Attorneys
Summary of Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (adobe acrobat format)
Peter W. Thomas, Esq. & Jeremy Allen
January 19, 2001
Download the Adobe Acrobat file of this article
Title I – Beneficiary ProvisionsSubtitle A – Improved Preventive Benefits
Section 101: Coverage of Biennial Screening Pap Smear and Pelvic Exams.
This provision modifies current law to provide for biennial pelvic exams and allows all women to have biennial pap smears.
Section 102: Coverage of Screening for Glaucoma.
This provision will add Medicare coverage for annual glaucoma screenings for individuals determined to be at high risk for glaucoma, individuals with a family history of glaucoma, and individuals with diabetes or myopia.
Section 103: Coverage of Screening Colonoscopy for Average Risk Individuals.
This provision will extend coverage for screening colonoscopies for all individuals (the Balanced Budget Act of 1997, or BBA 97, authorized payment for these tests only for high risk individuals). Medicare will cover a colonoscopy once every 10 years and a flexible sigmoidoscopy every 4 years.
Section 104: Modernization of Screening Mammography Benefit.
This provision will allow for coverage of a mammography under Medicare once for women between 35 and 39 and annually for women ages 40 and over. The provision also provides for payment for mammography screenings performed using new technologies.
Section 105: Coverage of Medical Nutrition Therapy Services for Beneficiaries With Diabetes or a Renal Disease.
This provision establishes Medicare coverage of medical nutrition therapy services for the purpose of disease management that are furnished by a registered dietician or nutrition professional, pursuant to a referral by a physician. The provision defines the term "registered dietician or nutrition professional" and specifies that the amount paid for medical nutrition therapy services would be the lesser of the actual charge for the service or 85% of the amount that would be paid under the physician fee schedule if such services were provided by a physician.
Subtitle B – Other Beneficiary Improvements
Section 111: Acceleration of Reduction of Beneficiary Copayment for Hospital Outpatient Department Services.
This provision directs the Secretary to reduce the national unadjusted copayment for covered outpatient department services so that the copayment does not exceed: 60% in fiscal year (FY) 2001, 55% in FYs 2002 and 2003; 50% in FY 2004; 45% in FY 2005; and 40% in FY 2006. The provision also clarifies that the copayment amount for a procedure exceed the inpatient hospital deductible for that year.
Section 112: Preservation of Coverage of Drugs and Biologicals Under Part B of the Medicare Program.
This provision will ensure that drugs and biologicals which are provided incident to a physician’s services and cannot be self-administered will be covered under Medicare. Under this provision, the criteria for determining whether or not a drug can be self-administered is based on the usual method of administration. This is a departure from the criteria developed by the Health Care Financing Administration (HCFA), which directed its carriers to base their coverage decisions on whether or not any patient could self-administer the drug or biological, regardless of the patient’s physical condition.
Section 113: Elimination of Time Limitation on Medicare Benefits for Immunosuppressive Drugs.
Under current law, Medicare provides coverage of immunosuppressive drugs for beneficiaries who undergo organ transplant surgery for 44 months following their surgery. This provision will eliminate all time limitations from the current benefit for all aged and disabled Medicare beneficiaries.
Section 114: Imposition of Billing Limits on Prescription Drugs.
Medicare payment for covered prescription drugs equals 95% of the average wholesale price of the drug. Certain practitioners are required to bill for all services on an assignment-related basis. This means that they are required to accept Medicare’s recognized payment amount as payment in full, except for any required deductible and coinsurance amounts. Balance billing is prohibited. This provision specifies that payment for drugs under Part B must be made on the basis of assignment.
Subtitle C – Demonstration Projects and Studies
Section 121: Demonstration Project for Disease Management for Severely Chronically Ill Medicare Beneficiaries.
This provision directs the Secretary of HHS (to be referred to as the Secretary for the remainder of this document) to conduct a demonstration project to determine the effectiveness of applying disease management to Medicare beneficiaries with diagnosed, advanced-stage congestive heart failure, diabetes, or coronary heart disease. The project will be for three years, with the Secretary required to report on the status of the project two years into the project and issue a final report no later than 6 months after the completion of the project.
Section 122: Cancer Prevention and Treatment Demonstration for Ethnic and Racial Minorities.
This provision directs the Secretary to conduct demonstration projects to: improve the quality of items and services provided to target individuals in order to reduce disparities in early detection and treatment of cancer; improve clinical outcomes among these targeted individuals with cancer; eliminate the disparities in the rate of preventive cancer screening measures among targeted individuals; and provide collaboration with community-based organizations to ensure cultural competency of health care professionals.
Section 123: Study on Medicare Coverage of Routine Thyroid Screening.
This provision directs the Secretary to have the National Academy of Sciences, in conjunction with the United States Preventive Services Task Force, analyze the addition of routine thyroid screenings as a new preventive benefit.
Section 124: MedPAC Study on Consumer Coalitions.
This provision directs the Medicare Payment Advisory Commission (MedPAC) to study the utility of using consumer coalitions in the marketing of Medicare+Choice (M+C) plans. The study will focus on the potential for these consumer coalitions in negotiating M+C benefits and premiums and the dissemination of comparative information about different M+C plan options to eligible beneficiaries.
Section 125: Study on Limitation on State Payment for Medicare Cost Sharing Affecting Access to Services for Qualified Medicare Beneficiaries.
Under current law, states are not required to pay Medicare cost-sharing for beneficiaries if these payments result in a total payment in excess of the Medicaid level. The Secretary shall conduct a study to determine if access to certain services (including mental health services) for beneficiaries have been affected by this limitation on a state’s payment for cost sharing for these beneficiaries. The Secretary is directed to analyze the affect of the payment limit on providers who serve a disproportionate share of these beneficiaries.
Section 126: Institute of Medicine Study on Waiver of 24-Month Waiting Period for Medicare Disability Eligibility for Amyotrophic Lateral Sclerosis (ALS) and Other Devastating Diseases.
This provision directs the Secretary to study the effect of waiving the 24-month waiting period for Medicare disability eligibility for beneficiaries with ALS and other diseases where most beneficiaries do not live long enough to become eligible for Medicare benefits.
Section 127: Studies on Preventive Interventions in Primary Care for Older Americans.
This provision directs the Secretary, acting through the United States Preventive Services Task Force, to conduct a series of studies designed to identify preventive interventions that can be delivered in the primary care setting that are most valuable to older Americans.
Section 128: MedPAC Study and Report on Medicare Coverage of Cardiac and Pulmonary Rehabilitation Services.
MedPAC is directed to study coverage of cardiac and pulmonary rehabilitation services under Medicare. In particular, MedPAC will focus on the appropriate qualifying diagnoses required for coverage of cardiac and pulmonary rehabilitation services, level of direct physician involvement and supervision in furnishing these services, and level of reimbursement for these services.
Title II – Rural Health Care Improvements
Subtitle A – Critical Access Hospitals
Section 201: Clarification of No Beneficiary Cost-Sharing for Clinical Diagnostic Laboratory Tests Furnished by Critical Access Hospitals.
The Balanced Budget Refinement Act of 19999 (BBRA 99) changed the basis for clinical diagnostic laboratory tests furnished by critical access hospitals (CAHs) from cost-based reimbursement to payment based on 80% of the laboratory fee schedule and obligated CAHs to collect 20% coinsurance from beneficiaries.
This provision will ensure that Medicare beneficiaries will not be liable for any coinsurances, deductible, copayment, or other cost-sharing amount with respect to clinical diagnostic laboratory services furnished as an outpatient CAH service.
Section 202: Assistance with Fee Schedule Payment for Professional Services Under All-Inclusive Rate.
Medicare pays CAHs on a reasonable cost basis or, at the election of an entity, a facility fee based on reasonable costs plus an amount based on Medicare’s fee schedule for professional services. This provision will allow CAHs to be paid based on reasonable costs plus an amount based on 115% of Medicare’s fee schedule for professional services.
Section 203: Exemption of Critical Access Hospital Swing Beds from SNF PPS.
Under this provision, swing beds (beds that may be used to provide either acute care or long-term services) would be exempt from the skilled nursing facility (SNF) prospective payment system.
Section 204: Payment in Critical Access Hospitals for Emergency Room On-Call Physicians.
This provision would direct the Secretary to recognize the amounts for the compensation and related costs for on-call emergency room physicians who are not present on the premises, are not otherwise furnishing services, and are not on-call at any other provider or facility.
Section 205: Treatment of Ambulance Services Furnished by Certain Critical Access Hospitals.
Under this provision, the Secretary is directed to reimburse CAHs for ambulance services if the CAH is the only provider of ambulance services within 35 miles of the CAH.
Section 206: GAO Study on Certain Eligibility Requirements for Critical Access Hospitals.
