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[Congressional Record: December 15, 2000 (House)]
[Page H12355-H12405]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr15de00-44]                         
 
[[pp. H12355-H12405]] CONFERENCE REPORT ON H.R. 4577, DEPARTMENTS OF LABOR, HEALTH AND HUMAN 
 SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2001

[[Continued from page H12354]]

[[Page H12355]]

 Subtitle B--Adjustments to PPS Payments for Skilled Nursing Facilities

     SEC. 311. ELIMINATION OF REDUCTION IN SKILLED NURSING 
                   FACILITY (SNF) MARKET BASKET UPDATE IN 2001.

       (a) In General.--Section 1888(e)(4)(E)(ii) (42 U.S.C. 
     1395yy(e)(4)(E)(ii)) is amended--
       (1) by redesignating subclauses (II) and (III) as 
     subclauses (III) and (IV), respectively;
       (2) in subclause (III), as so redesignated--
       (A) by striking ``each of fiscal years 2001 and 2002'' and 
     inserting ``each of fiscal years 2002 and 2003''; and
       (B) by striking ``minus 1 percentage point'' and inserting 
     ``minus 0.5 percentage points''; and
       (3) by inserting after subclause (I) the following new 
     subclause:

       ``(II) for fiscal year 2001, the rate computed for the 
     previous fiscal year increased by the skilled nursing 
     facility market basket percentage change for the fiscal 
     year;''.

       (b) Special Rule for Payment for Fiscal Year 2001.--
     Notwithstanding the amendments made by subsection (a), for 
     purposes of making payments for covered skilled nursing 
     facility services under section 1888(e) of the Social 
     Security Act (42 U.S.C. 1395yy(e)) for fiscal year 2001, the 
     Federal per diem rate referred to in paragraph (4)(E)(ii) of 
     such section--
       (1) for the period beginning on October 1, 2000, and ending 
     on March 31, 2001, shall be the rate determined in accordance 
     with the law as in effect on the day before the date of the 
     enactment of this Act; and
       (2) for the period beginning on April 1, 2001, and ending 
     on September 30, 2001, shall be the rate that would have been 
     determined under such section if ``plus 1 percentage point'' 
     had been substituted for ``minus 1 percentage point'' under 
     subclause (II) of such paragraph (as in effect on the day 
     before the date of the enactment of this Act).
       (c) Relation to Temporary Increase in BBRA.--The increases 
     provided under section 101 of BBRA (113 Stat. 1501A-325) 
     shall be in addition to any increase resulting from the 
     amendments made by subsection (a).
       (d) GAO Report on Adequacy of SNF Payment Rates.--Not later 
     than July 1, 2002, the Comptroller General of the United 
     States shall submit to Congress a report on the adequacy of 
     medicare payment rates to skilled nursing facilities and the 
     extent to which medicare contributes to the financial 
     viability of such facilities. Such report shall take into 
     account the role of private payors, medicaid, and case mix on 
     the financial performance of these facilities, and shall 
     include an analysis (by specific RUG classification) of the 
     number and characteristics of such facilities.
       (e) HCFA Study of Classification Systems for SNF 
     Residents.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study of the different systems for 
     categorizing patients in medicare skilled nursing facilities 
     in a manner that accounts for the relative resource 
     utilization of different patient types.
       (2) Report.--Not later than January 1, 2005, the Secretary 
     shall submit to Congress a report on the study conducted 
     under subsection (a). Such report shall include such 
     recommendations regarding changes in law as may be 
     appropriate.

     SEC. 312. INCREASE IN NURSING COMPONENT OF PPS FEDERAL RATE.

       (a) In General.--The Secretary of Health and Human Services 
     shall increase by 16.66 percent the nursing component of the 
     case-mix adjusted Federal prospective payment rate specified 
     in Tables 3 and 4 of the final rule published in the Federal 
     Register by the Health Care Financing Administration on July 
     31, 2000 (65 Fed. Reg. 46770) and as subsequently updated, 
     effective for services furnished on or after April 1, 2001, 
     and before October 1, 2002.
       (b) GAO Audit of Nursing Staff Ratios.--
       (1) Audit.--The Comptroller General of the United States 
     shall conduct an audit of nursing staffing ratios in a 
     representative sample of medicare skilled nursing facilities. 
     Such sample shall cover selected States and shall include 
     broad representation with respect to size, ownership, 
     location, and medicare volume. Such audit shall include an 
     examination of payroll records and medicaid cost reports of 
     individual facilities.
       (2) Report.--Not later than August 1, 2002, the Comptroller 
     General shall submit to Congress a report on the audits 
     conducted under paragraph (1). Such report shall include an 
     assessment of the impact of the increased payments under this 
     subtitle on increased nursing staff ratios and shall make 
     recommendations as to whether increased payments under 
     subsection (a) should be continued.

     SEC. 313. APPLICATION OF SNF CONSOLIDATED BILLING REQUIREMENT 
                   LIMITED TO PART A COVERED STAYS.

       (a) In General.--Section 1862(a)(18) (42 U.S.C. 
     1395y(a)(18)) is amended by striking ``or of a part of a 
     facility that includes a skilled nursing facility (as 
     determined under regulations),'' and inserting ``during a 
     period in which the resident is provided covered post-
     hospital extended care services (or, for services described 
     in section 1861(s)(2)(D), which are furnished to such an 
     individual without regard to such period),''.
       (b) Conforming Amendments.--(1) Section 1842(b)(6)(E) (42 
     U.S.C. 1395u(b)(6)(E)) is amended--
       (A) by inserting ``by, or under arrangements made by, a 
     skilled nursing facility'' after ``furnished'';
       (B) by striking ``or of a part of a facility that includes 
     a skilled nursing facility (as determined under 
     regulations)''; and
       (C) by striking ``(without regard to whether or not the 
     item or service was furnished by the facility, by others 
     under arrangement with them made by the facility, under any 
     other contracting or consulting arrangement, or otherwise)''.
       (2) Section 1842(t) (42 U.S.C. 1395u(t)) is amended by 
     striking ``by a physician'' and ``or of a part of a facility 
     that includes a skilled nursing facility (as determined under 
     regulations),''.
       (3) Section 1866(a)(1)(H)(ii)(I) (42 U.S.C. 
     1395cc(a)(1)(H)(ii)(I)) is amended by inserting after ``who 
     is a resident of the skilled nursing facility'' the 
     following: ``during a period in which the resident is 
     provided covered post-hospital extended care services (or, 
     for services described in section 1861(s)(2)(D), that are 
     furnished to such an individual without regard to such 
     period)''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to services furnished on or after January 
     1, 2001.
       (d) Oversight.--The Secretary of Health and Human Services, 
     through the Office of the Inspector General in the Department 
     of Health and Human Services or otherwise, shall monitor 
     payments made under part B of the title XVIII of the Social 
     Security Act for items and services furnished to residents of 
     skilled nursing facilities during a time in which the 
     residents are not being provided medicare covered post-
     hospital extended care services to ensure that there is not 
     duplicate billing for services or excessive services 
     provided.

     SEC. 314. ADJUSTMENT OF REHABILITATION RUGS TO CORRECT 
                   ANOMALY IN PAYMENT RATES.

       (a) Adjustment for Rehabilitation RUGs.--
       (1) In general.--For purposes of computing payments for 
     covered skilled nursing facility services under paragraph (1) 
     of section 1888(e) of the Social Security Act (42 U.S.C. 
     1395yy(e)) for such services furnished on or after April 1, 
     2001, and before the date described in section 101(c)(2) of 
     BBRA (113 Stat. 1501A-324), the Secretary of Health and Human 
     Services shall increase by 6.7 percent the adjusted Federal 
     per diem rate otherwise determined under paragraph (4) of 
     such section (but for this section) for covered skilled 
     nursing facility services for RUG-III rehabilitation groups 
     described in paragraph (2) furnished to an individual during 
     the period in which such individual is classified in such a 
     RUG-III category.
       (2) Rehabilitation groups described.--The RUG-III 
     rehabilitation groups for which the adjustment described in 
     paragraph (1) applies are RUC, RUB, RUA, RVC, RVB, RVA, RHC, 
     RHB, RHA, RMC, RMB, RMA, RLB, and RLA, as specified in Tables 
     3 and 4 of the final rule published in the Federal Register 
     by the Health Care Financing Administration on July 31, 2000 
     (65 Fed. Reg. 46770).
       (b) Correction With Respect to Rehabilitation RUGs.--
       (1) In general.--Section 101(b) of BBRA (113 Stat. 1501A-
     324) is amended by striking ``CA1, RHC, RMC, and RMB'' and 
     inserting ``and CA1''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to services furnished on or after April 1, 2001.
       (c) Review by Office of Inspector General.--The Inspector 
     General of the Department of Health and Human Services shall 
     review the medicare payment structure for services classified 
     within rehabilitation resource utilization groups (RUGs) (as 
     in effect after the date of the enactment of the BBRA) to 
     assess whether payment incentives exist for the delivery of 
     inadequate care. Not later than October 1, 2001, the 
     Inspector General shall submit to Congress a report on such 
     review.

     SEC. 315. ESTABLISHMENT OF PROCESS FOR GEOGRAPHIC 
                   RECLASSIFICATION.

       (a) In General.--The Secretary of Health and Human Services 
     may establish a procedure for the geographic reclassification 
     of a skilled nursing facility for purposes of payment for 
     covered skilled nursing facility services under the 
     prospective payment system established under section 1888(e) 
     of the Social Security Act (42 U.S.C. 1395yy(e)). Such 
     procedure may be based upon the method for geographic 
     reclassifications for inpatient hospitals established under 
     section 1886(d)(10) of the Social Security Act (42 U.S.C. 
     1395ww(d)(10)).
       (b) Requirement for Skilled Nursing Facility Wage Data.--In 
     no case may the Secretary implement the procedure under 
     subsection (a) before such time as the Secretary has 
     collected data necessary to establish an area wage index for 
     skilled nursing facilities based on wage data from such 
     facilities.

                        Subtitle C--Hospice Care

     SEC. 321. 5 PERCENT INCREASE IN PAYMENT BASE.

       (a) In General.--Section 1814(i)(1)(C)(ii)(VI) (42 U.S.C. 
     1395f(i)(1)(C)(ii)(VI)) is amended by inserting ``, plus, in 
     the case of fiscal year 2001, 5.0 percentage points'' before 
     the semicolon at the end.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to hospice care furnished on or after April 1, 
     2001. In applying clause (ii) of section 1814(i)(1)(C) of the 
     Social Security Act (42 U.S.C. 1395f(i)(1)(C)) beginning with 
     fiscal year 2002, the payment rates in effect under such 
     section during the period beginning on April 1, 2001, and 
     ending on September 30, shall be treated as the payment rates 
     in effect during fiscal year 2001.
       (c) No Effect on BBRA Temporary Increase.--The provisions 
     of this section shall have no effect on the application of 
     section 131 of BBRA.
       (d) Application of Wage Index.--Notwithstanding section 
     1814(i) of the Social Security Act (42 U.S.C. 1395f(i)), the 
     Secretary of Health and Human Services shall use 1.0043 as 
     the hospice wage index value for the Wichita, Kansas

[[Page H12356]]

     Metropolitan Statistical Area in calculating payments under 
     such section for a hospice program providing hospice care in 
     such area during fiscal year 2000. The Secretary may provide 
     for an appropriate timely lump sum payment to reflect the 
     application of the previous sentence.
       (e) Technical Amendment.--Section 1814(a)(7)(A)(ii) (42 
     U.S.C. 1395f(a)(7)(A)(ii)) is amended by striking the period 
     at the end and inserting a semicolon.

     SEC. 322. CLARIFICATION OF PHYSICIAN CERTIFICATION.

       (a) Certification Based on Normal Course of Illness.--
       (1) In general.--Section 1814(a) (42 U.S.C. 1395f(a)) is 
     amended by adding at the end the following new sentence: 
     ``The certification regarding terminal illness of an 
     individual under paragraph (7) shall be based on the 
     physician's or medical director's clinical judgment regarding 
     the normal course of the individual's illness.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to certifications made on or after the date of 
     the enactment of this Act.
       (b) Study and Report on Physician Certification Requirement 
     for Hospice Benefits.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study to examine the appropriateness of the 
     certification regarding terminal illness of an individual 
     under section 1814(a)(7) of the Social Security Act (42 
     U.S.C. 1395f(a)(7)) that is required in order for such 
     individual to receive hospice benefits under the medicare 
     program under title XVIII of such Act. In conducting such 
     study, the Secretary shall take into account the effect of 
     the amendment made by subsection (a).
       (2) Report.--Not later than 2 years after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report on the study 
     conducted under paragraph (1), together with any 
     recommendations for legislation that the Secretary deems 
     appropriate.

     SEC. 323. MEDPAC REPORT ON ACCESS TO, AND USE OF, HOSPICE 
                   BENEFIT.

       (a) In General.--The Medicare Payment Advisory Commission 
     shall conduct a study to examine the factors affecting the 
     use of hospice benefits under the medicare program under 
     title XVIII of the Social Security Act, including a delay in 
     the time (relative to death) of entry into a hospice program, 
     and differences in such use between urban and rural hospice 
     programs and based upon the presenting condition of the 
     patient.
       (b) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under subsection 
     (a), together with any recommendations for legislation that 
     the Commission deems appropriate.

                      Subtitle D--Other Provisions

     SEC. 331. RELIEF FROM MEDICARE PART A LATE ENROLLMENT PENALTY 
                   FOR GROUP BUY-IN FOR STATE AND LOCAL RETIREES.

       (a) In General.--Section 1818 (42 U.S.C. 1395i-2) is 
     amended--
       (1) in subsection (c)(6), by inserting before the semicolon 
     at the end the following: ``and shall be subject to reduction 
     in accordance with subsection (d)(6)''; and
       (2) by adding at the end of subsection (d) the following 
     new paragraph:
       ``(6)(A) In the case where a State, a political subdivision 
     of a State, or an agency or instrumentality of a State or 
     political subdivision thereof determines to pay, for the life 
     of each individual, the monthly premiums due under paragraph 
     (1) on behalf of each of the individuals in a qualified State 
     or local government retiree group who meets the conditions of 
     subsection (a), the amount of any increase otherwise 
     applicable under section 1839(b) (as applied and modified by 
     subsection (c)(6) of this section) with respect to the 
     monthly premium for benefits under this part for an 
     individual who is a member of such group shall be reduced by 
     the total amount of taxes paid under section 3101(b) of the 
     Internal Revenue Code of 1986 by such individual and under 
     section 3111(b) by the employers of such individual on behalf 
     of such individual with respect to employment (as defined in 
     section 3121(b) of such Code).
       ``(B) For purposes of this paragraph, the term `qualified 
     State or local government retiree group' means all of the 
     individuals who retire prior to a specified date that is 
     before January 1, 2002, from employment in 1 or more 
     occupations or other broad classes of employees of--
       ``(i) the State;
       ``(ii) a political subdivision of the State; or
       ``(iii) an agency or instrumentality of the State or 
     political subdivision of the State.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to premiums for months beginning with January 1, 
     2002.

                TITLE IV--PROVISIONS RELATING TO PART B

                Subtitle A--Hospital Outpatient Services

     SEC. 401. REVISION OF HOSPITAL OUTPATIENT PPS PAYMENT UPDATE.

       (a) In General.--Section 1833(t)(3)(C)(iii) (42 U.S.C. 
     1395l(t)(3)(C)(iii)) is amended by striking ``in each of 
     2000, 2001, and 2002'' and inserting ``in each of 2000 and 
     2002''.
       (b) Adjustment for Case Mix Changes.--
       (1) In general.--Section 1833(t)(3)(C) (42 U.S.C. 
     1395l(t)(3)(C)) is amended--
       (A) by redesignating clause (iii) as clause (iv); and
       (B) by inserting after clause (ii) the following new 
     clause:
       ``(iii) Adjustment for service mix changes.--Insofar as the 
     Secretary determines that the adjustments for service mix 
     under paragraph (2) for a previous year (or estimates that 
     such adjustments for a future year) did (or are likely to) 
     result in a change in aggregate payments under this 
     subsection during the year that are a result of changes in 
     the coding or classification of covered OPD services that do 
     not reflect real changes in service mix, the Secretary may 
     adjust the conversion factor computed under this subparagraph 
     for subsequent years so as to eliminate the effect of such 
     coding or classification changes.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect as if included in the enactment of BBA.
       (c) Special Rule for Payment for 2001.--Notwithstanding the 
     amendment made by subsection (a), for purposes of making 
     payments under section 1833(t) of the Social Security Act 
     (42 U.S.C. 1395l(t)) for covered OPD services furnished 
     during 2001, the medicare OPD fee schedule amount under 
     such section--
       (1) for services furnished on or after January 1, 2001, and 
     before April 1, 2001, shall be the medicare OPD fee schedule 
     amount for 2001 as determined under the provisions of law in 
     effect on the day before the date of the enactment of this 
     Act; and
       (2) for services furnished on or after April 1, 2001, and 
     before January 1, 2002, shall be the fee schedule amount (as 
     determined taking into account the amendment made by 
     subsection (a)), increased by a transitional percentage 
     allowance equal to 0.32 percent (to account for the timing of 
     implementation of the full market basket update).

     SEC. 402. CLARIFYING PROCESS AND STANDARDS FOR DETERMINING 
                   ELIGIBILITY OF DEVICES FOR PASS-THROUGH 
                   PAYMENTS UNDER HOSPITAL OUTPATIENT PPS.

       (a) In General.--Section 1833(t)(6) (42 U.S.C. 1395l(t)(6)) 
     is amended--
       (1) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E), respectively; and
       (2) by striking subparagraph (B) and inserting the 
     following new subparagraphs:
       ``(B) Use of categories in determining eligibility of a 
     device for pass-through payments.--The following provisions 
     apply for purposes of determining whether a medical device 
     qualifies for additional payments under clause (ii) or (iv) 
     of subparagraph (A):
       ``(i) Establishment of initial categories.--

       ``(I) In general.--The Secretary shall initially establish 
     under this clause categories of medical devices based on type 
     of device by April 1, 2001. Such categories shall be 
     established in a manner such that each medical device that 
     meets the requirements of clause (ii) or (iv) of subparagraph 
     (A) as of January 1, 2001, is included in such a category and 
     no such device is included in more than one category. For 
     purposes of the preceding sentence, whether a medical device 
     meets such requirements as of such date shall be determined 
     on the basis of the program memoranda issued before such 
     date.
       ``(II) Authorization of implementation other than through 
     regulations.--The categories may be established under this 
     clause by program memorandum or otherwise, after consultation 
     with groups representing hospitals, manufacturers of medical 
     devices, and other affected parties.

       ``(ii) Establishing criteria for additional categories.--

       ``(I) In general.--The Secretary shall establish criteria 
     that will be used for creation of additional categories 
     (other than those established under clause (i)) through 
     rulemaking (which may include use of an interim final rule 
     with comment period).
       ``(II) Standard.--Such categories shall be established 
     under this clause in a manner such that no medical device is 
     described by more than one category. Such criteria shall 
     include a test of whether the average cost of devices that 
     would be included in a category and are in use at the time 
     the category is established is not insignificant, as 
     described in subparagraph (A)(iv)(II).
       ``(III) Deadline.--Criteria shall first be established 
     under this clause by July 1, 2001. The Secretary may 
     establish in compelling circumstances categories under this 
     clause before the date such criteria are established.
       ``(IV) Adding categories.--The Secretary shall promptly 
     establish a new category of medical devices under this clause 
     for any medical device that meets the requirements of 
     subparagraph (A)(iv) and for which none of the categories in 
     effect (or that were previously in effect) is appropriate.

       ``(iii) Period for which category is in effect.--A category 
     of medical devices established under clause (i) or (ii) shall 
     be in effect for a period of at least 2 years, but not more 
     than 3 years, that begins--

       ``(I) in the case of a category established under clause 
     (i), on the first date on which payment was made under this 
     paragraph for any device described by such category 
     (including payments made during the period before April 1, 
     2001); and
       ``(II) in the case of any other category, on the first date 
     on which payment is made under this paragraph for any medical 
     device that is described by such category.

       ``(iv) Requirements treated as met.--A medical device shall 
     be treated as meeting the requirements of subparagraph 
     (A)(iv), regardless of whether the device meets the 
     requirement of subclause (I) of such subparagraph, if--

       ``(I) the device is described by a category established and 
     in effect under clause (i); or
       ``(II) the device is described by a category established 
     and in effect under clause (ii) and an application under 
     section 515 of the Federal Food, Drug, and Cosmetic Act has 
     been approved with respect to the device, or the device has 
     been cleared for market under section 510(k) of such Act, or 
     the device is exempt from the requirements of section 510(k) 
     of such Act pursuant to subsection (l) or (m) of section 510 
     of such Act or section 520(g) of such Act.

[[Page H12357]]

     Nothing in this clause shall be construed as requiring an 
     application or prior approval (other than that described in 
     subclause (II)) in order for a covered device described by a 
     category to qualify for payment under this paragraph.
       ``(C) Limited period of payment.--
       ``(i) Drugs and biologicals.--The payment under this 
     paragraph with respect to a drug or biological shall only 
     apply during a period of at least 2 years, but not more than 
     3 years, that begins--

       ``(I) on the first date this subsection is implemented in 
     the case of a drug or biological described in clause (i), 
     (ii), or (iii) of subparagraph (A) and in the case of a drug 
     or biological described in subparagraph (A)(iv) and for which 
     payment under this part is made as an outpatient hospital 
     service before such first date; or
       ``(II) in the case of a drug or biological described in 
     subparagraph (A)(iv) not described in subclause (I), on the 
     first date on which payment is made under this part for the 
     drug or biological as an outpatient hospital service.

       ``(ii) Medical devices.--Payment shall be made under this 
     paragraph with respect to a medical device only if such 
     device--

       ``(I) is described by a category of medical devices 
     established and in effect under subparagraph (B); and
       ``(II) is provided as part of a service (or group of 
     services) paid for under this subsection and provided during 
     the period for which such category is in effect under such 
     subparagraph.''.
       (b) Conforming Amendments.--Section 1833(t) (42 U.S.C. 
     1395l(t)) is further amended--
       (1) in paragraph (6)(A)(iv)(II), by striking ``the cost of 
     the device, drug, or biological'' and inserting ``the cost of 
     the drug or biological or the average cost of the category of 
     devices'';
       (2) in paragraph (6)(D) (as redesignated by subsection 
     (a)(1)), by striking ``subparagraph (D)(iii)'' in the matter 
     preceding clause (i) and inserting ``subparagraph (E)(iii)''; 
     and
       (3) in paragraph (12)(E), by striking ``additional payments 
     (consistent with paragraph (6)(B))'' and inserting 
     ``additional payments, the determination and deletion of 
     initial and new categories (consistent with subparagraphs (B) 
     and (C) of paragraph (6))''.
       (c) Effective Date.--The amendments made by this section 
     take effect on the date of the enactment of this Act.
       (d) Transition.--
       (1) In general.--In the case of a medical device provided 
     as part of a service (or group of services) furnished during 
     the period before initial categories are implemented under 
     subparagraph (B)(i) of section 1833(t)(6) of the Social 
     Security Act (as amended by subsection (a)), payment shall be 
     made for such device under such section in accordance with 
     the provisions in effect before the date of the enactment of 
     this Act. In addition, beginning on the date that is 30 days 
     after the date of the enactment of this Act, payment shall be 
     made for such a device that is not included in a program 
     memorandum described in such subparagraph if the Secretary of 
     Health and Human Services determines that the device 
     (including a device that would have been included in such 
     program memoranda but for the requirement of subparagraph 
     (A)(iv)(I) of that section) is likely to be described by such 
     an initial category.
       (2) Application of current process.--Notwithstanding any 
     other provision of law, the Secretary shall continue to 
     accept applications with respect to medical devices under the 
     process established pursuant to paragraph (6) of section 
     1833(t) of the Social Security Act (as in effect on the day 
     before the date of the enactment of this Act) through 
     December 1, 2000, and any device--
       (A) with respect to which an application was submitted 
     (pursuant to such process) on or before such date; and
       (B) that meets the requirements of clause (ii) or (iv) of 
     subparagraph (A) of such paragraph (as determined pursuant to 
     such process),
     shall be treated as a device with respect to which an initial 
     category is required to be established under subparagraph 
     (B)(i) of such paragraph (as amended by subsection (a)(2)).

     SEC. 403. APPLICATION OF OPD PPS TRANSITIONAL CORRIDOR 
                   PAYMENTS TO CERTAIN HOSPITALS THAT DID NOT 
                   SUBMIT A 1996 COST REPORT.

       (a) In General.--Section 1833(t)(7)(F)(ii)(I) (42 U.S.C. 
     1395l(t)(7)(F)(ii)(I)) is amended by inserting ``(or in the 
     case of a hospital that did not submit a cost report for such 
     period, during the first subsequent cost reporting period 
     ending before 2001 for which the hospital submitted a cost 
     report)'' after ``1996''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of BBRA.

     SEC. 404. APPLICATION OF RULES FOR DETERMINING PROVIDER-BASED 
                   STATUS FOR CERTAIN ENTITIES.

       (a) Grandfather.--Notwithstanding any other provision of 
     law, effective October 1, 2000, for purposes of provider-
     based status under title XVIII of the Social Security Act--
       (1) any facility or organization that is treated as 
     provider-based in relation to a hospital or critical access 
     hospital under such title as of such date shall continue to 
     be treated as provider-based in relation to such hospital or 
     critical access hospital under such title until October 1, 
     2002; and
       (2) the requirements, limitations, and exclusions specified 
     in subsections (d), (e), (f), and (h) of section 413.65 of 
     title 42, Code of Federal Regulations, shall not apply to 
     such facility or organization in relation to such hospital or 
     critical access hospital until October 1, 2002.
       (b) Continuing Criteria for Meeting Geographic Location 
     Requirement.--Except as provided in subsection (a), in making 
     determinations of provider-based status on or after October 
     1, 2000, the following rules shall apply:
       (1) The facility or organization shall be treated as 
     satisfying any requirements and standards for geographic 
     location in relation to a hospital or a critical access 
     hospital if the facility or organization--
       (A) satisfies the requirements of section 413.65(d)(7) of 
     title 42, Code of Federal Regulations; or
       (B) is located not more than 35 miles from the main campus 
     of the hospital or critical access hospital.
       (2) The facility or organization shall be treated as 
     satisfying any of the requirements and standards for 
     geographic location in relation to a hospital or a critical 
     access hospital if the facility or organization is owned and 
     operated by a hospital or critical access hospital that--
       (A) is owned or operated by a unit of State or local 
     government, is a public or private nonprofit corporation that 
     is formally granted governmental powers by a unit of State or 
     local government, or is a private hospital that has a 
     contract with a State or local government that includes the 
     operation of clinics located off the main campus of the 
     hospital to assure access in a well-defined service area to 
     health care services for low-income individuals who are not 
     entitled to benefits under title XVIII (or medical assistance 
     under a State plan under title XIX) of the Social Security 
     Act; and
       (B) has a disproportionate share adjustment percentage (as 
     determined under section 1886(d)(5)(F) of such Act (42 U.S.C. 
     1395ww(d)(5)(F))) greater than 11.75 percent or is described 
     in clause (i)(II) of such section.
       (c) Temporary Criteria.--For purposes of title XVIII of the 
     Social Security Act, a facility or organization for which a 
     determination of provider-based status in relation to a 
     hospital or critical access hospital is requested on or after 
     October 1, 2000, and before October 1, 2002, shall be treated 
     as having provider-based status in relation to such a 
     hospital or a critical access hospital for any period before 
     a determination is made with respect to such status pursuant 
     to such request.
       (d) Definitions.--For purposes of this section, the terms 
     ``hospital'' and ``critical access hospital'' have the 
     meanings given such terms in subsections (e) and (mm)(1), 
     respectively, of section 1861 of the Social Security Act (42 
     U.S.C. 1395x).

     SEC. 405. TREATMENT OF CHILDREN'S HOSPITALS UNDER PROSPECTIVE 
                   PAYMENT SYSTEM.

       (a) In General.--Section 1833(t) (42 U.S.C. 1395l(t)) is 
     amended--
       (1) in the heading of paragraph (7)(D)(ii), by inserting 
     ``and children's hospitals'' after ``cancer hospitals''; and
       (2) in paragraphs (7)(D)(ii) and (11), by striking 
     ``section 1886(d)(1)(B)(v)'' and inserting ``clause (iii) or 
     (v) of section 1886(d)(1)(B)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply as if included in the enactment of section 202 of 
     BBRA (113 Stat. 1501A-342).

     SEC. 406. INCLUSION OF TEMPERATURE MONITORED CRYOABLATION IN 
                   TRANSITIONAL PASS-THROUGH FOR CERTAIN MEDICAL 
                   DEVICES, DRUGS, AND BIOLOGICALS UNDER OPD PPS.

       (a) In General.--Section 1833(t)(6)(A)(ii) (42 U.S.C. 
     1395l(t)(6)(A)(ii)) is amended by inserting ``or temperature 
     monitored cryoablation'' after ``device of brachytherapy''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to devices furnished on or after April 1, 2001.

        Subtitle B--Provisions Relating to Physicians' Services

     SEC. 411. GAO STUDIES RELATING TO PHYSICIANS' SERVICES.

       (a) Study of Specialist Physicians' Services Furnished in 
     Physicians' Offices and Hospital Outpatient Department 
     Services.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study to examine the appropriateness of 
     furnishing in physicians' offices specialist physicians' 
     services (such as gastrointestinal endoscopic physicians' 
     services) which are ordinarily furnished in hospital 
     outpatient departments. In conducting this study, the 
     Comptroller General shall--
       (A) review available scientific and clinical evidence about 
     the safety of performing procedures in physicians' offices 
     and hospital outpatient departments;
       (B) assess whether resource-based practice expense relative 
     values established by the Secretary of Health and Human 
     Services under the medicare physician fee schedule under 
     section 1848 of the Social Security Act (42 U.S.C. 1395w-4) 
     for such specialist physicians' services furnished in 
     physicians' offices and hospital outpatient departments 
     create an incentive to furnish such services in physicians' 
     offices instead of hospital outpatient departments; and
       (C) assess the implications for access to care for medicare 
     beneficiaries if the medicare program were not to cover such 
     services in physicians' offices.
       (2) Report.--Not later than July 1, 2001, the Comptroller 
     General shall submit to Congress a report on such study and 
     include such recommendations as the Comptroller General 
     determines to be appropriate.
       (b) Study of the Resource-Based Practice Expense System.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study on the refinements to the practice 
     expense relative value units during the transition to a 
     resource-based practice expense system for physician payments 
     under the medicare program under title XVIII of the Social 
     Security Act. Such study shall examine how the Secretary of 
     Health and Human Services has accepted and used the practice 
     expense data submitted under section 212 of BBRA (113 Stat. 
     1501A-350).
       (2) Report.--Not later than July 1, 2001, the Comptroller 
     General shall submit to Congress a report on the study 
     conducted under paragraph (1) together with recommendations 
     regarding--

[[Page H12358]]

       (A) improvements in the process for acceptance and use of 
     practice expense data under section 212 of BBRA;
       (B) any change or adjustment that is appropriate to ensure 
     full access to a spectrum of care for beneficiaries under the 
     medicare program; and
       (C) the appropriateness of payments to physicians.

     SEC. 412. PHYSICIAN GROUP PRACTICE DEMONSTRATION.

       (a) In General.--Title XVIII is amended by inserting after 
     section 1866 the following new sections:


 ``demonstration of application of physician volume increases to group 
                               practices

       ``Sec. 1866A. (a) Demonstration Program Authorized.--
       ``(1) In general.--The Secretary shall conduct 
     demonstration projects to test and, if proven effective, 
     expand the use of incentives to health care groups 
     participating in the program under this title that--
       ``(A) encourage coordination of the care furnished to 
     individuals under the programs under parts A and B by 
     institutional and other providers, practitioners, and 
     suppliers of health care items and services;
       ``(B) encourage investment in administrative structures and 
     processes to ensure efficient service delivery; and
       ``(C) reward physicians for improving health outcomes.

     Such projects shall focus on the efficiencies of furnishing 
     health care in a group-practice setting as compared to the 
     efficiencies of furnishing health care in other health care 
     delivery systems.
       ``(2) Administration by contract.--Except as otherwise 
     specifically provided, the Secretary may administer the 
     program under this section in accordance with section 1866B.
       ``(3) Definitions.--For purposes of this section, terms 
     have the following meanings:
       ``(A) Physician.--Except as the Secretary may otherwise 
     provide, the term `physician' means any individual who 
     furnishes services which may be paid for as physicians' 
     services under this title.
       ``(B) Health care group.--The term `health care group' 
     means a group of physicians (as defined in subparagraph (A)) 
     organized at least in part for the purpose of providing 
     physicians' services under this title. As the Secretary finds 
     appropriate, a health care group may include a hospital and 
     any other individual or entity furnishing items or services 
     for which payment may be made under this title that is 
     affiliated with the health care group under an arrangement 
     structured so that such individual or entity participates in 
     a demonstration under this section and will share in any 
     bonus earned under subsection (d).
       ``(b) Eligibility Criteria.--
       ``(1) In general.--The Secretary is authorized to establish 
     criteria for health care groups eligible to participate in a 
     demonstration under this section, including criteria relating 
     to numbers of health care professionals in, and of patients 
     served by, the group, scope of services provided, and quality 
     of care.
       ``(2) Payment method.--A health care group participating in 
     the demonstration under this section shall agree with respect 
     to services furnished to beneficiaries within the scope of 
     the demonstration (as determined under subsection (c))--
       ``(A) to be paid on a fee-for-service basis; and
       ``(B) that payment with respect to all such services 
     furnished by members of the health care group to such 
     beneficiaries shall (where determined appropriate by the 
     Secretary) be made to a single entity.
       ``(3) Data reporting.--A health care group participating in 
     a demonstration under this section shall report to the 
     Secretary such data, at such times and in such format as the 
     Secretary requires, for purposes of monitoring and evaluation 
     of the demonstration under this section.
       ``(c) Patients Within Scope of Demonstration.--
       ``(1) In general.--The Secretary shall specify, in 
     accordance with this subsection, the criteria for identifying 
     those patients of a health care group who shall be considered 
     within the scope of the demonstration under this section for 
     purposes of application of subsection (d) and for assessment 
     of the effectiveness of the group in achieving the objectives 
     of this section.
       ``(2) Other criteria.--The Secretary may establish 
     additional criteria for inclusion of beneficiaries within a 
     demonstration under this section, which may include frequency 
     of contact with physicians in the group or other factors or 
     criteria that the Secretary finds to be appropriate.
       ``(3) Notice requirements.--In the case of each beneficiary 
     determined to be within the scope of a demonstration under 
     this section with respect to a specific health care group, 
     the Secretary shall ensure that such beneficiary is notified 
     of the incentives, and of any waivers of coverage or payment 
     rules, applicable to such group under such demonstration.
       ``(d) Incentives.--
       ``(1) Performance target.--The Secretary shall establish 
     for each health care group participating in a demonstration 
     under this section--
       ``(A) a base expenditure amount, equal to the average total 
     payments under parts A and B for patients served by the 
     health care group on a fee-for-service basis in a base period 
     determined by the Secretary; and
       ``(B) an annual per capita expenditure target for patients 
     determined to be within the scope of the demonstration, 
     reflecting the base expenditure amount adjusted for risk and 
     expected growth rates.
       ``(2) Incentive bonus.--The Secretary shall pay to each 
     participating health care group (subject to paragraph (4)) a 
     bonus for each year under the demonstration equal to a 
     portion of the medicare savings realized for such year 
     relative to the performance target.
       ``(3) Additional bonus for process and outcome 
     improvements.--At such time as the Secretary has established 
     appropriate criteria based on evidence the Secretary 
     determines to be sufficient, the Secretary shall also pay to 
     a participating health care group (subject to paragraph (4)) 
     an additional bonus for a year, equal to such portion as the 
     Secretary may designate of the saving to the program under 
     this title resulting from process improvements made by and 
     patient outcome improvements attributable to activities of 
     the group.
       ``(4) Limitation.--The Secretary shall limit bonus payments 
     under this section as necessary to ensure that the aggregate 
     expenditures under this title (inclusive of bonus payments) 
     with respect to patients within the scope of the 
     demonstration do not exceed the amount which the Secretary 
     estimates would be expended if the demonstration projects 
     under this section were not implemented.


