For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32005 ------------------------------------------------------------------------------ Order Code RL32005 CRS Report for Congress Received through the CRS Web Medicare Fee-for-Service Modifications and Medicaid Provisions of H.R. 1 as Enacted Updated January 16, 2004 Sibyl Tilson, Jennifer Boulanger, Jean Hearne, Steve Redhead, Evelyne Baumrucker, Julie Stone, Bernadette Fernandez, and Karen Tritz Specialists and Analysts in Social Legislation Domestic Social Policy Division Congressional Research Service ~ The Library of Congress Medicare Fee-for-Service Modifications and Medicaid Provisions of H.R. 1 as Enacted Summary On November 22, the House of Representatives voted 220 to 215 to approve the conference report on H.R. 1, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The Senate, on November 24, voted 54 to 44 to approve the conference report. Earlier, the conferees of the Medicare prescription drug and modernization legislation announced an agreement on November 16 and the legislative text was released November 20. The legislative language can be downloaded from the House Committee on Ways and Means website at: [http://waysandmeans.house.gov]. The bill was signed into law by the President on December 8, 2003. As well as establishing a prescription drug benefit for Medicare beneficiaries, the legislation contains provisions that involving significant payment increases, payment reductions, an expansion of covered benefits, new demonstration projects and new beneficiary cost-sharing provisions for the traditional Medicare fee-for- service (FFS) program. The bill includes a measure that would require congressional consideration of legislation if general revenue funding for the entire Medicare program exceeds 45%. Provisions affecting the State Childrens' Health Insurance Program (SCHIP) and Medicaid programs are included in the legislation as well. Earlier this year, under Congress' FY2004 budget resolution, $400 billion was reserved for Medicare modernization, creation of a prescription drug benefit, and, in the Senate, to promote geographic equity payment. The Congressional Budget Office (CBO) has estimated that the legislation for H.R. 1 would increase direct (or mandatory) spending by $394.3 billion from FY2004 through FY2013. Prescription drug spending is estimated at $409.8 billion over the 10-year period and Medicare Advantage spending at $14.2 billion. Overall, the fee-for-service provisions which change traditional Medicare are estimated to save $21.5 billion over the 10-year period and adjusting the Part B premium to beneficiaries' income is estimated to save $13.3 billion over the period. Some fee-for-service provisions will increase spending over this 10-year period including the provisions affecting hospitals and physician. Other fee-for-service provisions are projected to save money over the period including those affecting durable medical equipment, clinical laboratories and home health agencies. The CBO estimate is available on the CBO website at [ftp://ftp.cbo.gov/48xx/doc4808/11-20-MedicareLetter.pdf]. Contents Changes to Medicare's Fee for Service Program . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Selected Rural Provider Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Selected Acute Hospital Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Selected Physician Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Selected Provisions Affecting Other Providers and Practitioners . . . . . 5 Selected Fee-for Service Demonstration Projects . . . . . . . . . . . . . . . . . 6 Expansion of Covered Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Beneficiary Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Income-Relating the Part B Premium . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Indexing the Part B Deductible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Medicaid and Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Modifications to Fee-for-Service Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Provisions Relating to Part A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Hospital Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Allied Health and Graduate Medical Education Payments . . . . . . . . . 22 Skilled Nursing Facility (SNF) and Hospice Services . . . . . . . . . . . . . 25 Other Part A Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Provisions Relating to Part B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Physician and Practitioner Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Hospital Outpatient Department (HOPD), Ambulatory Surgery Center (ASC), and Clinic Services . . . . . . . . . . . . . . . . . . . . . . . 42 Covered Part B Outpatient Drugs (Not Provided by a HOPD) . . . . . . 48 Covered Drugs and Services at a Dialysis Facility . . . . . . . . . . . . . . . 57 Durable Medical Equipment (DME) and Related Outpatient Drugs . . 58 Ambulance Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Other Part B Services and Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 65 Provisions Relating to Parts A and B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Home Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Chronic Care Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Medicare Secondary Payor (MSP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Other Medicare A and B Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Medicare Demonstration Projects and Studies . . . . . . . . . . . . . . . . . . 82 Beneficiary Issues: Cost-Sharing Amounts and Provision of Information . 90 Other Health-Related Studies, Commissions or Committees . . . . . . . . . . . 94 Medicaid and State Children's Health Insurance Program (SCHIP) Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Cost Containment and Miscellaneous Financial Provisions . . . . . . . . . . . 106 Medicare Fee-for-Service Modifications and Medicaid Provisions of H.R. 1 as Enacted On November 22, 2003, the House of Representatives voted 220 to 215 to approve the conference report on H.R. 1, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The Senate, on November 24th, voted 54 to 44 to approve the conference report. The bill was signed by the President in a ceremony on December 8th. The legislation adds a prescription drug benefit to Medicare and replaces the existing Medicare+Choice program with a new MedicareAdvantage program that establishes managed care payments based on a system of bids and benchmarks. The bill also contains numerous provisions that would generally increase fee-for-service payments within Medicare's Part A and Part B program (also known as traditional Medicare), especially for rural health care providers; numerous regulatory and administrative practices will also be modified. This report discusses the fee-for-service (FFS) provisions of the legislation, those affecting Medicaid as well as the Medicare cost containment provisions1. It compares the provisions in the bill as enacted with those in the Medicare reform bills that were originally passed by the Senate and the House. The Medicare FFS provisions in the bill are found primarily in Titles GGIII through VIII; some FFS provisions are included in Titles VIII through X as noted. The cost containment provisions are in Title VIII and the Medicaid and other provisions are in Title X. An overview of the entire legislation can be found in CRS Report RL31966. Changes to Medicare's Fee for Service Program The legislation contains extensive changes to Medicare's FFS program, including payment increases and, in certain instances, decreases; development of competitive acquisition programs; implementation or refinement of other prospective payment systems (notably, the development of an end-stage renal disease (ESRD) basic payment system); expansion of covered preventive benefits; establishment of demonstration programs; and required studies. The anticipated financial impact of these changes on any individual provider, physician, or supplier will vary depending on many factors, such as the unique characteristics of the individual or entity participating in Medicare as well as the number and type of services provided to the 1 Cost containment provisions require an analysis of general tax revenue financing of the Medicare program as well as a Presidential and Congressional response when "excess general revenue financing of Medicare" exceeds a threshold of 45%. CRS-2 Medicare beneficiaries they serve. Selected highlights of the FFS payment provisions and those establishing preventive care benefits and demonstration programs will be briefly described. Selected Rural Provider Provisions. Generally, Medicare payments to certain rural providers are expected to increase; many of the rural provisions will benefit urban providers as well. CBO estimates that the rural provisions in Title IV of the bill will increase Medicare's direct spending by $9.3 billion from 2004 through 2008 and by $19.9 billion from 2004 though 2013. It should be noted that other provider payment provisions in H.R. 1 can impact rural providers, but their effect on Medicare payments to rural providers has not been specifically identified. ! Hospitals in rural areas and those in small urban areas will receive a permanent 1.6% increase to Medicare's base rate or per discharge payment; the payment limit for rural and small urban hospitals that qualify for disproportionate share hospital (DSH) adjustment will increase from 5.25% to 12%; hospitals in low-wage areas (those with wage index values below 1) will receive additional payments through a decrease from 71% to 62% in the labor-related portion of the base payment rate; and small rural hospitals with less than 50 beds will receive cost reimbursement for outpatient clinical laboratory tests. In addition, rural hospitals with less than 100 beds will be protected from payment declines associated with the hospital outpatient prospective payment system (OPPS) for an additional 2 years; these OPPS hold harmless provisions will be extended to sole community hospitals for services from 2004 through 2006. CBO estimates that these provisions will increase direct Medicare spending by $15.6 billion over the 10-year period. ! Critical access hospitals (CAHs) will have their bed limit increased from 15 to 25; there will be no restriction on the number of these beds that can be used for acute care services at any one time. CAHs will be able to establish distinct part rehabilitation and psychiatric units of up to 10 beds that will not be included in the CAH bed count. Cost reimbursement of CAH services will increase to 101% of reasonable costs, starting January 1, 2004. Periodic interim payments for CAHs will be authorized. State authority to waive the 35-mile requirement for new entities to qualify as a CAH will be eliminated as of January 1, 2006. CBO estimates that these provisions will increase direct Medicare spending by $900 million over the 10-year period. ! Physicians in newly established scarcity areas will receive a 5% increase in Medicare payments. Physicians in certain low-cost areas with geographic adjustment factors below 1 will receive payment increases so as to increase this factor to 1, starting in 2004 through 2006. CBO estimates that these provisions will increase direct Medicare spending by $1.7 billion over the 10-year period. ! Practitioners in rural health clinics and federally qualified health centers will be able to bill separately for services provided to CRS-3 beneficiaries in skilled nursing facilities. CBO estimates that these provisions will increase direct Medicare spending by $100 million over the 10-year period. ! Home health providers in rural areas will receive a 5% increase in Medicare payments for one year beginning April 1, 2004. CBO estimates that this one-year increase will increase direct Medicare spending by $100 million over the 10-year period. Selected Acute Hospital Provisions. Generally, Medicare payments to hospitals will increase under the conference report. Specifically, ! Acute hospitals paid under the inpatient prospective payment system (IPPS) will receive the full increase in the market basket (MB) index as an update in 2004. From 2005 through 2007, hospitals that submit data on specified quality indicators will receive the MB as an update; those hospitals that do not submit such data will receive the MB minus 0.4 percentage points for the year in question. CBO expects that this provision will reduce direct spending 0.2 billion from 2004 through 2008. ! Teaching hospitals will receive an increase in their indirect medical education adjustment from 2004 through 2006 that CBO projects will increase spending by $400 million. ! A one-time, geographic reclassification process to increase hospitals' wage index values for 3 years that is expected to increase payments by $900 million from 2004 through 2008 is established. ! Low volume hospitals with fewer than 800 discharges that are 25 road miles away from similar hospitals may qualify for up to a 25% increase in Medicare payments for an expected cost of $100 million from 2004-2013. ! Changes in payment methods for covered prescription drugs provided in outpatient hospital departments is expected to increase payments by $700 million from FY2004 through FY2008. ! A redistribution of unused resident positions will increase both direct and indirect graduate medical education spending by an anticipated $200 million from FY2004 thought FY2008 and by $600 million from FY2004 through FY2013. ! Certain teaching hospitals with high per resident payments will not receive a payment increase from FY2004 through FY2013; this provision was scored by CBO as a reduction in Medicare spending of $500 million from FY2004 through FY2008 and $1.3 billion from FY2004 through FY2013. ! For 18 months from the date of enactment, physicians will not be able to refer Medicare patients to specialty hospitals in which they have an investment interest. This provision will not apply to hospitals that are in operation or under development before November 18, 2003. Both MedPAC and HHS are to complete required studies on specialty hospitals within 15 months of enactment. CRS-4 Selected Physician Provisions. The impact of the legislation on Medicare's spending for physician spending is difficult to determine. Although physicians will receive a 1.5% update in 2004 and 2005 which is expected to increase spending by $2.8 billion from FY2004 through FY2007; subsequently, from FY2008 through FY2012, the provision is expected to result in a decline of $2.8 billion in Medicare spending. Over the 10 year period from 2004 through 2013, CBO expects the update provisions to increase Medicare spending by $200 million. Medicare's payments for some practice expenses, particularly the administration of covered drugs, will increase starting in 2004. A transitional adjustment to the drug administration payments of 32% in 2004 and 3% in 2005 is also established. These payment increases are expected to be counterbalanced by a decrease in Medicare's payments for covered outpatient drugs provided in a doctor's office. Medicare's payment for covered outpatient drugs furnished incident to a physician's service will change during 2004 as follows: ! Many covered outpatient drugs furnished in 2004 will be reimbursed at 85% of the average wholesale price (AWP). Certain of these drugs may be paid as low as 80% of the AWP (in effect as of April 1, 2003). ! Blood clotting factors and other blood products, drugs or biologicals (drug products) that were not available for payment by April 1, 2003, covered vaccinations, drug products furnished in during 2004 in connection with renal dialysis services, drugs provided through covered durable medical equipment will be paid at a higher rate during 2004. The decline in payments for covered outpatient drugs in 2004 can only be implemented concurrently with the increased payments for the administration of the drugs. Starting in 2005, Medicare's payment for many covered outpatient drugs will be based on average sales price methodology, that uses different pricing and cost data, depending on the prescription drug. Generally, multiple source drugs will be paid 106% of the average sales price; single source drugs will be paid 106% of the lower of the average sales price or the wholesale acquisition costs, unless the widely available market price or the average manufacturer price for those drugs exceeds a certain threshold. Starting in 2006, physicians will have the option of obtaining covered Part B drugs from selected entities awarded contracts for competitively biddable drug products under a newly established competitive acquisition program. CRS-5 Selected Provisions Affecting Other Providers and Practitioners. The follow provisions affecting other providers and practitioners are included in the legislation: Ambulatory Surgical Centers. Payments to ambulatory surgical centers (ASCs) are expected to be lower by $800 million from FY2004 through FY2008 and by $3.1 billion from FY2004 through FY2013 as a result of the legislation. ASCs will receive an update of the consumer price index for all urban consumers (CPI-U) minus 3.0 percentage points starting April 1, 2004 and will receive a O percent update for services provided starting October 1, 2004 through December 31, 2009. Therapy Caps. Application of the caps on outpatient therapy services provided by non-hospital providers is suspended from the date of enactment and for the remainder of 2003, in 2004 and 2005. CBO estimates that the therapy cap moratorium will increase direct Medicare spending by $700 million over the 10-year period. Durable Medical Equipment (DME). Competitive bidding for DME will be phased-in beginning in 2007 in 10 of the largest metropolitan statistical areas and may be phased in first for the highest cost and highest volume items and services. The update for most DME items and services and for prosthetics and orthotics is 0 in 2004, 2005, 2006, 2007, and 2008. For 2005, payment for certain items, oxygen and oxygen equipment, standard wheelchairs, nebulizers, diabetic lancets and testing strips, hospital beds and air mattresses will be reduced by an amount calculated using 2002 payment amounts and the median price paid by the Federal Employees Health Benefit Program.2 Beginning January 1, 2009, items and services included in the competitive acquisition program will be paid as determined under that program and the Secretary can use this information to adjust the payment amounts for DME, off- the-shelf orthotics, and other items and services that are supplied in an area that is not a competitive acquisition area. Class III items (devices that sustain or support life, are implanted, or present potential unreasonable risk, e.g., implantable infusion pumps and heart valve replacements, and are subject to premarket approval, the most stringent regulatory control) receive the full increase in the consumer price index for all urban consumers (CPI-U) in 2004, 2005, 2006 , 2008 and subsequent years. The Secretary will determine the update in 2007. CBO scored the DME provisions of the bill as reducing spending by $6.8 billion over the 10-year period. Home Health. Home health agency payments are increased by the full market basket percentage for the last quarter of 2003 (October, November, and December) and for the first quarter of 2004 (January, February, and March). The update for the remainder of 2004 and for 2005 and 2006 is the home health market basket percentage increase minus 0.8 percentage points. CBO estimates that this provision 2 Section 302 specifies that the reduction uses the "Median FEHP Price" in the table entitled "Summary of Medicare Prices Compared to VA, Medicaid, Retail, and FEHB Prices for 16 Items" that was included in testimony of the Health and Human Services Inspector General before the Senate Committee on Appropriations, June 12, 2002, or any subsequent report by the Inspector General. CRS-6 will reduce direct Medicare spending by $6.5 billion over the 10-year period. The legislation suspends the requirement that home health agencies must collect the Outcome and Assessment Information Set (OASIS) data on private pay (non- Medicare, non-Medicaid) until the Secretary reports to Congress and publishes final regulations regarding the collection and use of OASIS. Selected Fee-for Service Demonstration Projects. The legislation establishes numerous demonstration projects for the Medicare program. Several demonstrations address aspects of disease management for beneficiaries with chronic conditions. Chronic Care Improvement under Fee-For-Service. The legislation requires the Secretary to establish and implement chronic care improvement programs under fee-for-service Medicare to improve clinical quality and beneficiary satisfaction and achieve spending targets specified by the Secretary for Medicare for beneficiaries with certain chronic health conditions. Participation by beneficiaries is voluntary. The contractors are required to assume financial risk for performance under the contract. CBO has estimated that this demonstration will increase direct Medicare spending by $500 million over the 10-year period. Chronically Ill Beneficiary Research, Demonstration. The legislation requires the Secretary to develop a plan to improve quality of care and to reduce the cost of care for chronically ill Medicare beneficiaries within 6 months after enactment. The plan is required to use existing data and identify data gaps, develop research initiatives, and propose intervention demonstration programs to provide better health care for chronically ill Medicare beneficiaries. The Secretary is required to implement the plan no later than 2 years after enactment. Coverage of Certain Drugs and Biologicals Demonstration. The Secretary is required to conduct a 2-year demonstration where payment is made for certain drugs and biologicals that are currently provided as "incident to" a physician's services under Part B. The demonstration is required to provide for cost-sharing in the same manner as applies under Part D of Medicare. The demonstration is required to begin within 90 days of enactment and is limited to 50,000 Medicare beneficiaries in sites selected by the Secretary. Homebound Demonstration. The Secretary is required to conduct a 2-year demonstration project where beneficiaries with chronic conditions would be deemed to be homebound in order to receive home health services under Medicare. Adult Day Care. The Secretary is required to establish a demonstration where beneficiaries could receive adult day care services as a substitute for a portion of home health services otherwise provided in a beneficiary's home. Expansion of Covered Benefits. The legislation contains a number of provisions that expand coverage beginning January 1, 2005, including the following: CRS-7 Initial Physical Examination. Medicare coverage of an initial preventive physical examination is authorized for those individuals whose Medicare coverage begins on or after January 1, 2005. CBO estimates that this provision will increase direct Medicare spending by $1.7 billion over the 10-year period. Cardiovascular Screening Blood Tests. Medicare coverage of cardiovascular screening blood tests is authorized. CBO estimates that this provision will increase direct Medicare spending by $300 million over the 10-year period. Diabetes Screening Tests. Diabetes screening tests furnished to an individual at risk for diabetes for the purpose of early detection of diabetes are included as a covered medical service. In this instance, diabetes screening tests include fasting plasma glucose tests as well as other tests and modifications to those tests deemed appropriate by the Secretary. CBO estimates that this provision will increase direct Medicare spending less than $50 million over the 10-year period. Screening and Diagnostic Mammography. Screening mammography and diagnostic mammography will be excluded from OPPS and paid separately. CBO estimates that this provision will increase direct Medicare spending by $200 million over the 10-year period. Intravenous Immune Globulin. The bill includes intravenous immune globulin for the treatment in the home of primary immune deficiency diseases as a covered medical service under Medicare. CBO estimates that this provision will increase direct Medicare spending by $100 million over the 10-year period. Beneficiary Payments The bill contains two provisions which change the beneficiary premiums and deductibles. Income-Relating the Part B Premium. The legislation increases the monthly Part B premiums for higher income enrollees beginning in 2007. Beneficiaries whose modified adjusted gross income exceed $80,000 and couples filing joint returns whose modified adjusted gross income exceeds $160,000 will be subject to higher premium amounts. The increase will be calculated on a sliding scale basis and will be phased-in over a five-year period. The highest category on the sliding scale is for beneficiaries whose modified adjusted gross income is more than $200,000 ($400,000 for a couple filing jointly). Those amounts are increased beginning in 2007 by the percentage change in the consumer price index. CBO estimates that direct Medicare spending will be reduced by $13.3 billion over the 10-year period 2004 through 2013. Indexing the Part B Deductible. The Medicare Part B deductible will remain $100 through 2004, increase to $110 for 2005, and in subsequent years the deductible will be increased by the same CRS-8 percentage as the Part B premium increase. Specifically, the annual percentage increase in the monthly actuarial value of benefits payable from the Federal Supplementary Medical Insurance Trust Fund will be used as the index. Medicaid and Miscellaneous Provisions Title X of the legislation makes some changes to Medicaid and other programs. Omitted from the agreement were two provisions contained in S. 1, including a provision to amend the Age Discrimination in Employment Act of 1967 to allow an employee benefit plan to offer different benefits to their Medicare eligible employees than to their non-Medicare eligible employees, and a provision to allow states to cover certain lawfully residing aliens under the Medicaid program. CBO estimates the Medicaid and other provisions included in the bill to increase direct spending by $5.7 billion between FY2004 and FY2013. The following general points can be made about the Medicaid and Miscellaneous provisions included in Title X of the bill: ! The legislation temporarily increases states' disproportionate share hospital (DSH) allotments to erase the decline in these Medicaid amounts that occurred after a special rule for their calculation expired. ! The legislation includes several other Medicaid provisions, including raising the floor on DSH allotments for "extremely low DSH states," providing DSH allotment adjustments impacting Hawaii and/or Tennessee, increasing reporting requirements for DSH hospitals, and exempting prices of drugs provided to certain safety net hospitals from Medicaid's best price drug program. ! Miscellaneous provisions in Title X of the legislation include funding federal reimbursement of emergency health services furnished to undocumented aliens, and funding administrative start- up costs for Medicare reform, various research projects, work groups and infrastructure improvement programs for the health care system. This report contains a detailed side-by-side comparison of the relevant provisions of the legislation, S. 1, as passed the Senate, and H.R. 1, as passed the House. Certain of the provisions can be found in one or more of the sections. For example, the home health homebound demonstration (section 702) is listed in the home health section and the demonstration projects section. Also included in this side-by-side, are provision that were included in the House and/or Senate bill which were dropped in conference. CRS-9 Modifications to Fee-for-Service Medicare Provisions Relating to Part A Hospital Services. Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Inpatient Prospective Payment System (IPPS) Hospitals Increase standardized amounts for small Section 401. Medicare will pay hospitals Section 401. Medicare would pay Section 402. Similar provision with urban and rural hospitals in Medicare's in rural and small urban areas in the 50 hospitals in rural and small urban areas in respect to discharges in the fifty states. inpatient hospital prospective payment states using the standardized amount that the fifty states using the standardized Two standardized amounts would still be system (IPPS). Medicare pays for would be used to pay hospitals in large amount used to pay hospitals in large used for hospitals in Puerto Rico; one inpatient services in acute hospitals in urban areas starting for discharges in urban areas starting for discharges in federal amount would be used in the large urban areas using a standardized FY2004. The existing authority of the FY2004. The Secretary would compute calculation of these 2 rates. amount that is 1.6% larger than the Secretary to delay implementation of this one standardized amount for hospitals in standardized amount used to reimburse increase until November 1, 2003 for Puerto Rico equal to that for other areas. hospitals in other areas (both rural areas hospitals that are not in Puerto Rico is not and smaller urban areas). P.L. 108-7 affected. The Secretary will compute one provided that all Medicare discharges from local standardized amount for all hospitals April 1, 2003 to September 30, 2003, will in Puerto Rico equal to that for hospitals in be paid on the basis of the large urban area large urban areas in Puerto Rico starting amount. The Secretary is authorized to for discharges in FY2004. Hospitals in delay implementation of this payment Puerto Rico will receive the legislated increase until November 1, 2003, if payment increase starting for discharges on necessary. April 1, 2004. Under Medicare's IPPS, two different standardized amounts are used for hospitals in Puerto Rico, one for hospitals in large urban areas and one for other hospitals. Increase payments to hospitals in areas Section 403. For discharges on or after Section 402. For cost reporting periods Section 416. Same provision except that with wage index values below one (by October 1, 2004, the Secretary is required beginning October 1, 2004, the Secretary the effective date is October 1, 2003. lowering Medicare's IPPS labor-related to decrease the labor-related share to 62% would be required to decrease the labor- share which is the proportion of the of the standardized amount when such related share to 62% of the standardized standardized amount multiplied by the change will result in higher total payments amount only if such change would result in wage index). IPPS payments are adjusted, to the hospital. This provision is to be higher total payments to the hospital. This CRS-10 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) either increased or decreased as applied without regard to certain budget- provision would be applied without regard appropriate, by the hospital wage index of neutrality requirements. For discharges on to certain budget neutrality requirements. the area where the hospital is located or or after October 1, 2004, the Secretary is where it has been reassigned. Presently, also required to decrease the labor-related approximately 71% of the standardized share to 62% of the standardized amount amount is adjusted by the area wage index. for hospitals in Puerto Rico when such change results in higher total payments to the hospital. Increase Medicare IPPS payments for Section 406. The Secretary is required to Section 403. The Secretary would be No provision. low-volume hospitals. Medicare pays provide for a graduated adjustment of up to required to develop a graduated adjustment inpatient acute hospital services for each 25% of Medicare's inpatient payment rates of up to 25% of Medicare's inpatient discharge from the hospital without regard to account for the empirically established payment rates to account for the higher to the number of beneficiaries discharged higher unit costs associated with low- unit costs in low-volume hospitals. Certain from any given hospital. Under certain volume hospitals starting for discharges hospitals with fewer than 2,000 total circumstances, however, sole community occurring in FY2005. A low-volume discharges during the three most recent hospitals (SCHs) and Medicare dependent hospital is a short-term general hospital cost reporting periods would be eligible for hospitals with more than a 5% decline in that is located more than 25 road miles up to a 25% increase in their Medicare total discharges from one period to the from another such hospital and that has payment amount starting with cost reports next may apply for an adjustment to their less than 800 discharges during the fiscal that begin during FY2005. Eligible payment rates to partially account for year. Certain budget neutrality hospitals would be located at least 15 miles higher costs associated with a drop in requirements would not apply to this from a similar hospital or those determined patient volume due to circumstances provision. The determination of the by the Secretary to be so located due to beyond their control. percentage payment increase is not subject factors such as weather conditions, travel to administrative or judicial review. conditions, or travel time to the nearest alternative source of appropriate inpatient care. Certain budget neutrality requirements would not apply. Increase disproportionate share hospital Section 402. Starting for discharges after Section 404. Starting for discharges after Section 401. Starting for discharges after (DSH) payments for small urban and April 1, 2004, a hospital that is not a large October 1, 2004, a hospital that qualifies October 1, 2003, a hospital that is not a rural hospitals. Medicare makes urban hospital that qualifies for a DSH for a DSH adjustment when its DSH large urban hospital that qualifies for a additional payments to certain acute adjustment will receive its DSH payments patient percentage exceeds the 15% DSH DSH adjustment would receive its DSH hospitals that serve a large number of low- using the current DSH adjustment formula threshold would receive the DSH payments payments using the current DSH income Medicare and Medicaid patients. for large urban hospitals, subject to a limit. using the current formula that establishes adjustment formula for large urban Although a SCH or rural referral center The DSH adjustment for any of these the DSH adjustment for a large urban hospitals, subject to a limit. The DSH (RRC) can qualify for a higher DSH hospitals, except for rural referral centers, hospital. adjustment for any of these hospitals, adjustment, generally, the DSH adjustment will be capped at 12%. A Pickle hospital except for RRCs, would be capped at 10%. CRS-11 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) that a small urban or rural hospital can receiving a DSH adjustment under the receive is limited to a maximum of a alternative formula will not be affected by 5.25% increase to its IPPS payment. Large this provision. (For a description of Pickle (100 beds and more) urban hospitals and hospitals, see page 12 column 1.) large rural hospitals (500 beds and more) are eligible for a higher adjustment that can be significantly greater; the amount of the DSH adjustment received by these larger hospitals will depend upon its DSH patient percentage (the percentage of low- income Medicare or Medicaid patients served). Require MedPAC report on Medicare No provision. Section 404A. MedPAC would be No provision. DSH adjustments. No provision in required to conduct a study to determine current law. (1) whether DSH payments should be made in the same manner as Medicare's graduate medical education payments; (2) the extent that hospitals receiving Medicaid DSH payments also receive Medicare DSH payments; and (3) whether uncompensated care costs should be added to the Medicare DSH formula. The report, including recommendations, would be due to Congress within 1 year from enactment. Exclude wage data of hospitals that No provision. Section 405(e). The Secretary would be No provision. convert to critical access hospitals required to exclude wage data from (CAHs) from IPPS wage index. Certain hospitals that have converted to CAHs qualified small hospitals are converting to from the IPPS wage index calculation CAHs. After conversion, these facilities starting for cost reporting periods are paid on a reasonable cost basis and are beginning January 1, 2004. not paid under IPPS. Medicare's IPPS payments to acute hospitals are adjusted by the wage index of the area where the hospital is located or has been reassigned. Although the hospital wage index is CRS-12 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) recalculated annually, the wage index for any given fiscal year is based on data submitted as part of a hospital's cost report from 4 years previously. As of FY2004, wage data from hospitals that have converted to CAHs were excluded from the IPPS wage index calculation. Increase DSH for "Pickle" hospitals. No provision. Section 420A. Hospitals that qualify for No provision. Most DSH hospitals receive additional the DSH adjustment under the Pickle Medicare