GAO is required to conduct a study on the eligibility requirements for CAHs with respect to limitations on average length of stay and number of beds, including an analysis of the feasibility of having a distinct part unit as part of a CAH and the effect of seasonal variations in patient admissions on CAH eligibility requirements.
Subtitle B – Other Rural Hospital Provisions
Section 211: Equitable Treatment for Rural Disproportionate Share Hospitals
Medicare gives hospitals that serve a large number of poor Medicare and Medicaid patients an additional payment called a disproportionate share hospital (DSH) payment. Different factors are used when determining a hospital’s eligibility threshold and payment level (location, bed size, status as a rural referral center or sole community hospital).
Under this provision, all hospitals will be eligible to receive DSH payments when their threshold amount exceeds 15%. DSH payment levels for sole community hospitals, rural referral centers, rural hospitals that are both sole community hospitals and rural referral centers, small rural hospitals, and urban hospitals with less than 100 beds would be modified.
Section 212: Option to Base Eligibility for Medicare Dependent, Small Rural Hospital Program on Discharges During 2 of the 3 Most Recently Audited Cost Reporting Periods.
Medicare dependent hospitals (MDHs) are small rural hospitals that treat a relatively high proportion of Medicare patients. Under this provision, an otherwise qualifying small rural hospital will be classified as a MDH if at least 60% of its days or discharges were attributable to Medicare Part A beneficiaries in at least two of the three most recent audited cost reporting periods for which the Secretary has a settled cost report.
Section 213: Extension of Option to Use Rebased Target Amounts to All Sole Community Hospitals.
Sole Community Hospitals (SCHs) are hospitals that are the sole source of acute inpatient service reasonably available in a geographic area. BBRA 99 permitted SCHs to be paid on the basis of hospital-specific target amounts to transition to target amounts calculated using fiscal year 1996 costs. This provision will allow any SCH to elect payment based on hospital specific updated fiscal year 1996 costs if this target amount resulted in higher Medicare payments.
Section 214: MedPAC Analysis of Impact of Volume on Per Unit Cost of Rural Hospitals With Psychiatric Units.
MedPAC is required to report on the impact of volume on the per unit cost of rural hospitals with psychiatric units and include in its report a recommendation on whether special treatment is warranted.
Subtitle C – Other Rural Providers
Section 221: Assistance for Providers of Ambulance Services in Rural Areas.
This provision will make additional payments to providers of ground ambulance services for trips between 17 and 50 miles.
Section 222: Payment for Certain Physician Assistant Services.
This provision gives permanent authority to physician assistants who owned rural health clinics that lost their designation as rural health clinics to bill Medicare directly.
Section 223: Revision of Medicare Reimbursement for Telehealth Services.
The provision establishes revised payment provisions, effective no later than July 1, 2001, for services that are provided via a telecommunications system by a physician or practitioner to an eligible beneficiary in a rural area. The Secretary would be required to make payments for telehealth services to the physician or practitioner at the distant site in an amount equal to the amount that would have been paid to the physician or practitioner if the service had been furnished to the beneficiary without the use of a telecommunications system. A facility fee would be paid to the originating site. Originating sites would include a physician or practitioner office, a critical access hospital, a rural health clinic, a Federally qualified health center or a hospital.
The Secretary is required to conduct a study, and submit recommendations to Congress, that identify additional settings, sites, practitioners and geographic areas that would be appropriate for telehealth services. Entities participating in Federal demonstration projects approved by, or receiving funding from, the Secretary as of December 31, 2000 would be qualified sites.
Section 224: Expanding Access to Rural Health Clinics.
This provision will expand access to rural health clinics by revising the definition of hospitals that excluding limits on payments for services furnished by a rural health clinic in any hospital, as opposed to only rural health clinics in rural hospitals.
Section 225: MedPAC Study on Low-Volume, Isolated Rural Health Care Providers.
This provision directs MedPAC to study the effect of low patient and procedure volume on the financial statue of low-volume, isolated rural health care providers participating in Medicare. Additionally, MedPAC is to recommend any changes in payment methodologies necessary to provide appropriate reimbursement to these providers.
Title III – Provisions Relating to Part A
Subtitle A – Inpatient Hospital Services
Section 301: Revision of Acute Care Hospital Payment Update for 2001.
Under current law, Medicare’s operating payments to hospitals are annually updated by a factor that is determined in part by a "market basket" that measures price increases that affect the costs of goods and services purchased by acute care hospitals. Hospitals receive an annual update factor that is the market basket index (MBI) minus 1.1% with one exception – if a hospital is a sole community hospital, then it receives the full MBI each year.
This provision will ensure that every hospital receives a full MBI-based update in 2001, without the 1.1% decrease.
The provision further ensures that when the Secretary next rebases the MBI, she consider the prices of blood and blood products purchased by hospitals and determine whether those prices are adequately reflected in the MBI.
Finally, this provision gives the Secretary the authority to adjust the standardized amount in future fiscal years to correct for changes in the aggregate Medicare payments caused by adjustments to the DRG weighting factors in a previous fiscal year (or estimates that such adjustments for a future fiscal year) that did not take into account coding improvements or changes in discharge classifications and did not accurately represent increases in the resource intensity of patients treated by PPS hospitals.
Section 302: Additional Modification in Transition for Indirect Medical Education Percentage Adjustment.
This provision reduces the scheduled reductions in the indirect medical education payment adjustment (IME) mandated under BBA 97. Under BBA 97, the IME payment adjustment was gradually reduced from 7.7% for each 10% increase in teaching intensity to 5.5% in FY 2001 and beyond. BBRA 99 changed the IME reduction to 6.5% in FY 2000, 6.25% in FY 2001, and 5.5% in FY 2002 and beyond. Under this provision, that payment would be 6.5% in FY 2001, 6.5% in FY 2002, and 5.5% in FY 2003 and beyond.
Section 303: Decrease in Reductions for Disproportionate Share Hospital (DSH) Payments.
This provision would reduce scheduled reductions in payments to hospitals that serve a disproportionate share of low income Medicare and Medicaid beneficiaries. Under current law, DSH payments were scheduled to be reduced by 3% in FY 2000 and 2001, 4% in FY 2002, and 0% in FY 2003 and beyond. This provision will reduce these cuts to 2% in FY 2001, 3% in FY 2002, and 0% in FYs 2003 and beyond.
Section 304: Wage Index Improvements.
Under this provision, for FY 2001 or any fiscal year thereafter, a Medicare Geographic Classification Review Board (MGCRB) decision to reclassify a PPS hospital for use of a different area’s wage index would be effective for 3 fiscal years. The Secretary will establish procedures whereby a hospital could elect to terminate this reclassification decision before the end of the original 3-year period.
For FY 2003 and beyond, MGCRBs would base any comparison of the average hourly wage of the hospital with the average hourly wage for hospitals in the area using data from the each of the two immediately preceding surveys as well as data from the most recently published hospital wage survey.
The Secretary will establish a process which would first be available for discharges occurring on or after October 1, 2001 where a single wage index would be computed for all geographic areas in the state. If the Secretary applies a statewide geographic index, an application by an individual hospital would not be considered. The Secretary would also collect occupational data every three years in order to construct an occupational mix adjustment for the hospital area wage index. The first complete data collection effort would occur no later than September 30, 2003 for application beginning October 1, 2004.
Section 305: Payment for Inpatient Services of Rehabilitation Hospitals.
BBA 97 directed the Secretary to develop a prospective payment system (PPS) for rehabilitation hospitals and distinct part units, with PPS rates to be phased-in between October 1, 2000 and October 1, 2002. Payments to rehabilitation hospitals were to equal 98% of the amounts of payments that would have been made if the PPS had not been enacted.
The new provision ensures that total payments for rehabilitation hospitals in FY 2002 will be equal to payments that would have been made if the PPS had not been enacted. Payments in FY 2001 will remain equal to 98% of the amounts of payments that would have been made if the PPS had not been enacted. This provision will also allow a rehabilitation facility to make a one-time election before the start of the PPS to be paid based on a fully phased-in PPS rate.
Section 306: Payment for Inpatient Services of Psychiatric Hospitals.
This provision increases the incentive payments made to psychiatric hospitals for keeping its costs down in relation to its BBA 97-mandated cap to 3%.
Section 307: Payment for Inpatient Services of Long-term Care Hospitals.
For cost reporting periods beginning during FY 2001, long-term care hospitals will have the national cap increased by 2% and the target amount increased by 25%. Neither these payments nor the increased bonus payments provided by BBRA 99 will be factored into the development of the PPS for long-term hospitals. When developing the PPS for inpatient long-term care hospitals, the Secretary will be required to examine the feasibility and impact of basing payment on the existing (or refined) acute hospital DRGs and using the most recently available hospital discharge data. If the Secretary is unable to implement a long-term care hospital PPS by October 1, 2002, the Secretary would be required to implement a PPS for these hospitals using the existing acute hospital DRGs that have been modified where feasible.
