S 980 IS

To promote access to health care services in rural areas.

May 6, 1999

Mr. BAUCUS (for himself, Mr. DASCHLE, Mr. THOMAS, Mr. HARKIN, Mr. GRASSLEY, Mr. CONRAD, Mr. ROBERTS, Mr. FRIST, Mr. JOHNSON, Mr. ROCKEFELLER, Mr. JEFFORDS, Mr. WELLSTONE, and Mr. MURKOWSKI) introduced the following bill; which was read twice and referred to the Committee on Finance

To promote access to health care services in rural areas.

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 `Promoting Health in Rural Areas Act of 1999'.

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

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

TITLE I--PROMOTING ACCESS TO HEALTH CARE SERVICES IN RURAL AREAS UNDER THE MEDICARE PROGRAM

Subtitle A--Hospital-Related Provisions

Sec. 101. Sole community hospitals.

Sec. 102. Revision of criteria for designation as a critical access hospital.

Sec. 103. Graduate medical education technical amendments.

Sec. 104. Medicare-dependent small rural hospitals.

Sec. 105. All-inclusive payment option for outpatient critical access hospital services.

Sec. 106. Exclusion of swing beds in critical access hospitals from PPS for SNFs.

Sec. 107. Exclusion of small rural providers from PPS for hospital outpatient department services.

Sec. 108. Modification of DSH.

Sec. 109. Hospital geographic reclassification for labor costs for all items and services reimbursed under prospective payment systems.

Sec. 110. Requirement that wage levels for hospitals be standardized with respect to occupational mix before adjusting payment rates; study and report.

Subtitle B--General Provisions

Sec. 121. Payments to Medicare+Choice organizations.

Sec. 122. Direct billing of medicare, medicaid, and other third-party payors by Indian tribes and Alaska Native and tribal organizations.

Sec. 123. Additional duties for MedPAC and rural representation on MedPAC.

Sec. 124. Coverage of qualified mental health professional services under medicare.

Sec. 125. Study and report regarding barriers that individuals residing in rural areas face in obtaining quality mental health services.

Sec. 126. Medicare waivers for providers in rural areas.

Sec. 127. Revision of per-visit payment limits for rural health clinic services.

Sec. 128. Expansion of additional payments for services furnished in health professional shortage areas.

Sec. 129. Authority to establish a prospective payment system for RHC services.

Sec. 130. Separate wage indexes for making adjustments to payments under the prospective payment systems for skilled nursing facilities and home health agencies.

Sec. 131. Requirement to consider rural issues in establishing fee schedule for ambulance services.

TITLE II--ADDITIONAL PROVISIONS TO ADDRESS SHORTAGES OF HEALTH PROFESSIONALS IN RURAL AREAS

Sec. 201. Health professional shortage areas.

Sec. 202. Exclusion of certain amounts received under the National Health Service Corps Scholarship Program.

Sec. 203. Designation of underserved areas under health care contracts administered by the Office of Personnel Management.

Sec. 204. New prospective payment system for Federally-qualified health centers and rural health clinics under the medicaid program.

Sec. 205. Revision and clarification of medicare reimbursement of telehealth services.

Sec. 206. Study and reports to Congress regarding telehealth licensure.

Sec. 207. Joint working group on telehealth.

TITLE III--DEVELOPMENT OF TELEHEALTH NETWORKS

Subtitle A--Development of Telehealth Networks

Sec. 301. Financial assistance authorized.

Sec. 302. Financial assistance described.

Sec. 303. Eligible telehealth networks.

Sec. 304. Use of financial assistance.

Sec. 305. Application.

Sec. 306. Approval of application.

Sec. 307. Administration.

Sec. 308. Regulations.

Sec. 309. Authorization of appropriations.

Subtitle B--Rural Health Outreach and Network Development Grant Program

Sec. 315. Rural health outreach and network development grant program.

TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Bank deductibility of small, tax-exempt debts.

Sec. 402. Access to data.

SEC. 2. FINDINGS.

Congress finds the following:

(1) Rural communities have long had great difficulty recruiting and retaining health care providers to serve the needs of their residents.

(2) Despite great increases in the production of providers in this country (the number of individuals per physician fell from 724 in 1965 to 375 in 1995), individuals living in rural areas have not shared equitably in the benefits of this expansion.

(3) Over 73 percent of Americans live in non-metropolitan counties, but only 11 percent of patient care physicians practice in those counties, and this proportion has been falling for the last 25 years.

(4) The following conditions are characteristic of rural populations:

(A) The relative lack of health care resources as compared to urban areas.

(B) The uneven pattern of disease burden.

(C) The irregular distribution of programs and resources resulting from policy variations across the Nation.

TITLE I--PROMOTING ACCESS TO HEALTH CARE SERVICES IN RURAL AREAS UNDER THE MEDICARE PROGRAM

Subtitle A--Hospital-Related Provisions

SEC. 101. SOLE COMMUNITY HOSPITALS.

(a) IN GENERAL- Section 1886(b)(3)(C) of the Social Security Act (42 U.S.C. 1395ww(b)(3)(C)) is amended--

(1) in clause (i), by redesignating subclauses (I) and (II) as items (aa) and (bb), respectively;

(2) by redesignating clauses (i), (ii), (iii), and (iv) as subclauses (I), (II), (III), and (IV), respectively;

(3) by striking `(C) In' and inserting `(C)(i) Subject to clause (ii), in';

(4) in the last sentence, by striking `clause (i)' and inserting `subclause (I)'; and

(5) by inserting at the end the following:

`(ii)(I) If 1 or more of the alternative target amounts determined under subclause (II) for discharges occurring in fiscal year 2001 is greater than the target amount determined under clause (i) for such discharges, clause (i) shall be applied for such discharges by using the greatest of such alternative target amounts (and such amount shall be used in applying clause (i)(IV) to subsequent fiscal years).

`(II) The alternative target amounts are the amounts equal to the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital's cost reporting period (if any) beginning in each of the alternative base years, increased (in a compounded manner) by the applicable percentage increases applied to the hospital under this paragraph for discharges occurring in fiscal years beginning after the alternative base year and before fiscal year 2001.

`(III) The alternative base years are fiscal years 1982, 1987, 1996, and 1997.'.

(b) ELIGIBILITY FOR GEOGRAPHIC RECLASSIFICATION WITHOUT REGARD TO WAGE INDEX THRESHOLD-

(1) IN GENERAL- Section 1886(d)(10)(D)(iii) of the Social Security Act (42 U.S.C. 1395ww(d)(10)(D)(iii)) is amended by inserting `or a sole community hospital under paragraph (5)(D)' after `a rural referral center under paragraph (5)(C)'.

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

SEC. 102. 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) of the Social Security Act (42 U.S.C. 1395i-4(c)(2)) is amended--

(1) in subparagraph (A), by striking `subparagraph (B)' and inserting `subparagraphs (B), (C), and (D)'; 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 Promoting Health in Rural Areas 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;

`(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).'.