        ``provisions for administration of demonstration program

       ``Sec. 1866B. (a) General Administrative Authority.--
       ``(1) Beneficiary eligibility.--Except as otherwise 
     provided by the Secretary, an individual shall only be 
     eligible to receive benefits under the program under section 
     1866A (in this section referred to as the `demonstration 
     program') if such individual--
       ``(A) is enrolled under the program under part B and 
     entitled to benefits under part A; and
       ``(B) is not enrolled in a Medicare+Choice plan under part 
     C, an eligible organization under a contract under section 
     1876 (or a similar organization operating under a 
     demonstration project authority), an organization with an 
     agreement under section 1833(a)(1)(A), or a PACE program 
     under section 1894.
       ``(2) Secretary's discretion as to scope of program.--The 
     Secretary may limit the implementation of the demonstration 
     program to--
       ``(A) a geographic area (or areas) that the Secretary 
     designates for purposes of the program, based upon such 
     criteria as the Secretary finds appropriate;
       ``(B) a subgroup (or subgroups) of beneficiaries or 
     individuals and entities furnishing items or services 
     (otherwise eligible to participate in the program), selected 
     on the basis of the number of such participants that the 
     Secretary finds consistent with the effective and efficient 
     implementation of the program;
       ``(C) an element (or elements) of the program that the 
     Secretary determines to be suitable for implementation; or
       ``(D) any combination of any of the limits described in 
     subparagraphs (A) through (C).
       ``(3) Voluntary receipt of items and services.--Items and 
     services shall be furnished to an individual under the 
     demonstration program only at the individual's election.
       ``(4) Agreements.--The Secretary is authorized to enter 
     into agreements with individuals and entities to furnish 
     health care items and services to beneficiaries under the 
     demonstration program.
       ``(5) Program standards and criteria.--The Secretary shall 
     establish performance standards for the demonstration program 
     including, as applicable, standards for quality of health 
     care items and services, cost-effectiveness, beneficiary 
     satisfaction, and such other factors as the Secretary finds 
     appropriate. The eligibility of individuals or entities for 
     the initial award, continuation, and renewal of agreements to 
     provide health care items and services under the program 
     shall be conditioned, at a minimum, on performance that meets 
     or exceeds such standards.
       ``(6) Administrative review of decisions affecting 
     individuals and entities furnishing services.--An individual 
     or entity furnishing services under the demonstration program 
     shall be entitled to a review by the program administrator 
     (or, if the Secretary has not contracted with a program 
     administrator, by the Secretary) of a decision not to enter 
     into, or to terminate, or not to renew, an agreement with the 
     entity to provide health care items or services under the 
     program.
       ``(7) Secretary's review of marketing materials.--An 
     agreement with an individual or entity furnishing services 
     under the demonstration program shall require the individual 
     or entity to guarantee that it will not distribute materials 
     that market items or services under the program without the 
     Secretary's prior review and approval.
       ``(8) Payment in full.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     an individual or entity receiving payment from the Secretary 
     under a contract or agreement under the demonstration program 
     shall agree to accept such payment as payment in full, and 
     such payment shall be in lieu of any payments to which the 
     individual or entity would otherwise be entitled under this 
     title.
       ``(B) Collection of deductibles and coinsurance.--Such 
     individual or entity may collect any applicable deductible or 
     coinsurance amount from a beneficiary.
       ``(b) Contracts for Program Administration.--
       ``(1) In general.--The Secretary may administer the 
     demonstration program through a contract with a program 
     administrator in accordance with the provisions of this 
     subsection.
       ``(2) Scope of program administrator contracts.--The 
     Secretary may enter into such contracts for a limited 
     geographic area, or on a regional or national basis.
       ``(3) Eligible contractors.--The Secretary may contract for 
     the administration of the program with--
       ``(A) an entity that, under a contract under section 1816 
     or 1842, determines the amount of

[[Page H12359]]

     and makes payments for health care items and services 
     furnished under this title; or
       ``(B) any other entity with substantial experience in 
     managing the type of program concerned.
       ``(4) Contract award, duration, and renewal.--
       ``(A)  In general.--A contract under this subsection shall 
     be for an initial term of up to three years, renewable for 
     additional terms of up to three years.
       ``(B) Noncompetitive award and renewal for entities 
     administering part a or part b payments.--The Secretary may 
     enter or renew a contract under this subsection with an 
     entity described in paragraph (3)(A) without regard to the 
     requirements of section 5 of title 41, United States Code.
       ``(5) Applicability of federal acquisition regulation.--The 
     Federal Acquisition Regulation shall apply to program 
     administration contracts under this subsection.
       ``(6) Performance standards.--The Secretary shall establish 
     performance standards for the program administrator 
     including, as applicable, standards for the quality and cost-
     effectiveness of the program administered, and such other 
     factors as the Secretary finds appropriate. The eligibility 
     of entities for the initial award, continuation, and renewal 
     of program administration contracts shall be conditioned, at 
     a minimum, on performance that meets or exceeds such 
     standards.
       ``(7) Functions of program administrator.--A program 
     administrator shall perform any or all of the following 
     functions, as specified by the Secretary:
       ``(A) Agreements with entities furnishing health care items 
     and services.--Determine the qualifications of entities 
     seeking to enter or renew agreements to provide services 
     under the demonstration program, and as appropriate enter or 
     renew (or refuse to enter or renew) such agreements on behalf 
     of the Secretary.
       ``(B) Establishment of payment rates.--Negotiate or 
     otherwise establish, subject to the Secretary's approval, 
     payment rates for covered health care items and services.
       ``(C) Payment of claims or fees.--Administer payments for 
     health care items or services furnished under the program.
       ``(D) Payment of bonuses.--Using such guidelines as the 
     Secretary shall establish, and subject to the approval of the 
     Secretary, make bonus payments as described in subsection 
     (c)(2)(A)(ii) to entities furnishing items or services for 
     which payment may be made under the program.
       ``(E) Oversight.--Monitor the compliance of individuals and 
     entities with agreements under the program with the 
     conditions of participation.
       ``(F) Administrative review.--Conduct reviews of adverse 
     determinations specified in subsection (a)(6).
       ``(G) Review of marketing materials.--Conduct a review of 
     marketing materials proposed by an entity furnishing services 
     under the program.
       ``(H) Additional functions.--Perform such other functions 
     as the Secretary may specify.
       ``(8) Limitation of liability.--The provisions of section 
     1157(b) shall apply with respect to activities of contractors 
     and their officers, employees, and agents under a contract 
     under this subsection.
       ``(9) Information sharing.--Notwithstanding section 1106 
     and section 552a of title 5, United States Code, the 
     Secretary is authorized to disclose to an entity with a 
     program administration contract under this subsection such 
     information (including medical information) on individuals 
     receiving health care items and services under the program as 
     the entity may require to carry out its responsibilities 
     under the contract.
       ``(c) Rules Applicable to Both Program Agreements and 
     Program Administration Contracts.--
       ``(1) Records, reports, and audits.--The Secretary is 
     authorized to require entities with agreements to provide 
     health care items or services under the demonstration 
     program, and entities with program administration contracts 
     under subsection (b), to maintain adequate records, to afford 
     the Secretary access to such records (including for audit 
     purposes), and to furnish such reports and other materials 
     (including audited financial statements and performance data) 
     as the Secretary may require for purposes of implementation, 
     oversight, and evaluation of the program and of individuals' 
     and entities' effectiveness in performance of such agreements 
     or contracts.
       ``(2) Bonuses.--Notwithstanding any other provision of law, 
     but subject to subparagraph (B)(ii), the Secretary may make 
     bonus payments under the demonstration program from the 
     Federal Health Insurance Trust Fund and the Federal 
     Supplementary Medical Insurance Trust Fund in amounts that do 
     not exceed the amounts authorized under the program in 
     accordance with the following:
       ``(A) Payments to program administrators.--The Secretary 
     may make bonus payments under the program to program 
     administrators.
       ``(B) Payments to entities furnishing services.--
       ``(i) In general.--Subject to clause (ii), the Secretary 
     may make bonus payments to individuals or entities furnishing 
     items or services for which payment may be made under the 
     demonstration program, or may authorize the program 
     administrator to make such bonus payments in accordance with 
     such guidelines as the Secretary shall establish and subject 
     to the Secretary's approval.
       ``(ii) Limitations.--The Secretary may condition such 
     payments on the achievement of such standards related to 
     efficiency, improvement in processes or outcomes of care, or 
     such other factors as the Secretary determines to be 
     appropriate.
       ``(3) Antidiscrimination limitation.--The Secretary shall 
     not enter into an agreement with an entity to provide health 
     care items or services under the demonstration program, or 
     with an entity to administer the program, unless such entity 
     guarantees that it will not deny, limit, or condition the 
     coverage or provision of benefits under the program, for 
     individuals eligible to be enrolled under such program, based 
     on any health status-related factor described in section 
     2702(a)(1) of the Public Health Service Act.
       ``(d) Limitations on Judicial Review.--The following 
     actions and determinations with respect to the demonstration 
     program shall not be subject to review by a judicial or 
     administrative tribunal:
       ``(1) Limiting the implementation of the program under 
     subsection (a)(2).
       ``(2) Establishment of program participation standards 
     under subsection (a)(5) or the denial or termination of, or 
     refusal to renew, an agreement with an entity to provide 
     health care items and services under the program.
       ``(3) Establishment of program administration contract 
     performance standards under subsection (b)(6), the refusal to 
     renew a program administration contract, or the 
     noncompetitive award or renewal of a program administration 
     contract under subsection (b)(4)(B).
       ``(4) Establishment of payment rates, through negotiation 
     or otherwise, under a program agreement or a program 
     administration contract.
       ``(5) A determination with respect to the program (where 
     specifically authorized by the program authority or by 
     subsection (c)(2))--
       ``(A) as to whether cost savings have been achieved, and 
     the amount of savings; or
       ``(B) as to whether, to whom, and in what amounts bonuses 
     will be paid.
       ``(e) Application Limited to Parts A and B.--None of the 
     provisions of this section or of the demonstration program 
     shall apply to the programs under part C.
       ``(f) Reports to Congress.--Not later than two years after 
     the date of the enactment of this section, and biennially 
     thereafter for six years, the Secretary shall report to 
     Congress on the use of authorities under the demonstration 
     program. Each report shall address the impact of the use of 
     those authorities on expenditures, access, and quality under 
     the programs under this title.''.
       (b) GAO Report.--Not later than 2 years after the date on 
     which the demonstration project under section 1866A of the 
     Social Security Act, as added by subsection (a), is 
     implemented, the Comptroller General of the United States 
     shall submit to Congress a report on such demonstration 
     project. The report shall include such recommendations 
     with respect to changes to the demonstration project that 
     the Comptroller General determines appropriate.

     SEC. 413. STUDY ON ENROLLMENT PROCEDURES FOR GROUPS THAT 
                   RETAIN INDEPENDENT CONTRACTOR PHYSICIANS.

       (a) In General.--The Comptroller General of the United 
     States shall conduct a study of the current medicare 
     enrollment process for groups that retain independent 
     contractor physicians with particular emphasis on hospital-
     based physicians, such as emergency department staffing 
     groups. In conducting the evaluation, the Comptroller General 
     shall consult with groups that retain independent contractor 
     physicians and shall--
       (1) review the issuance of individual medicare provider 
     numbers and the possible medicare program integrity 
     vulnerabilities of the current process;
       (2) review direct and indirect costs associated with the 
     current process incurred by the medicare program and groups 
     that retain independent contractor physicians;
       (3) assess the effect on program integrity by the 
     enrollment of groups that retain independent contractor 
     hospital-based physicians; and
       (4) develop suggested procedures for the enrollment of 
     these groups.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under subsection 
     (a).

                       Subtitle C--Other Services

     SEC. 421. 1-YEAR EXTENSION OF MORATORIUM ON THERAPY CAPS; 
                   REPORT ON STANDARDS FOR SUPERVISION OF PHYSICAL 
                   THERAPY ASSISTANTS.

       (a) In General.--Section 1833(g)(4) (42 U.S.C. 1395l(g)(4)) 
     is amended by striking ``2000 and 2001.'' and inserting 
     ``2000, 2001, and 2002.''.
       (b) Conforming Amendment To Continue Focused Medical 
     Reviews of Claims During Moratorium Period.--Section 
     221(a)(2) of BBRA (113 Stat. 1501A-351) is amended by 
     striking ``(under the amendment made by paragraph (1)(B))''.
       (c) Study on Standards for Supervision of Physical 
     Therapist Assistants.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study of the implications--
       (A) of eliminating the ``in the room'' supervision 
     requirement for medicare payment for services of physical 
     therapy assistants who are supervised by physical therapists; 
     and
       (B) of such requirement on the cap imposed under section 
     1833(g) of the Social Security Act (42 U.S.C. 1395l(g)) on 
     physical therapy services.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the study conducted under paragraph (1).

     SEC. 422. UPDATE IN RENAL DIALYSIS COMPOSITE RATE.

       (a) Update.--
       (1) In general.--The last sentence of section 1881(b)(7) 
     (42 U.S.C. 1395rr(b)(7)) is amended by striking ``for such 
     services furnished on or after January 1, 2001, by 1.2 
     percent'' and inserting

[[Page H12360]]

     ``for such services furnished on or after January 1, 2001, by 
     2.4 percent''.
       (2) Prohibition on exceptions.--
       (A) In general.--Subject to subparagraphs (B) and (C), the 
     Secretary of Health and Human Services may not provide for an 
     exception under section 1881(b)(7) of the Social Security Act 
     (42 U.S.C. 1395rr(b)(7)) on or after December 31, 2000.
       (B) Deadline for new applications.--In the case of a 
     facility that during 2000 did not file for an exception rate 
     under such section, the facility may submit an application 
     for an exception rate by not later than July 1, 2001.
       (C) Protection of approved exception rates.--Any exception 
     rate under such section in effect on December 31, 2000 (or, 
     in the case of an application under subparagraph (B), as 
     approved under such application) shall continue in effect so 
     long as such rate is greater than the composite rate as 
     updated by the amendment made by paragraph (1).
       (b) Development of ESRD Market Basket.--
       (1) Development.--The Secretary of Health and Human 
     Services shall collect data and develop an ESRD market basket 
     whereby the Secretary can estimate, before the beginning of a 
     year, the percentage by which the costs for the year of the 
     mix of labor and nonlabor goods and services included in the 
     ESRD composite rate under section 1881(b)(7) of the Social 
     Security Act (42 U.S.C. 1395rr(b)(7)) will exceed the costs 
     of such mix of goods and services for the preceding year. In 
     developing such index, the Secretary may take into account 
     measures of changes in--
       (A) technology used in furnishing dialysis services;
       (B) the manner or method of furnishing dialysis services; 
     and
       (C) the amounts by which the payments under such section 
     for all services billed by a facility for a year exceed the 
     aggregate allowable audited costs of such services for such 
     facility for such year.
       (2) Report.--The Secretary of Health and Human Services 
     shall submit to Congress a report on the index developed 
     under paragraph (1) no later than July 1, 2002, and shall 
     include in the report recommendations on the appropriateness 
     of an annual or periodic update mechanism for renal dialysis 
     services under the medicare program under title XVIII of the 
     Social Security Act based on such index.
       (c) Inclusion of Additional Services in Composite Rate.--
       (1) Development.--The Secretary of Health and Human 
     Services shall develop a system which includes, to the 
     maximum extent feasible, in the composite rate used for 
     payment under section 1881(b)(7) of the Social Security Act 
     (42 U.S.C. 1395rr(b)(7)), payment for clinical diagnostic 
     laboratory tests and drugs (including drugs paid under 
     section 1881(b)(11)(B) of such Act (42 U.S.C. 
     1395rr(b)(11)(B)) that are routinely used in furnishing 
     dialysis services to medicare beneficiaries but which are 
     currently separately billable by renal dialysis facilities.
       (2) Report.--The Secretary shall include, as part of the 
     report submitted under subsection (b)(2), a report on the 
     system developed under paragraph (1) and recommendations on 
     the appropriateness of incorporating the system into medicare 
     payment for renal dialysis services.
       (d) GAO Study on Access to Services.--
       (1) Study.--The Comptroller General of the United States 
     shall study access of medicare beneficiaries to renal 
     dialysis services. Such study shall include whether there is 
     a sufficient supply of facilities to furnish needed renal 
     dialysis services, whether medicare payment levels are 
     appropriate, taking into account audited costs of facilities 
     for all services furnished, to ensure continued access to 
     such services, and improvements in access (and quality of 
     care) that may result in the increased use of long nightly 
     and short daily hemodialysis modalities.
       (2) Report.--Not later than January 1, 2003, the 
     Comptroller General shall submit to Congress a report on the 
     study conducted under paragraph (1).
       (e) Special Rule for Payment for 2001.--Notwithstanding the 
     amendment made by subsection (a)(1), for purposes of making 
     payments under section 1881(b) of the Social Security Act (42 
     U.S.C. 1395rr(b)) for dialysis services furnished during 
     2001, the composite rate payment under paragraph (7) of such 
     section--
       (1) for services furnished on or after January 1, 2001, and 
     before April 1, 2001, shall be the composite rate payment 
     determined under the provisions of law in effect on the day 
     before the date of the enactment of this Act; and
       (2) for services furnished on or after April 1, 2001, and 
     before January 1, 2002, shall be the composite rate payment 
     (as determined taking into account the amendment made by 
     subsection (a)(1)) increased by a transitional percentage 
     allowance equal to 0.39 percent (to account for the timing of 
     implementation of the CPI update).

     SEC. 423. PAYMENT FOR AMBULANCE SERVICES.

       (a) Restoration of Full CPI Increase for 2001.--
       (1) In general.--Section 1834(l)(3) (42 U.S.C. 1395m(l)(3)) 
     is amended by striking ``reduced in the case of 2001 and 
     2002'' each place it appears and inserting ``reduced in the 
     case of 2002''.
       (2) Special rule for payment for 2001.--Notwithstanding the 
     amendment made by paragraph (1), for purposes of making 
     payments for ambulance services under part B of title XVIII 
     of the Social Security Act, for services furnished during 
     2001, the ``percentage increase in the consumer price index'' 
     specified in section 1834(l)(3)(B) of such Act (42 U.S.C. 
     1395m(l)(3)(B))--
       (A) for services furnished on or after January 1, 2001, and 
     before July 1, 2001, shall be the percentage increase for 
     2001 as determined under the provisions of law in effect on 
     the day before the date of the enactment of this Act; and
       (B) for services furnished on or after July 1, 2001, and 
     before January 1, 2002, shall be equal to 4.7 percent.
       (b) Mileage Payments.--
       (1) In general.--Section 1834(l)(2)(E) (42 U.S.C. 
     1395m(l)(2)(E)) is amended by inserting before the period at 
     the end the following: ``, except that such phase-in shall 
     provide for full payment of any national mileage rate for 
     ambulance services provided by suppliers that are paid by 
     carriers in any of the 50 States where payment by a carrier 
     for such services for all such suppliers in such State did 
     not, prior to the implementation of the fee schedule, include 
     a separate amount for all mileage within the county from 
     which the beneficiary is transported''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to services furnished on or after July 1, 2001.

     SEC. 424. AMBULATORY SURGICAL CENTERS.

       (a) Delay in Implementation of Prospective Payment 
     System.--The Secretary of Health and Human Services may not 
     implement a revised prospective payment system for services 
     of ambulatory surgical facilities under section 1833(i) of 
     the Social Security Act (42 U.S.C. 1395l(i)) before January 
     1, 2002.
       (b) Extending Phase-in to 4 Years.--Section 226 of the BBRA 
     (113 Stat. 1501A-354) is amended by striking paragraphs (1) 
     and (2) and inserting the following:
       ``(1) in the first year of its implementation, only a 
     proportion (specified by the Secretary and not to exceed \1/
     4\) of the payment for such services shall be made in 
     accordance with such system and the remainder shall be made 
     in accordance with current regulations; and
       ``(2) in each of the following 2 years a proportion 
     (specified by the Secretary and not to exceed \1/2\, and \3/
     4\, respectively) of the payment for such services shall be 
     made under such system and the remainder shall be made in 
     accordance with current regulations.''.
       (c) Deadline for Use of 1999 or Later Cost Surveys.--
     Section 226 of BBRA (113 Stat. 1501A-354) is amended by 
     adding at the end the following:
     ``By not later than January 1, 2003, the Secretary shall 
     incorporate data from a 1999 medicare cost survey or a 
     subsequent cost survey for purposes of implementing or 
     revising such system.''.

     SEC. 425. FULL UPDATE FOR DURABLE MEDICAL EQUIPMENT.

       (a) In General.--Section 1834(a)(14) (42 U.S.C. 
     1395m(a)(14)) is amended--
       (1) by redesignating subparagraph (D) as subparagraph (F);
       (2) in subparagraph (C)--
       (A) by striking ``through 2002'' and inserting ``through 
     2000''; and
       (B) by striking ``and'' at the end; and
       (3) by inserting after subparagraph (C) the following new 
     subparagraphs:
       ``(D) for 2001, the percentage increase in the consumer 
     price index for all urban consumers (U.S. city average) for 
     the 12-month period ending with June 2000;
       ``(E) for 2002, 0 percentage points; and''.
       (b) Special Rule for Payment for 2001.--Notwithstanding the 
     amendments made by subsection (a), for purposes of making 
     payments for durable medical equipment under section 1834(a) 
     of the Social Security Act (42 U.S.C. 1395m(a)), other than 
     for oxygen and oxygen equipment specified in paragraph (9) of 
     such section, the payment basis recognized for 2001 under 
     such section--
       (1) for items furnished on or after January 1, 2001, and 
     before July 1, 2001, shall be the payment basis for 2001 as 
     determined under the provisions of law in effect on the day 
     before the date of the enactment of this Act (including the 
     application of section 228(a)(1) of BBRA); and
       (2) for items furnished on or after July 1, 2001, and 
     before January 1, 2002, shall be the payment basis that is 
     determined under such section 1834(a) if such section 
     228(a)(1) did not apply and taking into account the amendment 
     made by subsection (a), increased by a transitional 
     percentage allowance equal to 3.28 percent (to account for 
     the timing of implementation of the CPI update).

     SEC. 426. FULL UPDATE FOR ORTHOTICS AND PROSTHETICS.

       (a) In General.--Section 1834(h)(4)(A) (42 U.S.C. 
     1395m(h)(4)(A)) is amended--
       (1) by redesignating clause (vi) as clause (viii);
       (2) in clause (v)--
       (A) by striking ``through 2002'' and inserting ``through 
     2000''; and
       (B) by striking ``and'' at the end; and
       (3) by inserting after clause (v) the following new clause:
       ``(vi) for 2001, the percentage increase in the consumer 
     price index for all urban consumers (U.S. city average) for 
     the 12-month period ending with June 2000;
       ``(vii) for 2002, 1 percent; and''.
       (b) Special Rule for Payment for 2001.--Notwithstanding the 
     amendments made by subsection (a), for purposes of making 
     payments for prosthetic devices and orthotics and prosthetics 
     (as defined in subparagraphs (B) and (C) of paragraph (4) of 
     section 1834(h) of the Social Security Act (42 U.S.C. 
     1395m(h)) under such section, the payment basis recognized 
     for 2001 under paragraph (2) of such section--
       (1) for items furnished on or after January 1, 2001, and 
     before July 1, 2001, shall be the payment basis for 2001 as 
     determined under the provisions of law in effect on the day 
     before the date of the enactment of this Act; and
       (2) for items furnished on or after July 1, 2001, and 
     before January 1, 2002, shall be the payment basis that is 
     determined under such section taking into account the 
     amendments made by subsection (a), increased by a 
     transitional percentage allowance equal to 2.6 percent (to 
     account for the timing of implementation of the CPI update).

[[Page H12361]]

     SEC. 427. ESTABLISHMENT OF SPECIAL PAYMENT PROVISIONS AND 
                   REQUIREMENTS FOR PROSTHETICS AND CERTAIN 
                   CUSTOM-FABRICATED ORTHOTIC ITEMS.

       (a) In General.--Section 1834(h)(1) (42 U.S.C. 1395m(h)(1)) 
     is amended by adding at the end the following:
       ``(F) Special payment rules for certain prosthetics and 
     custom-fabricated orthotics.--
       ``(i) In general.--No payment shall be made under this 
     subsection for an item of custom-fabricated orthotics 
     described in clause (ii) or for an item of prosthetics unless 
     such item is--

       ``(I) furnished by a qualified practitioner; and
       ``(II) fabricated by a qualified practitioner or a 
     qualified supplier at a facility that meets such criteria as 
     the Secretary determines appropriate.

       ``(ii) Description of custom-fabricated item.--

       ``(I) In general.--An item described in this clause is an 
     item of custom-fabricated orthotics that requires education, 
     training, and experience to custom-fabricate and that is 
     included in a list established by the Secretary in subclause 
     (II). Such an item does not include shoes and shoe inserts.
       ``(II) List of items.--The Secretary, in consultation with 
     appropriate experts in orthotics (including national 
     organizations representing manufacturers of orthotics), shall 
     establish and update as appropriate a list of items to which 
     this subparagraph applies. No item may be included in such 
     list unless the item is individually fabricated for the 
     patient over a positive model of the patient.

       ``(iii) Qualified practitioner defined.--In this 
     subparagraph, the term `qualified practitioner' means a 
     physician or other individual who--

       ``(I) is a qualified physical therapist or a qualified 
     occupational therapist;
       ``(II) in the case of a State that provides for the 
     licensing of orthotics and prosthetics, is licensed in 
     orthotics or prosthetics by the State in which the item is 
     supplied; or
       ``(III) in the case of a State that does not provide for 
     the licensing of orthotics and prosthetics, is specifically 
     trained and educated to provide or manage the provision of 
     prosthetics and custom-designed or -fabricated orthotics, and 
     is certified by the American Board for Certification in 
     Orthotics and Prosthetics, Inc. or by the Board for 
     Orthotist/Prosthetist Certification, or is credentialed and 
     approved by a program that the Secretary determines, in 
     consultation with appropriate experts in orthotics and 
     prosthetics, has training and education standards that are 
     necessary to provide such prosthetics and orthotics.

       ``(iv) Qualified supplier defined.--In this subparagraph, 
     the term `qualified supplier' means any entity that is 
     accredited by the American Board for Certification in 
     Orthotics and Prosthetics, Inc. or by the Board for 
     Orthotist/Prosthetist Certification, or accredited and 
     approved by a program that the Secretary determines has 
     accreditation and approval standards that are essentially 
     equivalent to those of such Board.''.
       (b) Effective Date.--Not later than 1 year after the date 
     of the enactment of this Act, the Secretary of Health and 
     Human Services shall promulgate revised regulations to carry 
     out the amendment made by subsection (a) using a negotiated 
     rulemaking process under subchapter III of chapter 5 of title 
     5, United States Code.
       (c) GAO Study and Report.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study on HCFA Ruling 96-1, issued on 
     September 1, 1996, with respect to distinguishing orthotics 
     from durable medical equipment under the medicare program 
     under title XVIII of the Social Security Act. The study shall 
     assess the following matters:
       (A) The compliance of the Secretary of Health and Human 
     Services with the Administrative Procedures Act (under 
     chapter 5 of title 5, United States Code) in making such 
     ruling.
       (B) The potential impact of such ruling on the health care 
     furnished to medicare beneficiaries under the medicare 
     program, especially those beneficiaries with degenerative 
     musculoskeletal conditions.
       (C) The potential for fraud and abuse under the medicare 
     program if payment were provided for orthotics used as a 
     component of durable medical equipment only when made under 
     the special payment provision for certain prosthetics and 
     custom-fabricated orthotics under section 1834(h)(1)(F) of 
     the Social Security Act, as added by subsection (a) and 
     furnished by qualified practitioners under that section.
       (D) The impact on payments under titles XVIII and XIX of 
     the Social Security Act if such ruling were overturned.
       (2) Report.--Not later than 6 months after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under paragraph 
     (1).

     SEC. 428. REPLACEMENT OF PROSTHETIC DEVICES AND PARTS.

       (a) In General.--Section 1834(h)(1) (42 U.S.C. 
     1395m(h)(1)), as amended by section 427(a), is further 
     amended by adding at the end the following new subparagraph:
       ``(G) Replacement of prosthetic devices and parts.--
       ``(i) In general.--Payment shall be made for the 
     replacement of prosthetic devices which are artificial limbs, 
     or for the replacement of any part of such devices, without 
     regard to continuous use or useful lifetime restrictions if 
     an ordering physician determines that the provision of a 
     replacement device, or a replacement part of such a device, 
     is necessary because of any of the following:

       ``(I) A change in the physiological condition of the 
     patient.
       ``(II) An irreparable change in the condition of the 
     device, or in a part of the device.
       ``(III) The condition of the device, or the part of the 
     device, requires repairs and the cost of such repairs would 
     be more than 60 percent of the cost of a replacement device, 
     or, as the case may be, of the part being replaced.

       ``(ii) Confirmation may be required if device or part being 
     replaced is less than 3 years old.--If a physician determines 
     that a replacement device, or a replacement part, is 
     necessary pursuant to clause (i)--

       ``(I) such determination shall be controlling; and
       ``(II) such replacement device or part shall be deemed to 
     be reasonable and necessary for purposes of section 
     1862(a)(1)(A);

     except that if the device, or part, being replaced is less 
     than 3 years old (calculated from the date on which the 
     beneficiary began to use the device or part), the Secretary 
     may also require confirmation of necessity of the replacement 
     device or replacement part, as the case may be.''.
       (b) Preemption of Rule.--The provisions of section 
     1834(h)(1)(G) as added by subsection (a) shall supersede 
     any rule that as of the date of the enactment of this Act 
     may have applied a 5-year replacement rule with regard to 
     prosthetic devices.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to items replaced on or after April 1, 2001.

     SEC. 429. REVISED PART B PAYMENT FOR DRUGS AND BIOLOGICALS 
                   AND RELATED SERVICES.

       (a) Recommendations for Revised Payment Methodology for 
     Drugs and Biologicals.--
       (1) Study.--
       (A) In general.--The Comptroller General of the United 
     States shall conduct a study on the reimbursement for drugs 
     and biologicals under the current medicare payment 
     methodology (provided under section 1842(o) of the Social 
     Security Act (42 U.S.C. 1395u(o))) and for related services 
     under part B of title XVIII of such Act. In the study, the 
     Comptroller General shall--
       (i) identify the average prices at which such drugs and 
     biologicals are acquired by physicians and other suppliers;
       (ii) quantify the difference between such average prices 
     and the reimbursement amount under such section; and
       (iii) determine the extent to which (if any) payment under 
     such part is adequate to compensate physicians, providers of 
     services, or other suppliers of such drugs and biologicals 
     for costs incurred in the administration, handling, or 
     storage of such drugs or biologicals.
       (B) Consultation.--In conducting the study under 
     subparagraph (A), the Comptroller General shall consult with 
     physicians, providers of services, and suppliers of drugs and 
     biologicals under the medicare program under title XVIII of 
     such Act, as well as other organizations involved in the 
     distribution of such drugs and biologicals to such 
     physicians, providers of services, and suppliers.
       (2) Report.--Not later than 9 months after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress and to the Secretary of Health and Human Services 
     a report on the study conducted under this subsection, and 
     shall include in such report recommendations for revised 
     payment methodologies described in paragraph (3).
       (3) Recommendations for revised payment methodologies.--
       (A) In general.--The Comptroller General shall provide 
     specific recommendations for revised payment methodologies 
     for reimbursement for drugs and biologicals and for related 
     services under the medicare program. The Comptroller General 
     may include in the recommendations--
       (i) proposals to make adjustments under subsection (c) of 
     section 1848 of the Social Security Act (42 U.S.C. 1395w-4) 
     for the practice expense component of the physician fee 
     schedule under such section for the costs incurred in the 
     administration, handling, or storage of certain categories of 
     such drugs and biologicals, if appropriate; and
       (ii) proposals for new payments to providers of services or 
     suppliers for such costs, if appropriate.
       (B) Ensuring patient access to care.--In making 
     recommendations under this paragraph, the Comptroller General 
     shall ensure that any proposed revised payment methodology is 
     designed to ensure that medicare beneficiaries continue to 
     have appropriate access to health care services under the 
     medicare program.
       (C) Matters considered.--In making recommendations under 
     this paragraph, the Comptroller General shall consider--
       (i) the method and amount of reimbursement for similar 
     drugs and biologicals made by large group health plans;
       (ii) as a result of any revised payment methodology, the 
     potential for patients to receive inpatient or outpatient 
     hospital services in lieu of services in a physician's 
     office; and
       (iii) the effect of any revised payment methodology on the 
     delivery of drug therapies by hospital outpatient 
     departments.
       (D) Coordination with bbra study.--In making 
     recommendations under this paragraph, the Comptroller General 
     shall conclude and take into account the results of the study 
     provided for under section 213(a) of BBRA (113 Stat. 1501A-
     350).
       (b) Implementation of New Payment Methodology.--
       (1) In general.--Notwithstanding any other provision of 
     law, based on the recommendations contained in the report 
     under subsection (a), the Secretary of Health and Human 
     Services, subject to paragraph (2), shall revise the payment 
     methodology under section 1842(o) of the Social Security Act 
     (42 U.S.C. 1395u(o)) for drugs and biologicals furnished 
     under part B of the medicare program. To the extent the 
     Secretary determines appropriate, the Secretary may provide 
     for the adjustments to payments amounts referred to in 
     subsection (a)(3)(A)(i) or additional payments referred to in 
     subsection (a)(2)(A)(ii).

