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SEC. 101. TERMINATION OF MULTIYEAR REDUCTION OF INDIRECT GRADUATE MEDICAL EDUCATION PAYMENTS.

Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended--

(1) by adding `and' at the end of subclause (II); and

(2) by striking subclauses (III), (IV), and (V) and inserting the following:

`(III) on or after October 1, 1998, `c' is equal to 1.6.'.

SEC. 102. EXCLUSION OF NURSING AND ALLIED HEALTH EDUCATION COSTS IN CALCULATING MEDICARE+CHOICE PAYMENT RATE.

(a) EXCLUDING COSTS IN CALCULATING PAYMENT RATE-

(1) IN GENERAL- Section 1853(c)(3)(C)(i) (42 U.S.C. 1395w.FF0923(c)(3)(C)(i)) is amended--

(A) by striking `and' at the end of subclause (I);

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

(C) by adding at the end the following:

`(III) for costs attributable to approved nursing and allied health education programs under section 1861(v).'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) apply in determining the annual per capita rate of payment for years beginning with 2001.

(b) PAYMENT TO HOSPITALS OF NURSING AND ALLIED HEALTH EDUCATION PROGRAM COSTS FOR MEDICARE+CHOICE ENROLLEES- Section 1861(v)(1) of such Act (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the following:

`(V) In determining the amount of payment to a hospital for cost reporting periods (or portions thereof) occurring on or after January 1, 2001, with respect to the reasonable costs for approved nursing and allied health education programs, individuals who are enrolled with a Medicare+Choice organization under part C shall be treated as if they were not so enrolled.'.

TITLE II--RURAL HOSPITALS

SEC. 201. REVISION OF CRITERIA FOR DESIGNATION AS A CRITICAL ACCESS HOSPITAL.

(a) CONVERSION OF DOWNSIZED OR RECENTLY CLOSED HOSPITALS TO CRITICAL ACCESS HOSPITALS- Section 1820(c)(2) (42 U.S.C. 1395i.FF094(c)(2)) is amended--

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

(2) by adding at the end the following:

`(C) RECENTLY CLOSED FACILITIES- A State may designate a facility as a critical access hospital if the facility--

`(i) was a nonprofit or public hospital that ceased operations within the 3-year period ending on the date of enactment of the Health Care Preservation Act of 1999; and

`(ii) as of the effective date of such designation, meets the criteria for designation under subparagraph (B).

`(D) DOWNSIZED FACILITIES- A State may designate a health clinic or a health center (as defined by the State) as a critical access hospital if such clinic or center--

`(i) is licensed by the State as a health clinic or a health center if the State requires such licensure in order to operate as a health clinic or health center;

`(ii) was a nonprofit or public hospital that was downsized to a health clinic or health center; and

`(iii) as of the effective date of such designation, meets the criteria for designation under subparagraph (B).

`(E) FEDERALLY-QUALIFIED HEALTH CENTER- A State may designate a Federally-qualified health center (as defined in section 1905(l)(2)(B)) as a critical access hospital if such center--

`(i) operates a laboratory that has in effect a certificate issued under section 353 of the Public Health Service Act that permits such laboratory to perform tests categorized as high complexity;

`(ii) operates a radiology department; and

`(iii) as of the effective date of such designation, meets the criteria for designation under subparagraph (B).'.

(b) REVISION OF CRITERIA FOR DESIGNATION AS A CRITICAL ACCESS HOSPITAL- Section 1820(c)(2)(B)(iii) (42 U.S.C. 1395i.FF094(c)(2)(B)(iii)) is amended by striking `not to exceed 96 hours' and all that follows to the semicolon and inserting `not to exceed, on average, 96 hours per patient'.

(c) EFFECTIVE DATE- The amendments made by this section take effect on the date of enactment of this Act.

SEC. 202. AUTHORITY TO ESTABLISH A PROSPECTIVE PAYMENT SYSTEM FOR RHC SERVICES.

(a) ESTABLISHMENT OF SYSTEM- Section 1833 (42 U.S.C. 1395l) is amended by adding at the end the following:

`(u) AUTHORITY TO ESTABLISH PROSPECTIVE PAYMENT SYSTEM FOR RURAL HEALTH CLINIC SERVICES-

`(1) IN GENERAL- Notwithstanding subsections (a)(3) and (f), the Secretary may establish by regulation a prospective payment system for rural health clinic services (except for such services provided by a rural health clinic located in a rural hospital with less than 50 beds).

`(2) BUDGET NEUTRAL PAYMENTS- If the Secretary establishes a prospective payment system pursuant to paragraph (1), the Secretary shall establish the initial payment levels under such system in a manner that results in aggregate payments (including payments by individuals to whom services are provided) for the first year, as estimated by the Secretary, approximately equal to the aggregate payments that would have otherwise been made under this part.'.

(b) CONFORMING AMENDMENTS-

(1) PAYMENT- Section 1833(a)(3) (42 U.S.C. 1395l(a)(3)) is amended by inserting `subject to subsection (u),' before `in the case'.