(b) CRITERIA FOR DESIGNATION- Section 1820(c)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395i-4(c)(2)(B)(iii)) is amended by striking `to exceed 96 hours' and inserting `to exceed, on average, 96 hours per patient'.

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

SEC. 103. 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--

(A) by striking `(v) In determining' and inserting `(v)(I) Subject to subclause (II), in determining';

(B) by striking `in the hospital with respect to the hospital's most recent cost reporting period ending on or before December 31, 1996' and inserting `who were appointed by the hospital's approved medical residency training programs for the hospital's most recent cost reporting period ending on or before December 31, 1996'; and

(C) by adding at the end the following:

`(II) Beginning on or after January 1, 1997, in the case of a hospital that sponsors only 1 allopathic or osteopathic residency program, the limit determined for such hospital under subclause (I) may, at the hospital's discretion, be increased by 1 for each calendar year but shall not exceed a total of 3 more than the limit determined for the hospital under subclause (I).'.

(2) ADDITIONAL TECHNICAL AMENDMENTS- Section 1886(d)(5)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by moving clauses (ii), (v), and (vi) 2 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 were appointed by the hospital's approved medical residency training programs' after `may not exceed the number of such full-time equivalent residents'.

(2) FUNDING FOR NEW PROGRAMS- The first sentence of section 1886(h)(4)(H)(i) of the Social Security Act (42 U.S.C. 1395ww(h)(4)(H)(i)) is amended by inserting `and before September 30, 1999' after `January 1, 1995'.

(3) FUNDING FOR PROGRAMS MEETING RURAL NEEDS- The second sentence of section 1886(h)(4)(H)(i) of the Social Security Act (42 U.S.C. 1395ww(h)(4)(H)(i)) 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 rural training tracks.'.

(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. 104. MEDICARE-DEPENDENT SMALL RURAL HOSPITALS.

(a) MAKING PAYMENT PROVISION PERMANENT- Section 1886(d)(5)(G)(i) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(G)(i)) is amended by striking `and before October 1, 2001,'.

(b) OPTION TO BASE ELIGIBILITY ON DISCHARGES DURING ANY OF THE 3 MOST RECENT AUDITED COST REPORTING PERIODS- 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 inserting `, or any of the 3 most recent audited cost reporting periods,' after `1987'.

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

SEC. 105. ALL-INCLUSIVE PAYMENT OPTION FOR OUTPATIENT CRITICAL ACCESS HOSPITAL SERVICES.

(a) IN GENERAL- Section 1834(g) of the Social Security Act (42 U.S.C. 1395m(g)) is amended to read as follows:

`(g) PAYMENT FOR OUTPATIENT CRITICAL ACCESS HOSPITAL SERVICES- The amount of payment under this part for outpatient critical access hospital services shall be determined by using 1 of the 2 following methods, as elected by the critical access hospital:

`(1) COST-BASED FACILITY FEE PLUS PROFESSIONAL CHARGES-

`(A) FACILITY FEE- With respect to facility services, not including any services for which payment may be made under subparagraph (B), there shall be paid amounts equal to the reasonable costs of the critical access hospital in providing such services, less the amount that such hospital may charge as described in section 1866(a)(2)(A).

`(B) REASONABLE CHARGES FOR PROFESSIONAL SERVICES- In electing treatment under this paragraph, payment for professional medical services otherwise included within outpatient critical access hospital services shall be made under such other provisions of this part as would apply to payment for such services if they were not included in outpatient critical access hospital services.

`(2) ALL-INCLUSIVE RATE- With respect to both facility services and professional medical services, there shall be paid amounts equal to the reasonable costs of the critical access hospital in providing such services, less the amount that such hospital may charge as described in section 1866(a)(2)(A).

The amount of payment shall be determined under either method without regard to the amount of the customary or other charge.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect as if included in the enactment of the Balanced Budget Act of 1997.

SEC. 106. EXCLUSION OF SWING BEDS IN CRITICAL ACCESS HOSPITALS FROM PPS FOR SNFS.

(a) IN GENERAL- Section 1888(e)(7) of the Social Security Act (42 U.S.C. 1395yy(e)(7)) is amended--

(1) in the heading, by striking `TRANSITION' and inserting `SPECIAL RULES';

(2) in subparagraph (A), by striking `IN GENERAL- The' and inserting `TRANSITION- Except as provided in subparagraph (C), the'; and

(3) by adding at the end the following:

`(C) EXEMPTION OF SWING BEDS IN CRITICAL ACCESS HOSPITALS FROM PPS- The prospective payment system under this subsection shall not apply (and section 1834(g) shall apply) to services provided by a critical access hospital under an agreement described in subparagraph (B).'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to services provided on or after October 1, 1999.

SEC. 107. EXCLUSION OF SMALL RURAL PROVIDERS FROM PPS FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES.

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

(1) in subparagraph (B), by striking `For purposes of this' and inserting `Subject to subparagraph (C), for purposes of this'; and

(2) by adding at the end the following:

`(C) EXCLUSION FOR SERVICES FURNISHED BY SMALL RURAL PROVIDERS- The term `covered OPD services' does not include services furnished by a--

`(i) medicare-dependent, small rural hospital, as defined in section 1886(d)(5)(G)(iv);

`(ii) a critical access hospital, as defined in section 1861(mm)(1); or

`(iii) sole community hospital, as defined in section 1886(d)(5)(D)(iii);

if such hospital, within the 180-day period beginning on the date of enactment of the Promoting Health in Rural Areas Act of 1999, requests the Secretary to exclude services furnished by such hospital from the prospective payment system established under this subsection.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to payments for covered OPD services furnished on or after January 1, 2000.

SEC. 108. 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:

`(x) The Secretary shall collect from all subsection (d) hospitals annual data on inpatient and outpatient charges, including all such charges for each of the following categories:

`(I) All patients.

`(II) 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) Patients who are entitled to (or, if they applied, would be eligible for) medical assistance under title XIX.

`(IV) Patients who are beneficiaries of indigent care programs sponsored by State or local governments.

`(V) To the extent that payment is not made by patients, such charges.

In collecting the data for patients described in subclause (II), the Secretary may estimate the charges for such patients based on supplemental security income program data from other sources and from the data collected for patients described in subclause (I).'.

(b) REVISION OF FORMULA FOR DISPROPORTIONATE PATIENT PERCENTAGE- Section 1886(d)(5)(F)(vi) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)(vi)) 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- Section 1886(d)(5)(F)(v) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)(v)) 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 to this subparagraph made by section 108 of the Promoting Health in Rural Areas Act of 1999 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- Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended--

(1) in clause (iv), by striking `that is not described in clause (i)(II) and that--' and all that follows and inserting `described in clause (i) 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 to this subparagraph made by section 108 of the Promoting Health in Rural Areas Act of 1999 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.';

(2) by amending clause (i) to read as follows:

`(i) The Secretary shall provide, in accordance with this subparagraph, for an additional payment amount for each subsection (d) hospital which serves a significantly disproportionate number of low-income patients (as defined in clause (v)).';

(3) in clause (ii), by striking `clause (iii) or (iv)' and inserting `clause (iv)'; and

(4) by striking clauses (iii), (vii), and (viii).