Subtitle B – Adjustment to PPS Payments for Skilled Nursing Facilities
Section 311: Elimination of Reduction in Skilled Nursing Facility (SNF) Market Basket Update in 2001.
Under current law, SNFs are reimbursed through a PPS. The federal portion of that payment rate is updated annually by the MBI minus one percentage point in FYs 2001 and 2002. In subsequent years, the payment is increased by the full MBI.
This provision allows for a payment increase in fiscal year 2001 based on the full MBI (calculated as the MBI minus 1% from October 1, 2000 through March 31, 2001 and the MBI plus 1% for the period between April 1, 2001 and September 30, 2001) . In FY 2002 and FY 2003, the increase would be based on the MBI minus .5 percentage point. In subsequent years, the payment is increased by the full MBI. These increases are in addition to those provided under BBRA 99.
Additionally, GAO is required to report to Congress by July 1, 2002 on the adequacy of SNF payment rates. Finally, the Secretary is directed to study the different systems for categorizing patients in Medicare SNFs in a manner that accounts for the relative resource utilization of different payment types. By January 1, 2005, the Secretary shall submit a report on this study and include any recommendations on changes in the law that may be appropriate.
Section 312: Increase in Nursing Component of PPS Federal Rate.The Medicare PPS for SNFs is based on a resource utilization group (RUG) payment. Each RUG payment is comprised of an amount for nursing care, therapy, and other costs.
This provision will increase the nursing component of each SNF RUG by 16.66% on and after April 1, 2001 and before October 1, 2002. GAO is required to study this additional payment and whether it should continue.
Section 313: Application of SNF Consolidated Billing Requirement Limited to Part A Covered Stays.
BBA 97 contains a consolidated billing requirement, which mandates that SNFs and all nursing homes that include a Medicare-certified SNF component must submit to Medicare all Part A and Part B claims for all the services provided to their residents who are enrolled in traditional fee-for-service Medicare. Effective January 1, 2001, this provision limits this requirement only to services and items furnished to SNF residents in a Medicare Part A covered stay and to therapy services furnished in Part A and Part B covered stays.
Section 314: Adjustment of Rehabilitation RUGs to Correct Anomaly in Payment Rates.
BBRA 99 increased Medicare payments to SNFs by 20% for 15 of 44 RUGs. Under this provision, certain payments starting April 1, 2002 are increased by 6.7% to ensure that Medicare payments for SNF residents with "ultra high" and "high" rehabilitation needs are appropriate in relation to payments for residents needing "medium" or "low" levels of therapy. The 20% increase to certain RUGs is eliminated to make the provision budget neutral.
Section 315: Establishment of Process for Geographic Reclassification.
This provision authorizes the Secretary to establish a process for geographic reclassification of SNFs which may be based upon the method used for inpatient hospital patients.
Section 321: Five Percent Increase in Payment Base.
The provision would increase, effective April 1, 2001, the base Medicare daily payment rates for hospice care for FY 2001 by 5 percentage points over the rates otherwise in effect. This increase would continue to apply after FY 2001. The temporary increase in payment rates provided in BBRA 99 for FY 2001 and FY 2002 (.5 percent and .75 percent, respectively) would not be affected. In addition, the hospice wage index for one Metropolitan Statistical Area for FY 2000 (Wichita, KS) would be adjusted.
Section 322: Clarification of Physician Certification.
In order to be eligible for hospice care, the Medicare beneficiary’s attending physician and the medical director of the hospice program providing the care must certify in writing that the individual is terminally ill (less than 6 months to live). This provision clarifies that the physician or medical director’s certification of terminal illness shall be based on their clinical judgement regarding the normal course of the individual’s illness.
Section 323: MedPAC Report on Access to, and Use of, Hospice Benefit.
MedPAC shall study the factors affecting the use of hospice benefits under the Medicare program, including delayed entry into the program and urban and rural differences. MedPAC shall issue the report to Congress and HHS 18 months after enactment of the bill.
Section 331: Relief From Medicare Part A Late Enrollment Penalty for Group Buy-In for State and Local Retirees.
Almost all persons age 65 and over all eligible for Part A Medicare benefits. However, some state and local employees are not automatically entitled to Part A benefits because they are receiving benefits from a qualified state or local government retirement system.
This provision will exempt certain state and local retirees from the Part A delayed enrollment penalties. These would be for groups of persons for whom the state or local government elected to pay the delayed Part A enrollment penalty for life. The amount of the delayed enrollment penalty which would otherwise be assessed would be reduced by an amount equal to the total amount of Medicare payroll taxes paid by the employee and employer on behalf of the employee.
Title IV – Provisions Related to Part B
Subtitle A – Hospital Outpatient Services
Section 401: Revision of Hospital Outpatient PPS Payment Update.
The hospital outpatient PPS is a schedule of fees for groups of related types of care and services. The fee schedule is updated annually based on the hospital market basket index (MBI) increase. Under current law, the outpatient department fee schedule increase in FYs 2001 and 2002 is equal to the hospital MBI minus one percentage point. This provision will allow for PPS payments for hospital outpatient department services to increase by the full MBI in FY 2001.
A special rule applies to the outpatient PPS rates in 2001: For the period January 2, 2001 through March 31, 2001, the PPS amounts shall be those in effect on the day before implementation of the new law. For the periods April 1, 2001, through December 31, 2001, the PPS amounts in effect during the prior period shall be increased by 0.32%.
Section 402: Clarifying Process and Standards for Determining Eligibility of Devices for Pass-Through Payments Under Hospital Outpatient PPS.
BBRA 99 provided that, for a defined period of time of two to three years, the Secretary is required to provide additional payments for costs of certain innovative devices, drugs, and biologicals, and certain "new" high cost devices, drugs, and biologicals used in hospital outpatient department care. These payments are referred to as "pass-through payments," because they would pass through the hospital outpatient PPS and be paid separately from the underlying PPS payments associated with the procedure in which the pass-through item is used.
This provision will require the Secretary to establish criteria for defining special payment categories under the hospital outpatient PPS for new medical devices. These categories will be developed through the traditional rule-making process.
Section 403: Application of OPD PPS Transitional Corridor Payments to Certain Hospitals That Did Not Submit a 1996 Cost Report.
BBRA 99 provides for transition payments in addition to PPS payments to a hospital during the first three years of the PPS if its PPS payments are less than the hospital’s "pre-BBA 97 amount." The pre-BBA 97 amount is defined as the ratio of the hospital’s reimbursement for cost reporting periods ending in 1996 to the hospital’s reasonable costs for cost reporting periods ending in 1996.
This provision will enable all hospitals, not just those hospitals filing 1996 cost reports, to be eligible for transitional payments under the PPS.
Section 404: Application of Rules for Determining Provider-Based Status for Certain Entities.
This provision grandfathers existing arrangements whereby certain facilities (such as outpatient clinics, SNFs, etc.)are considered provider-based. Provider-based entities are clinically and financially affiliated with a main hospital. Under the grandfather provision, any relationship which was treated as provider-based as of October 1, 2000 will continue to be regarded as provider based until October 1, 2002.
If a facility or organization requests approval for provider-based status during the period October 1, 2000, through September 31, 2002, it could not be treated as if it did not have such status during the period of time the determination is pending. In making such a status determination on or after October 1, 2000, HCFA would treat the applicant as satisfying any requirements or standards for geographic location if it satisfied geographic location requirements in regulations or is located not more than 35 miles from the main campus of the hospital.
An applicant facility or organization would be treated as satisfying all requirements for provider-based status if it is owned or operated by a unit of state or local government, is a public or private nonprofit corporation that is formally granted governmental powers by a unit of state or local government, or is a private hospital that, under contract, serves certain low income households or has a certain disproportionate share adjustment.
Section 405: Treatment of Children’s Hospitals Under Prospective Payment System.
Under current law, children’s hospitals are subject to the hospital outpatient prospective payment system. This provision will ensure that children’s hospitals receive at least the amount under the outpatient PPS that they would have under the pre-PPS system.
Section 406: Inclusion of Temperature Monitored Cryoablation in Transitional Pass-Through for Certain Medical Devices, Drugs, and Biologicals Under OPD PPS.
The provision would include temperature-monitored cryoablation as part of the transitional pass-through for certain medical devices, drugs, and biologicals under the hospital outpatient prospective payment system, effective April 1, 2001.
Subtitle B – Provisions Relating to Physicians Services
Section 411: GAO Studies Relating to Physicians’ Services.
This provision directs the GAO to study the appropriateness of furnishing in physicians’ offices specialist physicians’ services which are ordinarily furnished in hospital outpatient departments. The GAO is also required to study the refinements to the practice expense relative value units made during the transition to the resource-based practice expense system.