(2) LIMITS- Section 1833(f) (42 U.S.C. 1395l(f)) is amended by striking `In establishing' and inserting `Subject to subsection (u), in establishing'.

(3) REQUIREMENT FOR RURAL HEALTH CLINICS- Clause (ii) of the second sentence of section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended by inserting `(and section 1833(u) if the Secretary implements a prospective payment system under that section)' after `section 1833'.

SEC. 203. REQUIREMENT TO CONSIDER RURAL ISSUES IN ESTABLISHING FEE SCHEDULE FOR AMBULANCE SERVICES.

(a) IN GENERAL- Section 1834(l)(2)(C) (42 U.S.C. 1395m(l)(2)(C)) is amended by inserting `, including differences in rural and non-rural areas' after `differences'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) takes effect as if included in the enactment of the Balanced Budget Act of 1997 (Public Law 105.FF0933; 111 Stat. 251).

SEC. 204. STOP-LOSS PROTECTION FOR RURAL HOSPITAL OPD SERVICES.

(a) IN GENERAL- Section 1833(t)(10)(D)(i) (42 U.S.C. 1395l(t)(10)(D)(i)) (as added by section 402) is amended by adding at the end the following:

`The applicable percentage shall be 100 percent with respect to covered OPD services furnished during a transition year in a rural hospital.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) take effect as if included in the amendments made by section 4523 of the Balanced Budget Act of 1997 (Public Law 105.FF0933; 111 Stat. 445).

TITLE III--SAFETY NET PROVIDERS

SEC. 301. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS UNDER THE MEDICAID PROGRAM.

(a) IN GENERAL- Section 1902(a)(13) (42 U.S.C. 1396a(a)(13)) is amended--

(1) in subparagraph (A), by adding `and' at the end;

(2) in subparagraph (B), by striking `and' at the end; and

(3) by striking subparagraph (C).

(b) NEW PROSPECTIVE PAYMENT SYSTEM- Section 1902 (42 U.S.C. 1396a) is amended by adding at the end the following:

`(aa) PAYMENT FOR SERVICES PROVIDED BY FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS-

`(1) IN GENERAL- Beginning with fiscal year 2000 and each succeeding fiscal year, the State plan shall provide for payment for services described in section 1905(a)(2)(C) furnished by a Federally-qualified health center and services described in section 1905(a)(2)(B) furnished by a rural health clinic in accordance with the provisions of this subsection.

`(2) FISCAL YEAR 2000- For fiscal year 2000, the State plan shall provide for payment for such services in an amount (calculated on a per visit basis) that is equal to 100 percent of the costs incurred by the center or clinic in furnishing such services during fiscal year 1999 which are reasonable and related to the cost of furnishing such services, or based on such other tests of reasonableness as the Secretary prescribes in regulations under section 1833(a)(3), or in the case of services to which such regulations do not apply, the same methodology used under section 1833(a)(3), adjusted to take into account any increase in the scope of such services furnished by the center or clinic during fiscal year 2000.

`(3) FISCAL YEAR 2001 AND SUCCEEDING YEARS- For fiscal year 2001 and each succeeding fiscal year, the State plan shall provide for payment for such services in an amount (calculated on a per visit basis) that is equal to the amount calculated for such services under this subsection for the preceding fiscal year--

`(A) increased by the percentage increase in the MEI (Medicare economic index) (as defined in section 1842(i)(3)) applicable to primary care services (as defined in section 1842(i)(4)) for that fiscal year; and

`(B) adjusted to take into account any increase in the scope of such services furnished by the center or clinic during that fiscal year.

`(4) ESTABLISHMENT OF INITIAL YEAR PAYMENT AMOUNT FOR NEW CENTERS OR CLINICS- In any case in which an entity first qualifies as a Federally-qualified health center or rural health clinic after October 1, 2000, the State plan shall provide for payment for services described in section 1905(a)(2)(C) furnished by the center or services described in section 1905(a)(2)(B) furnished by the clinic in the first fiscal year in which the center or clinic qualifies in an amount (calculated on a per visit basis) that is equal to 100 percent of the costs of furnishing such services during such fiscal year in accordance with the regulations and methodology referred to in paragraph (2). For each fiscal year following the fiscal year in which the entity first qualifies as a Federally-qualified health center or rural health clinic, the State plan shall provide for the payment amount to be calculated in accordance with paragraph (3) of this subsection.

`(5) ADMINISTRATION IN THE CASE OF MANAGED CARE- In the case of services furnished by a Federally-qualified health center or rural health clinic pursuant to a contract between the center or clinic and a managed care entity (as defined in section 1932(a)(1)(B)), the State plan shall provide for payment to the center or clinic (at least quarterly) by the State of a supplemental payment equal to the amount (if any) by which the amount determined under paragraphs (2), (3), and (4) of this subsection exceeds the amount of the payments provided under the contract.