(e) EFFECTIVE DATE- The amendments made by this section apply to payments for discharges occurring on or after January 1, 2001.

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:

`(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 approved by 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), 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 the prospective payment system for hospital outpatient department services under section 1833(t); 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.

SEC. 110. REQUIREMENT THAT WAGE LEVELS FOR HOSPITALS BE STANDARDIZED WITH RESPECT TO OCCUPATIONAL MIX BEFORE ADJUSTING PAYMENT RATES; STUDY AND REPORT.

(a) OCCUPATIONAL MIX-

(1) IN GENERAL- Section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) is amended--

(A) in the first sentence, by inserting `, but only after such wage levels have been standardized with respect to occupational mix' before the period; and

(B) in the third sentence, by striking `To the extent determined feasible by the Secretary, such' and inserting `Such'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply to adjustments made on or after October 1, 2002.

(b) STUDY AND REPORT-

(1) STUDY- The Secretary of Labor shall conduct a study on the feasibility and costs of having the Bureau of Labor Statistics collect data on wages that would assist the Secretary of Health and Human Services in determining (with reasonable accuracy)--

(A) average wage levels, at the metropolitan statistical area, statewide, and rural level, by--

(i) sector, including hospitals, skilled nursing facilities, home health agencies, and physicians' offices; and

(ii) occupational category within each sector; and

(B) the proportion of the workforce in each occupational category within each sector.

(2) REPORT- Not later than June 1, 2000, the Secretary of Labor shall submit a report to Congress on the study conducted under paragraph (1), together with any recommendations that the Secretary determines to be appropriate.

Subtitle B--General Provisions

SEC. 121. 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 2000.

SEC. 122. DIRECT BILLING OF MEDICARE, MEDICAID, AND OTHER THIRD-PARTY PAYORS BY INDIAN TRIBES AND ALASKA NATIVE AND TRIBAL ORGANIZATIONS.

(a) PERMANENT AUTHORIZATION- The Indian Health Care Improvement Act (25 U.S.C. 1645) is amended by inserting the following after section 404:

`DIRECT BILLING OF MEDICARE, MEDICAID, AND OTHER THIRD-PARTY PAYORS BY INDIAN TRIBES AND ALASKA NATIVE AND TRIBAL ORGANIZATIONS

`SEC. 405. (a) ESTABLISHMENT OF DIRECT BILLING PROGRAM-

`(1) IN GENERAL- The Secretary shall establish a program under which Indian tribes, tribal organizations, and Alaska Native health organizations that contract or compact for the operation of a hospital or clinic of the Service under the Indian Self-Determination and Education Assistance Act may elect to directly bill for, and receive payment for, health care services provided by such hospital or clinic for which payment is made under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) (in this section referred to as the `medicare program'), under a State plan for medical assistance approved under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) (in this section referred to as the `medicaid program'), or from any other third-party payor.

`(2) APPLICATION OF 100 PERCENT FMAP- The third sentence of section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b)) shall apply for purposes of reimbursement under the medicaid program for health care services directly billed under the program established under this section.

`(b) DIRECT REIMBURSEMENT-

`(1) USE OF FUNDS- Each hospital or clinic participating in the program described in subsection (a) of this section shall be reimbursed directly under the medicare and medicaid programs for services furnished, without regard to the provisions of section 1880(c) of the Social Security Act (42 U.S.C. 1395qq(c)) and sections 402(a) and 813(b)(2)(A),

but all funds so reimbursed shall first be used by the hospital or clinic for the purpose of making any improvements in the hospital or clinic that may be necessary to achieve or maintain compliance with the conditions and requirements applicable generally to facilities of such type under the medicare or medicaid programs. Any funds so reimbursed which are in excess of the amount necessary to achieve or maintain such conditions shall be used--

`(A) solely for improving the health resources deficiency level of the Indian tribe; and

`(B) in accordance with the regulations of the Service applicable to funds provided by the Service under any contract entered into under the Indian Self-Determination Act (25 U.S.C. 450f et seq.).

`(2) AUDITS- The amounts paid to the hospitals and clinics participating in the program established under this section shall be subject to all auditing requirements applicable to programs administered directly by the Service and to facilities participating in the medicare and medicaid programs.

`(3) SECRETARIAL OVERSIGHT-

`(A) QUARTERLY REPORTS- Subject to subparagraph (B), the Secretary shall monitor the performance of hospitals and clinics participating in the program established under this section, and shall require such hospitals and clinics to submit reports on the program to the Secretary on a quarterly basis during the first 2 years of participation in the program and annually thereafter.

`(B) ANNUAL REPORTS- Any participant in the demonstration program authorized under this section as in effect on the day before the date of enactment of the Promoting Health in Rural Areas Act of 1999 shall only be required to submit annual reports under this paragraph.

`(4) NO PAYMENTS FROM SPECIAL FUNDS- Notwithstanding section 1880(c) of the Social Security Act (42 U.S.C. 1395qq(c)) or section 402(a), no payment may be made out of the special funds described in such sections for the benefit of any hospital or clinic during the period that the hospital or clinic participates in the program established under this section.

`(c) REQUIREMENTS FOR PARTICIPATION-

`(1) APPLICATION- Except as provided in paragraph (2)(B), in order to be eligible for participation in the program established under this section, an Indian tribe, tribal organization, or Alaska Native health organization shall submit an application to the Secretary that establishes to the satisfaction of the Secretary that--

`(A) the Indian tribe, tribal organization, or Alaska Native health organization contracts or compacts for the operation of a facility of the Service;

`(B) the facility is eligible to participate in the medicare or medicaid programs under section 1880 or 1911 of the Social Security Act (42 U.S.C. 1395qq; 1396j);

`(C) the facility meets the requirements that apply to programs operated directly by the Service; and

`(D) the facility is accredited by an accrediting body designated by the Secretary or has submitted a plan, which has been approved by the Secretary, for achieving such accreditation.

`(2) APPROVAL-

`(A) IN GENERAL- The Secretary shall review and approve a qualified application not later than 90 days after the date the application is submitted to the Secretary unless the

Secretary determines that any of the criteria set forth in paragraph (1) are not met.

`(B) GRANDFATHER OF DEMONSTRATION PROGRAM PARTICIPANTS- Any participant in the demonstration program authorized under this section as in effect on the day before the date of enactment of the Promoting Health in Rural Areas Act of 1999 shall be deemed approved for participation in the program established under this section and shall not be required to submit an application in order to participate in the program.

`(C) DURATION- An approval by the Secretary of a qualified application under subparagraph (A), or a deemed approval of a demonstration program under subparagraph (B), shall continue in effect as long as the approved applicant or the deemed approved demonstration program meets the requirements of this section.