payments because they serve a amendment would receive a DSH disproportionate share of poor Medicare operating and capital adjustment of 40% and Medicaid patients. A few urban for discharges beginning October 1, 2003. hospitals receive DSH payments under an alternative Pickle formula. If a hospital receives at least 30% of its patient care revenue from indigent care funds, it will get a 35% increase in its Medicare operating payments. The Pickle hospitals receive a capital DSH adjustment of 14.16%, the amount that other non-Pickle hospitals with a 35% operating DSH adjustment would receive. Increase payments for hospitals in Section 504. Hospitals in Puerto Rico will Section 409. Hospitals in Puerto Rico Section 503. From FY2004 though Puerto Rico. Under Medicare's IPPS, receive Medicare payments based on a would receive Medicare payments based FY2007, hospitals in Puerto Rico would separate standardized amounts are used to 50/50 split between federal and local on a 50/50 split between national and local receive an increasing amount of the pay short-term general hospitals in Puerto amounts before April 1, 2004. Starting amounts before October 1, 2004. These payment rate based on national rates as Rico. The Balanced Budget Act of 1997 April 1, 2004 through September 30, 2004, hospitals would receive Medicare follows: during FY2004, payment would (BBA 97) provides for an adjustment of payment will be based on 62.5% national payments based on 100% of the federal be 59% national and 41% local; during the Puerto Rico rates from blended amount and 37.5% local amount; this will rate for discharges beginning October 1, 2005, payment would be 67% national amounts based on 25% of the national change to 75% national and 25% local 2004 and before October 1, 2009. The rate and 33% local and 75% national and 25% amounts and 75% of the local amounts to after October 1, 2004 and in subsequent for hospitals in Puerto Rico would revert to local during FY2006 and subsequently. blended amounts based on a 50/50 split years. a 50/50 split after October 1, 2009. between national and local amounts. CRS-13 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require GAO report on appropriateness No provision. Section 413. Using the most current data, No provision. of IPPS payments. No provision in the Comptroller General (GAO) would be current law. required to report to Congress within 18 months of enactment on: (1) the appropriate level and distribution of IPPS Medicare payments to short-term general hospitals; and (2) the need for geographic adjustments to reflect legitimate differences in hospital costs. Calculate wage indices for hospitals. Section 508. The Secretary will establish Section 419. The Secretary would be able No provision. IPPS hospitals may apply to the Medicare a wage index appeals process by January 1, to waive established reclassification Geographic Classification Review Board 2004. A hospital seeking to be reclassified criteria in calculating the wage index in a (MGCRB) for a change in classification to must submit an appeal to the MGCRB no state when making payments for hospital a different area. If reclassification is later than February 15, 2004. discharges in FY2004. granted, the new wage index will be used Reclassifications will be effective for a 3- to calculating Medicare's payment for year period starting April 1, 2004. There inpatient and outpatient services. The will be no further administrative or judicial reclassification standards are established review of these decisions. The additional by regulation. spending associated with this provision cannot exceed $900 million. Update hospital market basket more Section 404. The Secretary is required to No provision Section 404. The Secretary would be frequently. IPPS standardized amounts revise the market basket weights to reflect required to revise the market basket cost are increased annually using an update the most currently available data and to weights to reflect the most currently factor which is determined in part by the establish a schedule for revising the cost available data and to establish a schedule projected increase in the hospital market category weights more often than once for revising the weights more often than basket (MB), an input price index which every 5 years. The Secretary is required to once every 5 years. The Secretary would measures the average change in the price publish the reasons for and the options be required to submit a report to Congress of goods and services hospitals purchased considered in establishing such a schedule by October 1, 2004 on the reasons for and in order to furnish inpatient care. Centers in the final rule establishing FY2006 the options considered in establishing such for Medicare and Medicaid Services inpatient hospital payments. a schedule. (CMS) revises the category weights, reevaluates the price proxies for such categories, and rebases the MB every 5 years. CRS-14 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Reduce hospital update factor. Each Section 501. Acute hospitals will receive No provision. Section 501. Acute hospitals would year, Medicare's operating payments to the MB as the operating update for receive an operating update of the MB hospitals are increased or updated by a FY2004. From FY2005 through FY2007, minus 0.4 percentage points for FY2004 factor that is determined in part by the hospitals that submit required quality data through FY2006. The operating update projected annual change in the hospital will receive the MB as an update; would be the MB increase in FY2007 and MB. Congress establishes the update for hospitals that do not submit such data will subsequently. Medicare's IPPS for operating costs, often receive the MB minus 0.4 percentage several years in advance. Currently, acute points. The reduction would apply to the care hospitals will receive the MB as an year in question only and would not be update for FY2004 and subsequently. taken into account in subsequent years. The operating update will be the MB in FY2008 and in subsequent years. Increase pass-through payments for new Section 503. The Secretary is required to No provision. Section 502. New diagnosis and procedure inpatient technology. The Medicare, add new diagnosis and procedure codes in codes would be added in April 1 of each Medicaid, and SCHIP Benefits April 1 of each year but is not required to year that would affect Medicare's IPPS Improvement and Protection Act of 2000 change Medicare's payment or DRG starting the following October. The (BIPA) established that Medicare's IPPS classification as a result of these additions Secretary would not be able to deny new should recognize the costs of new medical until the fiscal year that begins after that technology status because an item has been services and technologies beginning date. When establishing whether DRG used prior to the 2-to-3 year period before October 1, 2001. The additional hospital payments are inadequate, the Secretary is it was issued a billing code. When payments can be made by the means of required to apply a threshold that is the establishing whether DRG payments are new technology groups, an add-on lesser of 75% of the standardized amount inadequate, the Secretary would be payment, a payment adjustment, or other (increased to reflect the difference between required to apply a threshold that is the mechanism, but cannot be a separate fee costs and charges) or 75% of one standard lesser of 75% of the standardized amount schedule and must be budget neutral. CMS deviation for the DRG involved. The (adjusted to reflect the difference between established that a technology that provided Secretary is required to: (1) maintain a costs and charges) or 75% of one standard a substantial improvement to existing current public list of pending applications deviation for DRG involved. The treatments would qualify for additional for this additional payment; (2) accept Secretary would be required to provide payments. The add-on payment for an public comment, recommendations, and additional regulatory guidance on the new eligible new technology would occur when data regarding whether a service or technology criteria. The Secretary would the standard diagnosis related group technology represents a substantial be required to deem that a technology (DRG) payment was inadequate. This improvement; and (3) provide for a public provides a substantial improvement on an threshold was established as one standard meeting with the clinical staff at CMS and existing treatment if it is designated under deviation above the mean standardized organizations representing physicians, section 506 of the FDA Act, approved DRG; the add-on payment for new beneficiaries, manufacturers or other under certain sections of Title 21, technology would be the lesser of: (a) 50% interested parties. These actions will occur designated for priority review, is an CRS-15 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) of the costs of the new technology; or (b) prior to the publication of a proposed exempt medical device under section 50% of the amount by which the costs regulation. Before establishing an add-on 520(m) of such Act, or receives expedited exceeded the standard DRG payment. payment as the appropriate reimbursement review under section 515(d)(5). Other However, if the new technology payments mechanism, the Secretary is directed to requirements requiring the process for are estimated to exceed the budgeted target identify one or more DRGs and assign the public input would be imposed. A amount of 1% of the total operating technology to that DRG. When such preference fo use of a DRG adjustment inpatient payments, the add-on payments assignment to a DRG occurs, no add-on would be established. Add-on payments are reduced prospectively. CMS has payment would be made; the budget- would be increased to the percentage that proposed to reduce the threshold to 75% of neutrality requirement with respect to Medicare reimburses inpatient outlier one standard deviation beyond the annual DRG reclassifications and cases. Funding for this new technology geometric mean standardized charge for all recalculation will apply. Funding for new would no longer be budget neutral. cases in the DRG to which the new service technology is no longer required to be is assigned. budget neutral. The provisions will apply to new technology determinations beginning in FY2005. Applications that were denied in FY2005 will be reconsidered under these provisions; if granted, the maximum time period otherwise permitted for such classification as a new technology is extended by 12 months. Increase hospitals' wage index values to Section 505. The Secretary is required to No provision. Section 504. The Secretary would be reflect commuting patterns from higher establish an application process and 3-year required to establish an application process wage index areas. Unlike other providers, payment adjustment to recognize the out- and payment adjustment to recognize the IPPS hospitals may apply to the Medicare migration of hospital employees who commuting patterns of hospital employees. Geographic Classification Review Board reside in a county and work in a different A hospital that qualified for such a (MGCRB) for reassignment to another area with a higher wage index. A hospital payment adjustment would have average area. The MGCRB was created to that receives such a payment adjustment hourly wages that exceed the average determine whether a hospital should be will be located in a qualifying county that wages of the area in which it is located and redesignated to an area with which it has meets certain criteria including (1) a have at least 10% of its employees living close proximity for purposes of using the threshold of no less than 10% for in one or more areas that have higher wage other area's wage index. A hospital can minimum out-migration to a higher wage index values. The process would be based establish proximity to the new area by index area or areas, and (2) a requirement on the MGCRB reclassification process documenting that at least 50% of its that the average hourly wage of the and schedule with respect to data employees reside there. Other cost criteria hospitals in the qualifying county equals or submitted. Such an adjustment would be must be met before a hospital will be exceeds the average hourly wage of all the effective for 3 years unless a hospital CRS-16 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) reclassified. If reclassification is granted, hospitals in the area where the county is withdraws or elects to terminate its the wage index for the new area will be located. The Secretary may require acute payment. It would also be exempt from used to calculate Medicare's payment for hospitals and other hospitals as well as certain budget neutrality requirements. inpatient and outpatient services provided critical access hospitals to submit data by the hospital. regarding the location of their employees' residence or the Secretary may use data from other sources. A hospital that receives a commuting wage adjustment is not eligible for reclassification into another area by the MCGRB. This adjustment is exempt from certain budget neutrality requirements. The thresholds and other qualifying criteria for the commuting wage adjustment are not subject to judicial review. The provisions apply to discharges on or after October 1, 2004. Permit hospitals with missing cost Section 407. A hospital will not be able to No provision. Section 414. Beginning January 1, 2004, reports to be SCHs. SCHs are hospitals be denied treatment as a SCH or receive a hospital would not be able to be denied that, because of factors such as isolated payment as a SCH because data are treatment as a SCH or receive payment as location, weather conditions, travel unavailable for any cost reporting period a SCH because data are unavailable for any conditions, or absence of other hospitals, due to changes in ownership, changes in cost reporting period due to changes in are the sole source of inpatient services fiscal intermediaries, or other o wn e r s h i p , c h a n g e s i n f i s c a l reasonably available in a geographic area, extraordinary circumstances, so long as intermediaries, or other extraordinary or are located more than 35 road miles data from at least one applicable base cost circumstances, so long as data from at least from another hospital. An SCH receives reporting period is available. The provision one applicable base cost reporting period is the higher of the following payment rates: applies to cost reporting periods beginning available. the current IPPS base payment rate, or its on or after January 1, 2004. hospital-specific per discharge costs from either FY 1982, 1987 or 1996 updated to the current year. The FY1996 base year option will be fully implemented beginning in FY2004. Provide hospitals with data on patient Section 951. The Secretary is required to No provision. Section 951. The Secretary would arrange days for DSH adjustment. A hospital's provide information that hospitals need to to furnish necessary patient day DSH payments under IPPS are calculated calculate the number of Medicaid patient information for the Medicare DSH using a formula that includes data on the days used in the Medicare DSH payment computation for the current cost reporting CRS-17 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) number of total patient days as well as formula not later than 1 year after year. days provided to those eligible for enactment. Medicaid and to Medicare beneficiaries who receive Supplemental Security Income. Permit adoption of new coding standard. No provision. No provision. Se c t io n 9 4 2 ( d) . T he new co d ing The Secretary is required to rely on the standards, International Classification of recommendations from the National Diseases 10th Revision (IDC-10) could be Committee on Vital and Health Statistics adopted within 1-year of enactment (NCVHS) before adopting health without receiving a recommendation from information standards and codes. NCVHS. Require GAO report on use of external Section 942(c). GAO is required to study No provision. Section 942(c). GAO would study which data for IPPS payments. No provision in which external data can be collected in a external data can be collected in a shorter current law. shorter time frame by CMS to use in time frame by CMS to use in calculating calculating IPPS payments. GAO may IPPS payments. GAO could evaluate evaluate feasibility and appropriateness of feasibility and appropriateness of using using quarterly samples or special surveys quarterly samples or special surveys and and would include an analysis of whether would include an analysis of whether other other executive agencies are best suited to executive agencies are best suited to collect this information. The report is due collect this information. The report would to Congress no later than October 1, 2004. be due to Congress no later than October 1, 2004. Critical Access Hospital Services Increase payments to CAHs. Generally, Section 405(a). Inpatient, outpatient, and No provision. Section 405(a). Inpatient, outpatient, and a critical access hospital (CAH) receives covered skilled nursing facility services covered skilled nursing facility services reasonable cost reimbursement for care provided by a CAH in its swing beds will provided by a CAH in its swing beds rendered to Medicare beneficiaries. CAHs be reimbursed at 101% of reasonable costs would be reimbursed at 102% of may elect either a cost-based hospital of services furnished to Medicare reasonable costs of services furnished to outpatient service reimbursement or an all- beneficiaries. This provision applies to Medicare beneficiaries. This provision inclusive rate which is equal to a cost reporting periods beginning on or would apply to cost reporting periods reasonable cost reimbursement for facility after January 1, 2004. beginning on or after October 1, 2003. services plus 115% of the fee schedule payment for professional services. CRS-18 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Eliminate 35-mile requirement for cost- No provision. Section 405(b). The requirement that the Section 405(c). The 35-mile requirement based reimbursement of CAH CAH or the related entity be the only would not apply to a provider or supplier ambulance services. Ambulance services ambulance provider within a 35-mile drive of ambulance services who is a first provided by a CAH or provided by an in order to receive reasonable cost responder to emergencies for services entity that is owned or operated by a CAH reimbursement for the ambulance services furnished after the first cost reporting are paid on a reasonable cost basis and not would be dropped for services furnished period beginning after the date of the ambulance fee schedule, if the CAH or beginning January 1, 2005. enactment. entity is the only provider or supplier of ambulance services that is located within a 35-mile drive of the CAH. Expand payment for emergency room Section 405(b). The provision expands Section 405(c). Reimbursement for on-call Section 405(b). Same provision but would on-call providers. BIPA required the reimbursement of on-call emergency room emergency room providers would be be effective January 1, 2004. Secretary to include the costs of providers to include not just emergency expanded to include physician assistants, compensation (and related costs) of on-call room physicians but also physician nurse practitioners, and clinical nurse emergency room physicians who are not assistants, nurse practitioners, and clinical specialists as well as emergency room present on the premises of a CAH, are not nurse specialists for the costs associated physicians for covered Medicare services otherwise furnishing services, and are not with covered Medicare services provided provided beginning January 1, 2005. on-call at any other provider or facility beginning January 1, 2005. when determining the allowable, reasonable cost of outpatient CAH services. Increase critical access hospital (CAH) Section 405(e). A CAH will be able to Section 405(a) A CAH would be able to Section 405(f). For designations bed limit. A CAH is a limited service operate up to 25 beds. The requirement operate up to 25 swing beds or acute care beginning January 1, 2004, the Secretary facility that must provide 24-hour that only 15 of the 25 beds be used for beds, subject to the 96-hour average length would specify standards for establishing emergency services and operate a limited acute care at any time is dropped. The of stay for acute care patients. The seasonal variations in a CAH's patient number of inpatient beds in which hospital provision applies to CAH designations requirement that only 15 of the 25 beds be admissions that would justify a five-bed stays can average no more than 96 hours. made before, on, or after January 1, 2004, used for acute care at any time would be increase in the number of beds it can A CAH is limited to 15 acute-care beds, but any election made pursuant to the dropped. This provision would be maintain (and still retain its classification but can have an additional 10 swing beds regulations promulgated to implement this effective for designations made beginning as a CAH). CAHs with swing beds would that are set up for skilled nursing facility provision will only apply prospectively. October 1, 2004. be able to use up to 25 beds for acute care level care. While all 25 beds in a CAH can services as long as no more than 10 beds at be used as swing beds, only 15 of the 25 any time are used for non-acute services. can be used for acute care at any time. Those CAHs with swing beds that made this election would not be eligible for the CRS-19 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) five-bed seasonal adjustment. A CAH with swing beds that elects to operate 15 of its 25 beds as acute care beds would be eligible for the five-bed seasonal adjustment. Authorize periodic interim payments for Section 405(c). An eligible CAH will be Section 405(d). Starting with payments Section 405(d). Same provision but would eligible CAHs. Eligible hospitals, skilled able to receive payments made on a PIP made beginning January 1, 2005, an be effective January 1, 2004. Also, the nursing facilities, and hospices which meet basis for its inpatient services. The eligible CAH would be able to receive Secretary would be required to develop certain requirements receive Medicare Secretary is required to develop alternative payments made on a PIP basis for inpatient alternative methods based on the periodic interim payments (PIP) every 2 methods for the timing of PIP payments to services. expenditures of the hospital for these PIP weeks; these payments are based on these CAHs. This provision applies to payments. estimated annual costs without regard to payments made on or after July 1, 2004. the submission of individual claims. At the end of the year, a settlement is made to account for any difference between the estimated PIP payment and the actual amount owed. A CAH is not eligible for PIP payments. Exclude beds in distinct-part units from Section 405(g). A CAH can establish a Section 405(g). The Secretary would not No provision. CAH bed count Beds in distinct-part distinct part psychiatric or rehabilitation be able to count any beds in a distinct-part skilled nursing facility units do not count unit that meets the applicable requirements psychiatric or rehabilitation unit operated toward the CAH bed limit. Beds in for such beds. If the units do not meet by the entity seeking to become a CAH for distinct-part psychiatric or rehabilitation these requirements during a cost reporting designations beginning October 1, 2003. units operated by an entity seeking to period, then no Medicare payment will be The total number of beds in these distinct- become a CAH count toward the bed limit. made to the CAH for services furnished in part units would not be able to exceed 25. the unit during the period in question. A CAH would be able to establish a such a Payments for services provided in these distinct-part unit. units will equal payments that are made on a prospective payment basis to distinct part units of short term general hospitals. The beds in the distinct part psychiatric or rehabilitation units will not count toward the CAH bed limit. The total number of beds in these distinct part units cannot CRS-20 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) exceed 10. The provision will apply to cost reporting periods starting October 1, 2004 Establish CAH improvement No provision. Section 415. The Secretary would be No provision. demonstration program. No provision in required to establish a budget neutral 5- current law. year CAH demonstration program in four areas including Kansas and Nebraska to test various methods to improve the CAH program. Services would be paid either on the basis of its reasonable costs (without regard to customary charges) or using the relevant PPS for those services. In this instance, reasonable cost reimbursement of capital would include a return on equity payment of 150% of the average rate of interest paid by the Hospital Insurance (HI) Trust Fund. Modify CAHs' billing requirements for Section 405(d). The requirement that all No provision. Section 405(e). The Secretary would not physician services. As specified by physicians or practitioners providing be able to require that all physicians Balanced Budget Refinement Act of 1999 services in a CAH assign their billing providing services in a CAH assign their (BBRA), CAHs can elect to be paid for rights to the entity in order for the CAH to billing rights to the entity in order for the outpatient services using cost-based be able to be paid 115% of the fee CAH to be able to be paid on the basis of reimbursement for its facility fee and at schedule cannot be imposed. However, a 115% of the fee schedule for the 115% of the fee schedule for professional CAH will not receive payment based on professional services provided by the services otherwise included within its 115% of the fee schedule for any physicians. However, a CAH would not outpatient critical access hospital services individual who does not assign billing receive such payment for any physician for cost reporting periods starting October rights to the CAH. This provision applies who did not assign billing rights to the 1, 2000. to cost report periods starting on or after CAH. July 1, 2004 except for those CAHs that have already elected payment for physician services on this basis before November 1, 2003; this provision will apply to those CAHs starting for cost reporting periods on or after July 1, 2003. CRS-21 Provision and Current Law Description H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Eliminate state authority to waive CAH Section 405(h). The State will no longer No provision. No provision. mileage requirements. Currently, to be able to waive the mileage standards and qualify as a CAH, the rural, for-profit, designate a facility seeking to become a nonprofit, or public hospital must be CAH as a necessary provider of care after located more than 35 miles from another January 1, 2004. A facility designated as hospital or 15 miles in areas with CAH before January 1, 2006 and certified mountainous terrain or those where only as a necessary provider of care will be able secondary roads are available. These retain such designation. mileage standards may be waived if the hospital has been designated by the State as a necessary provider of health care. Other Hospitals Create essential rural hospital category. No provision. No provision. Section 403. The definition of CAH Generally, a hospital designated as a CAH hospital and services would be amended to is exempt from IPPS and receives add an essential rural hospital. An eligible reasonable, cost-based reimbursement for hospital would apply for such a care rendered to Medicare beneficiaries. classification, have more than 25 licensed Certain acute general hospitals receive acute care beds, and be located in a rural special treatment under IPPS, particularly area as defined by IPPS. The Secretary those facilities identified as isolated or would have to determine that the closure of essential hospitals primarily located in this hospital would significantly diminish rural areas, including RRCs and SCHs. the ability of beneficiaries to obtain essential health care services based on certain criteria. Such hospitals would not be able to change such classification and would not be able to be treated as a SCH, Medicare dependent hospital or RRC under IPPS and would be reimbursed 102% of its reasonable costs for inpatient and outpatient services beginning October 1, 2004. Beneficiary cost-sharing amounts would not be affected and required billing for such services would not be waived. CRS-22 Allied Health and Graduate Medical Education Payments. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Pay hospitals for training costs of No provision. Discussion of congressional Section 408. Beginning October 1, 2004, No provision. psychologists. Medicare pays hospitals intent regarding this payment can be found Medicare would reimburse its share of the for its share of direct costs associated with on p. 276 of the Conference Report reasonable costs of approved education approved hospital-based training programs activities of psychologists under the allied for nurses and certain other allied health health professional training provisions. professionals including inhalation therapists, nurse anesthetists, occupational and physical therapists. Medicare does not pay for such costs associated with psychologists' training. Increase initial residency period for Section 712. The bill clarifies that Section 410. The Secretary would be No provision. geriatricians. Medicare counts residents Congress intended to provide an exception required to promulgate interim final in their initial residency period (the lesser to the initial residency period for geriatric regulations after notice and comment that of the minimum number of years required fellowship programs to accommodate would establish full GME payment for 2 for board eligibility in the physician's programs that require 2 years of training to years as a 2-year initial residency program specialty or 5 years) as 1.0 FTE. Residents initially become board eligible in the for certain geriatric training programs whose training has extended beyond their geriatric specialty. The Secretary is effective for cost reporting periods initial residency period count as 0.5 FTE. required to promulgate interim final beginning October 1, 2003. Geriatrics is a subspecialty of family regulations consistent with this expressed practice, internal medicine and psychiatry. intent after notice and subject to public A 1-year fellowship is required for comment. The regulations will be effective certification in geriatrics, following an for cost reporting periods on or after initial residency in one of those three areas. October 1, 2003. Increase indirect medical education Section 502. From April 1, 2004 until Section 418. The IME multiplier in No provision. (IME) payments. A hospital's IME September 30, 2004, the IME multiplier is FY2004 and in FY 2005 would be 1.36; payment is based on a percentage add-on equal to 1.47; during FY2005, the IME the multiplier would be 1.355 in FY2006 to its IPPS rate that is established by a multiplier is 1.42; during FY2006, the and in subsequent years. This would complicated curvilinear formula that IME multiplier is 1.37; during FY2007, the provide an IME adjustment of 5.508% for currently provides a payment increase of IME multiplier is 1.32; and, starting each 10% increase in a hospital's IRB ratio approximately 5.5% for each 10% increase October 1, 2007, the IME multiplier is for FY2004 and FY2005. This change has in the hospital's intern and resident-to-bed equal to 1.35. This provision applies to been projected to increase payments to (IRB) ratio. The statutory formula is discharges on or after April 1, 2004. teaching hospitals by $300 million over 10 multiplied by a hospital's base payment years. CRS-23 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) rate for each Medicare discharge to determine the IME payments: 1.35 X [(1+ IRB)0.405 - 1]. The multiplier of 1.35 increases the level of the IME adjustment to the existing target level of 5.5%. Congress has periodically changed the multiplier to decrease or increase IME payments to teaching hospitals. Count residents in a non-provider Section 713. For a 12-month period Section 411. The Secretary would be No provision. setting; drop dentists and podiatrists starting January 1, 2004 hospitals will be required to reimburse teaching hospitals from the 3-year rolling limit on IME able to count residents in osteopathic and for residents in non-hospital locations, payments. Medicare has different resident allopathic family practice programs in when hospitals incur all, or substantially limits for the IME adjustment and direct existence as of January 1, 2002 who are all, the costs of the training in that site medical education (DGME) payment. training at non-hospital setting without starting from the effective date of a written Generally, the resident counts for both regard to the financial arrangement agreement between the hospital and the IME and DGME payments are based on between the hospital and the teaching entity owning or operating the non-hospital the number of residents in approved physician practicing in the non hospital site. The effective date of the written allopathic and osteopathic teaching site. The Inspector General of Health And agreement would be determined according programs reported by the hospital in Human Services (HHS-IG) will submit a to generally accepted accounting calendar year 1996. The DGME limit may study including recommendations on the principles. The Secretary would not be differ from the IME limit because in 1996 appropriateness of the payment able to take into account the fact that the residents training in non-hospital sites were methodology for the volunteer supervision. hospital costs incurred are lower than eligible for DGME payments but not for actual Medicare reimbursement. Starting IME payments. Prior to BBA 1997, the with FY2005, dental and podiatric number of residents that could be counted residents would be removed from the 3- for IME purposes included only those in year rolling average calculation for IME the hospital inpatient and outpatient and DGME reimbursements. departments. Effective October 1, 1997, under certain circumstances, a hospital may now count residents in non-hospital sites for the purposes of IME. Subject to these resident limits, a teaching hospital's IME and DGME payments are based on a 3-year rolling average of resident counts. The rolling average calculation includes CRS-24 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) podiatry and dental residents. CMS has proposed regulations that limit Medicare's medical education payments when existing residents are transferred from a non- hospital entity to a teaching hospital, particularly when the non-hospital entity has historically paid for the training costs without hospital funding. Extend update limitation on high cost Section 711. Hospitals with per resident No provision. Section 711. Hospitals with per resident programs. Hospitals with per resident amounts above 140% of the geographically a mo u n t s a b o v e 1 4 0 % o f t h e amounts between 85% and 140% of the adjusted national average amount will not geographically-adjusted national average geographically-adjusted national average get an update from FY2004 through amount would not get an update from would continue to receive payments based FY2013. FY2004 through FY2013. on their hospital-specific per resident amounts updated for inflation. Redistribute unused residency positions. Section 422. A teaching hospital's total No provision. Section 406. A teaching hospital's total Medicare has different resident limits for number of resident positions will be number of Medicare-reimbursed resident the IME adjustment and DGME payment. reduced for cost reporting periods starting positions would be reduced by a portion of Generally, the resident counts for both July 1, 2005 if its reference resident level its unused residency slots for cost reporting IME and DGME payments are based on is less than its applicable resident limit. periods starting January 1, 2004 if its the number of residents in approved Rural hospitals with less than 250 acute resident reference level is less than its allopathic and osteopathic teaching care inpatient beds would be exempt from applicable resident limit. If so, the programs that were reported by the these reductions. The reduction for other reduction would be equal to 75% of the hospital for the cost reporting period hospitals will equal 75% of the difference difference between the hospital's limit and ending in calendar year 1996. The DGME between the hospital's limit and its its resident reference level upon the timely resident limit is based on the unweighted reference resident level. The reference request for such an adjustment, for the cost resident counts. It may differ from the resident level is the highest number of reporting period that includes July 1, 2003. IME limit because in 1996 residents allopathic and osteopathic resident A hospital's reference period would be the training in non-hospital sites were eligible positions (before the application of any three most recent settled or submitted for DGME payments but not for IME weighting factors) for the hospital during consecutive cost reporting periods on or payments. Generally, a hospital's IME the reference period. This reference period before September 30, 2002. The need for adjustment and increased IPPS payments is either (1) the resident level of the most an increase in the physician specialty and depends on a hospital's teaching intensity recent cost reporting period of the hospital the location involved would be considered. as measured by the ratio of the number of for which a cost report has been settled (or Positions would be distributed to programs CRS-25 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) interns and residents per bed. Medicare's submitted, subject to audit) on or before in rural areas and those not in large urban DGME payment to teaching hospitals is September 30, 2002 or (2) the resident areas on a first-come-first-served basis. based on its updated cost per resident level for the cost reporting period that The hospital would have to demonstrate (subject to a locality adjustment and includes July 1, 2003 subject to audit. A that the resident positions would be filled; certain payment corridors), the weighted hospital's reference level may be adjusted not more than 25 positions would be given number of approved full-time equivalent under certain circumstances. The increase to any hospital. These hospitals would be (FTE) residents, and Medicare's share of in applicable resident limits applies to reimbursed for DGME for the increase in inpatient days in the hospital. portions of cost reporting periods resident positions at the locality-adjusted occurring on or after July 1, 2005. The national average per resident amount. IME aggregate increase may not exceed the payments would also be affected. The overall reduction in such limits. The Secretary would be required to submit a Secretary is directed to take several factors report to Congress, no later than July 1, into account when distributing the resident 2005, on whether to extend the application positions to hospitals. No more than 25 deadline for increases in resident limits. additional FTEs will be given to any hospital. These hospitals will be reimbursed for DGME for the increase in resident positions at the locality adjusted national average per resident amount and will receive increased IME payments as well for discharges after July 1, 2005. The Secretary is required to submit a report to Congress no later than July 1, 2005 on whether to extend the application deadline for increases in resident limits. Skilled Nursing Facility (SNF) and Hospice Services. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Skilled Nursing Facility Services (SNF) Increase skilled nursing facility (SNF) Section 511. Starting October 1, 2004, the No provision. Section 511. Starting October 1, 2003, the payments for AIDS patients. Under PPS, per diem RUG payment for a SNF resident per diem RUG payment for a SNF resident SNFs are paid a daily rate that varies with acquired immune deficiency with acquired immune deficiency depending on the care needs of the syndrome (AIDS) will be increased by syndrome (AIDS) would be increased by CRS-26 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) beneficiary. There are 44 resource 128%. This increase does not apply after 128%. This increase would not apply after utilization groups (RUGs) used to adjust the date that the Secretary certifies that the the date that the Secretary certifies that the payment for care needs; each group case-mix adj ustment adequately case-mix adj ustment adequately reflects the intensity of services, such as compensates for the increased costs compensates for the increased costs skilled nursing care and/or various therapy associated with caring for residents with associated with caring for residents with and other services needed by a beneficiary. AIDS. AIDS. Exclude certain clinic visits from skilled Section 410. Services provided to a SNF Section 429. Services provided by a RHC Section 408. Provision is limited to RHCs nursing facility (SNF) prospective resident by a rural health clinic (RHC) and and a FQHC after January 1, 2005 would and FQHC services provided after January payment system (PPS) Under Medicare's a federally qualified health center (FQHC) be excluded from SNF-PPS if these 1, 2004 and does not extend to outpatient PPS, SNFs are paid a predetermined after January 1, 2005 are excluded from services would have been excluded if services that are beyond the general scope amount to cover all services provided in a SNF-PPS if these services would have furnished by a physician or practitioner of SNF comprehensive care plans. day adjusted for the care needs of the been excluded if furnished by a physician who was not affiliated with a RHC or patient. Certain services and items or practitioner who was not affiliated with FQHC. Outpatient services that are provided a SNF resident, such as a RHC or FQHC. beyond the general scope of SNF physicians' services, specified ambulance comprehensive care plans that are provided services, specified chemotherapy items and by an entity that is 100% owned as a joint services, and certain outpatient services venture by two Medicare-participating provided by a Medicare-participating hospitals or critical access hospitals would hospital or CAH, are excluded from the be excluded from the SNF-PPS. SNF-PPS and paid separately under Part B. Require background check on workers Section 306. The Secretary, in consultation Section 636. All providers of long-term No provision. for certain Medicare and Medicaid with the Attorney General, is required to care services that participate in Medicare health and long-term care providers. establish pilot projects on background and/or Medicaid would be required to Nursing homes and home health agencies checks for certain long-term care workers initiate background checks for certain may request the Federal Bureau of with direct access to patients or residents in workers with access to a patient or Investigation (FBI) to search its all-state no more than 10 states. The Secretary is resident. Procedures for conducting national data bank of arrest and required to establish criteria for selecting background checks would be specified, convictions for the criminal histories of those states that volunteer to participate. and would include searches of state and applicants who would provide direct The bill specifies procedures for FBI criminal records. Violators of these patient care, as long as states establish conducting background checks, and requirements would be subject to criminal mechanisms for processing these requests includes searches of state and FBI criminal penalty fines and/or imprisonment. (most states require checks for certain records. At least one state in the pilot Providers would be permitted to groups of employees). Providers follow project would be allowed to establish provisionally employ workers pending certain procedures to conduct these checks. procedures for using employment agencies completion of the checks and would be CRS-27 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) HHS maintains a national health care to conduct these checks. Providers may reimbursed for their costs of conducting fraud and abuse data base, the Healthcare provisionally employ workers pending these checks. Integrity and Protection Data Bank completion of the checks. (HIPDB). Self-queries of HIPDB are The nurse aide registry would be expanded allowed by government agencies, health The Secretary is required to pay those to include all employees of long-term care plans, health care providers, suppliers and states for the costs of conducting the pilot providers and renamed "employee practitioners. All states also maintain their program (reserving 4% of the payments for registry." The investigatory responsibilities own registries of those persons that the the program's evaluation). A sum of $25 of survey and certification agencies would state determines meet the requirements to million is appropriated from funds in the be expanded. $10.2 million would be work as nurse aides. Included in these Treasury not otherwise appropriated, for authorized to be appropriated for FY 2004, registries are data describing state findings fiscal years 2004 through 2007. with compliance deadlines varying by of resident neglect, abuse and/or the provider group. misappropriation of resident property. Grants would be available to develop State survey agencies are required to information on best practices in patient investigate allegations of resident neglect, abuse prevention training and for other abuse and/or the misappropriation of purposes. resident property in nursing homes. Long-term care providers could access the HIPDB data bank and more information would be required to be included. A report on background checks would be due to Congress no later than 2 years after enactment. Hospice Services Permit hospices to provide core hospice Section 946. Beginning with the date of Section 406. Beginning with the date of Section 946. Same provision. services under arrangement. Medicare enactment, a hospice is permitted to enter enactment, a hospice would be permitted requires a hospice to provide certain core into arrangements with another hospice to enter into arrangements with another services directly. These core services program to provide core services in hospice program to provide core service in include nursing care, medical social extraordinary circumstances. extraordinary circumstances. services, and counseling services. CRS-28 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Permit nurse practitioners, clinical Section 408. The definition of an attending Section 407. Beginning October 1, 2004, Section 409. Nurse practitioners would be nurse specialists, and physician physician in hospice is expanded to include a terminally ill beneficiary under hospice permitted to be identified as a beneficiary's assistants to attend hospice patients. a nurse practitioner. A nurse practitioner is care would be able to designate a physician attending physician and would be able to Medicare covers hospice services to care not permitted to certify a beneficiary as assistant, nurse practitioner, or clinical establish and review the written plan-of- for the terminal illness of a beneficiary. terminally ill for the purposes of receiving nurse specialist (who is not an employee of care as well as provide other services, but Reasonable and necessary medical and the hospice benefit. The provision is the hospice program) as his or her would not be able to certify that a support services for the management of the effective upon enactment. attending physician. The written plan-of- beneficiary is terminally ill. terminal illness are furnished under a care would be able to be established by written plan-of-care established and these professionals who would be able to periodically reviewed by the patient's periodically review the beneficiary's attending physician and the hospice. The written plan-of-care. attending physician may be employed by the hospice and is identified by the beneficiary as having the most significant role in the determination and delivery of medical care to the beneficiary at the time that hospice care is elected. Pay for physician consultation services Section 512. Beginning January 1, 2005, No provision. Section 512. As of January 1, 2004, in certain instances. Current law Medicare will pay for a hospice-employed Medicare would pay for a hospice- authorizes coverage of hospice services, in physician's consultation with a terminally employed physician's consultation with a lieu of certain other Medicare benefits, for ill beneficiary who has not elected the terminally ill beneficiary who has not terminally ill beneficiaries who elect such hospice benefit. elected the hospice benefit. coverage. The hospice can be paid by Medicare only after the beneficiary has elected the hospice benefit Establish rural hospice demonstration Section 409. The Secretary is required to No provision. Section 418. The Secretary would program. Medicare's hospice services establish a demonstration project in 3 establish a 5-year demonstration project in are provided primarily in a patient's home hospice programs to deliver hospice care to three hospice programs to deliver hospice to beneficiaries who are terminally ill and Medicare beneficiaries in rural areas. A care to Medicare beneficiaries in rural who elect such services. Medicare law project is not permitted to last longer than areas. Those Medicare beneficiaries who prescribes that the aggregate number of 5 years. Those Medicare beneficiaries who lack an appropriate caregiver and are days of inpatient care provided to lack an appropriate caregiver and are unable to receive home-based hospice care Medicare beneficiaries who elect hospice unable to receive home-based hospice care would be able to receive hospice care in a care in any 12-month period cannot could receive hospice care in a facility of facility of 20 or fewer beds that offers a CRS-29 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) exceed 20% of the total number of days of 20 or fewer beds that offers a full range of full range of hospice services within its hospice coverage provided to these hospice services within its walls. walls. The facility would not be required persons. to offer services outside of the home and the limit on the aggregate number of inpatient days provided to Medicare beneficiaries who elect hospice care would be waived. Other Part A Provisions. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Make grants to States and certain Section 405(f). The rural hospital Section 405(f). Under this program, the Section 405(g). The authorization to rural hospitals. The Secretary is able to flexibility grant program is authorized at Secretary would be able to award grants of award grants under the existing Rural make grants for specified purposes to $35 million each year from FY2005 up to $50,000 to hospitals to assist eligible Hospital Flexibility Program would be States or eligible small rural hospitals through FY2008. Starting in FY2005, a small rural hospitals in reducing medical established from FY2004 through FY2008 that apply for such awards under the state is required to consult with the hospital errors and increasing patient safety under from the Federal HI Trust Fund at amounts Medicare Hospital Flexibility Program. association and rural hospitals in the state the new Small Rural Hospital of up $25 million each year. The Secretary may also award grants to on the most appropriate way to use such Improvement Program. Appropriations of hospitals to assist eligible small rural funds. A state may not spend more than $25 million each year from the Treasury hospitals (with less than 50 beds) in the lesser of 15% of the grant amount or from FY2004 through FY2008 would be implementing data systems required the States' federally negotiated indirect authorized for this purpose. under BBA 1997. Annual funding for the rate for administrative purposes. Appropriations of $40 million each year Rural Hospital Flexibility Grant Program Beginning with FY2005, up to 5% of the from FY2004 through FY2008 from the HI was $25 million from 1999 through total amount appropriated for grants will Trust Fund for grants to states for specified 2001; $40 million in FY2002; and $25 be available to the Health Resources and purposes would be authorized. States that million in 2003. The authorization to Services Administration for administering are awarded grants would be required to award the grants expired in FY2002. these grants. consult with the hospital associations and rural hospitals in the state. Establish health care infrastructure loan Section 1016. A loan program will be Section 608. A loan program would be No provision. program. No provision in current law. established to improve the cancer-related established to improve the cancer-related health care infrastructure. In order to health care infrastructure in states with a receive assistance, the applicant will be population of less than 3 million. In order required to: (1) be engaged in cancer to receive assistance, the applicant would research; and (2) be designated as a be required to: (1) be engaged in cancer CRS-30 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) cancer center for the National Cancer research; and (2) be designated as a cancer Institute (NCI) or be similarly designated center for the NCI or be similarly by the state. $200 million in budget designated by the state. $49 million in authority is authorized for July 1, 2004 budget authority would be authorized for through FY2008 to carry out the loan July 1, 2004 through FY2008 to carry out program, $2 million for program the loan program, $2 million for program administration. By 4 years from enactment, administration. the Secretary will submit a report to Congress on continuing the program. Establish capital infrastructure No provision. Section 609. The Secretary would be able No provision. revolving loan program The Public to make loans to any rural entity including Health Services Act establishes a fund in rural health clinics, a medical facility with the Treasury from which the Secretary of less than 50 beds in non- MSA counties or HHS can make loans or loan guarantees in in rural census tracts of MSAs, rural the amounts that have been specified in referral centers or sole community appropriations acts from time to time. hospitals for various purposes. An Under the Medicare Rural Hospital geographically reclassified entity would be Flexibility Program established as part of eligible for these loans and loan Title XVIII, the Secretary may award guarantees. The government's total grants to rural hospitals to cover the exposure for this program would not implementation costs associated with data exceed $50 million per year and the systems needed to meet the BBA 97 principal amount of all loans directly made requirements. or guaranteed in any year is not to exceed $250 million per year. In addition, rural providers could apply to receive $50,000 planning grants to help assess capital and infrastructure needs. The grants awarded in any year would not exceed $2.5 million. The program would expire after September 30, 2008. Establish rural community hospital Section 410A. The Secretary will establish Section 414. The Secretary would be No provision. demonstration program. No provision a 5-year rural community hospital (RCH) required to establish a 5-year RCH in current law. demonstration program in selected rural demonstration program in 4 areas areas with low population densities. Under including Kansas and Nebraska to pay for CRS-31 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) the program, up to 15 hospitals with 50 acute inpatient services, outpatient acute care beds will receive payment for services, and certain home health services inpatient services either on the basis of its in qualifying hospitals either on the basis reasonable costs (without regard to the of its reasonable costs (without regard to amount of customary charges) or using a the amount of customary charges) or using target amount. The project will be the respective prospective payment implemented not later than January 1, 2005 systems for those services. In this instance, and not before October 1, 2004. The reasonable cost reimbursement of capital project would be budget neutral. Certain costs would include a return on equity limits on beneficiary cost-sharing will be payment of 150% of the average rate of imposed. The Secretary will submit a interest paid by the HI Trust Fund. The report with recommendations to Congress project would be budget neutral. Certain no later than 6 months after completion of limits on beneficiary cost-sharing would be the project imposed. Ensure status as long-term hospitals No provision. Section 416. The Secretary would not be No provision. for certain hospital-in-hospitals. A able to impose any special conditions on hospital-in-a-hospital is a long-term care the operation, size, number of beds, or hospital that is physically located in an location of an existing long-term hospital acute care hospital. CMS has established in order to continue participating in certain requirements for these entities to Medicare or Medicaid or to continue being be excluded from the IPPS and be paid as classified as a long-term hospital. The a long-term hospital. It exempted Secretary would not be able to adopt a existing entities (those that were in proposed regulation that would implement existence on or before September 30, such conditions or any revision to such 1995) when these requirements were regulation that have a comparable effect. established. On May 19, 2003, CMS [Duplicate provision is at Section 420B] proposed that a grandfathered hospital- in-a hospital would only be exempt from the existing requirements if it continues to operate within the same terms and conditions that were in effect as of September 30, 1995. Establish special treatment for certain Section 508(f). Reclassifications of a Section 417. Starting October 1, 2003, No provision. entities. Unlike other providers, acute county or area made by an Act of Congress Iredell County and Rowan County, North hospitals may apply to the Medicare that expired on September 30, 2003 shall Carolina would be deemed to be located in CRS-32 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Geographic Classification Review Board be reinstated starting on January 1, 2004 the Charlotte-Gastonia-Rock Hill, NC-SC (MGCRB) for a change in classification through September 30, 2004. Metropolitan Statistical Area for the from a rural area to an urban area, or purpose of Medicare's inpatient and reassignment from one urban area to outpatient acute hospital payments as well another urban area. Hospital as SNF and home health payments. The reclassifications are established on a Secretary would be required to adjust the budget neutral basis so aggregate inpatient wage index values of all hospitals in North prospective payment system expenditures Carolina to assure that aggregate payments will not increase as a result. Aside from for hospital inpatient operating costs are reclassifications through the MGCRB, not greater than they would have been hospitals have also been reclassified by without such a change: also aggregate law. payments for SNF and home health services in North Carolina would not be greater than they would have been without such a change. Limit charges for contract health Section 506. Hospitals that participate in Section 412. The amendment would No provision. services provided to Indians by Medicare and that provide Medicare prohibit Medicare providers from charging participating hospitals. The Indian covered inpatient hospital services under the Indian Health Service more than the Health Service (IHS) provides health care the contract health services program Medicare-established rates for inpatient both directly, through tribes and tribal funded by the Indian Health Services and hospital services. consortia, and through urban Indian operated by the Indian Health Service, an organizations. Indian tribe, an Indian tribal organization, or an urban Indian organization will be paid in accordance with regulations promulgated by the Secretary regarding admission practices, payment methodologies, and rates of payments. This will include the requirement to accept these rates as payment in full except for the payment rates for neonatal care. This provision will apply to Medicare participation agreements in effect or entered into by a date specified by the Secretary. In no case will this date be later than 1 year after the date of enactment. CRS-33 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Pay interest on clerical error into HI Section 734. The Secretary of the Treasury Section 623. After consultation with the Section 513. Same provision. Trust Fund. An incorrect amount of is required to transfer into the HI Trust Secretary of HHS, the Secretary of the income was transferred into the HI Trust Fund an amount that would have been held Treasury would be required to transfer into Fund in April 2001, because of a clerical by that fund if the clerical error had not the HI Trust fund an amount that would error. An additional amount was occurred. The appropriation is to be made have been held by that fund if the clerical transferred into the HI Trust Fund in and transfer is required within 120 days of error had not occurred within 120 days of December, 2001 to correct for the principal enactment of this Act. In the case of a enactment. amount associated with the error. clerical error that occurs after April 15, Correction of the interest associated with 2001, the Secretary of the Treasury is the clerical error requires legislation. required to notify the appropriate committees of Congress about the error and the actions to be taken, before such action is taken. Apply the Occupational Safety and Section 947. Public hospitals, not No provision. Section 947. As of July 1, 2004, public Health Act of 1970 (OSHA) bloodborne otherwise subject to the Occupational hospitals that are not otherwise subject to pathogens standard to public hospitals. Safety and Health Act of 1970, are OSHA would be required to comply with Section 1866 of the Social Security Act required to comply with the Bloodborne the Bloodborne Pathogens standard under establishes certain conditions of Pathogens standard under section Section 1910.1030 of Title 29 of the Code participation that hospitals must meet in 1910.1030 of title 29 of the Code of of Federal Regulations. A hospital that order to participate in Medicare. Federal Regulations. A hospital that fails fails to comply with the requirement would to comply with the requirement will be be subject to a civil monetary penalty, but subject to a civil monetary penalty, but would not be terminated from participating cannot be terminated from participating in in Medicare. Medicare. The provision applies to hospitals as of July 1, 2004. CRS-34 Provisions Relating to Part B Physician and Practitioner Services. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish floor on geographic Section 412. The Secretary is required to Section 421. For services furnished after Section 605(a). For services furnished adjustment for physician fee schedule. increase the value of any work geographic January 1, 2004, the Secretary would be after January 1, 2004 and before January 1, Medicare's payment for physicians' index that is below 1.0 to 1.0 for services required to increase the value of any work 2006, the Secretary would be required to services under a fee schedule has three furnished on or after January 1, 2004 and geographic index that is below .980 to increase the value of any work geographic components: the relative value for the before January 1, 2007 .980. The values for work index would be index that is below 1.00. to 1.00 unless the service, geographic adjustment factors and raised to 1.0 for services furnished in 2005, Secretary determines, based on the a conversion factor into a dollar amount. 2006, and 2007. The practice expense and subsequent GAO study which is due by The geographic adjustment factors are malpractice geographic indices in low September 1, 2004, that there is no sound indices that reflect the relative cost value localities areas would be raised to economic rationale for such change. difference in a given area in comparison to 1.00 for services furnished in 2005 until the national average 2008. Increase practice expense payments for Sections 303(a) and 304. Beginning in Section 432(b)(1). The Secretary would Section 303(a) The Secretary would certain specialists. The relative value 2004, the practice expense relative value establish the practice expense relative increase the practice expense relative associated with a particular physician units for oncology administration services values for the CY2004 fee schedule using values for the physician fee schedule in service is the sum of three components one will be adjusted using survey data that was the survey data from a physician specialty CY2005 using appropriate survey data on of which is practice expense. Practice collected as of January 1, 2003 (this data group as of January 1, 2003 if the data the expenses associated with drug expense includes both direct costs (such as was submitted by the American Society of appropriately covers the practice expenses administration provided by entities and a clinician's time and the medical supplies Clinical Oncologists); the additional for oncology administration services. The organizations that are submitted by to provide a specific service to a patient) expenditures will be exempt from the Secretary would review and appropriately December 31, 2004. Using existing and indirect costs (such as rent and budget neutrality requirement in 2004. The modify payments for the administration of processes for coding considerations, the utilities). BBRA required the Secretary to work relative value units for drug more than one anti-cancer agent to a Secretary would evaluate existing codes establish a data collection process and administration services furnished on or patient in a day. The resulting increase in for drug administration to ensure accurate standards for determining practice expense after January 1, 2004 will be equal to the spending would be exempt from the reporting and billing for these services. relative values as well as to use data work relative value units for a level 1 budget neutrality requirement. Also, the Any resulting CY2005 payment increase collected or developed outside HHS, to the office medical visit for an established Secretary would change the non-physician would not be subject to budget neutrality maximum extent practicable, consistent patient. Starting in 2005 through 2006, the work pool method so that associated provisions, would be exempt from with sound data collection practices. The practice expense relative values for other payments are not inordinately reduced. administrative and judicial review, and relative values are periodically reviewed drug administration services will be These adjustments would not be would be treated as a change in law and and adjusted to account for various factors; increased in the physician fee schedule implemented unless other outpatient drug regulation in the sustainable growth rate changes that cause more than $20 million using appropriate supplemental survey data pricing changes in the section are determination. Subsequent budget in spending trigger a budget neutrality submitted by March 1, 2004, for 2005, or implemented. neutrality adjustments would be permitted. adjustment. March 1, 2005 for 2006. Data will be The same non-physician work pool CRS-35 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) accepted from those specialists who methodology provision as in S. 1 is received 40% or more of their Medicare included. payments in 2002 from drugs and b iologicals. The existing d r ug administration codes will be evaluated under existing processes after consultation with interested parties. These adjustments in practice expense relative value units for certain drug administration services are exempt from the budget neutrality requirements in 2005, 2006, and 2007. The Secretary can adjust practice expense payments in subsequent years, subject to the budget neutrality provisions. The effect of the nonphysician workpool methodology will not be changed. Medicare's payment policy in effect on October 1, 2003, for the administration of more than one drug or biological to an individual on a single day through the push technique will be modified and the increased payments will be exempt from the budget-neutrality requirement in 2004. A transitional adjustment (or additional payment) of 32% in 2004 and 3% in 2005 will be made. Increase payments to physicians in Section 413. Certain physicians, both Section 422. The Secretary would be Section 417. Same provision with respect newly created scarcity areas; change primary care and specialists, in scarcity required to establish procedures to to Secretary developing procedures to Medicare Incentive Program (MIP). areas are eligible for an additional 5% determine when a physician in a HPSA is identify physicians eligible for bonus Physicians providing services in a health increase in payments starting on January 1, eligible for a bonus payment. The payments. Also, physicians in newly- professional shortage area (HPSA) are 2005 and ending by January 1, 2008. To Secretary would also be required to created scarcity areas as well as other entitled to an incentive payment from the determine the scarcity areas, the Secretary establish an ongoing education program, physicians would be eligible for an Medicare program. This incentive will calculate ratios of practicing primary an ongoing study and submit annual additional 5% increase in their fee payment is a 10% increase over the care physicians and specialists to Medicare reports. A GAO report would be required schedule payment amounts. The Secretary amount which would otherwise be paid beneficiaries, rank each county (or no later than 1 year from enactment. would also be required to publish a list of under the physician fee schedule. equivalent area) according to each ratio, all areas that qualify as a HPSA each year CRS-36 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) and then identify those areas with the in the proposed and final rule lowest ratios which collectively represent implementing the physician fee schedule. 