[[Page H12362]]

       (2) Limitation.--In revising the payment methodology under 
     paragraph (1), in no case may the estimated aggregate 
     payments for drugs and biologicals under the revised system 
     (including additional payments referred to in subsection 
     (a)(3)(A)(ii)) exceed the aggregate amount of payment for 
     such drugs and biologicals, as projected by the Secretary, 
     that would have been made under the payment methodology in 
     effect under such section 1842(o).
       (c) Moratorium on Decreases in Payment Rates.--
     Notwithstanding any other provision of law, effective for 
     drugs and biologicals furnished on or after January 1, 2001, 
     the Secretary may not directly or indirectly decrease the 
     rates of reimbursement (in effect as of such date) for drugs 
     and biologicals under the current medicare payment 
     methodology (provided under section 1842(o) of the Social 
     Security Act (42 U.S.C. 1395u(o))) until such time as the 
     Secretary has reviewed the report submitted under subsection 
     (a)(2).

     SEC. 430. CONTRAST ENHANCED DIAGNOSTIC PROCEDURES UNDER 
                   HOSPITAL PROSPECTIVE PAYMENT SYSTEM.

       (a) Separate Classification.--Section 1833(t)(2) (42 U.S.C. 
     1395l(t)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (E);
       (2) by striking the period at the end of subparagraph (F) 
     and inserting ``; and''; and
       (3) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) the Secretary shall create additional groups of 
     covered OPD services that classify separately those 
     procedures that utilize contrast agents from those that do 
     not.''.
       (b) Conforming Amendment.--Section 1861(t)(1) (42 U.S.C. 
     1395x(t)(1)) is amended by inserting ``(including contrast 
     agents)'' after ``only such drugs''.
       (c) Effective Date.--The amendments made by this section 
     apply to items and services furnished on or after July 1, 
     2001.

     SEC. 431. QUALIFICATIONS FOR COMMUNITY MENTAL HEALTH CENTERS.

       (a) Medicare Program.--Section 1861(ff)(3)(B) (42 U.S.C. 
     1395x(ff)(3)(B)) is amended by striking ``entity'' and all 
     that follows and inserting the following: ``entity that--
       ``(i)(I) provides the mental health services described in 
     section 1913(c)(1) of the Public Health Service Act; or
       ``(II) in the case of an entity operating in a State that 
     by law precludes the entity from providing itself the service 
     described in subparagraph (E) of such section, provides for 
     such service by contract with an approved organization or 
     entity (as determined by the Secretary);
       ``(ii) meets applicable licensing or certification 
     requirements for community mental health centers in the State 
     in which it is located; and
       ``(iii) meets such additional conditions as the Secretary 
     shall specify to ensure (I) the health and safety of 
     individuals being furnished such services, (II) the effective 
     and efficient furnishing of such services, and (III) the 
     compliance of such entity with the criteria described in 
     section 1931(c)(1) of the Public Health Service Act.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to community mental health centers 
     with respect to services furnished on or after the first day 
     of the third month beginning after the date of the enactment 
     of this Act.

     SEC. 432. PAYMENT OF PHYSICIAN AND NONPHYSICIAN SERVICES IN 
                   CERTAIN INDIAN PROVIDERS.

       (a) In General.--Section 1880 (42 U.S.C. 1395qq) is 
     amended--
       (1) by redesignating subsection (e), as added by section 
     3(b)(1) of the Alaska Native and American Indian Direct 
     Reimbursement Act of 2000 (Public Law 106-417), as subsection 
     (f); and
       (2) by inserting after subsection (d) the following new 
     subsection:
       ``(e)(1)(A) Notwithstanding section 1835(d), subject to 
     subparagraph (B), the Secretary shall make payment under part 
     B to a hospital or an ambulatory care clinic (whether 
     provider-based or freestanding) that is operated by the 
     Indian Health Service or by an Indian tribe or tribal 
     organization (as defined for purposes of subsection (a)) for 
     services described in paragraph (2) furnished in or at the 
     direction of the hospital or clinic under the same 
     situations, terms, and conditions as would apply if the 
     services were furnished in or at the direction of such a 
     hospital or clinic that was not operated by such Service, 
     tribe, or organization.
       ``(B) Payment shall not be made for services under 
     subparagraph (A) to the extent that payment is otherwise made 
     for such services under this title.
       ``(2) The services described in this paragraph are the 
     following:
       ``(A) Services for which payment is made under section 
     1848.
       ``(B) Services furnished by a practitioner described in 
     section 1842(b)(18)(C) for which payment under part B is made 
     under a fee schedule.
       ``(C) Services furnished by a physical therapist or 
     occupational therapist as described in section 1861(p) for 
     which payment under part B is made under a fee schedule.
       ``(3) Subsection (c) shall not apply to payments made under 
     this subsection.''.
       (b) Conforming Amendments.--
       (1) Coverage amendment.--Section 1862(a)(3) (42 U.S.C. 
     1395y(a)(3)) is amended--
       (A) by striking the second comma after ``1861(aa)(1)''; and
       (B) by inserting ``in the case of services for which 
     payment may be made under section 1880(e),'' after ``as 
     defined in section 1861(aa)(3),''.
       (2) Direct payment amendment.--The first sentence of 
     section 1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended--
       (A) by striking ``and (F)'' and inserting ``(F)''; and
       (B) by inserting before the period the following: ``, and 
     (G) in the case of services in a hospital or clinic to which 
     section 1880(e) applies, payment shall be made to such 
     hospital or clinic''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after July 1, 2001.

     SEC. 433. GAO STUDY ON COVERAGE OF SURGICAL FIRST ASSISTING 
                   SERVICES OF CERTIFIED REGISTERED NURSE FIRST 
                   ASSISTANTS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study on the effect on the medicare program 
     under title XVIII of the Social Security Act and on medicare 
     beneficiaries of coverage under the program of surgical first 
     assisting services of certified registered nurse first 
     assistants. The Comptroller General shall consider the 
     following when conducting the study:
       (1) Any impact on the quality of care furnished to medicare 
     beneficiaries by reason of such coverage.
       (2) Appropriate education and training requirements for 
     certified registered nurse first assistants who furnish such 
     first assisting services.
       (3) Appropriate rates of payment under the program to such 
     certified registered nurse first assistants for furnishing 
     such services, taking into account the costs of compensation, 
     overhead, and supervision attributable to certified 
     registered nurse first assistants.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under subsection 
     (a).

     SEC. 434. MEDPAC STUDY AND REPORT ON MEDICARE REIMBURSEMENT 
                   FOR SERVICES PROVIDED BY CERTAIN PROVIDERS.

       (a) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study on the appropriateness of the current payment 
     rates under the medicare program under title XVIII of the 
     Social Security Act for services provided by a--
       (1) certified nurse-midwife (as defined in subsection 
     (gg)(2) of section 1861 of such Act (42 U.S.C. 1395x));
       (2) physician assistant (as defined in subsection 
     (aa)(5)(A) of such section);
       (3) nurse practitioner (as defined in such subsection); and
       (4) clinical nurse specialist (as defined in subsection 
     (aa)(5)(B) of such section).
     The study shall separately examine the appropriateness of 
     such payment rates for orthopedic physician assistants, 
     taking into consideration the requirements for accreditation, 
     training, and education.
       (b) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under subsection 
     (a), together with any recommendations for legislation that 
     the Commission determines to be appropriate as a result of 
     such study.

     SEC. 435. MEDPAC STUDY AND REPORT ON MEDICARE COVERAGE OF 
                   SERVICES PROVIDED BY CERTAIN NONPHYSICIAN 
                   PROVIDERS.

       (a) Study.--
       (1) In general.--The Medicare Payment Advisory Commission 
     shall conduct a study to determine the appropriateness of 
     providing coverage under the medicare program under title 
     XVIII of the Social Security Act for services provided by a--
       (A) surgical technologist;
       (B) marriage counselor;
       (C) marriage and family therapist;
       (D) pastoral care counselor; and
       (E) licensed professional counselor of mental health.
       (2) Costs to program.--The study shall consider the short-
     term and long-term benefits, and costs to the medicare 
     program, of providing the coverage described in paragraph 
     (1).
       (b) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under subsection 
     (a), together with any recommendations for legislation that 
     the Commission determines to be appropriate as a result of 
     such study.

     SEC. 436. GAO STUDY AND REPORT ON THE COSTS OF EMERGENCY AND 
                   MEDICAL TRANSPORTATION SERVICES.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study on the costs of providing emergency and 
     medical transportation services across the range of acuity 
     levels of conditions for which such transportation services 
     are provided.
       (b) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under subsection 
     (a), together with recommendations for any changes in 
     methodology or payment level necessary to fairly compensate 
     suppliers of emergency and medical transportation services 
     and to ensure the access of beneficiaries under the medicare 
     program under title XVIII of the Social Security Act.

     SEC. 437. GAO STUDIES AND REPORTS ON MEDICARE PAYMENTS.

       (a) GAO Study on HCFA Post-Payment Audit Process.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study on the post-payment audit process under 
     the medicare program under title XVIII of the Social Security 
     Act as such process applies to physicians, including the 
     proper level of resources that the Health Care Financing 
     Administration should devote to educating physicians 
     regarding--
       (A) coding and billing;
       (B) documentation requirements; and
       (C) the calculation of overpayments.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report

[[Page H12363]]

     on the study conducted under paragraph (1) together with 
     specific recommendations for changes or improvements in the 
     post-payment audit process described in such paragraph.
       (b) GAO Study on Administration and Oversight.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study on the aggregate effects of regulatory, 
     audit, oversight, and paperwork burdens on physicians and 
     other health care providers participating in the medicare 
     program under title XVIII of the Social Security Act.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under paragraph 
     (1) together with recommendations regarding any area in 
     which--
       (A) a reduction in paperwork, an ease of administration, or 
     an appropriate change in oversight and review may be 
     accomplished; or
       (B) additional payments or education are needed to assist 
     physicians and other health care providers in understanding 
     and complying with any legal or regulatory requirements.

     SEC. 438. MEDPAC STUDY ON ACCESS TO OUTPATIENT PAIN 
                   MANAGEMENT SERVICES.

       (a) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study on the barriers to coverage and payment for 
     outpatient interventional pain medicine procedures under the 
     medicare program under title XVIII of the Social Security 
     Act. Such study shall examine--
       (1) the specific barriers imposed under the medicare 
     program on the provision of pain management procedures in 
     hospital outpatient departments, ambulatory surgery centers, 
     and physicians' offices; and
       (2) the consistency of medicare payment policies for pain 
     management procedures in those different settings.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study.

             TITLE V--PROVISIONS RELATING TO PARTS A AND B

                    Subtitle A--Home Health Services

     SEC. 501. 1-YEAR ADDITIONAL DELAY IN APPLICATION OF 15 
                   PERCENT REDUCTION ON PAYMENT LIMITS FOR HOME 
                   HEALTH SERVICES.

       (a) In General.--Section 1895(b)(3)(A)(i) (42 U.S.C. 
     1395fff(b)(3)(A)(i)) is amended--
       (1) by redesignating subclause (II) as subclause (III);
       (2) in subclause (III), as redesignated, by striking 
     ``described in subclause (I)'' and inserting ``described in 
     subclause (II)''; and
       (3) by inserting after subclause (I) the following new 
     subclause:

       ``(II) For the 12-month period beginning after the period 
     described in subclause (I), such amount (or amounts) shall be 
     equal to the amount (or amounts) determined under subclause 
     (I), updated under subparagraph (B).''.

       (b) Change in Report.--Section 302(c) of BBRA (113 Stat. 
     1501A-360) is amended--
       (1) by striking ``Not later than'' and all that follows 
     through ``(42 U.S.C. 1395fff)'' and inserting ``Not later 
     than April 1, 2002''; and
       (2) by striking ``Secretary'' and inserting ``Comptroller 
     General of the United States''.
       (c) Case Mix Adjustment Corrections.--
       (1) In general.--Section 1895(b)(3)(B) (42 U.S.C. 
     1395fff(b)(3)(B)) is amended by adding at the end the 
     following new clause:
       ``(iv) Adjustment for case mix changes.--Insofar as the 
     Secretary determines that the adjustments under paragraph 
     (4)(A)(i) for a previous fiscal year (or estimates that such 
     adjustments for a future fiscal year) did (or are likely to) 
     result in a change in aggregate payments under this 
     subsection during the fiscal year that are a result of 
     changes in the coding or classification of different units of 
     services that do not reflect real changes in case mix, the 
     Secretary may adjust the standard prospective payment amount 
     (or amounts) under paragraph (3) for subsequent fiscal years 
     so as to eliminate the effect of such coding or 
     classification changes.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to episodes concluding on or after October 1, 
     2001.

     SEC. 502. RESTORATION OF FULL HOME HEALTH MARKET BASKET 
                   UPDATE FOR HOME HEALTH SERVICES FOR FISCAL YEAR 
                   2001.

       (a) In General.--Section 1861(v)(1)(L)(x) (42 U.S.C. 
     1395x(v)(1)(L)(x)) is amended--
       (1) by striking ``2001,''; and
       (2) by adding at the end the following: ``With respect to 
     cost reporting periods beginning during fiscal year 2001, the 
     update to any limit under this subparagraph shall be the home 
     health market basket index.''.
       (b) Special Rule for Payment for Fiscal Year 2001 Based on 
     Adjusted Prospective Payment Amounts.--
       (1) In general.--Notwithstanding the amendments made by 
     subsection (a), for purposes of making payments under section 
     1895(b) of the Social Security Act (42 U.S.C. 1395fff(b)) for 
     home health services furnished during fiscal year 2001, the 
     Secretary of Health and Human Services shall--
       (A) with respect to episodes and visits ending on or after 
     October 1, 2000, and before April 1, 2001, use the final 
     standardized and budget neutral prospective payment amounts 
     for 60-day episodes and standardized average per visit 
     amounts for fiscal year 2001 as published by the Secretary in 
     the Federal Register on July 3, 2000 (65 Fed. Reg. 41128-
     41214); and
       (B) with respect to episodes and visits ending on or after 
     April 1, 2001, and before October 1, 2001, use such amounts 
     increased by 2.2 percent.
       (2) No effect on other payments or determinations.--The 
     Secretary shall not take the provisions of paragraph (1) into 
     account for purposes of payments, determinations, or budget 
     neutrality adjustments under section 1895 of the Social 
     Security Act.

     SEC. 503. TEMPORARY TWO-MONTH PERIODIC INTERIM PAYMENT.

       (a) In General.--Notwithstanding the amendments made by 
     section 4603(b) of BBA (42 U.S.C. 1395fff note), in the case 
     of a home health agency that was receiving periodic interim 
     payments under section 1815(e)(2) of the Social Security Act 
     (42 U.S.C. 1395g(e)(2)) as of September 30, 2000, and that is 
     not described in subsection (b), the Secretary of Health and 
     Human Services shall, as soon as practicable, make a single 
     periodic interim payment to such agency in an amount equal to 
     four times the last full fortnightly periodic interim payment 
     made to such agency under the payment system in effect prior 
     to the implementation of the prospective payment system under 
     section 1895(b) of such Act (42 U.S.C. 1395fff(b)). Such 
     amount of such periodic interim payment shall be included in 
     the tentative settlement of the last cost report for the home 
     health agency under the payment system in effect prior to the 
     implementation of such prospective payment system, regardless 
     of the ending date of such cost report.
       (b) Exceptions.--The Secretary shall not make an additional 
     periodic interim payment under subsection (a) in the case of 
     a home health agency (determined as of the day that such 
     payment would otherwise be made) that--
       (1) notifies the Secretary that such agency does not want 
     to receive such payment;
       (2) is not receiving payments pursuant to section 405.371 
     of title 42, Code of Federal Regulations;
       (3) is excluded from the medicare program under title XI of 
     the Social Security Act;
       (4) no longer has a provider agreement under section 1866 
     of such Act (42 U.S.C. 1395cc);
       (5) is no longer in business; or
       (6) is subject to a court order providing for the 
     withholding of medicare payments under title XVIII of such 
     Act.

     SEC. 504. USE OF TELEHEALTH IN DELIVERY OF HOME HEALTH 
                   SERVICES.

       Section 1895 (42 U.S.C. 1395fff) is amended by adding at 
     the end the following new subsection:
       ``(e) Construction Related to Home Health Services.--
       ``(1) Telecommunications.--Nothing in this section shall be 
     construed as preventing a home health agency furnishing a 
     home health unit of service for which payment is made under 
     the prospective payment system established by this section 
     for such units of service from furnishing services via a 
     telecommunication system if such services--
       ``(A) do not substitute for in-person home health services 
     ordered as part of a plan of care certified by a physician 
     pursuant to section 1814(a)(2)(C) or 1835(a)(2)(A); and
       ``(B) are not considered a home health visit for purposes 
     of eligibility or payment under this title.
       ``(2) Physician certification.--Nothing in this section 
     shall be construed as waiving the requirement for a physician 
     certification under section 1814(a)(2)(C) or 1835(a)(2)(A) of 
     such Act (42 U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) for the 
     payment for home health services, whether or not furnished 
     via a telecommunications system.''.

     SEC. 505. STUDY ON COSTS TO HOME HEALTH AGENCIES OF 
                   PURCHASING NONROUTINE MEDICAL SUPPLIES.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study on variations in prices paid by home 
     health agencies furnishing home health services under the 
     medicare program under title XVIII of the Social Security Act 
     in purchasing nonroutine medical supplies, including ostomy 
     supplies, and volumes of such supplies used, shall determine 
     the effect (if any) of variations on prices and volumes in 
     the provision of such services.
       (b) Report.--Not later than August 15, 2001, the 
     Comptroller General shall submit to Congress a report on the 
     study conducted under subsection (a), and shall include in 
     the report recommendations respecting whether payment for 
     nonroutine medical supplies furnished in connection with home 
     health services should be made separately from the 
     prospective payment system for such services.

     SEC. 506. TREATMENT OF BRANCH OFFICES; GAO STUDY ON 
                   SUPERVISION OF HOME HEALTH CARE PROVIDED IN 
                   ISOLATED RURAL AREAS.

       (a) Treatment of Branch Offices.--
       (1) In general.--Notwithstanding any other provision of 
     law, in determining for purposes of title XVIII of the Social 
     Security Act whether an office of a home health agency 
     constitutes a branch office or a separate home health agency, 
     neither the time nor distance between a parent office of the 
     home health agency and a branch office shall be the sole 
     determinant of a home health agency's branch office status.
       (2) Consideration of forms of technology in definition of 
     supervision.--The Secretary of Health and Human Services may 
     include forms of technology in determining what constitutes 
     ``supervision'' for purposes of determining a home heath 
     agency's branch office status under paragraph (1).
       (b) GAO Study.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study of the provision of adequate 
     supervision to maintain quality of home health services 
     delivered under the medicare program under title XVIII of the 
     Social Security Act in isolated rural areas. The study shall 
     evaluate the methods that home health agency branches and 
     subunits use to maintain adequate supervision in the delivery 
     of services to clients residing in those areas, how these 
     methods of supervision compare to requirements that subunits 
     independently meet medicare conditions of participation, and 
     the resources utilized by subunits to meet such conditions.

[[Page H12364]]

       (2) Report.--Not later than January 1, 2002, the 
     Comptroller General shall submit to Congress a report on the 
     study conducted under paragraph (1). The report shall include 
     recommendations on whether exceptions are needed for subunits 
     and branches of home health agencies under the medicare 
     program to maintain access to the home health benefit or 
     whether alternative policies should be developed to assure 
     adequate supervision and access and recommendations on 
     whether a national standard for supervision is appropriate.

     SEC. 507. CLARIFICATION OF THE HOMEBOUND DEFINITION UNDER THE 
                   MEDICARE HOME HEALTH BENEFIT.

       (a) Clarification.--
       (1) In general.--Sections 1814(a) and 1835(a) (42 U.S.C. 
     1395f(a) and 1395n(a)) are each amended--
       (A) in the last sentence, by striking ``, and that absences 
     of the individual from home are infrequent or of relatively 
     short duration, or are attributable to the need to receive 
     medical treatment''; and
       (B) by adding at the end the following new sentences: ``Any 
     absence of an individual from the home attributable to the 
     need to receive health care treatment, including regular 
     absences for the purpose of participating in therapeutic, 
     psychosocial, or medical treatment in an adult day-care 
     program that is licensed or certified by a State, or 
     accredited, to furnish adult day-care services in the State 
     shall not disqualify an individual from being considered to 
     be `confined to his home'. Any other absence of an individual 
     from the home shall not so disqualify an individual if 
     the absence is of infrequent or of relatively short 
     duration. For purposes of the preceding sentence, any 
     absence for the purpose of attending a religious service 
     shall be deemed to be an absence of infrequent or short 
     duration.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to home health services furnished on or after the 
     date of the enactment of this Act.
       (b) Study.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct an evaluation of the effect of the 
     amendment on the cost of and access to home health services 
     under the medicare program under title XVIII of the Social 
     Security Act.
       (2) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     to Congress a report on the study conducted under paragraph 
     (1).

     SEC. 508. TEMPORARY INCREASE FOR HOME HEALTH SERVICES 
                   FURNISHED IN A RURAL AREA.

       (a) 24-Month Increase Beginning April 1, 2001.--In the case 
     of home health services furnished in a rural area (as defined 
     in section 1886(d)(2)(D) of the Social Security Act (42 
     U.S.C. 1395ww(d)(2)(D))) on or after April 1, 2001, and 
     before April 1, 2003, the Secretary of Health and Human 
     Services shall increase the payment amount otherwise made 
     under section 1895 of such Act (42 U.S.C. 1395fff) for such 
     services by 10 percent.
       (b) Waiving Budget Neutrality.--The Secretary shall not 
     reduce the standard prospective payment amount (or amounts) 
     under section 1895 of the Social Security Act (42 U.S.C. 
     1395fff) applicable to home health services furnished during 
     a period to offset the increase in payments resulting from 
     the application of subsection (a).

             Subtitle B--Direct Graduate Medical Education

     SEC. 511. INCREASE IN FLOOR FOR DIRECT GRADUATE MEDICAL 
                   EDUCATION PAYMENTS.

       Section 1886(h)(2)(D)(iii) (42 U.S.C. 1395ww(h)(2)(D)(iii)) 
     is amended--
       (1) in the heading, by striking ``in fiscal year 2001 at 70 
     percent of'' and inserting ``for''; and
       (2) by inserting after ``70 percent'' the following: ``, 
     and for the cost reporting period beginning during fiscal 
     year 2002 shall not be less than 85 percent,''.

     SEC. 512. CHANGE IN DISTRIBUTION FORMULA FOR MEDICARE+CHOICE-
                   RELATED NURSING AND ALLIED HEALTH EDUCATION 
                   COSTS.

       (a) In General.--Section 1886(l)(2)(C) (42 U.S.C. 
     1395ww(l)(2)(C)) is amended by striking all that follows 
     ``multiplied by'' and inserting the following: ``the ratio 
     of--
       ``(i) the product of (I) the Secretary's estimate of the 
     ratio of the amount of payments made under section 1861(v) to 
     the hospital for nursing and allied health education 
     activities for the hospital's cost reporting period ending in 
     the second preceding fiscal year, to the hospital's total 
     inpatient days for such period, and (II) the total number of 
     inpatient days (as established by the Secretary) for such 
     period which are attributable to services furnished to 
     individuals who are enrolled under a risk sharing contract 
     with an eligible organization under section 1876 and who are 
     entitled to benefits under part A or who are enrolled with a 
     Medicare+Choice organization under part C; to
       ``(ii) the sum of the products determined under clause (i) 
     for such cost reporting periods.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to portions of cost reporting periods occurring 
     on or after January 1, 2001.

      Subtitle C--Changes in Medicare Coverage and Appeals Process

     SEC. 521. REVISIONS TO MEDICARE APPEALS PROCESS.

       (a) Conduct of Reconsiderations of Determinations by 
     Independent Contractors.--Section 1869 (42 U.S.C. 1395ff) is 
     amended to read as follows:


                       ``determinations; appeals

       ``Sec. 1869. (a) Initial Determinations.--
       ``(1) Promulgations of regulations.--The Secretary shall 
     promulgate regulations and make initial determinations with 
     respect to benefits under part A or part B in accordance with 
     those regulations for the following:
       ``(A) The initial determination of whether an individual is 
     entitled to benefits under such parts.
       ``(B) The initial determination of the amount of benefits 
     available to the individual under such parts.
       ``(C) Any other initial determination with respect to a 
     claim for benefits under such parts, including an initial 
     determination by the Secretary that payment may not be made, 
     or may no longer be made, for an item or service under such 
     parts, an initial determination made by a utilization and 
     quality control peer review organization under section 
     1154(a)(2), and an initial determination made by an entity 
     pursuant to a contract (other than a contract under section 
     1852) with the Secretary to administer provisions of this 
     title or title XI.
       ``(2) Deadlines for making initial determinations.--
       ``(A) In general.--Subject to subparagraph (B), in 
     promulgating regulations under paragraph (1), initial 
     determinations shall be concluded by not later than the 45-
     day period beginning on the date the fiscal intermediary or 
     the carrier, as the case may be, receives a claim for 
     benefits from an individual as described in paragraph (1). 
     Notice of such determination shall be mailed to the 
     individual filing the claim before the conclusion of such 45-
     day period.
       ``(B) Clean claims.--Subparagraph (A) shall not apply with 
     respect to any claim that is subject to the requirements of 
     section 1816(c)(2) or 1842(c)(2).
       ``(3) Redeterminations.--
       ``(A) In general.--In promulgating regulations under 
     paragraph (1) with respect to initial determinations, such 
     regulations shall provide for a fiscal intermediary or a 
     carrier to make a redetermination with respect to a claim for 
     benefits that is denied in whole or in part.
       ``(B) Limitations.--
       ``(i) Appeal rights.--No initial determination may be 
     reconsidered or appealed under subsection (b) unless the 
     fiscal intermediary or carrier has made a redetermination of 
     that initial determination under this paragraph.
       ``(ii) Decisionmaker.--No redetermination may be made by 
     any individual involved in the initial determination.
       ``(C) Deadlines.--
       ``(i) Filing for redetermination.--A redetermination under 
     subparagraph (A) shall be available only if notice is filed 
     with the Secretary to request the redetermination by not 
     later than the end of the 120-day period beginning on the 
     date the individual receives notice of the initial 
     determination under paragraph (2).
       ``(ii) Concluding redeterminations.--Redeterminations shall 
     be concluded by not later than the 30-day period beginning on 
     the date the fiscal intermediary or the carrier, as the case 
     may be, receives a request for a redetermination. Notice of 
     such determination shall be mailed to the individual filing 
     the claim before the conclusion of such 30-day period.
       ``(D) Construction.--For purposes of the succeeding 
     provisions of this section a redetermination under this 
     paragraph shall be considered to be part of the initial 
     determination.
       ``(b) Appeal Rights.--
       ``(1) In general.--
       ``(A) Reconsideration of initial determination.--Subject to 
     subparagraph (D), any individual dissatisfied with any 
     initial determination under subsection (a)(1) shall be 
     entitled to reconsideration of the determination, and, 
     subject to subparagraphs (D) and (E), a hearing thereon by 
     the Secretary to the same extent as is provided in section 
     205(b) and to judicial review of the Secretary's final 
     decision after such hearing as is provided in section 205(g). 
     For purposes of the preceding sentence, any reference to the 
     `Commissioner of Social Security' or the `Social Security 
     Administration' in subsection (g) or (l) of section 205 shall 
     be considered a reference to the `Secretary' or the 
     `Department of Health and Human Services', respectively.
       ``(B) Representation by provider or supplier.--
       ``(i) In general.--Sections 206(a), 1102, and 1871 shall 
     not be construed as authorizing the Secretary to prohibit an 
     individual from being represented under this section by a 
     person that furnishes or supplies the individual, directly or 
     indirectly, with services or items, solely on the basis that 
     the person furnishes or supplies the individual with such a 
     service or item.
       ``(ii) Mandatory waiver of right to payment from 
     beneficiary.--Any person that furnishes services or items to 
     an individual may not represent an individual under this 
     section with respect to the issue described in section 
     1879(a)(2) unless the person has waived any rights for 
     payment from the beneficiary with respect to the services or 
     items involved in the appeal.
       ``(iii) Prohibition on payment for representation.--If a 
     person furnishes services or items to an individual and 
     represents the individual under this section, the person may 
     not impose any financial liability on such individual in 
     connection with such representation.
       ``(iv) Requirements for representatives of a beneficiary.--
     The provisions of section 205(j) and of section 206 (other 
     than subsection (a)(4) of such section) regarding 
     representation of claimants shall apply to representation of 
     an individual with respect to appeals under this section in 
     the same manner as they apply to representation of an 
     individual under those sections.
       ``(C) Succession of rights in cases of assignment.--The 
     right of an individual to an appeal under this section with 
     respect to an item

[[Page H12365]]

     or service may be assigned to the provider of services or 
     supplier of the item or service upon the written consent of 
     such individual using a standard form established by the 
     Secretary for such an assignment.
       ``(D) Time limits for filing appeals.--
       ``(i) Reconsiderations.--Reconsideration under subparagraph 
     (A) shall be available only if the individual described in 
     subparagraph (A) files notice with the Secretary to request 
     reconsideration by not later than the end of the 180-day 
     period beginning on the date the individual receives notice 
     of the redetermination under subsection (a)(3), or within 
     such additional time as the Secretary may allow.
       ``(ii) Hearings conducted by the secretary.--The Secretary 
     shall establish in regulations time limits for the filing of 
     a request for a hearing by the Secretary in accordance with 
     provisions in sections 205 and 206.
       ``(E) Amounts in controversy.--
       ``(i) In general.--A hearing (by the Secretary) shall not 
     be available to an individual under this section if the 
     amount in controversy is less than $100, and judicial review 
     shall not be available to the individual if the amount in 
     controversy is less than $1,000.
       ``(ii) Aggregation of claims.--In determining the amount in 
     controversy, the Secretary, under regulations, shall allow 
     two or more appeals to be aggregated if the appeals involve--

       ``(I) the delivery of similar or related services to the 
     same individual by one or more providers of services or 
     suppliers, or
       ``(II) common issues of law and fact arising from services 
     furnished to two or more individuals by one or more providers 
     of services or suppliers.

       ``(F) Expedited proceedings.--
       ``(i) Expedited determination.--In the case of an 
     individual who has received notice from a provider of 
     services that such provider plans--

       ``(I) to terminate services provided to an individual and a 
     physician certifies that failure to continue the provision of 
     such services is likely to place the individual's health at 
     significant risk, or
       ``(II) to discharge the individual from the provider of 
     services,

     the individual may request, in writing or orally, an 
     expedited determination or an expedited reconsideration of an 
     initial determination made under subsection (a)(1), as the 
     case may be, and the Secretary shall provide such expedited 
     determination or expedited reconsideration.
       ``(ii) Expedited hearing.--In a hearing by the Secretary 
     under this section, in which the moving party alleges that no 
     material issues of fact are in dispute, the Secretary shall 
     make an expedited determination as to whether any such facts 
     are in dispute and, if not, shall render a decision 
     expeditiously.
       ``(G) Reopening and revision of determinations.--The 
     Secretary may reopen or revise any initial determination or 
     reconsidered determination described in this subsection under 
     guidelines established by the Secretary in regulations.
       ``(c) Conduct of Reconsiderations by Independent 
     Contractors.--
       ``(1) In general.--The Secretary shall enter into contracts 
     with qualified independent contractors to conduct 
     reconsiderations of initial determinations made under 
     subparagraphs (B) and (C) of subsection (a)(1). Contracts 
     shall be for an initial term of three years and shall be 
     renewable on a triennial basis thereafter.
       ``(2) Qualified independent contractor.--For purposes of 
     this subsection, the term `qualified independent contractor' 
     means an entity or organization that is independent of any 
     organization under contract with the Secretary that makes 
     initial determinations under subsection (a)(1), and that 
     meets the requirements established by the Secretary 
     consistent with paragraph (3).
       ``(3) Requirements.--Any qualified independent contractor 
     entering into a contract with the Secretary under this 
     subsection shall meet all of the following requirements:
       ``(A) In general.--The qualified independent contractor 
     shall perform such duties and functions and assume such 
     responsibilities as may be required by the Secretary to carry 
     out the provisions of this subsection, and shall have 
     sufficient training and expertise in medical science and 
     legal matters to make reconsiderations under this subsection.
       ``(B) Reconsiderations.--
       ``(i) In general.--The qualified independent contractor 
     shall review initial determinations. Where an initial 
     determination is made with respect to whether an item or 
     service is reasonable and necessary for the diagnosis or 
     treatment of illness or injury (under section 1862(a)(1)(A)), 
     such review shall include consideration of the facts and 
     circumstances of the initial determination by a panel of 
     physicians or other appropriate health care professionals and 
     any decisions with respect to the reconsideration shall be 
     based on applicable information, including clinical 
     experience and medical, technical, and scientific evidence.
       ``(ii) Effect of national and local coverage 
     determinations.--

       ``(I) National coverage determinations.--If the Secretary 
     has made a national coverage determination pursuant to the 
     requirements established under the third sentence of section 
     1862(a), such determination shall be binding on the qualified 
     independent contractor in making a decision with respect to a 
     reconsideration under this section.
       ``(II) Local coverage determinations.--If the Secretary has 
     made a local coverage determination, such determination shall 
     not be binding on the qualified independent contractor in 
     making a decision with respect to a reconsideration under 
     this section. Notwithstanding the previous sentence, the 
     qualified independent contractor shall consider the local 
     coverage determination in making such decision.
       ``(III) Absence of national or local coverage 
     determination.--In the absence of such a national coverage 
     determination or local coverage determination, the qualified 
     independent contractor shall make a decision with respect to 
     the reconsideration based on applicable information, 
     including clinical experience and medical, technical, and 
     scientific evidence.

