THE BALANCED BUDGET ADJUSTMENT ACT OF 1999
TITLE I-PROVISIONS RELATING TO PART A ONLY
Section 101. Increase in payment for certain high cost patients.
Current Law
The BBA 97 required that a prospective payment system be implemented for skilled nursing facility care starting in July 1998. The prospective payment system outlined in the BBA reflects the Resource Utilization Group (RUG) design HCFA developed over several years and tested on a demonstration project basis. The RUG system requires skilled nursing facilities (SNFs) to categorize their Medicare patients according to 44 hierarchical groups based on the kinds and intensities of care and services they need. For example, patients needing mostly physical therapy or speech therapy of different intensities use different kinds and amounts of resources from patients needing such services as skilled nursing care, intravenous feeding or medications, extensive laboratory testing, or use of a respirator, and such patients would be assigned to different groups. The SNF prospective payment system provides facilities a fixed amount per day per patient (a "per diem" payment), with the amount of the payment determined by the RUG into which the patient is classified. This RUG classification system serves as the case-mix adjustment that is used to relate program payment to individual patient characteristics and resource use.
The BBA 97 instructs the Secretary how to (a) compute average per diem payment rates using Medicare-approved SNF costs in 1995 as the base year; (b) adjust the average rates for facility case-mix and geographic differences; and © update the per diem rates for years after 1995. This methodology aims at setting the prospective payment system per diem amounts to reflect overall Medicare payments for SNF care under the retrospective reimbursement payment system used prior to the prospective payment system in order to achieve budget neutrality for the new payment system when it is first implemented. The law specifies limited updates to payments under the RUG system in future years.
Explanation of Provision
The bill would add 7.5% to the federal per diem payments for beneficiaries in the Extensive Services and Special Care RUGs (categories SE3, SE2, SE1, SSC, SSB, SSA as listed in HCFA's May 12, 1998 final rule). These additional payments would end when the Secretary published the final rule for the prospective payment system and the RUG rates, including refinements to the RUGs system to account for medically complex patients. The RUG refinements are expected to be completed by fall 2000.
Reason for Change
In a report prepared for the Health Care Financing Administration (HCFA), an independent review of the RUGs classifications demonstrated that the payment rates for the Extensive Services and Special Care RUGs did not meet the anticipated costs for the medically complex patients that fall within these categories. The additional payments provide targeted relief in the interim, as the Secretary refines allocations among the RUGs in preparation for publication of the final rule.
Effective Date
January 1, 2000.
Section 102. Provision for Part B add-ons for facilities participating in the NCHMQ demonstration project.
Current Law
A demonstration project, the Nursing Home Case Mix and Quality (NHCMQ) demonstration, preceded implementation of the SNF prospective payment system. Nursing facilities participating in that project are not currently receiving the cost of Medicare Part B services to SNF patients accounted for under the facility-specific component of the prospective payment system as are other SNFs, although their federal per diem amounts are higher than those for other SNFs because they are based on allowable costs in 1997 rather than 1995.
Explanation of Provision
The bill would include the cost of Part B services, and specified updates, in the facility-specific component of Medicare payments to SNFs that participated in the Nursing Home Case Mix and Quality demonstration project.
Reason for Change
HCFA has interpreted inadvertent placement of the Part B provisions in the BBA to mean that Congressional intent was to prohibit these facilities from adding appropriate reimbursement for Part B services to facility-specific rates for participants in the RUG III Demonstration Project. The provision would allow these facilities to receive payments for Part B services provided since enactment of the BBA.
Effective Date
As if included in the BBA.
Section 103. Exemption of facilities from 3-year transition period under the prospective payment system for skilled nursing facility services.
Current Law
The BBA 97 requires that the SNF prospective payment system be phased in over 3 years starting July 1, 1998 (or the first date thereafter on which a SNF started a new annual cost reporting period). During this phase-in period, part of the per diem payment to each SNF is based on the facility's historical costs (the "facility specific" component of the prospective payment system), and part is based on the new federal per diem prospective payment. During the 3-year phase-in period, a SNF receives per diem rates that are a "blend" of 75% the facility-specific rate and 25% of the federal per diem rate. The proportion of the facility-specific rate to the federal per diem rate shifts annually by 25 percentage points until the federal rate equals the full payment.
Explanation of Provision
Effective upon enactment, the bill would allow SNFs to elect to be paid according to the transition formula or exclusively under the federal per diem rate if the full federal per diem amount would be more advantageous.
Reason for Change
By allowing facilities to choose the federal rate instead of the blended rate, the provision seeks to more adequately reimburse facilities whose Medicare population may have increased in volume or case mix since the 1995 base year.
Effective Date
Upon Enactment.
Section 104. Study on respiratory competency requirements.
Current Law
No provision.
Explanation of Provision
The Secretary would be required to report on variations in state licensure and certification standards for health providers, including nurses and allied health professionals, providing respiratory therapy in skilled nursing facilities. The report would focus on whether the Medicare program should require competency examinations or certification for respiratory care. The Secretary should submit this report within one year of enactment of the act.
Reason for Change
There is some evidence suggesting that the quality of respiratory
care provided to Medicare beneficiaries in skilled nursing facilities is varied and, in some cases, inadequate. The purpose of this study is to examine whether the Medicare program should require competency exams or certification for those providing respiratory care.
Effective Date
Upon enactment.
Section 105. Report on SNFs specializing in care of extremely high cost, chronically ill populations.
Current Law
No provision.
Explanation of Provision
This provision would require the Secretary to study and issue a
report to Congress on alternative payment methods for skilled nursing facilities that specialize in providing care to extremely high cost, chronically ill populations.
Reason for Change
A broad-based prospective payment system might be inappropriate for a facility
that exclusively specializes in caring for AIDS patients, for example. This study is intended to address payment issues for such facilities.
Effective Date
Upon enactment.
Section 121. Payment for Hospice Care
Current Law
Medicare covers hospice care, in lieu of most other Medicare benefits, for terminally ill beneficiaries. Payment for hospice care is based on one of four prospectively determined rates which correspond to four different levels of care; hospices receive one of these rates for each day a beneficiary is under the care of the hospice. The four rate categories are routine home care, continuous home care, inpatient respite care, and general inpatient care. The prospective payments are updated annually by the hospital market basket.
The BBA 97 reduced the hospice payment update to market basket minus 1 percentage point for each of FY 1998 through FY 2002. It required the Secretary of HHS to collect data from hospices on the costs of care they provide for each fiscal year beginning with FY 1999.
Explanation of Provision
The bill would change the hospice payment rate to market basket minus .5 percentage point through FY 2002.
Reason for Change
Due to the rising costs of pharmaceuticals and technological advances in pain management, there was evidence for a need to provide relief to the payment reduction included in the market basket update.
Effective Date
Retroactive to October 1, 1999
Section 122. Study and report to Congress regarding modification of the payment rates for hospice care.
Current Law
No provision.
Explanation of Provision
The bill requires the Comptroller General of the United States to conduct a study on the feasibility and advisability of updating the hospice rates, including an evaluation of whether the cost factors used to determine the rates should be modified, eliminated, or supplemented with additional cost factors. A report on that study would be required to be submitted to Congress within 1 year of enactment, and would also include any recommendations for legislation the Comptroller General determines appropriate based on the study.
Reason for Change
Because of the unique role of the hospice benefit within the Medicare program, and the changing needs of the Medicare population, a thorough review of the current hospice benefit structure and payment method is warranted.
Effective Date
Upon enactment.
Subtitle C - Other Provisions
Section 141. Study on prospective payment system for psychiatric hospitals.
Current Law
No provision.
Explanation of Provision
The Secretary must report to Congress within two years of enactment
of this act on the development of a prospective payment system for psychiatric hospitals. Special attention should be given to the unique circumstances affecting mental health facilities in rural areas.
Reason for Change
Medicare payment systems have moved from cost-based reimbursement
to prospective payment. Psychiatric hospitals are currently exempt from the PPS for inpatient hospital services. This study would examine the feasibility and advisability of adopting a PPS for these hospitals.
Effective Date
Upon enactment.
TITLE II-PROVISIONS RELATING TO PART B ONLY
Section 201. Multi-year transition to prospective payment system for hospital outpatient department services.
Current Law
The BBA 97 directed the Secretary of HHS to implement a prospective payment system for hospital outpatient departments in 1999. In proposed rules issued on September 8, 1998, HCFA delayed implementation of the new system until after the start of 2000 in order to ensure that "year 2000" data processing problems were fully resolved before the new system was implemented. The agency currently estimates that the hospital outpatient prospective payment system will be implemented in July 2000.
The BBA required that the outpatient prospective payment system be designed so that the estimated sum of Medicare payments to hospital outpatient departments would equal the aggregate amount Medicare would have paid hospitals in 1999 under old law, prior to the prospective payment system. This requirement makes the new prospective payment system budget-neutral with regard to the cost to the government for outpatient hospital care for Medicare beneficiaries. HCFA computer simulation analysis of the new system showed the effects to be uneven among hospitals, with some hospitals losing more than others compared with their old law Medicare payments.
Explanation of Provision
The bill would authorize Medicare payments to hospitals for outpatient services in amounts such that the ratio of Medicare payments plus beneficiary copayments (computed with the corrected formula-driven overpayment under the new BBA 97) to the hospitals' costs would be no less than 90%, 85%, and 80% of the ratio of the hospital's 1996 payments to costs in the first, second, and third years (transition years) of the new system, respectively. The bill authorizes the Secretary to make interim payments to hospitals during the transition years, if necessary, and subsequently to make retroactive adjustments. The bill would waive the budget neutrality requirements of the BBA with respect to Medicare payments in the transition years.
For each year beginning in 2000, the Secretary is authorized to increase payments under the prospective payment system to Medicare dependent, small rural hospitals, sole community hospitals, and cancer hospitals to amounts such that the ratio of Medicare payments plus beneficiary copayments to a hospital's costs would not be less than that ratio in 1996. The beneficiary coinsurance reductions would be protected for services of these facilities. The bill would waive the budget neutrality provisions of the BBA for these payments.
Reason for Change
Certain classes of hospitals are expected to lose a substantial share of their Medicare outpatient revenues under the proposed PPS. Low-volume rural hospitals and cancer hospitals, for example, are expected to lose 17.4% and 32.4% of their Medicare outpatient revenue, respectively. Teaching hospitals also are expected to lose 11% of their Medicare revenue.