20% of the total Medicare beneficiary population in those areas. The list of counties will be revised no less often than once every 3 years unless there are no new data. There will be no administrative or judicial review of the designation of the county or area as a scarcity area, the designation of an individual physician's specialty, or the assignment of a postal zip code to the county or other area. MIP payments to physicians in HPSAs that consist of entire counties will be made without requiring the physician to identify the HPSA when requesting payment. Revise reassignment provisions. Section 952. The bill permits Medicare Section 434. Staffing companies Section 952. Same provision with some Beneficiaries are the parties who are payment for Part B services to be made to (individuals or entities) would be able to drafting differences. entitled to receive Medicare payments an entity, as defined by the Secretary, that submit claims to Medicare for physician under the Medicare statute. However, most has a contractual arrangement with the services provided under contractual beneficiaries assign these rights to physician or other person who provided arrangement between the company and the participating physicians, suppliers, and the service. In order to bill for the service, physician, if the arrangement meets other providers who directly provide the the entity and the contractual arrangement appropriate program integrity and other care and then submit claims for Medicare will have to meet program integrity and safeguards established by the Secretary. payment. Although Medicare permits other safeguards specified by the physicians to reassign their right to Secretary. payment to certain other entities, they cannot reassign their right to payment to staffing companies (entities that retain physicians on a contractual basis). Extend provision for separate payments Section 732. Direct payments for the Section 435. Direct payments for the Section 734. Similar provision except of certain inpatient pathology services. technical component for these pathology technical component for these pathology Medicare would make direct payments for In general, independent laboratories cannot services will be made for services services would be made for services the technical component of pathology directly bill for the technical component of furnished during 2005 and 2006. furnished during 2005. services from 2004 though 2008. Would pathology services provided to Medicare also specify that a change in hospital CRS-37 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) beneficiaries who are inpatients or ownership would not affect these direct outpatients of acute care hospitals. BIPA billing arrangements. permitted certain independent laboratories with existing arrangements with acute hospitals to do so if the arrangement had been in effect as of July 22, 1999. The direct payments for these services apply to services furnished during a 2-year period starting on January 1, 2001 and ending December 31, 2002. Increase Medicare payments to Section 602. Physicians in Alaska with Section 450K. For 2004, physicians in No provision. physicians in Alaska. Physicians that values of practice expense, malpractice, Alaska would be paid 90% of the VA provide services to Medicare beneficiaries and work geographic index below 1.67 physician fee schedule used for FY2001. are paid based on Medicare's physician fee will have these values raised to 1.67 In 2005, this amount would be increased schedule that is adjusted to account for starting January 1, 2004 and before by the update amount for the Medicare geographic variations in practice expenses. January 1, 2006. physician fee schedule for 2005. If no VA fee schedule amount exists for a service, the payment amount would be an adjustment to the Medicare payment. The adjustment would equal 90% of the overall percentage difference between the two fee schedules weighted by the distribution of Medicare claims in 2001. Establish update to physician fee Section 601. The update to the conversion No provision. Section 601. The update to the conversion schedule. Medicare pays for services of factor for 2004 and 2005 will not be less factor for 2004 and 2005 would be not less physicians and certain non-physician than 1.5% and will be exempt from the than 1.5% and would be exempt from the practitioners on the basis of a fee schedule. budget neutrality adjustment. budget neutrality adjustment. The law provides a specific formula for calculating the annual update to the conversion factor. CRS-38 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Change the sustainable growth rate Section 601. The formula for calculating Section 464. The provision expresses a Section 601. The formula for calculating formula. Medicare pays for services of the sustainable growth rate will be sense of the Senate that Medicare the sustainable growth rate would be physicians and certain non-physician modified. Starting in 2003, the GDP factor beneficiary access to quality care may be modified. Starting with the SGR for 2003, practitioners on the basis of a fee schedule. will be based on the annual average change compromised if Congress does not prevent the GDP factor would be based on the The law provides a specific formula for over the preceding 10 years (a 10-year cuts in 2004 and following years that stem annual average change over the preceding calculating the annual update to the rolling average). The 10-year rolling from the SGR formula. [Duplicate of 10 years (a 10-year rolling average). This conversion factor which regulates overall average calculation of the GDP will apply Section 622] calculation would replace the current GDP spending for physicians' services. Several to computations of the SGR starting in factor which measures the 1-year change factors enter into the calculation of the 2003. from the preceding year. formula. One of those factors is the sustainable growth rate (SGR) which is essentially a target for Medicare spending Section 629. The provision provides a growth in physicians' services. One sense of the Senate that the reductions in measure used to calculate the SGR is the Medicare's physician fee schedule are annual percentage change in gross destabilizing, primarily caused by the domestic product (GDP). If expenditures sustainable growth rate calculation, and exceed the target, the update for a future that CMS should use its discretion to make year is reduced. If expenditures are less certain exclusions and adjustments to the than the target, the update is increased. SGR calculation. The recent negative update adjustment factors reflect the application of the SGR system. Require GAO report on physician No provision. No provision. Section 953(a). No later than six months compensation. No provision in current from enactment, GAO would report to law. Congress on the appropriateness of the conversion factor updates and the SGR formula for 2002 and subsequently; the stability and the predictability of the updates; and alternatives to the SGR in the update. No later than 12 months from enactment, GAO would be required to report to Congress on all aspects of physician compensation for Medicare services. The report would review alternatives to the physician fee schedule. CRS-39 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Extend Medicare's private contracting Section 603. Doctors of dental surgery or No provision. Section 604. Doctors of dental surgery or authority to dentists and podiatrists. of dental medicine, doctors of podiatric of dental medicine and doctors of podiatric Private contracting allows a physician and medicine, and doctors of optometry will be medicine would be able to enter into Medicare beneficiary not to submit a claim able to enter into private contracts with private contracts with Medicare for a service which would otherwise be Medicare beneficiaries. The provision will beneficiaries. covered and paid for by Medicare. Under be effective upon enactment. private contracting, physicians (not podiatrists or dentists) can bill patients at their discretion without being subject to upper payment limits specified by Medicare. If a physician decides to enter a private contract with a Medicare beneficiary, that physician must agree to forego any reimbursement by Medicare for all Medicare beneficiaries for 2 years. Require GAO report on geographic Section 413(c). GAO will study payment Section 444. GAO would be required to Section 413. Same provision. differences in physician payments. No differences under the physician fee study geographic differences in payment provision in current law. schedule for different geographic areas. amounts in the physician fee schedule and The study, including recommendations report to Congress within 1 year of concerning use of more current data and enactment. use of cost data rather than price proxies, is due to Congress within 1 year of the enactment date. Require GAO report on beneficiary Section 604. GAO is required to conduct Section 447. GAO would submit a report Section 602(a). GAO would be required access to services including concierge a study on access of Medicare beneficiaries to Congress, including recommendations, to conduct a study on access of Medicare care and impact of these mandatory fees to physicians' services under Medicare and regarding the effect of concierge care on beneficiaries to physicians' services under and/or services on access Periodic submit a report to Congress on this study beneficiaries' access to Medicare covered Medicare including beneficiaries' use of analyses by the Physician Payment Review within 18 months of enactment. services by 12 months from enactment. In services through an analysis of claims data Commission, and subsequently MedPAC, Section 650. GAO would study concierge this instance, concierge care would be an and the extent to which physicians are not as well as CMS showed that access to care provided to Medicare beneficiaries arrangement where a physician or accepting new Medicare beneficiaries as physicians' services generally remained and its effect on their access to Medicare practitioner charges an individual a patients. good for most beneficiaries through 1999. covered services and submit a report to membership fee or other fee or requires the More recent surveys convey a more mixed Congress, including recommendations, no purchase of an item or service as a picture however. later than 12 months from enactment. prerequisite for providing the care. CRS-40 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require Institute of Medicine (IOM) No provision. No provision. Section 602(b). The Secretary would be study on supply of physicians. No required to request that IOM study the provision in current law. adequacy of the supply of physicians (including specialists) in the country and the factors that affect supply. The Secretary would be required to submit the results of the study in a report to Congress no later than 2 years from the date of enactment. Require MedPAC report on payment Section 303(a). MedPAC is required to No provision. Section 603. MedPAC would be required for physician services. No provision in review the payment changes as they affect to report to Congress on the effects of current law. payments for items and services furnished refinements to the practice expense by oncologists and for drug administration component of payments for physicians' services furnished by other specialists and services after full implementation of the submit a report to the Secretary. The resource-based payment in 2002. MedPAC report on oncologists' payments is due to Congress by January 1, 2006 and the report on drug administration services furnished by other specialists is due by January 1, 2007. The Secretary could make appropriate adjustments to payments as part of the rulemaking for physician payments for 2006. Section 606. MedPAC is required to report to Congress on the effects of refinements to the practice expense component, by specialty within 1 year of enactment. A MedPAC report on the effect of increased physician services on the well-being of Medicare beneficiaries and other factors is due within 1 year of enactment as well. CRS-41 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require consultative process before Section 941. The Secretary is prohibited Section 553. The Secretary, before Section 941. The Secretary would be establishing new evaluation and f r o m i mp le me nting n e w E & M making changes in documentation prohibited from implementing new E&M management (E&M) codes. Initial E&M documentation guidelines unless the guidelines for, providing clinical examples documentation guidelines unless the documentation guidelines were issued in Secretary developed the guidelines in of, or changing codes for reporting E&M Secretary developed the guidelines in 1995 with revisions issued in 1997; both collaboration with practicing physicians, physician services, would be required to collaboration with practicing physicians; remain in force today. Approximately 40% established a plan with goals, conducted ensure that the process used in developing established a plan with goals; conducted of Medicare payments for physician pilot projects, and established and the guidelines, examples, or codes was pilot projects; established and services are for services which are implemented an education program on the widely consultative among physicians, implemented an education program on the classified as evaluation and management use of the guidelines with appropriate reflects a broad consensus among use of the guidelines with appropriate services (i.e., physician visits). The outreach. Any changes to E&M guidelines specialties, and would allow verification of outreach. Changes to E&M guidelines Secretary stopped work on the current re- are required to reduce paperwork burden reported and furnished services. would be required to reduce paperwork draft of E&M codes in order to reassess the on physicians. burden on physicians. entire effort. Pay for additional hospital outpatient Section 614. Screening mammography Section 445. Unilateral and bilateral Section 614. Same provision except department (HOPD) mammography and diagnostic mammography will be diagnostic mammography as well as effective date would be January 1, 2004. services using physician fee schedule. excluded from OPPS. This provision will screening mammography services would Screening mammography coverage apply to screening mammography services be paid for under the physician fee includes the radiological procedure as well furnished on or after the date of enactment schedule beginning January 1, 2005. as the physician's interpretation of the a n d will ap p ly to d ia g n o s t i c results of the procedure. The usual Part B mammography services furnished on or deductible is waived for tests. Payment is after January 1, 2005. made under the physician fee schedule. Certain services paid under fee schedules or other payment systems are excluded from Medicare's OPPS-PPS. For diagnostic mammography services provided in an HOPD, the technical component of the fee is paid under the HOPD PPS. Pay the physician for pharmacy Section 303(e)(2). The Secretary will pay No provision. Section 303(g). The Secretary would be management services. No provision in a dispensing fee (less the applicable required to provide for separate payments current law. deductible and coinsurance amounts) to in the physician fee schedule to cover the licensed approved pharmacies for covered administration and acquisition costs immunosuppressive drugs, oral anti-cancer associated with covered drugs and drugs, and oral anti-nausea drugs used as biologicals furnished by a contractor under part of a chemotherapeutic regimen. the competitive acquisition program. CRS-42 Hospital Outpatient Department (HOPD), Ambulatory Surgery Center (ASC), and Clinic Services. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Hospital Outpatient Department (HOPD) Services Extend hold-harmless provisions for Section 411. The hold-harmless provisions Section 423. The hold-harmless provisions Section 407. The hold-harmless provision small rural hospitals. The outpatient governing OPPS for small rural hospitals governing OPPS reimbursement for small would be extended to January 1, 2006. prospective payment system (OPPS) was are extended to HOPD services provided rural hospitals would be re-established in The Secretary would be required to implemented in August 2000 for most before January 1, 2006. The Secretary is 2006. conduct a study to determine if the costs by acute care hospitals. Under hold-harmless required to conduct a study to determine if ambulatory payment classification (APC) provisions, rural hospitals with no more the costs, by ambulatory payment groups incurred by rural providers exceeds than 100 beds are paid no less under this classification (APC) groups, incurred by those costs incurred by urban providers PPS system than they would have received rural providers exceed those costs incurred and provide an appropriate payment under the prior reimbursement system for by urban providers. If appropriate, the adjustment to reflect the higher costs of covered HOPD services provided before Secretary will provide for a payment rural providers by January 1, 2005. January 1, 2004. adjustment to reflect the higher costs of rural providers by January 1, 2006 Establish hold-harmless provision for Section 411. The hold harmless provisions Section 423. OPPS hold-harmless Section 407. The hold-harmless provisions sole community hospitals (SCHs). No are extended to SCHs located in a rural provisions would be extended to SCHs would be extended to SCHs for 2004 and provision in current law. area starting for cost reporting periods located in rural areas for services provided 2005. beginning on and after January 1, 2004 and in 2006. ending for HOPD services furnished before January 1,2006. Change hold-harmless provision for No provision. Section 450J. These provisions for No provision. children's hospitals. OPPS contains a children's hospitals would be modified so permanent hold-harmless for cancer that those in Maryland (which has a hospitals and children's hospitals where Medicare waiver) that are paid less under payments to these hospitals cannot fall OPPS than what would have been received below what these hospitals would have under the prior system or using hospital's received under the payment system in reasonable operating and capital costs place before OPPS. receive additional payments after October 1, 2003. Increase HOPD payments to small rural No provision. Section 424. Medicare's fee schedule No provision. hospitals. Under OPPS, which was payments would be increased by 5% for implemented in August, 2000, Medicare covered outpatient clinic and emergency CRS-43 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) pays for covered services using a fee room visits that are provided by rural schedule based on APCs. Beneficiary hospitals with up to 100 beds beginning copayments are established as a percentage January 1, 2005 and before January 1, of Medicare's fee schedule payment and 2008. Beneficiary copayment amounts differ by APC. Certain hospitals, including would not be affected. The increased rural hospitals with no more than 100 beds, Medicare payments would not be are protected, either on a temporary or on considered when calculating a rural a permanent basis, from financial losses hospital's hold-harmless payment. Budget that result from implementation of OPPS neutrality provisions for Medicare's OPPS under hold-harmless provisions would not apply. Finally, these increased payments would not affect Medicare payments for covered outpatient services after January 1, 2008. Increase payments to sole community No provision. Section 427. SCHs that provide clinical No provision. hospitals (SCHs) for clinical diagnostic diagnostic laboratory tests covered under laboratory tests. Generally, hospitals that Part B in 2005 and 2006 would be provide clinical diagnostic laboratory tests reimbursed their reasonable costs of under Part B are reimbursed using a fee furnishing the tests. No beneficiary cost- schedule. SCHs that provide some clinical sharing amounts would apply to these diagnostic tests 24 hours a day qualify for services. a 2% increase in the amounts established in the outpatient laboratory fee schedule; no beneficiary cost-sharing amounts are imposed. Establish new payment method for Section 621. Starting January 1, 2004, Section 436. A new payment method for Section 621(a). Starting for services certain HOPD drugs and biologicals. specified covered HOPD drugs will be certain HOPD drugs and biologicals would furnished beginning January 1, 2004, Under OPPS, Medicare pays for covered paid based on a percentage of the reference be established for 2005 and 2006. The certain covered HOPD drugs would be outpatient drugs in one of three ways: (1) average wholesale price for the drug. The drugs and biologicals would be those for paid no more than 95% of AWP or less as a transitional pass-through payment; (2) percentage of the reference price for sole- which hospitals received transitional pass- than the transition percentage of the AWP as a separate APC payment; or (3) as source drugs manufactured by one entity through payments prior to January 1, 2005 from CY2004 through CY2006. In packaged APC payment with other can be no less than 88% and no greater that have been assigned to drug-specific subsequent years, payment would be equal services. Transitional pass-through than 95% in CY2004 and no less than 83% APCs beginning the date of enactment. Or to average price for the drug in the area payments are extra payments to cover the and no greater than 95% in CY2005. The those that would have been paid in such a and year established by the competitive incremental cost associated with certain percentage of the reference price for manner but for the application of this acquisition program under 1847A. The CRS-44 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) medical devices, drugs and biologicals that innovator multiple source drugs can be no provision. Payments made under this covered HOPD drugs affected by this are inputs to an existing service. The greater than 68% in CY2004 and CY2005. provision would be exempt from the provision are radiopharmaceuticals and additional payment for a given item is The percentage of the reference price for budget neutrality requirement in FY2005 outpatient drugs that were paid on a pass- established for 2 or 3 years and then the noninnovator multiple source drugs can be and FY2006. In 2005, these drugs would through basis on or before December 31, costs are incorporated into the APC no greater than 46% in CY2004 and be paid as follows: a single source or 2002. These would not include drugs for relative weights. BBRA specified that CY2005. The reference average wholesale orphan product would be paid at 94% of which pass-through payments are first pass-through payments would be made for price is the average wholesale price for the the AWP existing on May 1, 2003; a made beginning January 1, 2003 or those current orphan drugs; current cancer drug as of May 1, 2003. In subsequent multiple source drug would be paid at 91% drugs for which a temporary HCPCS code therapy drugs, biologicals, and years, payment will equal to the average of that existing average wholesale price has not been assigned. Drugs for which a brachytherapy; current radiophamaceutical acquisition cost for the drug for that year (AWP); and a drug with generic versions temporary HCPCS code has not been drugs and biological products; and new (which may vary by hospital group taking would be paid at 71% of that existing assigned would be reimbursed at 95% of drugs and biological agents. Generally, into account hospital volume or other AWP. Those items furnished as part of the AWP. The transition percentage to CMS has established that a pass-through hospital characteristics) or if hospital other HOPD services would be paid using AWP for sole-source drugs manufactured payment for an eligible drug is based on acquisition cost data are not available, the the same applicable percentage of the by one entity is 83% in CY2004, 77% in the difference between 95% of its average average price for the drug in the year AWP that would have been determined on CY2005, and 71% in CY2006. The wholesale price and the portion of the established under Sections 1842(o), 1847A May 1, 2003 if such payment were to have transition percentage to AWP for innovator otherwise applicable APC payment rate or 1847B (which specify Medicare been made on that date. For 2006, these multiple source drugs is 81.5% in CY2004, attributable to the existing drug, subject to payments for outpatient drugs covered payment amounts would be increased by 75% in CY2005, and 68% in CY2006. The a budget neutrality provision. under Part B) as calculated and adjusted by CPI-U. A private non-profit organization transition percentage to AWP for multiple the Secretary. The covered HOPD drugs under contract would determine the source drugs with generic drug competitors affected by this provision are outpatient hospital acquisition, pharmacy services, is 46% in CY2004 through CY2006. The drugs that were paid on a pass-through and handling costs for each of the drugs additional expenditures resulting from basis on or before December 31, 2002. paid in this fashion to set payments in 2007 these provisions would not be subject to These would not include drugs for which and beyond. This analysis would be the budget neutrality requirement. Starting pass-through payments are first made on or accurate within 3% of the true mean in CY2004, the Secretary would be after January 1, 2003; those drugs for hospital acquisition and handling costs at a required to lower the threshold for which a temporary HCPCS code has not 95% confidence level; begin by January 1, establishing a separate APC group for been assigned; or, during 2004 and 2005, 2005; and be updated annually. Starting higher costs drugs from $150 to $50 per orphan drugs. Drugs for which a January 1, 2006, a report would be due to administration. These separate drug APC temporary HCPCS code has not been Congress each year. groups would not be eligible for outlier assigned will be reimbursed at 95% of the payments. Starting in CY2004, AWP. Orphan drugs during this 2-year Medicare's transitional pass-through time period will be paid at an amount payments for drugs and biologicals specified by the Secretary. covered under a competitive acquisition contract would reflect the amount paid MedPAC will submit a report to the under that contract, not 95% of AWP. CRS-45 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Secretary on the payment adjustment to ambulatory payment classifications for specified covered outpatient drugs that takes into account overhead and related expenses (such as pharmacy services and handling costs). The Secretary is authorized to adjust the weights for ambulatory payment classification based on such a recommendation. The additional expenditures that result from the previous changes will not be taken into account in establishing the conversion, weighting and other adjustment factors for 2004 and 2005, but will be taken into account in subsequent years. For drugs and biologicals furnished in 2005 and 2006, the Secretary is required to lower the threshold for establishing a separate APC group for higher cost drugs from $150 to $50 per administration. These separate drug APC groups are not eligible for outlier payments. Starting in CY2004, Medicare's transitional pass- through payments for drugs and biologicals covered under a competitive acquisition contract will equal the average price for the drug or biological for all competitive acquisition areas calculated and adjusted by the Secretary for that year. CRS-46 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Limit application of functional Section 622. The Secretary is prohibited Section 437. The Secretary would not be Section 621(c). The Secretary would be equivalence standards when determining from publishing regulations that apply a able to apply this standard to a drug or prohibited from applying a "functional a drug's eligibility for transitional pass functional equivalence standard to a drug biological for transitional pass-through equivalence" standard or any similar though payments. Starting in 2003, or biological for transitional pass-through payments under OPPS. This prohibition standard in order to deem a particular drug CMS decided that a new anemia treatment payments under OPPS. This prohibition would apply, unless such a standard was or biological to be similar or functionally for cancer patients was no longer eligible applies to the application of the functional made prior to enactment and only for the equivalent to another drug unless the for pass-though payments under OPPS, equivalence standard on or after the date of purposes of transitional pass-through Commissioner of FDA establishes such a because it was functionally equivalent enactment, unless such application was payments. The Secretary would still be standard and certifies that the two products (although not structurally identical or made prior to enactment and the Secretary able to deem a particular drug as identical are functionally equivalent. The Secretary therapeutically equivalent) to an existing applies such standard to the drug only for to another drug if the two products are would be able to implement this standard treatment. The transitional pass-through the purposes of transitional pass-through pharmaceutically equivalent and after meeting applicable rulemaking rate for the drug was reduced to zero payments. This provision does not affect bioequivalent, as determined by FDA. requirements. The provision prohibits the starting for services in 2003. the Secretary's authority to deem a application of this standard to a drug or particular drug to be identical to another biological prior to June 13, 2003. drug if the 2 products are pharmaceutically equivalent and bioequivalent, as determined by the Commissioner of the Food and Drug Administration. Establish separate payments for certain Section 421(b). From January 1, 2004 Section 450A. The Secretary would be Section 621(b). From 2004 through brachytherapy devices. In Medicare's through December 31, 2006, Medicare's required to conduct a budget neutral, 3- 2006, payments for brachytherapy devices OPPS, current drugs and biologicals that payments for brachytherapy devices will year demonstration project that would would equal the hospital's charges adjusted were eligible for transitional pass-through equal the hospital's charges adjusted to exclude brachytherapy devices from the to cost. The Secretary would be required payments on or prior to January 1, 2000, cost. Charges for such devices will not be OPPS and make payment on the basis of to create separate APCs to pay for these were removed from that payment status included in determining any outlier the hospital's charges for each device, devices that reflect the number, isotope, effective January 1, 2003. CMS payments. The Secretary is required to adjusted to cost. The Secretary would be and radioactive intensity of such devices. established separate APC payments for create separate APCs to pay for these required to create separate, additional This would include separate groups for certain of these drugs. Other drugs such as devices that reflect the number, isotope, groups of covered HOPD services for palladium-103 and iodine-125 devices. brachytherapy seeds (radioactive isotopes and radioactive intensity of such devices, brachytherapy devices to reflect the GAO would submit a report to Congress used in cancer treatments) were packaged including separate groups for palladium- number, isotope, and radioactive intensity on the appropriateness of such payments into payments for brachytherapy 103 and iodine-125 devices. GAO is of such devices. no later than January 1, 2005. procedures. required to study the appropriateness of payments for brachytherapy devices and submit a report including recommendations to Congress and to the Secretary no later than January 1, 2005. CRS-47 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require hospital acquisition study. No Section 621(a). GAO will conduct an No provision. Section 621(d). The Secretary would provision in current law acquisition cost survey for each specified study the hospital acquisition costs related covered drug in 2004 and 2005. No later to covered outpatient drugs that cost $50 than April 1, 2005, GAO will furnish this per administration and more that are survey data to set 2006 payment rates. reimbursed under the OPPS. GAO will submit a report to Congress on 2006 rates no later than 30 days after issuance of the proposed rule setting forth these rates. GAO will submit recommendations regarding the survey methodology and frequency to the Secretary who will conduct periodic surveys to set subsequent payment rates. Ambulatory Surgery Center Services (ASCs) Reduce ambulatory surgery center Section 626. In FY2004, starting April 1, No provision. Section 625. The reduction in the update (ASC) update. Medicare uses a fee 2004, the ASC update will be the CPI-U would be reestablished for FY 2004 - FY schedule to pay for the facility services (estimated as of March 31, 2003) minus 2008. ASCs would get an increase related to a surgery provided in an ASC. 3.0 percentage points. In FY2005, the last calculated as the CPI-U minus 2.0 From FY1998 through FY2002, the update quarter of calendar year 2005, and each of percentage points (but not less than zero) was established as the CPI-U minus 2.0 the calendar years 2006 through 2009 the in each of the fiscal years from 2004 percentage points, but not less than zero. update will be 0%. A revised payment through 2008. In 2003 and subsequent years, the update is system for surgical services furnished in an CPI-U. ASC will be implemented on or after January 1, 2006 and not later than January 1, 2008. It will be budget neutral in its implementation year. There will be no administrative or judicial review of the ASC classification system, relative weights, payment amounts and any geographic adjustments. GAO will study the relative costs of ASC procedures. CRS-48 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Rural Health Clinics (RHCs) and Federally Qualified Health Clinics (FQHCs) Services Increase payments for rural health No provision. Section 428. The RHC upper payment No provision. clinics. BBA 1997 extended the per visit would be increased to $80.00 for calendar payment limits that had existed for year 2005. The MEI applicable to primary independent rural health clinics to care services would be used to increase the provider-based rural health clinics (RHC) payment limit in subsequent years. except for those clinics based in small rural hospitals with fewer than 50 beds. For services rendered from January 1, 2003 through February 28, 2003, the RHC upper payment limit is $66.46, which reflects a 2.6% increase in 2002 payment limit as established by the 2002 Medicare Economic Index (MEI). For services rendered from March 1, 2003 through December 31, 2003, the Medicare RHC upper payment limit is $66.72, which reflects a 3.0% increase in the 2002 payment limit as established by the 2003 MEI. The 2002 MEI was used as an update for 3 months because of the delayed implementation. Covered Part B Outpatient Drugs (Not Provided by a HOPD). Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Pay for existing outpatient drugs Section 303(b) In general, payments for Section 432(a). In 2004, existing drugs Section 303(b). Physicians who opt out of provided incident to a physician's most covered Part B drugs, including (available by April 1, 2003) would be paid the competitive acquisition program services. Although Medicare does not intravenous immune globulin, furnished in the lower of the widely available market (which is described subsequently) would currently have an outpatient prescription 2004 will equal 85% of the average price or 85% of the listed AWP as of Apr. be paid under a new, separate 1847B drug benefit, it covers approximately 450 wholesale price (determined as of April 1, 1, 2003 as subsequently increased by the payment method. Subject to the outpatient drugs and biologicals authorized 2003). Certain categories of drugs and CPI for medical care as of June. The beneficiary cost-sharing, non-generic drugs by statute, including those: (1) that are biologicals (drug products) will continue to Secretary would be required to determine would be paid 112% of the applicable CRS-49 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) covered if they are usually not self- be paid at 95% of the AWP including whether the widely available market price price in 2005 and 2006 and 100% of the administered and are provided incident to blood products and clotting factors is different from the AWP amounts using price subsequently. The multiple source a physician's services; (2) those that are furnished during 2004; a drug product any HHS-IG or GAO report issued in 2000 drug applicable price would be the necessary for the effective use of covered furnished during 2004 that was not and later as well as other data from reported volume-weighted average of the durable medical equipment; (3) certain available for Part B payment as of April 1, purchaser, supplier and manufacturers. If average sales price; the applicable price for self-administered oral cancer and anti- 2003; pneumococcal, influenza, and different, the widely available market price a single source drug would be the lesser of nausea drugs (those with injectable hepatitis B vaccines; and a drug or would be treated as the AWP amount in the manufacturer's average sales price equivalents; (4) erythropoietin (used to biological (other than erythropoietin) 2004 and subsequently. However, if that (ASP) for the NDC code or the reported treat anemia); (5) immunosuppressive furnished in connection with renal dialysis difference is more than 15%, payments wholesale acquisition cost (WAC). drugs after covered Medicare organ services that are separately billed by renal would be reduced in 15% increments of Payments would not account for special transplants; (6) hemophilia clotting factors; dialysis facilities. Drug products paid at Medicare's prior year payment. This packaging, labeling or identifiers on the and (7) vaccines for influenza, pneumonia, 85% of AWP in 2004 may be paid a transition would not apply to those with dosage form or product or package. By and hepatitis B. Payments are based on different amount if the widely available generic versions in the market beginning April 1, 2004, the ASP would be 95% of the average wholesale price (AWP) market price is different than the payment 2004. After Jan. 1, 2004, payments for calculated by NDC each calendar quarter published in industry reference amount for the year. Also payments may covered vaccines would be equal to the by dividing a manufacturer's total sales by publications. AWP does not account for be adjusted because of data submitted by AWP. the units sold in that quarter with certain discounts routinely offered to providers the manufacturer or by another entity by adjustments to account for volume and physicians. Current Medicare October 15, 2003. In no case will payment discounts and other rebates. Certain sales payment rates are 95% of AWP for brand be less than 80% of AWP. would be exempt from the calculation. name drugs produced by a single The WAC would be the manufacturer's list manufacturer (or single source drugs). Section 303(c) Beginning in 2005, drug price to wholesalers or direct purchasers Medicare will pay 95% of the lower of (a) products, except for pneumococcal, for the most recent available month, not the median AWP of all generic drugs or (b) influenza, and hepatitis B vaccines, those including discounts or other price the lowest brand-name product AWP for associated with certain renal dialysis reductions, as reported in wholesale price drugs with two or more competing brand services, blood products and clotting guides or other pricing publications. names (or multiple source drugs) or those factors and radiopharmaceuticals, will be Payment rates would be updated on a drugs with available generic equivalents. paid using either the average sales price quarterly basis. Certain contractors would Although Medicare uses the Healthcare methodology or through the competitive determine the payment amounts. Certain Common Procedure Coding System acquisition program. Medicare's payment standards would define multiple and single (HCPCS) codes to pay for physician under the average sales price (ASP) source drugs and establish pharmaceutical administered drugs, the AWPs are methodology will equal 106% of the equivalence. There would be no established for national drug codes (NDC) applicable price for a multiple source drug administrative or judicial review of the which provides data on chemical molecule, or single source drug subject to beneficiary ASP. drug manufacturer, dosage, dosage form deductible and coinsurance amounts. The and package size. applicable price for multiple source drugs is the volume-weighted average of the average sale price calculated by NDC code CRS-50 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) for each calendar quarter. The applicable price for single source drugs is the lesser of the average sales price or the wholesale acquisition cost. Certain sales such as those to the Medicaid drug rebate program are exempt from the calculation, but the ASP will take into account certain discounts (not including Medicaid rebates). After 2004, the Secretary may include other price concessions recommended by the HHS-IG who will conduct market surveys. If the ASP exceeds the market price or average manufacturer price by a threshold percentage, the ASP may be disregarded. In 2005 the threshold is 5%; in 2006 and subsequent years, the percentage threshold will be specified by the Secretary. The payment amount will then be equal to the lesser of the widely available market price or 103% of the average manufacturer price. For drugs furnished in a year after 2004, the widely available market price is the price that a prudent physician or supplier would pay for a drug product, taking into account certain routinely available discounts. The wholesale acquisition cost or other reasonable measure may be used instead of the manufacturer's average sale price in the case of certain public emergencies. There will be no administrative or judicial review of determinations of payment amounts; the identification of units and package size; or the method used to allocate price concessions to a specific quarter among other items. CRS-51 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Pay for new outpatient drugs provided Section 303(c). Drug products during an Section 432(a) continued. New drugs Section 303(b) continued. New drugs. incident to a physician's services. See initial period (not to exceed a full calendar (available after April 1, 2003) would be The Secretary would be able to disregard above. quarter) when data on the prices for sales is paid based on the manufacturer's estimated the average sales price during the first not sufficiently available to compute ASP price data. During the first and second quarter of a new drug's sales if the price will be paid based on the wholesale years, the manufacturer would provide data data is not sufficient to determine an acquisition cost or on the payment methods on the actual market prices paid by average amount payable. in effect as of November 1, 2003. physicians or suppliers which would be equal to the lesser of the AWP or the original estimate. Subsequently, payments would be equal to the lesser of the AWP or the widely available market price established for existing drugs. If no market price exists, the prior year's payment is increased by June's CPI for medical care. Other payment changes for the administration of drugs would be contingent on the implementation of these provisions. Establish competitive pricing program Section 303(d). Under the new Section See above. Section 303(b). Under new section as an establish alternative pricing 1847B, the Secretary is required to 1847A, the Secretary would establish a method for physicians who elect not to establish a competitive acquisition competitive acquisition program to acquire participate in competitive bidding program to acquire and pay for and pay for covered outpatient drugs. program. See above competitively biddable drug products. The Under this program, at least two Secretary is required to compute an area contractors would be established in each average of the bid prices submitted, in competitive acquisition area (which would contract offers accepted for the category be defined as an appropriate geographic and the area, for each year or other region) throughout the United States. Each contract period. Medicare's program year, a physician would be able to select a payment for these drugs will equal 80% of contractor who would deliver covered the average bid price after the Medicare drugs and biologicals to the physician; as beneficiary meets the applicable discussed above, a physician would be able deductible. Generally, coinsurance and to elect payment under the ASP payment deductible amounts will be collected by the methodology established by 1847B. Blood contractor that supplies the drug product. clotting factors, drugs and biologicals There shall be no administrative or judicial furnished as treatment for end-stage renal review with respect to the establishment of disease (ESRD), radiopharmaceuticals, and CRS-52 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) payment amounts, contract awards, vaccines would not be considered covered establishment of competitive acquisition drugs under the competitive acquisition areas, the phased-in implementation, the program. selection of categories of competitively biddable drugs and biologicals for competitive acquisition, or the bidding structure or number of contractors who are selected. No later than July 1, 2008, the Secretary is required to report to Congress on savings, reductions in cost-sharing, access to competitively biddable drugs and biologicals, the range of choices of contractors available to providers as well as beneficiary and provider satisfaction under the competitive acquisition program. Establish contracting requirements for Section 303(d) Certain contractor No provision. Section 303(b). The 1847A program competitive acquisition program. No selection and contracting requirements for would have two drug categories: the provision in current law. the competitive acquisition program are oncology drugs which would be established. Specifically, the Secretary is implemented by 2005 and the non- required to establish an annual selection oncology drugs which would be process for a contractor in each area for implemented by 2006. Certain contractor each category of drugs and biologicals. selection and contracting requirements for The Secretary may not award the 3-year the program would be established. contract to any entity that does not have Specifically, the Secretary would establish the capacity to supply the drug products or an annual selection process for a contractor does not meet established quality, service, in each area for each of the two categories financial performance and solvency of drugs. The Secretary may not award the standards. The number of qualified 2-year contract to any entity that does not entities selected in each category and area meet capacity, quality, service, financial may be limited but will not be less than 2. performance, solvency standards, conduct All drugs and biological products standards or disclosure requirements. The distributed by a contractor must be number of qualified entities selected in acquired directly from the manufacturer or each category and area may be limited but from a distributor that has acquired the will not be less than 2. As part of the products directly from the manufacturer. awarded contract, the selected contractor The amount of the bid price will be would be required to disclose the CRS-53 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) required to be the same for all portions of reasonable, net acquisition costs regularly the area. The appropriate contractor, as (but not more often than once a quarter) as selected by the physician, will supply drug specified by the Secretary. Contract offers products directly to the physician, except could be rejected if the aggregate average in situations when a beneficiary is bid price exceeds the ASP under e 1847B presently able to receive a drug at home or process. The bid price would be required other appropriate non-physician office to be the same for all portions of the area. settings. Rules will be established relating The appropriate contractor, as selected by to resupply of inventories, consistent with the physician, would supply covered drugs safe drug practices and with adequate directly to the physician, except under the safeguards against fraud and abuse. No circumstances when a beneficiary is applicable State requirements relating to presently able to receive a drug at home or the licensing of pharmacies are waived. at other specified non-physician office settings. Adequate safeguards against fraud and abuse and consistent with safe drug practices, in order for a physician to maintain a supply of drugs that may be needed in emergency situations, would be established. Pay separately for the administration of Section 303(e)(1). The Secretary is Section 432(b)(4). The Secretary would Section 303(f). MedPAC would be blood clotting factors. Medicare will pay required to review a GAO report and be required to review a GAO report and required to submit to Congress specific for blood clotting factors for hemophilia provide a separate payment for the provide a separate payment for the recommendations with respect to payment patients who are competent to use such administration of these factors. The total administration of these factors. These for blood clotting factors and its factors to control bleeding without medical amount of payments for blood clotting payments in CY2004 would not exceed the administration in its 2004 annual report. supervision as well as the items related to factors furnished in CY2005 can not amount that would have otherwise been the administration of such factors. exceed the amount that would have expended. In CY2005 and subsequently, otherwise been expended. In CY2006 and the separate payment amount would be subsequently, this separate payment updated by June's CPI for medical care. amount would be updated by the change in the CPI for medical care for the previous year ending in June. Pay the physician a pharmacy Section 303(e)(2). The Secretary is Section 432(b)(8). Medicare would pay a No provision. dispensing fee. Medicare pays for certain required to pay a dispensing fee (less the dispensing fee (less applicable cost-sharing outpatient prescription drugs and applicable deductible and coinsurance amounts) to licensed approved pharmacies biologicals. For instance, Medicare pays a amounts) to licensed approved pharmacies for covered immunosuppressive drugs, oral CRS-54 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) dispensing fee in conjunction with for covered immunosuppressive drugs, oral anti-cancer drugs, and oral anti- nausea inhalation therapy drugs used in anti-cancer drugs, and oral anti-nausea drugs used as part of an anti-cancer nebulizers. Medicare does not pay a drugs used as part of an anti-cancer chemotherapeutic regimen. Medicare dispensing fee to pharmacists or providers chemotherapeutic regimen. would be able to pay a dispensing fee (less who supply oral drugs. the applicable deductible and coinsurance amounts) to licensed approved pharmacies for other drugs and biologicals. Pay for discarded chemotherapy drugs. No provision. Section 432(b)(9). The Secretary would No provision. Medicare does not pay for chemotherapy be able to pay a physician for drugs that are purchased by physicians, are chemotherapy drugs that are purchased not dispensed, and must be discarded. with a reasonable intent to administer to a Medicare beneficiary but which cannot be administered despite the physician's reasonable efforts and must be discarded. Payment amounts for all covered chemotherapy drugs could be increased, subject to a 1% cap. The beneficiary's cost-sharing amounts would not be affected. Cover intravenous immune globulin Section 642. The provision covers No provision. Section 629. By January 1, 2004, IVIG (IVIG) for the treatment of primary intravenous immune globulin (IVIG) for for the treatment of primary immune immune deficiency diseases in the home. the treatment in the home of primary deficiency diseases in the home would be Intravenous immune globulin (IVIG) is a immune deficiency diseases under included as a covered medical service, if a blood product prepared from the pooled Medicare. IVIG is defined as an approved physician determines administration of the plasma of donors. It has been used to treat pooled plasma derivative for the treatment, derivative in the patient's home is a variety of autoimmune diseases, in the patient's home, of a patient with a medically appropriate. This would not including mucocutaneous blistering diagnosed primary immune deficiency include items or services related to the diseases. It has fewer side effects than disease, if a physician determines administration of the derivative. steroids or immunosuppressive agents. administration of the derivative in the Intravenous immune globulin would be Effective October 1, 2002, IVIG is covered patient's home is medically appropriate. paid at 80% of the lesser of actual charge for the treatment of certain conditions for Items or services related to the or the payment amount. certain subpopulations. IVIG for the administration of the derivative are not treatment of autoimmune mococutateous included. IVIG will be paid at 80% of the blistering diseases must be used only for lesser of actual charge or the payment short term therapy, but not as a amount beginning January 1, 2004. CRS-55 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) maintenance therapy, for those for whom conventional therapy has failed. Establish demonstration project to cover Section 641. A 2-year demonstration No provision. Section 631. The Secretary would outpatient drugs. No provision in current project will be established that will cover conduct a 2-year demonstration project in law. more than 50,000 patients and will pay for three states covering more than 10,000 drug products that are prescribed as patients under Part B that would pay for replacements for existing covered Part B drugs and biologicals that are prescribed as drugs that are furnished incident to a replacements for existing covered drugs physician's service which are not usually that are furnished incident to a physician's self-administered, including oral anticancer professional service and which are not chemotheraputic agents. The project is not usually self-administered including oral permitted to cost more than $500 million. anti-cancer chemotheraputic agents. The The Secretary is required to submit an project would not extend beyond Dec. 31, evaluation to Congress no later than July 1, 2005 and would not cost more than $100 2006. The project will begin 90 days from million. enactment and end no later than December 31, 2005. Require GAO report on impact of drug No provision. Section 432(e). GAO would examine the Section 303(e). Same provision except provisions on beneficiary access to impact of the drug provisions on the access report would be due 2 years after the covered drugs. No provision in current of Medicare beneficiaries' to covered implementation of the competitive law. drugs and biologicals which would be due acquisition program (January 1, 2007). to Congress no later than January 1, 2006. Require HHS-IG reports on market Section 303(c). The HHS-IG will submit Section 432(e). The HHS IG would be No provision. prices for drugs. No provision in current a study to Congress on the adequacy of required to conduct one or more studies law. ASP payments for cancer treatments by that compare the market prices to October 1, 2005. The Secretary will Medicare payments for drugs that submit a report to Congress by January 1, represent the largest portion of Medicare 2006 on the sales of drugs and biologicals spending on such items. to large volume purchasers to determine whether the price at which drugs and biologicals are sold to these purchasers represent the price made available to physicians and recommend whether these sales should be excluded from the ASP computation. CRS-56 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require study on non-oncology codes. No provision. No provision. Section 303(h). The Secretary would be No provision in current law. required to submit a study to Congress within 1 year of enactment that examines the appropriateness of establishing and implementing separate codes for non- oncology infusions that address the level of complexity and resource consumption. If deemed appropriate, the Secretary would be able to implement appropriate changes in the payment methodology. Self-Injected Drugs and Biologicals Pay for selected self-injected drugs and No provision. Section 450E. In 2004 and 2005, No provision. biologicals. Coverage of certain outpatient Medicare would cover FDA approved self- drugs and biologicals is authorized by injected biologicals that are prescribed as statute. Under Medicare Part B, these complete replacements for currently items are covered if they are usually not covered drugs in physicians' offices or as self-administered and are provided incident usually self-administered outpatient to a physician's services. Generally, hospital services and other self-injected Medicare will cover an outpatient drug as drugs that are used to treat multiple usually self-administered if it is delivered sclerosis. by intramuscular injection, but not if it is injected subcutaneously. CRS-57 Covered Drugs and Services at a Dialysis Facility. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish the composite rate and Section 623. The bill increases the Section 432(b)(5). In 2004 the composite Section 623(c). The ESRD composite payments for covered drugs and services composite rate for renal dialysis by 1.6% rate would be increased so that the sum of payment rate would increase by 1.6% for in a dialysis facility. Dialysis facilities for 2005. The bill requires the Secretary these payments plus the payments for non- 2004. providing care to end stage renal disease to establish a basic case-mix adjusted EPO drugs and biologicals billed (ESRD) beneficiaries receive a fixed prospective payment system for dialysis separately equal payments that would have prospectively determined payment amount services. The basic case-mix adjusted been made without enactment of the drug (the composite rate) for each dialysis system is required to begin for services pricing provisions in this legislation. treatment, regardless of whether services furnished beginning January 1, 2005. The During 2005, the ESRD rate would be are provided at the facility or in the system is required to adjust for a limited increased by 0.05% and further increased patient's home. Medicare pays separately number of patient characteristics (the case- by 1.6%. During 2006, the rate would be for erythropoietin (EPO) which is used to mix). The basic case-mix adjusted system increased by 0.05% and then further treat anemia for persons with chronic renal is composed of two components: (1) those increased by 1.6%. During 2007 and failure who are on dialysis. Congress has services which currently comprise the subsequently, the ESRD rate of the set Medicare's payment for EPO at $10 per composite rate (including the 1.6% previous year would be increased by 1,000 units whether it is administered increase in 2005), and (2) the spread on 0.05%. In any year after 2004, the intravenously or subcutaneously in dialysis separately billed drugs and biologicals Secretary would be required to provide for facilities or in patients' homes. Providers (including erythropoietin and as additional increases in the composite rate receive 95% of the AWP for separately determined by the HHS-IG reports). to account for any payment reductions for billable injectable medications other than separately administered drugs (but not EPO administered during treatments at the Drugs and biologicals (including EPO) in the same manner as in 2004. facility. erythropoietin) currently billed separately, These payment amounts, methods or will continue to be billed separately under adjustments would not be subject to the basic case-mix adjusted system. They administrative or judicial review. cannot be bundled into the new system. Restore composite rate exception for Section 623. The prohibition on exceptions No provision Section 623(b). The prohibition on pediatric facilities. Prior to BIPA, an contained in BIPA section 422(a)(2) does exceptions would not apply to pediatric increase in the composite rate would not apply to pediatric ESRD facilities as of ESRD facilities as of October 1, 2002. trigger an opportunity for ESRD facilities October 1, 2002. Pediatric ESRD facilities Pediatric facilities would be defined as a to request a rate exception in order to are defined as renal facilities with 50% of renal facility with 50% of its patients under receive higher payments. BIPA required their patients under 18 years old. The 18 years old. the Secretary to develop an new ESRD provision is effective upon enactment. payment system and prohibited the granting of new exceptions with respect to applications received after July 1, 2001. CRS-58 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Change requirements for existing end- Section 623. By October 1, 2005, the No provision. Section 623(a). The provision would stage renal disease demonstration Secretary is required to report to Congress require the Secretary to establish an project. The Secretary announced a on the elements and features for the design advisory board for the ESRD disease demonstration project establishing a and implementation of a fully case-mix management demonstration. disease-management program that will adjusted, bundled prospective payment allow organizations experienced with system for services furnished by ESRD treating ESRD patients to develop facilities. The Secretary is required to financing and delivery approaches to better establish a 3-year demonstration project of meet the needs of beneficiaries with the fully case-mix adjusted payment ESRD. system for ESRD services, beginning January 1, 2006 and consult with a required advisory board in carrying out the demonstration. Durable Medical Equipment (DME) and Related Outpatient Drugs. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Pay for home infusion drugs. Medicare Section 303(b). Infusion drugs furnished Section 432(b)(6). The Secretary would Section 302. Infusion drugs would be will cover outpatient prescription drugs through covered durable medical be able to make separate payments for covered under the competitive bidding and biologicals if they are necessary for equipment starting January 1, 2004 will be infusion drugs and biologicals furnished project. the effective use of covered durable paid 95% of the AWP in effect on October through covered DME beginning January medical equipment (DME), including 1, 2003; starting January 1, 2007, infusion 1, 2004 if such payments are determined to those drugs which must be put directly into drugs furnished in any area covered by the be appropriate. Total amount of payments the equipment such as tumor DME competitive acquisition program will for the infusion drugs in the year could not chemotherapy agents used with infusion be paid at the competitive price. exceed the total amount of spending that pump (home infusion drugs). would have occurred without enactment of this legislation. Payment for inhalation therapy. As Section 305. Inhalation drugs or Section 432(b)(7). The Secretary would Section 302. The competitive acquisition mentioned above, Medicare will cover biologicals furnished through covered be able to increase payments for covered program would include drugs and supplies outpatient prescription drugs and durable medical equipment will be paid at DME associated with inhalation drugs and used in conjunction with DME, including biologicals if they are necessary for the 85% of the AWP (determined as of April biologicals and make separate payments, if inhalation therapy. effective use of covered durable medical 1, 2003) in 2004 and by the amount appropriate, for those furnished through Section 302. The competitive acquisition equipment (DME), including those drugs provided under the average sales price covered DME beginning January 1, 2004. program would include drugs and supplies which must be put directly into the methodology in 2005 and subsequently. The associated spending in any year would used in conjunction with DME, including equipment such as respiratory drugs given not exceed the 10% of the difference of the inhalation therapy. Section 602(c). GAO through a nebulizer (inhalation drugs). GAO is be required to conduct a study to savings for these drugs attributed to this would be required to conduct a study to CRS-59 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) examine the adequacy of current legislation. examine the adequacy of current reimbursements for inhalation therapy reimbursements for inhalation therapy under the Medicare program and submit under the Medicare program and submit the results of the study in a report to the results of the study in a report to Congress no later than 1 year from the Congress no later than May 1, 2004. enactment date of this legislation. Establish payments for durable medical Section 302(b). The bill establishes a Section 430. Medicare would not increase Section 302. Competitive acquisition equipment (DME). Medicare pays for competitive acquisition program for DME the DME fee schedule amounts in any of programs for durable medical equipment, DME and PO, using different fee schedules (including items used in infusion and the years from 2004 through 2010 and medical supplies, items used in infusion, for each class of covered item that are drugs), medical supplies, home dialysis would update the amounts by the CPI-U in drugs and supplies used in conjunction subject to different floors and ceilings, supplies, therapeutic shoes, enteral each subsequent year. Payments for with durable medical equipment, medical calculated either on a state, regional, or nutrients, equipment, and supplies, orthotic devices that have not been custom- supplies, home dialysis supplies, blood national basis. BBA 1997 amended electromyogram devices, salivation fabricated would be similarly affected. products, parental nutrition, and off-the- Medicare law to freeze DME fee schedule devices, blood products, and transfusion Class III medical devices would be exempt shelf orthotics (requiring minimal self- allowances for 5 years, beginning in 1998. medicine, and off-the-shelf orthotics from the freeze in DME payments. adjustment for appropriate use) would POs were subject to a 1% increase for 5 (requiring minimal self-adjustment for Prosthetics, prosthetic devices, and replace the fee schedule payments. Enteral years, beginning in 1998. BBA 97 also appropriate use). This program will custom-fabricated orthotics would be nutrients and class III devices would not be required the Secretary to undertake a replace the Medicare fee schedule updated by the percentage change in the covered by the program. Rural areas and competitive bidding demonstration for payments. Exclusions from the competitive CPI-U. areas with low population density within DME which occurred at two sites: Polk acquisition are: inhalation drugs; parenteral urban areas would be able to be exempt, County, Florida and San Antonio, Texas. nutrients, equipment, and supplies; and unless a significant national market exists Class III medical devices are devices that class III devices (those that sustain or through mail order for a particular item or sustain or support life, are implanted, or support life, are implanted, or present service. The programs would be phased-in present potential unreasonable risk (e.g., potential unreasonable risk and are subject over 3 years with at least one-third of the implantable infusion pumps and heart to premarket approval by the Food and areas implemented in 2005 and two-thirds valve replacements) and are subject to Drug Administration). In starting the of the areas implemented in 2006. High- premarket approval, the most stringent programs, the Secretary is required to cost items and services would be required regulatory control. establish competitive acquisition areas, but to be phased-in first. Certain requirements would be able to exempt rural areas and for the competitive acquisition program areas with low population density within would be established. A Program Advisory urban areas that are not competitive, unless and Oversight Committee would be a significant national market exists through established. The Secretary would be able mail order for a particular item or service. to use this payment information to adjust The programs will be phased-in so that the payment amounts for DME not in a competition under the programs occurs in competitive acquisition area. In this 10 of the largest metropolitan statistical instance, the inherent reasonableness rule areas in 2007. The Secretary is permitted would not be applied. CRS-60 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) to phase-in first items and services with the highest cost and highest volume, or those items and services that the Secretary determines have the largest savings potential. The Secretary is required to report to Congress by July 1, 2009, on savings, reductions in cost-sharing, access to items and services, and beneficiary satisfaction under the competitive acquisition program. Establish accreditation standards and Section 302(a). DME companies and Section 430(c). DME companies and Section 302. The competitive bidding process for DME suppliers. Medicare suppliers will be subject to an accreditation suppliers would be subject to an project would establish certain quality law requires DME suppliers to meet and quality assurance process. The accreditation and quality assurance standards for DME products no later than certain requirements in order to participate Secretary is required to designate process. The Secretary would be required July 1, 2004. in the program. Medicare law does not independent accreditation organizations no to designate independent accreditation authorize the Secretary to deem later than 1 year from enactment. The organizations no later than 6 months from accreditation by an independent entity as a Secretary is required to establish standards enactment after consultation with an expert substitute for onsite inspection by CMS. for clinical conditions for payment for outside advisory panel. The application of covered durable medical equipment that quality standards would be phased-in over include the specification of types or classes a 3-year period. of covered items that require, as a condition of payment, a face-to-face examination and a prescription for the item. Beginning with the date of enactment, payment may not be made for motorized or power wheelchairs unless a physician, physician assistant, nurse practitioner, or a clinical nurse specialist has conducted a face-to-face examination of the individual and written a prescription for the item. Medicare payment is not permitted unless the item meets the standards established for clinical condition of coverage. CRS-61 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Cover total body orthotic management No provision. Section 450B. Medicare would pay for No provision. services for certain nursing home qualified total body orthotic management residents . Orthotics are rigid devices, or devices provided by qualified practitioners braces, which are applied to the outside of and suppliers no later than 60 days from the body to support or restrict movement in enactment. These medically prescribed a body part. Orthotics are covered Part B devices would consist of custom fitted benefits when furnished in an institutional individual braces that are attached to a setting, such as in a hospital or skilled frame that is integral to the device for a nursing facility, while durable medical full-time patient of a skilled nursing equipment (DME) is not covered in those facility who requires such medical care. settings, because Medicare law requires that covered DME be appropriate for use in home. Pay for certain custom shoes for diabetic Section 627. Starting January 1, 2005, No provision. Section 626. As of January 1, 2004, patients. Subject to specified limits and payment for diabetic shoes is limited to the diabetic shoes would be paid as is if they under certain circumstances, Medicare will amount that would be paid if they were were considered to be a prosthetic or pay for extra-depth shoes with inserts or considered to be a prosthetic or orthotic orthotic device. The Secretary or a carrier custom molded shoes with inserts for an device. The Secretary may establish lower would be able to establish lower payment individual with severe diabetic foot payment limits than these amount if shoes limits than these amounts if shoes and disease. Diabetic shoes are neither and inserts of an appropriate quality are inserts of an appropriate quality are readily considered DME nor orthotics, but a readily available at lower amounts. The available at lower amounts. The Secretary separate category of coverage under Secretary is required to establish a would be required to establish a payment Medicare Part B. payment amount for an individual amount for an individual substituting substituting modifications to the covered modifications to the covered shoe that shoe that would assure that there is no net would assure that there is no net increase increase in Medicare expenditures. in Medicare expenditures. CRS-62 Ambulance Services. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Increase ambulance fee schedule. Section 414 (b). Medicare's payments Section 425. Payments for ground Section 410. The base rate for ground Traditionally, Medicare has paid suppliers of for ground ambulance services will be ambulance services originating in a ambulance services that originate in a qualified ambulance services on a reasonable charge increased by one quarter of the rural area or a rural census tract would rural area would be increased after January 1, basis and paid provider-based ambulances on payment per mile rate otherwise be increased by 5% for services 2004 by the average costs per trip for the base a reasonable cost basis. BBA 1997 provided established for trips longer than 50 furnished January 1, 2005 through rate in the lowest quartile as compared to the for a national fee schedule which was to be miles occurring on or after July 1, December 31, 2007. The fee schedule average cost for the base rate in the highest implemented in phases. The required fee 2004 and before January 1, 2009. The for other areas would be increased by quartile of all rural counties. A qualified rural schedule became effective April 1, 2002 with payment increase applies regardless of 2%. These increased payments would county is a rural area (a county not assigned to full implementation by January, 2006. In the where the transportation originates. not affect subsequent periods. The a metropolitan statistical area) with a transition period, a gradually decreasing Section 414(c). The Secretary will ambulance conversion factor would population density of Medicare beneficiaries in portion of the payment is to be based on the provide a percentage increase in the not be adjusted downward because of the lowest quartile of all rural counties. prior payment methodology. base rate of the fee schedule for the evaluation of the prior year's ground ambulance services furnished conversion factor. on or after July 1, 2004 and before January 1, 2010 that originate in a qualified rural area. The qualified rural areas are those with lowest populations densities that collectively represent a total of 25% of the population in those areas. To the extent feasible, the Secretary is required to treat certain rural census tracts in metropolitan statistical areas as rural areas. There will be no administrative or judicial review under Sections 1869 and 1878 of the SSA or otherwise with respect to the identification of a qualified rural area. In order to promptly implement this provision, the Secretary may use data furnished by GAO. Section 414(c). The payments for ground ambulance services originating in a rural area or a rural census tract will be increased by 2% (after CRS-63 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) application of the long trip and low density payment increases) for services furnished on or after July 1, 2004 through December 31, 2007. The fee schedule for ambulances in other areas (after application of the long trip adjustment) will increase by 1%. These increased payments will not affect Medicare payments for covered ambulance services after 2006. A GAO report is required. Change ambulance fee schedule. In the Section 414(a). Payments for No provision. Section 622. Payments would be incorporate a transition period from 2002-2006, payment is ambulance services will be based on regional fee schedule, if that would result in a based on a blend with a gradually increasing either the national fee schedule amount larger payment to the ambulance provider or portion of the payment based on the fee or a blended rate of the national fee supplier. The blended rate from 2004 through schedule and a decreasing portion on the schedule and a regional fee schedule, 2010 would incorporate a decreasing portion of former payment method (of either reasonable whichever results in the larger the regional fee schedules calculated for each costs for ambulance providers or reasonable payment. The blended rate during the of nine census regions. Full phase-in to the charges for ambulance suppliers.) In 2003, phase-in period will incorporate a existing fee schedule would occur by 2010. the blend is 40% of the fee schedule and 60% decreasing portion of the payment Medicare's payments for ground ambulance of the cost or charge rates. based on regional fee schedules services would be increased by one quarter of calculated for each of nine census the amount otherwise established for trips regions. For 2004, starting for services longer than 50 miles occurring beginning on July 1, 2004, the blended rate is January 1, 2004 and before January 1 2009. based on 20% of the national fee A GAO report would be required. schedule and 80% of the regional fee schedule; for 2005, the blended rate is based on a 40% national and 60% regional split; in 2006, the blended rate is based on a 60% national and 40% regional split; in 2007, 2008 and 2009, the blended rate is based on a 80% national and 20% regional split; and in 2010 and subsequently, the ambulance fee schedule is based on the national fee schedule. CRS-64 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Increase coverage for air ambulance Section 415. Regulations will provide Section 426. For services furnished No provision. services. Medicare pays for ambulance that air ambulance services will be beginning January 1, 2005, the services under a fee schedule. Seven covered if: (1) such service is regulations governing ambulance categories of ground ambulance services, reasonable and necessary based on the services would be required to ensure ranging from basic life support to specialty patient's health condition at or that air ambulance services be covered care transport, and two categories of air immediately prior to the time of the if: (1) the air ambulance service is ambulance services are established. Payment transport service; and (2) the air medically necessary based on the for ambulance services can only be made if ambulance service complies with health condition of the patient being other methods of transportation are established equipment and crew transported at or immediately prior to contraindicated by the patient's medical requirements. An air ambulance the time of the transport service; and conditions, but only to the extent provided in service is considered reasonable and (2) the air ambulance service complies regulations. necessary when requested: (1) by a with the equipment and crew physician or other qualified medical requirements established by the personnel who reasonably determines Secretary. These services would be a that the time need to transport by land fixed wing or rotary wing air or the instability of such transport ambulance services. threatens the patient's health or survival; or (2) such services are furnished pursuant to a protocol that is established by a state or regional emergency medical services (EMS) agency and approved by the Secretary. The EMS agency cannot have an ownership interest in the entity furnishing such service. Also, there cannot be a financial, employment or ownership relationship between the person (or immediate family member) requesting the service and the furnishing entity. This prohibition does not apply to certain instances when a hospital and an entity furnishing the rural air ambulance services are under common ownership. A rural air ambulance service is defined as a fixed wing or rotary wing CRS-65 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) air ambulance service where the patient pick up occurs in a rural area or rural census tract. The provision applies to services on or after January 1, 2005. Other Part B Services and Provisions. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish 2-year moratorium on therapy Section 624. Application of the therapy No provision. Section 624. Application of the therapy caps. BBA 97 established annual payment caps is suspended for the remainder of caps would be suspended in 2004. limits per beneficiary for all outpatient 2003 (after enactment), in 2004 and 2005. Provisions with respect to existing report therapy services provided by non-hospital The Secretary is required to submit the requirements are included. providers. The cap applied in 19999. reports required by BBA 97 and BIPA by BBRA and BIPA suspended application March 31, 2004 relating to the alternatives for 2000 through 2002. Enforcement was to a single annual dollar cap on outpatient delayed until September 1, 2003. therapy and the utilization patterns for outpatient therapy. The GAO is required to identify conditions or diseases that may justify waiving the application of the therapy caps and report to Congress by October 1, 2004. Cover routine costs associated with Section 731. The Secretary is prohibited Section 438. After January 1, 2005, the Section 733. The routine costs of care for clinical trials. Currently, Medicare covers from excluding from Medicare coverage routine costs of care for Medicare Medicare beneficiaries participating in the routine costs of qualifying clinical the routine costs of care incurred by a beneficiaries participating in clinical trials clinical trials that are conducted in trials without explicit statutory instruction. Medicare beneficiary participating in a would be covered by statute. The Secretary accordance with an investigational device However, Medicare does not pay for category A clinical trial, beginning with would not be required to modify the exemption approved under Section 530(g) certain aspects of the clinical trial routine costs incurred on and after January existing regulations. Total Medicare of the Federal Food, Drug, and Cosmetic including: the investigational item or 1, 2005. This provision does not apply to, expenditures associated with this provision Act would be covered. Any clinical trial service, items and services not used in the or affect, Medicare coverage or payment would not exceed specified limits that start established on the date of enactment or direct clinical management of the patient, for a non-experimental/investigational at $32 million in 2005 and increase after would be covered. Services provided and items and services customarily (category B) device. gradually to $50 million in 2013. on or after enactment would be covered. provided by the research sponsor free of charge for any enrollee in the trial. CRS-66 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Cover certain vision rehabilitation Section 645. The Secretary is required to Section 446. Medicare Part B would cover No provision. services. Medicare does not cover routine study the feasibility and advisability of vision rehabilitation services furnished to eye care or related services and will not providing for payment for vision a beneficiary who is diagnosed with certain pay for eyeglasses; most contact lenses; rehabilitation services furnished by vision vision impairments. Covered services eye examinations for the purpose of rehabilitation professionals. The report is would be established by a plan of care prescribing, fitting, or changing eyeglasses due to Congress by January 1, 2005. developed by a qualified physician or or contact lenses; and most procedures qualified occupational therapist whose plan performed to determine the refractive state of care is periodically reviewed by a of the eyes. A CMS program memorandum qualified physician. Medicare would pay issued May 29, 2002, clarified that for the services under the physician fee Medicare beneficiaries who are blind or schedule. visually impaired are eligible for physician-prescribed rehabilitation services from approved health care professionals on the same basis as beneficiaries with other medical conditions that result in reduced physical functioning. Cover marriage counseling and family No provision. Section 448. Starting January 1, 2004, No provision. therapy. Medicare will cover services Medicare would cover marriage and family connected with the treatment of a mental, therapist services and mental health psychoneurotic, or personality disorder of counselor services for the diagnosis and an individual who is not an inpatient of a treatment of mental illness. Payment hospital at the time such expenses are amounts would be 80% of the lesser of the incurred. The term "treatment" does not actual charge or 75% of the amount paid to include brief office visits for the sole a psychologist. These services would be purpose of monitoring or changing drug subject to assignment. Rural health clinics, prescriptions used in the treatment of such federally qualified health centers, and disorders or partial hospitalization services hospice programs would be authorized to that are not directly provided by the provide such services. Marriage and physician. Family counseling services family therapists would be authorized to with members of the household are develop post hospital discharge plans for covered only where the primary purpose of patients. such counseling is the treatment of the patient's condition. CRS-67 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Cover all Part B services provided by Section 630. The bill provides a 5-year Section 450C. All Medicare Part B items No provision. Indian hospitals and clinics. Medicare expansion of the items and services and services provided by hospitals, skilled covers specific Part B services provided by covered under Medicare Part B when nursing facilities, or ambulatory care a hospital, skilled nursing facility, or furnished in Indian hospitals and clinics operated by the Indian Health ambulatory care clinic (whether provider- ambulatory care clinics. The bill applies to Service or by an Indian tribe or based or freestanding) that is operated by items and services furnished on or after organization beginning October 1, 2004 the Indian Health Service or by an Indian January 1, 2005. would be paid. tribe or tribal organization. Cover cardiovascular screening tests. Section 612. Medicare will cover Section 450D. Beginning January 1, 2005, Section 612. Medicare coverage of Medicare covers a number of preventive cardiovascular screening blood tests Medicare would cover cardiovascular cholesterol and blood lipid screening services. However, it does not cover beginning January 1, 2005. The Secretary diagnostic testing including tests for would be authorized. The Secretary would cardiovascular screening tests. is required to establish standards regarding cholesterol levels, lipid levels of the blood, be required to establish standards the frequency of these screening tests, but and other tests identified after consultation regarding the frequency and type of these not more often than once every 2 years. with appropriate organizations to establish screening tests, but not more often than the frequency and type of these screening once every 2 years. tests which could occur no more often than once every 2 years. Cover initial preventative physical Section 611. Medicare will cover an No provision. Section 611. Medicare coverage of an examination. Medicare covers a number initial preventive physical examination initial preventive physical examination of preventive services. However, it does beginning January 1, 2005 for newly would be authorized and paid for using the not cover routine physical examinations. enrolling beneficiaries within 6 months of physician fee schedule. No beneficiary enrollment. Beneficiary cost sharing cost-sharing would be imposed. applies to initial preventive physical examinations. Cover diabetes laboratory diagnostic Section 613. Medicare will cover diabetes No provision. Section 630. Starting 90 days from tests. On July 1, 1998, Medicare began screening tests furnished to individuals at enactment, diabetes screening tests and covering diabetes self-management risk for developing diabetes, beginning services would be included as a covered training services. These educational and January 1, 2005. medical service for individuals at high-risk training services are provided on an for developing diabetes. outpatient basis by physicians or other certified providers who have experience in diabetes self-management training services. CRS-68 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Cover kidney disease education services. No provision. Section 456. Starting January 1, 2004, No provision. No provision in current law. kidney disease education services would be covered and paid using Medicare's physician fee schedule on an assignment- related basis (and thus prohibiting balance billing) outside the ESRD composite rate. A report from the Secretary would be due to Congress by April 1, 2004. Increase providers eligible for payments Section 418. The Administrator of the Section 450H. Other types of providers No provision. for telehealth services. Medicare pays for Health Resources and Services would be added to the list of originating telehealth services that are provided in Administration is required to evaluate sites that can bill Medicare for telehealth specified "originating sites." These demonstration projects under which a services. In addition, the Secretary would originating sites are: physician or skilled nursing facility is treated as an be required to encourage and facilitate the practitioner office, a critical access originating site for telehealth services. The adoption of state provisions allowing for hospital, a rural health clinic, a Federally- report to Congress is due by January 1, multi-state practitioner licensure across qualified health center, or a hospital. 2005. state boundaries. Prohibit private insurers from requiring Section 950. Group health plans providing Section 555. A group health plan Section 950. Same provision. prior Medicare processing of dental supplemental or secondary coverage to providing supplemental or secondary claims. The Medicare benefit does not Medicare beneficiaries cannot require coverage to Medicare beneficiaries would include most dental services. Some dentists to obtain a claim denial from not be able to require dentists to obtain a insurers may require a claim denial from Medicare for dental services that are not claim denial from Medicare for non- Medicare before accepting the dental claim covered by Medicare before paying the covered dental services before paying the for payment review, even if the service is claim, beginning 60 days after enactment. claim. not covered by Medicare. CRS-69 Provisions Relating to Parts A and B Home Health Services. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Increase for home health services Section 421. Home health agencies will Section 451. A 5% increase in payments Section 411. A 5% additional payment for furnished in a rural area. BIPA recive a 1 year, 5% additional payment for for home health care services furnished in home health care services furnished in a increased PPS payments by 10% for home home health care services furnished in a a rural area would be provided during FY rural area would be provided during 2004 health services furnished in the home of rural area without regard to certain budget- 2005 and FY2006 without regard to certain and 2005 without regard to certain budget beneficiaries living in rural areas during neutrality requirements. The temporary budget neutrality requirements. The neutrality requirements. the 2-year period beginning April 1, 2001, additional payment begins for episodes and temporary additional payment would not through March 31, 2003. The temporary visits ending on or after April 1, 2004 and be considered when determining future additional payment was not included in the before April 1, 2005 and cannot to be used home health payment amounts. base for determination of payment updates. in calculating future home health payment amounts. Reduce update for home health services. Section 701. Home health agency (HHA) No provision. Section 701. HHA payments would be Home health service payments are payments are increased by the full market increased by the home health market increased on a federal fiscal year basis that basket percentage for the last quarter of basket minus 0.4 percentage points for begins in October. The FY2004 statutory 2003 (October, November, and December) 2004 through 2006. The update for update will be the full increase in the and for the first quarter of 2004 (January, subsequent years would be the full market market basket index. February, and March). The update for the basket increase. The provision would also remainder of 2004 and for 2005 and 2006 change the time frame for the update from is the home health market basket the federal fiscal year to a calendar year percentage increase minus 0.8 percentage basis. The home health PPS rates would points. HHA payment updates are moved not increase for the October 1 through from the federal fiscal year to a calendar December 31, 2003 period. year basis beginning with 2004. Establish demonstration project to Section 702. A 2-year demonstration Section 450. A 2-year demonstration Section 704. Substantially similar clarify definition of homebound. A project where beneficiaries enrolled in project where beneficiaries with chronic provision, however, beneficiaries would Medicare beneficiary must be confined to Medicare Part B with a permanent and conditions would be deemed to be permanently need skilled nursing services the home (or homebound) in addition to severe disabling condition and with homebound in order to receive home (other than medication management); these other criteria in order to qualify for the specified care needs would be deemed to health services under Medicare would be skilled nursing services would need to be home health benefit. be homebound in order to receive home established. provided each day or an attendant would health services under Medicare. The be needed during the day to monitor and number of participants is limited to 15,000. treat the beneficiary's medical condition. CRS-70 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish adult day care demonstration Section 703. A demonstration project is Section 454. A demonstration would be Section 732. Same provision. project. No provision in current law. required where a HHA, directly or under established where a HHA, directly or under arrangement with a medical adult day care arrangement with a medical adult day care facility, will provide medical adult day facility, would provide medical adult day care services as a substitute for a portion of care services as a substitute for a portion of home health services otherwise provided in home health services otherwise provided in a beneficiary's home. a beneficiary's home. Suspend the requirement that Outcome Section 704. The requirement that HHAs Section 630. The requirement that HHAs Section 954. Same provision. and Assessment Information Set must collect OASIS data on private pay must collect OASIS data on private pay (OASIS) data be submitted for non- (non-Medicare, non-Medicaid) patients is (non-Medicare, non-Medicaid) patients Medicare, non-Medicaid patients. suspended until the Secretary reports to would be suspended until the Secretary Medicare is required to monitor the quality Congress on the benefits of these data. reported to Congress on the benefits of of home health care and services for all these data. patients as part of the survey process with a standardized, reproducible assessment instrument. OASIS is the data collection instrument that is used. Require MedPAC study on home health Section 705. MedPAC is required to study No provision. Section 703. MedPAC would study agency (HHA) margins. No provision in payment margins of HHAs paid under payment margins of HHAs paid under PPS current law. PPS, to examine whether systematic to examine whether systematic differences differences in payment margins are related in payment margins were related to to differences in case mix, as measured by differences in case mix, as measured by home health resource groups (HHRGs), HHRGs. among agencies. CRS-71 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Coverage of religious nonmedical health Section 706. The definition of a home No provision. No provision. care institution services furnished in the health agency is expanded to include a home. Under specified conditions, religious nonmedical health care Medicare will make payment for services institution, but only with respect to items furnished to a beneficiary in a religious and services ordinarily furnished by this nonmedical health care institution. institution to individuals in their homes and that are comparable to items and services furnished to individuals by HHAs. Payments are prohibited from exceeding $700,000 in a year and are prohibited after December 31, 2006. Increase for home health services No provision. Section 459. A 10% additional payment No provision. furnished in a rural area. BIPA for home health care services furnished in increased PPS payments by 10% for home a rural area during FY2005 and FY2006 health services furnished in the home of would be provided without regard to beneficiaries living in rural areas during certain budget neutrality requirements. the 2-year period beginning April 1, 2001, The total amount of outlier payments through March 31, 2003. Home health would be reduced to no more than 3% of PPS makes additional outlier payments for total payments in FY 2004 and 4% for FYs extraordinarily costly cases; outlier 2005 and 2006. [Duplicate provision is at payments may not exceed 5% of the total Section 463]. estimated payments for the fiscal year. Limit reduction in area wage No provision. Section 452. The provision would limit No provision. adjustment factors under home health any reduction in the home health area PPS. In calculating PPS payment, the wage adjustment factor for fiscal years portion of the base payment amount that is 2005 and 2006. Any reduction could be attributable to wages and wage-related no more than 3% less than the area wage costs is required to be adjusted for those adjustment factor applicable to home costs. The Secretary is required to health services for the area in the previous calculate an area wage adjustment factor year. that is actually used to adjust the base payment amount. The factors change annually as new wage data are reported and areas change in relative costliness. CRS-72 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require GAO report on flexibility in No provision. No provision. Section 953(d). GAO would report to applying home health conditions of Congress on the implications if participation (COP) to patients who are Medicare's COPs for home health agencies not Medicare beneficiaries. No provision were applied flexibly with respect to in current law. groups or types of patients who are not Medicare beneficiaries, include an analysis of the potential impact of this flexibility on clinical operations and the recipients of such services and analyze methods for monitoring the quality of care provided to these recipients. The report would be due no later than 6 months after enactment. Establish beneficiary cost-sharing for No provision No provision. Section 702. A beneficiary copayment for home health services. The home health each 60-day episode of care beginning benefit does not have any cost-sharing January 1, 2004 would be established. The requirement. copayment amount would be 1.5% of the national average payment per episode in a calendar year, rounded to the nearest multiple of $5. For 2004, the copayment would be $40 unless otherwise calculated on a timely basis by the Secretary. Medicare payments would be reduced to reflect copayments. Qualified Medicare beneficiaries, beneficiaries dually eligible for Medicare and Medicaid, and beneficiaries receiving four or fewer home health visits in an episode of care would not face any cost-sharing requirements. Administrative and judicial review of the calculated copayment amounts would be prohibited. CRS-73 Chronic Care Improvement. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Cover chronic care improvement Section 721. The Secretary is required to Section 443. The Secretary would be Section 721. Specified chronic care services under traditional fee-for- establish and implement chronic care required to establish a 5-year budget improvement services would be provided service. No provision in current law. improvement programs for Medicare fee- neutral demonstration program that uses to certain beneficiaries with chronic for-service. The programs must be qualified care management organizations conditions as a Medicare benefit, not as a designed to improve clinical quality and to provide health risk assessment and care demonstration project. beneficiary satisfaction and achieve management services to high-risk spending targets for Medicare for Medicare beneficiaries including those beneficiaries with certain chronic health with multiple sclerosis or other disabling conditions. chronic conditions, nursing home residents or those at risk for placement, or high-risk dual eligible beneficiaries. Cover chronic care improvement Section 722. Each Medicare Advantage Section 442. The Secretary would be Section 722. Comparable chronic care services under Medicare Advantage. No organization is required to have an on- required to establish a 3-year budget improvement services would be provided provision in current law. going quality improvement program for neutral demonstration program to promote to beneficiaries in MedicareAdvantage and improving the quality of care provided to continuity of care, help stabilize medical Enhanced FFS as a Medicare benefit, not enrollees (except for private fee-for-service conditions, prevent or minimize acute as a demonstration project. plans or MSA plans) effective for contract exacerbations of chronic conditions, and years beginning January 1, 2006. As part reduce adverse health outcomes before of the quality improvement program, each October 1, 2004. Six sites would be MA organization is required to have a designated for the demonstration, three in chronic care improvement program. Each urban areas and at least one in a rural area. chronic care improvement program is One site would be required to be located in required to have a method for monitoring Arkansas. The Secretary would pay each and identifying enrollees with multiple or principal care physician a monthly sufficiently severe chronic conditions that complex care management fee developed meet criteria established by the by the Secretary. The fee would be the full organization for participation under the payment for all the functions performed. program. Establish consumer- directed chronic Section 648. The Secretary is required to No provision. Section 736. The Secretary would outpatient services. No provision in establish no fewer than 3 demonstration establish no fewer than three current law. Medicare coverage requires projects that evaluate methods to improve demonstration projects to evaluate method that a beneficiary need medically necessary the quality of care provided to Medicare to improve the care and reduce the cost of care. In general, Medicare pays the beneficiaries with chronic conditions and care provided to Medicare beneficiaries CRS-74 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) provider that delivers skilled health care that reduce expenditures that would with chronic conditions including methods services. otherwise be made on their behalf by that would permit beneficiaries to direct Medicare. The methods are required to their own health care needs and services. include permitting beneficiaries to direct The Secretary would establish the their own health care needs and services. demonstrations located in an urban area, a In designing the demonstrations, the rural area, and an area that has a Medicare Secretary is required to evaluate practices population with a diabetes rate that used by group health plans and practices significantly exceeds the national average under State Medicaid programs that permit rate within 2 years of enactment. The patients to self-direct the provision of Secretary would evaluate and submit personal care services and to determine the reports to Congress on the cost and clinical appropriate scope of personal care services effectiveness of the projects biannually that apply under the demonstration beginning 2 years after their start. projects. Require Institute of Medicine (IOM) No provision. No provision. Section 723. The Secretary would report related to chronic conditions. No contract with the IOM to study the barriers provision in current law. to effective integrated care improvement across settings and over time for beneficiaries with multiple or severe chronic conditions in transition from one setting to another. Require MedPAC report related to No provision. No provision. Section 724. MedPAC would evaluate the chronic care improvement program. No chronic care improvement program provision in current law. established in Section 721. The evaluation would include a description of the status of the implementation of the program, the quality of health care services provided to individuals participating in the program, and the cost savings attributed to the implementation of the program. CRS-75 Medicare Secondary Payor (MSP). Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Modify MSP provisions. In certain Section 301. The provision clarifies that Section 461. The provision would clarify Section 301. Same provision. instances, Medicare is prohibited from the Secretary can make a conditional that the Secretary could make a conditional making payment for a health care claim if payment if a primary plan did not make a payment if a primary plan did not make a payment is expected to be made promptly prompt payment or could not have prompt payment or could not have by a primary plan. The definition of a reasonably been expected to make a reasonably been expected to make a primary plan includes a workmen's prompt payment (as determined by prompt payment (as determined by compensation law or plan, under regulations). Payment is contingent on regulations). Payment would be automobile or liability insurance (including reimbursement by the primary plan to the contingent on reimbursement by the a self-insured plan) or under no-fault Medicare Trust Funds. An entity engaging primary plan to the Medicare Trust Funds. insurance on behalf of a beneficiary. in a business, trade, or profession is An entity engaging in a business, trade, or deemed as having a self-insured plan if it profession would be deemed as having a carried its own risk. Failure to obtain self-insured plan if it carried its own risk. insurance is considered evidence of Failure to obtain insurance would be carrying risk. considered evidence of carrying risk. Extend MSP rules for individuals with No provision. Section 450F. This provision would No provision. end-stage renal disease (ESRD). The extend the limited time period that MSP provisions apply to group health employer health plans are primary payer plans for the working aged, large group for beneficiaries with end-stage renal health plans for the disabled, and, for 30 disease to 36 months. months, employer health plans for the ESRD population. Revise Medicare secondary payor Section 943. The Secretary is not No provision. Section 943. The Secretary would not be requirements for diagnostic laboratory permitted to require that a hospital obtain able to require that a hospital obtain services. In certain instances when a information on other insurance coverage information on other insurance coverage beneficiary has other insurance coverage, for reference laboratory services, if such for reference laboratory services, if the Medicare becomes the secondary requirements are not imposed in the case Secretary does not impose such insurance. An entity furnishing a Part B of services furnished by independent requirements in the case of services service is required to obtain information laboratories. furnished by independent laboratories. from the beneficiary on whether other insurance coverage is available. CRS-76 Other Medicare A and B Provisions. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish self-referral exemption for Section 431. Remuneration between a No provision. Section 412. Remuneration between a certain arrangements in underserved public or non-profit private health center public or non-profit private health center areas. People who knowingly and and an entity providing goods or services and an entity providing goods or services willfully offer or pay a kickback, a bribe, to the health center is not a violation of the to the health center would not be a or rebate to directly or indirectly induce anti-kickback statute if such an agreement violation of the anti-kickback statute if referrals or the provision of services under would contribute to the ability of the health such an agreement would contribute to the a federal program may be subject to center to maintain or increase the ability of the health center to maintain or financial penalties and imprisonment. availability or quality of services provided increase the availability or quality of Certain exceptions or safe harbors that are to a medically underserved population. services provided to a medically not considered violations of the anti- The Secretary is required to establish underserved population. The Secretary kickback statute have been established. standards, on an expedited basis, related to would be required to establish standards, this safe harbor with final regulations due on an expedited basis, related to this safe within 1 year from enactment. harbor with final regulations due within 1 year from enactment. CHECK. Change self-referral provision as applied Section 507. The exception for physician Section 453. The exception for physician Section 505. MedPAC would be required to specialty hospitals. Physicians are investment and self-referral will not extend investment and self-referral would not to conduct a study of specialty hospitals generally prohibited from referring to specialty hospitals for 18 months from extend to specialty hospitals. In this compared with other similar general acute Medicare patients to facilities in which the enactment date. A specialty hospital is instance, a specialty hospital would be one hospitals and report to Congress, including they (or their immediate family member) one that primarily or exclusively treats that is primarily or exclusively engaged in recommendations, no later than 1 year have financial interests. Physicians, patients with a cardiac condition, an the cardiac, orthopedic, surgical care, or from enactment. however, are not prohibited from referring orthopedic condition, those receiving a other specialized categories of patients or patients to hospitals where they have surgical procedure, or other cases that the cases deemed appropriate. A specialty ownership or investment interest in the Secretary designates. A specialty hospital hospital would not include any hospital whole hospital itself (and not merely in a does not include any hospital that is that is determined by the Secretary to be in subdivision of the hospital). Certain rural determined by the Secretary to be in operation before June 12, 2003, under providers that provide substantially all of operation or under development as of development as of such date, with the same the designated health services to November 18, 2003, with the same number number of beds and physician investors as individuals residing in the rural area are of physician investors, categories of care, of such date. The Secretary would also exempt from the self-referral or limited increase in beds as of such date. consider certain factors in determining restriction Certain factors, such as whether whether a hospital is under development. architectural plans are done, will be The rural provider exception would be considered when determining whether a modified. These rural providers would not hospital is under development. During this include specialty hospitals and the 18-month period, the exception will apply Secretary would determine, with respect to CRS-77 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) if substantially all of the designated the entity, that such services would not be services provided by the entity are available in such area but for the furnished to individuals residing in the ownership or investment interest. rural area and the entity is not a specialty hospital as defined previously. Reports from MedPAC and the Secretary on various aspects of specialty hospitals are due to Congress within 15 months of enactment. Cha ng e in na t io nal coverage Section 731. The Secretary is required to Section 458. The provision would Section 733. Similar provision. The determination process to respond to make public the factors considered in establish the following time frame for routine costs of care for Medicare changes in technology. The Secretary has making national coverage determinations. national coverage determinations -- 6 beneficiaries participating in clinical trials established procedures and timeframes for The following time frame for national months when a technology assessment is that are conducted in accordance with an making national coverage decisions. coverage determinations is established -- not required and 9 months when a investigational device exemption approved 6 months when a technology assessment is technology assessment is required and in under Section 530(g) of the Federal Food, not required and 9 months when a which a clinical trial is not requested. Drug, and Cosmetic Act would be covered. technology assessment is required and in After the 6- or 9-month period, the draft Also, the Secretary would be required to which a clinical trial is not requested. proposed decision would be available on implement revised procedures for the After the 6- or 9-month period, the draft the HHS website or by other means to issuance of temporary national HCPCS proposed decision is to be available on the provide a 30-day public comment period. codes by January 1, 2004. HHS website or by other means to provide The final decision on the request must be a 30-day public comment period. The made 60 days following the end of the final decision on the request must be made public comment period. 