       ``(C) Deadlines for decisions.--
       ``(i) Reconsiderations.--Except as provided in clauses 
     (iii) and (iv), the qualified independent contractor shall 
     conduct and conclude a reconsideration under subparagraph 
     (B), and mail the notice of the decision with respect to the 
     reconsideration by not later than the end of the 30-day 
     period beginning on the date a request for reconsideration 
     has been timely filed.
       ``(ii) Consequences of failure to meet deadline.--In the 
     case of a failure by the qualified independent contractor to 
     mail the notice of the decision by the end of the period 
     described in clause (i) or to provide notice by the end of 
     the period described in clause (iii), as the case may be, the 
     party requesting the reconsideration or appeal may request a 
     hearing before the Secretary, notwithstanding any 
     requirements for a reconsidered determination for purposes of 
     the party's right to such hearing.
       ``(iii) Expedited reconsiderations.--The qualified 
     independent contractor shall perform an expedited 
     reconsideration under subsection (b)(1)(F) as follows:

       ``(I) Deadline for decision.--Notwithstanding section 
     216(j) and subject to clause (iv), not later than the end of 
     the 72-hour period beginning on the date the qualified 
     independent contractor has received a request for such 
     reconsideration and has received such medical or other 
     records needed for such reconsideration, the qualified 
     independent contractor shall provide notice (by telephone and 
     in writing) to the individual and the provider of services 
     and attending physician of the individual of the results of 
     the reconsideration. Such reconsideration shall be conducted 
     regardless of whether the provider of services or supplier 
     will charge the individual for continued services or whether 
     the individual will be liable for payment for such continued 
     services.
       ``(II) Consultation with beneficiary.--In such 
     reconsideration, the qualified independent contractor shall 
     solicit the views of the individual involved.
       ``(III) Special rule for hospital discharges.--A 
     reconsideration of a discharge from a hospital shall be 
     conducted under this clause in accordance with the provisions 
     of paragraphs (2), (3), and (4) of section 1154(e) as in 
     effect on the date that precedes the date of the enactment of 
     this subparagraph.

       ``(iv) Extension.--An individual requesting a 
     reconsideration under this subparagraph may be granted such 
     additional time as the individual specifies (not to exceed 14 
     days) for the qualified independent contractor to conclude 
     the reconsideration. The individual may request such 
     additional time orally or in writing.
       ``(D) Limitation on individual reviewing determinations.--
       ``(i) Physicians and health care professional.--No 
     physician or health care professional under the employ of a 
     qualified independent contractor may review--

       ``(I) determinations regarding health care services 
     furnished to a patient if the physician or health care 
     professional was directly responsible for furnishing such 
     services; or
       ``(II) determinations regarding health care services 
     provided in or by an institution, organization, or agency, if 
     the physician or any member of the family of the physician or 
     health care professional has, directly or indirectly, a 
     significant financial interest in such institution, 
     organization, or agency.

       ``(ii) Family described.--For purposes of this paragraph, 
     the family of a physician or health care professional 
     includes the spouse (other than a spouse who is legally 
     separated from the physician or health care professional 
     under a decree of divorce or separate maintenance), children 
     (including stepchildren and legally adopted children), 
     grandchildren, parents, and grandparents of the physician or 
     health care professional.
       ``(E) Explanation of decision.--Any decision with respect 
     to a reconsideration of a qualified independent contractor 
     shall be in writing, and shall include a detailed explanation 
     of the decision as well as a discussion of the pertinent 
     facts and applicable regulations applied in making such 
     decision, and in the case of a determination of whether an 
     item or service is reasonable and necessary for the diagnosis 
     or treatment of illness or injury (under section 
     1862(a)(1)(A)) an explanation of the medical and scientific 
     rationale for the decision.
       ``(F) Notice requirements.--Whenever a qualified 
     independent contractor makes a decision with respect to a 
     reconsideration under this subsection, the qualified 
     independent contractor shall promptly notify the entity 
     responsible for the payment of claims under part A or part B 
     of such decision.
       ``(G) Dissemination of decisions on reconsiderations.--Each 
     qualified independent contractor shall make available all 
     decisions with respect to reconsiderations of such qualified 
     independent contractors to fiscal intermediaries (under 
     section 1816), carriers (under section 1842), peer review 
     organizations (under part B of title XI), Medicare+Choice 
     organizations offering Medicare+Choice plans under part C, 
     other entities under contract with the Secretary to make 
     initial determinations under part A or part B or title XI, 
     and to the public. The Secretary shall establish a 
     methodology under which qualified independent contractors 
     shall carry out this subparagraph.
       ``(H) Ensuring consistency in decisions.--Each qualified 
     independent contractor shall

[[Page H12366]]

     monitor its decisions with respect to reconsiderations to 
     ensure the consistency of such decisions with respect to 
     requests for reconsideration of similar or related matters.
       ``(I) Data collection.--
       ``(i) In general.--Consistent with the requirements of 
     clause (ii), a qualified independent contractor shall collect 
     such information relevant to its functions, and keep and 
     maintain such records in such form and manner as the 
     Secretary may require to carry out the purposes of this 
     section and shall permit access to and use of any such 
     information and records as the Secretary may require for such 
     purposes.
       ``(ii) Type of data collected.--Each qualified independent 
     contractor shall keep accurate records of each decision made, 
     consistent with standards established by the Secretary for 
     such purpose. Such records shall be maintained in an 
     electronic database in a manner that provides for 
     identification of the following:

       ``(I) Specific claims that give rise to appeals.
       ``(II) Situations suggesting the need for increased 
     education for providers of services, physicians, or 
     suppliers.
       ``(III) Situations suggesting the need for changes in 
     national or local coverage policy.
       ``(IV) Situations suggesting the need for changes in local 
     medical review policies.

       ``(iii) Annual reporting.--Each qualified independent 
     contractor shall submit annually to the Secretary (or 
     otherwise as the Secretary may request) records maintained 
     under this paragraph for the previous year.
       ``(J) Hearings by the secretary.--The qualified independent 
     contractor shall (i) prepare such information as is required 
     for an appeal of a decision of the contractor with respect to 
     a reconsideration to the Secretary for a hearing, including 
     as necessary, explanations of issues involved in the decision 
     and relevant policies, and (ii) participate in such hearings 
     as required by the Secretary.
       ``(4) Number of qualified independent contractors.--The 
     Secretary shall enter into contracts with not fewer than 12 
     qualified independent contractors under this subsection.
       ``(5) Limitation on qualified independent contractor 
     liability.--No qualified independent contractor having a 
     contract with the Secretary under this subsection and no 
     person who is employed by, or who has a fiduciary 
     relationship with, any such qualified independent contractor 
     or who furnishes professional services to such qualified 
     independent contractor, shall be held by reason of the 
     performance of any duty, function, or activity required or 
     authorized pursuant to this subsection or to a valid contract 
     entered into under this subsection, to have violated any 
     criminal law, or to be civilly liable under any law of the 
     United States or of any State (or political subdivision 
     thereof) provided due care was exercised in the performance 
     of such duty, function, or activity.
       ``(d) Deadlines for Hearings by the Secretary.--
       ``(1) Hearing by administrative law judge.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     an administrative law judge shall conduct and conclude a 
     hearing on a decision of a qualified independent contractor 
     under subsection (c) and render a decision on such hearing by 
     not later than the end of the 90-day period beginning on the 
     date a request for hearing has been timely filed.
       ``(B) Waiver of deadline by party seeking hearing.--The 90-
     day period under subparagraph (A) shall not apply in the case 
     of a motion or stipulation by the party requesting the 
     hearing to waive such period.
       ``(2) Departmental appeals board review.--
       ``(A) In general.--The Departmental Appeals Board of the 
     Department of Health and Human Services shall conduct and 
     conclude a review of the decision on a hearing described in 
     paragraph (1) and make a decision or remand the case to the 
     administrative law judge for reconsideration by not later 
     than the end of the 90-day period beginning on the date a 
     request for review has been timely filed.
       ``(B) DAB hearing procedure.--In reviewing a decision on a 
     hearing under this paragraph, the Departmental Appeals Board 
     shall review the case de novo.
       ``(3) Consequences of failure to meet deadlines.--
       ``(A) Hearing by administrative law judge.--In the case of 
     a failure by an administrative law judge to render a decision 
     by the end of the period described in paragraph (1), the 
     party requesting the hearing may request a review by the 
     Departmental Appeals Board of the Department of Health and 
     Human Services, notwithstanding any requirements for a 
     hearing for purposes of the party's right to such a review.
       ``(B) Departmental appeals board review.--In the case of a 
     failure by the Departmental Appeals Board to render a 
     decision by the end of the period described in paragraph (2), 
     the party requesting the hearing may seek judicial review, 
     notwithstanding any requirements for a hearing for purposes 
     of the party's right to such judicial review.
       ``(e) Administrative Provisions.--
       ``(1) Limitation on review of certain regulations.--A 
     regulation or instruction that relates to a method for 
     determining the amount of payment under part B and that was 
     initially issued before January 1, 1981, shall not be subject 
     to judicial review.
       ``(2) Outreach.--The Secretary shall perform such outreach 
     activities as are necessary to inform individuals entitled to 
     benefits under this title and providers of services and 
     suppliers with respect to their rights of, and the process 
     for, appeals made under this section. The Secretary shall use 
     the toll-free telephone number maintained by the Secretary 
     under section 1804(b) to provide information regarding appeal 
     rights and respond to inquiries regarding the status of 
     appeals.
       ``(3) Continuing education requirement for qualified 
     independent contractors and administrative law judges.--The 
     Secretary shall provide to each qualified independent 
     contractor, and, in consultation with the Commissioner of 
     Social Security, to administrative law judges that decide 
     appeals of reconsiderations of initial determinations or 
     other decisions or determinations under this section, such 
     continuing education with respect to coverage of items and 
     services under this title or policies of the Secretary with 
     respect to part B of title XI as is necessary for such 
     qualified independent contractors and administrative law 
     judges to make informed decisions with respect to appeals.
       ``(4) Reports.--
       ``(A) Annual report to congress.--The Secretary shall 
     submit to Congress an annual report describing the number of 
     appeals for the previous year, identifying issues that 
     require administrative or legislative actions, and 
     including any recommendations of the Secretary with 
     respect to such actions. The Secretary shall include in 
     such report an analysis of determinations by qualified 
     independent contractors with respect to inconsistent 
     decisions and an analysis of the causes of any such 
     inconsistencies.
       ``(B) Survey.--Not less frequently than every 5 years, the 
     Secretary shall conduct a survey of a valid sample of 
     individuals entitled to benefits under this title who have 
     filed appeals of determinations under this section, providers 
     of services, and suppliers to determine the satisfaction of 
     such individuals or entities with the process for appeals of 
     determinations provided for under this section and education 
     and training provided by the Secretary with respect to that 
     process. The Secretary shall submit to Congress a report 
     describing the results of the survey, and shall include any 
     recommendations for administrative or legislative actions 
     that the Secretary determines appropriate.''.
       (b) Applicability of Requirements and Limitations on 
     Liability of Qualified Independent Contractors to 
     Medicare+Choice Independent Appeals Contractors.--Section 
     1852(g)(4) (42 U.S.C. 1395w-22(g)(4)) is amended by adding at 
     the end the following: ``The provisions of section 1869(c)(5) 
     shall apply to independent outside entities under contract 
     with the Secretary under this paragraph.''.
       (c) Conforming Amendment.--Section 1154(e) (42 U.S.C. 
     1320c-3(e)) is amended by striking paragraphs (2), (3), and 
     (4).
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to initial determinations made on or 
     after October 1, 2002.

     SEC. 522. REVISIONS TO MEDICARE COVERAGE PROCESS.

       (a) Review of Determinations.--Section 1869 (42 U.S.C. 
     1395ff), as amended by section 521, is further amended by 
     adding at the end the following new subsection:
       ``(f) Review of Coverage Determinations.--
       ``(1) National coverage determinations.--
       ``(A) In general.--Review of any national coverage 
     determination shall be subject to the following limitations:
       ``(i) Such a determination shall not be reviewed by any 
     administrative law judge.
       ``(ii) Such a determination shall not be held unlawful or 
     set aside on the ground that a requirement of section 553 of 
     title 5, United States Code, or section 1871(b) of this 
     title, relating to publication in the Federal Register or 
     opportunity for public comment, was not satisfied.
       ``(iii) Upon the filing of a complaint by an aggrieved 
     party, such a determination shall be reviewed by the 
     Departmental Appeals Board of the Department of Health and 
     Human Services. In conducting such a review, the Departmental 
     Appeals Board--

       ``(I) shall review the record and shall permit discovery 
     and the taking of evidence to evaluate the reasonableness of 
     the determination, if the Board determines that the record is 
     incomplete or lacks adequate information to support the 
     validity of the determination;
       ``(II) may, as appropriate, consult with appropriate 
     scientific and clinical experts; and
       ``(III) shall defer only to the reasonable findings of 
     fact, reasonable interpretations of law, and reasonable 
     applications of fact to law by the Secretary.

       ``(iv) The Secretary shall implement a decision of the 
     Departmental Appeals Board within 30 days of receipt of such 
     decision.
       ``(v) A decision of the Departmental Appeals Board 
     constitutes a final agency action and is subject to judicial 
     review.
       ``(B) Definition of national coverage determination.--For 
     purposes of this section, the term `national coverage 
     determination' means a determination by the Secretary with 
     respect to whether or not a particular item or service is 
     covered nationally under this title, but does not include a 
     determination of what code, if any, is assigned to a 
     particular item or service covered under this title or a 
     determination with respect to the amount of payment made for 
     a particular item or service so covered.
       ``(2) Local coverage determination.--
       ``(A) In general.--Review of any local coverage 
     determination shall be subject to the following limitations:
       ``(i) Upon the filing of a complaint by an aggrieved party, 
     such a determination shall be reviewed by an administrative 
     law judge of the Social Security Administration. The 
     administrative law judge--

       ``(I) shall review the record and shall permit discovery 
     and the taking of evidence to evaluate the reasonableness of 
     the determination, if the administrative law judge determines 
     that the record is incomplete or lacks adequate information 
     to support the validity of the determination;
       ``(II) may, as appropriate, consult with appropriate 
     scientific and clinical experts; and
       ``(III) shall defer only to the reasonable findings of 
     fact, reasonable interpretations of law, and reasonable 
     applications of fact to law by the Secretary.

[[Page H12367]]

       ``(ii) Upon the filing of a complaint by an aggrieved 
     party, a decision of an administrative law judge under clause 
     (i) shall be reviewed by the Departmental Appeals Board of 
     the Department of Health and Human Services.
       ``(iii) The Secretary shall implement a decision of the 
     administrative law judge or the Departmental Appeals Board 
     within 30 days of receipt of such decision.
       ``(iv) A decision of the Departmental Appeals Board 
     constitutes a final agency action and is subject to judicial 
     review.
       ``(B) Definition of local coverage determination.--For 
     purposes of this section, the term `local coverage 
     determination' means a determination by a fiscal intermediary 
     or a carrier under part A or part B, as applicable, 
     respecting whether or not a particular item or service is 
     covered on an intermediary- or carrier-wide basis under such 
     parts, in accordance with section 1862(a)(1)(A).
       ``(3) No material issues of fact in dispute.--In the case 
     of a determination that may otherwise be subject to review 
     under paragraph (1)(A)(iii) or paragraph (2)(A)(i), where the 
     moving party alleges that--
       ``(A) there are no material issues of fact in dispute, and
       ``(B) the only issue of law is the constitutionality of a 
     provision of this title, or that a regulation, determination, 
     or ruling by the Secretary is invalid,
     the moving party may seek review by a court of competent 
     jurisdiction without filing a complaint under such paragraph 
     and without otherwise exhausting other administrative 
     remedies.
       ``(4) Pending national coverage determinations.--
       ``(A) In general.--In the event the Secretary has not 
     issued a national coverage or noncoverage determination with 
     respect to a particular type or class of items or services, 
     an aggrieved person (as described in paragraph (5)) may 
     submit to the Secretary a request to make such a 
     determination with respect to such items or services. By not 
     later than the end of the 90-day period beginning on the date 
     the Secretary receives such a request (notwithstanding the 
     receipt by the Secretary of new evidence (if any) during such 
     90-day period), the Secretary shall take one of the following 
     actions:
       ``(i) Issue a national coverage determination, with or 
     without limitations.
       ``(ii) Issue a national noncoverage determination.
       ``(iii) Issue a determination that no national coverage or 
     noncoverage determination is appropriate as of the end of 
     such 90-day period with respect to national coverage of such 
     items or services.
       ``(iv) Issue a notice that states that the Secretary has 
     not completed a review of the request for a national coverage 
     determination and that includes an identification of the 
     remaining steps in the Secretary's review process and a 
     deadline by which the Secretary will complete the review and 
     take an action described in subclause (I), (II), or (III).
       ``(B) Deemed action by the secretary.--In the case of an 
     action described in clause (i)(IV), if the Secretary fails to 
     take an action referred to in such clause by the deadline 
     specified by the Secretary under such clause, then the 
     Secretary is deemed to have taken an action described in 
     clause (i)(III) as of the deadline.
       ``(C) Explanation of determination.--When issuing a 
     determination under clause (i), the Secretary shall include 
     an explanation of the basis for the determination. An action 
     taken under clause (i) (other than subclause (IV)) is deemed 
     to be a national coverage determination for purposes of 
     review under subparagraph (A).
       ``(5) Standing.--An action under this subsection seeking 
     review of a national coverage determination or local coverage 
     determination may be initiated only by individuals entitled 
     to benefits under part A, or enrolled under part B, or both, 
     who are in need of the items or services that are the subject 
     of the coverage determination.
       ``(6) Publication on the internet of decisions of hearings 
     of the secretary.--Each decision of a hearing by the 
     Secretary with respect to a national coverage determination 
     shall be made public, and the Secretary shall publish each 
     decision on the Medicare Internet site of the Department of 
     Health and Human Services. The Secretary shall remove from 
     such decision any information that would identify any 
     individual, provider of services, or supplier.
       ``(7) Annual report on national coverage determinations.--
       ``(A) In general.--Not later than December 1 of each year, 
     beginning in 2001, the Secretary shall submit to Congress a 
     report that sets forth a detailed compilation of the actual 
     time periods that were necessary to complete and fully 
     implement national coverage determinations that were made in 
     the previous fiscal year for items, services, or medical 
     devices not previously covered as a benefit under this title, 
     including, with respect to each new item, service, or medical 
     device, a statement of the time taken by the Secretary to 
     make and implement the necessary coverage, coding, and 
     payment determinations, including the time taken to complete 
     each significant step in the process of making and 
     implementing such determinations.
       ``(B) Publication of reports on the internet.--The 
     Secretary shall publish each report submitted under clause 
     (i) on the medicare Internet site of the Department of Health 
     and Human Services.
       ``(8) Construction.--Nothing in this subsection shall be 
     construed as permitting administrative or judicial review 
     pursuant to this section insofar as such review is explicitly 
     prohibited or restricted under another provision of law.''.
       (b) Establishment of a Process for Coverage 
     Determinations.--Section 1862(a) (42 U.S.C. 1395y(a)) is 
     amended by adding at the end the following new sentence: ``In 
     making a national coverage determination (as defined in 
     paragraph (1)(B) of section 1869(f)) the Secretary shall 
     ensure that the public is afforded notice and opportunity to 
     comment prior to implementation by the Secretary of the 
     determination; meetings of advisory committees established 
     under section 1114(f) with respect to the determination are 
     made on the record; in making the determination, the 
     Secretary has considered applicable information (including 
     clinical experience and medical, technical, and scientific 
     evidence) with respect to the subject matter of the 
     determination; and in the determination, provide a clear 
     statement of the basis for the determination (including 
     responses to comments received from the public), the 
     assumptions underlying that basis, and make available to the 
     public the data (other than proprietary data) considered in 
     making the determination.''.
       (c) Improvements to the Medicare Advisory Committee 
     Process.--Section 1114 (42 U.S.C. 1314) is amended by adding 
     at the end the following new subsection:
       ``(i)(1) Any advisory committee appointed under subsection 
     (f) to advise the Secretary on matters relating to the 
     interpretation, application, or implementation of section 
     1862(a)(1) shall assure the full participation of a nonvoting 
     member in the deliberations of the advisory committee, and 
     shall provide such nonvoting member access to all information 
     and data made available to voting members of the advisory 
     committee, other than information that--
       ``(A) is exempt from disclosure pursuant to subsection (a) 
     of section 552 of title 5, United States Code, by reason of 
     subsection (b)(4) of such section (relating to trade 
     secrets); or
       ``(B) the Secretary determines would present a conflict of 
     interest relating to such nonvoting member.
       ``(2) If an advisory committee described in paragraph (1) 
     organizes into panels of experts according to types of items 
     or services considered by the advisory committee, any such 
     panel of experts may report any recommendation with respect 
     to such items or services directly to the Secretary without 
     the prior approval of the advisory committee or an executive 
     committee thereof.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to--
       (1) a review of any national or local coverage 
     determination filed,
       (2) a request to make such a determination made, and
       (3) a national coverage determination made,
     on or after October 1, 2001.

            Subtitle D--Improving Access to New Technologies

     SEC. 531. REIMBURSEMENT IMPROVEMENTS FOR NEW CLINICAL 
                   LABORATORY TESTS AND DURABLE MEDICAL EQUIPMENT.

       (a) Payment Rule for New Laboratory Tests.--Section 
     1833(h)(4)(B)(viii) (42 U.S.C. 1395l(h)(4)(B)(viii)) is 
     amended by inserting before the period at the end the 
     following: ``(or 100 percent of such median in the case of a 
     clinical diagnostic laboratory test performed on or after 
     January 1, 2001, that the Secretary determines is a new test 
     for which no limitation amount has previously been 
     established under this subparagraph)''.
       (b) Establishment of Coding and Payment Procedures for New 
     Clinical Diagnostic Laboratory Tests and Other Items on a Fee 
     Schedule.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall establish procedures for coding and payment 
     determinations for the categories of new clinical 
     diagnostic laboratory tests and new durable medical 
     equipment under part B of title XVIII of the Social 
     Security Act that permit public consultation in a manner 
     consistent with the procedures established for 
     implementing coding modifications for ICD-9-CM.
       (c) Report on Procedures Used for Advanced, Improved 
     Technologies.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress a report that identifies 
     the specific procedures used by the Secretary under part B of 
     title XVIII of the Social Security Act to adjust payments for 
     clinical diagnostic laboratory tests and durable medical 
     equipment which are classified to existing codes where, 
     because of an advance in technology with respect to the test 
     or equipment, there has been a significant increase or 
     decrease in the resources used in the test or in the 
     manufacture of the equipment, and there has been a 
     significant improvement in the performance of the test or 
     equipment. The report shall include such recommendations for 
     changes in law as may be necessary to assure fair and 
     appropriate payment levels under such part for such improved 
     tests and equipment as reflects increased costs necessary to 
     produce improved results.

     SEC. 532. RETENTION OF HCPCS LEVEL III CODES.

       (a) In General.--The Secretary of Health and Human Services 
     shall maintain and continue the use of level III codes of the 
     HCPCS coding system (as such system was in effect on August 
     16, 2000) through December 31, 2003, and shall make such 
     codes available to the public.
       (b) Definition.--For purposes of this section, the term 
     ``HCPCS Level III codes'' means the alphanumeric codes for 
     local use under the Health Care Financing Administration 
     Common Procedure Coding System (HCPCS).

     SEC. 533. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER 
                   INPATIENT HOSPITAL PPS.

       (a) Expediting Recognition of New Technologies Into 
     Inpatient PPS Coding System.--
       (1) Report.--Not later than April 1, 2001, the Secretary of 
     Health and Human Services shall

[[Page H12368]]

     submit to Congress a report on methods of expeditiously 
     incorporating new medical services and technologies into the 
     clinical coding system used with respect to payment for 
     inpatient hospital services furnished under the medicare 
     program under title XVIII of the Social Security Act, 
     together with a detailed description of the Secretary's 
     preferred methods to achieve this purpose.
       (2) Implementation.--Not later than October 1, 2001, the 
     Secretary shall implement the preferred methods described in 
     the report transmitted pursuant to paragraph (1).
       (b) Ensuring Appropriate Payments for Hospitals 
     Incorporating New Medical Services and Technologies.--
       (1) Establishment of mechanism.--Section 1886(d)(5) (42 
     U.S.C. 1395ww(d)(5)) is amended by adding at the end the 
     following new subparagraphs:
       ``(K)(i) Effective for discharges beginning on or after 
     October 1, 2001, the Secretary shall establish a mechanism to 
     recognize the costs of new medical services and technologies 
     under the payment system established under this subsection. 
     Such mechanism shall be established after notice and 
     opportunity for public comment (in the publications required 
     by subsection (e)(5) for a fiscal year or otherwise).
       ``(ii) The mechanism established pursuant to clause (i) 
     shall--
       ``(I) apply to a new medical service or technology if, 
     based on the estimated costs incurred with respect to 
     discharges involving such service or technology, the DRG 
     prospective payment rate otherwise applicable to such 
     discharges under this subsection is inadequate;
       ``(II) provide for the collection of data with respect to 
     the costs of a new medical service or technology described in 
     subclause (I) for a period of not less than two years and not 
     more than three years beginning on the date on which an 
     inpatient hospital code is issued with respect to the service 
     or technology;
       ``(III) subject to paragraph (4)(C)(iii), provide for 
     additional payment to be made under this subsection with 
     respect to discharges involving a new medical service or 
     technology described in subclause (I) that occur during the 
     period described in subclause (II) in an amount that 
     adequately reflects the estimated average cost of such 
     service or technology; and
       ``(IV) provide that discharges involving such a service or 
     technology that occur after the close of the period described 
     in subclause (II) will be classified within a new or existing 
     diagnosis-related group with a weighting factor under 
     paragraph (4)(B) that is derived from cost data collected 
     with respect to discharges occurring during such period.
       ``(iii) For purposes of clause (ii)(II), the term 
     `inpatient hospital code' means any code that is used with 
     respect to inpatient hospital services for which payment may 
     be made under this subsection and includes an alphanumeric 
     code issued under the International Classification of 
     Diseases, 9th Revision, Clinical Modification (`ICD-9-CM') 
     and its subsequent revisions.
       ``(iv) For purposes of clause (ii)(III), the term 
     `additional payment' means, with respect to a discharge for a 
     new medical service or technology described in clause 
     (ii)(I), an amount that exceeds the prospective payment rate 
     otherwise applicable under this subsection to discharges 
     involving such service or technology that would be made but 
     for this subparagraph.
       ``(v) The requirement under clause (ii)(III) for an 
     additional payment may be satisfied by means of a new-
     technology group (described in subparagraph (L)), an add-on 
     payment, a payment adjustment, or any other similar mechanism 
     for increasing the amount otherwise payable with respect to a 
     discharge under this subsection. The Secretary may not 
     establish a separate fee schedule for such additional payment 
     for such services and technologies, by utilizing a 
     methodology established under subsection (a) or (h) of 
     section 1834 to determine the amount of such additional 
     payment, or by other similar mechanisms or methodologies.
       ``(vi) For purposes of this subparagraph and subparagraph 
     (L), a medical service or technology will be considered a 
     `new medical service or technology' if the service or 
     technology meets criteria established by the Secretary after 
     notice and an opportunity for public comment.
       ``(L)(i) In establishing the mechanism under subparagraph 
     (K), the Secretary may establish new-technology groups into 
     which a new medical service or technology will be classified 
     if, based on the estimated average costs incurred with 
     respect to discharges involving such service or technology, 
     the DRG prospective payment rate otherwise applicable to such 
     discharges under this subsection is inadequate.
       ``(ii) Such groups--
       ``(I) shall not be based on the costs associated with a 
     specific new medical service or technology; but
       ``(II) shall, in combination with the applicable 
     standardized amounts and the weighting factors assigned to 
     such groups under paragraph (4)(B), reflect such cost cohorts 
     as the Secretary determines are appropriate for all new 
     medical services and technologies that are likely to be 
     provided as inpatient hospital services in a fiscal year.
       ``(iii) The methodology for classifying specific hospital 
     discharges within a diagnosis-related group under paragraph 
     (4)(A) or a new-technology group shall provide that a 
     specific hospital discharge may not be classified within both 
     a diagnosis-related group and a new-technology group.''.
       (2) Prior consultation.--The Secretary of Health and Human 
     Services shall consult with groups representing hospitals, 
     physicians, and manufacturers of new medical technologies 
     before publishing the notice of proposed rulemaking 
     required by section 1886(d)(5)(K)(i) of the Social 
     Security Act (as added by paragraph (1)).
       (3) Conforming amendment.--Section 1886(d)(4)(C)(i) (42 
     U.S.C. 1395ww(d)(4)(C)(i)) is amended by striking 
     ``technology,'' and inserting ``technology (including a new 
     medical service or technology under paragraph (5)(K)),''.

                      Subtitle E--Other Provisions

     SEC. 541. INCREASE IN REIMBURSEMENT FOR BAD DEBT.

       Section 1861(v)(1)(T) (42 U.S.C. 1395x(v)(1)(T)) is 
     amended--
       (1) in clause (ii), by striking ``and'' at the end;
       (2) in clause (iii)--
       (A) by striking ``during a subsequent fiscal year'' and 
     inserting ``during fiscal year 2000''; and
       (B) by striking the period at the end and inserting ``, 
     and''; and
       (3) by adding at the end the following new clause:
       ``(iv) for cost reporting periods beginning during a 
     subsequent fiscal year, by 30 percent of such amount 
     otherwise allowable.''.

     SEC. 542. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES 
                   UNDER MEDICARE.

       (a) In General.--When an independent laboratory furnishes 
     the technical component of a physician pathology service to a 
     fee-for-service medicare beneficiary who is an inpatient or 
     outpatient of a covered hospital, the Secretary of Health and 
     Human Services shall treat such component as a service for 
     which payment shall be made to the laboratory under section 
     1848 of the Social Security Act (42 U.S.C. 1395w-4) and not 
     as an inpatient hospital service for which payment is made to 
     the hospital under section 1886(d) of such Act (42 U.S.C. 
     1395ww(d)) or as an outpatient hospital service for which 
     payment is made to the hospital under section 1833(t) of such 
     Act (42 U.S.C. 1395l(t)).
       (b) Definitions.--For purposes of this section:
       (1) Covered hospital.--The term ``covered hospital'' means, 
     with respect to an inpatient or an outpatient, a hospital 
     that had an arrangement with an independent laboratory that 
     was in effect as of July 22, 1999, under which a laboratory 
     furnished the technical component of physician pathology 
     services to fee-for-service medicare beneficiaries who were 
     hospital inpatients or outpatients, respectively, and 
     submitted claims for payment for such component to a medicare 
     carrier (that has a contract with the Secretary under section 
     1842 of the Social Security Act, 42 U.S.C. 1395u) and not to 
     such hospital.
       (2) Fee-for-service medicare beneficiary.--The term ``fee-
     for-service medicare beneficiary'' means an individual who--
       (A) is entitled to benefits under part A, or enrolled under 
     part B, or both, of such title; and
       (B) is not enrolled in any of the following:
       (i) A Medicare+Choice plan under part C of such title.
       (ii) A plan offered by an eligible organization under 
     section 1876 of such Act (42 U.S.C. 1395mm).
       (iii) A program of all-inclusive care for the elderly 
     (PACE) under section 1894 of such Act (42 U.S.C. 1395eee).
       (iv) A social health maintenance organization (SHMO) 
     demonstration project established under section 4018(b) of 
     the Omnibus Budget Reconciliation Act of 1987 (Public Law 
     100-203).
       (c) Effective Date.--This section shall apply to services 
     furnished during the 2-year period beginning on January 1, 
     2001.
       (d) GAO Report.--
       (1) Study.--The Comptroller General of the United States 
     shall conduct a study of the effects of the previous 
     provisions of this section on hospitals and laboratories and 
     access of fee-for-service medicare beneficiaries to the 
     technical component of physician pathology services.
       (2) Report.--Not later than April 1, 2002, the Comptroller 
     General shall submit to Congress a report on such study. The 
     report shall include recommendations about whether such 
     provisions should be extended after the end of the period 
     specified in subsection (c) for either or both inpatient and 
     outpatient hospital services, and whether the provisions 
     should be extended to other hospitals.

     SEC. 543. EXTENSION OF ADVISORY OPINION AUTHORITY.

       Section 1128D(b)(6) (42 U.S.C. 1320a-7d(b)(6)) is amended 
     by striking ``and before the date which is 4 years after such 
     date of enactment''.

     SEC. 544. CHANGE IN ANNUAL MEDPAC REPORTING.

       (a) Revision of Deadlines for Submission of Reports.--
       (1) In general.--Section 1805(b)(1)(D) (42 U.S.C. 1395b-
     6(b)(1)(D)) is amended by striking ``June 1 of each year 
     (beginning with 1998),'' and inserting ``June 15 of each 
     year,''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply beginning with 2001.
       (b) Requirement for on the Record Votes on 
     Recommendations.--Section 1805(b) (42 U.S.C. 1395b-6(b)) is 
     amended by adding at the end the following new paragraph:
       ``(7) Voting and reporting requirements.--With respect to 
     each recommendation contained in a report submitted under 
     paragraph (1), each member of the Commission shall vote on 
     the recommendation, and the Commission shall include, by 
     member, the results of that vote in the report containing the 
     recommendation.''.

     SEC. 545. DEVELOPMENT OF PATIENT ASSESSMENT INSTRUMENTS.

