDEX.

(a) AVERAGE HOURLY WAGE WEIGHTED FOR OCCUPATIONAL MIX- Section 1886(d)(10)(D)(i)(I) of the Social Security Act (42 U.S.C. 1395ww(d)(10)(D)(i)(I)) is amended to read as follows:

`(I) Guidelines for comparing a hospital's average hourly wage to the average hourly wage of hospitals in the area in which the hospital is classified, guidelines for comparing a hospital's average hourly wage to the average hourly wage of hospitals in the area in which the hospital is applying to be classified, and guidelines for comparing a hospital's average hourly wage adjusted by the occupational mix of the area in which the hospital is applying to be classified to the average hourly wage of hospitals in such area.'.

(b) DATA COLLECTION REQUIREMENT- Section 1886(d)(10)(D) of such Act (42 U.S.C. 1395ww(d)(10)(D)), as amended by section 107(b), is further amended--

(1) by redesignating clause (v) as clause (vi);

(2) by inserting after clause (iv) the following new clause:

`(v) For purposes of considering an application under subparagraph (C)(i)(II), the Secretary shall collect and update every three years such information as is necessary to compare a hospital's wages weighted by the occupational mix of hospitals in the area in which the hospital is applying to be classified, or the Board shall, in considering such an application, apply the most current available information with respect to such wages collected by the American Hospital Association.'; and

(3) in clause (vi), as so redesignated by paragraph (1), by inserting `subclause (I), as amended by the Triple-A Rural Health Improvement Act of 1999, and' before `subclause (III) of clause (i) by January 1, 2000.'.

(c) EFFECTIVE DATE- The amendments made by subsections (a) and (b) take effect on January 1, 2000, and apply with respect to applications for geographic reclassification for cost reporting periods beginning on or after such date.

(d) REPORT TO CONGRESS- Not later than one year after the date of the enactment of this Act, the Secretary shall submit to Congress a report describing revised methodology to compute hospital wage indices, for purposes of adjustments in payment amounts to hospitals under the medicare program, that reflect legitimate differences in hospital wage rates by area, but that do not rely on average per employee expenditures.

(e) SENSE OF CONGRESS- It is the Sense of the Congress that the adjustment in payment amounts to hospitals under the medicare program to reflect variations in the costs of wages and wage-related costs of hospitals, under section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)), should only be used with respect to payments made on a prospective basis to such hospitals for inpatient hospital services. Such adjustment should not be applied to payment amounts for any other item or service reimbursed under the medicare program.

SEC. 109. HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR LABOR COSTS FOR ALL ITEMS AND SERVICES REIMBURSED UNDER PROSPECTIVE PAYMENT SYSTEMS.

(a) IN GENERAL- Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection:

`(l) APPLICATION OF HOSPITAL GEOGRAPHIC RECLASSIFICATION FOR INPATIENT SERVICES TO ALL HOSPITAL FURNISHED ITEMS AND SERVICES REIMBURSED UNDER PROSPECTIVE PAYMENT SYSTEM-

`(1) IN GENERAL- In the case of a hospital with an application to the Medicare Geographic Classification Review Board under subsection (d)(10)(C) to change the hospital's geographic classification for a fiscal year for purposes of the factor used to adjust the DRG prospective payment rate for area differences in hospital wage levels that applies to such hospital under subsection (d)(3)(E) that has been approved, the change in the hospital's geographic classification for such purposes shall apply for purposes of adjustments to payments for variations in costs which are attributable to wages and wage-related costs for all pps-reimbursed items and services.

`(2) PPS-REIMBURSED ITEMS AND SERVICES DEFINED- For purposes of paragraph (1), the term `pps-reimbursed items and services' means, for cost reporting periods beginning during the fiscal year for which such change has been approved, items and services furnished by the hospital, or by an entity or department of the hospital which is provider-based (as determined by the Secretary), for which payments--

`(A) are made under this title on a prospective basis; and

`(B) are adjusted for variations in costs which are attributable to wages and wage-related costs.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to items and services furnished on or after January 1, 2000.

Subtitle B--Medicare+Choice

SEC. 111. PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS.

(a) ADJUSTMENT TO CALCULATION OF ANNUAL CAPITATION RATES- Section 1853(c) of the Social Security Act (42 U.S.C. 1395w-23(c)) is amended--

(1) in paragraph (1)--

(A) in subparagraph (A), by striking the comma at the end of clause (ii) and all that follows before the period; and

(B) in subparagraph (C)(ii), by inserting `multiplied by the budget neutrality adjustment factor determined under paragraph (5)' before the period at the end; and

(2) in paragraph (5), by striking `paragraph (1)(A)' and inserting `paragraph (1)(C)(ii)'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to rates calculated for years after 1999.

SEC. 112. REPEAL OF PHASE OUT OF CERTAIN MEDICARE REASONABLE COST REIMBURSEMENT CONTRACTS.

Section 1876(h)(5) of the Social Security Act (42 U.S.C. 1395mm(h)(5)) is amended--

(1) by striking `(5)(A)' and inserting `(5)'; and

(2) by striking subparagraph (B).

SEC. 113. MEDICARE+CHOICE RURAL DEMONSTRATION PROJECT.