`(6) ALTERNATIVE PAYMENT SYSTEM- Notwithstanding any other provision of this section, the State plan may provide for payment in any fiscal year to a Federally-qualified health center (as defined in section 1905(l)(2)(B)) for services described in section 1905(a)(2)(C) or to a rural health clinic for services described in section 1905(a)(2)(B) in an amount that is in excess of the amount otherwise required to be paid to the center or clinic under this subsection.'.

(c) CONFORMING AMENDMENTS-

(1) Section 4712 of the Balanced Budget Act of 1997 (Public Law 105.FF0933; 111 Stat. 508) is amended by striking subsection (c).

(2) Section 1915(b) (42 U.S.C. 1396n(b)) is amended by striking `1902(a)(13)(E)' and inserting `1902(aa)'.

(d) EFFECTIVE DATE- The amendments made by this section take effect on October 1, 1999.

SEC. 302. CARVING OUT DSH PAYMENTS FROM PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS AND PAYING THE AMOUNTS DIRECTLY TO DSH HOSPITALS ENROLLING MEDICARE+CHOICE ENROLLEES.

(a) IN GENERAL- Section 1853(c)(3) (42 U.S.C. 1395w.FF0923(c)(3)) is amended--

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

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

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

`(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 2001), the annual per capita rate of payment for 1997 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 made 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.'.

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

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

(2) by adding at the end the following:

`(x)(I) For cost reporting periods (or portions thereof) occurring on or after January 1, 2001, 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 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 (as determined by the Secretary) that would otherwise have been paid under this subparagraph if the individual 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.'.

SEC. 303. LIMITATION IN REDUCTION OF PAYMENTS TO DISPROPORTIONATE SHARE HOSPITALS.

(a) IN GENERAL- Section 1886(d)(5)(F)(ix) (42 U.S.C. 1395ww(d)(5)(F)(ix)) is amended--

(1) in subclause (IV), by striking `4' and inserting `3'; and

(2) in subclause (V), by striking `5' and inserting `3'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) takes effect as if included in the amendments made by section 4403 of the Balanced Budget Act of 1997 (Public Law 105.FF0933; 111 Stat. 398).

TITLE IV--OTHER HOSPITAL PROVISIONS

SEC. 401. DELAY OF FINANCIAL LIMITATION ON REHABILITATION SERVICES.

(a) IN GENERAL- Section 1833(g) (42 U.S.C. 1395l(g)) is amended by adding at the end the following:

`(4) Notwithstanding the preceding provisions of this subsection, for outpatient physical therapy services, outpatient occupational therapy services, and outpatient speech-language pathology services covered under this title and furnished on or after January 1, 2000, and before January 1, 2002, the Secretary shall implement a payment methodology based on the classification of individuals by diagnostic category, functional status, and prior use of services in both inpatient and outpatient settings.'.

(b) BUDGET NEUTRALITY IN IMPLEMENTATION- The payment methodology implemented under section 1833(g)(4) (42 U.S.C. 1395l(g)(4)), as added by subsection (a), shall be designed so that the methodology, taking into account the increased expenditures resulting from the implementation of such methodology, does not result in any increase or decrease in the expenditures under title XVIII of the Social Security Act on a fiscal year basis.

SEC. 402. MULTIYEAR TRANSITION TO PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

(a) IN GENERAL- Section 1833(t) (42 U.S.C. 1395l(t)) is amended by adding at the end the following:

`(10) MULTIYEAR TRANSITION-

`(A) IN GENERAL- In the case of covered OPD services furnished by a hospital during a transition year, the Secretary shall increase the payments for such services under the prospective payment system established under this subsection by the amount (if any) which the Secretary determines necessary to ensure that the payment to cost ratio of the hospital for the transition year equals a ratio equal to the applicable percentage of the payment to cost ratio of the hospital for 1996.

`(B) PAYMENT TO COST RATIO-

`(i) IN GENERAL- The payment to cost ratio of a hospital for any year is the ratio which--

`(I) the hospital's reimbursement under this title for covered OPD services furnished during the year, including through cost-sharing described in subparagraph (D)(ii), bears to

`(II) the cost of such services.

`(ii) CALCULATION OF 1996 PAYMENT TO COST RATIO- The Secretary shall determine each hospital's payment to cost ratio for 1996 as if the amendments made to this title by the provisions of section 4521 of the Balanced Budget Act of 1997 were in effect in 1996.

`(iii) TRANSITION YEARS- The Secretary shall estimate each payment to cost ratio of a hospital for any transition year before the beginning of such year.

`(C) INTERIM PAYMENTS-

`(i) IN GENERAL- The Secretary shall make interim payments to a hospital during any transition year for which the Secretary estimates a payment is required under subparagraph (A).

`(ii) ADJUSTMENTS- If the Secretary makes payments under clause (i) for any transition year, the Secretary shall make retrospective adjustments to each hospital based on its settled cost report so that the amount of any additional payment to a hospital for such year equals the amount described in subparagraph (A).

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