       (a) Development.--
       (1) In general.--Not later than January 1, 2005, the 
     Secretary of Health and Human Services shall submit to the 
     Committee on Ways and Means and the Committee on Commerce of 
     the House of Representatives and the Committee on Finance of 
     the Senate a report on the development of standard 
     instruments for the assessment of the health and functional 
     status of patients,

[[Page H12369]]

     for whom items and services described in subsection (b) are 
     furnished, and include in the report a recommendation on the 
     use of such standard instruments for payment purposes.
       (2) Design for comparison of common elements.--The 
     Secretary shall design such standard instruments in a manner 
     such that--
       (A) elements that are common to the items and services 
     described in subsection (b) may be readily comparable and are 
     statistically compatible;
       (B) only elements necessary to meet program objectives are 
     collected; and
       (C) the standard instruments supersede any other assessment 
     instrument used before that date.
       (3) Consultation.--In developing an assessment instrument 
     under paragraph (1), the Secretary shall consult with the 
     Medicare Payment Advisory Commission, the Agency for 
     Healthcare Research and Quality, and qualified organizations 
     representing providers of services and suppliers under title 
     XVIII.
       (b) Description of Services.--For purposes of subsection 
     (a), items and services described in this subsection are 
     those items and services furnished to individuals entitled to 
     benefits under part A, or enrolled under part B, or both of 
     title XVIII of the Social Security Act for which payment is 
     made under such title, and include the following:
       (1) Inpatient and outpatient hospital services.
       (2) Inpatient and outpatient rehabilitation services.
       (3) Covered skilled nursing facility services.
       (4) Home health services.
       (5) Physical or occupational therapy or speech-language 
     pathology services.
       (6) Items and services furnished to such individuals 
     determined to have end stage renal disease.
       (7) Partial hospitalization services and other mental 
     health services.
       (8) Any other service for which payment is made under such 
     title as the Secretary determines to be appropriate.

     SEC. 546. GAO REPORT ON IMPACT OF THE EMERGENCY MEDICAL 
                   TREATMENT AND ACTIVE LABOR ACT (EMTALA) ON 
                   HOSPITAL EMERGENCY DEPARTMENTS.

       (a) Report.--The Comptroller General of the United States 
     shall submit a report to the Committee on Commerce and the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate by May 1, 2001, on 
     the effect of the Emergency Medical Treatment and Active 
     Labor Act on hospitals, emergency physicians, and physicians 
     covering emergency department call throughout the United 
     States.
       (b) Report Requirements.--The report should evaluate--
       (1) the extent to which hospitals, emergency physicians, 
     and physicians covering emergency department call provide 
     uncompensated services in relation to the requirements of 
     EMTALA;
       (2) the extent to which the regulatory requirements and 
     enforcement of EMTALA have expanded beyond the legislation's 
     original intent;
       (3) estimates for the total dollar amount of EMTALA-related 
     care uncompensated costs to emergency physicians, physicians 
     covering emergency department call, hospital emergency 
     departments, and other hospital services;
       (4) the extent to which different portions of the United 
     States may be experiencing different levels of uncompensated 
     EMTALA-related care;
       (5) the extent to which EMTALA would be classified as an 
     unfunded mandate if it were enacted today;
       (6) the extent to which States have programs to provide 
     financial support for such uncompensated care;
       (7) possible sources of funds, including medicare hospital 
     bad debt accounts, that are available to hospitals to assist 
     with the cost of such uncompensated care; and
       (8) the financial strain that illegal immigration 
     populations, the uninsured, and the underinsured place on 
     hospital emergency departments, other hospital services, 
     emergency physicians, and physicians covering emergency 
     department call.
       (c) Definition.--In this section, the terms ``Emergency 
     Medical Treatment and Active Labor Act'' and ``EMTALA'' mean 
     section 1867 of the Social Security Act (42 U.S.C. 1395dd).

     SEC. 547. CLARIFICATION OF APPLICATION OF TEMPORARY PAYMENT 
                   INCREASES FOR 2001.

       (a) Inpatient Hospital Services.--The payment increase 
     provided under the following sections shall not apply to 
     discharges occurring after fiscal year 2001 and shall not be 
     taken into account in calculating the payment amounts 
     applicable for discharges occurring after such fiscal year:
       (1) Section 301(b)(2)(A) (relating to acute care hospital 
     payment update).
       (2) Section 302(b) (relating to IME percentage adjustment).
       (3) Section 303(b)(2) (relating to DSH payments).
       (b) Skilled Nursing Facility Services.--The payment 
     increase provided under section 311(b)(2) (relating to 
     covered skilled nursing facility services) shall not apply to 
     services furnished after fiscal year 2001 and shall not be 
     taken into account in calculating the payment amounts 
     applicable for services furnished after such fiscal year.
       (c) Home Health Services.--
       (1) Transitional allowance for full marketbasket 
     increase.--The payment increase provided under section 
     502(b)(1)(B) shall not apply to episodes and visits ending 
     after fiscal year 2001 and shall not be taken into account in 
     calculating the payment amounts applicable for subsequent 
     episodes and visits.
       (2) Temporary increase for rural home health services.--The 
     payment increase provided under section 508(a) for the period 
     beginning on April 1, 2001, and ending on September 30, 2002, 
     shall not apply to episodes and visits ending after such 
     period, and shall not be taken into account in calculating 
     the payment amounts applicable for episodes and visits 
     occurring after such period.
       (d) Calendar Year 2001 Provisions.--The payment increase 
     provided under the following sections shall not apply after 
     calendar year 2001 and shall not be taken into account in 
     calculating the payment amounts applicable for items and 
     services furnished after such year:
       (1) Section 401(c)(2) (relating to covered OPD services).
       (2) Section 422(e)(2) (relating to renal dialysis services 
     paid for on a composite rate basis).
       (3) Section 423(a)(2)(B) (relating to ambulance services).
       (4) Section 425(b)(2) (relating to durable medical 
     equipment).
       (5) Section 426(b)(2) (relating to prosthetic devices and 
     orthotics and prosthetics).

 TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS

              Subtitle A--Medicare+Choice Payment Reforms

     SEC. 601. INCREASE IN MINIMUM PAYMENT AMOUNT.

       (a) In General.--Section 1853(c)(1)(B) (42 U.S.C. 1395w-
     23(c)(1)(B)) is amended--
       (1) by redesignating clause (ii) as clause (iv);
       (2) by inserting after clause (i) the following new 
     clauses:
       ``(ii) For 1999 and 2000, the minimum amount determined 
     under clause (i) or this clause, respectively, for the 
     preceding year, increased by the national per capita 
     Medicare+Choice growth percentage described in paragraph 
     (6)(A) applicable to 1999 or 2000, respectively.
       ``(iii)(I) Subject to subclause (II), for 2001, for any 
     area in a Metropolitan Statistical Area with a population of 
     more than 250,000, $525, and for any other area $475.
       ``(II) In the case of an area outside the 50 States and the 
     District of Columbia, the amount specified in this clause 
     shall not exceed 120 percent of the amount determined under 
     clause (ii) for such area for 2000.''; and
       (3) in clause (iv), as so redesignated--
       (A) by striking ``a succeeding year'' and inserting ``2002 
     and each succeeding year''; and
       (B) by striking ``clause (i)'' and inserting ``clause 
     (iii)''.
       (b) Special Rule for January and February of 2001.--
       (1) In general.--Notwithstanding the amendments made by 
     subsection (a), for purposes of making payments under section 
     1853 of the Social Security Act (42 U.S.C. 1395w-23) for 
     January and February 2001, the annual Medicare+Choice 
     capitation rate for a Medicare+Choice payment area shall be 
     calculated, and the excess amount under section 1854(f)(1)(B) 
     of such Act (42 U.S.C. 1395w-24(f)(1)(B)) shall be 
     determined, as if such amendments had not been enacted.
       (2) Construction.--Paragraph (1) shall not be taken into 
     account in computing such capitation rate for 2002 and 
     subsequent years.

     SEC. 602. INCREASE IN MINIMUM PERCENTAGE INCREASE.

       (a) In General.--Section 1853(c)(1)(C) (42 U.S.C. 1395w-
     23(c)(1)(C)) is amended--
       (1) by redesignating clause (ii) as clause (iv);
       (2) by inserting after clause (i) the following new 
     clauses:
       ``(ii) For 1999 and 2000, 102 percent of the annual 
     Medicare+Choice capitation rate under this paragraph for the 
     area for the previous year.
       ``(iii) For 2001, 103 percent of the annual Medicare+Choice 
     capitation rate under this paragraph for the area for 
     2000.''; and
       (3) in clause (iv), as so redesignated, by striking ``a 
     subsequent year'' and inserting ``2002 and each succeeding 
     year''.
       (b) Application of Special Rule for January and February of 
     2001.--The provisions of section 601(b) shall apply with 
     respect to the amendments made by subsection (a) in the same 
     manner as they apply to the amendments made by section 
     601(a).

     SEC. 603. PHASE-IN OF RISK ADJUSTMENT.

       Section 1853(a)(3)(C) (42 U.S.C. 1395w-23(a)(3)(C)) is 
     amended--
       (1) in clause (ii)--
       (A) in subclause (I), by striking ``and 2001'' and 
     inserting ``and each succeeding year through 2003'' and by 
     striking ``and'' at the end; and
       (B) by striking subclause (II) and inserting the following 
     new subclauses:

       ``(II) 30 percent of such capitation rate in 2004;
       ``(III) 50 percent of such capitation rate in 2005;
       ``(IV) 75 percent of such capitation rate in 2006; and
       ``(V) 100 percent of such capitation rate in 2007 and 
     succeeding years.''; and

       (2) by adding at the end the following new clause:
       ``(iii) Data for risk adjustment methodology.--Such risk 
     adjustment methodology for 2004 and each succeeding year, 
     shall be based on data from inpatient hospital and ambulatory 
     settings.''.

     SEC. 604. TRANSITION TO REVISED MEDICARE+CHOICE PAYMENT 
                   RATES.

       (a) Announcement of Revised Medicare+Choice Payment 
     Rates.--Within 2 weeks after the date of the enactment of 
     this Act, the Secretary of Health and Human Services shall 
     determine, and shall announce (in a manner intended to 
     provide notice to interested parties) Medicare+Choice 
     capitation rates under section 1853 of the Social Security 
     Act (42 U.S.C. 1395w-23) for 2001, revised in accordance with 
     the provisions of this Act.

[[Page H12370]]

       (b) Reentry Into Program Permitted for Medicare+Choice 
     Programs.--A Medicare+Choice organization that provided 
     notice to the Secretary of Health and Human Services before 
     the date of the enactment of this Act that it was terminating 
     its contract under part C of title XVIII of the Social 
     Security Act or was reducing the service area of a 
     Medicare+Choice plan offered under such part shall be 
     permitted to continue participation under such part, or to 
     maintain the service area of such plan, for 2001 if it 
     submits the Secretary with the information described in 
     section 1854(a)(1) of the Social Security Act (42 U.S.C. 
     1395w-24(a)(1)) within 2 weeks after the date revised rates 
     are announced by the Secretary under subsection (a).
       (c) Revised Submission of Proposed Premiums and Related 
     Information.--If--
       (1) a Medicare+Choice organization provided notice to the 
     Secretary of Health and Human Services as of July 3, 2000, 
     that it was renewing its contract under part C of title XVIII 
     of the Social Security Act for all or part of the service 
     area or areas served under its current contract, and
       (2) any part of the service area or areas addressed in such 
     notice includes a payment area for which the Medicare+Choice 
     capitation rate under section 1853(c) of such Act (42 U.S.C. 
     1395w-23(c)) for 2001, as determined under subsection (a), is 
     higher than the rate previously determined for such year,

     such organization shall revise its submission of the 
     information described in section 1854(a)(1) of the Social 
     Security Act (42 U.S.C. 1395w-24(a)(1)), and shall submit 
     such revised information to the Secretary, within 2 weeks 
     after the date revised rates are announced by the Secretary 
     under subsection (a). In making such submission, the 
     organization may only reduce beneficiary premiums, reduce 
     beneficiary cost-sharing, enhance benefits, utilize the 
     stabilization fund described in section 1854(f)(2) of such 
     Act (42 U.S.C. 1395w-24(f)(2)), or stabilize or enhance 
     beneficiary access to providers (so long as such 
     stabilization or enhancement does not result in increased 
     beneficiary premiums, increased beneficiary cost-sharing, or 
     reduced benefits).
       (d) Waiver of Limits on Stabilization Fund.--Any regulatory 
     provision that limits the proportion of the excess amount 
     that can be withheld in such stabilization fund for a 
     contract period shall not apply with respect to submissions 
     described in subsections (b) and (c).
       (e) Disregard of New Rate Announcement in Applying Pass-
     Through for New National Coverage Determinations.--For 
     purposes of applying section 1852(a)(5) of the Social 
     Security Act (42 U.S.C. 1395w-22(a)(5)), the announcement of 
     revised rates under subsection (a) shall not be treated as an 
     announcement under section 1853(b) of such Act (42 U.S.C. 
     1395w-23(b)).

     SEC. 605. REVISION OF PAYMENT RATES FOR ESRD PATIENTS 
                   ENROLLED IN MEDICARE+CHOICE PLANS.

       (a) In General.--Section 1853(a)(1)(B) (42 U.S.C. 1395w-
     23(a)(1)(B)) is amended by adding at the end the following: 
     ``In establishing such rates, the Secretary shall provide for 
     appropriate adjustments to increase each rate to reflect the 
     demonstration rate (including the risk adjustment methodology 
     associated with such rate) of the social health maintenance 
     organization end-stage renal disease capitation 
     demonstrations (established by section 2355 of the Deficit 
     Reduction Act of 1984, as amended by section 13567(b) of the 
     Omnibus Budget Reconciliation Act of 1993), and shall compute 
     such rates by taking into account such factors as renal 
     treatment modality, age, and the underlying cause of the end-
     stage renal disease.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to payments for months beginning with January 
     2002.
       (c) Publication.--Not later than 6 months after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall publish for public comment a description of 
     the appropriate adjustments described in the last sentence of 
     section 1853(a)(1)(B) of the Social Security Act (42 U.S.C. 
     1395w-23(a)(1)(B)), as added by subsection (a). The Secretary 
     shall publish such adjustments in final form by not later 
     than July 1, 2001, so that the amendment made by subsection 
     (a) is implemented on a timely basis consistent with 
     subsection (b).

     SEC. 606. PERMITTING PREMIUM REDUCTIONS AS ADDITIONAL 
                   BENEFITS UNDER MEDICARE+CHOICE PLANS.

       (a) In General.--
       (1) Authorization of part b premium reductions.--Section 
     1854(f)(1) (42 U.S.C. 1395w-24(f)(1)) is amended--
       (A) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (B) by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) Premium reductions.--
       ``(i) In general.--Subject to clause (ii), as part of 
     providing any additional benefits required under subparagraph 
     (A), a Medicare+Choice organization may elect a reduction in 
     its payments under section 1853(a)(1)(A) with respect to a 
     Medicare+Choice plan and the Secretary shall apply such 
     reduction to reduce the premium under section 1839 of each 
     enrollee in such plan as provided in section 1840(i).
       ``(ii) Amount of reduction.--The amount of the reduction 
     under clause (i) with respect to any enrollee in a 
     Medicare+Choice plan--

       ``(I) may not exceed 125 percent of the premium described 
     under section 1839(a)(3); and
       ``(II) shall apply uniformly to each enrollee of the 
     Medicare+Choice plan to which such reduction applies.''.

       (2) Conforming amendments.--
       (A) Adjustment of payments to medicare+choice 
     organizations.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-
     23(a)(1)(A)) is amended by inserting ``reduced by the amount 
     of any reduction elected under section 1854(f)(1)(E) and'' 
     after ``for that area,''.
       (B) Adjustment and payment of part b premiums.--
       (i) Adjustment of premiums.--Section 1839(a)(2) (42 U.S.C. 
     1395r(a)(2)) is amended by striking ``shall'' and all that 
     follows and inserting the following: ``shall be the amount 
     determined under paragraph (3), adjusted as required in 
     accordance with subsections (b), (c), and (f), and to reflect 
     80 percent of any reduction elected under section 
     1854(f)(1)(E).''.
       (ii) Payment of premiums.--Section 1840 (42 U.S.C. 1395s) 
     is amended by adding at the end the following new subsection:
       ``(i) In the case of an individual enrolled in a 
     Medicare+Choice plan, the Secretary shall provide for 
     necessary adjustments of the monthly beneficiary premium to 
     reflect 80 percent of any reduction elected under section 
     1854(f)(1)(E). To the extent to which the Secretary 
     determines that such an adjustment is appropriate, with the 
     concurrence of any agency responsible for the administration 
     of such benefits, such premium adjustment may be provided 
     directly, as an adjustment to any social security, railroad 
     retirement, or civil service retirement benefits, or, in the 
     case of an individual who receives medical assistance under 
     title XIX for medicare costs described in section 
     1905(p)(3)(A)(ii), as an adjustment to the amount otherwise 
     owed by the State for such medical assistance.''.
       (C) Information comparing plan premiums under part c.--
     Section 1851(d)(4)(B) (42 U.S.C. 1395w-21(d)(4)(B)) is 
     amended--
       (i) by striking ``Premiums.--The'' and inserting 
     ``Premiums.--
       ``(i) In general.--The''; and
       (ii) by adding at the end the following new clause:
       ``(ii) Reductions.--The reduction in part B premiums, if 
     any.''.
       (D) Treatment of reduction for purposes of determining 
     government contribution under part b.--Section 1844 (42 
     U.S.C. 1395w) is amended by adding at the end the following 
     new subsection:
       ``(c) The Secretary shall determine the Government 
     contribution under subparagraphs (A) and (B) of subsection 
     (a)(1) without regard to any premium reduction resulting from 
     an election under section 1854(f)(1)(E).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to years beginning with 2003.

     SEC. 607. FULL IMPLEMENTATION OF RISK ADJUSTMENT FOR 
                   CONGESTIVE HEART FAILURE ENROLLEES FOR 2001.

       (a) In General.--Section 1853(a)(3)(C) (42 U.S.C. 1395w-
     23(a)(3)(C)) is amended--
       (1) in clause (ii), by striking ``Such risk adjustment'' 
     and inserting ``Except as provided in clause (iii), such risk 
     adjustment''; and
       (2) by adding at the end the following new clause:
       ``(iii) Full implementation of risk adjustment for 
     congestive heart failure enrollees for 2001.--

       ``(I) Exemption from phase-in.--Subject to subclause (II), 
     the Secretary shall fully implement the risk adjustment 
     methodology described in clause (i) with respect to each 
     individual who has had a qualifying congestive heart failure 
     inpatient diagnosis (as determined by the Secretary under 
     such risk adjustment methodology) during the period beginning 
     on July 1, 1999, and ending on June 30, 2000, and who is 
     enrolled in a coordinated care plan that is the only 
     coordinated care plan offered on January 1, 2001, in the 
     service area of the individual.
       ``(II) Period of application.--Subclause (I) shall only 
     apply during the 1-year period beginning on January 1, 
     2001.''.

       (b) Exclusion From Determination of the Budget Neutrality 
     Factor.--Section 1853(c)(5) (42 U.S.C. 1395w-23(c)(5)) is 
     amended by striking ``subsection (i)'' and inserting 
     ``subsections (a)(3)(C)(iii) and (i)''.

     SEC. 608. EXPANSION OF APPLICATION OF MEDICARE+CHOICE NEW 
                   ENTRY BONUS.

       (a) In General.--Section 1853(i)(1) (42 U.S.C. 1395w-
     23(i)(1)) is amended in the matter preceding subparagraph (A) 
     by inserting ``, or filed notice with the Secretary as of 
     October 3, 2000, that they will not be offering such a plan 
     as of January 1, 2001'' after ``January 1, 2000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply as if included in the enactment of BBRA.

     SEC. 609. REPORT ON INCLUSION OF CERTAIN COSTS OF THE 
                   DEPARTMENT OF VETERANS AFFAIRS AND MILITARY 
                   FACILITY SERVICES IN CALCULATING 
                   MEDICARE+CHOICE PAYMENT RATES.

       The Secretary of Health and Human Services shall report to 
     Congress by not later than January 1, 2003, on a method to 
     phase-in the costs of military facility services furnished by 
     the Department of Veterans Affairs, and the costs of military 
     facility services furnished by the Department of Defense, to 
     medicare-eligible beneficiaries in the calculation of an 
     area's Medicare+Choice capitation payment. Such report shall 
     include on a county-by-county basis--
       (1) the actual or estimated cost of such services to 
     medicare-eligible beneficiaries;
       (2) the change in Medicare+Choice capitation payment rates 
     if such costs are included in the calculation of payment 
     rates;
       (3) one or more proposals for the implementation of payment 
     adjustments to Medicare+Choice plans in counties where the 
     payment rate has been affected due to the failure to 
     calculate the cost of such services to medicare-eligible 
     beneficiaries; and
       (4) a system to ensure that when a Medicare+Choice enrollee 
     receives covered services through a facility of the 
     Department of Veterans Affairs or the Department of Defense

[[Page H12371]]

     there is an appropriate payment recovery to the medicare 
     program under title XVIII of the Social Security Act.

               Subtitle B--Other Medicare+Choice Reforms

     SEC. 611. PAYMENT OF ADDITIONAL AMOUNTS FOR NEW BENEFITS 
                   COVERED DURING A CONTRACT TERM.

       (a) In General.--Section 1853(c)(7) (42 U.S.C. 1395w-
     23(c)(7)) is amended to read as follows:
       ``(7) Adjustment for national coverage determinations and 
     legislative changes in benefits.--If the Secretary makes a 
     determination with respect to coverage under this title or 
     there is a change in benefits required to be provided under 
     this part that the Secretary projects will result in a 
     significant increase in the costs to Medicare+Choice of 
     providing benefits under contracts under this part (for 
     periods after any period described in section 1852(a)(5)), 
     the Secretary shall adjust appropriately the payments to such 
     organizations under this part. Such projection and adjustment 
     shall be based on an analysis by the Chief Actuary of the 
     Health Care Financing Administration of the actuarial costs 
     associated with the new benefits.''.
       (b) Conforming Amendment.--Section 1852(a)(5) (42 U.S.C. 
     1395w-22(a)(5)) is amended--
       (1) in the heading, by inserting ``and legislative changes 
     in benefits'' after ``National coverage determinations'';
       (2) by inserting ``or legislative change in benefits 
     required to be provided under this part'' after ``national 
     coverage determination'';
       (3) in subparagraph (A), by inserting ``or legislative 
     change in benefits'' after ``such determination'';
       (4) in subparagraph (B), by inserting ``or legislative 
     change'' after ``if such coverage determination''; and
       (5) by adding at the end the following:
     ``The projection under the previous sentence shall be based 
     on an analysis by the Chief Actuary of the Health Care 
     Financing Administration of the actuarial costs associated 
     with the coverage determination or legislative change in 
     benefits.''.
       (c) Effective Date.--The amendments made by this section 
     are effective on the date of the enactment of this Act and 
     shall apply to national coverage determinations and 
     legislative changes in benefits occurring on or after such 
     date.

     SEC. 612. RESTRICTION ON IMPLEMENTATION OF SIGNIFICANT NEW 
                   REGULATORY REQUIREMENTS MIDYEAR.

       (a) In General.--Section 1856(b) (42 U.S.C. 1395w-26(b)) is 
     amended by adding at the end the following new paragraph:
       ``(4) Prohibition of midyear implementation of significant 
     new regulatory requirements.--The Secretary may not 
     implement, other than at the beginning of a calendar year, 
     regulations under this section that impose new, significant 
     regulatory requirements on a Medicare+Choice organization or 
     plan.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect on the date of the enactment of this Act.

     SEC. 613. TIMELY APPROVAL OF MARKETING MATERIAL THAT FOLLOWS 
                   MODEL MARKETING LANGUAGE.

       (a) In General.--Section 1851(h) (42 U.S.C. 1395w-21(h)) is 
     amended--
       (1) in paragraph (1)(A), by inserting ``(or 10 days in the 
     case described in paragraph (5))'' after ``45 days''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Special treatment of marketing material following 
     model marketing language.--In the case of marketing material 
     of an organization that uses, without modification, proposed 
     model language specified by the Secretary, the period 
     specified in paragraph (1)(A) shall be reduced from 45 days 
     to 10 days.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to marketing material submitted on or after 
     January 1, 2001.

     SEC. 614. AVOIDING DUPLICATIVE REGULATION.

       (a) In General.--Section 1856(b)(3)(B) (42 U.S.C. 1395w-
     26(b)(3)(B)) is amended--
       (1) in clause (i), by inserting ``(including cost-sharing 
     requirements)'' after ``Benefit requirements''; and
       (2) by adding at the end the following new clause:
       ``(iv) Requirements relating to marketing materials and 
     summaries and schedules of benefits regarding a 
     Medicare+Choice plan.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on the date of the enactment of this Act.

     SEC. 615. ELECTION OF UNIFORM LOCAL COVERAGE POLICY FOR 
                   MEDICARE+CHOICE PLAN COVERING MULTIPLE 
                   LOCALITIES.

       Section 1852(a)(2) (42 U.S.C. 1395w-22(a)(2)) is amended by 
     adding at the end the following new subparagraph:
       ``(C) Election of uniform coverage policy.--In the case of 
     a Medicare+Choice organization that offers a Medicare+Choice 
     plan in an area in which more than one local coverage policy 
     is applied with respect to different parts of the area, the 
     organization may elect to have the local coverage policy for 
     the part of the area that is most beneficial to 
     Medicare+Choice enrollees (as identified by the Secretary) 
     apply with respect to all Medicare+Choice enrollees enrolled 
     in the plan.''.

     SEC. 616. ELIMINATING HEALTH DISPARITIES IN MEDICARE+CHOICE 
                   PROGRAM.

       (a) Quality Assurance Program Focus on Racial and Ethnic 
     Minorities.--Subparagraphs (A) and (B) of section 1852(e)(2) 
     (42 U.S.C. 1395w-22(e)(2)) are each amended by adding at the 
     end the following:
     ``Such program shall include a separate focus (with respect 
     to all the elements described in this subparagraph) on racial 
     and ethnic minorities.''.
       (b) Report.--Section 1852(e) (42 U.S.C. 1395w-22(e)) is 
     amended by adding at the end the following new paragraph:
       ``(5) Report to congress.--
       ``(A) In general.--Not later than 2 years after the date of 
     the enactment of this paragraph, and biennially thereafter, 
     the Secretary shall submit to Congress a report regarding how 
     quality assurance programs conducted under this subsection 
     focus on racial and ethnic minorities.
       ``(B) Contents of report.--Each such report shall include 
     the following:
       ``(i) A description of the means by which such programs 
     focus on such racial and ethnic minorities.
       ``(ii) An evaluation of the impact of such programs on 
     eliminating health disparities and on improving health 
     outcomes, continuity and coordination of care, management of 
     chronic conditions, and consumer satisfaction.
       ``(iii) Recommendations on ways to reduce clinical outcome 
     disparities among racial and ethnic minorities.''.

     SEC. 617. MEDICARE+CHOICE PROGRAM COMPATIBILITY WITH EMPLOYER 
                   OR UNION GROUP HEALTH PLANS.

       (a) In General.--Section 1857 (42 U.S.C. 1395w-27) is 
     amended by adding at the end the following new subsection:
       ``(i) Medicare+Choice Program Compatibility With Employer 
     or Union Group Health Plans.--To facilitate the offering of 
     Medicare+Choice plans under contracts between Medicare+Choice 
     organizations and employers, labor organizations, or the 
     trustees of a fund established by 1 or more employers or 
     labor organizations (or combination thereof) to furnish 
     benefits to the entity's employees, former employees (or 
     combination thereof) or members or former members (or 
     combination thereof) of the labor organizations, the 
     Secretary may waive or modify requirements that hinder the 
     design of, the offering of, or the enrollment in such 
     Medicare+Choice plans.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to years beginning with 2001.

     SEC. 618. SPECIAL MEDIGAP ENROLLMENT ANTIDISCRIMINATION 
                   PROVISION FOR CERTAIN BENEFICIARIES.

       (a) Disenrollment Window in Accordance With Beneficiary's 
     Circumstance.--Section 1882(s)(3) (42 U.S.C. 1395ss(s)(3)) is 
     amended--
       (1) in subparagraph (A), in the matter following clause 
     (iii), by striking ``, subject to subparagraph (E), seeks to 
     enroll under the policy not later than 63 days after the date 
     of the termination of enrollment described in such 
     subparagraph'' and inserting ``seeks to enroll under the 
     policy during the period specified in subparagraph (E)''; and
       (2) by striking subparagraph (E) and inserting the 
     following new subparagraph:
       ``(E) For purposes of subparagraph (A), the time period 
     specified in this subparagraph is--
       ``(i) in the case of an individual described in 
     subparagraph (B)(i), the period beginning on the date the 
     individual receives a notice of termination or cessation of 
     all supplemental health benefits (or, if no such notice is 
     received, notice that a claim has been denied because of such 
     a termination or cessation) and ending on the date that is 63 
     days after the applicable notice;
       ``(ii) in the case of an individual described in clause 
     (ii), (iii), (v), or (vi) of subparagraph (B) whose 
     enrollment is terminated involuntarily, the period beginning 
     on the date that the individual receives a notice of 
     termination and ending on the date that is 63 days after the 
     date the applicable coverage is terminated;
       ``(iii) in the case of an individual described in 
     subparagraph (B)(iv)(I), the period beginning on the earlier 
     of (I) the date that the individual receives a notice of 
     termination, a notice of the issuer's bankruptcy or 
     insolvency, or other such similar notice, if any, and (II) 
     the date that the applicable coverage is terminated, and 
     ending on the date that is 63 days after the date the 
     coverage is terminated;
       ``(iv) in the case of an individual described in clause 
     (ii), (iii), (iv)(II), (iv)(III), (v), or (vi) of 
     subparagraph (B) who disenrolls voluntarily, the period 
     beginning on the date that is 60 days before the effective 
     date of the disenrollment and ending on the date that is 63 
     days after such effective date; and
       ``(v) in the case of an individual described in 
     subparagraph (B) but not described in the preceding 
     provisions of this subparagraph, the period beginning on the 
     effective date of the disenrollment and ending on the date 
     that is 63 days after such effective date.''.
       (b) Extended Medigap Access for Interrupted Trial 
     Periods.--Section 1882(s)(3) (42 U.S.C. 1395ss(s)(3)), as 
     amended by subsection (a), is further amended by adding at 
     the end the following new subparagraph:
       ``(F)(i) Subject to clause (ii), for purposes of this 
     paragraph--
       ``(I) in the case of an individual described in 
     subparagraph (B)(v) (or deemed to be so described, pursuant 
     to this subparagraph) whose enrollment with an organization 
     or provider described in subclause (II) of such subparagraph 
     is involuntarily terminated within the first 12 months of 
     such enrollment, and who, without an intervening enrollment, 
     enrolls with another such organization or provider, such 
     subsequent enrollment shall be deemed to be an initial 
     enrollment described in such subparagraph; and
       ``(II) in the case of an individual described in clause 
     (vi) of subparagraph (B) (or deemed to be so described, 
     pursuant to this subparagraph) whose enrollment with a plan 
     or in a program described in such clause is involuntarily 
     terminated within the first 12 months of such enrollment, and 
     who, without an intervening enrollment, enrolls in another 
     such plan or program, such subsequent enrollment shall be 
     deemed to be an initial enrollment described in such clause.

[[Page H12372]]

       ``(ii) For purposes of clauses (v) and (vi) of subparagraph 
     (B), no enrollment of an individual with an organization or 
     provider described in clause (v)(II), or with a plan or in a 
     program described in clause (vi), may be deemed to be an 
     initial enrollment under this clause after the 2-year period 
     beginning on the date on which the individual first enrolled 
     with such an organization, provider, plan, or program.''.

     SEC. 619. RESTORING EFFECTIVE DATE OF ELECTIONS AND CHANGES 
                   OF ELECTIONS OF MEDICARE+CHOICE PLANS.

       (a) Open Enrollment.--Section 1851(f)(2) (42 U.S.C. 1395w-
     21(f)(2)) is amended by striking ``, except that if such 
     election or change is made after the 10th day of any calendar 
     month, then the election or change shall not take effect 
     until the first day of the second calendar month following 
     the date on which the election or change is made''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to elections and changes of coverage made on or 
     after June 1, 2001.

     SEC. 620. PERMITTING ESRD BENEFICIARIES TO ENROLL IN ANOTHER 
                   MEDICARE+CHOICE PLAN IF THE PLAN IN WHICH THEY 
                   ARE ENROLLED IS TERMINATED.

       (a) In General.--Section 1851(a)(3)(B) (42 U.S.C. 1395w-
     21(a)(3)(B)) is amended by striking ``except that'' and all 
     that follows and inserting the following: ``except that--
       ``(i) an individual who develops end-stage renal disease 
     while enrolled in a Medicare+Choice plan may continue to be 
     enrolled in that plan; and
       ``(ii) in the case of such an individual who is enrolled in 
     a Medicare+Choice plan under clause (i) (or subsequently 
     under this clause), if the enrollment is discontinued under 
     circumstances described in section 1851(e)(4)(A), then the 
     individual will be treated as a `Medicare+Choice eligible 
     individual' for purposes of electing to continue enrollment 
     in another Medicare+Choice plan.''.
       (b) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to terminations and discontinuations occurring on or 
     after the date of the enactment of this Act.
       (2) Application to prior plan terminations.--Clause (ii) of 
     section 1851(a)(3)(B) of the Social Security Act (as inserted 
     by subsection (a)) shall also apply to individuals whose 
     enrollment in a Medicare+Choice plan was terminated or 
     discontinued after December 31, 1998, and before the date of 
     the enactment of this Act. In applying this paragraph, such 
     an individual shall be treated, for purposes of part C of 
     title XVIII of the Social Security Act, as having 
     discontinued enrollment in such a plan as of the date of the 
     enactment of this Act.

     SEC. 621. PROVIDING CHOICE FOR SKILLED NURSING FACILITY 
                   SERVICES UNDER THE MEDICARE+CHOICE PROGRAM.