`(d) EXAMINATION AND IMPLEMENTATION OF CHANGES-

`(1) IN GENERAL- The Secretary, acting through the Service, and with the assistance of the Administrator of the Health Care Financing Administration, shall examine on an ongoing basis and implement--

`(A) any administrative changes that may be necessary to facilitate direct billing and reimbursement under the program established under this section, including any agreements with States that may be necessary to provide for direct billing under the medicaid program; and

`(B) any changes that may be necessary to enable participants in the program established under this section to provide to the Service medical records information on patients served under the program that is consistent with the medical records information system of the Service.

`(2) ACCOUNTING INFORMATION- The accounting information that a participant in the program established under this section shall be required to report shall be the same as the information required to be reported by participants in the demonstration program authorized under this section as in effect on the day before the date of enactment of the Promoting Health in Rural Areas Act of 1999. The Secretary may from time to time, after consultation with the program participants, change the accounting information submission requirements.

`(e) WITHDRAWAL FROM PROGRAM- A participant in the program established under this section may withdraw from participation in the same manner and under the same conditions that a tribe or tribal organization may retrocede a contracted program to the Secretary under authority of the Indian Self-Determination Act (25 U.S.C. 450 et seq.). All cost accounting and billing authority under the program established under this section shall be returned to the Secretary upon the Secretary's acceptance of the withdrawal of participation in this program.'.

(b) CONFORMING AMENDMENTS-

(1) Section 1880 of the Social Security Act (42 U.S.C. 1395qq) is amended by adding at the end the following:

`(e) For provisions relating to the authority of certain Indian tribes, tribal organizations, and Alaska Native health organizations to elect to directly bill for, and receive payment for, health care services provided by a hospital or clinic of such tribes or organizations and for which payment may be made under this title, see section 405 of the Indian Health Care Improvement Act (25 U.S.C. 1645).'.

(2) Section 1911 of the Social Security Act (42 U.S.C. 1396j) is amended by adding at the end the following:

`(d) For provisions relating to the authority of certain Indian tribes, tribal organizations, and Alaska Native health organizations to elect to directly bill for, and receive payment for, health care services provided by a hospital or clinic of such tribes or organizations and for which payment may be made under this title, see section 405 of the Indian Health Care Improvement Act (25 U.S.C. 1645).'.

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

SEC. 123. ADDITIONAL DUTIES FOR MEDPAC AND RURAL REPRESENTATION ON MEDPAC.

(a) ADDITIONAL DUTIES- Section 1805(b)(2) of the Social Security Act (42 U.S.C. 1395b-6(b)(2)) is amended by adding at the end the following:

`(D) MEDICARE PAYMENTS IN RURAL AREAS- Specifically, the Commission shall review--

`(i) the impact that the prospective payment systems for skilled nursing facility services under section 1888(e), for home health services under section 1895, and for hospital outpatient department services under section 1833(t) have on access to services in rural areas; and

`(ii) the operating margins for hospitals located in rural or frontier areas.'.

(b) RURAL REPRESENTATION- Section 1805(c)(2)(A) of the Social Security Act (42 U.S.C. 1395b-6(c)(2)(A)) is amended by adding at the end the following: `At least 2 of the members of the Commission shall be individuals who can represent the interests of rural health care providers and beneficiaries.'.

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

SEC. 124. 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:

`(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:

`Qualified Mental Health Professional Services

`(uu)(1) The term `qualified mental health professional services' means--

`(A) such services furnished (with such frequency limits as the Secretary determines appropriate) to an eligible individual by a mental health professional as the mental health professional is legally authorized to perform under State law (or under a State regulatory mechanism provided by State law) of the State in which such services are performed; and

`(B) such services and supplies (with such limits) furnished as an incident to services described in subparagraph (A),

as would otherwise be covered if furnished by a physician (or as an incident to a physician's professional service).

`(2) In this subsection:

`(A) The term `eligible individual' means an individual who resides in an area designated by the Secretary as a mental health professional shortage area.

`(B) The term `mental health professional' means an individual who--

`(i) holds a master's or doctor's degree in the field of mental health;

`(ii) has at least 2 years of post-degree supervised clinical experience; and

`(iii) has been certified or licensed as a mental health professional for the diagnosis and treatment of mental illnesses by the State (or under the State regulatory mechanism provided by State law) in which the individual furnishes qualified mental health professional services.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to services furnished on or after October 1, 1999.

SEC. 125. STUDY AND REPORT REGARDING BARRIERS THAT INDIVIDUALS RESIDING IN RURAL AREAS FACE IN OBTAINING QUALITY MENTAL HEALTH SERVICES.

(a) STUDY- The Secretary of Health and Human Services shall conduct a study on--

(1) the barriers that beneficiaries under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) who reside in rural areas face in obtaining quality mental health services; and

(2) ways to reduce or eliminate such barriers.

(b) REPORT- Not later than January 1, 2001, the Secretary of Health and Human Services shall submit a report to Congress on the study conducted under subsection (a), together with any recommendations for legislation that the Secretary determines to be appropriate to reduce or eliminate the barriers described in subsection (a).

SEC. 126. MEDICARE WAIVERS FOR PROVIDERS IN RURAL AREAS.

Notwithstanding section 1886(d)(2)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(2)(D)), by not later than 180 days after the date of enactment of this Act, the Secretary of Health and Human Services shall establish a waiver process in which entities and individuals under the medicare program that are determined by the Office of Management and Budget to be located in an urban or large urban area for purposes of reimbursement under such program may apply to the Secretary to be considered to be located in a rural area for such purposes if such entity or individual is located--

(1) in a rural area within a metropolitan county, as defined by the most recent update of the Goldsmith Modification; or

(2) in a rural area as determined by using a census tract definition of a rural area adopted by the Office of Rural Health Policy in awarding grants.

SEC. 127. REVISION OF PER-VISIT PAYMENT LIMITS FOR RURAL HEALTH CLINIC SERVICES.

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

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

(2) in paragraph (2)--

(A) by striking `in a subsequent year' and inserting `in each of the years 1989 through 1999'; and

(B) by striking the period at the end and inserting a comma; and

(3) by adding at the end the following:

`(3) in 2000, at an amount per visit that the Secretary determines (by regulation) is reasonable and related to the costs of furnishing rural health clinic services, but in no case shall such amount be less than the limit applicable under this subsection in 1999, and

`(4) in a subsequent year, at the limit established under this subsection for the previous year--

`(A) increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) applicable to primary care services (as defined in section 1842(i)(4)) furnished as of the first day of that year; and

`(B) adjusted, as determined appropriate by the Secretary, for changes in the scope of services that rural health clinics are authorized to provide.

In determining the amount under paragraph (3), the Secretary shall use the fee schedule established under section 1848(b).'.