By establishing a transition policy under the hospital outpatient department prospective payment system, the bill provides protection for all hospitals for the first three years of the new system. For cancer and rural hospitals, including Medicare dependent hospitals and sole community hospitals, this protection is extended beyond the three-year transition period. The protection for these hospitals would be permanent.
Effective Date
Upon enactment.
Section 202. Study and report to Congress regarding the inclusion of rural and cancer hospitals in prospective payment system for hospital outpatient department services.
Current Law
No provision.
Explanation of Provision
The bill would require the Medicare Payment Advisory Commission to prepare a report for Congress within 2 years of enactment regarding the feasibility and advisability of including cancer hospitals and rural hospitals in the outpatient prospective payment system.
Reason for Change
Although the bill protects cancer and rural hospitals from the impact of the hospital outpatient prospective payment system on a permanent basis, this provision requires the Secretary to consider whether this protection is warranted over time and should be maintained.
Effective Date
Upon enactment.
Section 203. Report on chemotherapy and other drugs, blood products and new technologies under the hospital outpatient prospective payment system.
Current Law
The proposed rule addressing the new prospective payment system for
hospital outpatient department services was promulgated on September 8, 1998. The rule has created substantial anxiety among the pharmaceutical industry, medical device manufacturer and others. Patient groups and consumer groups are also concerned that the new system, as outlined in the proposed rule, will severely curtail their access to state-of-the-art medical care.
Explanation of Provision
This provision requires the Secretary to issue a report by March 1,
2000 explaining how chemotherapy and other high cost drugs, blood products, and new technologies will be paid under the outpatient prospective payment system.
Reason for Change
The report is intended to allay concerns of the various patient
groups and specific health care industry groups about the payment for high cost drugs and new technology in the outpatient prospective payment system.
Effective Date
Upon enactment.
Section 221. Technical Amendment to Update Adjustment Factor and Physician Sustainable Growth Rate.
Current Law
The conversion factor is a dollar figure that converts geographically adjusted relative values into a dollar payment amount. This amount is updated each year according to a formula established in law. Beginning in 1999, the update percentage equals the Medicare Economic Index (MEI) subject to an adjustment to match target spending for physicians services under the sustainable growth rate (SGR) system. In no case can the adjustment be more than three percentage points above or seven percentage points below the MEI.
Four factors make up the SGR: changes in spending due to fee increases, fee-for-service enrollment, gross domestic product (GDP) growth per capita, and laws and regulations. Data from various measurement periods are used for the SGR calculation. Time lags between these measurement periods can lead to oscillation in conversion factor updates.
Prior to the enactment of BBA 97, the Secretary was required to make a conversion factor update recommendation to the Congress by April 15 of each year. The Physician Payment Review Commission (one of MedPAC's predecessor Commissions) was required to comment on the Secretary's recommendation and make its own recommendation by May 15. BBA 97 eliminated these requirements.
Explanation of Provision
The bill would reduce the time lags between sustainable growth measurement periods by providing for the calculation of the sustainable growth rate and update adjustment factors on a calendar year basis. The bill would specify that the conversion factor update for 2000 would be budget neutral, that is expenditures under the revised calculation would be equal to those which would have occurred in the absence of this provision. A similar budget neutral requirement would apply for calendar years 2001 - 2006.
The Secretary would be required to publish the conversion factor by November 1 for the following year. The Secretary would also be required to publish, by November 1, the sustainable growth rate for the succeeding year, the current year, and each of the two preceding years.
The bill specifies that the sustainable growth rate calculation would take into account the best data available to the Secretary on September 1.
The bill would require the Secretary to publish the estimated conversion factor, and data on which the estimate is based, by April 15 of the previous year. MedPAC would be required to review these items and submit a report to Congress, together with any recommendations, by June 30.
The Secretary, acting through the Administrator of the Agency for Health Care Policy and Research, would conduct a study on the utilization of physicians services under the fee-for-service program by Medicare beneficiaries. The study would include an analysis of: (1) the various methods for accurately estimating the economic impact on physician expenditures of improvements in medical capabilities, advancements in scientific technology, demographic changes, and geographic changes in where beneficiaries receive benefits; (2) the rate of usage of physicians services by age group; and (3) other factors that may be reliable predictors of utilization. The Secretary would submit the report to MedPAC within 3 years of enactment. MedPAC would be required to report to Congress on such report within 180 days of receipt.
Reason for Change
The bill corrects what HCFA actuaries have determined to be unstable aspects of the SGR system that will cause payments to fluctuate widely from year to year. A second problem that has been identified is that once the SGR target is set for a year, it cannot be changed, even to correct for estimation errors and even if better data become available. The bill would address these shortcomings of the new system.
Effective Date
Upon enactment.
Section 222. Correcting Amendments to Physician Practice Expense Transition.
Current Law
Payments for physicians services are made on the basis of a fee schedule. The fee schedule is intended to relate payments for a given service to actual resources used. The fee schedule assigns relative values to services. The relative values reflect physician work, practice expenses and malpractice costs. The relative values are adjusted for geographic variations in costs. The adjusted relative values are then converted into a dollar payment amount by a conversion factor.
When the fee schedule went into effect in 1992, practice expense relative value units were based on historical charges. The Social Security Act Amendments of 1994 (P.L.103-432) required the Secretary to develop a methodology for a resource-based system for calculating practice expenses which would be implemented in calendar year 1998. BBA 97 delayed implementation of a resource-based practice expense methodology for a year, until 1999. In 1998, certain practice expense relative value units were reduced. The new resource-based system is being phased-in beginning in calendar year 1999. In 1999, 75% of the payment is based on the 1998 charge-based relative value unit and 25% on the resource-based relative value. In 2000, the percentages will be 50% charge-based and 50% resource based. For 2001, the percentages will be 25% charge-based and 75% resource based. Beginning in 2002, the values will be totally resource-based.
Explanation of Provision
The bill would clarify that the base year for calculating transition practice expense relative value units is 1998. The provision would be effective as if included in BBA 97.
Reason for Change
The bill corrects textual inconsistencies arising from the BBA. Some physician specialties have sued the Secretary, arguing for an alternative transition methodology. The issue is now before the courts. The bill would clarify Congressional intent and render the present litigation moot.
Effective Date
As if included in the BBA.
Section 301. Repeal of 15% contingency reduction to home health agencies
Current Law
BBA 97 required the Secretary to implement a prospective payment system for Medicare home health care cost reporting periods beginning on or after October 1, 1999, and required that the new system be designed to reduce the initial aggregate cost of Medicare home health care by 15%. The BBA allows a transition period for implementation of the new system of not longer than 4 years.
The BBA put in place an "interim payment system" for home health care to replace temporarily the prior retrospective system that reimbursed home health agencies for the lesser of their reasonable costs or a limited amount per visit, applied in the aggregate. (The limit was 112% of the national average cost, which was calculated separately for each type of service such as nursing or therapy.) The interim payment system applies a new methodology, based on the least of agency costs, per visit limits, or agency average costs per beneficiary in fiscal year 1994 (with certain updates), to determine aggregate payments to home health agencies. The interim system is to remain in effect until implementation of the prospective payment system. The BBA provides that if the new prospective payment system were not ready for implementation on October 1, 1999, the cost limits and per beneficiary limits then in effect under the interim system would be reduced by 15%.
The Omnibus Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999 (P.L. 105-277) moved implementation of the home health care prospective payment system to October 1, 2000, and moved the 15% reduction in cost limits and per beneficiary limits to coincide with implementation of the prospective payment system on October 1, 2000. Should the prospective payment system not be implemented on October 1, 2000, payment limits to home health agencies will be reduced by 15%, and when the prospective payment system is subsequently implemented it will be budget neutral compared to the interim payment levels with the 15% reduction.
Explanation of Provision
The bill would repeal the reduction to the cost limits and per beneficiary limits under the interim payment system if the home health prospective payment system is not ready for implementation on October 1, 2000.
Reason for Change
Implementing the scheduled reduction in home health payments simultaneously with the new prospective payment system is necessary to ease the administrative burden on agencies. The bill ensures that any reduction in payments would not occur under the interim payment system but would be delayed until PPS is implemented.
Effective Date
Upon enactment.
Section 302. Delay in the 15 percent reduction in payments under the PPS for home health service.
Current Law
BBA 97 required the Secretary of HHS to implement a prospective payment system for Medicare home health care cost reporting periods beginning on or after October 1, 1999, and required that the new system be designed to reduce the initial aggregate cost of Medicare home health care by 15%. The BBA allows a transition period for implementation of the new system of not longer than 4 years. The Consolidated and Emergency Supplemental Appropriations Act for 1999 delayed implementation to October 1, 2000, and retained the requirement for payments to be reduced by 15% in the aggregate.
Explanation of Provision
The bill would require the home health prospective payment system to be structured so that total Medicare payments for home health services would be reduced by 15% compared with the pre-prospective payment system year over a 3 year phase-in period. In fiscal year 2001 the prospective payment system payments would be 5% less that the prior year, which would be the base year; in the second year, costs would be 10% less than the base year; and in the third year costs would be 15% less than the base year.
Reason for Change
The bill would moderate the impact of the scheduled 15% reduction in payments under the prospective payment system for home health services by requiring that the reduction be phased-in over three years. This provision ensures that home health patients, particularly high cost patients, will continue to receive access to quality home health care services.
Effective Date
Upon enactment.
Section 303. Increase in per visit limit.
Current Law
The Omnibus Consolidated and Emergency Supplemental Appropriations Act for fiscal year 1999 (P.L. 105-277) increased the limits on per-visit payments to home health agencies beyond those specified in BBA 97. BBA 97 limited per visit payments to 105% of the national median payment, and P.L. 105-277 increased it to 106% of the national median. HCFA estimates that about one-fifth of agencies are subject to the per visit limit because it is less than the per beneficiary limit that would apply to them.
Explanation of Provision
The bill would increase the per visit limit to 108% of the national median.
Reason for Change
The per visit limits are particularly problematic for home health providers in rural areas because of the travel distances required for providers to see patients. These providers are reportedly more likely to exceed the payment caps than providers in urban areas. This bill would assist rural home health agencies and low-cost agencies that have been disadvantaged under the interim payment system by increasing the per visit limit for patient cost reimbursement.
Effective Date
October 1, 1999.
Section 305. Elimination of 15-minute billing requirement.