       (a) In General.--Section 1852 (42 U.S.C. 1395w-22) is 
     amended by adding at the end the following new subsection:
       ``(l) Return to Home Skilled Nursing Facilities for Covered 
     Post-Hospital Extended Care Services.--
       ``(1) Ensuring return to home snf.--
       ``(A) In general.--In providing coverage of post-hospital 
     extended care services, a Medicare+Choice plan shall provide 
     for such coverage through a home skilled nursing facility if 
     the following conditions are met:
       ``(i) Enrollee election.--The enrollee elects to receive 
     such coverage through such facility.
       ``(ii) SNF agreement.--The facility has a contract with the 
     Medicare+Choice organization for the provision of such 
     services, or the facility agrees to accept substantially 
     similar payment under the same terms and conditions that 
     apply to similarly situated skilled nursing facilities that 
     are under contract with the Medicare+Choice organization 
     for the provision of such services and through which the 
     enrollee would otherwise receive such services.
       ``(B) Manner of payment to home snf.--The organization 
     shall provide payment to the home skilled nursing facility 
     consistent with the contract or the agreement described in 
     subparagraph (A)(ii), as the case may be.
       ``(2) No less favorable coverage.--The coverage provided 
     under paragraph (1) (including scope of services, cost-
     sharing, and other criteria of coverage) shall be no less 
     favorable to the enrollee than the coverage that would be 
     provided to the enrollee with respect to a skilled nursing 
     facility the post-hospital extended care services of which 
     are otherwise covered under the Medicare+Choice plan.
       ``(3) Rule of construction.--Nothing in this subsection 
     shall be construed to do the following:
       ``(A) To require coverage through a skilled nursing 
     facility that is not otherwise qualified to provide benefits 
     under part A for medicare beneficiaries not enrolled in a 
     Medicare+Choice plan.
       ``(B) To prevent a skilled nursing facility from refusing 
     to accept, or imposing conditions upon the acceptance of, an 
     enrollee for the receipt of post-hospital extended care 
     services.
       ``(4) Definitions.--In this subsection:
       ``(A) Home skilled nursing facility.--The term `home 
     skilled nursing facility' means, with respect to an enrollee 
     who is entitled to receive post-hospital extended care 
     services under a Medicare+Choice plan, any of the following 
     skilled nursing facilities:
       ``(i) SNF residence at time of admission.--The skilled 
     nursing facility in which the enrollee resided at the time of 
     admission to the hospital preceding the receipt of such post-
     hospital extended care services.
       ``(ii) SNF in continuing care retirement community.--A 
     skilled nursing facility that is providing such services 
     through a continuing care retirement community (as defined in 
     subparagraph (B)) which provided residence to the enrollee at 
     the time of such admission.
       ``(iii) SNF residence of spouse at time of discharge.--The 
     skilled nursing facility in which the spouse of the enrollee 
     is residing at the time of discharge from such hospital.
       ``(B) Continuing care retirement community.--The term 
     `continuing care retirement community' means, with respect to 
     an enrollee in a Medicare+Choice plan, an arrangement under 
     which housing and health-related services are provided (or 
     arranged) through an organization for the enrollee under an 
     agreement that is effective for the life of the enrollee or 
     for a specified period.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to contracts entered into or renewed 
     on or after the date of the enactment of this Act.
       (c) MedPAC Study.--
       (1) Study.--The Medicare Payment Advisory Commission shall 
     conduct a study analyzing the effects of the amendment made 
     by subsection (a) on Medicare+Choice organizations. In 
     conducting such study, the Commission shall examine the 
     effects (if any) such amendment has had--
       (A) on the scope of additional benefits provided under the 
     Medicare+Choice program;
       (B) on the administrative and other costs incurred by 
     Medicare+Choice organizations; and
       (C) on the contractual relationships between such 
     organizations and skilled nursing facilities.
       (2) Report.--Not later than 2 years after the date of the 
     enactment of this Act, the Commission shall submit to 
     Congress a report on the study conducted under paragraph (1).

     SEC. 622. PROVIDING FOR ACCOUNTABILITY OF MEDICARE+CHOICE 
                   PLANS.

       (a) Mandatory Review of ACR Submissions by the Chief 
     Actuary of the Health Care Financing Administration.--Section 
     1854(a)(5)(A) (42 U.S.C. 1395w-24(a)(5)(A)) is amended--
       (1) by striking ``value'' and inserting ``values''; and
       (2) by adding at the end the following: ``The Chief Actuary 
     of the Health Care Financing Administration shall review the 
     actuarial assumptions and data used by the Medicare+Choice 
     organization with respect to such rates, amounts, and values 
     so submitted to determine the appropriateness of such 
     assumptions and data.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to submissions made on or after May 1, 2001.

     SEC. 623. INCREASED CIVIL MONEY PENALTY FOR MEDICARE+CHOICE 
                   ORGANIZATIONS THAT TERMINATE CONTRACTS MID-
                   YEAR.

       (a) In General.--Section 1857(g)(3) (42 U.S.C. 1395w-
     27(g)(3)) is amended by adding at the end the following new 
     subparagraph:
       ``(D) Civil monetary penalties of not more than $100,000, 
     or such higher amount as the Secretary may establish by 
     regulation, where the finding under subsection (c)(2)(A) is 
     based on the organization's termination of its contract under 
     this section other than at a time and in a manner provided 
     for under subsection (a).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to terminations occurring after the date of the 
     enactment of this Act.

                 Subtitle C--Other Managed Care Reforms

     SEC. 631. 1-YEAR EXTENSION OF SOCIAL HEALTH MAINTENANCE 
                   ORGANIZATION (SHMO) DEMONSTRATION PROJECT.

       Section 4018(b)(1) of the Omnibus Budget Reconciliation Act 
     of 1987, as amended by section 531(a)(1) of BBRA (113 Stat. 
     1501A-388), is amended by striking ``18 months'' and 
     inserting ``30 months''.

     SEC. 632. REVISED TERMS AND CONDITIONS FOR EXTENSION OF 
                   MEDICARE COMMUNITY NURSING ORGANIZATION (CNO) 
                   DEMONSTRATION PROJECT.

       (a) In General.--Section 532 of BBRA (113 Stat. 1501A-388) 
     is amended--
       (1) in subsection (a), by striking the second sentence; and
       (2) by striking subsection (b) and inserting the following 
     new subsection:
       ``(b) Terms and Conditions.--
       ``(1) January through september 2000.--For the 9-month 
     period beginning with January 2000, any such demonstration 
     project shall be conducted under the same terms and 
     conditions as applied to such demonstration during 1999.
       ``(2) October 2000 through december 2001.--For the 15-month 
     period beginning with October 2000, any such demonstration 
     project shall be conducted under the same terms and 
     conditions as applied to such demonstration during 1999, 
     except that the following modifications shall apply:
       ``(A) Basic capitation rate.--The basic capitation rate 
     paid for services covered under the project (other than case 
     management services) per enrollee per month and furnished 
     during--
       ``(i) the period beginning with October 1, 2000, and ending 
     with December 31, 2000, shall be determined by actuarially 
     adjusting the actual capitation rate paid for such 
     services in 1999 for inflation, utilization, and other 
     changes to the CNO service package, and by reducing such 
     adjusted capitation rate by 10 percent in the case of the 
     demonstration sites located in Arizona, Minnesota, and 
     Illinois, and 15 percent for the demonstration site 
     located in New York; and
       ``(ii) 2001 shall be determined by actuarially adjusting 
     the capitation rate determined under clause (i) for 
     inflation, utilization, and other changes to the CNO service 
     package.
       ``(B) Targeted case management fee.--Effective October 1, 
     2000--
       ``(i) the case management fee per enrollee per month for--

       ``(I) the period described in subparagraph (A)(i) shall be 
     determined by actuarially adjusting the case management fee 
     for 1999 for inflation; and

[[Page H12373]]

       ``(II) 2001 shall be determined by actuarially adjusting 
     the amount determined under subclause (I) for inflation; and

       ``(ii) such case management fee shall be paid only for 
     enrollees who are classified as moderately frail or frail 
     pursuant to criteria established by the Secretary.
       ``(C) Greater uniformity in clinical features among 
     sites.--Each project shall implement for each site--
       ``(i) protocols for periodic telephonic contact with 
     enrollees based on--

       ``(I) the results of such standardized written health 
     assessment; and
       ``(II) the application of appropriate care planning 
     approaches;

       ``(ii) disease management programs for targeted diseases 
     (such as congestive heart failure, arthritis, diabetes, and 
     hypertension) that are highly prevalent in the enrolled 
     populations;
       ``(iii) systems and protocols to track enrollees through 
     hospitalizations, including pre-admission planning, 
     concurrent management during inpatient hospital stays, and 
     post-discharge assessment, planning, and follow-up; and
       ``(iv) standardized patient educational materials for 
     specified diseases and health conditions.
       ``(D) Quality improvement.--Each project shall implement at 
     each site once during the 15-month period--
       ``(i) enrollee satisfaction surveys; and
       ``(ii) reporting on specified quality indicators for the 
     enrolled population.
       ``(c) Evaluation.--
       ``(1) Preliminary report.--Not later than July 1, 2001, the 
     Secretary of Health and Human Services shall submit to the 
     Committees on Ways and Means and Commerce of the House of 
     Representatives and the Committee on Finance of the Senate a 
     preliminary report that--
       ``(A) evaluates such demonstration projects for the period 
     beginning July 1, 1997, and ending December 31, 1999, on a 
     site-specific basis with respect to the impact on per 
     beneficiary spending, specific health utilization measures, 
     and enrollee satisfaction; and
       ``(B) includes a similar evaluation of such projects for 
     the portion of the extension period that occurs after 
     September 30, 2000.
       ``(2) Final report.--The Secretary shall submit a final 
     report to such Committees on such demonstration projects not 
     later than July 1, 2002. Such report shall include the same 
     elements as the preliminary report required by paragraph (1), 
     but for the period after December 31, 1999.
       ``(3) Methodology for spending comparisons.--Any evaluation 
     of the impact of the demonstration projects on per 
     beneficiary spending included in such reports shall include a 
     comparison of--
       ``(A) data for all individuals who--
       ``(i) were enrolled in such demonstration projects as of 
     the first day of the period under evaluation; and
       ``(ii) were enrolled for a minimum of 6 months thereafter; 
     with
       ``(B) data for a matched sample of individuals who are 
     enrolled under part B of title XVIII of the Social Security 
     Act and are not enrolled in such a project, or in a 
     Medicare+Choice plan under part C of such title, a plan 
     offered by an eligible organization under section 1876 of 
     such Act, or a health care prepayment plan under section 
     1833(a)(1)(A) of such Act.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall be effective as if included in the enactment of section 
     532 of BBRA (113 Stat. 1501A-388).

     SEC. 633. EXTENSION OF MEDICARE MUNICIPAL HEALTH SERVICES 
                   DEMONSTRATION PROJECTS.

       Section 9215(a) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (42 U.S.C. 1395b-1 note), as 
     amended by section 6135 of the Omnibus Budget Reconciliation 
     Act of 1989, section 13557 of the Omnibus Budget 
     Reconciliation Act of 1993, section 4017 of BBA, and section 
     534 of BBRA (113 Stat. 1501A-390), is amended by striking 
     ``December 31, 2002'' and inserting ``December 31, 2004''.

     SEC. 634. SERVICE AREA EXPANSION FOR MEDICARE COST CONTRACTS 
                   DURING TRANSITION PERIOD.

       Section 1876(h)(5) (42 U.S.C. 1395mm(h)(5)) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (2) by inserting after subparagraph (A), the following new 
     subparagraph:
       ``(B) Subject to subparagraph (C), the Secretary shall 
     approve an application for a modification to a reasonable 
     cost contract under this section in order to expand the 
     service area of such contract if--
       ``(i) such application is submitted to the Secretary on or 
     before September 1, 2003; and
       ``(ii) the Secretary determines that the organization with 
     the contract continues to meet the requirements applicable to 
     such organizations and contracts under this section.''.

                          TITLE VII--MEDICAID

     SEC. 701. DSH PAYMENTS.

       (a) Modifications to DSH Allotments.--
       (1) Increased allotments for fiscal years 2001 and 2002.--
       (A) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is 
     amended--
       (i) in paragraph (2), by striking ``The DSH allotment'' and 
     inserting ``Subject to paragraph (4), the DSH allotment'';
       (ii) by redesignating paragraph (4) as paragraph (6); and
       (iii) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) Special rule for fiscal years 2001 and 2002.--
       ``(A) In general.--Notwithstanding paragraph (2), the DSH 
     allotment for any State for--
       ``(i) fiscal year 2001, shall be the DSH allotment 
     determined under paragraph (2) for fiscal year 2000 
     increased, subject to subparagraph (B) and paragraph (5), by 
     the percentage change in the consumer price index for all 
     urban consumers (all items; U.S. city average) for fiscal 
     year 2000; and
       ``(ii) fiscal year 2002, shall be the DSH allotment 
     determined under clause (i) increased, subject to 
     subparagraph (B) and paragraph (5), by the percentage change 
     in the consumer price index for all urban consumers (all 
     items; U.S. city average) for fiscal year 2001.
       ``(B) Limitation.--Subparagraph (B) of paragraph (3) shall 
     apply to subparagraph (A) of this paragraph in the same 
     manner as that subparagraph (B) applies to paragraph (3)(A).
       ``(C) No application to allotments after fiscal year 
     2002.--The DSH allotment for any State for fiscal year 2003 
     or any succeeding fiscal year shall be determined under 
     paragraph (3) without regard to the DSH allotments determined 
     under subparagraph (A) of this paragraph.''.
       (2) Special rule for medicaid dsh allotment for extremely 
     low dsh states.--
       (A) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)), as 
     amended by paragraph (1), is amended by inserting after 
     paragraph (4) the following new paragraph:
       ``(5) Special rule for extremely low dsh states.--In the 
     case of a State in which the total expenditures under the 
     State plan (including Federal and State shares) for 
     disproportionate share hospital adjustments under this 
     section for fiscal year 1999, as reported to the 
     Administrator of the Health Care Financing Administration as 
     of August 31, 2000, is greater than 0 but less than 1 percent 
     of the State's total amount of expenditures under the State 
     plan for medical assistance during the fiscal year, the DSH 
     allotment for fiscal year 2001 shall be increased to 1 
     percent of the State's total amount of expenditures under 
     such plan for such assistance during such fiscal year. In 
     subsequent fiscal years, such increased allotment is subject 
     to an increase for inflation as provided in paragraph 
     (3)(A).''.
       (B) Conforming amendment.--Section 1923(f)(3)(A) (42 U.S.C. 
     1396r-4(f)(3)(A)) is amended by inserting ``and paragraph 
     (5)'' after ``subparagraph (B)''.
       (3) Effective date.--The amendments made by paragraphs (1) 
     and (2) take effect on the date the final regulation required 
     under section 705(a) (relating to the application of an 
     aggregate upper payment limit test for State medicaid 
     spending for inpatient hospital services, outpatient hospital 
     services, nursing facility services, intermediate care 
     facility services for the mentally retarded, and clinic 
     services provided by government facilities that are not 
     State-owned or operated facilities) is published in the 
     Federal Register.
       (b) Assuring Identification of Medicaid Managed Care 
     Patients.--
       (1) In general.--Section 1932 (42 U.S.C. 1396u-2) is 
     amended by adding at the end the following new subsection:
       ``(g) Identification of Patients for Purposes of Making DSH 
     Payments.--Each contract with a managed care entity under 
     section 1903(m) or under section 1905(t)(3) shall require the 
     entity either--
       ``(1) to report to the State information necessary to 
     determine the hospital services provided under the contract 
     (and the identity of hospitals providing such services) for 
     purposes of applying sections 1886(d)(5)(F) and 1923; or
       ``(2) to include a sponsorship code in the identification 
     card issued to individuals covered under this title in order 
     that a hospital may identify a patient as being entitled to 
     benefits under this title.''.
       (2) Clarification of counting managed care medicaid 
     patients.--Section 1923 (42 U.S.C. 1396r-4) is amended--
       (A) in subsection (a)(2)(D), by inserting after ``the 
     proportion of low-income and medicaid patients'' the 
     following: ``(including such patients who receive benefits 
     through a managed care entity)'';
       (B) in subsection (b)(2), by inserting after ``a State plan 
     approved under this title in a period'' the following: 
     ``(regardless of whether such patients receive medical 
     assistance on a fee-for-service basis or through a managed 
     care entity)''; and
       (C) in subsection (b)(3)(A)(i), by inserting after ``under 
     a State plan under this title'' the following: ``(regardless 
     of whether the services were furnished on a fee-for-service 
     basis or through a managed care entity)''.
       (3) Effective dates.--
       (A) The amendment made by paragraph (1) shall apply to 
     contracts as of January 1, 2001.
       (B) The amendments made by paragraph (2) shall apply to 
     payments made on or after January 1, 2001.
       (c) Application of Medicaid DSH Transition Rule to Public 
     Hospitals in All States.--
       (1) In general.--During the period described in paragraph 
     (3), with respect to a State, section 4721(e) of the Balanced 
     Budget Act of 1997 (Public Law 105-33; 111 Stat. 514), as 
     amended by section 607 of BBRA (113 Stat. 1501A-396), shall 
     be applied as though--
       (A) ``September 30, 2002'' were substituted for ``July 1, 
     1997'' each place it appears;
       (B) ``hospitals owned or operated by a State (as defined 
     for purposes of title XIX of such Act), or by an 
     instrumentality or a unit of government within a State (as so 
     defined)'' were substituted for ``the State of California'';
       (C) paragraph (3) were redesignated as paragraph (4);
       (D) ``and'' were omitted from the end of paragraph (2); and
       (E) the following new paragraph were inserted after 
     paragraph (2):

[[Page H12374]]

       ``(3) `(as defined in subparagraph (B) but without regard 
     to clause (ii) of that subparagraph and subject to subsection 
     (d))' were substituted for `(as defined in subparagraph (B))' 
     in subparagraph (A) of such section; and''.
       (2) Special rule.--With respect to California, section 
     4721(e) of the Balanced Budget Act of 1997 (Public Law 105-
     33; 111 Stat. 514), as so amended, shall be applied without 
     regard to paragraph (1).
       (3) Period described.--The period described in this 
     paragraph is the period that begins, with respect to a State, 
     on the first day of the first State fiscal year that begins 
     after September 30, 2002, and ends on the last day of the 
     succeeding State fiscal year.
       (4) Application to waivers.--With respect to a State 
     operating under a waiver of the requirements of title XIX of 
     the Social Security Act (42 U.S.C. 1396 et seq.) under 
     section 1115 of such Act (42 U.S.C. 1315), the amount by 
     which any payment adjustment made by the State under title 
     XIX of such Act (42 U.S.C. 1396 et seq.), after the 
     application of section 4721(e) of the Balanced Budget Act of 
     1997 under paragraph (1) to such State, exceeds the costs of 
     furnishing hospital services provided by hospitals described 
     in such section shall be fully reflected as an increase in 
     the baseline expenditure limit for such waiver.
       (d) Assistance for Certain Public Hospitals.--
       (1) In general.--Beginning with fiscal year 2002, 
     notwithstanding section 1923(f) of the Social Security Act 
     (42 U.S.C. 1396r-4(f)) and subject to paragraph (3), with 
     respect to a State, payment adjustments made under title XIX 
     of the Social Security Act (42 U.S.C. 1396 et seq.) to a 
     hospital described in paragraph (2) shall be made without 
     regard to the DSH allotment limitation for the State 
     determined under section 1923(f) of that Act (42 U.S.C. 
     1396r-4(f)).
       (2) Hospital described.--A hospital is described in this 
     paragraph if the hospital--
       (A) is owned or operated by a State (as defined for 
     purposes of title XIX of the Social Security Act), or by an 
     instrumentality or a unit of government within a State (as so 
     defined);
       (B) as of October 1, 2000--
       (i) is in existence and operating as a hospital described 
     in subparagraph (A); and
       (ii) is not receiving disproportionate share hospital 
     payments from the State in which it is located under title 
     XIX of such Act; and
       (C) has a low-income utilization rate (as defined in 
     section 1923(b)(3) of the Social Security Act (42 U.S.C. 
     1396r-4(b)(3))) in excess of 65 percent.
       (3) Limitation on expenditures.--
       (A) In general.--With respect to any fiscal year, the 
     aggregate amount of Federal financial participation that may 
     be provided for payment adjustments described in paragraph 
     (1) for that fiscal year for all States may not exceed the 
     amount described in subparagraph (B) for the fiscal year.
       (B) Amount described.--The amount described in this 
     subparagraph for a fiscal year is as follows:
       (i) For fiscal year 2002, $15,000,000.
       (ii) For fiscal year 2003, $176,000,000.
       (iii) For fiscal year 2004, $269,000,000.
       (iv) For fiscal year 2005, $330,000,000.
       (v) For fiscal year 2006 and each fiscal year thereafter, 
     $375,000,000.
       (e) DSH Payment Accountability Standards.--Not later than 
     September 30, 2002, the Secretary of Health and Human 
     Services shall implement accountability standards to ensure 
     that Federal funds provided with respect to disproportionate 
     share hospital adjustments made under section 1923 of the 
     Social Security Act (42 U.S.C. 1396r-4) are used to reimburse 
     States and hospitals eligible for such payment adjustments 
     for providing uncompensated health care to low-income 
     patients and are otherwise made in accordance with the 
     requirements of section 1923 of that Act.

     SEC. 702. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-
                   QUALIFIED HEALTH CENTERS AND RURAL HEALTH 
                   CLINICS.

       (a) In General.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
     amended--
       (1) in paragraph (13)--
       (A) in subparagraph (A), by adding ``and'' at the end;
       (B) in subparagraph (B), by striking ``and'' at the end; 
     and
       (C) by striking subparagraph (C); and
       (2) by inserting after paragraph (14) the following new 
     paragraph:
       ``(15) provide for payment for services described in clause 
     (B) or (C) of section 1905(a)(2) under the plan in accordance 
     with subsection (aa);''.
       (b) New Prospective Payment System.--Section 1902 (42 
     U.S.C. 1396a) is amended by adding at the end the following:
       ``(aa) Payment for Services Provided by Federally-Qualified 
     Health Centers and Rural Health Clinics.--
       ``(1) In general.--Beginning with fiscal year 2001 with 
     respect to services furnished on or after January 1, 2001, 
     and each succeeding fiscal year, the State plan shall provide 
     for payment for services described in section 1905(a)(2)(C) 
     furnished by a Federally-qualified health center and services 
     described in section 1905(a)(2)(B) furnished by a rural 
     health clinic in accordance with the provisions of this 
     subsection.
       ``(2) Fiscal year 2001.--Subject to paragraph (4), for 
     services furnished on and after January 1, 2001, during 
     fiscal year 2001, the State plan shall provide for payment 
     for such services in an amount (calculated on a per visit 
     basis) that is equal to 100 percent of the average of the 
     costs of the center or clinic of furnishing such services 
     during fiscal years 1999 and 2000 which are reasonable and 
     related to the cost of furnishing such services, or based on 
     such other tests of reasonableness as the Secretary 
     prescribes in regulations under section 1833(a)(3), or, in 
     the case of services to which such regulations do not apply, 
     the same methodology used under section 1833(a)(3), adjusted 
     to take into account any increase or decrease in the scope of 
     such services furnished by the center or clinic during fiscal 
     year 2001.
       ``(3) Fiscal year 2002 and succeeding fiscal years.--
     Subject to paragraph (4), for services furnished during 
     fiscal year 2002 or a succeeding fiscal year, the State plan 
     shall provide for payment for such services in an amount 
     (calculated on a per visit basis) that is equal to the amount 
     calculated for such services under this subsection for the 
     preceding fiscal year--
       ``(A) increased by the percentage increase in the MEI (as 
     defined in section 1842(i)(3)) applicable to primary care 
     services (as defined in section 1842(i)(4)) for that fiscal 
     year; and
       ``(B) adjusted to take into account any increase or 
     decrease in the scope of such services furnished by the 
     center or clinic during that fiscal year.
       ``(4) Establishment of initial year payment amount for new 
     centers or clinics.--In any case in which an entity first 
     qualifies as a Federally-qualified health center or rural 
     health clinic after fiscal year 2000, the State plan shall 
     provide for payment for services described in section 
     1905(a)(2)(C) furnished by the center or services described 
     in section 1905(a)(2)(B) furnished by the clinic in the first 
     fiscal year in which the center or clinic so qualifies in an 
     amount (calculated on a per visit basis) that is equal to 100 
     percent of the costs of furnishing such services during such 
     fiscal year based on the rates established under this 
     subsection for the fiscal year for other such centers or 
     clinics located in the same or adjacent area with a similar 
     case load or, in the absence of such a center or clinic, in 
     accordance with the regulations and methodology referred to 
     in paragraph (2) or based on such other tests of 
     reasonableness as the Secretary may specify. For each fiscal 
     year following the fiscal year in which the entity first 
     qualifies as a Federally-qualified health center or rural 
     health clinic, the State plan shall provide for the payment 
     amount to be calculated in accordance with paragraph (3).
       ``(5) Administration in the case of managed care.--
       ``(A) In general.--In the case of services furnished by a 
     Federally-qualified health center or rural health clinic 
     pursuant to a contract between the center or clinic and a 
     managed care entity (as defined in section 1932(a)(1)(B)), 
     the State plan shall provide for payment to the center or 
     clinic by the State of a supplemental payment equal to the 
     amount (if any) by which the amount determined under 
     paragraphs (2), (3), and (4) of this subsection exceeds the 
     amount of the payments provided under the contract.
       ``(B) Payment schedule.--The supplemental payment required 
     under subparagraph (A) shall be made pursuant to a payment 
     schedule agreed to by the State and the Federally-qualified 
     health center or rural health clinic, but in no case less 
     frequently than every 4 months.
       ``(6) Alternative payment methodologies.--Notwithstanding 
     any other provision of this section, the State plan may 
     provide for payment in any fiscal year to a Federally-
     qualified health center for services described in section 
     1905(a)(2)(C) or to a rural health clinic for services 
     described in section 1905(a)(2)(B) in an amount which is 
     determined under an alternative payment methodology that--
       ``(A) is agreed to by the State and the center or clinic; 
     and
       ``(B) results in payment to the center or clinic of an 
     amount which is at least equal to the amount otherwise 
     required to be paid to the center or clinic under this 
     section.''.
       (c) Conforming Amendments.--
       (1) Section 4712 of the BBA (Public Law 105-33; 111 Stat. 
     508) is amended by striking subsection (c).
       (2) Section 1915(b) (42 U.S.C. 1396n(b)) is amended by 
     striking ``1902(a)(13)(C)'' and inserting ``1902(a)(15), 
     1902(aa),''.
       (d) GAO Study of Future Rebasing.--The Comptroller General 
     of the United States shall provide for a study on the need 
     for, and how to, rebase or refine costs for making payment 
     under the medicaid program for services provided by 
     Federally-qualified health centers and rural health clinics 
     (as provided under the amendments made by this section). The 
     Comptroller General shall provide for submittal of a report 
     on such study to Congress by not later than 4 years after the 
     date of the enactment of this Act.
       (e) Effective Date.--The amendments made by this section 
     take effect on January 1, 2001, and shall apply to services 
     furnished on or after such date.

     SEC. 703. STREAMLINED APPROVAL OF CONTINUED STATE-WIDE 
                   SECTION 1115 MEDICAID WAIVERS.

       (a) In General.--Section 1115 (42 U.S.C. 1315) is amended 
     by adding at the end the following new subsection:
       ``(f) An application by the chief executive officer of a 
     State for an extension of a waiver project the State is 
     operating under an extension under subsection (e) (in this 
     subsection referred to as the `waiver project') shall be 
     submitted and approved or disapproved in accordance with the 
     following:
       ``(1) The application for an extension of the waiver 
     project shall be submitted to the Secretary at least 120 days 
     prior to the expiration of the current period of the waiver 
     project.
       ``(2) Not later than 45 days after the date such 
     application is received by the Secretary, the Secretary shall 
     notify the State if the Secretary intends to review the terms 
     and conditions of the waiver project. A failure to provide 
     such notification shall be deemed to be an approval of the 
     application.

[[Page H12375]]

       ``(3) Not later than 45 days after the date a notification 
     is made in accordance with paragraph (2), the Secretary shall 
     inform the State of proposed changes in the terms and 
     conditions of the waiver project. A failure to provide such 
     information shall be deemed to be an approval of the 
     application.
       ``(4) During the 30-day period that begins on the date 
     information described in paragraph (3) is provided to a 
     State, the Secretary shall negotiate revised terms and 
     conditions of the waiver project with the State.
       ``(5)(A) Not later than 120 days after the date an 
     application for an extension of the waiver project is 
     submitted to the Secretary (or such later date agreed to by 
     the chief executive officer of the State), the Secretary 
     shall--
       ``(i) approve the application subject to such modifications 
     in the terms and conditions--
       ``(I) as have been agreed to by the Secretary and the 
     State; or
       ``(II) in the absence of such agreement, as are determined 
     by the Secretary to be reasonable, consistent with the 
     overall objectives of the waiver project, and not in 
     violation of applicable law; or
       ``(ii) disapprove the application.
       ``(B) A failure by the Secretary to approve or disapprove 
     an application submitted under this subsection in accordance 
     with the requirements of subparagraph (A) shall be deemed to 
     be an approval of the application subject to such 
     modifications in the terms and conditions as have been agreed 
     to (if any) by the Secretary and the State.
       ``(6) An approval of an application for an extension of a 
     waiver project under this subsection shall be for a period 
     not to exceed 3 years.
       ``(7) An extension of a waiver project under this 
     subsection shall be subject to the final reporting and 
     evaluation requirements of paragraphs (4) and (5) of 
     subsection (e) (taking into account the extension under this 
     subsection with respect to any timing requirements imposed 
     under those paragraphs).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to requests for extensions of demonstration 
     projects pending or submitted on or after the date of the 
     enactment of this Act.

     SEC. 704. MEDICAID COUNTY-ORGANIZED HEALTH SYSTEMS.

       (a) In General.--Section 9517(c)(3)(C) of the Comprehensive 
     Omnibus Budget Reconciliation Act of 1985 is amended by 
     striking ``10 percent'' and inserting ``14 percent''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect on the date of the enactment of this Act.

     SEC. 705. DEADLINE FOR ISSUANCE OF FINAL REGULATION RELATING 
                   TO MEDICAID UPPER PAYMENT LIMITS.

       (a) In General.--Not later than December 31, 2000, the 
     Secretary of Health and Human Services (in this section 
     referred to as the ``Secretary''), notwithstanding any 
     requirement of the Administrative Procedures Act under 
     chapter 5 of title 5, United States Code, or any other 
     provision of law, shall issue under sections 447.272, 
     447.304, and 447.321 of title 42, Code of Federal Regulations 
     (and any other section of part 447 of title 42, Code of 
     Federal Regulations that the Secretary determines is 
     appropriate), a final regulation based on the proposed rule 
     announced on October 5, 2000, that--
       (1) modifies the upper payment limit test applied to State 
     medicaid spending for inpatient hospital services, outpatient 
     hospital services, nursing facility services, intermediate 
     care facility services for the mentally retarded, and clinic 
     services by applying an aggregate upper payment limit to 
     payments made to government facilities that are not State-
     owned or operated facilities; and
       (2) provides for a transition period in accordance with 
     subsection (b).
       (b) Transition Period.--
       (1) In general.--The final regulation required under 
     subsection (a) shall provide that, with respect to a State 
     described in paragraph (3), the State shall be considered to 
     be in compliance with the final regulation required under 
     subsection (a) so long as, for each State fiscal year during 
     the period described in paragraph (4), the State reduces 
     payments under a State medicaid plan payment provision or 
     methodology described in paragraph (3) (including a payment 
     provision or methodology described in that paragraph that was 
     approved under a waiver of such plan), or reduces the actual 
     dollar payment levels described in paragraph (3)(B), so that 
     the amount of the payments that would otherwise have been 
     made under such provision, methodology, or payment levels by 
     the State for any State fiscal year during such period is 
     reduced by 15 percent in the first such State fiscal year, 
     and by an additional 15 percent in each of the next 5 State 
     fiscal years.
       (2) Requirement.--Notwithstanding paragraph (1), the final 
     regulation required under subsection (a) shall provide that, 
     for any period (or portion of a period) that occurs on or 
     after October 1, 2008, medicaid payments made by a State 
     described in paragraph (3) shall comply with such final 
     regulation.
       (3) State described.--A State described in this paragraph 
     is a State with a State medicaid plan payment provision or 
     methodology (including a payment provision or methodology 
     approved under a waiver of such plan) which--
       (A) was approved, deemed to have been approved, or was in 
     effect on or before October 1, 1992 (including any subsequent 
     amendments or successor provisions or methodologies and 
     whether or not a State plan amendment was made to carry 
     out such provision or methodology after such date) or 
     under which claims for Federal financial participation 
     were filed and paid on or before such date; and
       (B) provides for payments that are in excess of the upper 
     payment limit test established under the final regulation 
     required under subsection (a) (or which would be noncompliant 
     with such final regulation if the actual dollar payment 
     levels made under the payment provision or methodology in the 
     State fiscal year which begins during 1999 were continued).
       (4) Period described.--The period described in this 
     paragraph is the period that begins on the first State fiscal 
     year that begins after September 30, 2002, and ends on 
     September 30, 2008.

     SEC. 706. ALASKA FMAP.

       Notwithstanding the first sentence of section 1905(b) of 
     the Social Security Act (42 U.S.C. 1396d(b)), only with 
     respect to each of fiscal years 2001 through 2005, for 
     purposes of titles XIX and XXI of the Social Security Act, 
     the State percentage used to determine the Federal medical 
     assistance percentage for Alaska shall be that percentage 
     which bears the same ratio to 45 percent as the square of the 
     adjusted per capita income of Alaska (determined by dividing 
     the State's 3-year average per capita income by 1.05) bears 
     to the square of the per capita income of the 50 States.

     SEC. 707. 1-YEAR EXTENSION OF WELFARE-TO-WORK TRANSITION.

       (a) In General.--Section 1925(f) (42 U.S.C. 1396r-6(f)) is 
     amended by striking ``2001'' and inserting ``2002''.
       (b) Conforming Amendment.--Section 1902(e)(1)(B) (42 U.S.C. 
     1396a(e)(1)(B)) is amended by striking ``2001'' and inserting 
     ``2002''.

     SEC. 708. ADDITIONAL ENTITIES QUALIFIED TO DETERMINE MEDICAID 
                   PRESUMPTIVE ELIGIBILITY FOR LOW-INCOME 
                   CHILDREN.

       (a) In General.--Section 1920A(b)(3)(A)(i) (42 U.S.C. 
     1396r-1a(b)(3)(A)(i)) is amended--
       (1) by striking ``or (II)'' and inserting ``, (II)''; and
       (2) by inserting ``eligibility of a child for medical 
     assistance under the State plan under this title, or 
     eligibility of a child for child health assistance under the 
     program funded under title XXI, (III) is an elementary school 
     or secondary school, as such terms are defined in section 
     14101 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 8801), an elementary or secondary school operated 
     or supported by the Bureau of Indian Affairs, a State or 
     tribal child support enforcement agency, an organization that 
     is providing emergency food and shelter under a grant under 
     the Stewart B. McKinney Homeless Assistance Act, or a State 
     or tribal office or entity involved in enrollment in the 
     program under this title, under part A of title IV, under 
     title XXI, or that determines eligibility for any assistance 
     or benefits provided under any program of public or assisted 
     housing that receives Federal funds, including the program 
     under section 8 or any other section of the United States 
     Housing Act of 1937 (42 U.S.C. 1437 et seq.) or under the 
     Native American Housing Assistance and Self-Determination Act 
     of 1996 (25 U.S.C. 4101 et seq.), or (IV) any other entity 
     the State so deems, as approved by the Secretary'' before the 
     semicolon.
       (b) Technical Amendments.--Section 1920A (42 U.S.C. 1396r-
     1a) is amended--
       (1) in subsection (b)(3)(A)(i), by striking ``42 U.S.C. 
     9821'' and inserting ``42 U.S.C. 9831'';
       (2) in subsection (b)(3)(A)(ii), by striking ``paragraph 
     (1)(A)'' and inserting ``paragraph (2)''; and
       (3) in subsection (c)(2), in the matter preceding 
     subparagraph (A), by striking ``subsection (b)(1)(A)'' and 
     inserting ``subsection (b)(2)''.