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

SEC. 128. EXPANSION OF ADDITIONAL PAYMENTS FOR SERVICES FURNISHED IN HEALTH PROFESSIONAL SHORTAGE AREAS.

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

(1) by inserting `(or services furnished by a physician assistant or nurse practitioner that would be physicians' services if furnished by a physician)' after `physicians' services';

(2) by inserting `or nurse practitioner' after `physician'; and

(3) by striking `clause (A)' and inserting `subparagraphs (A) and (C)'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to payments for services provided on or after January 1, 2000.

SEC. 129. AUTHORITY TO ESTABLISH A PROSPECTIVE PAYMENT SYSTEM FOR RHC SERVICES.

(a) ESTABLISHMENT OF SYSTEM- Section 1833 of the Social Security Act (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) of the Social Security Act (42 U.S.C. 1395l(a)(3)) is amended by inserting `subject to subsection (u),' before `in the case'.

(2) LIMITS- Section 1833(f) of the Social Security Act (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) of the Social Security Act (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. 130. SEPARATE WAGE INDEXES FOR MAKING ADJUSTMENTS TO PAYMENTS UNDER THE PROSPECTIVE PAYMENT SYSTEMS FOR SKILLED NURSING FACILITIES AND HOME HEALTH AGENCIES.

(a) SKILLED NURSING FACILITY PROSPECTIVE PAYMENT SYSTEM- Section 1888(e)(4)(G)(ii) of the Social Security Act (42 U.S.C. 1395yy(e)(4)(G)(ii)) is amended by adding at the end the following: `Beginning in 2001, the area wage adjustment under this clause shall be based on the wages of individuals employed at skilled nursing facilities.'.

(b) HOME HEALTH PROSPECTIVE PAYMENT SYSTEM-

(1) IN GENERAL- Section 1895(b)(4)(C) of the Social Security Act (42 U.S.C. 1395fff(b)(4)(C)) is amended by striking the second sentence and inserting the following: `Such factors shall be based on the wages of individuals employed at home health agencies.'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall take effect as if included in the enactment of the Balanced Budget Act of 1997.

SEC. 131. REQUIREMENT TO CONSIDER RURAL ISSUES IN ESTABLISHING FEE SCHEDULE FOR AMBULANCE SERVICES.

(a) IN GENERAL- Section 1834(l)(2)(C) of the Social Security Act (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) shall take effect as if included in the enactment of the Balanced Budget Act of 1997.

TITLE II--ADDITIONAL PROVISIONS TO ADDRESS SHORTAGES OF HEALTH PROFESSIONALS IN RURAL AREAS

SEC. 201. HEALTH PROFESSIONAL SHORTAGE AREAS.

(a) IN GENERAL- Section 332 of the Public Health Service Act (42 U.S.C. 254e) is amended--

(1) in subsection (a)(1)(A), by inserting after `services)' the following: `, or a frontier area (as defined by the Secretary),'; and

(2) by adding at the end of subsection (c), the following:

`(3) Any pending retirements or resignations of physicians available within the area involved. In implementing this paragraph, the Secretary shall waive the requirements of this section with respect to the number of physicians serving the area for the 12-month period ending on the date on which the retirement or resignation takes effect.'.

(b) DEVELOPMENT OF DEFINITION OF FRONTIER- For purposes of section 332 of the Public Health Service Act (42 U.S.C. 254e) and for purposes of payment under

title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), the Secretary of Health and Human Services shall, by regulation, define the term `frontier'. Such definition shall take into account population density and distance in miles, and time in minutes, to the nearest medical facility.

(c) REQUIREMENTS FOR FUTURE REGULATIONS REGARDING THE DESIGNATION OF A HPSA- The Secretary of Health and Human Services shall not implement any regulation that establishes a new methodology for designating an area as a health professional shortage area under section 332 of the Public Health Service Act (42 U.S.C. 254e) unless such methodology--

(1) is not detrimental to underserved rural or frontier communities, including that the methodology does not result in the provision of fewer services in such communities; and

(2) includes consideration of the percentage of the population over the age of 65 years residing in an area.

(d) REPORT TO CONGRESS- Not later than January 1, 2001, the Secretary of Health and Human Services shall submit a report to Congress which contains a detailed description of--

(1) the development of a definition of the term `frontier' pursuant to subsection (b);

(2) the impact that the use of such definition has on Federal heath care programs; and

(3) any recommendations that the Secretary determines to be appropriate.

(e) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect on the date of enactment of this Act.

SEC. 202. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM.

(a) IN GENERAL- Subsection (c) of section 117 of the Internal Revenue Code of 1986 (relating to the exclusion from gross income amounts received as a qualified scholarship) is amended--

(1) by striking `Subsections (a)' and inserting the following:

`(1) IN GENERAL- Subject to paragraph (2), subsections (a)'; and

(2) by adding at the end the following:

`(2) NATIONAL HEALTH CORPS SCHOLARSHIP PROGRAM- Paragraph (1) shall not apply to any amount received by an individual under the National Health Corps Scholarship Program under section 338A(g)(1)(A) of the Public Health Service Act.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to amounts received in taxable years beginning after December 31, 1995.

SEC. 203. DESIGNATION OF UNDERSERVED AREAS UNDER HEALTH CARE CONTRACTS ADMINISTERED BY THE OFFICE OF PERSONNEL MANAGEMENT.

Section 8902(m)(2)(A) of title 5, United States Code, is amended by striking `a State where 25 percent' and all that follows through the period and inserting `an area designated as a health professional shortage area by the Department of Health and Human Services in accordance with section 332 of the Public Health Service Act (42 U.S.C. 254e).'.

SEC. 204. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS UNDER THE MEDICAID PROGRAM.

(a) IN GENERAL- Section 1902(a)(13) of the Social Security Act (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 of the Social Security Act (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 of the center or clinic of 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 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.'.

(b) CONFORMING AMENDMENTS-

(1) Section 4712 of the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 508) is amended by striking subsection (c).

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

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

SEC. 205. REVISION AND CLARIFICATION OF MEDICARE REIMBURSEMENT OF TELEHEALTH SERVICES.

(a) IN GENERAL- Section 4206(a) of the Balanced Budget Act of 1997 (42 U.S.C. 1395l note) is amended to read as follows:

`(a) REIMBURSEMENT OF TELEHEALTH SERVICES AUTHORIZED-

`(1) IN GENERAL- Beginning on the date of enactment of the Comprehensive Telehealth Act of 1999 and subject to paragraph (3), the Secretary of Health and Human Services shall make payments from the Federal Supplementary Medical Insurance Trust Fund under part B of title XVIII of the Social Security Act (42 U.S.C. 1395j et seq.) in accordance with the methodology described in subsection (b) for items and services for which payment may be made under such part that are provided via telecommunications systems including store-and-forward technologies (as defined in paragraph (2)) by a physician (as defined in section 1861(r) of such Act (42 U.S.C. 1395x(r))) or a practitioner (as defined in paragraph (2)) to a beneficiary under the medicare program residing in a county in a rural area (as defined in section 1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D))) notwithstanding that the physician or practitioner providing the item or service via telecommunication systems is not at the same location as the medicare beneficiary.