60 days following the end of the public comment period. The Secretary is prohibited from excluding from Medicare coverage the routine costs of care incurred by a Medicare beneficiary participating in a category A clinical trial, beginning with routine costs incurred on and after January 1, 2005. This provision does not apply to, or affect, Medicare coverage or payment for a non- experimental/investigational (category B) CRS-78 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) device. Also, the Secretary is required to implement revised procedures for the issuance of temporary national HCPCS codes by July 1, 2004. Publish annual list of national coverage Section 953(b). The Secretary is required No provision. Section 953(b). The Secretary would determinations. The CMS website to publish an annual list of national publish an annual list of national coverage provides public information about coverage determinations made under determinations made under Medicare in decisions in the national coverage process. Medicare in the previous year. the previous year. Information on how to Information on how to get more get more information about the information about the determinations is determinations would be included. The list required to be included in the publication. would be published in an appropriate The list and the information is required to annual publication that is publically be published in an appropriate annual available. publication that is publically available Establish pancreatic islet cell transplant Section 733. The Secretary, acting through Section 462. The Secretary would be Section 735. Medicare would be required demonstration project. No explicit the National Institute of Diabetes and required to establish a 5-year to pay the routine costs for items and statutory authorization. Under existing Digestive and Kidney Disorders, is demonstration project to pay for pancreatic services that beneficiaries receive as part authorities, Medicare covers the routine required to conduct a clinical investigation islet cell transplantation and related items of a clinical investigation of pancreatic costs of qualifying clinical trials which of pancreatic islet cell transplantation and services for Medicare beneficiaries islet cell transplants conducted by the includes items or services typically which includes Medicare beneficiaries. who have type 1 diabetes and end-stage National Institute of Health. The provided absent a clinical trial and items or Beginning no earlier than October 1, 2004, renal disease. transplant would not be covered. services needed for the diagnosis or the Secretary is required to pay for the treatment of complications. Routine costs routine costs as well as transplantation and include items and services that are appropriate related items and services for typically provided absent a clinical trial Medicare beneficiaries who are (such as conventional care) and needed for participating in such a trial or a trial reasonable and necessary care (such as investigating organ or tissue diagnosis or treatment of complications) transplantation for which the Secretary has that arises from the provision of an made a non-coverage decision. investigational item or service. Medicare does not pay for certain aspects of the clinical trial including: the investigational item or service, items and services not used in the direct clinical management of the CRS-79 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) patient, and items and services customarily provided by the research sponsor free of charge for any enrollee in the trial. Establish funding for consumer No provision. (A beneficiary ombudsman Section 606. A Consumer Ombudsman No provision. ombudsman The Omnibus Budget is established in section 923.) Account would be established in the Reconciliation Act of 1990 established Medicare Trust Fund and $1 for every State Health Insurance Counseling Medicare beneficiary would be Assistance grants to states to provide appropriated to the account from the Trust education and information to Medicare Fund beginning with fiscal year 2005. The beneficiaries. Funding has been subject to account would be used to make grants to annual appropriations. State Health Insurance Counseling Programs. Increase funding for the Health Care No provision. Section 611. Additional appropriations to No provision. Fraud and Abuse Control (HCFAC) HCFAC would be authorized. In FY2004, Program and the HHS-IG The Health the increase would be $10 million over the Insurance Portability and Accountability FY2003 appropriation limit; in FY2005 the Act of 1996 (HIPAA, PL.104-91) increase would be $15 million over the established the HCFAC Program which is FY2003 limit; in FY2006 the increase administered by the HHS-OIG and the would be $25 million above the FY2003 Department of Justice. Funds for the limit. Subsequent years' appropriations HCFAC program are appropriated from would be at the 2003 limit. The HHS-OIG the Federal Hospital Insurance Trust Fund. earmarked appropriations would increase HIPAA provided for annual increases of as well: to $170 million in FY2004, $175 15% in HCFAC funding through 2003, million in FY2005, $185 million in after which the appropriation for HCFAC FY2006. In subsequent years, it would be and the amount earmarked for HHS-OIG not less than $150 million and not more remains the same. In FY2003 the available than $160 million. a p p r o p r iatio n for HCFAC was $240,558,320 of which $150 million to $160 million was available to the HHS- OIG. CRS-80 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Increase the civil monetary penalties in No provision. Section 612. For violations occurring No provision. the False Claims Act The False Claims beginning January 1, 2004, the minimum Act imposes a liability on those who amount of the civil penalty would be knowingly present or cause to be increased from $5,000 to $7,500 and the presented a false or fraudulent claim for maximum amount would increase from payment by the government. In certain $10,000 to $15,000. instances, the person may be liable for a civil penalty of not less than $5,000 and not more than $10,000, plus treble damages. Increase the civil monetary penalties No provision. Section 613. The amount of penalties No provision. (CMP) in the Social Security Act OIG would be increased for violations that has the authority to impose CMPs on any occur beginning January 1, 2004. person (including an organization or other Penalties that are limited to $10,000 would entity, but not a beneficiary) who be increased to $12,500; those penalties knowingly presents, or causes to be that are limited to $15,000 would be presented, to a state or federal government increased to $18,750; and those that are employee or agent, certain false or limited to $50,000 would be increased to improper claims for medical or other items $62,500. or services. CMPs may also be imposed for other fraudulent activities such as inflating charges or soliciting remuneration to influence the provision of services. Depending upon the violation, Section 1128A of the SSA authorizes CMPs up to $10,000 for each item or service, up to $15,000 for individuals who provide false or misleading information in certain instances, and up to $50,000 per act in other instances as well as treble damages. Require MedPAC to examine financial Section 735. MedPAC is to examine the No provision. Section 731. MedPAC would be required consequences associated with its budgetary consequences of a to examine the budgetary consequences of recomme n d a t i o n s a n d other recommendation before making the a recommendation and review the factors requirements. The Medicare Payment recommendation and to review the factors affecting the efficient provision of CRS-81 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Advisory Commission is a 17-member affecting the efficient provision of expenditures for services in different b o d y that r ep o r ts and makes expenditures for services in different health care sectors. Two additional recommendations to Congress regarding health care sectors under Medicare fee-for- MedPAC reports would be submitted no Medicare payment policies. GAO is service. GAO is required to appoint experts later than June 1, 2004: the first would required to establish a public disclosure in the area of pharmaco-economics or study the solvency and financial system for Commissioners to disclose prescription drug benefit programs to circumstances of hospitals and other financial and other potential conflicts of MedPAC. In addition, members of the Medicare providers, including interest. Commission are required to be treated as uncompensated care accounted for by the employees of Congress for purposes of treatment of illegal aliens; the second financial disclosure requirements and GAO would address investments, capital is required to ensure compliance with this financing and access to capital of hospitals requirement. participating under Medicare. Members of the Commission would be treated as employees of Congress for purposes of financial disclosure requirements. Change Emergency Medical Treatment Section 944. Emergency room services No provision. Section 944. For EMTALA-required and Active Labor Act (EMTALA) provided to screen and stabilize a Medicare services provided to a Medicare requirements. Medicare participating beneficiary furnished after January 1, beneficiary, determinations about medical hospitals that operate an emergency room 2004, are required to be evaluated for necessity would be required to be made on (ER) are required to provide necessary Medicare's "reasonable and necessary" the basis of the information available to the screening and stabilization services to any requirement on the basis of the information treating physician or practitioner at the patient who comes to an ER requesting available to the treating physician or time the item or service was ordered or examination or treatment for a medical practitioner at the time the services were furnished and not on the patient's principal condition, in order to determine whether an ordered. The Secretary is required to diagnosis. The Secretary would establish a emergency medical situation exists. establish a procedure to notify hospitals procedure to notify hospitals and Hospitals found in violation of EMTALA and physicians when an EMTALA p h ys i c i a n s when an EMT ALA may face civil money penalties and investigation is closed. Except in the case investigation is closed. Except where a termination of their provider agreement. where a delay would jeopardize the health delay would jeopardize the health and and safety of individuals, the Secretary is safety of individuals, the Secretary would required to request a peer review be required to request a PRO review before organization (PRO) review before making making a determination to terminate a a compliance determination that would hospital's Medicare participation because terminate a hospital's Medicare of an EMTALA violation. Other participation because of an EMTALA requirements would apply. violation. Other requirements would apply. CRS-82 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish an EMTALA technical Section 945. The Secretary is required to No provision. Section 945. The Secretary would be advisory group. No explicit statutory establish a technical advisory group required to establish a technical advisory instruction. comprised of the CMS Administrator, the group comprised o f the CMS HHS-IG of HHS, hospital, physician and Administrator, the HHS-IG of HHS, patient representatives, CMS staff hospital, physician and patient investigating EMTALA cases and a state representatives, CMS staff investigating survey office representative to review EMTALA cases and a state survey office issues related to EMTALA. representative to review issues related to EMTALA. Permit the Secretary to waive a Section 949. The Secretary is permitted to Section 544. The Secretary would be Section 949. Same provision. program exclusion. The Secretary has the waive a program exclusion at the request permitted to waive a program exclusion at authority to waive exclusion from of an administrator of a federal health care the request of an administrator of a federal participation in any Federal health program program (which includes state health care health care program (which includes state when the provider is the sole source of care programs). health care programs). in a community, at the request of a state. Medicare Demonstration Projects and Studies. Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Demonstration Projects Establish demonstration project to Section 702. A 2-year demonstration Section 450. The Secretary would Section 704. Same provision. clarify definition of homebound. A project where beneficiaries enrolled in establish a 2-year demonstration project Medicare beneficiary must be confined to Medicare Part B with a permanent and where beneficiaries with chronic the home (or homebound) in addition to severe disabling condition and with conditions would be deemed to be other criteria in order to qualify for the specified care needs would be deemed to homebound in order to receive home home health benefit. be homebound in order to receive home health services under Medicare. health services under Medicare. The number of participants is limited to 15,000. CRS-83 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish health care quality Section 646. The Secretary is required to Section 441. The Secretary would be No provision. demonstration projects. No provision in establish a 5-year demonstration program required to establish a 5-year, budget current law. that examines factors that encourage neutral demonstration program that improved patient care quality, including examines the health delivery factors which incentives to improve the safety of care; encourage the delivery of improved quality examination of service variation and patient care. outcomes measurement; shared decision making between providers and patients; among others. Under this program, certain physician groups, integrated health care delivery systems, or regional coalitions may implement alternative payment systems, streamline documentation and reporting requirements, and offer benefit packages distinct from those currently available under the Medicare program. This program is subject to budget- neutrality requirements. Establish adult day care demonstration Section 703. A demonstration project is Section 454. A demonstration project Section 732. Same provision. project. No provision in current law. required where a HHA, directly or under under which a home health agency, arrangement with a medical adult day care directly or under arrangement with a facility, will provide medical adult day medical adult day care facility, would care services as a substitute for a portion of provide medical adult day care services as home health services otherwise provided in a substitute for a portion of home health a beneficiary's home. services otherwise provided in a beneficiary's home would be established. Establish complex clinical care Section 721. The Secretary is required to Section 442. The Secretary would be Section 721. Chronic care improvement improvement program. No provision in establish and implement chronic care required to establish a 3-year budget services to certain beneficiaries with current law. improvement programs for Medicare fee- neutral demonstration program to promote chronic conditions would be provided as a for-service (not a demonstration). The continuity of care, help stabilize medical Medicare benefit, not a demonstration programs must be designed to improve conditions, prevent or minimize acute project. clinical quality and beneficiary satisfaction exacerbations of chronic conditions, and and achieve spending targets for Medicare reduce adverse health outcomes before CRS-84 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) beneficiaries with certain chronic health October 1, 2004. Six sites would be conditions. designated for the demonstration, three in urban areas and at least one in a rural area. One site would be required to be located in Arkansas. The Secretary would pay each principal care physician a monthly management fee developed by the Secretary that would be the full payment for all the functions performed. Establish MA chronic care improvement Section 722. Each Medicare Advantage Section 443. The Secretary would be Section 722. Comparable services to program. No provision in current law. organization is required to have an on- required to establish a 5-year, budget beneficiaries in MedicareAdvantage and going quality improvement program for neutral demonstration program that uses Enhanced FFS would be established as a improving the quality of care provided to qualified care management organizations Medicare benefit, not as a demonstration enrollees (except for private fee-for-service to provide health risk assessment and care project. plans or MSA plans) effective for contract management services to high-risk years beginning January 1, 2006. As part Medicare beneficiaries including those of the quality improvement program, each with multiple sclerosis or other disabling MA organization is required to have a chronic conditions, nursing home residents chronic care improvement program. Each (or those at risk for placement), or high- chronic care improvement program is risk, dual-eligible beneficiaries. required to have a method for monitoring and identifying enrollees with multiple or sufficiently severe chronic conditions that meet criteria established by the organization for participation under the program. Establish frontier extended stay clinic Section 434. The Secretary is to conduct Section 457. The Secretary would conduct No provision. demonstration project. No provision in a 3-year budget-neutral demonstration a 3-year demonstration project that would current law. project that treats frontier extended stay treat frontier extended stay clinics as a clinics as Medicare providers. A frontier Medicare provider. A frontier extended extended stay clinic is one that is located in stay clinic is one that is located in a a community where the closest acute care community where the closest acute care hospital or critical access hospital is at hospital or critical access hospital is at least 75 miles away or is inaccessible by least 75 miles away or is inaccessible by CRS-85 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) public road and is designed to address the public road and is designed to address the needs of seriously or critically ill or injured needs of seriously or critically ill or injured patients who, due to adverse weather patients who, due to adverse weather conditions or other reasons, cannot be conditions or other reasons, cannot be transferred quickly to acute care referral transferred quickly to acute care referral centers; or patients who need monitoring centers; or patients who need monitoring and observation for a limited period of and observation for a limited period of time. A report to Congress from the time. [Duplicate provision at Section 460]. Secretary is due within 1 year of the project's conclusion. Establish chiropractor demonstration Section 651. Requires the Secretary to Section 440. The Secretary would No provision. project. No specific provision with establish a 2-year demonstration project to establish a 3-year budget neutral respect to a demonstration project. evaluate the feasibility and advisability of demonstration program at 6 sites to Medicare covers limited chiropractic covering additional chiropractic services evaluate the feasibility and desirability of services, specifically manual manipulation under Medicare in 4 sites. covering additional chiropractic services for correction of a subluxation. under the Medicare program. Physical therapy service demonstration Section 647. MedPAC is required to study Section 449. The Secretary would be Section 624. The GAO would be required project . No provision in current law. the feasibility and advisability of allowing required to establish a budget neutral 3- to conduct a study of patient access to Medicare beneficiaries in fee-for-service year demonstration project in at least five physical therapist services in states direct access to outpatient physical therapy states to examine the costs and patient authorizing such services without a services and those physical therapy satisfaction associated with allowing physician referral compared to that in services that are furnished as Medicare fee-for-service beneficiaries states requiring such referral. The study comprehensive rehabilitation facility direct access to outpatient physical therapy would be due to Congress within 1 month services. For the purposes of the study, services and comprehensive outpatient of enactment. direct access is defined as access to rehabilitation facility (CORF) services. In physical therapy services without the this instance, the beneficiary would not be requirement that beneficiaries be under the required to be under the care of or referred care of, or referred by, a physician. by a physician to receive physical therapy Further, the services provided are not services. required to be under the supervision of a physician. The study is due by January 1, 2005. CRS-86 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish certified registered nurses as Section 643. MedPAC is required to study Section 450I. The Secretary would be No provision. surgical first assistants demonstration the feasibility and advisability of Medicare required to conduct a 3-year budget neutral project. No provision in current law. Part B payment for surgical first assisting demonstration in five states that would pay services furnished by a certified registered for "surgical first assisting services" to nurse first assistants to Medicare Medicare beneficiaries furnished by a beneficiaries. The report is due by January certified registered nurse first assistant. 1, 2005. Section 644. MedPAC is required to study the practice expense relative values in the Medicare physician fee schedule for the specialty of thoracic surgery to determine whether such values adequately take into account the attendant costs of nurse assistants at surgery. The study is due by January 1, 2005. Establish weight loss program No provision. Section 450L. The Secretary would be No provision. demonstration project. No provision in required to establish a demonstration current law. Medicare covers medical project that would provide group weight nutrition therapy services for beneficiaries loss management services for Medicare with diabetes or renal disease who (1) have beneficiaries who are obese and have not received diabetes outpatient self- impaired glucose tolerance and who have management training services within a been diagnosed and referred by a physician time period to be determined by the for assessment and treatment based on Secretary, (2) are not receiving individual needs to a specific program or maintenance dialysis, and (3) meet other method that has demonstrated efficacy to criteria that will be established. Nutrition produce and maintain weight loss through therapy services are nutritional diagnostic, results published in peer-reviewed therapy, and counseling services for the scientific journals. Services include current purpose of disease management. The body weight measurement and recording services must be provided by a registered of weight status at each meeting session; dietitian or nutritional professional provision of a healthy eating plan; pursuant to a referral by a physician. provision of an activity plan; provision of Payment is based on the lower of actual a behavior modification plan; and a weekly charges or 85% of the physician fee group support meeting. schedule on an assignment-related basis. CRS-87 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Extend the telehealth project at Section 417. The demonstration project No provision. Section 415. The demonstration project Columbia University consortium. BBA will be extended for 4 years and total would be extended for 4 years and total 1997 established a single 4-year funding will be increased from $30 million funding would be increased from $30 demonstration project where an eligible to $60 million. million to $60 million. health care provider telemedicine network would use high-capacity computer systems and medical infomatics to improve primary care and prevent health complications in Medicare beneficiaries with diabetes mellitus. Extend the municipal demonstration No provision. Section 618. Demonstration projects Section 236. Demonstration projects projects Under the Consolidated Omnibus would be extended until December 31, would be extended until December 31, Budget Reconciliation Act of 1985, as 2006, for individuals who reside in the city 2009, for individuals who reside in the city amended, the Municipal Health Service in which the project is operated. in which the project is operated. Demonstration projects will expire on December 31, 2004. The project is a multi- site demonstration intended to improve access to primary care services in underserved urban areas and to reduce the cost of health care. BBA 1997 authorized the Secretary to extend the project through December 31, 2000, but only with respect to persons who had received at least one service for the period of January 1, 1996- August 7, 1997 (the enactment date of BBA 97). Sites that wanted the demonstration project extended were required to submit plans for the orderly transition of participants to a non- demonstration health care delivery system. Subsequent legislation extended the project through December 31, 2004. CRS-88 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Establish consumer directed chronic Section 648. The Secretary is required to No provision. Section 736. The Secretary would outpatient services demonstration establish no fewer than 3 demonstration establish no fewer than three project. No provision. Medicare coverage projects that evaluate methods to improve demonstration projects to evaluate method requires that a beneficiary need medically the quality of care provided to Medicare to improve the care and reduce the cost of necessary care. In general, Medicare pays beneficiaries with chronic conditions and care provided to Medicare beneficiaries the provider that delivers skilled health that reduce expenditures that would with chronic conditions including methods care services. otherwise be made on their behalf by that would permit beneficiaries to direct Medicare. The methods are required to their own health care needs and services. include permitting beneficiaries to direct The Secretary would establish the their own health care needs and services. demonstrations located in an urban area, a In designing the demonstrations, the rural area, and an area that has a Medicare Secretary is required to evaluate practices population with a diabetes rate that used by group health plans and practices significantly exceeds the national average under State Medicaid programs that permit rate within 2 years of enactment. The patients to self-direct the provision of Secretary would evaluate and submit personal care services and to determine the reports to Congress on the cost and clinical appropriate scope of personal care services effectiveness of the projects biannually that apply under the demonstration beginning 2 years after their start. projects. Required Studies Require MedPAC study on home health Section 705. MedPAC is required to study No provision. Section 703. MedPAC would study agency (HHA) margins No provision in payment margins of HHAs paid under payment margins of home health agencies current law. PPS, to examine whether systematic paid under PPS to examine whether differences in payment margins are related systematic differences in payment margins to differences in case mix, as measured by were related to differences in case mix, as home health resource groups (HHRGs), measured by HHRGs. among agencies. Require Institute of Medicine (IOM) No provision. No provision. Section 723. The Secretary would report related to chronic conditions No contract with the IOM to study the barriers provision in current law. to effective integrated care improvement for Medicare beneficiaries with multiple or severe chronic conditions across settings and over time. The study would examine CRS-89 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) the statutory and regulatory barriers to coordinating care across settings for Medicare beneficiaries in transition from one setting to another. Require MedPAC report related to No provision. No provision. Section 724. MedPAC would evaluate the chronic care improvement program No chronic care improvement program provision in current law. established in Section 721. The evaluation would include a description of the status of the implementation of the program, the quality of health care services provided to individuals participating in the program, and the cost savings attributed to the implementation of the program. Require GAO study on impact of assets Section 107(e). GAO is required to Section 607. GAO would determine the No provision. test on low-income beneficiaries. No determine the extent to which drug extent to which drug utilization and access provision in current law. utilization and access to covered drugs to covered drugs differs between: (1) differs between: (1) individuals who individuals who qualify for the transitional qualify as subsidy eligible individuals, and assistance prescription drug card program (2) individuals who do not qualify for this or for subsidies available to certain low- type of assistance solely because of an income beneficiaries and (2) individuals assets test. The final report (including who do not qualify for these types of recommendations for legislation) is due no assistance solely because of an assets test later than September 30, 2007. to the income eligibility requirements of such individuals. The final report ( including recommendations for legislation) would be due no later than September 30, 2007. Require MedPAC study on Medicare No provision. Section 455. MedPAC is required to No provision. payments and efficiencies in the health recommend to Congress ways to recognize care system No provision in current law. and reward the practice of medicine in historically efficient and low-cost areas. The recommendations would be made within established Medicare payment methods for hospitals and physicians. CRS-90 Beneficiary Issues: Cost-Sharing Amounts and Provision of Information Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Beneficiary Cost-Sharing Amounts Indexing Part B deductible to inflation. Section 629. The Medicare Part B Section 433. The Medicare Part B Section 628. Starting January 1, 2004, the Under Part B, Medicare generally pays deductible will remain $100 through 2004. deductible would be set at $100 through Medicare Part B deductible would be 80% of the approved amount for covered The deductible will be $110 for 2005, and 2005 and then increased to $125 in 2006. increased by the same percentage as the services after the beneficiary pays an in subsequent years the deductible will be Effective January 1 of subsequent years, Part B premium increase. Specifically, the annual deductible of $100. The Part B increased by the same percentage as the the deductible would be increased annually annual percentage increase in the monthly deductible has been $100 since 1991. Part B premium increase, rounded to the by the percentage change in the CPI-U for actuarial value of benefits payable from the nearest dollar. the previous year ending in June. The Federal Supplementary Medical Insurance amount would be rounded to the nearest Trust Fund would be used as the update. dollar. The amount would be rounded to the nearest dollar. Income-relating the Part B premium. Section 811. The Part B premiums for No provision. No provision. Beneficiaries pay a monthly Part B higher income enrollees will be increased premium equal to 25% of program costs. beginning in 2007. Individuals whose The remaining 75% is financed from modified adjusted gross income exceeds federal general revenues. The premium $80,000 and couples filing joint returns amount is the same for all enrollees. In whose modified adjusted gross income general, the premium amount is subtracted exceeds $160,000 will be subject to higher from the beneficiary's social security premium amounts. The increase will be check. A beneficiary's social security calculated on a sliding scale basis and be check can not go down from one year to phased-in over a five-year period. The the next as a result of the annual Part B prohibition against a drop in an premium increase. individual's social security check will not apply to this population group. Waive Part B enrollment fee for certain Section 625. The late enrollment penalty Section 439. Beginning January 2005, the Medicare beneficiaries who are military is waived for certain military retirees who late enrollment penalty would be waived retirees. A late enrollment penalty is enrolled in part B during 2001, 2002, for certain military retirees who enrolled in required to be imposed on beneficiaries 2003, or 2004. The Secretary is required to Part B during, 2002, 2003, 2004 or 2005 who do not enroll in Medicare part B upon provide a special Part B enrollment period and a special enrollment period, beginning becoming eligible for Medicare. for these military retirees beginning as 1 year after enactment and ending soon as possible after enactment and December 31, 2005, would be ending December 31, 2004. The provision provided.Section 627. Similar provision, CRS-91 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) applies to premiums for months beginning except that the waiver would apply January 2004. The Secretary is required to beginning January 1, 2004, and the special rebate premium penalties paid for months enrollment period would begin as soon as on or after January 2004 for which a possible after enactment and end penalty does not apply as a result of this December 31, 2004. provision, but for which a penalty was collected. Establish beneficiary cost-sharing for No provision. No provision. Section 702. A beneficiary copayment for home health services. The home health each 60-day episode of care beginning benefit does not have any cost-sharing January 1, 2004 would be established. The requirement. copayment amount would be 1.5% of the national average payment per episode in a calendar year, rounded to the nearest multiple of $5. For 2004, the copayment would be $40 unless otherwise calculated on a timely basis by the Secretary. Medicare payments would be reduced to reflect copayments. Qualified Medicare beneficiaries, beneficiaries dually eligible for Medicare and Medicaid, and beneficiaries receiving four or fewer home health visits in an episode of care would not face any cost-sharing requirements. Administrative and judicial review of the calculated copayment amounts would be prohibited. Establish beneficiary cost-sharing for No provision. Section 431. Beginning January 1, 2004, No provision. clinical diagnostic services not provided Medicare would pay all clinical by a sole community hospital. Medicare laboratories 80% of the applicable fee pays laboratories directly for laboratory schedule amount. Hospital-based, services provided to ambulatory patients in physician office and independent an outpatient setting. Clinical lab services laboratories would be able to charge are paid on the basis of area-wide fee beneficiaries a 20% coinsurance amount. CRS-92 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) schedules. The fee schedule amounts are The Medicare Part B deductible would periodically updated. Assignment is apply to clinical diagnostic laboratory tests mandatory. No beneficiary cost-sharing is furnished across all settings. SCHs would imposed. be exempt from this provision. (see Section 427). Waive deductible for colorectal cancer No provision. No provision. Section 613. The Part B deductible would screening tests. Unless otherwise be waived for colorectal cancer screening specified, Part B services are subject to tests. beneficiary cost-sharing amounts, including an annual deductible and coinsurance amount. Provision of Information to Beneficiaries Include additional information in notices Section 925. Beneficiary notices for those Section 