     SEC. 709. DEVELOPMENT OF UNIFORM QMB/SLMB APPLICATION FORM.

       (a) In General.--Section 1905(p) (42 U.S.C. 1396d(p)) is 
     amended by adding at the end the following new paragraph:
       ``(5)(A) The Secretary shall develop and distribute to 
     States a simplified application form for use by individuals 
     (including both qualified medicare beneficiaries and 
     specified low-income medicare beneficiaries) in applying for 
     medical assistance for medicare cost-sharing under this title 
     in the States which elect to use such form. Such form shall 
     be easily readable by applicants and uniform nationally.
       ``(B) In developing such form, the Secretary shall consult 
     with beneficiary groups and the States.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 1 year after the date of the enactment of 
     this Act, regardless of whether regulations have been 
     promulgated to carry out such amendment by such date. The 
     Secretary of Health and Human Services shall develop the 
     uniform application form under such amendment by not later 
     than 9 months after the date of the enactment of this Act.

     SEC. 710. TECHNICAL CORRECTIONS.

       (a) In General.--Section 1903(f)(4) (42 U.S.C. 1396b(f)(4)) 
     is amended--
       (1) by inserting ``1902(a)(10)(A)(ii)(XVII),'' after 
     ``1902(a)(10)(A)(ii)(XVI),''; and
       (2) by inserting ``1902(a)(10)(A)(ii)(XVIII),'' after 
     ``1902(a)(10)(A)(ii)(XVII),''.
       (b) Effective Dates.--(1) The amendment made by subsection 
     (a)(1) shall be effective as if included in the enactment of 
     section 121 of the Foster Care Independence Act of 1999 
     (Public Law 106-169).
       (2) The amendment made by subsection (a)(2) shall be 
     effective as if included in the enactment of the Breast and 
     Cervical Cancer Prevention and Treatment Act of 2000 (Public 
     Law 106-354).

         TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

     SEC. 801. SPECIAL RULE FOR REDISTRIBUTION AND AVAILABILITY OF 
                   UNUSED FISCAL YEAR 1998 AND 1999 SCHIP 
                   ALLOTMENTS.

       (a) Change in Rules for Redistribution and Retention of 
     Unused SCHIP Allotments for Fiscal Years 1998 and 1999.--
     Section 2104 (42 U.S.C. 1397dd) is amended by adding at the 
     end the following new subsection:
       ``(g) Rule for Redistribution and Extended Availability of 
     Fiscal Years 1998 and 1999  Allotments.--

[[Page H12376]]

       ``(1) Amount redistributed.--
       ``(A) In general.--In the case of a State that expends all 
     of its allotment under subsection (b) or (c) for fiscal year 
     1998 by the end of fiscal year 2000, or for fiscal year 1999 
     by the end of fiscal year 2001, the Secretary shall 
     redistribute to the State under subsection (f) (from the 
     fiscal year 1998 or 1999 allotments of other States, 
     respectively, as determined by the application of paragraphs 
     (2) and (3) with respect to the respective fiscal year) the 
     following amount:
       ``(i) State.--In the case of 1 of the 50 States or the 
     District of Columbia, with respect to--

       ``(I) the fiscal year 1998 allotment, the amount by which 
     the State's expenditures under this title in fiscal years 
     1998, 1999, and 2000 exceed the State's allotment for fiscal 
     year 1998 under subsection (b); or
       ``(II) the fiscal year 1999 allotment, the amount by which 
     the State's expenditures under this title in fiscal years 
     1999, 2000, and 2001 exceed the State's allotment for fiscal 
     year 1999 under subsection (b).

       ``(ii) Territory.--In the case of a commonwealth or 
     territory described in subsection (c)(3), an amount that 
     bears the same ratio to 1.05 percent of the total amount 
     described in paragraph (2)(B)(i)(I) as the ratio of the 
     commonwealth's or territory's fiscal year 1998 or 1999 
     allotment under subsection (c) (as the case may be) bears 
     to the total of all such allotments for such fiscal year 
     under such subsection.
       ``(B) Expenditure rules.--An amount redistributed to a 
     State under this paragraph with respect to fiscal year 1998 
     or 1999--
       ``(i) shall not be included in the determination of the 
     State's allotment for any fiscal year under this section;
       ``(ii) notwithstanding subsection (e), shall remain 
     available for expenditure by the State through the end of 
     fiscal year 2002; and
       ``(iii) shall be counted as being expended with respect to 
     a fiscal year allotment in accordance with applicable 
     regulations of the Secretary.
       ``(2) Extension of availability of portion of unexpended 
     fiscal years 1998 and 1999 allotments.--
       ``(A) In general.--Notwithstanding subsection (e):
       ``(i) Fiscal year 1998 allotment.--Of the amounts allotted 
     to a State pursuant to this section for fiscal year 1998 that 
     were not expended by the State by the end of fiscal year 
     2000, the amount specified in subparagraph (B) for fiscal 
     year 1998 for such State shall remain available for 
     expenditure by the State through the end of fiscal year 2002.
       ``(ii) Fiscal year 1999 allotment.--Of the amounts allotted 
     to a State pursuant to this subsection for fiscal year 1999 
     that were not expended by the State by the end of fiscal year 
     2001, the amount specified in subparagraph (B) for fiscal 
     year 1999 for such State shall remain available for 
     expenditure by the State through the end of fiscal year 2002.
       ``(B) Amount remaining available for expenditure.--The 
     amount specified in this subparagraph for a State for a 
     fiscal year is equal to--
       ``(i) the amount by which (I) the total amount available 
     for redistribution under subsection (f) from the allotments 
     for that fiscal year, exceeds (II) the total amounts 
     redistributed under paragraph (1) for that fiscal year; 
     multiplied by
       ``(ii) the ratio of the amount of such State's unexpended 
     allotment for that fiscal year to the total amount described 
     in clause (i)(I) for that fiscal year.
       ``(C) Use of up to 10 percent of retained 1998 allotments 
     for outreach activities.--Notwithstanding section 
     2105(c)(2)(A), with respect to any State described in 
     subparagraph (A)(i), the State may use up to 10 percent of 
     the amount specified in subparagraph (B) for fiscal year 1998 
     for expenditures for outreach activities approved by the 
     Secretary.
       ``(3) Determination of amounts.--For purposes of 
     calculating the amounts described in paragraphs (1) and (2) 
     relating to the allotment for fiscal year 1998 or fiscal year 
     1999, the Secretary shall use the amounts reported by the 
     States not later than December 15, 2000, or November 30, 
     2001, respectively, on HCFA Form 64 or HCFA Form 21, as 
     approved by the Secretary.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of section 
     4901 of BBA (111 Stat. 552).

     SEC. 802. AUTHORITY TO PAY MEDICAID EXPANSION SCHIP COSTS 
                   FROM TITLE XXI APPROPRIATION.

       (a) Authority To Pay Medicaid Expansion SCHIP Costs From 
     Title XXI Appropriation.--Section 2105(a) (42 U.S.C. 
     1397ee(a)) is amended--
       (1) by redesignating subparagraphs (A) through (D) of 
     paragraph (2) as clauses (i) through (iv), respectively, and 
     indenting appropriately;
       (2) by redesignating paragraph (1) as subparagraph (C), and 
     indenting appropriately;
       (3) by redesignating paragraph (2) as subparagraph (D), and 
     indenting appropriately;
       (4) by striking ``(a) In General.--'' and the remainder of 
     the text that precedes subparagraph (C), as so redesignated, 
     and inserting the following:
       ``(a) Payments.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this section, the Secretary shall pay to each State with a 
     plan approved under this title, from its allotment under 
     section 2104, an amount for each quarter equal to the 
     enhanced FMAP (or, in the case of expenditures described in 
     subparagraph (B), the Federal medical assistance percentage 
     (as defined in the first sentence of section 1905(b))) of 
     expenditures in the quarter--
       ``(A) for child health assistance under the plan for 
     targeted low-income children in the form of providing medical 
     assistance for which payment is made on the basis of an 
     enhanced FMAP under the fourth sentence of section 1905(b);
       ``(B) for the provision of medical assistance on behalf of 
     a child during a presumptive eligibility period under section 
     1920A;''; and
       (5) by adding after subparagraph (D), as so redesignated, 
     the following new paragraph:
       ``(2) Order of payments.--Payments under paragraph (1) from 
     a State's allotment shall be made in the following order:
       ``(A) First, for expenditures for items described in 
     paragraph (1)(A).
       ``(B) Second, for expenditures for items described in 
     paragraph (1)(B).
       ``(C) Third, for expenditures for items described in 
     paragraph (1)(C).
       ``(D) Fourth, for expenditures for items described in 
     paragraph (1)(D).''.
       (b) Elimination of Requirement To Reduce Title XXI 
     Allotment by Medicaid Expansion SCHIP Costs.--Section 2104 
     (42 U.S.C. 1397dd) is amended by striking subsection (d).
       (c) Authority To Transfer Title XXI Appropriations to Title 
     XIX Appropriation Account as Reimbursement for Medicaid 
     Expenditures for Medicaid Expansion SCHIP Services.--
     Notwithstanding any other provision of law, all amounts 
     appropriated under title XXI and allotted to a State pursuant 
     to subsection (b) or (c) of section 2104 of the Social 
     Security Act (42 U.S.C. 1397dd) for fiscal years 1998 through 
     2000 (including any amounts that, but for this provision, 
     would be considered to have expired) and not expended in 
     providing child health assistance or related services for 
     which payment may be made pursuant to subparagraph (C) or (D) 
     of section 2105(a)(1) of such Act (42 U.S.C. 1397ee(a)(1)) 
     (as amended by subsection (a)), shall be available to 
     reimburse the Grants to States for Medicaid account in an 
     amount equal to the total payments made to such State under 
     section 1903(a) of such Act (42 U.S.C. 1396b(a)) for 
     expenditures in such years for medical assistance described 
     in subparagraphs (A) and (B) of section 2105(a)(1) of such 
     Act (42 U.S.C. 1397ee(a)(1)) (as so amended).
       (d) Conforming Amendments.--
       (1) Section 1905(b) (42 U.S.C. 1396d(b)) is amended in the 
     fourth sentence by striking ``the State's allotment under 
     section 2104 (not taking into account reductions under 
     section 2104(d)(2)) for the fiscal year reduced by the amount 
     of any payments made under section 2105 to the State from 
     such allotment for such fiscal year'' and inserting ``the 
     State's available allotment under section 2104''.
       (2) Section 1905(u)(1)(B) (42 U.S.C. 1396d(u)(1)(B)) is 
     amended by striking ``and section 2104(d)''.
       (3) Section 2104 (42 U.S.C. 1397dd), as amended by 
     subsection (b), is further amended--
       (A) in subsection (b)(1), by striking ``and subsection 
     (d)''; and
       (B) in subsection (c)(1), by striking ``subject to 
     subsection (d),''.
       (4) Section 2105(c) (42 U.S.C. 1397ee(c)) is amended--
       (A) in paragraph (2)(A), by striking all that follows 
     ``Except as provided in this paragraph,'' and inserting ``the 
     amount of payment that may be made under subsection (a) for a 
     fiscal year for expenditures for items described in paragraph 
     (1)(D) of such subsection shall not exceed 10 percent of the 
     total amount of expenditures for which payment is made under 
     subparagraphs (A), (C), and (D) of paragraph (1) of such 
     subsection.'';
       (B) in paragraph (2)(B), by striking ``described in 
     subsection (a)(2)'' and inserting ``described in subsection 
     (a)(1)(D)''; and
       (C) in paragraph (6)(B), by striking ``Except as otherwise 
     provided by law,'' and inserting ``Except as provided in 
     subparagraph (A) or (B) of subsection (a)(1) or any other 
     provision of law,''.
       (5) Section 2110(a) (42 U.S.C. 1397jj(a)) is amended by 
     striking ``section 2105(a)(2)(A)'' and inserting ``section 
     2105(a)(1)(D)(i)''.
       (e) Technical Amendment.--Section 2105(d)(2)(B)(ii) (42 
     U.S.C. 1397ee(d)(2)(B)(ii)) is amended by striking ``enhanced 
     FMAP under section 1905(u)'' and inserting ``enhanced FMAP 
     under the fourth sentence of section 1905(b)''.
       (f) Effective Date.--The amendments made by this section 
     shall be effective as if included in the enactment of section 
     4901 of the BBA (111 Stat. 552).

     SEC. 803. APPLICATION OF MEDICAID CHILD PRESUMPTIVE 
                   ELIGIBILITY PROVISIONS.

       Section 2107(e)(1) (42 U.S.C. 1397gg(e)(1)) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Section 1920A (relating to presumptive eligibility 
     for children).''.

                       TITLE IX--OTHER PROVISIONS

                        Subtitle A--PACE Program

     SEC. 901. EXTENSION OF TRANSITION FOR CURRENT WAIVERS.

       Section 4803(d)(2) of BBA is amended--
       (1) in subparagraph (A), by striking ``24 months'' and 
     inserting ``36 months'';
       (2) in subparagraph (A), by striking ``the initial 
     effective date of regulations described in subsection (a)'' 
     and inserting ``July 1, 2000''; and
       (3) in subparagraph (B), by striking ``3 years'' and 
     inserting ``4 years''.

     SEC. 902. CONTINUING OF CERTAIN OPERATING ARRANGEMENTS 
                   PERMITTED.

       (a) In General.--Section 1894(f)(2) (42 U.S.C. 
     1395eee(f)(2)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Continuation of modifications or waivers of 
     operational requirements under demonstration status.--If a 
     PACE program operating under demonstration authority has 
     contractual or other operating arrangements which are not 
     otherwise recognized in regulation and which were in effect 
     on July 1, 2000,

[[Page H12377]]

     the Secretary (in close consultation with, and with the 
     concurrence of, the State administering agency) shall permit 
     any such program to continue such arrangements so long as 
     such arrangements are found by the Secretary and the State to 
     be reasonably consistent with the objectives of the PACE 
     program.''.
       (b) Conforming Amendment.--Section 1934(f)(2) (42 U.S.C. 
     1396u-4(f)(2)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Continuation of modifications or waivers of 
     operational requirements under demonstration status.--If a 
     PACE program operating under demonstration authority has 
     contractual or other operating arrangements which are not 
     otherwise recognized in regulation and which were in effect 
     on July 1 2000, the Secretary (in close consultation with, 
     and with the concurrence of, the State administering agency) 
     shall permit any such program to continue such arrangements 
     so long as such arrangements are found by the Secretary and 
     the State to be reasonably consistent with the objectives of 
     the PACE program.''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective as included in the enactment of BBA.

     SEC. 903. FLEXIBILITY IN EXERCISING WAIVER AUTHORITY.

       In applying sections 1894(f)(2)(B) and 1934(f)(2)(B) of the 
     Social Security Act (42 U.S.C. 1395eee(f)(2)(B), 1396u-
     4(f)(2)(B)), the Secretary of Health and Human Services--
       (1) shall approve or deny a request for a modification or a 
     waiver of provisions of the PACE protocol not later than 90 
     days after the date the Secretary receives the request; and
       (2) may exercise authority to modify or waive such 
     provisions in a manner that responds promptly to the needs of 
     PACE programs relating to areas of employment and the use of 
     community-based primary care physicians.

   Subtitle B--Outreach to Eligible Low-Income Medicare Beneficiaries

     SEC. 911. OUTREACH ON AVAILABILITY OF MEDICARE COST-SHARING 
                   ASSISTANCE TO ELIGIBLE LOW-INCOME MEDICARE 
                   BENEFICIARIES.

       (a) Outreach.--
       (1) In general.--Title XI (42 U.S.C. 1301 et seq.) is 
     amended by inserting after section 1143 the following new 
     section:


    ``outreach efforts to increase awareness of the availability of 
                         medicare cost-sharing

       ``Sec. 1144. (a) Outreach.--
       ``(1) In general.--The Commissioner of Social Security (in 
     this section referred to as the `Commissioner') shall conduct 
     outreach efforts to--
       ``(A) identify individuals entitled to benefits under the 
     medicare program under title XVIII who may be eligible for 
     medical assistance for payment of the cost of medicare cost-
     sharing under the medicaid program pursuant to sections 
     1902(a)(10)(E) and 1933; and
       ``(B) notify such individuals of the availability of such 
     medical assistance under such sections.
       ``(2) Content of notice.--Any notice furnished under 
     paragraph (1) shall state that eligibility for medicare cost-
     sharing assistance under such sections is conditioned upon--
       ``(A) the individual providing to the State information 
     about income and resources (in the case of an individual 
     residing in a State that imposes an assets test for such 
     eligibility); and
       ``(B) meeting the applicable eligibility criteria.
       ``(b) Coordination With States.--
       ``(1) In general.--In conducting the outreach efforts under 
     this section, the Commissioner shall--
       ``(A) furnish the agency of each State responsible for the 
     administration of the medicaid program and any other 
     appropriate State agency with information consisting of the 
     name and address of individuals residing in the State that 
     the Commissioner determines may be eligible for medical 
     assistance for payment of the cost of medicare cost-sharing 
     under the medicaid program pursuant to sections 
     1902(a)(10)(E) and 1933; and
       ``(B) update any such information not less frequently than 
     once per year.
       ``(2) Information in periodic updates.--The periodic 
     updates described in paragraph (1)(B) shall include 
     information on individuals who are or may be eligible for the 
     medical assistance described in paragraph (1)(A) because such 
     individuals have experienced reductions in benefits under 
     title II.''.
       (2) Amendment to title xix.--Section 1905(p) (42 U.S.C. 
     1396d(p)), as amended by section 710(a), is amended by adding 
     at the end the following new paragraph:
       ``(6) For provisions relating to outreach efforts to 
     increase awareness of the availability of medicare cost-
     sharing, see section 1144.''.
       (b) GAO Report.--The Comptroller General of the United 
     States shall conduct a study of the impact of section 1144 of 
     the Social Security Act (as added by subsection (a)(1)) on 
     the enrollment of individuals for medicare cost-sharing under 
     the medicaid program. Not later than 18 months after the date 
     that the Commissioner of Social Security first conducts 
     outreach under section 1144 of such Act, the Comptroller 
     General shall submit to Congress a report on such study. The 
     report shall include such recommendations for legislative 
     changes as the Comptroller General deems appropriate.
       (c) Effective Date.--The amendments made by subsection (a) 
     shall take effect one year after the date of the enactment of 
     this Act.

           Subtitle C--Maternal and Child Health Block Grant

     SEC. 921. INCREASE IN AUTHORIZATION OF APPROPRIATIONS FOR THE 
                   MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT.

       (a) In General.--Section 501(a) (42 U.S.C. 701(a)) is 
     amended in the matter preceding paragraph (1) by striking 
     ``$705,000,000 for fiscal year 1994'' and inserting 
     ``$850,000,000 for fiscal year 2001''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect on October 1, 2000.

                          Subtitle D--Diabetes

     SEC. 931. INCREASE IN APPROPRIATIONS FOR SPECIAL DIABETES 
                   PROGRAMS FOR TYPE I DIABETES AND INDIANS.

       (a) Special Diabetes Programs for Type I Diabetes.--Section 
     330B(b) of the Public Health Service Act (42 U.S.C. 254c-
     2(b)) is amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(1) Transferred funds.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(2) Appropriations.--For the purpose of making grants 
     under this section, there is appropriated, out of any funds 
     in the Treasury not otherwise appropriated--
       ``(A) $70,000,000 for each of fiscal years 2001 and 2002 
     (which shall be combined with amounts transferred under 
     paragraph (1) for each such fiscal years); and
       ``(B) $100,000,000 for fiscal year 2003.''.
       (b) Special Diabetes Programs for Indians.--Section 330C(c) 
     of such Act (42 U.S.C. 254c-3(c)) is amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(1) Transferred funds.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(2) Appropriations.--For the purpose of making grants 
     under this section, there is appropriated, out of any money 
     in the Treasury not otherwise appropriated--
       ``(A) $70,000,000 for each of fiscal years 2001 and 2002 
     (which shall be combined with amounts transferred under 
     paragraph (1) for each such fiscal years); and
       ``(B) $100,000,000 for fiscal year 2003.''.
       (c) Extension of Final Report on Grant Programs.--Section 
     4923(b)(2) of BBA is amended by striking ``2002'' and 
     inserting ``2003''.

     SEC. 932. APPROPRIATIONS FOR RICKY RAY HEMOPHILIA RELIEF 
                   FUND.

       Section 101(e) of the Ricky Ray Hemophilia Relief Fund Act 
     of 1998 (42 U.S.C. 300c-22 note) is amended by adding at the 
     end the following: ``There is appropriated to the Fund 
     $475,000,000 for fiscal year 2001, to remain available until 
     expended.''.

               Subtitle E--Information on Nurse Staffing

     SEC. 941. POSTING OF INFORMATION ON NURSING FACILITY 
                   STAFFING.

       (a) Medicare.--Section 1819(b) (42 U.S.C. 1395i-3(b)) is 
     amended by adding at the end the following new paragraph:
       ``(8) Information on nurse staffing.--
       ``(A) In general.--A skilled nursing facility shall post 
     daily for each shift the current number of licensed and 
     unlicensed nursing staff directly responsible for resident 
     care in the facility. The information shall be displayed in a 
     uniform manner (as specified by the Secretary) and in a 
     clearly visible place.
       ``(B) Publication of data.--A skilled nursing facility 
     shall, upon request, make available to the public the nursing 
     staff data described in subparagraph (A).''.
       (b) Medicaid.--Section 1919(b) (42 U.S.C. 1395r(b)) is 
     amended by adding at the end the following new paragraph:
       ``(8) Information on nurse staffing.--
       ``(A) In general.--A nursing facility shall post daily for 
     each shift the current number of licensed and unlicensed 
     nursing staff directly responsible for resident care in the 
     facility. The information shall be displayed in a uniform 
     manner (as specified by the Secretary) and in a clearly 
     visible place.
       ``(B) Publication of data.--A nursing facility shall, upon 
     request, make available to the public the nursing staff data 
     described in subparagraph (A).''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2003.

    Subtitle F--Adjustment of Multiemployer Plan Benefits Guaranteed

     SEC. 951. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.

       (a) In General.--Section 4022A(c) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1322a(c)) 
     is amended--
       (1) by striking ``$5'' each place it appears in paragraph 
     (1) and inserting ``$11'';
       (2) by striking ``$15'' in paragraph (1)(A)(i) and 
     inserting ``$33''; and
       (3) by striking paragraphs (2), (5), and (6) and by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively.
       (b) Effective Date.--The amendments made by this section 
     shall apply to any multiemployer plan that has not received 
     financial assistance (within the meaning of section 4261 of 
     the Employee Retirement Income Security Act of 1974) within 
     the 1-year period ending on the date of the enactment of this 
     Act.

 MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT 
                                OF 2000

       Following is explanatory language on H.R. 5661, as 
     introduced on December 14, 2000. The conferees on H.R. 4577 
     agree with the matter included in H.R. 5661 and enacted in 
     this conference report by references and the following 
     description of it.

               TITLE I--MEDICARE BENEFICIARY IMPROVEMENTS


                SUBTITLE A--IMPROVED PREVENTIVE BENEFITS

     Section 101. Coverage of biennial screening pap smear and 
         pelvic exams
       The provision modifies current law to provide Medicare 
     coverage for biennial screening pap smears and pelvic exams, 
     effective July 1, 2001.

[[Page H12378]]

     Section 102. Coverage of screening for glaucoma
       The provision would add Medicare coverage for annual 
     glaucoma screenings, beginning January 1, 2002, for persons 
     determined to be at high risk for glaucoma, individuals with 
     a family history of glaucoma, and individuals with diabetes. 
     The service would have to be furnished by or under the 
     supervision of an optometrist or ophthalmologist who is 
     legally authorized to perform such services in the state 
     where the services are furnished.
     Section 103. Coverage of screening colonoscopy for average 
         risk individuals
       The provision would authorize coverage for screening 
     colonscopies, beginning July 1, 2001, for all individuals, 
     not just those at high risk. For persons not at high risk, 
     payments could not be made for such procedures if performed 
     within 10 years of a previous screening colonscopy or within 
     4 years of a screening flexible sigmoidoscopy.
     Section 104. Modernization of screening mammography benefit
       Beginning in 2002, the provision would eliminate the 
     statutorily prescribed payment rate for screening mammography 
     payments and specify that the services are to be paid under 
     the physician fee schedule. The provision would specify two 
     new payment rates for mammographies that utilize advanced new 
     technology for the period April 1, 2001 to December 31, 2001. 
     Payment for technologies that directly take digital images 
     would equal 150% of what otherwise be paid for a bilateral 
     diagnostic mammography. For technologies that convert 
     standards film images to digital form, an additional payment 
     of fifteen dollars would be authorized. The Secretary would 
     be required to determine whether a new code is required for 
     tests furnished after 2001.
     Section 105. Coverage of medical nutrition therapy services 
         for beneficiaries within diabetes or a renal disease
       The provision would establish, effective January 1, 2002, 
     Medicare coverage for medical nutrition therapy services for 
     beneficiaries who have diabetes or a renal disease. Medical 
     nutrition therapy services would be defined as nutritional 
     diagnostic, therapy and counseling services for the purpose 
     of disease management which are furnished by a registered 
     dietitian or nutrition professional, pursuant to a referral 
     by a physician. The provision would specify that the amount 
     paid for medical nutrition therapy services would equal the 
     lesser of the actual charge for the service or 85% of the 
     amount that would be paid under the physician fee schedule if 
     such services were provided by a physician. Assignment would 
     be required for all claims. The Secretary would be required 
     to submit a report to Congress that contains an evaluation of 
     the effectiveness of services furnished under this provision.


               subtitle b--other beneficiary improvements

     Section 111. Acceleration of reduction of beneficiary 
         copayment for hospital outpatient department services
       Effective April 1, 2000, the provision would modify current 
     law by limiting the amount of a beneficiary copayment for a 
     procedure in a hospital outpatient department to the hospital 
     inpatient deductible applicable in that year.
       In addition, starting in April 2001, the provisions would 
     require the Secretary of HHS to reduce the effective 
     copayment rate for outpatient services to a maximum rate of 
     57% for the remainder of 2001, 55% in 2002 and 2003, 50% in 
     2004, 45% in 2005, and 40% in 2006 and subsequent years. As 
     stated in BBA 97, hospitals may waive any increase in 
     coinsurance that may have arisen from the implementation of 
     the outpatient prospective payment system (PPS).
       The Comptroller General would be required to work with the 
     National Association of Insurance Commissioners (NAIC) to 
     evaluate the extent to which premiums for supplemental 
     policies reflect the acceleration of the reduction in 
     beneficiary coinsurance of hospital outpatient services and 
     result in saving to beneficiaries and to report to the 
     Congress by April 1, 2004.
     Section 112. Preservation of coverage of drugs and 
         biologicials under part B of the Medicare Program
       The provision would clarify policy with regard to coverage 
     of drugs, provided incident to physicians services, that 
     cannot be self-administered. The provision would specify that 
     such drugs are covered when they are not usually self-
     administered by the patient.
     Section 113. Elimination of time limitation on Medicare 
         benefits for immunosuppressive drugs
       The provision would eliminate the current time limitations 
     on the coverage of immunosuppressive drugs for beneficiaries 
     would have received a covered organ transplant. The provision 
     would apply to drugs furnished, on or after the date 
     enactment.
     Section 114. Imposition of billings limits on drugs
       The provision would specify that payment for drugs under 
     Part B must be made on the basis of assignment.
     Section 115. Waiver of 24-month waiting period for Medicare 
         coverage of individuals disabled with amyotrophic lateral 
         sclerosis (ALS)
       The provision would waive the 24-month waiting period 
     (otherwise required for an individual to establish Medicare 
     eligibility on the basis of a disability) for persons 
     medically determined to have amyotrophic lateral sclerosis 
     (ALS). The provision would be effective July 1, 2001.


             subtitle C--demonstration projects and studies

     Section 121. Demonstration project for disease management for 
         severely chronically ill Medicare beneficiaries
       The Secretary would be required to conduct a demonstration 
     project to illustrate the impact on costs and health outcomes 
     of applying disease management to Medicare beneficiaries with 
     diagnosed, advanced-stage congestive heart failure, diabetes, 
     or coronary heart disease. Up to 30,000 beneficiaries would 
     be able to enroll, on a voluntary basis, for disease 
     management services related to their chronic health 
     condition. In addition, contractors providing disease 
     management services would be responsible for providing 
     beneficiaries enrolled in the project with prescription 
     drugs.
     Section 122. Cancer prevention and treatment demonstration 
         for ethnic and racial minorities
       The provision would require the Secretary to conduct 
     demonstration projects for the purpose of developing models 
     and evaluating methods that improve the quality of cancer 
     prevention services, improve clinical outcomes, eliminates 
     disparities in the rate of preventative screening measures, 
     and promote collaboration and community-based organizations 
     for ethnic and racial minorities.
     Section 123. Study on Medicare coverage of routine tyroid 
         screening
       The provision would require the Secretary to request the 
     National Academy of Sciences, and as appropriate in 
     conjunction with the United States Preventive Services Task 
     Force, to analyze the addition of routine thyroid screening 
     under Medicare. The analysis would consider the short term 
     and long term benefits, and cost to Medicare, of adding such 
     coverage for some or all beneficiaries.
     Section 124. MedPAC study on consumer coalitions
       The provision would require MedPAC to conduct a study that 
     examines the use of consumer coalitions in the marketing of 
     Medicare+Choice plans. A consumer coalition would be defined 
     as a non-profit community-based organization that provides 
     information to beneficiaries about their health options under 
     Medicare and negotiates with Medicare+Choice plans on 
     benefits and premiums for beneficiaries who are members of 
     the coalition or otherwise affiliated with it.
     Section 125. Study on limitation on State payment for 
         Medicare cost-sharing affecting access to services for 
         qualified Medicare beneficiaries
       The provision would require the Secretary of HHS to conduct 
     a study to determine if access to certain services (including 
     mental health services) has been affected by a specific 
     provision in law. The provision specifies that states are not 
     required to pay Medicare cost-sharing charges for QMBs to the 
     extent these payments would result in a total payment in 
     excess of the Medicaid level.
     Section 126. Studies on preventive interventions in primary 
         care for older Americans
       The provision would require the Secretary, acting through 
     the United States Preventive Services Task Force, to conduct 
     a series of studies designed to identify preventive 
     interventions in primary care for older Americans.
     Section 127. MedPAC study and report on Medicare coverage of 
         cardiac and pulmonary rehabilitation and therapy services
       The provision would require MedPAC to conduct a study on 
     coverage of cardiac and pulmonary rehabilitation therapy 
     services under Medicare.
     Section 128. Lifestyle modification program demonstration
       The provision modifies the current medicare demonstration 
     project, known as the Lifestyle Modification Program. It 
     would extent the project to 4 years and to assure 1,800 
     beneficiaries complete the Program in order to provide a 
     statistically valid sample. The provision requires a study of 
     its cost-effectiveness and provides for an initial report 
     after 900 beneficiaries complete the Program and a final 
     report after 1,800 beneficiaries complete the Program.