Section 412: Physician Group Practice Determination.
The provision requires the Secretary to conduct demonstration projects to test, and if proven effective, expand the use of incentives to health care groups participating under Medicare. These incentives would be designed to: encourage coordination of care furnished under Medicare Parts A and B by institutional and other providers and practitioners; encourage investment in administrative structures and processes to encourage efficient service delivery; and reward physicians for improving health outcomes.
Section 413: Study on Enrollment Procedures for Groups that Retain Independent Contractor Provisions.
This provision directs the GAO to study the current Medicare enrollment process for groups that retain independent contractor physicians with particular emphasis on hospital-based physicians, such as emergency department staffing groups.
Section 421: One-Year Extensions of Moratorium on Therapy Caps; Report on Standards for Supervision of Physical Therapy Assistants.
BBA 97 established annual payment limits for all outpatient therapy services by non-hospital providers effective January 1, 1999. Medicare beneficiaries are limited to $1500 annually (with inflation updates) for all outpatient physical therapy and speech language pathology services and $1500 annually (with inflation updates) for outpatient physical therapy services.
BBRA 99 placed a two-year moratorium for calendar years 2000 and 2001 on these therapy caps, which meant that Medicare would continue to pay 80% of therapy services, without a dollar limit. Payments for such services are only limited by medical necessity.
This provision extends the moratorium on therapy caps through 2002. The provision also requires the Secretary to conduct a study on the implications of eliminating the "in the room" supervision requirement for Medicare payment for services of physical therapy assistants who are supervised by physical therapists.
Section 422: Update in Renal Dialysis Composite Rate.
Since 1983, Medicare has paid dialysis facilities a fixed, prospective amount for each outpatient dialysis treatment. This is referred to as the composite rate, and it covers a bundle of services, laboratory tests, drugs, and supplies routinely required for dialysis treatment.
In BRBA 99, Congress mandated a 1.2% increase in the composite rate in calendar years 2000 and 2001. This provision will mandate an additional 1.2% increase in calendar year 2001 (for a total increase of 2.4%). This provision also directs the Secretary to develop an ESRD market basket and make recommendations to Congress on the appropriateness of an annual or periodic update mechanism for renal dialysis services.
The provision also directs the Secretary to consider the inclusion of additional services, such as diagnostic tests and drugs, in the composite rate.
Finally, the GAO is directed to study access by Medicare beneficiaries to renal dialysis services.
Section 423: Payment for Ambulance Services.
Medicare payments for hospital or other provider-based ambulance services are paid on a reasonable cost basis. The reasonable costs or charges cannot exceed costs or charges recognized in a previous year, increased by the consumer price index for all urban consumers (CPI-U) minus one percentage point.
This provision will eliminate the 1 percentage point reduction in calendar year 2001.
Section 424: Ambulatory Surgical Centers.
This provision delays the implementation of the ambulatory surgical center PPS until January 1, 2002, and then has a 4 year phase-in.
Section 425: Full Update for Durable Medical Equipment.
Durable Medical Equipment (DME) is reimbursed on the basis of a fee schedule. The DME fee schedule is updated annually by the CPI-U. BBA 97 froze payment for DME at the FY 1997 level for FYs 1998 through 2002. BBRA 99 increased payment rates for FY 2001 to 0.3% over FY 2002 and FY 2002 levels to 0.6% over FY 2000 rates.
This provision increases the payments for DME by the full CPI-U for FY 2001.
Section 426: Full Update for Orthotics and Prosthetics.
The provision will modify updates to payments for orthotics and prosthetics. In FY 2001, the increase will be equal to the percentage increase in the CPI-U during the 12-month period ending with June, 2000, and for FY 2002 payments will be increased by one percent over the prior year’s amounts. The provision specifies that for items furnished after January 1, 2001, and before July 1, 2001, payment will be determined by the provisions of law in effect the day before enactment of this law. For items furnished on or after July 1, 2001, and before January 1, 2002, the payment basis will be the provisions in this bill plus 2.6%, which represents an increase to account for the timing of the implementation of the CPI update.
Section 427: Establishment of Special Payment Provisions and Requirements for Prosthetics and Certain Custom Fabricated Orthotic Items.
Medicare DME coverage under part B includes prosthetics and orthotic devices that are reasonable and medically necessary. In certain cases, upgraded items may be covered.
This provision establishes that certain prosthetics or custom fabricated orthotics are covered if furnished by a qualified practitioner and fabricated by a qualified practitioner or qualified supplier. The Secretary is to establish a list of such items in consultation with appropriate experts.
The GAO is directed to conduct a study on HCFA Ruling 96-1 with respect to distinguishing orthotics from DME under Medicare. Specifically, GAO is to report on: certain impacts of that ruling; the potential for fraud and abuse in provision of O&P under special payment rule for custom fabricated items; and the effect on Medicare and Medicaid payments if the ruling was overturned.
Section 428: Replacement of Prosthetic Devices and Parts.
This provision will provide for the replacement of prosthetics devices which are artificial limbs without regard to continuous use or lifetime restrictions if an ordering physician determines that the provision of a replacement device is necessary for any of the following reasons:
-
The condition of the device requires repairs and the cost of repairing the device would be more than 60% of the cost of the replacement device.
This provision requires confirmation by the physician if the device is less than three years old.
Section 429: Revised Part B Payment for Drugs and Biologicals and Related Services.
While Medicare generally doesn’t pay for prescription drugs, it does cover drugs and biologicals that are administered incident to a physician’s services. When payment is not made on a cost or PPS basis, Medicare reimburses at a rate equal to 95% of the average wholesale price (AWP) of the drug.
Recent Congressional and federal investigations have uncovered that in many cases this methodology results in payments to physicians and other suppliers of covered drugs that are substantially in excess of the supplier’s actual acquisition cost. BBRA 99 directed GAO to study the physician and non-physician clinical resources necessary to provide safe outpatient cancer therapy services and the appropriate payment rates for such services.
This provision will require the GAO to conduct a broader study on discrepancies between the average acquisition costs of covered drugs and the associated payments made for such drugs currently under the AWP reimbursement methodology. Additionally, GAO is required to study the adequacy of other payments currently made to physicians and other suppliers of drugs under the Medicare program for the related administration and handling of these drugs. GAO must submit recommendations to the Secretary for revising the current payment methodology such that a more appropriate payment methodology can be made for the cost of covered drugs. The provision requires that this report be submitted to Congress and the Secretary within 9 months after enactment. Finally, the Secretary is precluded from taking any administrative action to reduce the payment for covered drugs until the GAO has completed its study and made its recommendation.
Section 430: Contrast Enhanced Diagnostic Procedures Under Hospital Prospective Payment System.
This provision requires the Secretary to create additional groups of covered outpatient department services that separately classify those procedures that use contrast media and those that do not.
Section 431: Qualifications for Community Mental Health Centers.
The provision clarifies the qualifications for community mental health centers providing partial hospitalization services under Medicare.
Section 432: Payment of Physician and Nonphysician Services in Certain Indian Providers.
This provision will authorize hospitals and free-standing ambulatory care clinics of the Indian Health Service to bill Medicare for services which are paid for under the physician fee schedule.
Section 433: GAO Study on Coverage of Surgical First Assisting Services of Certified Nurse First Assistants.
The GAO is directed to study the effect on Medicare of coverage of surgical first assisting services of certified nurse first assistants. The GAO will consider impact on quality of care furnished to beneficiaries under this coverage, education and training requirements for certified registered nurse first assistants who furnish these first assisting services, and appropriate rates of payment under the program to certified registered nurse first assistants for furnishing these services.
Section 434: MedPAC Study and Report on Medicare Reimbursement for Services Provided by Certain Providers.
This provision directs MedPAC to study the appropriateness of current payment rates under Medicare for services provided by certified nurse-midwives, physician assistants, nurse practitioners, and clinical nurse specialists.
Section 435: MedPAC Study and Report on Medicare Coverage of Services Provided by Certain Non-Physician Providers.
This provision directs the Secretary to study the appropriateness of providing coverage under Medicare for services provided by a surgical technologist, marriage counselor, marriage and family therapist, pastoral care counselor, and licensed professional counselor of mental health.
Section 436: GAO Study and Report on the Costs of Emergency and Medical Transportation Services.
This provision directs GAO to conduct a study on the costs of providing emergency and medical transportation services across the range of acuity levels of conditions for which such transportation services are provided.
Section 437: GAO Studies and Reports on Medicare Payments.
The provision directs the GAO to conduct a study on the post-payment audit process for physicians services. The study would include the proper level of resources HCFA should devote to educating physicians regarding coding and billing, documentation requirements, and calculation of overpayments. The GAO is also required to conduct a study of the aggregate effects of regulatory, audit, oversight and paperwork burdens on physicians and other health care providers participating in Medicare.