Current Law
The BBA 97 requires home health agencies to keep track of and report their activities during a home visit in 15-minute increments.
Explanation of Provision
The bill would repeal the requirement that home health agencies report their activities during a home visit in 15-minute intervals.
Reason for Change
The 15-minute reporting requirement was established to collect data in the event that a coding system based on the amount of time a home health provider spent with a beneficiary was developed. However, with the establishment and pending implementation of the proposed prospective payment system, there is no longer a need for the collection of this data.
Effective Date
Upon enactment.
Section 306. Clarification regarding agency responsibilities for purposes of beneficiary utilization proration.
Current Law
The BBA 97 requires that the per beneficiary limit be prorated among home health agencies serving a beneficiary who uses services furnished by more than one home health agency. Regulations issued by HCFA have not specified whether the fiscal intermediary or the home health agency has responsibility for tracking beneficiaries' utilization among agencies.
Explanation of Provision
The bill would clarify that home health agencies are not responsible for tracking beneficiaries who use the services of more than one home health agency.
Reason for Change
The clarification assures home health agencies that they will not need to address such a potentially complex administrative requirement.
Effective Date
Upon enactment.
Section 307. Refinement of home health agency consolidated billing.
Current Law
The BBA 97 requires that Medicare payments for items such as durable medical equipment, oxygen and oxygen supplies used by Medicare beneficiaries who are under a home health plan of care be billed to Medicare by the home health agency and be paid by Medicare to the home health agency rather than to the provider or the supplier of the item or equipment. The home health agency would be responsible for paying the supplier.
Explanation of Provision
The bill would exclude durable medical equipment, including oxygen and oxygen supplies, from the consolidated billing requirement.
Reason for Change
Many home health agencies may not be ready to administer the additional administrative burden of billing the Medicare program on behalf of durable medical equipment suppliers. The provision maintains the billing responsibility for home medical equipment with the suppliers of that equipment.
Effective Date
Upon enactment.
Section 308. Study and report to Congress regarding the exemption of rural agencies and populations from inclusion in the home health prospective payment system.
Current Law
No provision.
Explanation of Provision
The bill would require that the Medicare Payment Advisory Commission report to Congress within 2 years of enactment of the act on the feasibility and advisability of including rural populations and rural home health agencies in the prospective payment system.
Reason for Change
Concern has been cited that BBA changes in home health care services, and that the establishment of a prospective payment system, will create undue hardships on rural home health providers. This provision seeks to determine the effects of the prospective payment system on those providers and will advise Congress on whether these providers or populations should be exempt from the home health prospective payment system.
Effective Date
Upon enactment.
Subtitle B - Graduate Medical Education
Section 321. Revision of multi-year reduction of indirect graduate medical education payments.
Current Law
Prior to BBA, the IME adjustment increased Medicare's hospital payments by approximately 7.7% for each 10% increase in a hospital's ratio of interns and residents to beds. The BBA provided for a reduction in the IME adjustment from the 7.7% to 7.0% in fiscal year 1998; to 6.5% in fiscal year 1999; to 6.0% in fiscal year 2000; and to 5.5% in fiscal year 2001 and subsequent years.
Explanation of Provision
The bill freezes the reduction in the IME adjustment factor to 6.5% in fiscal year 2000 through fiscal year 2003. Beginning in fiscal year 2004, the IME adjustment factor becomes 5.5%.
Reason for Change
The cumulative impact of several BBA provisions has produced an unintended financial burden on teaching hospitals. Payments to these hospitals have been reduced by cuts in payments for the indirect costs associated with medical education (IME payments), cuts in payments to "disproportionate share hospitals" that serve a larger share of low-income patients, and the reduction in payment updates to hospitals as a whole. This provision would restore a portion of the funding reductions that teaching hospitals have experienced.
Effective Date
Retroactive to October 1, 1999.
TITLE IV-- RURAL INITIATIVES
Section 401. Sole Community Hospitals and Medicare Dependent Hospitals
Current Law
Medicare pays most acute care hospitals under a prospective payment system (PPS) where a fixed predetermined amount is paid according to the patient's diagnosis. Payments to PPS hospitals are updated annually using an update factor which is determined in part by the projected increase in the hospital market basket index (MBI). BBA 97 included a 0% update for fiscal year 1998; the MBI minus 1.9 percentage points for fiscal year 1999; the MBI minus 1.8 percentage points for fiscal year 2000; the MBI minus 1.1 percentage points for fiscal year 2001 and fiscal year 2002; and for fiscal year 2003 and each subsequent year, the MBI percentage increase.
Explanation of Provision
This provision would provide selected rural hospitals, that is, sole community hospitals and Medicare dependent hospitals, the MBI in fiscal year 2000 and in each subsequent year.
Reason for Change
Rural hospitals are among the providers most affected by the changes brought forth in the BBA. This provision recognizes the particular needs of rural health care delivery and addresses those needs by providing additional funding for inpatient, acute care services.
Effective Date
Retroactive to October 1, 1999.
Section 402. Revision of Criteria for Designation as a Critical Access Hospital
Current Law
BBA 1997 established the criteria for a small, rural, limited service hospital to be designated as a critical access hospital (CAH). These hospitals are required to be a rural nonprofit or public hospitals either located more that 35 miles away (or given geographic constraints, 15 miles away) from another hospital and certified by the State as a necessary provider. The CAHs provide 24-hour emergency services, have up to 15 acute care inpatient beds (or up to 25 beds if CAH is also a swing bed provider) and have hospitals stays of no more than 96 hours except under certain circumstances. For instance, a longer inpatient stay is permitted if inclement weather or other emergency circumstances prevent the transfer of a patient to another hospital; alternatively, a peer review organization or comparable entity may waive the 96-hour restriction on a case-by-case basis.
Explanation of Provision
This provision would change the 96-hour restriction on individual inpatient hospital stays to a requirement that the average inpatient stay of patients not exceed 96 hours.
Reason for Change
This change would provide increased flexibility and choice for rural health care delivery settings. The provision also eliminates increased administrative burdens on these facilities.
Effective Date
Retroactive to October 1, 1999.
Section 403. Medicare Waivers for Providers in Rural Areas
Current Law
Medicare's payments to acute hospitals vary depending upon the geographic location of the hospital. Specifically, hospitals are paid using an average standardized amount. Two standardized amounts are calculated: one for hospitals located in large urban areas and one for hospitals located in other areas--both smaller urban and rural counties. Large urban areas are statutorily defined to be a metropolitan statistical area (MSAs) as defined by the Office of Management and Budget or within a similar area as defined by the Secretary that has a population of more than 1 million as measured by the most recently available Bureau of Census data. Urban areas are defined to be MSAs and rural areas are areas outside of MSAs.
Explanation of Provision
This provision would permit a hospital that is considered to be in an urban or large urban area, for the purposes of PPS reimbursement using the existing definition, to be treated as a hospital in a rural area if classified as such by either of two alternative definitions. The Secretary is directed to set up a waiver process within 180 days of enactment of this legislation whereby hospitals currently treated as urban or large urban would be treated as rural if located in a rural area within a metropolitan county as defined by the most recent update of the Goldsmith Modification or as determined by the census tract definition adopted by the Office of Rural Health Policy.
Reason for Change
Because MSAs are based on county boundaries, some cover large geographic areas that include rural areas. For purposes of Medicare reimbursements and policies, this provision would allow hospitals and providers to be considered rural even if they are located in MSAs, if they meet certain other definitions of rural. The provision would allow these providers to participate in programs aimed at expanding access in rural areas.
Effective Date
Upon enactment.
TITLE V: PROVISIONS RELATING TO PART C
Subtitle A - Provisions to Accommodate and Protect Medicare Beneficiaries.
Section 501. Permitting Enrollment in Alternative Medicare+Choice Plans and
Medigap Coverage in Case of Involuntary Termination of Medicare
Enrollment.
Current Law
Some HMOs have announced their intention not to renew their Medicare+Choice contracts or to reduce the service area covered by the contracts. These decisions become effective for the next contract period which begins on January 1, 2000. Most beneficiaries enrolled in these Medicare+Choice plans will be able to enroll in another Medicare+Choice plan in their area. Generally this would occur during the November 1999 open enrollment period; coverage under the new plan would begin January 1, 2000. These beneficiaries could also return to "original Medicare." Beneficiaries in counties with no available managed care plans will be automatically moved to "original Medicare."
Effective January 1, 2002, beneficiaries will only be able to discontinue their enrollment with a Medicare+Choice plan during the annual coordinated election period, except under certain specified conditions.
Persons returning to original Medicare have certain rights with regard to purchase of Medigap plans. Medigap refers to individually purchased insurance policies which supplement Medicare's benefits. Beneficiaries select a policy from one of 10 standardized plans; these are known as Plan A through Plan J.
Individuals who are enrolled with an HMO at the time its contract terminates are guaranteed issue of any Medigap Plan A, B, C, or F that is sold to new enrollees by Medigap issuers in the state. This right must be exercised within 63 days of termination of prior HMO coverage. Since prior coverage is terminated at the end of the calendar year, the 63-day period begins January 1, 2000.
Explanation of Provision
The bill would modify the conditions under which an individual would be entitled to a special election period to include situations where the individual is notified of an impending termination of certification of the plan or an impending termination or discontinuation of the plan.
The bill would modify the Medigap 63-day guaranteed issue provision. At the individual's discretion, the 63-day guaranteed issue period could begin on the date the individual is notified by the plan of either impending termination or discontinuance of the plan in the area where the individual resides.
Reason for change
To ease the transition for beneficiaries whose Medicare+Choice plan leaves the program.
Effective date
Upon enactment.
Section 502. Change in Effective Date of Elections.
Current Law
Under Medicare+Choice, changes of election or coverage during continuous open enrollment periods take effect on the first day of the first calendar month following the date on which the election is made.
Explanation of Provision
The bill would require that the election must occur by the tenth of the month in order to be effective the following month.
Reason for Change
This provision would allow plans time to process the beneficiary's enrollment information and ensure a smooth transition in coverage.
Effective date
Upon enactment.
Section 503. Extension of Reasonable Cost Contracts.
Current Law
Prior to enactment of BBA 97, beneficiaries were able to enroll in risk-based health maintenance organizations (HMOs). They could also enroll in organizations with cost contracts. These entities were required to meet essentially the same conditions of participation as risk contractors. Under a cost contract, Medicare pays the actual cost the entity incurs in furnishing covered services.