(a) ESTABLISHMENT OF PROJECT- For purposes of expanding and improving the quality of items and services furnished under the medicare program to medicare beneficiaries residing in rural and frontier areas, the Secretary of Health and Human Services (in this section referred to as the `Secretary') shall conduct demonstration projects under which the Secretary shall establish, and provide for payment for such items and services to, provider-sponsored organizations and other managed care entities that are based in rural and frontier areas.

(b) REQUIREMENT OF RURAL AND FRONTIER AREAS- The Secretary shall designate areas in which projects under this section shall be conducted. Such projects may only be conducted in rural or frontier areas, as defined under title XVIII of the Social Security Act and under regulations promulgated thereunder.

(c) PROJECT IMPLEMENTATION-

(1) IN GENERAL- The Secretary shall establish a benefit design, and establish payment amounts for items and services furnished by such provider-sponsored organizations and managed care entities to medicare beneficiaries.

(2) DATA COLLECTION- The Secretary shall provide for the collection of information (including information concerning quality and access to care), for purposes of evaluating the results of the project.

(d) REPORT TO CONGRESS-

(1) IN GENERAL- Not later than two years after the Secretary implements the demonstration projects under this section, and annually thereafter, the Secretary shall submit to Congress a report regarding such demonstration projects.

(2) CONTENTS OF REPORT- The report in paragraph (1) shall include the following:

(A) A description of the demonstration projects conducted under this section.

(B) An evaluation of--

(i) the viability of such provider-sponsored organizations and managed care entities operating in rural and frontier areas;

(ii) the quality of the health care services provided to medicare beneficiaries residing in such areas under the demonstration projects; and

(iii) beneficiary and health care provider satisfaction under the demonstration project.

(C) Any other information regarding the demonstration projects conducted under this section that the Secretary determines to be appropriate.

(e) WAIVER AUTHORITY- The Secretary of Health and Human Services may waive such requirements of title XVIII of the Social Security Act (as amended by this Act) as may be necessary for the purposes of carrying out the project.

Subtitle C--General Payment Provisions

SEC. 121. DIRECT MEDICARE PAYMENT FOR PHYSICIAN ASSISTANTS, NURSE PRACTITIONERS, AND CLINICAL NURSE SPECIALISTS PRACTICING IN UNDERSERVED RURAL AREAS.

(a) IN GENERAL- Section 1833(a)(1)(O) of the Social Security Act (42 U.S.C. 1395l(a)(1)(O)) is amended--

(1) by inserting `(or 100 percent in the case of services furnished in an underserved rural area)' after `85 percent' the first place it appears.

(b) DIRECT REIMBURSEMENT- Section 1842(b)(6)(C) of such Act (42 U.S.C. 1395u(b)(6)(C)) is amended--

(1) by striking `clause (i) of';

(2) by inserting `, nurse practitioner, or clinical nurse specialist' after `physician assistant' the first place it appears; and

(3) by amending clause (ii) to read as follows: `(ii) with respect to a physician assistant, nurse practitioner, or clinical nurse specialist who is providing services in an underserved rural area, payment may be made directly to the assistant, practitioner, or specialist;'.

(c) EFFECTIVE DATE- The amendments made by this section apply to services furnished on or after January 1, 2000.

SEC. 122. COVERAGE OF QUALIFIED MENTAL HEALTH PROFESSIONAL SERVICES UNDER MEDICARE.

(a) IN GENERAL- Section 1861(s)(2) of the Social Security Act (42 U.S.C. 1395x(s)(2)) is amended--

(1) in subparagraph (S), by striking `and' at the end;

(2) in subparagraph (T), by striking the period at the end and inserting `; and'; and

(3) by adding at the end the following new subparagraph:

`(U) qualified mental health professional services (as defined in subsection (uu));'.

(b) PAYMENT RULES-

(1) DETERMINATION OF AMOUNT OF PAYMENT- Section 1833(a)(1) of the Social Security Act (42 U.S.C. 1395l(a)(1)) is amended--

(A) by striking `and' before `(S)'; and

(B) by striking the semicolon at the end and inserting the following: `, and (T) with respect to qualified mental health professional services described in section 1861(s)(2)(U), the amounts paid shall be the amount determined by a fee schedule established by the Secretary for purposes of this subparagraph;'.

(2) SEPARATE PAYMENT FOR SERVICES OF INSTITUTIONAL PROVIDERS- Section 1832(a)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395k(a)(2)(B)(iii)) is amended--

(A) by striking `and services' and inserting `services'; and

(B) by striking the semicolon at the end and inserting the following: `, and qualified mental health professional services described in section 1861(s)(2)(U);'.

(c) SERVICES DESCRIBED- Section 1861 of the Social Security Act (42 U.S.C. 1395x) is amended by adding at the end the following new subsection:

`Qualified Mental Health Professional Services

`(uu)(1) The term `qualified mental health professional services' means such services (with such frequency limits as the Secretary determines appropriate) furnished by a mental health professional (as defined in paragraph (2)) and such services and supplies (with such limits) furnished as an incident to services furnished by the mental health professional that the mental health professional is legally authorized to perform under State law (or under a State regulatory mechanism provided by State law), if such services and supplies are furnished to an individual who resides in an area designated as a health professional shortage area in accordance with section 332 of the Public Health Service Act (42 U.S.C. 254e).

`(2) The term `mental health professional' means an individual who is licensed as a mental health professional for the diagnosis and treatment of mental illnesses by the State (or under a State regulatory mechanism provided by State law) in which the individual furnishes qualified mental health professional services.'.

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