Section 438: MedPAC Study on Access to Outpatient Pain Management Services.
This provision directs MedPAC to conduct a study on the barriers to coverage and payment for outpatient interventional pain medicine procedures under Medicare. Specifically, GAO will focus on the specific barriers imposed on the provision of pain medicine procedures in hospital outpatient departments, ambulatory surgery services, and physicians’ offices.
Title V – Provisions Relating to Parts A and B
Subtitle A – Home Health Services
Section 501: One-Year Additional Delay in Application of 15 percent reduction on Payment Limits for Home Health Services
BBA 97 required implementation of a home health care PPS. The act specified that the PPS be designed so that in the first 12 months of operation, the aggregate amount of PPS payments would equal the amount that would have been paid under the interim system had it remained in effect but with a 15% across-the-board reduction in Medicare payments. The home health PPS was originally scheduled to go into effect starting in FY 1999 but was delayed until the beginning of FY 2001.
BBRA 99 delayed the reduction by another year and it required the Secretary to report on the need for a 15% or other reduction within 6 months.
This provision will require that the aggregate amount of Medicare payments to home health agencies in the second year of the PPS (FY 2002) shall equal the aggregate payments in the first year of the PPS, updated by the MBI increase minus 1.1 percentage points. The 15% reduction is delayed until the start of FY 2003. The Comptroller General is required to submit, by April 2002, a report analyzing the need for the 15% or other reduction (absolving the Secretary of her responsibility for the report mandated under BBRA 99).
Section 502: Restoration of Full Home Health Market Basket Update for Home Health Services for Fiscal Year 2001.
The FY 1999 Omnibus Appropriations bill specified that per visit limits and per beneficiary limits under the home health interim payment system are to be updated by the home health MBI increase minus 1.1 percentage points in FY 2000 through FY 2003. Under this provision, any updates to home health payments would be equal to the full MBI increase starting in FY 2001.
Section 503: Temporary Two-Month Extension of Periodic Interest Payments.
Effective with implementation of the home health PPS, BBA 97 repealed periodic interim payments (PIP) under which certain home health agencies with consistent Medicare payment experience received biweekly payments based on past payment levels. Under this provision, those home health agencies who were receiving PIP as of September 30, 2000 shall continue to receive those payments until December 1, 2000.
Section 504: Use of Telehealth in Delivery of Home Health Services.
This provision clarifies that nothing in the bill should be construed as preventing a home health agency from furnishing covered services (under the PPS) via a telecommunication system, provided that these services do not substitute for home health services ordered as part of a plan of care certified by a physician and are not considered a home health visit for purposed of payment.
Section 505: Study on Costs to Home Health Agencies of Purchasing Nonroutine Medical Supplies.
Under this provision, the Comptroller General is directed to conduct a study on the variations in prices paid by home health agencies furnishing home health services under the Medicare program in purchasing nonroutine medical supplies, including ostomy supplies. The Comptroller General shall determine the effect (if any) of variations on prices and volumes in the provision of such services.
Section 506: Treatment of Branch Offices; GAO Study on Supervision of Home Health Care Provided in Rural Areas.
Prior to BBA 97, home health agency payments were made based on the agency’s billing location, regardless of where the actual services were provided. BBA 97 required home health agencies to submit payment claims on the basis of the location in which the service was provided.
In order to ensure that branch offices of home health agencies are adequately supervised, HCFA regional offices have established "time and distance" standards on how far a branch office may be from an agency’s main office. The purpose of time and distance standards is to establish a basis for determining the ability of a home health agency to supervise and control branch offices and to monitor care to patients. These policies vary by regional office. Because these definitions are not in federal regulations, they have not been subject to public rule-making requirements under the Administrative Procedure Act.
This provision clarifies that neither the time nor distance requirement shall be the sole determinant of a home health agency’s branch office status. Further, this provision requires the Comptroller General to submit to Congress a report regarding the adequacy of supervision and quality of home health services provided by home health agency branch offices and subunits in isolated rural areas, and make recommendations on whether national standards for supervision would be appropriate in assuring quality. This report is due to Congress no later than January 1, 2002.
Section 507: Clarification of the Homebound Definition Under the Medicare Home Health Benefit.
This provision clarifies that a beneficiary’s need to leave his or her home to receive health care treatment in an adult day care center shall not disqualify the individual from being considered confined to his or her home. Other absences from the home will not disqualify the beneficiary either, as long as they are short and infrequent.
Subtitle B – Direct Graduate Medical Education
Section 511: Increase in Floor for Direct Graduate Medical Education Payments.
Medicare pays hospitals for its share of the direct costs of graduate medical education (GME) based on a count of the residents trained by the hospital and an updated per resident training cost. BBRA 99 established that a national average per resident amount should be used to compute direct GME payments to acute hospitals for cost reporting periods beginning on or after October 1, 2000 and on or before September 30, 2005. Generally, a hospital with a per resident amount below 70% of the geographically adjusted national average per resident amount will be increased to that amount. Those teaching hospitals with per resident amounts above 140% of the national average adjusted for their locality will not receive an inflation update for FY 2001 and FY 2002 and then will receive a lower update than other hospitals (CPI-U minus 2 percentage points) for FY 2003 to FY 2005.
This provision increases the payment floor from 70% to 85% beginning in fiscal year 2002.
Section 512: Change in Distribution Formula for Medicare+Choice-related Nursing and Allied Health Education Costs.
BBRA 99 authorizes hospitals that operate approved nursing and allied health professional training programs to receive additional payments to reflect utilization of Medicare+Choice (M+C) enrollees. As specified by the Secretary, the payment amount is calculated based on the proportion of physician direct GME payments for M+C enrollees to the total physician GME payments multiplied by the Secretary’s estimate of total reasonable cost reimbursement for approved nursing and allied health professional training programs. This payment cannot exceed $60 million. Hospitals receive these allied health payments in proportion to the amount of Medicare reasonable cost reimbursement for nursing and allied health programs received in the second preceding fiscal year to the total paid to all hospitals in that cost reporting period.
Under this provision, a hospital would receive these nursing and allied health payments in proportion to its relative cost of allied and nursing health programs and M+C utilization in comparison to that in all other hospitals. Specifically, a hospital’s payments would be calculated by the product of its Medicare reasonable cost reimbursement for allied and health programs multiplied by the number of M+C inpatient days in this hospital divided by the sum of the products in all other hospitals.
Subtitle C – Changes in Medicare Coverage and Appeals Process
Section 521: Revisions to Medicare Appeals Process.
The provision would modify the Medicare appeals process. Generally, initial determinations by the Secretary would be concluded no later than 45-days from the date the Secretary received a claim for benefits. Any individual dissatisfied with the initial determination would be entitled to a redetermination by the carrier or fiscal intermediary who made the initial determination. Such redetermination would be required to be completed within 30 days of a beneficiary’s request.
Beneficiaries could appeal the outcome of a redetermination by seeking a reconsideration. Generally, a request for a reconsideration must be initiated no later than 180 days after the date the individual receives the notice of an adverse redetermination. In addition, if contested amounts are greater than $100, an individual would be able to appeal an adverse reconsideration decision by requesting a hearing by the Secretary (first for a hearing by an administrative law judge, then in certain circumstances, for a hearing before the Department Appeals Board).
If the dispute is not satisfactorily resolved through this administrative process, and if contested amounts are greater than $1,000, the individual would be able to request judicial review of the Secretary’s final decision. Aggregation of claims to meet these thresholds would be permitted.
An expedited determination would be available for a beneficiary who received notice: 1) that a provider plans to terminate services and a physician certifies that failure to continue the provisions of the services is likely to place the beneficiary’s health at risk; or 2) that the provider plans to discharge the beneficiary.
The Secretary would enter into 3-year contracts with at least 12 qualified independent contractors (QICs) to conduct reconsiderations. A QIC would promptly notify beneficiaries and Medicare claims processing contractors of its determinations. A beneficiary could appeal the decision of a QIC to an ALJ. In cases where the ALJ decision is not rendered within the 90-day deadline, the appealing party would be able to request a DAB hearing.
The Secretary would perform outreach activities to inform beneficiaries, providers, and suppliers of their appeal rights and procedures. The Secretary would submit to Congress an annual report including information on the number of appeals for the previous year, identifying issues that require administrative or legislative actions, and including recommendations for change as necessary. The report would also contain an analysis of the consistency of the QIC determinations as well as the cause for any identified inconsistencies.
Section 522: Revisions to Medicare Coverage Process.