BBA 97 replaced the risk program with Medicare+Choice. It also specified that no new cost contracts could be initiated and most cost-based contracts could not be renewed beyond December 31, 2002.
Explanation of Provision
The bill would extend cost contracts through December 31, 2004. However, after December 31, 2003, cost contractors could not enroll any persons who had not been enrolled in the plan on that date.
Reason for change
The are a small number of pre-BBA "cost contracts" that are scheduled to expire in 2002. This provision would allow these plans another two years of operation. This provision would allow both the beneficiaries and the plans additional time to transition to the Medicare+Choice program.
Effective Date
Upon enactment.
Section 504. Revision of Notice by Hospitals Regarding Coverage of Inpatient Hospital Services.
Current Law
Hospitals are required to provide patients, on or about the time of admission, a written statement. This statement must contain information on the individual's rights to benefits; the circumstances under which an individual would, and would not, be liable for charges for continued stays in a hospital; the individual's right to appeal benefit denials; and the individual's liability if the denial is upheld on appeal.
Explanation of Provision
The provision specifies that the notice must be provided within 16 - 24 hours prior to discharge. It would also modify the notice requirements. The notice would be required to include a specific mention that appeals for continued stays are made to the peer review organization. The notice would also be required, in the case of a Medicare+Choice enrollee, to contain additional information, as determined by the Secretary, regarding appeal rights. Further, the notice would no longer have to contain a statement regarding the individual's rights to hospital and post-hospital benefits.
Reason for Change
This provision would have the traditional fee-for-service program operate under the same rules as the Medicare+Choice program in informing beneficiaries of their rights to appeal when being discharged from the hospital, creating a "level playing field" between the traditional program and the Medicare+Choice plans. This would also ensure that all beneficiaries are informed of their appeal rights. HCFA is more than willing to implement this change, but requires statutory authority to proceed.
Effective Date
Upon enactment.
Section 505. Extended Medicare+Choice Disenrollment Window for Certain Involuntarily Terminated Enrollees.
Current Law
The law guarantees issuance of specified Medigap policies (without an exclusion based on a pre-existing condition) for certain persons. Guaranteed issue protections extend to certain persons who elect to try out one of the options available under the Medicare+Choice program. An individual is guaranteed issuance of the Medigap policy in which he or she was previously enrolled if the individual terminated enrollment in a Medigap policy, enrolled in a Medicare+Choice organization, and then terminated such enrollment within 12 months. The guarantee only applies if the individual was never previously enrolled in a Medicare+Choice plan.
One group of persons is guaranteed issuance of any Medigap policy. These are persons who, when they first become entitled to Medicare at age 65, enroll in a Medicare+Choice plan and disenroll from the plan within 12 months.
Explanation of Provision
The bill would extend the period when re-enrollment was allowed for these persons if their enrollment in a Medicare+Choice plan was involuntarily terminated either because the plan's certification is terminated or the organization no longer provides the plan in the individual's service area. The 12-month period would begin when the individual re-enrolled in a Medicare+Choice organization or plan.
Reason for change
The purpose of the provision is to ease the transition for beneficiaries who lose their Medicare+Choice plan. To provide these beneficiaries with the option of returning to the traditional fee-for-service program and secure Medigap coverage.
Effective Date
Upon enactment.
Subtitle B - Provisions to Facilitate Implementation of the
Medicare+Choice Program.
Section 521. Moderation of Medicare+Choice Risk Adjustment Implementation
Present law
Currently HCFA plans to implement the risk adjustment of Medicare+Choice plan payments by 2004. This was done administratively by HCFA, so any changes to the phase-in formula will be necessary only if the Administration is unwilling to make the suggested changes administratively.
Explanation of provision
Under the proposal, risk adjustment would be fully phased in 2006, rather than 2004. The table below details the current phase-in formula, as well as the proposed change.
|
Proposed Modifications to the Risk Adjustment of Medicare+Choice Payments | |||
| Year | Current HCFA Proposal | Proposed Modification | Type of Risk Adjuster |
| 2000 | 10% | 10% | inpatient only |
| 2001 | 30% | 10% | inpatient only |
| 2002 | 55% | 20% | inpatient only |
| 2003 | 80% | 30% | inpatient only |
| 2004 | 100% | 55% | inpatient and outpatient1 |
| 2005 | 100% | 80% | inpatient and outpatient2 |
| 2006 | 100% | 100 | inpatient and outpatient3 |
1 The proposal would also phase-in the introduction of the new risk adjustment method that includes both inpatient and outpatient data. In 2004, the first year outpatient data would be used, the payment would be a mix where 67 percent of the risk-adjusted portion would be based on the old method (inpatient data only) and 33 percent would be based on the new method ( both inpatient and outpatient data).
2 In 2005, 33 percent of the risk-adjusted portion would be based on the old method and 67 percent based on the new method.
3 By 2006, the new risk adjustment method that uses both inpatient and outpatient data would comprise 100 percent of the payment.
Reason for change
In the last two years, plans have found the Medicare program to be an increasingly volatile business environment. Plans are concerned that the current implementation schedule will result in further volatility and cuts in their payments, which could lead to further plan withdrawals. By slowing the implementation of risk adjustment, plans will see smaller cuts and less volatility. In addition, in 2004 the risk adjuster will be changed to include both inpatient and outpatient data, while this should be an improvement, it will add to the uncertainty and volatility of plan payments. By slowing the phase-in, only 55% of plan payments will be risk adjusted in 2004, rather than 100% as under the HCFA plan.
Effective date
Upon enactment.
Section 522. Delay in Deadline for Submission of Adjusted Community Rates Under Medicare+Choice Program and Related Modifications.
Current Law
BBA 97 required Medicare+Choice plans to submit adjusted community rate (ACR) proposals by May 1 of the year prior to the actual contract year. Medicare+Choice organizations are required to submit ACR proposals to show that the benefit packages they plan to market neither exceeds cost sharing for traditional Medicare plans nor unfairly charges enrollees for additional benefits.
Under the law in effect prior to BBA 97, risk plans had a November 15 deadline for submission of their ACRs. The earlier deadline means that Medicare+Choice organizations must now project future payments and costs six months further out. The earlier deadline was selected, in part, to ensure HCFA had the time both to review and approve submissions and to include information on all plan choices in the information sent to beneficiaries before the annual open enrollment season.
Explanation of Provision
The bill would delay the deadline for the ACR submission to July 1. It would also require that any organization that wished to terminate its contract at the end of the contract year must inform the Secretary of such fact by not later than July 1.
The bill would also modify the requirement that the Secretary make available to beneficiaries, during the annual open enrollment period, comparative information on all plan choices. The requirement would apply to the extent such information was available at the time of the preparation of the material for mailing.
Reason for change
Administratively the May 1 deadline has proven to be unreasonable. HCFA has allowed plans until July 1, but needs statutory authority to be able to continue the practice.
The second part of the provision allows the Secretary flexibility to provide beneficiaries with whatever information is available in a timely manner.
Effective Date
Upon enactment.
Section 523. User Fee for Medicare+Choice Organizations Based on the Number of Enrolled Beneficiaries.
Current Law
The law requires the Secretary to collect a user fee from each Medicare+Choice organization for use in carrying out: (1) the enrollment activities and distribution of related information for Medicare+Choice; and (2) the health insurance and counseling and assistance program. The user fee is equal to the organization's pro rata share of the aggregate amount of fees collected from Medicare+Choice organizations. Collection of fees is contingent upon enactment of appropriations. All beneficiary education activities are financed by the Medicare+Choice user fees, although only 15 percent of all beneficiaries are enrolled in Medicare+Choice plans.
Explanation of Provision
The bill specifies that the aggregate amount of fees collected would be based on the number of beneficiaries in Medicare+Choice plans compared to the total number of Medicare beneficiaries. The limit on the total amount available in a fiscal year to the Secretary to carry out the functions would be $100 million. No further appropriation would be required.
Reason for Change
The information campaign is key to ensuring that beneficiaries have proper information to make prudent choices between plan options, including the traditional fee-for-service plan. Currently the Medicare+Choice plans pay the full cost of supplying information to beneficiaries concerning their Medicare benefits, including enrollment and plan options, although the Medicare+Choice plans comprise only about 15 percent of Medicare enrollees. Allowing HCFA the ability to use the Part A trust fund to finance these essential beneficiary information activities ensures the program will be able to meet its obligation in this key area.
Effective Date
Upon enactment.
Section 524. Change in Time Period for Exclusion of Medicare+Choice Organizations That Have Had a Contract Terminated.
Current Law
The law specifies that the Secretary cannot enter into a Medicare+Choice contract with a Medicare+Choice organization, if within the preceding five years, that organization had a Medicare+Choice contract which it did not renew. An exception may be made for special circumstances that warrant special consideration, as determined by the Secretary.
HCFA has indicated that it will apply the prohibition only in cases where the entire contract is nonrenewed. Thus, the ban would not apply if an organization dropped a single county from a service area while retaining the rest of the service area. It would also not apply if a managed care organization nonrenewed one plan under a contract but retained other plans in that contract.
Explanation of Provision
The bill would provide that the exclusion period would be reduced from 5 years to 2 years.
Reason for Change
The logic behind the original lengthy exclusion is to keep plans from dropping in and out of the program. In practice this has not been a problem. In addition, other similar programs, such as the Federal Employees Health Benefits Program (FEHBP), have no such exclusion.
Effective Date
Upon enactment.
Section 525. Flexibility to Tailor Benefits Under Medicare+Choice Plans.
Current Law
In general, M+C managed care plans offer benefits in addition to those provided under Medicare's benefit package. In certain cases, the beneficiary has the option of selecting the additional benefits, while in other cases some or all of the supplementary benefits are mandatory.
Some plans may require members to accept additional benefits, and pay extra for them in some cases. The amount a plan may charge for additional benefits is based on a comparison between the plan's adjusted community rate (ACR, essentially the estimated market price) for the Medicare package and the average of the M+C payment rate. A plan must offer "additional benefits" at no additional charge if the plan achieves a savings from Medicare.
If the difference between the average M+C payment rate and the adjusted ACR is insufficient to cover the cost of additional benefits, the plan may charge a supplemental premium for the benefits. Under current law, the monthly basic and supplemental premiums, benefits covered, and cost sharing may not vary among individuals enrolled in the plan.