`(2) DEFINITIONS-

`(A) PRACTITIONER- For purposes of paragraph (1), the term `practitioner' includes--

`(i) a practitioner described in section 1842(b)(18)(C) of the Social Security Act (42 U.S.C. 1395u(b)(18)(C)) (including a clinical psychologist); and

`(ii) a physical, occupational, or speech therapist.

`(B) STORE-AND-FORWARD TECHNOLOGIES- For purposes of paragraph (1), the term `store-and-forward technologies' has the meaning given that term by the Secretary, except that the term shall include technologies through which information (including any audio recording or visual image) is transferred and stored for purposes of review by a health care provider if the patient, the referring physician, or the health care provider is not present at the time the asynchronous review occurs at the remote site.

`(3) RULE OF CONSTRUCTION- Nothing in this subsection shall be construed as requiring payment for services provided to a patient solely on the basis of information conveyed via facsimile machine or via traditional telephone conversation.'.

(b) ANY HEALTH CARE PRACTITIONER MAY PRESENT BENEFICIARY TO CONSULTING PHYSICIAN- Section 4206(b) of the Balanced Budget Act of 1997 (42 U.S.C. 1395l note) is amended by adding at the end the following:

`(5) Any health care practitioner (whether or not such practitioner is certified under the medicare program) that is acting on instructions from the referring physician or practitioner may present the beneficiary to the consulting physician or practitioner for the provision of items and services. The referring physician and the practitioner shall not receive any reimbursement for such presentation other than the payment that the referring physician receives pursuant to paragraph (1).'.

(c) ALL CPT BILLING CODES COVERED UNDER TELEHEALTH PROGRAM- Section 4206 of the Balanced Budget Act of 1997 (42 U.S.C. 1395l note) is amended by adding at the end the following:

`(e) COVERAGE OF SERVICES- Payment for items and services provided pursuant to subsection (a) shall include payment for all current procedural terminology billing codes that are covered under the medicare program

under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.).'.

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

SEC. 206. STUDY AND REPORTS TO CONGRESS REGARDING TELEHEALTH LICENSURE.

(a) STUDY- The Secretary shall conduct a study regarding--

(1) the number, percentage, and types of health care providers licensed to provide telehealth services across State lines, including the number and types of health care providers licensed to provide such services in more than 3 States;

(2) the status of any reciprocal, mutual recognition, fast-track, or other licensure agreements between or among various States;

(3) the status of any efforts to develop uniform national sets of standards for the licensure of health care providers to provide telehealth services across State lines;

(4) a projection of future utilization of telehealth consultations across State lines;

(5) State efforts to increase or reduce licensure as a burden to interstate telehealth practice; and

(6) any State licensure requirements that appear to constitute unnecessary barriers to the provision of telehealth services across State lines.

(b) REPORTS TO CONGRESS-

(1) INITIAL REPORT- Not later than January 1, 2000, the Secretary shall submit to the appropriate committees of Congress a detailed report on the study conducted under subsection (a).

(2) ANNUAL REPORTS-

(A) IN GENERAL- Not later than January 1, 2001, and each January 1 thereafter, the Secretary shall submit to the appropriate committees of Congress a report on relevant developments regarding the matters studied by the Secretary pursuant to subsection (a).

(B) RECOMMENDATIONS- If, with respect to a report submitted under subparagraph (A), the Secretary determines that States are not making progress in facilitating the provision of telehealth services across State lines by eliminating unnecessary requirements, adopting reciprocal licensing arrangements for telehealth services, implementing uniform requirements for telehealth licensure, or other means, the Secretary shall include in the report recommendations concerning the scope and nature of Federal actions required to reduce licensure as a barrier to the interstate provision of telehealth services.

SEC. 207. JOINT WORKING GROUP ON TELEHEALTH.

(a) IN GENERAL-

(1) REDESIGNATION- The Joint Working Group on Telemedicine, established by the Secretary, shall hereafter be known as the `Joint Working Group on Telehealth' with the chairperson being designated by the Director of the Office for the Advancement of Telehealth.

(2) MISSION- The mission of the Joint Working Group on Telehealth is to--

(A) identify, monitor, and coordinate Federal telehealth projects, data sets, and programs;

(B) analyze--

(i) how telehealth systems are expanding access to health care services, education, and information;

(ii) the clinical, educational, or administrative efficacy and cost-effectiveness of telehealth applications; and

(iii) the quality of the telehealth services delivered; and

(C) make further recommendations for coordinating Federal and State efforts to increase access to health care services, education, and information in rural and underserved areas.

(3) ANNUAL REPORTS- Not later than January 1, 2000, and annually thereafter, the Joint Working Group on Telehealth shall report to Congress on the status of the Group's mission and the state of the telehealth field generally.

(b) REPORT SPECIFICS- The annual report required under subsection (a)(3) shall include--

(1) an analysis of--

(A) the matters described in subsection (a)(2)(B);

(B) the Federal activities with respect to telehealth; and

(C) the progress of the Joint Working Group on Telehealth's efforts to coordinate Federal telehealth programs; and

(2) recommendations for a coordinated Federal strategy to increase health care access through telehealth.

(c) TERMINATION- The Joint Working Group on Telehealth shall terminate on the date that the Group submits the annual report that is due to be submitted on January 1, 2004, under subsection (a)(3).

(d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated such sums as are necessary for the Joint Working Group on Telehealth to carry out the purposes of this section.

TITLE III--DEVELOPMENT OF TELEHEALTH NETWORKS

Subtitle A--Development of Telehealth Networks

SEC. 301. FINANCIAL ASSISTANCE AUTHORIZED.

(a) IN GENERAL- The Secretary, acting through the Director of the Office for Advancement of Telehealth, shall provide financial assistance (as described in section 302) to eligible telehealth networks (as described in section 303) for the purpose of expanding access to health care services for individuals in rural and frontier areas through the use of telehealth networks.

(b) MAXIMUM AMOUNT OF FINANCIAL ASSISTANCE- The Secretary may establish the maximum amount of financial assistance made available to a recipient for each fiscal year under this title by publishing notice of such amount in the Federal Register or the Health Resources and Services Administration Preview.

SEC. 302. FINANCIAL ASSISTANCE DESCRIBED.

(a) IN GENERAL- Financial assistance shall consist of loans (as described under subsection (b)), grants (as described under subsection (c)), or both as apportioned under subsection (d).

(b) LOANS-

(1) IN GENERAL- The Secretary is authorized to provide loans to eligible telehealth networks under this title.

(2) MAXIMUM TERM OF LOANS-

(A) IN GENERAL- Subject to subparagraph (B), the Secretary may establish the maximum term of any loan provided under this title by publishing notice of such term in the Federal Register or the Health Resources and Services Administration Preview.