The provision would clarify when and under what circumstances Medicare coverage policy could be challenged. An aggrieved party could file a complaint concerning a national coverage decision. Such complaint would be reviewed by the Department Appeals Board (DAB) of HHS. The provision would also permit an aggrieved party to file a complaint concerning a local coverage determination. In this case, the determination would be reviewed by an administrative law judge. If unsatisfied, complainants could subsequently seek review of such a local policy by the DAB. In both cases, a DAB decision would constitute final HHS action, and would be subject to judicial review. The provision would also permit an affected party to submit a request to the Secretary to issue a national coverage or noncoverage determination if one has not been issued. The Secretary would have 90 days to respond. HHS would be required to prepare an annual report on national coverage determinations.
Subtitle D – Improving Access to New Technologies
Section 531: Reimbursement Improvements for New Clinical Laboratory Tests and Durable Medical Equipment.
The provision specifies that the national limitation amount for a new clinical laboratory test would equal 100% of the national median for such test. The Secretary is required to establish procedures for coding and payment determinations for the categories of new clinical diagnostic laboratory tests and new DME.
The Secretary is further required to submit a report to Congress that identifies specific procedures used to adjust payments for advanced technologies; the report would include recommendations for legislative changes needed to assure fair and appropriate payments.
Section 532: Retention of HCPCS Level III Codes.
This provision extends the time for the use of local codes (known as HCPCS level III codes) through December 31, 2003. The Secretary is further required to make the codes available to the public.
Section 533: Recognition of New Medical Technologies Under Inpatient Hospital PPS.
This provision requires the Secretary to submit a report to Congress no later than April 1, 2001, on potential methods for more rapidly incorporating new medical services and technologies used in the inpatient setting in the clinical coding system used with respect to payment for inpatient services.
Section 541: Increase in Reimbursement for Bad Debt.
Medicare currently reimburses 55% of the bad debt incurred by hospitals in caring for indigent Medicare beneficiaries. This provision increases that reimbursement rate to 70%, for cost reports starting in FY 2001.
Section 542: Treatment of Certain Physician Pathology Services Under Medicare.
This provision permits independent laboratories, under a grandfather arrangement to continue, for a 2-year period (2001-2002), direct billing for the technical component of pathology services provided to hospital inpatients and hospital outpatients.
GAO is required to conduct a study of the effect of these provisions on hospitals and laboratories and access of fee-for-service beneficiaries to the technical component of physician pathology services. The report will include recommendations on whether the provisions should continue after the 2-year period for either (or both) inpatient and outpatient hospital services and whether the provision should be extended to other hospitals.
Section 543: Extension of Advisory Opinion Authority.
This provision makes permanent the Office of the Inspector General’s authority to issue advisory opinions to outside parties who request guidance on the applicability of the anti-kickback statute, safe harbor provisions and other OIG health care fraud and abuse sanctions.
Section 544: Change in Annual MedPAC Reporting.
This provision delays the reporting date for the MedPAC report on issues affecting the Medicare program by 15 days to June 15. The provision also requires recorded votes on recommendations contained both in this report and the March report on payment policies.
Section 545: Development of Patient Assessment Instruments.
This position requires the Secretary to submit to Congress a report on the development of standard instruments for the assessment of the health and functional status of patients who are furnished the following services: inpatient and outpatient hospital services; inpatient and outpatient rehabilitation services; covered SNF services; home health services; physical or occupational therapy or speech-language pathology services; items or services furnished to beneficiaries with ESRD; partial hospitalization services and other mental health services; and any other service for which payment is made that the Secretary deems appropriate.
Section 546: GAO Report on Impact of Emergency Medical Treatment and Active Labor Act (EMTALA) on Hospital Emergency Departments.
This provision requires GAO to evaluate the impact of the Emergency Medical Treatment and Active Labor Act on hospitals, emergency physicians, and on-call physicians covering emergency departments and to submit a report to Congress by May 1, 2001.
Title VI – Provisions Relating to Part C (Medicare+Choice Program) and Other Medicare Managed Care Provisions.
Subtitle A – Medicare+Choice Payment Reforms.
Section 601: Increase in Minimum Payment Amount.
Every county is subject to a floor amount, which is designed to raise the payments in certain counties more quickly than would otherwise occur. These minimum payments for Medicare+Choice (M+C) enrollees are to increase each year by a measure of the national growth percentage. The minimum payment in FY 2000 was $401.61 and is scheduled to be increased to $415.01 in FY 2001. This minimum payment will be the floor amount in about one-third of all counties in FY 2001.
This provision will increase the minimum payment in FY 2001 to $525 if the plan is in a Metropolitan Statistical Area (MSA) with more than 250,000 people and $475 in MSAs with less than 250,000 people. This increased is designed to ensure that M+C plans continue to offer coverage in rural areas, where health plans argue that the payments are to low to make offering coverage feasible.
Section 602: Increase in Minimum Percentage Increase.
The minimum increase rule protects counties that would otherwise receive only a small annual increase, if any at all. Currently, the minimum payment update for any M+C payment area is 102% of its annual per capita rate for the previous year.
This provision will increase that rate to 103% for FY 2001. The payment update will continue to be 102% in FY 2002 and beyond.
Section 603: Phase-In of Risk Adjustment.
M+C payments are risk-adjusted to reflect variations in the cost of providing health care to Medicare beneficiaries. The risk adjustment is used to compensate plans that may have to serve a disproportionate share of very old or very sick beneficiaries.
BBA 97 directed the Secretary to develop a risk adjuster based on variations in health status as well as demographic factors. In January 2000, the Secretary implemented this new risk adjuster. Under this mechanism, a payment to a M+C plan is adjusted if the beneficiary had an inpatient hospital stay during the previous year. Separate demographic categories are used to adjust payments for individuals who have not been hospitalized, newly eligible aged persons, newly eligible persons with disabilities, and others without a medical history.
BBRA 99 slowed down the implementation of this risk adjustment. In FY 2000 and 2001, 10% of payments will include the risk adjustment, while 90% will be based on the older demographic method. In FY 2002, the split will be 20/80. After that, there is no timetable, although the Secretary was planning on basing 80% of the payments on the risk adjustment in FY 2003 and develop a new system based on for FY 2004 and beyond that would incorporate both inpatient and outpatient diagnoses.
This provision will establish a phase-in schedule for risk adjustment. In FYs 2002 and 2003, 10% of payments will be based on the new risk adjustment mechanism. After that, the risk adjustment will be phased-in at 30% in FY 2004, 50% in FY 2005, 75% in FY 2006, and 100% for FY 2007 and subsequent years.
Section 604: Transition to Revised Medicare+Choice Payment Rates.
M+C organizations that choose not to renew their contract with HCFA or eliminate coverage in a certain service area must notify HCFA by July 1 of the calendar year in which the contract would end.
This provision requires the Secretary to announce new M+C capitation rates for 2001, based on requirements of this act. Plans that notified HCFA of its intent to terminate its contract or reduce its service area would have two weeks to rescind their notice. Additionally, any M+C plan that will receive a higher payment due to the new capitation rate must submit new information to the Secretary within two weeks.
Section 605: Revision of Payment Rates For ESRD Patients Enrolled in M+C Plans.
M+C payments for ESRD beneficiaries are calculated using a similar method as that used for aged beneficiaries except that ESRD rates are calculated on a statewide basis. The Secretary plans on developing a new risk-adjustment mechanism based on both inpatient and outpatient diagnoses in FY 2004. When that occurs, ESRD enrollees will be risk-adjusted incorporating the new system with data from all settings.
This provision requires that ESRD rates be adjusted for factors such as age, renal treatment modality, the underlying cause of the end-stage renal disease, and other factors that the Secretary deems appropriate. These rates will remain in effect until the Secretary implements a risk-adjustment system based on data from inpatient hospital stays and ambulatory sites.
Section 606: Permitting Premium Reductions as Additional Benefits Under Medicare+Choice Plans.
This provision would permit M+C plans to offer reduced Medicare Part B premiums to their enrollees as part of providing any required additional benefits or reduced cost-sharing. A M+C organization could elect a reduction in its M+C payment up to 125% of the annual Part B premium. However, only 80% of this amount could be used to reduce an enrollee’s actual Part B premium. This would have the effect of returning up to 100% of the beneficiary’s Part B premium. The reduction would apply uniformly to each enrollee of the M+C plan. Plans would include information about Part B premium reductions as part of the required information that is provided to enrollees for comparing plan options.
Section 607: Full Implementation of Risk Adjustment for Congestive Heart Failure Enrollees for FY 2001.
This provision will fully implement risk adjustment with respect to each patient who has a qualifying congestive heart failure inpatient diagnosis between July 1, 1999 and June 30, 2000, if that individual was enrolled in a coordinated care plan offered on January 1, 2001. This would apply for only 1 year, beginning on January 1, 2001.
Section 608: Expansion of Application of Medicare+Choice New Entry Bonus.
This provision extends the M+C new entry bonus to areas that as of October 3, 2000 notification had been provided that no plans would be available in FY 2001. This expansion is designed to increase the incentive for plans to offer coverage in areas that otherwise would not have a M+C plan offered in the area.