Explanation of Provision
The bill would allow plans to vary premiums, benefits, and cost sharing across individuals enrolled in the plan so long as these were uniform within an entire segment in a service area. A segment would comprise one or more counties within the plan's service area.
Reason for Change
Before the BBA, plans could offer different benefits in different counties, paralleling the different payment rates found in different counties. More benefits could be offered in counties with higher payment rates. The BBA would require uniform benefits across all counties a plan serves in a particular market. In the interim, HCFA has allowed plans to "segment" their markets into groups of counties. This provision would allow that interim practice to continue.
Effective Date
The provision would apply to contract years beginning on or after January 1, 2000.
Section 526. Inapplicability of QISMC to Preferred Provider Organizations.
Current Law.
In implementing the statutory requirement that Medicare+Choice plans have ongoing quality assurance programs, the Secretary has required that participating plans meet Quality Improvement System for Managed Care (QISMC) standards and guidelines.
Explanation of Provision.
The bill would exempt Medicare+Choice preferred provider organizations from the requirements of QISMC. If the Secretary establishes requirements similar to QISMC's for fee-for-service providers participating under Parts A and B of Medicare, then preferred provider organizations would be required to comply with them.
Reason for Change
Preferred Provider Organizations (PPO) in many ways operate more like a fee-for-service plan than a health maintenance organization. Standards developed for HMOs appear to have discouraged the entry of PPO plans into the Medicare+Choice system, because these standards are incompatible with the financing and delivery model of PPOs. This change would hold PPO plans to the same standards as the fee-for-service program, rather than those used for HMOs.
Effective Date
The provision would apply to contract years beginning on or after January 1, 2000.
Subtitle C-Provisions regarding special Medicare populations
Section 541. Extension of social health maintenance organizations.
Current Law
The Deficit Reduction Act of 1984 required the Secretary of HHS to grant 3-year waivers for demonstrations of social health maintenance organizations (SHMOs) which provide integrated health and long-term care services on a prepaid capitation basis. The waivers have been extended on several occasions since then, and a second generation of projects was authorized by the Omnibus Budget Reconciliation Act of 1990.
The BBA 97 extended waivers for social health maintenance organizations through December 31, 2000, and expanded the number of persons who can be served per site from 12,000 to 36,000.
Explanation of Provision
The bill would extend the waivers for first and second generation social health maintenance organizations (SHMO) one year after their respective reports are issued by the Secretary of HHS.
Reason for Change
The Secretary has not issued a report on the effectiveness of these demonstrations. This provision would ensure that the demonstrations not expire before the Secretary's report is issued and that there is ample time to act after the results of the report are known.
Effective Date
Upon enactment.
Section 542. Inapplicability of OASIS to PACE.
Current Law
BBA 97 authorized HCFA to undertake research and data collection to develop a case mix adjustment system for the home health prospective payment system. HCFA has used that authority to require home health agencies to administer and report information from a data collection instrument known as the Outcome and Assessment Information Set (OASIS), which had been under design and pilot testing for several years. OASIS will permit HCFA to obtain information on which to base the design and case mix adjustment of the home health care prospective payment system. It is a questionnaire required to be administered by a home health worker to home health beneficiaries at the start of a spell of care and occasionally thereafter.
PACE is a managed-care approach to integration of acute care and long-term care services for the frail elderly. Enrollment is limited to individuals whose impairments are severe enough that they meet state nursing home admission requirements, but the objective is to maintain the individuals in their homes and in the community. PACE originally operated in a limited number of sites as a demonstration project and the BBA 97 made it a permanent component of Medicare, allowing up to 40 sites to be approved in 1998 and 20 more to be added annually thereafter.
Explanation of Provision
The bill would prohibit the Secretary from applying the data collection and reporting requirements of OASIS to home health services provided by PACE directly, or through a contract with a home health care agency.
Reason for Change
OASIS is designed to collect data from home health agencies. While PACE plans do provide home health services, they receive capitated payments based on the Medicare+Choice plan payment formula. The collection of OASIS data under these circumstances is unwarranted.
Effective Date
Upon enactment.
Section 543. Extension of EverCare demonstrations.
Current Law
The EverCare demonstration project allows frail elderly beneficiaries in Medicare+Choice plans access to additional, specialized benefits and services. These demonstrations are due to expire at the end of 2000.
Explanation of Provision
This provision would extend the EverCare demonstration an additional year until 12/31/01.
Reason for Change
The EverCare program's focus on the frail elderly makes it especially vulnerable to certain aspects of the new risk adjustment methodology. MedPAC has issued a report detailing the need for certain technical adjustments to by made to the proposed risk adjustment methodology. This one-year extension would allow HCFA and MedPAC additional time to develop a more effective risk adjuster for the frail elderly.
Effective Date
Upon enactment.
Subtitle D - Studies and Reports to Assist in Making Future Improvements in the Medicare Program.
Section 561. GAO Studies, Audits and Reports.
Current Law
The Secretary is required to provide information to Medicare beneficiaries on the Medicare+Choice program.
Explanation of Provision
The bill would require GAO to conduct a study on Medigap policies. The report would include a study of: (1) the level of coverage provided by each type of Medigap policy; (2) the current enrollment levels in each type of policy; (3) the availability of each type of policy to persons over age 65 ½; (4) the number of states that offer each type of policy; and (5) the average out-of-pocket costs (including premiums) per beneficiary under each type of policy.
The bill also would require the General Accounting Office (GAO), beginning in 2000, to conduct an annual audit of the Secretary's expenditures for providing information on Medicare+Choice to beneficiaries. By March 31 of 2000, 2003, 2006, and 2009, the GAO would submit the results of the preceding year's audit to Congress. The report would also include an evaluation of the effectiveness of the means used to provide the information.
Reason for Change
Millions of Medicare beneficiaries rely on supplemental Medigap plans to provide additional coverage beyond what they receive from the Medicare fee-for-service plan. Information on the availability, adequacy and expense of such coverage is essential for a complete understanding of the coverage protections available to the Medicare population.
In the past ,questions have been raised about the adequacy and effectiveness of the information HHS provides beneficiaries on their coverage options under both Medicare+Choice and the traditional fee-for-service plans. This provision asks GAO to audit this activity and report on the effectiveness of the program every three years. This information is provided to the Congress to help improve the information process.
Effective Date
GAO would report its Medigap findings to Congress by July 1, 2001.
GAO would submit the results of the preceding year's audit by March 31 of 2000, 2003, 2006, and 2009.
Section 562. Medicare Payment Advisory Commission Studies and Reports.
Current Law
The Medicare Payment Advisory Commission (MedPAC) is required to review Medicare payment policies and prepare annual reports to Congress on the results of the reviews.
Explanation of Provision
The bill would require MedPAC to conduct a study that evaluates the methodology used by the Secretary in developing risk adjustment factors for Medicare+Choice capitation rates. Specific issues would include: The ability of risk adjustment to explain variations in plans' average per capita costs. The year-to-year stability of risk adjustment factors, especially for plans with smaller enrollments. Risk adjustment factors for beneficiaries entering and exiting Medicare+Choice plans. A report on the study, together with any recommendations, would be due to the Congress by December 1, 2000.
The bill would also require MedPAC to conduct a study on the development of a payment methodology under the Medicare+Choice program for frail elderly beneficiaries enrolled in a specialized program for the frail elderly. Such payment methodology would account for: (1) the prevalence, mix and severity of chronic conditions among such beneficiaries; (2) include medical diagnostic factors from all provider settings; and (3) include functional indicators of health status and such other factors that may be necessary to achieve appropriate payments for plans serving such beneficiaries.
Reason for Change
The introduction of risk adjustment in the Medicare+Choice program will result in significant changes in the way plans are paid by Medicare. MedPAC is asked to examine and evaluate the relative effects of the new system under a wide variety of circumstances. MedPAC is asked to provide the Congress with analysis necessary to judge the effectiveness of the new payment methodology.
MedPAC is also asked to analyze and report on the appropriate modifications that may be necessary to ensure that risk adjustment methodologies will prove effective when dealing with the frail elderly. The frail elderly present a particularly complex problem for risk adjustment, as earlier MedPAC analysis brought to light. If there are modifications needed to ensure the frail elderly are properly served in the Medicare+Choice program, the Congress needs to be informed as soon as possible.
Effective Dates
A report on the risk adjustment study, together with any recommendations, would be due to the Congress by December 1, 2000.
The report on an appropriate risk adjustment methodology for the frail elderly would be due to Congress within one year of enactment, together with any legislative recommendations determined appropriate by MedPAC.
Section 563. Computation and Report on Medicare Original Fee-for-Service Expenditures on a County-by-County Basis.
Current law
The Secretary is required to announce M+C payment rates for each payment area, and risk and other factors to be used in adjusting payments, not later than March 1 before the calendar year concerned. At least 45 days before making the announcement for a year, the Secretary must provide for notice to M+C organizations of proposed changes to be made in the methodology and assumptions used in the previous announcement. The Secretary must also provide sufficient detail so that M+C organizations can compute monthly adjusted M+C capitation rates for individuals in each M+C payment area.
The Secretary is not required to publish original fee-for-service expenditures on a county-by-county basis. These data comprise adjusted average per-capita cost (AAPCC) data. AAPCCs formed the basis of payments to managed care plans prior to enactment of BBA 97, and represented the costs of providing Medicare benefits to beneficiaries under the original fee-for-service program under parts A and B in each county nationwide. Because M+C payments are no longer directly tied to a payment area's fee-for-service costs, AAPCCs have not been published.
Explanation of Provision
The Secretary of Health and Human Services would be required to compute expenditures under the original fee-for-service program under parts A and B of the Medicare program on a county-by-county basis, and submit a report to Congress on the computation. This report would include any recommendations for legislation that the Secretary determines to be appropriate as a result of the computation.
Reason for Change
It is essential to the proper legislative oversight of the Medicare program to have accurate data on the variations in Medicare spending across the country. These data are necessary to judge the cost-effectiveness of Medicare+Choice plans and ensure that their payment rates reflect an appropriate amount for the markets they operate within. The data are equally essential to understand variations in fee-for-services spending in different markets across the country.
Effective Date
The Secretary must submit a report to Congress not later than January 1, 2000, and biannually thereafter.
Section 564. Study and Report on the Effects, Costs, and Feasibility of Requiring Medicare Original Fee-For-Service Entities and Medicare+Choice Coordinated Care Plans to Comply With Uniform Quality Standards and Related Reporting Requirements.