(B) LIMITATION- The maximum term of any loan provided under this title shall be for a period of not more than 10 years.

(3) LOAN SECURITY AND FEASIBILITY- The Secretary shall make a loan under this title only if the Secretary determines that--

(A) the security for the loan is reasonably adequate; and

(B) the loan will be repaid within the term of such loan.

(4) LOAN FORGIVENESS PROGRAM-

(A) ESTABLISHMENT- With respect to loans provided under this title, the Secretary shall establish a loan forgiveness program under which recipients of such loans may apply to have all or a portion of such loans forgiven.

(B) APPLICATION-

(i) IN GENERAL- Any recipient of a loan under this title that desires to have such loan forgiven under the program established under subparagraph (A) shall submit an application to the Secretary within 180 days of the end of the term of such loan, in such manner, and accompanied by such information as the Secretary may reasonably require.

(ii) CONTENTS- Each application submitted pursuant to clause (i) shall--

(I) demonstrate that the recipient has a financial need for such forgiveness; and

(II) demonstrate that the recipient has satisfied the quality and cost-effectiveness criteria developed under subparagraph (C).

(C) QUALITY AND COST-EFFECTIVENESS CRITERIA- As part of the program established under subparagraph (A), the Secretary shall develop criteria for determining the quality and cost-effectiveness of programs operated with loans provided under this title.

(c) GRANTS- The Secretary is authorized to award grants to eligible telehealth networks under this title.

(d) APPORTIONMENT-

(1) IN GENERAL- Subject to paragraph (2), the Secretary shall determine what portion of the financial assistance provided to an eligible telehealth network is a grant and what portion of such financial assistance is a loan.

(2) REQUIREMENTS- In determining the apportionment under paragraph (1), the Secretary shall--

(A) ensure that the Federal Government receives the maximum feasible repayment of the financial assistance by basing such apportionment on the ability of the recipient to repay a loan provided under this title; and

(B) fully use the funds made available to carry out this title.

SEC. 303. ELIGIBLE TELEHEALTH NETWORKS.

(a) IN GENERAL- An entity that is a health care provider and a member of an existing or proposed telehealth network, or an entity that is a consortium of health care providers that are members of an existing or proposed telehealth network shall be eligible for financial assistance under this title.

(b) REQUIREMENTS-

(1) IN GENERAL- A telehealth network referred to in subsection (a) shall, at a minimum, be composed of a multispecialty entity (as defined in paragraph (2)(A)), a network of community-based health care providers (as defined in paragraph (2)(B)), and a public entity (as defined in paragraph (2)(C)).

(2) DEFINITIONS-

(A) MULTISPECIALTY ENTITY- For purposes of paragraph (1), the term `multispecialty entity' means an entity which--

(i) provides 24-hour access to a range of diagnostic and therapeutic services; and

(ii) may be located in an urban area.

(B) NETWORK OF COMMUNITY-BASED HEALTH CARE PROVIDERS- For purposes of paragraph (1), the term `network of community-based health care providers' means a network located in a rural area (as defined by the Secretary) that includes at least 2 of the following:

(i) A community or migrant health center.

(ii) A local health department.

(iii) A nonprofit or public hospital.

(iv) A health professional in private practice.

(v) A rural health clinic.

(vi) A skilled nursing facility.

(vii) A county mental health facility or other publicly funded mental health facility.

(viii) A provider of home health services.

(ix) Any other publicly funded health or social services agency.

(C) PUBLIC ENTITY- For purposes of paragraph (1), the term `public entity' means an entity that demonstrates its use of the telehealth network for purposes of education and economic development (as required by the Secretary), and includes--

(i) a public school;

(ii) a public library;

(iii) a college or university;

(iv) a local government entity; or

(v) a local business entity that is not related to the provision of health care services.

(c) FOR-PROFIT ENTITY- A telehealth network may include for-profit entities so long as the recipient of financial assistance under this title is a nonprofit entity.

SEC. 304. USE OF FINANCIAL ASSISTANCE.

(a) PERMITTED USES- Any recipient of financial assistance under this title may use such financial assistance for the acquisition of telehealth equipment and modifications or improvements of telehealth services including--

(1) the development and acquisition through lease or purchase of computer hardware and software, audio and video equipment, computer network equipment, interactive equipment, data terminal equipment, or other equipment that would further the purposes of this title;

(2) the provision of technical assistance and instruction for the development and use of such equipment;

(3) the development and acquisition of instructional programming;

(4) demonstration projects for teaching or training medical students, residents, and other students in health professions in rural training sites regarding the application of telehealth;

(5) transmission costs, maintenance of equipment, compensation of specialists, and referring health care providers;

(6) development of projects to use telehealth to facilitate collaboration among health care providers;

(7) electronic archival of patient records;

(8) collection and analysis of usage statistics and data that can be used to document the cost-effectiveness of the telehealth services; or

(9) such other uses that are consistent with achieving the purposes of this title as approved by the Secretary.

(b) PROHIBITED USES- Any recipient of financial assistance under this title may not use such financial assistance for the following purposes:

(1) To build structures on or acquire real property, except that such funds may be expended for minor renovations relating to the installation of equipment.

(2) To purchase or lease equipment to the extent the expenditures would exceed more than 40 percent of the financial assistance provided in the form of grants pursuant to section 302(c).

(3) To purchase or install transmission equipment (such as laying cable or telephone lines, microwave towers, amplifiers, and digital switching equipment).

(4) For indirect costs (as determined by the Secretary) to the extent the expenditures would exceed more than 20 percent of the financial assistance.

SEC. 305. APPLICATION.

(a) IN GENERAL- Each eligible telehealth network that desires to receive financial assistance under this title, in consultation with the State office of rural health or other appropriate State agency, shall submit an application to the Secretary at such time, in such manner, and accompanied by such additional information as the Secretary may reasonably require.

(b) CONTENTS- Each application submitted pursuant to subsection (a) shall include at least the following information:

(1) A description of the anticipated need for financial assistance.

(2) A description of the activities which the entity intends to carry out using the financial assistance provided under this title.

(3) A plan for continuing the project after financial assistance provided under this title has ended.

(4) A description of the manner in which the activities funded by the financial assistance provided under this title will meet health care needs of underserved rural populations within the State.

(5) A description of how the local community or region to be served by the proposed telehealth network will be involved in the development and ongoing operations of the telehealth network.

(6) A description of the source and amount of non-Federal funds the entity would pledge for the project.

(7) A description of the long-term viability of the project and evidence of health care provider commitment to the telehealth network.

SEC. 306. APPROVAL OF APPLICATION.

(a) IN GENERAL- The Secretary shall approve applications in accordance with the criteria established in subsection (b) and the preferences described in subsection (c).

(b) CRITERIA- The Secretary shall not approve an application under this section unless the Secretary finds the following:

(1) EXPENDITURES IN RURAL AREAS- At least 50 percent of the financial assistance is expended--

(A) in a rural area; or

(B) to provide services to residents of rural areas.