551. Beneficiary notices for those Section 925. Similar provision. Would to beneficiaries about SNF and hospital beneficiaries in SNFs are required to beneficiaries in SNFs and hospital would require information for beneficiaries in a benefits. Although the statute requires that include information about the number of be required to include information about SNF stay only. beneficiaries receive a statement listing the days of coverage remaining under the SNF the number of days of coverage remaining items and services for which payment has benefit and the spell of illness involved. under the SNF benefit and the spell of been made, there is no explicit statutory illness involved. instruction that requires the notice to include information about the number of days of coverage remaining in either the hospital or SNF benefit. Provide information on Medicare- Section 926. The Secretary is required to Section 552. The Secretary would be Section 926. Same provision. certified SNF in hospital discharge make information publicly available required to make information publically plans. The hospital discharge planning regarding whether SNFs are participating available regarding whether SNFs were process requires evaluation of a patient's in the Medicare program. Hospital participating in the Medicare program. likely need for post-hospital services discharge planning is required to evaluate Hospital discharge planning would be including hospice and home care. a patient's need for SNF care. required to include evaluating a patient's need for SNF care. CRS-93 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Require information on advance No provision. Section 616. The Secretary would be No provision. directives. Information about advance required to provide information on directives is required to be given to advance directives in the Medicare and patients in hospitals, skilled nursing You handbook. The information would be facilities, and served by home health required to be presented in a separate agencies. The Secretary is required to section on advance directives and would provide Medicare beneficiaries annual include specific information about living information about Medicare benefits, wills and durable power of attorney for limitations on payment, and a description health care. The Secretary would further be of the limited benefits for long-term care. required to note the inclusion of this This information is provided to Medicare information in the introductory letter that beneficiaries in the Medicare and You accompanies the handbook. handbook that is mailed annually to all beneficiaries. Require OIG report on notices No provision. No provision. Section 953(d). The OIG would report to concerning use of hospital lifetime Congress on the extent to which hospitals reserve days. No provision in current law. provide notice to Medicare beneficiaries, in accordance with applicable requirements, before they use the 60 lifetime reserve days under the hospital benefit as well as the appropriateness and feasibility of hospitals providing a notice to beneficiaries before they exhaust the lifetime reserve days. The report would be due no later than 1 year after enactment. CRS-94 Other Health-Related Studies, Commissions or Committees Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Pay emergency health services provided Section 1011. The bill appropriates $250 Section 610. $250 million in additional No provision. to undocumented aliens BBA 1997 million in additional federal funding for federal funding for emergency health provided $25 million in funding for state emergency health services furnished to services furnished to undocumented aliens emergency health services furnished to undocumented aliens for each year from would be appropriated for each year from undocumented aliens for each of FY1998 FY2005-FY2008. Of this amount, $167 FY2005-FY2008. Of this amount, $167 through 2001. Funds were distributed million will be allocated among eligible million would be allocated among all states among the 12 states with the highest providers in all states according to a according to a specified formula, the number of undocumented aliens. In a specified formula, the remaining money remaining money would be distributed to fiscal year, each state's portion of the total will be distributed among eligible the six states with the highest number of funds available was based on its share of providers in the six states with the highest undocumented alien apprehensions for total undocumented aliens in all of the number of undocumented alien such fiscal year according to specified eligible states based on the estimates apprehensions for such fiscal year formulas. Other provisions would apply. provided by the Immigration and according to a specified formula. Naturalization Service (INS). From the $250 million in state allotments described above, the Secretary will pay directly to eligible providers for unreimbursed costs incurred by providing emergency health care services during that fiscal year to certain specified groups of undocumented aliens. The Secretary shall determine the payment amount for each eligible provider and if necessary will reduce the amount of payment to eligible providers to ensure that each eligible provider is paid. Other provisions would also apply and funds will remain available until they are expended. The provision will be effective upon enactment. Commission of systematic Section 1012. The Secretary is required to No provision. No provision. interoperability. No provision in current establish a Commission on Systemic law. Interoperability to develop a comprehensive strategy for the adoption CRS-95 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) and implementation of health care information technology standards. Members of the Commission are to be appointed by the President, the Senate Majority and Minority Leaders, and the House Speaker and Minority Leader. In developing its strategy, the Commission must consider the costs and benefits of the standards, the current demand on industry resources to implement these and other electronic standards (including the HIPAA Administrative Simplification standards), and the most cost-effective and efficient means for industry to implement the standards. Not later than October 31, 2005, the Commission must submit a report to the Secretary and the Congress describing its strategy. The Commission shall terminate 30 days after submitting its report to the Secretary and the Congress. The bill authorizes to be appropriated such sums as may be necessary to carry out this Section. Research on outcomes of health care Section 1013. The bill authorizes and No provision. No provision. items and services. The Agency for appropriates $50 million for the Secretary Healthcare Research and Quality (AHRQ) through the Agency for Healthcare is an agency within the Department of Research and Quality to conduct research Health and Human Services. AHRQ's to address the scientific information needs mission is to support, conduct, and and priorities identified by the Medicare, disseminate research that improves access Medicaid, and State Children Health to care an the outcomes, quality, cost, and Insurance Programs. The information utilization of health care services. needs and priorities will relate to the clinical effectiveness and appropriateness of specified health services and treatments, and the health outcomes associated with CRS-96 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) such services and treatments. The needs and priorities also will address strategies for improving the efficiency and effectiveness of those health care programs. Express sense of the Senate that the No provision. Section 617. The provision expresses a No provision. Senate Finance Committee should hold sense of the Senate that the Committee on meeting to monitor the implementation Finance should hold at least four hearings of this legislation. No provision in current to monitor implementation of the law. Prescription Drug and Medicare Improvement Act of 2003. The first hearing should be held within 60 days after enactment of the Act, the remaining hearings should be held May 2004, October 2004, and May 2005. Require study on making prescription No provision. Section 619. The Secretary would study No provision. drug information accessible to the sight how to make prescription drug impaired. No provision in current law. information, including drug labels and usage instructions, accessible to blind and visually impaired individuals with a report due within 18 months of enactment. Establish citizens' health care working Section 1014. The bill authorizes the Section 620. The Secretary would use the No provision. group. No provision in current law. Secretary of HHS, acting through the Agency for Healthcare Research and Agency for Healthcare Research and Quality to establish a 25-member Citizens' Quality, to establish a group called the Health Care Working Group. This group "Citizens' Health Care Working Group." would be appointed by Congressional The 15-member group will include the leaders to provide recommendations on Secretary and individuals appointed by ways to improve and strengthen health care GAO. The Working Group will hold coverage and the health care system. hearings and produce public reports about expanding coverage options, the cost of health care, innovative state and community strategies to expand coverage CRS-97 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) or reduce costs, and the role of evidence- based medicine and technology in improving quality and lowering costs. In addition to hearings, the Working Group will hold community meetings and develop recommendations on health care coverage, and ways to improve and strengthen the health care system based on the information and preferences expressed at the community meetings. Require GAO report on price controls in No provision. Sections 621. GAO would study No provision. different countries. No provision in pharmaceutical price controls in France, current law. Germany, Italy, Japan, the United Kingdom, and Canada and review their impact on consumers, including American consumers, as well as on medical innovations. [Duplicate of Section 634] Establish Safety Net Advisory No provision. Section 624. The Safety Net Organizations No provision. Commission. No provision in current law. and Patient Advisory Commission would be established to conduct an ongoing review of the health care safety net programs including Medicaid, the State Children's Health Insurance Program (SCHIP), and Maternal and Child Health Services Block Grant Programs, among other programs and payments. The appointment process would be similar to that for MedPAC. Annual reports would be required. [Duplicate of Section 635] Establish Committee on Drug No provision. Section 626. The Secretary would No provision. Compounding. No provision in current establish a committee on Drug law. Compounding within the FDA to ensure that patients are receiving necessary, safe, CRS-98 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) and accurate dosages of compounded drugs. Members would be appointed by the Secretary and would include representatives from associations, advocates and other interested parties. The Committee would submit a report with recommendations to improve and protect patient safety within 1 year of enactment whereupon the Committee would terminate. Express sense of Senate regarding No provision. Section 627. The provision provides a No provision. structure of Medicare reform. No sense of the Senate that Medicare reform provision in current law. should be developed according to nine principles. For instance, prescription drug coverage should be directed to those who need it most; should incorporate private sector market based elements; should cost no more than $400 billion; and should preserve employer sponsored retiree plans among other things. Express sense of Senate regarding No provision. Section 628. The provision provides a No provision. establishment of national lifestyle sense of the Senate that coronary disease is modification program. The Medicare expensive, the Medicare Lifestyle Lifestyle Modification Demonstration Modification Program has been operating Program has been operating in 12 states. in 12 states as a demonstration program, and this program of behavior modification should be conducted on a national basis for those beneficiaries who elect to participate. Emphasize employer flexibility in No provision. Section 631. The provision allow No provision. providing health coverage for retirees. employers to provide different health No provision in current law. insurance benefits to various groups of their retirees, without being in violation of the Age Discrimination and Employment Act (ADEA). CRS-99 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Expand responsibilities of the Office of No provision. Section 637. The list of explicit No provision. Rural Health Policy (ORHP) in HHS responsibilities of the Office is expanded ORHP advises the Secretary on the effects to include administering grants, of current policies and proposed statutory, cooperative agreements, and contracts to regulatory, administrative, and budgetary provide technical assistance and other changes in the Medicare and Medicaid activities as necessary to support activities programs on the financial viability of small related to improving health care in rural rural hospitals, the ability of rural areas to areas. attract and retain physicians and other health professionals, and access to and the quality of health care in rural areas. In addition to advising the Secretary, the Office has other responsibilities including coordinating the activities within HHS that relate to rural health care. Medicaid and State Children's Health Insurance Program (SCHIP) Provisions Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Increase Medicaid disproportionate Section 1001(a). The bill establishes a Section 601. The special DSH rule Section 1001. Temporary increase in DSH share hospital (DSH) allotments temporary increase in DSH allotments for established by BIPA that raised DSH allotments, subject to the current law limit Hospitals that serve a large number of FY2004 and for certain subsequent fiscal allotments, subject to the current law limit of 12% of spending for medical assistance, uninsured patients and Medicaid enrollees years. Allotments for FY2004 are to be set of 12% of spending for medical assistance, would be established for FY2004 and for receive additional Medicaid at 116% of FY2003 allotments as under will be extended for FY2004 and FY2005. certain subsequent fiscal years. Allotments disproportionate share hospital (DSH) BIPA and will not be subject to the ceiling Allotments for FY2004 will be calculated for FY2004 would be set at 120% of payments. BBA 1997 capped the federal capping states' allotments at 12% of to be equal to FY2004 allotments as FY2003 allotments as under BIPA. share of Medicaid DSH payments at medical assistance payments. Allotments established by BBA 1997 increased by the Allotments for subsequent years would be specified amounts for each state for for subsequent years will be equal to the product of 0.50 and the difference equal to the allotments for FY 2004 unless FY1998 through FY2002. For most states, allotments for FY2004 unless the Secretary between: (a) FY2002 allotments as the Secretary determines that the those specified amounts declined over the determines that the allotments as would established by BIPA 2000 increased by the allotments as would have been calculated 5-year period. A state's allotment for have been calculated prior to the enactment percentage change in the CPI-U for each of prior to the enactment of this bill would FY2003 and for later years is equal to its of this bill would equal or no longer fiscal years 2002 and 2003, and (b) equal or exceed the FY 2004 amounts. For allotment for the previous year increased exceed the FY2004 amounts. For such FY2004 allotments as established by BBA such fiscal years, allotments would be by the percentage change in CPI-U for the fiscal years, allotments will be equal to 1997. Allotments for FY2005 will be equal to allotments for the prior fiscal year previous year. In addition, each state's allotments for the prior fiscal year calculated to be equal to FY2005 increased by the CPI-U for the previous DSH payment for FY2003 and subsequent increased by the percentage change in the allotments as established by BBA 1997 fiscal year. CRS-100 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) years is limited to no more than 12% of consumer price index for all urban increased by the product of 0.50; and the spending for medical assistance in each consumers for the previous fiscal year. difference between: (a) FY2002 allotments state for that year. BIPA provided states The provision is effective upon enactment. as established by the BIPA 2000 increased with a temporary reprieve from the by the percentage change in the CPI-U for declining allotments by establishing a each of fiscal years 2002, 2003, and 2004, special rule for the calculation of DSH and (b) FY2005 allotments as established allotments for 2 years, raising allotments by BBA 1997. For FY2006 and for FY2001 and for FY2002. The thereafter, DSH allotments will be provision also clarified that the FY2003 calculated based on the previous years' allotments were to be calculated as amount as established by BBA 1997 and specified above, using the lower, pre-BIPA subject to the current law limit of 12% of levels for FY2002 in those calculations. spending for medical assistance increased by the CPI-U for the previous fiscal year. All allotments would be subject to the existing limit of 12% of medical assistance spending. A separate calculation of the DSH allotment for the District of Columbia for FY2004 would be specified. Increase in floor for state with low DSH Section 1001(b). Allotments for low DSH Section 602. Allotments for certain No provision. allotments. Extremely low DSH states are states for FY2004 and subsequent years extremely low DSH states for FY2004 and those states whose FY1999 federal and will be increased. For states with DSH FY2005 would be increased. For states state DSH expenditures (as reported to expenditures for FY2000 (as reported to with DSH expenditures for FY2000 (as CMS on August 31, 2000) are greater than CMS as of August 31, 2003) that were reported to CMS as of August 31, 2003) zero but less than 1% of the state's total greater than zero but less than 3% of the that are greater than zero but less than 3% medical assistance expenditures during that state's total medical assistance of the state's total medical assistance fiscal year. DSH allotments for the expenditures during that fiscal year, the expenditures during that fiscal year, the extremely low DSH states for FY2001 provision would raise the DSH allotments provision would raise the DSH allotments were equal to 1% of the state's total for FY2004 by 16% over the state's for FY2004 to 3% of the state's total amount of expenditures under their plan allotment for fiscal year 2003. For each of amount of expenditures for such assistance for such assistance during that fiscal year. FY 2005 through 2008, those states would during that fiscal year. States with For subsequent fiscal years, the allotments receive allotments that are increased by expenditures for FY2001 (as reported to for extremely low DSH states would be 16% over the previous year's amount. For CMS as of August 31, 2004) that are equal to their allotment for the previous FY 2009 and all subsequent fiscal years, greater than zero but less than 3% of the year, increased by the percentage change DSH allotments for those states will be state's total medical assistance in the CPI-U for the previous year, subject equal to the prior year's amount increased expenditures during that fiscal year would to a ceiling of 12% of that state's total by inflation as for all other states. have the DSH allotments for FY2005 equal medical assistance payments in that year. to such state's DSH allotment for FY2004 CRS-101 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) increased by the percentage change in the CPI-U for FY2004. A special DSH allotment for Tennessee would be specified in FY2004 and FY2005 under certain circumstances. Allotment adjustment. No provision in Section 1101(c). The bill establishes a No provision. No provision. current law. contingent DSH allotment for states for fiscal years 2004 and 2005 that have a statewide waiver under section 1115 that is revoked or terminated before the end of either fiscal year and that have an allotment of zero under current law. The provision would permit the state to submit an amendment to its state plan describing the methodology to identify DSH hospitals and to make payments to those hospitals, including children's hospitals and institutions for mental diseases or other mental health facilities, on the basis of their proportion of patients that are low- income with special needs. The provision directs the Secretary of HHS to compute a DSH allotment for the state that provides for an appropriate amount subject to the current law limit of 12% of medical assistance payments, and up to a ceiling such that Medicaid spending in the state would not exceed the spending that would have been made if such waiver had not been revoked or terminated. In determining the amount of an appropriate DSH allotment, the Secretary shall take into account the level of DSH spending for the State for the fiscal year preceding the year in which the waiver commenced. CRS-102 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Increase DSH reporting requirements Section 1001(d). As a condition of Section 603. As a condition of receiving No provision. BBA 1997 required each state to submit to receiving federal Medicaid payments for federal Medicaid payments for FY2004 the Secretary an annual report describing FY2004 and each fiscal year thereafter, and each fiscal year thereafter, the the disproportionate share payments made states are required to submit to the provision would require each state to to each disproportionate share hospital Secretary an annual report (for the submit to the Secretary an annual report (DSH) and the methodology used by the previous fiscal year) identifying each (for the previous fiscal year) identifying state for prioritizing payments to such disproportionate share hospital that each disproportionate share hospital that hospitals. received a payment, the amount such received a payment, the amount such hospital received, as well as other hospital received, as well as other information the Secretary determines information the Secretary determines necessary to ensure the appropriateness of necessary to ensure the appropriateness of the DSH payments for the previous fiscal the DSH payments for the previous fiscal year. In addition, states are required to year. submit annually to the Secretary an independent certified audit verifying: the extent to which hospitals receiving DSH payments have reduced their uncompensated care costs to reflect DSH payments received; the states' compliance with the hospital-specific payment ceilings; the methodology used to calculate those ceilings; and the documentation maintained by the states regarding claimed costs, expenditures and payments under this section. The provision is effective upon enactment. Clarification regarding non-regulation Section 1001(e). The provision clarifies No provision. No provision. of transfers States are required to provide that the non-federal share of Medicaid not less than 40% of the non-federal share funds transferred from, or certified by a of matching funds toward their Medicaid specified publically-owned regional expenditures. The Medicaid Voluntary medical center may be used as the non- Contribution and Provider-Specific Tax federal share of Medicaid expenditures as Amendments of 1991 (P.L. 102-234) long as the Secretary determines that such prohibited the use of health care related donations are proper and in the interest of taxes that were not broad based, and the Medicaid program. The provision certain provider-related donations for the targets, but is not limited to a medical purpose of claiming federal matching center located in Memphis, Tennessee, and CRS-103 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) payments. The law also limits HHS' that meets certain other specified criteria. authority to restrict a state's inclusions of This provision is effective for the period tax-derived funds transferred from or between enactment and December 31, certified by different levels of governments 2005. or governmental entities to the state government as the state's share of Medicaid funding. Exempt prices of drugs provided to Section 1002. The definition of "best Section 604. Effective October 1, 2003, Section 1002. Effective on the data of certain safety net hospitals from price" is modified for the purpose of the definition of "best price" for the enactment, the definition of "best price" Medicaid best price drug program calculating Medicaid drug rebates, to also purpose of calculating Medicaid drug for the purpose of calculating Medicaid Medicaid drug rebates are calculated based exclude the discounted inpatient drug rebates, would be modified to also exclude drug rebates, would be modified to also on the difference between the Average prices charged to certain public safety net the discounted inpatient drug prices exclude the discounted inpatient drug Manufacturer's Price and the hospitals. Those hospitals will also be charged to certain public safety net prices charged to certain public safety net manufacturer's "best price". In subject to the same auditing and record hospitals. Those hospitals would also be hospitals. Those hospitals would also be determining a drug's best price, certain keeping requirements as other providers subject to the same auditing and record subject to the same auditing and record discounted prices and fee schedules are with similar exemptions from Medicaid's keeping requirements as other providers keeping requirements as other providers excluded. Discounted prices for outpatient "best price" determination. The provision with similar exemptions from Medicaid's with similar exemptions from Medicaid's drugs negotiated by the Office of is effective upon enactment. "best price" determination. "best price" determination. Pharmacy Affairs (of HHS) with drug manufacturers on behalf of certain clinics and safety net providers are one example of such exclusion. Because of this exclusion, the discounts available to safety net providers have no bearing on the calculation of Medicaid drug rebates which allows those providers to negotiate better rates with manufacturers -- since Medicaid rebates will not change with the size of their negotiated discounts. Discounted prices for inpatient drugs for many safety net providers, however, are included in the Medicaid best price. Assist legal immigrants in Medicaid and No provision. Section 605. The provision would lift the No provision. SCHIP programs "Qualified aliens" who 5-year ban and would allow states the entered the United States after enactment option to provide medical assistance to of the Personal Responsibility and Work certain lawfully residing individuals under CRS-104 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Opportunity Reconciliation Act of 1996 Medicaid (including under a waiver (PRWORA, Aug. 22, 1996) are not eligible authorized by the Secretary) or SCHIP for to receive federally funded benefits under any of fiscal years 2005 through 2007. Medicaid or SCHIP for 5 years. Qualified Those eligible would include lawfully aliens who entered the United States prior residing women during pregnancy and the to the enactment of PRWORA are eligible 60-day period after delivery, and children for federally funded Medicaid coverage at otherwise eligible for Medicaid or SCHIP state option, as are qualified aliens arriving as defined by the state plan. States opting after Aug. 22, 1996 who have been present to provide coverage to such lawfully in the United States for more than 5 years. residing individuals under SCHIP must A person who executed an affidavit of also provide coverage to such individuals support for an alien under Section 213A of under Medicaid. If services are provided the Immigration and Nationality Act (INA) under the Medicaid program, the alien's is liable to reimburse the federal or state sponsor would not be liable to reimburse government for the public benefits the federal or state government for the cost received by the sponsored alien until the of such services. alien naturalizes or has accumulated 40 quarters of work. Section 213A was enacted as a part of PRWORA on Aug. 22, 1996. Extend special DSH treatment for No provision. Section 625. DSH payments made to No provision. certain urban providers. Hospital- hospitals that are owned and operated by specific limits on DSH payments as well as the state of Indiana and located in Marion overall state-wide DSH allotments have County would be made without regard to been established. DSH payments to the state's DSH allotment limitation so hospitals are limited to some percentage of long as those payment amounts, for each hospital's costs of providing inpatient FY2004 and each fiscal year thereafter do and outpatient services to Medicaid and not exceed 175% of the "unreimbursed uninsured patients net of payments costs" of furnishing hospital services. received from or on behalf of these patients ("unreimbursed costs"). DSH payments to public hospitals are limited to 100% of unreimbursed costs except in FY2003 and FY2004 when that limit rises to 175% of unreimbursed costs. DSH payments to private hospitals are limited to 100% of these costs; certain public CRS-105 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) hospitals in California have a permanent DSH limit of 175%. Increase Medicaid payments for certain No provision. Section 632. For services provided to a No provision. Hawaiian providers. The Medicaid Native Hawaiian by a federally qualified program is jointly financed by the states health center or a Native Hawaiian health and the federal government with the care system, the FMAP would be 100%. federal government share based on each Services qualifying for the 100% FMAP state's federal medical assistance would include those provided by referral, percentage (FMAP). The FMAP for a and under contract or other arrangement state is calculated using a formula designed between a health care provider and the to give a higher FMAP to states with a per federally qualified health center or Native capita income below the U.S. average. No Hawaiian health care system. state can have an FMAP of less than 50% or more than 83%. Certain services including family planning are paid at alternative FMAP rate, as are administrative expenses. In addition, certain services provided through an Indian Health Service facility, Indian tribe or organization have an FMAP of 100%. The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JEGTRRA, P.L. 108-026) altered the statutory calculation of the FMAPs by providing a hold harmless for declines from the prior year for each state FMAP, and a temporary increase of 2.95 percentage points for the last two quarters of fiscal year 2003 and the first three quarters of fiscal year 2004. The calculated statutory FMAPs for Hawaii would be 58.77% for fiscal year 2003 and 58.90% for fiscal year 2004. The JEGTRRA changes result in an FMAP for Hawaii of 61.75% for the last two quarters of fiscal year 2003, and 61.85% for the first three quarters of fiscal year 2004. The FMAP for services provided to a Native CRS-106 Provisions H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Hawaiian is the same as for services provided to other Medicaid beneficiaries in Hawaii. Extend special treatment for a specific Section 1003. The moratorium on the Section 633. The moratorium on the No provision. provider Medicaid payment for services determination of Saginaw Community determination of Saginaw Community provided by an institution for mental Hospital as an IMD is permanently Hospital as an IMD would be permanently disease (IMD) may be made only for extended as if this provision were included extended as if included in BBA 1997. beneficiaries who are under age 21 or over in Section 4758 of the Balanced Budget 65. IMD means a hospital, nursing Act of 1997 (BBA 1997). facility, or other institution of more than 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services. For two facilities in Michigan -- Kent Community Hospital Complex and Saginaw Community Hospital -- previous legislation has imposed a moratorium on determination of the facilities as IMDs through December 31, 2002. Cost Containment and Miscellaneous Financial Provisions Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Status of Medicare trust funds in annual Section 801. Beginning with the 2005 Section 131. The Trustees would be The Trustees would be required to submit trustees report. The Medicare Board of report, the Trustees annual report is required to submit a combined report on a combined report on the status of the two Trustees was established under the Social required to include a determination the status of the two trust funds including trust funds and the Prescription Drug Trust Security Act to oversee the financial whether there is projected to be "excess the Prescription Drug Account. The report Fund. The report would include a operations of the Medicare Hospital general revenue Medicare funding" for the would include a statement of the total statement of the total amounts obligated Insurance (HI) trust fund and the Medicare fiscal year or any of the succeeding 6 fiscal amounts obligated during the preceding during the preceding fiscal year from the Supplementary Medical Insurance (SMI) years. Excess general revenue Medicare fiscal year from the General Revenues of General Revenues of the Treasury for trust fund. The Trustees are required to funding is when general revenue Medicare the Treasury and the percentage such payment of benefits and the percentage submit annual reports to the Congress. funding expressed as a percentage of total amount bore to all other obligations of the such amount bore to all other general Medicare outlays for the fiscal year Treasury in that year. revenue obligations of the Treasury in that exceeds 45%. When excess general Section 132. The 2004 reports would be year. revenue funding of Medicare is projected required to include an analysis of the total CRS-107 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) for 2 consecutive annual reports this is to amount of unfunded obligation of be treated as a "funding warning" for the Medicare. The analysis would compare purpose of requiring the President to long-term obligations, including the submit legislation to Congress. combined obligations of the HI and SMI trust funds, to the dedicated funding Section 802. The President is required to sources for the program (not including submit proposed legislation to Congress to transfers of general revenue) respond to the warning of excess general revenue funding of Medicare within specified timeframes. Section 803. The provision sets out the procedures for House consideration of the President's legislative proposal. Section 804. The provision provides for some limited special procedures in the Senate for consideration of legislation arising from the Trustees determination of excess general revenue Medicare funding. CRS-108 Provision and Current Law H.R. 1 as enacted S. 1 (as passed the Senate) H.R. 1 (as passed the House) Extend authority to collect Customs fees No provision. Section 614. The authority would be No provision. The U.S. Customs Service, the federal extended until September 30, 2013. government's oldest revenue collecting agency is responsible for regulating the movement of persons, carriers, merchandise, and commodities between the United States and other countries. Its authority to impose user fees for certain services lapsed on September 30, 2003. Require the Internal Revenue Service No provision. Section 450G. The Secretary of the No provision. (IRS) to deposit certain receipts The Treasury must deposit any fees collected Secretary of the Treasury was granted the under the authority provided by Section 3 authority by Section 3 of the of the Administrative Provisions of the Administrative Provisions of the Internal Internal Revenue Service of Public Law Revenue Service of Public Law 103-286, 103-286, the Treasury, Postal Service and the Treasury, Postal Service and General General Government Appropriations Act Government Appropriations Act of 1995 to of 1995 into the Treasury as miscellaneous establish new fees (if the fee is authorized receipts. The fees collected are only by another law) or raise fees for services available to the IRS if authority is provided provided by the IRS to supplement in advance in an appropriations Act. appropriations made available to the IRS. The fees must be based on the costs of providing the specific services (to the persons paying the fees), and the Secretary must report quarterly to the Congress on the collection of such fees and how they are spent. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32005