Current Law
Medicare+Choice organizations are required to comply with certain quality standards and related reporting requirements.
Explanation of Provision
The bill would require the Secretary to conduct a study on the effects, costs, and feasibility of requiring fee-for-service providers and entities to comply with quality standards and related reporting requirements which are comparable to those required for Medicare+Choice plans. The study would also include an examination the effects, costs, and feasibility of developing specific quality standards for different types of Medicare+Choice coordinated care plans.
Reasons for Change
As quality has become more of an issue in the Medicare program, the primary emphasis has been on the HMOs. This study would provide analysis to help look beyond HMOs, to both the traditional fee-for-service program, as well as other types of plans that became possible as a result of the BBA, (e.g., preferred provider organizations, or point-of-service plans)
Effective Date
A report on the study, together with any legislative recommendations, would be due to Congress by January 1, 2000.
Section 565. Study and Report to Congress Regarding Data Submission Used to Establish Risk Adjustment Methodology Under the Medicare+Choice Program.
Current Law
No provision.
Explanation of provision
The Secretary of Health and Human Services would conduct a study on reducing the amount of data that are required to be submitted by M+C organizations in order for the Secretary to establish a risk adjustment methodology. The Secretary would submit a report to Congress on the study, together with any recommendations for legislation that the Secretary determines to be appropriate as a result of the study.
Reason for Change
As risk adjustment becomes a more powerful influence in plan payments, it is necessary to ensure that the data needed to build the risk adjusters is collected in the most efficient, least burdensome manner. It is also important that these adjusters be as accurate as possible to avoid over payment or under payment of plans. Given the amount of controversy surrounding the use of risk adjusters, it is important that the process be open and understood.
Effective Date
The Secretary would submit the report by July 1, 2000.
Section 566. To provide HCFA with flexibility with regard to the timing of health information fair activities.
Current Law
Current law establishes an annual coordinated election period in November of each year for individuals to elect or change their election of a Medicare+Choice plan. The law also provides for a nationally coordinated information and publicity campaign, to be held in the month of November, to inform beneficiaries concerning their Medicare+Choice options.
Explanation of Provision
The provision would permit HCFA to conduct the information campaign during the fall season. This would give HCFA flexibility with regard to the timing of health information fair activities.
Reason for Change
To provide HCFA with greater administrative flexibility.
Effective Date
Upon enactment.
Section 601. Increase of Cap on Therapy Services
Current Law
BBA 97 established annual payment limits for all outpatient therapy services provided by non-hospital providers. The limits apply to services provided by independent therapists as well as to those provided by comprehensive outpatient rehabilitation facilities (CORFs) and other rehabilitation agencies. The limits do not apply to outpatient services provided by hospitals.
There are two per beneficiary limits. The first is a $1,500 per beneficiary annual cap for all outpatient physical therapy services and speech language pathology services. The second is a $1,500 per beneficiary annual cap for all outpatient occupational therapy services. Beginning in 2002, the amount will increase by the Medicare Economic Index (MEI), rounded to the nearest multiple of $10.
Explanation of Provision
The bill would establish a single annual cap for all outpatient therapy services provided by non-hospital providers. The cap would be $3,500 in 2000 and 2001; it would be increased in future years by the percentage increase in the Medicare Economic Index. It would apply to physical therapy services, speech language pathology services, and occupational therapy services.
Reason for Change
The current $1500 cap is an arbitrary amount. Moreover, the cap does not allow flexibility for the needs of a particular beneficiary. This provision broadens the scope of the therapy benefit cap and provides increased payments to providers to lessen the potential harm resulting from the cap. This proposal is intended to provide targeted relief until the Secretary reports in 2002 on a more appropriate long-term policy with regard to outpatient therapy services.
Effective Date
January 1, 2000.
Section 602. Increase in Payment Amount for Renal Dialysis Services Furnished Under the Medicare Program
Current Law
Dialysis facilities providing care to beneficiaries with end-stage renal disease (ESRD) receive a fixed prospective payment amount for each dialysis treatment. This composite rate also includes payment for tests, services, drugs and supplies routinely required for dialysis treatment. The base composite rate for hospital-based providers is $126 and for free-standing facilities, it is $122. P.L. 101-508, required that the composite payment rate to dialysis facilities be increased by $1 above the rate that was in effect as of September 30, 1990. The composite rate has not been changed since then.
Explanation of Provision
The bill would set the composite rate for services furnished after October 1, 2000, at 102.4% of the rate for services furnished on December 31, 1999.
Reason for Change
The prospective payment, or composite rate, paid to dialysis facilities for each dialysis treatment they provide to Medicare beneficiaries has remained essentially unchanged since 1983. MedPAC reports that costs have risen in relation to the composite rate in recent years and has recommended that the rate be increased.
Effective Date
Services furnished on or after October 1, 2000.
Section 603. Collection of disallowances of Medicare disproportionate share
hospital payments.
Current Law
Medicare disproportionate share hospital "DSH" payments are distributed among eligible hospitals through a formula-based percentage adjustment to the basic inpatient payment rate. The add-on factor for each case represents a hospital's percentage, or share, of low income patients and is set by the sum of two ratios: (1) Medicaid patient days as a share of total patient days, and (2) patient days for Medicare beneficiaries who are eligible for Supplemental Security Income "SSI" as a share of total Medicare patient days.
In 1998, the Health Care Financing Administration (HCFA) made a decision to disallow a portion of certain DSH payments to Pennsylvania hospitals and to recoup payments made to these hospitals in the past. HCFA is currently conducting a study to determine if any other states are similarly situated.
Explanation of Provision
The bill suspends collection of disallowances of DSH payments for one year, to permit HCFA, the states, and hospitals to analyze whether payments were made in error and come to a mutual understanding of outstanding disallowances, if any. It grants the Secretary the authority to spread any appropriate recoupment over a 10 year period at a reduced interest rate.
Reason for Change
It has very recently come to the Committee's attention that a limited number of states may have been reporting allowable Medicare DSH days in a manner that may be inconsistent with HCFA's administrative interpretation. The misreporting, if it occurred, was due to ambiguous or incorrect guidance provided by Medicare fiscal intermediaries related to the inclusion of state general assistance programs in DSH calculations. HCFA's fiscal intermediaries have begun the process of recouping alleged overpayments. The committee has made no determination of the appropriateness of such recoupment. However, because of the lack of certainty over the direction given to the states when they were establishing their DSH methodologies, and because of the potentially severe impact on individual hospitals, the Committee proposal intends to create a window of opportunity for HCFA, the impacted states, and affected hospitals to reach a resolution on the question of overpayments and recovery, if any.
Effective Date
Upon enactment.
Section 604. Technical amendments relating to BBA Provisions.
(a) Medicare Rural Hospital Flexibility Program
Current Law
BBA 1997 established the criteria for a small, rural, limited service hospital to be designated as a critical access hospital (CAH). The facility is designated as a critical access hospital if the facility is a nonprofit or public hospital and is located in a county that is either located more that 35 miles away (or given geographic constraints, 15 miles away) from another hospital or is certified by the State as a necessary provider.
Explanation of Provision
This change would clarify a drafting ambiguity and ensure an interpretation where the hospital and not the rural area itself, must be a certain distance from other hospitals or certified as a necessary provider of health services.
Effective Date
Effective as if in included in the Balanced Budget Act of 1997.
(b) Medicare-Dependent, Small Rural Hospital Payment Extension.
Current Law
BBA 1997 extended the Medicare Dependent Hospital program for cost reporting periods beginning on or after October 1, 1997 and before October 1, 2001, applicable with respect to discharges occurring on or after October 1, 1997
Explanation of Provision
This change would extend the Medicare Dependent Hospital program for discharges occurring after October 1, 1997 and before October 1, 2001.
Effective Date
As if in included in the Balanced Budget Act of 1997.
(c) Rural Health Clinic Services
Current Law
BBA 1997 applied a per-visit payment limit for rural health clinic services (other than those provided in clinics in rural hospitals with less than 50 beds) furnished on or after January 1, 1998.
Explanation of Provision
This provision would change the effective date of the per-visit payment limit to cost reporting periods beginning on or after January 1, 1998.
Effective Date
As if in included in the Balanced Budget Act of 1997.
(d) PPS Hospital Payment Update for Temporary Relief Hospitals
Current Law
BBA 1997 provided a temporary special payment in FY 1998 and FY 1999 for certain hospitals. Qualifying hospitals received a .5% additional increase to the FY1998 hospital market basket index and were supposed to have a .3% additional increase to the FY 1999 market basket index. However the existing language establishing the way these qualifying hospitals should be treated in FY 1999 refers to the FY 1998 hospital market basket update.
Explanation of Provision
This legislation would correct the reference.
Effective Date
As if in included in the Balanced Budget Act of 1997.
(e) Maintaining Savings From Temporary Reduction in Capital Payments for PPS Hospitals
Current Law
BBA 97 required the Secretary to rebase the acute hospital's capital payment rates by the actual rates in effect in FY 1995, so that aggregate capital payments will equal 90% of what payments would have been under reasonable cost payments, with an additional reduction of 2.1%. This capital payment method applies to discharges occurring on or after October 1, 1997 and before September 30, 2002
Explanation of Provision
The provision would extend the effective date of the existing capital payment method to discharges occurring before October 1, 2002
Effective Date
As if in included in the Balanced Budget Act of 1997.
(f) Elimination of Exemptions for Certain Units.
Current Law
BBA 1997 removed TEFRA exemptions for hospital except for those hospitals or units described in 1886(d)(1)(B)(iii). However 1886(d)(1)(B)(iii) is a definition of a hospital whose inpatients are predominantly under the age of 18.
Explanation of Provision
This change would remove the reference of a TEFRA exemption for children's unit.
Effective Date
As if in included in the Balanced Budget Act of 1997.
(g) To allow sufficient time for facility-specific rates to be established for Skilled Nursing Facilities (SNFs) for which the PPS does not begin until after January 1, 1999.
Current Law
The BBA 97 requires that the SNF prospective payment system be phased in over 3 years starting July 1, 1998, or the first date thereafter on which a SNF started a new annual cost reporting period. During this phase-in period, part of the per diem payment to each SNF is based on the facility's historical costs (the "facility specific" component of the prospective payment system), and part is based on the new federal per diem prospective payment. In the first year of the 3-year phase-in period starting on or after July 1, 1998, a SNF receives per diem rates that are a "blend" of 75% of the facility-specific rate and 25% of the federal per diem rate; in the second year the blend is 50% facility specific and 50% federal; in the third year the blend is 25% facility specific and 25% federal; in the fourth year the federal per diem rate is the full rate.