Section 609: Report on Inclusion of Certain Costs of the Department of Veterans’ Affairs and Military Facility Services in Calculating Medicare+Choice Payment Rates.
The Secretary shall report to Congress by January 1, 2003, on a method to phase-in the costs of military facility services furnished by the Department of Veterans Affairs or the Department of Defense to Medicare-eligible beneficiaries in the calculation of an area’s M+C capitation payment. This report would include, on a county-by-county basis: the actual or estimated costs of such services to Medicare-eligible beneficiaries; the change in M+C capitation payment rates if such costs were included in the calculation of payment rates; one or more proposals for the implementation of payment adjustments to M+C plans in counties where the payment rate has been affected due to failure to account for the cost of such services; and a system to ensure that when a M+C enrollee receives covered services through a facility of these Departments, there is an appropriate payment recovery to the Medicare program.
Subtitle B – Other Medicare+Choice Reforms
Section 611: Payment of Additional Amounts for New Benefits Covered During a Contract Term.
Currently, if the Secretary makes a national coverage determination that will result in significant increased costs for M+C plans, then the Secretary is required to adjust payments to M+C organizations accordingly.
This provision extends that requirement to increased costs resulting from legislative changes as well.
Section 612: Restriction on Implementation of Significant New Regulatory Requirements Midyear.
This provision prohibits the Secretary from issuing new, significant regulatory requirements on M+C plans other than at the beginning of a calendar year.
Section 613: Timely Approval of Marketing Material That Follows Model Marketing Language.
Under current law, the Secretary has 45 days to approve marketing material submitted for review by M+C plans. This provision requires the Secretary to make decisions, within 10 days, approving or modifying marketing material used by M+C organizations, provided that the organization uses model language specified by the Secretary. This provision will apply to marketing material submitted on or after January 1, 2001.
Section 614: Avoiding Duplicative Regulation.
Currently, Medicare law supersedes state insurance law with respect to M+C plans to the extent that it is inconsistent with federal requirements imposed on M+C plans. This provision further stipulates instances when Medicare law preempts a state law or regulation from applying to M+C plans by specifying that the term "benefit requirements" includes cost-sharing requirements. The provision also stipulates that state laws and regulations affecting marketing materials, and summaries and schedules of benefits regarding an M+C plan, would also be preempted by Medicare law.
Section 615: Election of Uniform Local Coverage Policy for Medicare+Choice Plan Covering Multiple Localities.
This provision clarifies that a M+C organization may elect to have the local coverage policy for the part of the area that most is most beneficial to M+C enrollees apply to all enrollees enrolled in the plan.
Section 616: Eliminating Health Disparities in Medicare+Choice Program.
This provision expands the M+C quality assurance programs to include a separate focus on racial and ethnic minorities. The Secretary is also required to report to Congress how the quality assurance programs focus on racial and ethnic minorities, within two years after enactment and biannually thereafter.
Section 617: Medicare+Choice Program Compatibility with Employer or Union Group Health Plans.
In order to make the M+C program compatible with employer or union group health plans, this provision allows the Secretary to waive or modify requirements that hinder the design of, offering of, or enrollment in certain M+C plans. Plans included in the category are M+C plans under contract between M+C organizations and employers, labor organizations, or trustees of a fund established by employers and/or labor organizations.
Section 618: Special Medigap Enrollment Anti-Discrimination Provision for Certain Beneficiaries.
This provision extends the period for Medigap enrollment for M+C enrollees affected by termination of coverage. For individuals enrolled in an M+C plan during a 12-month trial period, their trial period would begin again if they re-enrolled in another M+C plan because of an involuntary termination. During this new trial period, they would retain their rights to enroll in a Medigap plan; however, the total time for a trial period could not exceed two years from the time they first enrolled in an M+C plan.
Section 619: Restoring Effective Date of Elections and Changes of Elections of Medicare+Choice Plans.
This provision would allow individuals who enroll in an M+C plan after the 10th day of the month to receive coverage beginning on the first day of the next calendar month, effective January 1, 2001.
Section 620: Permitting ESRD Beneficiaries to Enroll in Another Medicare+Choice Plan if the Plan in Which They Are Enrolled is Terminated.
This provision permits ESRD beneficiaries to remain eligible for the M+C program if the plan they are enrolled in terminates its contract or reduces its service area. This provision is retroactive, to include individuals whose enrollment in an M+C plan was terminated between December 31, 1998 and enactment of this legislation.
Section 621: Providing Choice for Skilled Nursing Facility Services Under the Medicare+Choice Program.
This provision requires that M+C organizations provide coverage for home SNF coverage. The M+C enrollee must agree to receive coverage through the facility and the SNF must have a contract with the M+C organization to provide these services or agree to receive similar payment as do other SNFs that contract with these M+C organizations. Home SNFs are permitted to refuse to accept M+C enrollees or to impose conditions on their acceptance of such an enrollee.
The provision further directs MedPAC to analyze and, within 2 years of enactment, report to Congress on the effects of this provision on the scope of benefits, administrative and other costs incurred by M+C organizations, and the contractual relationships +between those plans and SNFs.
Section 622: Providing for Accountability of Medicare+Choice Plans.
This provision directs HCFA to review the actuarial assumptions and data used by M+C organizations with respect to the rates they charge and to determine the appropriateness of such assumptions and data.
Subtitle C – Other Managed Care Reforms
Section 631: 1-Year Extension of Social Health Maintenance Organization Demonstration Project.
BBRA 99 extended the waivers for social health maintenance organizations for 18 months after the Secretary submits a report with a plan for integration and inclusion of SHMOs into an option under M+C. This provision extends that waiver for 30 months.
Section 632: Revised Terms and Conditions for Extension of Medicare Community Nursing Organization (CNO) Demonstration Project.
The Community Nursing Organization (CNO) demonstration project began on January 1, 1994 to test in four sites a system of capitated payments for specified community nursing services covered by Medicare. The demo projects were scheduled to end in 1997, but BBA 97 extended their operation through 1999. BBRA 99 further extended them through December 31, 2000.
BBRA 99 required these projects to be budget neutral; that is, the total cost of the capitated payments could not exceed traditional Medicare costs. This provision waives that budget neutrality requirement.
Section 633: Extension of Medicare Municipal Health Services Demonstration Projects.
The Medicare Municipal Health Services Demonstration Project was created to improve access to primary care services. It was extended through December 2000 in BBA 97, while BBRA 99 extended the program for another 2 years. This provision further extends the demonstration project through December 31, 2004.
Section 634: Service Area Expansion for Medicare Cost Contracts During Transition Period.
This provision would allow service area expansion for Medicare cost contracts, if the request was submitted to the Secretary before September 1, 2003.
Section 701: DSH Payments.
This provision makes several revisions to the disproportionate share hospital (DSH) program. Specifically, the bill does the following:
-
For FY 2001, the provision sets each state’s DSH allotment equal to its allotment for FY 2000 increased by the percentage change in the consumer price index for that year, subject to a ceiling that would be equal to 12% of that state’s total medical assistance expenditures in that year.
-
For FY 2002, the provision will set each state’s DSH allotment equal to its allotment for 2001 as determined above, increased by the percentage change in the consumer price index for FY 2001, subject to a ceiling equal to 12% of that state’s total medical assistance payments in that year.
-
For extremely low DSH states (defined as states whose FY 1999 federal and state DSH expenditures, as reported to HCFA on August 31, 2000, are greater than zero but less than one percent of the state’s total medical assistance expenditures during that fiscal year) the DSH allotments for FY 2001 would be increased to one percent of the state’s total amount of expenditures under their plan for such assistance during that fiscal year. For subsequent fiscal years, the allotments for extremely low DSH states would be equal to their allotment for the previous year, increased by the percentage change in the consumer price index for the previous year, subject to a ceiling of 12% of that state’s total medical assistance payments in that year.
This provision will be effective on the date that the final regulation for Medicaid upper payment limits is published in the Federal Register.
-
The provision clarifies that Medicaid enrollees of managed care organizations and primary care case management organizations are to be included for the purposes of calculating the Medicaid inpatient utilization rate and the low income utilization rate. This provision goes into effect on January 1, 2001.
-
BBA 97 included a provision that authorizes hospital-DSH payments for the state of California to be as high as 175% of the cost of care provided to Medicaid recipients and individuals who have no health insurance or other third-party coverage for services during the year (net of non-disproportionate share Medicaid payments and other payments by uninsured individuals). BBRA 99 extended this provision, which was set to expire July 1, 1999, indefinitely. This provision applies the transition rule to all states.