(2) PROMOTION OF INTEGRATION- The application demonstrates that the project will--

(A) promote the integration of telehealth in the community;

(B) avoid redundancy of technology;

(C) achieve economies of scale; and

(D) coordinate telehealth services across different networks within a geographic region.

(c) PREFERENCES- In providing financial assistance under this title, the Secretary shall give preference to any applicant telehealth network that--

(1) is a health care provider in a telehealth network or a health care provider that proposes to form such a network, in which the majority of the health care providers in such network are located in an area that is designated by the Federal Government or the State as--

(A) a medically underserved area; or

(B) a health, dental health, or mental health professional shortage area;

(2) proposes to use financial assistance provided under this title to plan and establish telehealth networks that will link rural hospitals and rural health care providers to other hospitals, health care providers, and patients;

(3) proposes to use financial assistance provided under this title--

(A) to offer a range of health care applications; and

(B) to promote greater efficiency in the use of health care resources;

(4) demonstrates financial, institutional, and community support for the long-term viability of the telehealth network through cost participation and other indicators determined by the Secretary; and

(5) demonstrates a detailed plan for coordinating telehealth network use by eligible telehealth networks so that health care services are given priority over services that are not related to the provision of health care services.

SEC. 307. ADMINISTRATION.

(a) NONDUPLICATION- The Secretary shall ensure that services and programs developed with financial assistance provided under this title do not duplicate established telehealth networks that adequately serve rural populations.

(b) COORDINATION WITH OTHER AGENCIES- The Secretary shall coordinate, to the extent practicable, with other Federal and State agencies with similar grant, loan, or other financial assistance programs to pool resources for funding meritorious proposals for the development of telehealth networks in rural areas.

(c) INFORMATIONAL EFFORTS- The Secretary shall establish and implement procedures to carry out informational efforts that notify potential applicants located in the rural areas of each State of the financial assistance available under this title.

SEC. 308. REGULATIONS.

Not later than 180 days after the date of enactment of this Act, the Secretary shall by regulation prescribe such rules and regulations as the Secretary deems necessary to carry out the provisions of this title.

SEC. 309. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this title, $40,000,000 for fiscal year 2000, and such sums as may be necessary for each of fiscal years 2001 through 2006.

Subtitle B--Rural Health Outreach and Network Development Grant Program

SEC. 315. RURAL HEALTH OUTREACH AND NETWORK DEVELOPMENT GRANT PROGRAM.

(a) IN GENERAL- Section 330A of subpart I of part D of title III of the Public Health Service Act (42 U.S.C. 254c) is amended--

(1) in the heading, by striking `outreach, network, development, and telemedicine' and inserting `outreach and network development';

(2) in subsection (c)--

(A) in paragraph (1)(A)--

(i) by striking `nonprofit private entity' and inserting `private nonprofit entity'; and

(ii) by striking `three' and inserting `3';

(B) in paragraph (2), by striking `so long as' and inserting `as long as'; and

(C) by striking paragraph (3); and

(3) in subsection (e)--

(A) in paragraph (1), by striking `Amounts' and inserting `Subject to paragraphs (2) and (3), amounts';

(B) in paragraph (2)--

(i) by striking `RURAL AREAS- ' and all that follows through `In awarding' and inserting `RURAL AREAS- In awarding'; and

(ii) by striking subparagraph (B); and

(C) by striking paragraph (3) and inserting the following:

`(3) LIMITATIONS- An eligible network described in subsection (c) may not use--

`(A) more than 40 percent of the amounts provided under a grant under this section to purchase equipment; or

`(B) any of the amounts provided under a grant under this section--

`(i) to build structures on or acquire real property; or

`(ii) for construction.'.

(b) TRANSITION- The Secretary of Health and Human Services shall ensure the continued funding of

grants made, or contracts or cooperative agreements entered into, under subpart I of part D of title III of the Public Health Service Act (42 U.S.C. 254b et seq.) (as such subpart existed on the day prior to the date of enactment of this Act), until the expiration of the grant period or the term of the contract or cooperative agreement. Such funding shall be continued under the same terms and conditions as were in effect on the date on which the grant, contract, or cooperative agreement was awarded, subject to the availability of appropriations.

TITLE IV--MISCELLANEOUS PROVISIONS

SEC. 401. BANK DEDUCTIBILITY OF SMALL, TAX-EXEMPT DEBTS.

(a) IN GENERAL- Section 265(b)(3) of the Internal Revenue Code of 1986 (relating to exception for certain tax-exempt obligations) is amended by adding at the end the following:

`(G) ELECTION TO APPLY LIMITATION ON AMOUNT OF OBLIGATIONS AT BORROWER LEVEL-

`(i) IN GENERAL- An issuer, the proceeds of the obligations of which are to be used to make or finance eligible loans, may elect to apply subparagraphs (C) and (D) by treating each borrower as the issuer of a separate issue.

`(ii) ELIGIBLE LOAN- For purposes of this subparagraph--

`(I) IN GENERAL- The term `eligible loan' means 1 or more loans to a qualified borrower the proceeds of which are used by the borrower for health care or educational purposes and the outstanding balance of which issued during a calendar year does not exceed $5,000,000.

`(II) QUALIFIED BORROWER- The term `qualified borrower' means a borrower which is an organization described in section 501(c)(3) and exempt from taxation under section 501(a).

`(iii) MANNER OF ELECTION- The election described in clause (i) may be made by an issuer for any calendar year at any time prior to its first issuance during such year of obligations the proceeds of which will be used to make or finance 1 or more eligible loans.

`(iv) MODIFICATION OF RULE FOR COMPOSITE ISSUES- In the case of an obligation which is issued by any issuer which has made the election described in clause (i), subparagraph (F) shall be applied without regard to clause (i) of such subparagraph.'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1999.

SEC. 402. ACCESS TO DATA.

(a) REQUIREMENT- The heads of the agencies described in subsection (b) shall negotiate and enter into interagency agreements with agencies and offices of the Department of Health and Human Services under which such agencies and offices will be provided access to data sets for intramural and extramural research conducted or supported by such agencies or offices.

(b) AGENCY HEADS- The agencies described in this section are the following:

(1) The National Center for Health Statistics.

(2) The Centers for Disease Control and Prevention.

(3) The Agency for Health Care Policy and Research.

(4) The Bureau of the Census.

(c) INFORMATION- The information that is to be made available under interagency agreements under this section shall include all information that is necessary for scholarly and policy research. Such information shall be made available in a manner that includes a description of the geographic area or location of the individuals who are the subject of such information.

(d) AVAILABILITY- Information that is subject to an interagency agreement under this section shall be made available to bona fide researchers as determined appropriate by the Secretary of Health and Human Services.

(e) CONFIDENTIALITY- Each interagency agreement entered into under this section shall contain provisions that protect the confidentiality of the individuals who are the subjects of such information.

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