The current law requires that administrative and judicial review of facility specific rates not be permitted for SNFs with cost reporting periods starting before January 1, 9999.
Explanation of Provision
Some SNFs began the first cost reporting period to which the transition period and facility specific rates were applicable on or after January 1, 1999. Under current law, these facilities would be able to appeal their facility specific rate under the transition period. The provision would clarify that administrative and judicial review of facility specific rates under the prospective payment system transition period plan would not be permitted for all SNFs, including those starting their first transition cost reporting period on or after January 1, 1999.
Effective Date
Effective as if in included in the Balanced Budget Act of 1997.
(h) Transfer of Criminal Fines Recovered in a Federal Health Care Offense
Current Law
HIPPA established that criminal fines recovered in cases involving a federal health care offense (as defined by 18 USC 982(a)(6)(B)) shall be transferred to the Hospital Insurance Trust Fund. There is no 18 USC 982(a)(6)(B). 18 USC 982(a)(6) states: the court in imposing sentence on a person convicted of a Federal health care offense, shall order the person to forfeit property, real or personal, that constitutes or is derived directly or indirectly, from gross proceeds traceable to the commission of the offense.
Explanation of Provision
The provision would change the reference to criminal fines recovered in cases involving a federal health care offense as defined by 18 USC 24(a).
Effective Date
Effective as if in included in the HIPPA.
(I) To conform BBA 97 to existing statutes and link telehealth coverage to services furnished in a health professional shortage area (HPSA)
Current Law
BBA 97 authorized Medicare telemedicine payment for professional consultation with a physician or other practitioner furnishing a service to a Medicare beneficiary residing in a county in a rural area designated as a health professional shortage area (HPSA).
Explanation of Provision
The bill includes an amendment to specify that payment for telemedicine consultations is authorized for providers in HPSAs, regardless of where the beneficiary actually lives.
Effective Date
Effective as if in included in the Balanced Budget Act of 1997.
(j) To limit telehealth coverage to full county health professional shortage areas (HPSAs)
Current Law
HPSAs can encompass either a full county or part of a county. BBA 97 authorized Medicare telemedicine payment for professional consultation with a physician or other practitioner furnishing a service to a Medicare beneficiary residing in a county in a rural area designated as a health professional shortage area (HPSA).
Explanation of Provision.
The bill would clarify that reimbursement for telemedicine consultation services would be available only when a full county is designated as a HPSA.
Effective Date
Effective as if in included in the Balanced Budget Act of 1997.
(k) Medicare Payments to Newly Established PPS Exempt Providers.
Current Law
BBA 1997 authorized the Secretary to establish payment limits to new PPS exempt providers that are based on the target amounts of established providers. PPS exempt providers established after October 1, 1997 are subject to a limit equal to 110 percent of the wage and inflation adjusted, median target amount of established facilities in each provider class in FY 1996.
Explanation of Provision
This provision would make the Secretary's authority to estimate these limits explicit.
Effective Date
Effective as if in included in the Balanced Budget Act of 1997.
Section 605. Budgetary Compliance
Current Law
The Budget Enforcement Act requires the Office of Management & Budget to implement automatic across-the-board cuts (known as "sequestration") in non-exempt direct spending programs to offset any "net deficit increase caused by all direct spending and receipts legislation enacted before October 1, 2002."
Explanation of Provision
This provision clarifies that for purposes of section 252 of the Budget Enforcement Act, this bill shall not be considered to cause any "net deficit increase."
Reason for Change
This provision will prevent the bill from triggering a budget sequester.
Effective Date
Upon enactment.
TITLE VII - PROVISIONS RELATING TO MEDICAID AND CHIP
Section 701. Medicaid-related BBA Technicals.
(a). Cross Reference Corrections.
Current Law
No provision.
Explanation of Provision
The Committee's provision makes technical corrections to cross-references in Title XIX.
Reason for Change
The Health Care Financing Administration has identified errors in cross references drafted in the Balanced Budget Act of 1997.
Effective Date
Upon enactment.
(b) Elimination of Duplicative Requirements for External Quality
Review of Medicaid Managed Care Organizations.
Current Law
Medicaid managed care organizations are required to obtain annual independent, external reviews using either a utilization and quality control peer review organization, a PRO defined under section 1152, or a private accreditation body. The results must be made available to the State and upon request to the Secretary, the Inspector General of HHS and the Comptroller General. This requirement is contained in two different sections of Medicaid law.
Explanation of Provision
The committee's provision deletes the external review requirements of Section 1902 (a)(C) and would require the Secretary of HHS to certify to Congress that the external review requirement in Section 1932(c)(2) is fully implemented.
Reason for Change
The Health Care Financing Administration has identified redundancies in current law.
Effective Date
Upon enactment.
(c) Making Enhanced Match Under CHIP Program Inapplicable to
Medicaid DSH Payments.
Current Law
Medicaid authorizes states to make special disproportionate share (DSH) payments to certain hospitals treating large numbers of low-income and Medicaid patients. States have a great deal of flexibility in determining the formula used to calculate the payments paid to individual hospitals within minimum and maximum federal criteria. Those payments are matched by the federal government at the federal medical assistance percentage (FMAP), the same percentage that the federal government matches most other Medicaid payments for benefits. On the other hand, Medicaid payments for children who are eligible for benefits on the basis of being a targeted low-income child under Title XXI are matched at an enhanced federal matching percentage which is considerably higher than the basic Medicaid FMAP.
Explanation of Provision
The Committee's provision clarifies that Medicaid DSH payments are matched at the FMAP and not at the enhanced federal matching percentage authorized under Title XXI.
Reason for Change
The Health Care Financing Administration requested clarification to ensure that draw down of state DSH allotments is not altered unintentionally as a result of the creation of the CHIP program.
Effective Date
Effective on October 1, 1999 and applies to expenditures made on or after such date.
(d) Making Deferment of the Effective Date for Outpatient Drug
Agreements Optional for States.
Current Law
Medicaid law requires that rebate agreements between the Secretary (or, if authorized by the Secretary, with the States) and drug manufacturers that were not in effect before March 1, 1991 become effective the first day of the calendar quarter that begins more than 60 days after the date the agreement is entered into.
Explanation of Provision
The Committee's provision allows rebate agreements entered into after the date of enactment of this act to become effective on the date on which the agreement is entered into, or at State option, any date before or after the date on which the agreement is entered into.
Reason for Change
The Health Care Financing Administration and the states believe that flexibility related to effective dates will increase the efficiency of program administration.
Effective Date
Upon enactment.
(e) Authority to Transfer Funds from CHIP Appropriation to HCFA
Medicaid Account.
Current Law
No provision.
Explanation of Provision
The Committee's provision would allow the Secretary of HHS to transfer funds appropriated for Title XXI to the appropriations account for Title XIX in amounts necessary to pay for Medicaid spending on children eligible on the basis of Title XXI.
Reason for Change
The Health Care Financing Administration requested this provision to streamline their program accounting practices. The provision does not impact policy.
Effective Date
Effective for funds appropriated for fiscal year 2000.
Section 702. Increase in disproportionate share hospital allotment for certain states and the District of Columbia.
Current Law
The federal share of Medicaid disproportionate share hospital (DSH) payments is capped at amounts specified for each state.
Explanation of Provision
The Committee's provision increases the ceiling on the federal share of Medicaid disproportionate share payments for the District of Columbia, from $23 million to $ 32 million for each of fiscal years 2000 through 2002; for Minnesota, from $16 million to $33 million for each of fiscal years 1999 through 2002; for New Mexico, from $5 million to $9 million for each of fiscal years 1998 through 2002; for Wyoming, from 0 to $.1 million for each of fiscal years 1999 through 2002.
Reason for Change
The Balanced Budget Act (BBA) of 1997 increased the Medicaid matching rate for the District of Columbia, but the DSH table written into Title XIX elsewhere in BBA reflected the previous, lower match rate. This change recalculates DC's allotment based on the new rate. Minnesota, New Mexico, and Wyoming all misreported their DSH spending during the time periods used as the base in calculating the DSH allotments set forth in BBA. These errors, verified by HCFA, have been corrected through the appropriations process in previous years; this provision would make the correction permanent.
Effective Date
Retroactive to October 1, 1999.
Section 703. Making medicaid DSH transition rule permanent.
Current Law
For the period July 1, 1997 through July 1, 1999, hospital-specific disproportionate share hospital (DSH) payments for the State of California may be as high as 175% of the cost of care provided to Medicaid recipients and individuals who have no health insurance or other third-party coverage for services during the year (net of non-disproportionate share Medicaid payments and other payments by uninsured individuals).
Explanation of Provision
The Committee's provision would remove the July 1, 1999 end date for increased hospital-specific disproportionate share payments for the State of California, extending the transition period indefinitely.
Reason for Change
The State has petitioned for continuation of the transition rule to ensure the stability and viability of California's negotiated consensus on the allocation of its DSH allotment. The provision in no way impacts the state's overall DSH spending - it only relates to internal distribution of funds among hospitals. The California hospitals strongly support this provision.
Effective Date
Effective as if included in the Balanced Budget Act of 1997.
Section 704. Increased allotments for territories under the state children's health insurance program.
Current Law
Of the total amount available for allotment for the CHIP program, commonwealths and territories are allotted .25%, to be divided among them based on specified percentages. In addition, for fiscal year 1999, commonwealths and territories were allotted $32 million. This "additional allotment" amount was also divided among them based on the same specified percentages as the basic allotment.
Explanation of Provision
The provision requires an additional allotment to be available for the commonwealths and territories of $34.2 million for each of fiscal years 2000 and 2001, $25.2 million for each of fiscal years 2002 through 2004, $32.4 million for each of fiscal years 2005 and 2006, and $40 million for fiscal year 2007.
Reason for Change
The provision permanently corrects an under-representation of the population of the territories reflected in the original formula set forth in the Balanced Budget Act of 1997, rather than relying on the appropriations process to make the correction as was done in fiscal year 1999.
Effective Date
Upon enactment.
Section 705. Removal of fiscal year limitation on certain transitional administrative costs assistance.