-
The provision provides additional funds for certain public hospitals that are: owned or operated by a state; are not receiving DSH payments as of October 1, 2000; and have a low-income utilization rate in excess of 65%. Funds are provided in addition to the DSH allotment for any state with eligible hospitals and the total for all states cannot exceed the following amounts: $15 million for FY 2002; $176 million for FY 2003; $269 million for FY 2004; $330 million for FY 2005; and for FY 2006 and each fiscal year thereafter; $375 million.
-
The provision ensures that federal DSH payments are used to reimburse states and hospitals eligible for such payments and are in accordance with other relevant Medicaid statutory requirements.
Section 702: New Prospective Payment System for Federally Qualified Health Centers and Rural Health Clinics.
This provision establishes a PPS for Federally-qualified health centers and rural health clinics in the Medicaid program. Starting January 1, 2001, the state will make payments for the services a center or clinic provides based on 100% of the average of the costs of the center or clinic for furnishing such services. For FY 2002 and succeeding fiscal years, payments will equal the amount for the previous fiscal year increased by the Medicare Economic Index for primary care and any changes in the scope of services.
The provision also directs the GAO to study the need for rebasing or refining costs for making payments to health centers. The report is to be submitted to Congress four years after the enactment of this bill.
Section 703: Streamlined Approval of Continued State-wide Section 1115 Medicaid Waivers.
This provision defines the process by which a state can apply for an extension of a Medicaid demonstration waiver. The application for a waiver extension is due to the Secretary at least 120 days prior to the expiration of the current period of the waiver project. Within 45 days after the application is received by the Secretary, the Secretary shall notify the state if she intends to review the terms and conditions of the waiver project. After 45 days, the Secretary is required to inform the state of the proposed changes in the terms and conditions of the waiver requirement. If the Secretary does not respond within 45 days, then the extension is considered approved.
30 days after the Secretary informs the state of the proposed new conditions of the waiver requirement, the Secretary and state will negotiate revised terms of the waiver project with the state. 120 days after the submission of the application, the Secretary is required to approve or disapprove the application.
Section 704: Medicaid County-Organized Health Systems.
The Consolidated Omnibus Budget Reconciliation Act of 1985 exempts Health Insuring Organizations (HIOs) from certain Medicaid HMO contracting requirements as long as no more than 10% of all Medicaid beneficiaries in the state are enrolled in those HIOs. This provision increases the allowable number of Medicaid beneficiaries enrolled in the HIOs to increase to 14%.
Section 705: Deadline for Issuance of Final Regulation Relating to Medicaid Upper Payment Limits.
Currently, some state are taking advantage of a loophole in the Medicaid program that allows them to use intergovernmental transfers to maximize federal matching funds, return such transfers to certain governmental facilities in the form of high Medicaid rates, and to retain the difference to use for other purposes. While this practice is not illegal, it does result in a substantial increases in federal Medicaid expenditures and Medicaid rates for such governmental institutions that are significantly in excess both of what private and other public institutions are reimbursed by Medicaid and of what Medicaid would pay for the same services.
This provision directs the Secretary to issue regulations to eliminate this practice by December 31, 2000. The regulations will provide for a transition period, beginning October 1, 2002, that requires states to spend 15% less each year for six state fiscal years, until the excess payments have been phased out as of October 1, 2008. This is to ensure that no state loses all of these funds at once which could potentially destabilize its health care safety net.
Section 706: Alaska FMAP.
The provision would change the formula for calculating the state percentage and thus the federal matching percentage for Alaska for FYs 2001 through 2005. The state percentage for Alaska would be calculated by using an adjusted per capita income instead of the per capita income generally used. The adjusted per capita income for Alaska would be calculated as the three year average per capita income for the state divided by 1.05.
Section 707: 1-year Extension of Welfare-to-Work Transition.
This provision extends the sunset on traditional medical assistance for families who are no longer eligible for assistance from September 30, 2001, to September 30, 2002.
Section 708: Additional Entities Qualified to Determine Medicaid Presumptive Eligibility for Low-income Children.
Under Medicaid presumptive eligibility rules, states are allowed to temporarily enroll children whose family income appears to be below Medicaid income standards until a final formal determination of eligibility is made.
The provision adds several entities to the list of those qualified to make Medicaid presumptive eligibility determinations for children. These new entities include agencies that determine eligibility for Medicaid or the State Children’s Health Insurance Program and certain elementary and secondary schools, including those operated or supported by the Bureau of Indian Affairs.
Section 709: Development of Uniform QMB/SLMB Application Form.
This provision directs the Secretary to develop a simplified application form for states to use, at their option, to enroll individuals for medical assistance with Medicare cost-sharing.
Title VIII – State Children’s Health Insurance Program.
Section 801: Special Rule for Redistribution and Availability of Unused Fiscal Year 1998 and 1999 SCHIP Allotments.
This provision creates a new method for redistributing unused CHIP funds. States that use all their SCHIP allotments for fiscal years 1998 and 1999 will receive an amount equal to estimated spending in excess of their original exhausted allotment.
States that do not use all their SCHIP funds will receive an amount equal to the total amount of unspent funds, less amounts distributed to states that fully exhausted their FY 1998 and 1999 funds, multiplied by the ratio of a state’s unspent original allotment to the total amount of unspent funds. States may use up to 10% of the retained FY 1998 funds for outreach activities.
Section 802: Authority to Pay Medicaid Expansion SCHIP Costs From Title XXI Appropriation.
This provision represents a technical accounting correction requested by HCFA. It authorizes the payment of the costs of SCHIP medical expansions and costs of benefits provided during periods of presumptive eligibility from the SCHIP appropriation instead of from the Medicaid appropriation.
Section 803: Application of Medicaid Child Presumptive Eligibility Requirements.
Under Medicaid, states are allowed to temporarily enroll children whose family income appears to be below Medicaid income standards until a final formal determination of eligibility is made. However, there is no express provision for presumptive eligibility in the SCHIP program. This provision clarifies that states have the authority to make presumptive eligibility determinations under the SCHIP program.
Section 901: Extension of Transition for Current Waivers
This provision extends the operation of the Program of All-Inclusive Care for the Elderly under waivers for 36 months, rather than 24 months. In addition, states may do so for four years (as opposed to three).
Section 902: Continuing of Certain Operating Arrangements Permitted.
Under this provision, if a PACE program operating under demonstration authority has contractual or other operating arrangements which are not otherwise recognized in the regulation, the Secretary would be required to permit the program to continue under those arrangements as long as they are found by the Secretary and the state to be reasonably consistent with the objectives of the program.
Section 903: Flexibility in Exercising Waiver Authority.
Under this provision, the Secretary must approve or deny a request for a modification or a waiver of provisions of the PACE protocol not later than 90 days after the date the Secretary receives the request. Additionally, the Secretary has the authority to modify or waive such provisions in a manner that responds promptly to the needs of PACE programs relating to areas of employment and the use of community-based primary care physicians.
Subtitle B – Outreach to Eligible Low-Income Medicare Beneficiaries
Section 911: Outreach on Availability of Medicare Cost-Sharing Assistance to Eligible Low-Income Medicare Beneficiaries.
This provision directs the Social Security Administration to conduct a public outreach campaign to identify Medicare-eligible individuals who may be eligible for cost-sharing under the Medicaid program and notify them of their eligibility. This provision also requires GAO to conduct a study on the impact of these outreach activities on the enrollment of individuals in Medicare cost-sharing under Medicaid.
Subtitle C – Maternal and Child Health Block Grant
Section 921: Increase in Authorization of Appropriations for the Maternal and Child Health Block Grant.
This provision increases the authorization of appropriations for the Maternal and Child Health Block Grant from $705 million to $850 million in FY 2001 and each fiscal year thereafter.
Section 931: Increase in Appropriations for Special Diabetes Programs for Type I Diabetes and Indians.
This provision extends for 1 year, to FY 2003, the authority for grants to be made for both the Special Diabetes Program for Type I Diabetes and for the Special Diabetes Programs for Indians under the Public Health Service Act. This provision also expands funding available for these programs.
Section 932: Appropriations for Ricky Ray Hemophilia Fund.
This provision appropriates $475 million for the Ricky Ray Hemophilia Fund in FY 2001, with the funds remaining available until spent.
Subtitle E – Information on Nurse Staffing
Section 941: Posting of Information on Nursing Facility Staffing.
This provision mandates that a SNF must post daily for each shift the current number of licensed and unlicensed nursing staff directly responsible for resident care in the facility, effective January 1, 2003.
Subtitle F – Adjustment of Multiemployer Plan Benefits Guaranteed
Section 951: Adjustment of Multiemployer Plan Benefits Guaranteed.
This provision adjusts the level of multiemployer pension plan benefits guaranteed under Title IV of ERISA.
Prepared by:
Peter Thomas, Principal, Powers Pyles Sutter & Verville PC
Jeremy Allen, Legislative Director, Powers Pyles Sutter & Verville PC