Current Law
The Personal Welfare and Responsibility Act of 1996 replaced the Aid to Families with Dependent Children (AFDC) program and established the Temporary Assistance for Needy Families (TANF) program. Under the old program, people who qualified for AFDC were automatically eligible for Medicaid. Welfare reform de-linked Medicaid and TANF eligibility. Further, it provided states with a great deal more flexibility in designing welfare benefits and eligibility rules. Concerned that state Medicaid programs would face large new administrative costs for conducting Medicaid eligibility determinations that would otherwise not have occurred, Congress established a fund of $500 million to assist with the transitional costs of the new dual eligibility activities. The funds are available at an increased federal matching for states that can demonstrate to the satisfaction of the Secretary that such additional administrative costs were attributable to welfare reform. The increased matching funds are available for the period beginning with fiscal year 1997 and ending with fiscal year 2000 and must relate to costs incurred during the first 12 quarters following the welfare reform effective date.
Explanation of Provision
The Committee's provision would extend the availability of the transitional increased federal matching funds beyond fiscal year 2000 and allow costs for which the increased matching funds are claimed to relate to costs incurred for the calender quarters beyond the first 12 following the effective date of welfare reform.
Reason for Change
The Health Care Financing Administration is conducting state-by-state reviews to ensure that Medicaid and welfare eligibility systems are properly aligned. Extension of the period of access to the transition fund would make assistance available to correct any problems that are identified by the HCFA site visits.
Effective Date
The provision is effective as if included in the enactment of Section 114 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
Section 706. Stabilization of CHIP allotment formula.
Current Law
States and the District of Columbia are allotted funds for the CHIP program using a distribution formula based on the product of the number of low-income uncovered children and a "state cost factor". For fiscal years 1998 through 2000, low income uncovered children are equal to the 3-year average of uninsured children in families with income below 200% of the federal poverty level estimated for the fiscal year using the three most recent supplements to the March Current Population Survey. For fiscal year 2001, low-income uncovered children become 75% of the 3-year average of uninsured children in families with income below 200% of poverty plus 25% of the number of low-income children in the state. For years thereafter, low-income uncovered children would be equal to 50% of the 3-year average of uninsured, low-income children plus 50% of the low-income children in the state. The state cost factor for a fiscal year would be equal to the sum of .85 multiplied by the ratio of the annual average wages per employee in the state for such year to the national average wages per employee for such year and .15. The annual average wage per employee for each year would be calculated using the wages of employees in the health services industry as reported by the Bureau of Labor Statistics of the Department of Labor for each of the most recent 3 years before the beginning of the fiscal year involved.
CHIP further provides that allotments for states and the District of Columbia are subject to a floor of $2 million and should the calculation of the distribution formula result in an amount for any state (or the District) that is below $2 million, the allotment amount for that state (or the District) would be raised to $2 million and allotments for all other states be lowered accordingly.
Explanation of Provision
Acceleration of blended rate. The Committee's provision would accelerate the transition to the blended rate formula by one year. For 2000, low-income uncovered children would be calculated as the sum of 75% of the number of low-income uninsured children plus 25% of the number of low-income children. For years thereafter, low-income uncovered children would be calculated as 50% of low-income uninsured plus 50% of the number of low-income.
Floors and Ceilings in State Allotments. For any single state, the committee's provision would provide that the percentage of total federal allotment for any fiscal year cannot decrease by more than 10 percent from the previous year's allotment, nor may any state experience more than a 30 percent cumulative decline. In addition, no state may experience a cumulative increase of more than 45 percent over its fiscal year 1999 allotment. In order to keep within the overall SCHIP allotment amount, a reconciliation process will limit the annual growth of those states experiencing the highest annual increases.
Modification of Data Set Used to Determine Number of Children. The Committee's provision would change the data set to be used to estimate the number of low income uncovered children for a fiscal year from the three most recent March supplements of the CPS to the three most recent March supplements that were available before the calendar year in which the relevant fiscal year begins.
Reason for Change
The formula established by the Balanced Budget Act of 1997 results in allotment fluctuations of as much as 40 percent from one year to the next because of data instability. To avoid those fluctuations, last year Congress froze allotments at the fiscal year 1998 level. The provisions in this package build greater stability into the formula set forth in BBA, without making fundamental changes to the formula itself. These technical stability adjustments were developed with the input of HCFA, GAO, and CBO.
Effective Date
The amendments made by this section apply to allotments for fiscal year 2000 and each fiscal year thereafter.
Section 707. CHIP Data and Evaluation Improvement Act of 1999.
(a) Funding for reliable annual state-by-state estimates on the number of children who do not have health insurance coverage
Current Law
No provision.
Explanation of Provision
The Committee provision requires that the Secretary of Commerce make appropriate adjustments to the annual Current Population Survey (CPS) conducted by the Bureau of the Census to produce statistically reliable annual State-level data on the number of low-income children without health insurance. Data should be stratified by family income, age, and race or ethnicity. Appropriate adjustments to the CPS may include expanding sample size and/or sampling units within States, and appropriate verification methods. For these purposes, the Committee's provision requires that $10 million be appropriated for FY-2000 and for each year thereafter.
These changes to the CPS will improve critical data for evaluation purposes. They will also affect State-specific counts of number of low-income children and the number of such children who have no health insurance coverage that feed into the formula in existing law that determines annual State-specific allotments from Federal CHIP appropriations.
Reason for Change
Current state-by-state estimates of uninsured, low-income children rely on data sets too small to produce reliable results. Increasing the sample size will yield more accurate data.
Effective Date
Upon enactment.
(b) Funding for children's health care access and utilization state-by-state data
Current Law
No provision.
Explanation of Provision
The Committee provision requires the Secretary of Health and Human Services, acting through the National Center for Health Statistics (NCHS), to collect data on children's health insurance through the State and Local Area Integrated Telephone Survey (SLAITS) for the 50 States and the District of Columbia. The data collected must provide reliable, annual State-by-State information on health care access and utilization by low-income children. Data must also allow for stratification by family income, age, and race or ethnicity. The Secretary must obtain input from appropriate sources, including States, in designing the survey and its content. For these purposes, the Committee's provision requires that $9 million be appropriated for FY-2000 and for each year thereafter.
Finally, at State request, the Secretary may also collect additional SLAITS data to assist with individual State CHIP evaluations, for which the States must reimburse NCHS for such services.
Reason for Change
This provision will improve state-by-state data collection on health care access and utilization, which will be useful in evaluations of the state children's health insurance program.
Effective Date
Upon enactment.
(c) Federal evaluation of state children's health insurance programs
Current Law
The Secretary is required to submit to Congress by December 31, 2001, a report based on the annual evaluations submitted by States, with conclusions and recommendations, as appropriate.
Explanation of Provision
The Committee provision adds a new Federal evaluation to current law. The Secretary of Health and Human Services, directly or through contracts or interagency agreements, would be required to conduct an independent evaluation of 10 States with approved CHIP plans. The selected States must represent diverse approaches to providing child health assistance, a mix of geographic areas (including rural and urban areas), and a significant portion of uninsured children. The Federal evaluation will include, but not be limited to: (1) a survey of the target population, (2) an assessment of effective and ineffective outreach and enrollment practices for both CHIP and Medicaid, (3) an analysis of Medicaid eligibility rules and procedures that are a barrier to enrollment in Medicaid, and how coordination between Medicaid and CHIP has affected enrollment under both programs, (4) an assessment of the effects of cost-sharing policies on enrollment, utilization and retention, and (5) an analysis of disenrollment patterns and factors influencing this process. The Secretary must submit the results of the Federal evaluation to Congress no later than December 31, 2001. For these purposes, the Committee's provision requires that $10 million be appropriated for FY-2000. This appropriation shall remain available without fiscal year limitation.
Reason for Change
Under current law, there is no federal evaluation of the CHIP program as a whole, only a compilation of state-by-state reports. This provision would establish a broader evaluation to study trends and patterns and elicit information about areas of possible improvement.
Effective Date
Upon enactment.
(d) Inspector general audit and GAO report on enrollees eligible for medicaid
Current Law
No provision.
Explanation of Provision
The Committee provision requires that the Inspector General of the Department of Health and Human Services conduct an audit to determine how many Medicaid-eligible children are incorrectly enrolled in CHIP among a sample of States that provide child health assistance through separate programs only (not via a Medicaid expansion). This audit will also assess progress in reducing the number of uninsured children relative to the goals stated in approved CHIP plans. The first such audit will be conducted in FY-2000, and will be repeated every third fiscal year thereafter. In addition, this provision requires GAO to monitor these audits and report their results to Congress within six months of audit completion (i.e., by March 1 of the fiscal year following each audit).
Reason for Change
There have been anecdotal reports of Medicaid eligible children enrolling in CHIP inappropriately. This research will determine whether there is in fact a problem with inappropriate program assignment. In addition, the provision also will require ongoing assessment of whether the CHIP program is on track to meet its coverage goals.
Effective Date
Upon enactment.
(e) Coordination of data collection with data requirements under the maternal and child health services block grant
Current Law
Under current law, States are required to submit annual reports detailing their activities under the Maternal and Child Health (MCH) Services Block Grant. These reports must include, among other items, information (by racial and ethnic group) on: (1) the number of deliveries to pregnant women who were provided prenatal, delivery or postpartum care under the block grant or who were entitled to benefits with respect to such deliveries under Medicaid, and (2) the number of infants under one year of age who were provided services under the block grant or were entitled to benefits under Medicaid.
Explanation of Provision
The Committee provision would add to the existing reporting requirement under the MCH Block Grant authority inclusion of information (by racial and ethnic group) on the number of deliveries to pregnant women entitled to benefits under CHIP, and the number of infants under age one year entitled to CHIP benefits.
Reason for Change
The provision will improve coordination between the MCH and CHIP programs.
Effective Date
Upon enactment.
(f) Coordination of data surveys and reports
Current Law
No provision.
Explanation of Provision
The Committee provision requires that the Secretary of Health and Human Services, through the Assistant Secretary of Planning and Evaluation, establish a clearinghouse for the consolidation and coordination of all Federal data bases and reports regarding children's health.
Reason for Change
The provision will facilitate greater ease of access to data regarding children's health.
Effective Date
Upon enactment.
Section 709. Additional technical corrections.
Current Law
No provision
Explanation of Provision
The provision would make technical corrections to Title XIX.
Reason for Change
Legislative counsel recommends that typographical errors in the statute be corrected.
Effective Date
Upon enactment.