                TITLE II--RURAL HEALTH CARE IMPROVEMENTS


            subtitle A--critical access hospital provisions

     Section 201. Clarification of no beneficiary cost-sharing for 
         clinical diagnostic laboratory tests furnished by 
         critical access hospitals
       Effective for services furnished on or after the enactment 
     of BBRA99, Medicare beneficiaries would not be liable for any 
     coinsurance deductible, copayment, or other cost sharing 
     amount with respect to clinical diagnostic laboratory 
     services furnished as an outpatient critical access hospital 
     (CAH) service. Conforming changes that clarify that CAHs are 
     reimbursed on a reasonable cost basis for outpatient clinical 
     diagnostic laboratory services are also included.
     Section 202. Assistance with fee schedule payment for 
         professional services under all-inclusive rate
       Effective for items and services furnished on or after July 
     1, 2001, Medicare would pay a CAH for outpatient services 
     based on reasonable costs or, at the election of an entity,

[[Page H12379]]

     would pay the CAH a facility fee based on reasonable costs 
     plus an amount based on 115% of Medicare's fee schedule 
     for professional services.
     Section 203. Exemption of critical access hospital swing beds 
         from SNF PPS
       Swing beds in critical access hospitals (CAHs) would be 
     exempt from the SNF prospective payment system. CAHs would be 
     paid for covered SNF services on a reasonable cost basis.
     Section 204. Payment in critical access hospitals for 
         emergency room on-call physicians
       When determining the allowable, reasonable cost of 
     outpatient CAH services, the Secretary would recognize 
     amounts for the compensation and related costs for on-call 
     emergency room physicians who are not present on the 
     premises, are not otherwise furnishing services, and are not 
     on-call at any other provider or facility. The Secretary 
     would define the reasonable payment amounts and the meaning 
     of the term ``on-call.'' The provision would be effective for 
     cost reporting periods beginning on or after October 1, 2001.
     Section 205. Treatment of ambulance services furnished by 
         certain critical access hospitals
       Ambulance services provided by a critical access hospital 
     (CAH) or provided by an entity that is owned or operated by a 
     CAH would be paid on a reasonable cost basis if the CAH or 
     entity is the only provider or supplier of ambulance services 
     that is located within a 35-mile drive of the CAH. The 
     provision would be effective for services furnished on or 
     after enactment.
     Section 206. GAO study on certain eligibility requirements 
         for critical access hospitals
       Within one year of enactment, GAO would be required to 
     conduct a study on the eligibility requirements for critical 
     access hospitals (CAHs) with respect to limitations on 
     average length of stay and number of beds, including an 
     analysis of the feasibility of having a distinct part unit as 
     part of a CAH and the effect of seasonal variations in CAH 
     eligibility requirements. GAO also would be required to 
     analyze the effect of seasonal variations in patient 
     admissions on critical access hospital eligibility 
     requirements with respect to limits on average annual length 
     of stay and number of beds.


              subtitle b--other rural hospitals provisions

     Section 211. Treatment of rural disproportionate share 
         hospitals
       For discharges occurring on or after April 1, 2001, all 
     hospitals would be eligible to receive DSH payments when 
     their DSH percentage (threshold amount) exceeds 15%. The DSH 
     payment formulas for sole community hospitals (SCHs), rural 
     referral centers (RRCs), rural hospitals that are both SCHs 
     and RRCs, small rural hospitals and urban hospitals with less 
     than 100 beds would be modified.
     Section 212. Option to base eligibility for Medicare 
         dependent, small rural hospital program on discharges 
         during 2 of the 3 most recent audited cost reporting 
         periods
       An otherwise qualifying small rural hospital would be able 
     to be classified as an MDH if at least 60% of its days or 
     discharges were attributable to Medicare Part A beneficiaries 
     in at least two of the three most recent audited cost 
     reporting periods for which the Secretary has a settled cost 
     report.
     Section 213. Extension of option to use rebased target 
         amounts to all sole community hospitals
       Any SCH would be able to elect payment based on hospital 
     specific, updated FY1996 costs if this target amount resulted 
     in higher Medicare payments. There would be a transition 
     period with Medicare payment based completely on updated 
     FY1996 hospital specific costs for discharges occurring after 
     FY2003.
     Section 214. MedPAC analysis of impact of volume on per unit 
         cost of rural hospitals with psychiatric units
       MedPAC would be required to report on the impact of volume 
     on the per unit cost of rural hospitals with psychiatric 
     units and include in its report a recommendation on whether 
     special treatment is warranted.


                   subtitle c--other rural provisions

     Section 221. Assistance for providers of ambulance services 
         in rural areas
       The provision would make additional payments to providers 
     of ground ambulance services for trips, originating in rural 
     areas, that are greater than 17 miles and up to 50 miles. The 
     payments would be made for services furnished on or after 
     July 1, 2001 and before January 1, 2004. The provision would 
     require the Comptroller General to conduct a study to examine 
     both the costs of efficiently providing ambulance services 
     for trips originating in rural areas and the means by which 
     rural areas with low population densities can be identified 
     for the purpose of designating areas in which the costs of 
     ambulance services would be expected to be higher. The 
     Comptroller General would submit a report to Congress by June 
     30, 2002 on the results of the study, together with 
     recommendations on steps that should be taken to assure 
     access to ambulance services for trips originating in rural 
     areas. The Secretary would be required to take these findings 
     into account when establishing the fee schedule, beginning 
     with 2004.
     Section 222. Payment for certain physician assistant services
       This provision would give permanent authority to physician 
     assistants who owned rural health clinics that lost their 
     designation as such to bill Medicare directly.
     Section 223. Expansion of Medicare payment for telehealth 
         services
       The provision would establish revised payment provisions, 
     effective no later than October 1, 2001, for services that 
     are provided via a telecommunications system by a physician 
     or practitioner to an eligible beneficiary in a rural area. 
     The Secretary would be required to make payments for 
     telehealth services to the physician or practitioner at the 
     distant site in an amount equal to the amount that would have 
     been paid to such physician or practitioner if the service 
     had been furnished to the beneficiary without the use of a 
     telecommunications system. A facility fee would be paid to 
     the originating site. Originating sites would include a 
     physician or practitioner office, a critical access hospital, 
     a rural health clinic, a Federally qualified health center or 
     a hospital. The Secretary would be required to conduct a 
     study, and submit recommendations to Congress, that identify 
     additional settings, sites, practitioners and geographic 
     areas that would be appropriate for telehealth services. 
     Entities participating in Federal demonstration projects 
     approved by, or receiving funding from, the Secretary as of 
     December 31, 2000 would be qualified sites.
     Section 224. Expanding access to rural health clinics
       All hospitals of less than 50 beds that own rural health 
     clinics would be exempt from the per visit limit.
     Section 225. MedPAC study on low-volume, isolated rural 
         health providers
       MedPAC would be required to study the effect of low patient 
     and procedure volume on the financial status and Medicare 
     payment methods for hospital outpatient services, ambulance 
     services, hospital inpatient services, skilled nursing 
     facility services, and home health services in isolated rural 
     health care providers.

                TITLE III--PROVISIONS RELATING TO PART A


                SUBTITLE A--INPATIENT HOSPITAL SERVICES

     Section 301. Revision of acute care hospital payment update 
         for 2001
       All hospitals would receive the full market basket index 
     (MBI) as an update for FY2001. In order to implement this 
     increase for hospitals other than sole community hospitals 
     (SCH), those hospitals would receive the MBI minus 1.1 
     percentage points (the current statutory provision) for 
     discharges occurring on or after October 1, 2000 and before 
     April 1, 2001; these non-SCH hospitals would receive the MBI 
     plus 1.1 percentage points for discharges occurring on or 
     after April 1, 2001 and before October 1, 2001. As indicated 
     by section 547(a), this payment increase would not apply to 
     discharges occurring after FY2001. For FY2002 and FY2003, 
     hospitals would receive the MBI minus .55 percentage points. 
     For FY2004 and subsequently, hospitals would receive the MBI.
       The Secretary is directed to consider the prices of blood 
     and blood products purchased by hospitals in the next 
     rebasing and revision of the hospital market basket to 
     determine whether those prices are adequately reflected in 
     the market basket index. MedPAC is directed to conduct a 
     study on increased hospital costs attributable to complying 
     with new blood safety measures and providing such services 
     using new technologies among other issues.
       For discharges occurring on or after October 1, 2001, the 
     Secretary would be able to adjust the standardized amount in 
     future fiscal years to correct for changes in the aggregate 
     Medicare payments caused by adjustments to the DRG weighting 
     factors in a previous fiscal year (or estimates that such 
     adjustments for a future fiscal year) that did not take into 
     account coding improvements or changes in discharge 
     classifications and did not accurately represent increases in 
     the resource intensity of patients treated by PPS hospitals.
     Section 302. Additional modification in transition for 
         indirect medical education (IME) percentage adjustment
       Teaching hospitals would receive 6.25% IME payment 
     adjustment (for each 10% increase in teaching intensity) for 
     discharges occurring on or after October 1, 2001 and before 
     April 1, 2001. The IME adjustment would increase to 6.75% for 
     discharges on or after April 1, 2001 and before October 1, 
     2001. As indicated in Section 547(a), the payment increase 
     would not apply to discharges after FY2001. The IME 
     adjustment would be 6.5% in FY2002 and 5.5% in FY2003 and in 
     subsequent years.
     Section 303. Decrease in reductions for disproportionate 
         share hospital (DSH) payments
       Reductions in the DSH payment formula amounts would be 2% 
     in FY2001, 3% in FY2002, and 0% in FY2003 and subsequently. 
     To implement the FY2001 provision, DSH amounts for discharges 
     occurring on or after October 1, 2000 and before April 1, 
     2001, would be reduced by 3% which was the reduction in 
     effect prior to enactment of this provision. DSH amounts for 
     discharges occurring on or after April 1, 2001 and before 
     October 1, 2001 would be reduced by only 1 percentage point. 
     As indicated by Section 547(a), this payment adjustment would 
     not apply to discharges after FY2001.

[[Page H12380]]

     Section 304. Wage index improvements
       For FY2001 or any fiscal year thereafter, a Medicare 
     Geographic Classification Review Board (MGCRB) decision to 
     reclassify a prospective payment system hospital for use of a 
     different area's wage index would be effective for 3 fiscal 
     years. The Secretary would establish procedures whereby a 
     hospital could elect to terminate this reclassification 
     decision before the end of such period. For FY2003 and 
     subsequently, MGCRB would base any comparison of the average 
     hourly wage of the hospital with the average hourly wage for 
     hospitals in the area using data from the each of the two 
     immediately preceding surveys as well as data from the most 
     recently published hospital wage survey.
       The Secretary would establish a process which would first 
     be available for discharges occurring on or after October 1, 
     2001 where a single wage index would be computed for all 
     geographic areas in the state. If the Secretary applies a 
     statewide geographic index, an application by an individual 
     hospital would not be considered. The Secretary would also 
     collect occupational data every three years in order to 
     construct an occupational mix adjustment for the hospital 
     area wage index. The first complete data collection effort 
     would occur no later than September 30, 2003 for application 
     beginning October 1, 2004.
     Section 305. Payment for inpatient services in rehabilitation 
         hospitals
       Total payments for rehabilitation hospitals in FY2002 would 
     equal the amounts of payments that would have been made if 
     the rehabilitation prospective payment system (PPS) had not 
     been enacted. A rehabilitation facility would be able to make 
     a one-time election before the start of the PPS to be paid 
     based on a fully phased-in PPS rate.
     Section 306. Payment for inpatient services of psychiatric 
         hospitals
       The provision would increase the incentive payments for 
     psychiatric hospitals and distinct part units of 3% for cost 
     reporting periods beginning on or after October 1, 2000.
     Section 307. Payment for inpatient services of long-term care 
         hospitals
       For cost reporting periods beginning during FY2001, long 
     term hospitals would have the national cap increased by 2% 
     and the target amount increased by 25%. Neither these 
     payments nor the increased bonus payments provided by BBRA 99 
     would be factored into the development of the prospective 
     payment system (PPS) for long term hospitals. When developing 
     the PPS for inpatient long term hospitals, the Secretary 
     would be required to examine the feasibility and impact of 
     basing payment on the existing (or refined) acute hospital 
     DRGs and using the most recently available hospital discharge 
     data. If the Secretary is unable to implement a long term 
     hospital PPS by October 1, 2002, the Secretary would be 
     required to implement a PPS for these hospitals using the 
     existing acute hospital DRGs that have been modified where 
     feasible.


 subtitle b--adjustments to pps payments for skilled nursing facilities

     Section 311. Elimination of reduction in skilled nursing 
         facility (SNF) market basket update in 2001
       The provision would modify the schedule and rates according 
     to which federal per diem payments are updated. In FY2002 and 
     FY2003 the updates would be the market basket index increase 
     minus 0.5 percentage point. The update rate for the period 
     October 1, 2000, through March 31, 2001, would be the market 
     basket index increase minus 1 percentage point; the update 
     rate for the period April 1, 2001, through September 30, 
     2001, would be the market basket index increase plus one 
     percentage point (this increase would not be included when 
     determining payment rates for the subsequent period). 
     Temporary increases in the federal per diem rates provided by 
     BBRA 99 would be in addition to the increases in this 
     provision. By July 1, 2002, the Comptroller General would be 
     required to submit a report to Congress on the adequacy of 
     Medicare payments to SNFs, taking into account the role of 
     private payers, medicaid, and case mix on the financial 
     performance of SNFs and including an analysis, by RUG 
     classification, of the number and characteristics of such 
     facilities. By January 1, 2005, the Secretary would be 
     required to submit a report to Congress on alternatives for 
     classification of SNF patients.
     Section 312. Increase in nursing component of PPS Federal 
         rate
       The provision would increase the nursing component of each 
     RUG by 16.66 percent over current law for SNF care furnished 
     after April 1, 2001, and before October 1, 2002.
       The Comptroller General would be required to conduct an 
     audit of nurse staffing ratios in a sample of SNFs and to 
     report to Congress by August 1, 2002, on the results of the 
     audit of nurse staffing ratios and recommend whether the 
     additional 16.66 percent payment should be continued.
     Section 313. Application of SNF consolidated billing 
         requirement limited to part A covered stays
       Effective January 1, 2001, the provision would limit the 
     current law consolidated billing requirement to services and 
     items furnished to SNF residents in a Medicare part A covered 
     stay and to therapy services furnished in part A and part B 
     covered stays.
       The Inspector General of HHS would be required to monitor 
     part B payments to SNFs on behalf of residents who are not in 
     a part A covered stay.
     Section 314. Adjustment of rehabilitation RUGS to correct 
         anomaly in payment rates
       Effective for skilled nursing facility (SNF) services 
     furnished on or after April 1, 2002, the provision would 
     increase by 6.7 percent certain federal per diem payments to 
     ensure that Medicare payments for SNF residents with ``ultra 
     high'' and ``high'' rehabilitation therapy needs are 
     appropriate in relation to payments for residents needing 
     ``medium'' or ``low'' levels of therapy. The 20 percent 
     additional payment that was provided in BBRA 99 for certain 
     RUGS is removed to make this provision budget neutral.
       The Inspector General of HHS would be required to review 
     and report to Congress by October 1, 2001, regarding whether 
     the RUG payment structure as in effect under the BBRA 99 
     includes incentives for the delivery of inadequate care.
     Section 315. Establishment of process for geographic 
         reclassification
       The provision would permit the Secretary to establish a 
     process for geographic reclassification of skilled nursing 
     facilities based upon the method used for inpatient 
     hospitals. The Secretary may implement the process upon 
     completion of the data collection necessary to calculate an 
     area wage index for workers in skilled nursing facilities.


                        subtitle c--hospice care

     Section 321. 5 Percent increase in payment base
       The provision would increase, effective April 1, 2001, the 
     base Medicare daily payment rates for hospice care for fiscal 
     year 2001 by 5 percentage points over the rates otherwise in 
     effect. This increase would continue to apply after fiscal 
     year 2001. The temporary increase in payment rates provided 
     in BBRA 99 for FY2001 and FY2002 (.5 percent and .75 percent, 
     respectively) would not be affected. In addition, the hospice 
     wage index for one Metropolitan Statistical Area for fiscal 
     year 2000 would be adjusted.
     Section 322. Clarification of physician certification
       Effective for certifications of terminal illness made on or 
     after the date of enactment, the provision would modify 
     current law to specify that the physician's or hospice 
     medical director's certification of terminal illness would be 
     based on his/her clinical judgment regarding the normal 
     course of the individual's illness. The Secretary would be 
     required to study and report to Congress within 2 years of 
     enactment on the appropriateness of certification of 
     terminally ill individuals and the effect of this provision 
     on such certification.
     Section 323. MedPAC report on access to, and use of, hospice 
         benefit
       The provision would require MedPAC to examine the factors 
     affecting the use of Medicare hospice benefits, including 
     delay of entry into the hospice program and urban and rural 
     differences in utilization rates. The provision would require 
     a report on the study to be submitted to Congress 18 months 
     after enactment.


                      subtitle d--other provisions

     Section 331. Relief from Medicare Part A late enrollment 
         penalty for group buy-in for state and local retirees
       The provision would exempt certain state and local 
     retirees, retiring prior to January 1, 2002, from the Part A 
     delayed enrollment penalties. These would be groups of 
     persons for whom the state or local government elected to pay 
     the delayed Part A enrollment penalty for life. The amount of 
     the delayed enrollment penalty which would otherwise be 
     assessed would be reduced by an amount equal to the total 
     amount of Medicare payroll taxes paid by the employee and the 
     employer on behalf of the employee. The provision would apply 
     to premiums for months beginning with January 1, 2002.

                TITLE IV--PROVISIONS RELATING TO PART B


                subtitle a--hospital outpatient services

     Section 401. Revision of hospital outpatient PPS payment 
         update
       The provision would modify the current law update rates 
     applicable to the hospital outpatient PPS by providing in 
     FY2001 an update equal to the full rate of increase in the 
     market basket index. As under current law, the increase in FY 
     2002 would be the market basket index increase minus one 
     percentage point.
       A special rule applies to the OPD PPS rates in 2001: For 
     the period January 2, 2001 through March 31, 2001, the PPS 
     amounts shall be those in effect on the day before 
     implementation of the new law. For the periods April 2001, 
     through December 31, 2001, the PPS amounts in effect during 
     the prior period shall be increased by 0.32%.
       Effective as if enacted with BBA 97, if the Secretary 
     determines that updates to the adjustment factor used to 
     convert the relative utilization weights under the PPS into 
     payment amounts have, or are likely to, result in hospitals' 
     changing their coding or classification of covered services, 
     thereby changing aggregate payments, the Secretary would be 
     authorized to adjust the conversion factor in later years to 
     eliminate the effect of coding or classification changes.
     Section 402. Clarifying process and standards for determining 
         eligibility of devices for pass-through payments under 
         hospital outpatient PPS
       The provision would modify the procedures and standards by 
     which certain medical devices are categorized and determined 
     eligible

[[Page H12381]]

     for pass-through payments under the PPS. Through public rule-
     making procedures, the Secretary would be required to 
     establish criteria for defining special payment categories 
     under the PPS for new medical devices. The Secretary would be 
     required to promulgate, through the use of a program 
     memorandum, initial categories that would encompass each of 
     the individual devices that the Secretary had designated as 
     qualifying for the pass-through payments to date. In 
     addition, similar devices not so designated because they were 
     payable under Medicare prior to December 31, 1996, would also 
     be included in initial categories. The Secretary would be 
     required to create additional new categories in the future to 
     acommodate new technologies meeting the ``not insignificant 
     cost'' test established in BBRA 99.
       Once the categories were established, pass-through payments 
     currently authorized under section 1833(t)(b) of the Social 
     Security Act would proceed on a category-specific, rather 
     than device-specific basis. These payments would be 
     designated as ``category-based pass-through payments.'' These 
     payments would be continued to be made for the 2 to 3 years 
     payment period originally specified in BBRA 99, and, for each 
     given category, would begin when the first such payment is 
     made for any device included in a specified category. At the 
     conclusion of this transitional payment period, categories 
     would sunset and payment for the device would be included in 
     the underlying PPS payment for the related service.
     Section 403. Application of OPD PPS transitional corridor 
         payments to certain hospitals that did not submit a 1996 
         cost report
       Effective as if enacted with BBRA 99, the provision would 
     modify current law as enacted in BBA 99 to enable all 
     hospitals, not just those hospitals filing 1996 cost reports, 
     to be eligible for transitional payments under the PPS.
     Section 404. Application of rules for determining provider-
         based status for certain entities
       The provision would grandfather existing arrangements 
     whereby certain entities (such as outpatient clinics, skilled 
     nursing facilities, etc.) are considered ``provider-based'' 
     entities, meaning they are affiliated financially and 
     clinically with a hospital. Existing provider-based status 
     designations would continue for two years beginning October 
     1, 2000. If a facility or organization requests approval for 
     provider-based status during the period October 1, 2000, 
     through September 31, 2002, it could not be treated as if 
     it did not have such status during the period of time the 
     determination is pending. In making such a status 
     determination on or after October 1, 2000, HCFA would 
     treat the applicant as satisfying any requirements or 
     standards for geographic location if it satisfied 
     geographic location requirements in regulations or is 
     located not more than 35 miles from the main campus of the 
     hospital.
       An applicant facility or organization would be treated as 
     satisfying all requirements for provider-based status if it 
     is owned or operated by a unit of State or local government 
     or is a public or private nonprofit corporation that is 
     formally granted governmental powers by a unit of State or 
     local government, or is a private hospital that, under 
     contract, serves certain low income households or has a 
     certain disproportionate share adjustment.
       These provisions are in effect during a two-year period 
     beginning on October 1, 2000.
     Section 405. Treatment of children's hospitals under 
         prospective payment system
       The BBRA 99 provides special ``hold harmless'' payments to 
     ensure that cancer hospitals would receive no less under the 
     hospital outpatient PPS than they would have received, in 
     aggregate, under the ``pre-BBA'' system, that is, the pre-PPS 
     payment system. Effective as if included in the BBRA 99, the 
     provision would extend this hold harmless protection to 
     children's hospitals.
     Section 406. Inclusion of temperature monitored cryoablation
       The provision would include temperature monitored 
     cryoablation as part of the transitional pass-through for 
     certain medical devices, drugs, and biologicals under the 
     hospital outpatient prospective payment system, effective 
     April 1, 2001.


         subtitle b--provisions relating to physicians services

     Section 411. GAO studied relating to physicians' services
       The provision would require the GAO to conduct a study on 
     the appropriateness of furnishing in physicians offices 
     specialist services (such as gastrointestinal endoscopic 
     physicians services) which are ordinarily furnished in 
     hospital outpatient departments. The GAO would not be 
     required to study the refinements to the practice expense 
     relative value made during the transition to the resource-
     based system.
     Section 412. Physician group practice demonstration
       The provision would require the Secretary to conduct 
     demonstration projects to test, and if proven effective, 
     expand the use of incentives to health care groups 
     participating under Medicare. Such incentives would be 
     designed to encourage coordination of care furnished under 
     Medicare Parts A and B by institutional and other providers 
     and practitioners; to encourage investment in administrative 
     structures and processes to encourage efficient service 
     delivery; and to reward physicians for improving health 
     outcomes. The Secretary would establish for each group 
     participating in a demonstration, a base expenditure amount 
     and an expenditure target (reflecting base expenditures 
     adjusted for risk and expected growth rates). The Secretary 
     would pay each group a bonus for each year equal to a portion 
     of the savings for the year relative to the target. In 
     addition, at such time as the Secretary had developed 
     appropriate criteria, the Secretary would pay an additional 
     bonus related to process and outcome improvements. Total 
     payments under demonstrations could not exceed what the 
     Secretary estimates would be paid in the absence of the 
     demonstration program.
     Section 413. Study on enrollment procedures for groups that 
         retain independent contractor physicians.
       The provision would require the Comptroller General to 
     conduct a study of the current Medicare enrollment process 
     for groups that retain independent contractor physicians; 
     particular emphasis would be placed on hospital-based 
     physicians, such as emergency department staffing groups.


                       subtitle c--other services

     Section 421. One-year extension of moratorium on therapy 
         caps; report on standards for supervision of physical 
         therapy assistants
       The provision would extend the moratorium on the physical 
     therapy and occupational therapy caps for 1 year through 
     2002; it would also extend the requirement for focused 
     reviews of therapy claims for the same period. The Secretary 
     would be required to conduct a study on the implications of 
     eliminating the ``in the room'' supervision requirements for 
     Medicare payment for physical therapy assistants who are 
     supervised by physical therapists and the implications of 
     this requirement on the physical therapy cap.
     Section 422. Update in renal dialysis composite rate
       The provision would specify that the composite rate payment 
     for renal dialysis service would be increased by 2.4% for 
     2001. The provision would require the Secretary to collect 
     data and develop an end-stage renal disease (ESRD) market 
     basket whereby the Secretary could estimate before the 
     beginning of a year the percentage increase in costs for the 
     mix of labor and non-labor goods and services included in the 
     composite rate. The Secretary would report to Congress on the 
     index together with recommendations on the appropriateness of 
     an annual or periodic update mechanism for dialysis services. 
     The Comptroller General would be required to study the access 
     of beneficiaries to dialysis services. There is a hotel 
     harmless provision for facilities who received exceptions for 
     their 2000 rates. In addition, facilities which did not apply 
     for an exception in 2000 would have the opportunity to apply 
     during the first 6 months of 2001. Exceptions granted under 
     the hold harmless or granted during the extension period, 
     would continue to apply so long as they provide for higher 
     payment rates. The provision would specify that for the 
     period January 1, 2001-March 31, 2001, the applicable 
     composite rate is the rate in effect before enactment of this 
     provision. The rate in effect for the period April 1, 2001-
     December 31, 2001 is the rate established under this section 
     increased by a transitional percentage allowance equal to 
     0.39 percent.
     Section 423. Payment for ambulance services
       The provision would provide for the full inflation update 
     in ambulance payments for 2001. It would also specify that 
     any phase-in of the ambulance fee schedule would provide for 
     full payment of national mileage rates in states where 
     separate mileage payments were not made prior to 
     implementation of the fee schedule. The provision would 
     specify that for the period January 1, 2001-June 30, 2001, 
     the inflation update would be that determined prior to 
     enactment of this provision. For services furnished from July 
     1, 2001-December 31, 2001, the update would be 4.7%. The 
     provision relating to mileage payments would be effective 
     July 1, 2001.
     Section 424. Ambulatory surgical centers
       The provision would delay implementation of proposed 
     regulatory changes to the ambulatory payment classification 
     system, which are based on 1994 cost data, until January 1, 
     2002. At that time, such changes would be phased in over 4 
     years: in the first year the payment amounts would be 25 
     percent of the revised rates and 75 percent of the prior 
     system rates; in the second year payments would be 50 percent 
     of the revised rate and 50 percent of the prior system rates, 
     etc. The provision also requires that the revised system, 
     based on 1999 (or later) cost data, be implemented January 1, 
     2003. (The phase-in of the revised system and 1994 data would 
     end when the system with 1999 or later data was implemented.)
     Section 425. Full updated for durable medical equipment
       The provision would modify updates to payments for durable 
     medical equipment. For 2001, the payments for covered DME 
     would be increased by the full increase in the consumer price 
     index for urban consumers (CPI-U) during the 12-month period 
     ending June 2000. In general, in 2002 and thereafter, the 
     annual update would equal the full increase in the CPI-U for 
     the 12 months ending the previous June. The provision specify 
     that fir the period January 1, 2001, through June 30 2000, 
     the applicable amounts paid for DME are the amounts in effect 
     before enactment of the provision. The amounts in effect for

[[Page H12382]]

     the period July 1, 2001. through December 31, 2001 would be 
     the amounts established under this section increased by a 
     transitional allowance of 3.28%.
     Section 426. Full update for orthotics and prosthetics
       The provision would modify updates to payments for 
     orthotics and prosthetics. In 2000, the rates would be 
     increased by one percent. In 2001, the increase would be 
     equal to the percentage increase in the CPI-U during the 12-
     month period ending with June, 2000. For 2002, payments would 
     be increased by one percent over the prior year's amounts. 
     The provision would specify that for the period January 1, 
     2001, through June 30, 2001, the applicable amounts paid for 
     these items would be the amounts in effect before enactment 
     of this provision. The amounts in effect for the period July 
     1, 2001, through December 31, 2001, would be amounts 
     established under this section increased by a transitional 
     allowance of 2.6%.
     Section 427. Establishment of special payment provisions and 
         requirement for prosthetics and certain custom fabricated 
         orthotic items
       Under the provision, certain prosthetics or custom 
     fabricated orthotics would be covered by Medicare if 
     furnished by a qualified practitioner and fabricated by a 
     qualified practitioner or qualified supplier. The Secretary 
     would be required to establish a list of such items in 
     consultation with experts. Within one year of enactment, the 
     Secretary would be required to promulgate regulations to 
     provide these items, using negotiated rulemaking procedures.
       Not later than 6 months from enactment, the Comptroller 
     General would be required to submit to Congress a report on 
     the Secretary's compliance with the Administrative Procedures 
     Act with regard to HCFA Ruling 96-1; certain impacts of that 
     ruling; the potential for fraud and abuse in provision of 
     prosthetics and orthotics under special payment rules and for 
     custom fabricated items; and the effect on Medicare payments 
     if that ruling were overturned.
     Section 428. Replacement of prosthetic devices and parts
       The provision would authorize Medicare coverage for 
     replacement of artificial limbs, or replacement parts for 
     such devices, if ordered by a physician for specified 
     reasons. Effective for items furnished on or after enactment, 
     coverage would apply to prosthetic items 3 or more years old, 
     and would supersede any 5-year age rules for such item under 
     current law.
     Section 429. Revised part B payment for drugs and 
         bioliogicals and related services
       The provision would require the Comptroller General to 
     study and submit a report to Congress and the Secretary on 
     the reimbursement for drugs and biologicals and for related 
     services under Medicare; the report would include specific 
     recommendations for revised payment methodologies. The 
     Secretary would revise the current payment methodologies for 
     covered drugs and biologicals and related services based on 
     these recommendations; however, total payments under the 
     revised methodologies could not exceed the aggregate payments 
     the Secretary estimates would have been made under the 
     current law. The provision would establish a moratorium on 
     reductions in payment rates, in effect on January 1, 2001, 
     until the Secretary reviewed the GAO report.
     Section 430. Contrast enhanced diagnostic procedures under 
         hospital prospective Payment system
       The provision would require the Secretary to create under 
     the hospital outpatient PPS additional and separate groups of 
     covered services which include procedures that utilize 
     contrast agents and would include contrast agents within the 
     definition of ``drugs'' for purposes of the medicare title. 
     The provision would apply to items and services furnished on 
     or after July 1, 2001.
     Section 431. Qualification for community mental health 
         centers
       The provision would clarify the qualifications for 
     community mental health centers providing partial 
     hospitalization services under Medicare.
     Section 432. Modification of Medicare billing requirements 
         for certain Indian providers
       The provision would authorize hospitals and free-standing 
     ambulatory care clinics of the Indian Health Service or 
     operated by a tribe or tribal organization to bill Medicare 
     Part B for certain services furnished at the direction of the 
     hospital or clinic. Services covered under the provision 
     are those furnished under the physician fee schedule, and 
     services furnished by a practitioner or therapist under a 
     fee schedule. The provision would be effective July 1, 
     2001.
     Section 433. GAO study on coverage of surgical first 
         assisting services of certified registered nurse first 
         assistants
       The provision would require the Comptroller General to 
     conduct a study on the effect on both the program and 
     beneficiaries of covering surgical first assisting services 
     of certified registered nurse first assistants.
     Section 434. MedPAC study and report on Medicare 
         reimbursement for services provided by certain providers
       The provision would require MedPAC to conduct a study on 
     the appropriateness of current payment rates for services 
     provided by a certified nurse midwife, physician assistant, 
     nurse practitioner, and clinical nurse specialist, including 
     specifically for orthopedic physician assistants.
     Section 435. MedPAC study and report on Medicare coverage of 
         services provided by certain non-physician providers
       The provision would require MedPAC to conduct a study to 
     determine the appropriateness of Medicare coverage of the 
     services provided by a surgical technologist, marriage 
     counselor, pastoral care counselor, and licensed professional 
     counselor of mental health.
     Section 436. GAO study and report on the costs of emergency 
         and medical transportation services
       The provision would require the Comptroller General to 
     conduct a study of the costs of providing emergency and 
     medical transportation services across the range of acuity 
     levels of conditions for which such transportation services 
     are provided.
     Section 437. GAO studies and reports on Medicare payments
       The provision would require the Comptroller General to 
     conduct a study on the post-payment audit process for 
     physicians services. The study would include the proper level 
     of resources HCFA should devote to educating physicians 
     regarding coding and billing, documentation requirements, and 
     calculation of overpayments. The Comptroller General would 
     also be required to conduct a study of the aggregate effects 
     of regulatory, audit, oversight and paperwork burdens on 
     physicians and other health care providers participating in 
     Medicare.
     Section 438. MedPAC study on access to outpatient plan 
         management services
       The provision would require MedPAC to conduct a study on 
     the barriers to coverage and payment for outpatient 
     intervention pain medicine procedures under Medicare.

              TITLE V--PROVISION RELATING TO PARTS A AND B


                    subtitle a--home health services

     Section 501. 1-Year additional delay in application of 15 
         percent reduction on payment limits of home health 
         services
       The provision would require that the aggregate amount of 
     Medicare payments to home health agencies in the second year 
     of the PPS (FY 2002) shall be the aggregate payments in the 
     first year of the PPS, updated by the market basket index 
     (MBI) increase minus 1.1 percentage points. The 15 percent 
     reduction to aggregate PPS amounts, which, under current law, 
     would go into effect October 1, 2001, would be delayed until 
     October 1, 2002.
       The Comptroller General (rather than the Secretary) would 
     be required to submit, by April 1, 2002, a report analyzing 
     the need for the 15 percent or other reduction.
       If the Secretary determines that updates to the PPS system 
     for a previous fiscal year (or estimates of such adjustments 
     for a future fiscal year) did (or are likely to) result in a 
     change in aggregate payments due to changes in coding or 
     classification of beneficiaries' service needs that do not 
     reflect real changes in case mix, effective for home health 
     episodes concluding on or after October 1, 2001, the 
     Secretary may adjust PPS amounts to eliminate the effect of 
     such coding or classification changes.
     Section 502. Restoration of full home health market basket 
         update for home health services for fiscal year 2001
       The provision would modify the home health PPS updates. 
     During the period October 1, 2000, through March 31, 2001, 
     the rates promulgated in the home health PPS regulations on 
     July 3, 2000, would apply for 60-day episodes of care (or 
     visits) ending in that period. For the period April 1, 2001, 
     through September 31, 2001, those rates would be increased by 
     2.2 percent for 60-day episodes (or visits) ending in that 
     time period. This increase would be included in determining 
     subsequent payment amounts.
     Section 503. Temporary two-month periodic interim payment
       The provision would provide for a one-time payment for 
     certain home health agencies that were receiving periodic 
     interim payments under current law. Home health agencies that 
     were receiving such payments as of September 30, 2000, 
     receive a one-time payment equal to four times the last 2-
     week payment the agency received before implementation of the 
     home health PPS on October 1, 2000. The amounts would be 
     included in the agency's last settled cost report before 
     implementation of the PPS.
     Section 504. Use of telehealth in delivery of home health 
         services
       The provision would clarify that the telecommunications 
     provisions should not be construed as preventing a home 
     health agency from providing a service, for which payment is 
     made under the prospective payment system, via a 
     telecommunications system, provided that the services do not 
     substitute for ``in-person'' home health services ordered by 
     a physician as part of a plan of care or are not considered a 
     home health visit for purposes of eligibility or payment.
     Section 505. Study on costs to home health agencies of 
         purchasing nonroutine medical supplies
       The provision would require that, not later than August 15, 
     2001, the Comptroller General shall submit to Congress a 
     report regarding the variation in prices home health agencies 
     pay for nonroutine supplies, the volume of supplies used, and 
     what effect the variations have on the provision of services.

[[Page H12383]]

     The Secretary would be required to make recommendations on 
     whether Medicare payment for those supplies should be made 
     separately from the home health PPS.
     Section 506. Treatment of branch offices; GAO study on 
         supervision of home health care provided in isolated 
         rural areas
       The provision would clarify that neither time nor distance 
     between a home health agency parent office and a branch 
     office shall be the sole determinant of a home health 
     agency's branch office status. The Secretary would be 
     authorized to include forms of technology in determining 
     ``supervision'' for purposes of determining a home health 
     agency's branch office status.
       Not later than January 1, 2002, the Comptroller General 
     would be required to submit to Congress a report regarding 
     the adequacy of supervision and quality of home health 
     services provided by home health agency branch offices and 
     submits in isolated rural areas and to make recommendations 
     on whether national standards for supervision would be 
     appropriate in assuring quality.
     Section 507. Clarification of the homebound benefit
       The provision clarifies that the need for adult day care 
     for a patient's plan of treatment does not preclude 
     appropriate coverage for home health care for other medical 
     conditions. The provision also clarifies the ability of 
     homebound beneficiaries to attend religious services without 
     being disqualified from receiving home health benefits.
     Section 508. Temporary increase for home health services 
         furnished in a rural area
       For home health services furnished in certain rural areas 
     during the 2-year period beginning April 1, 2001, Medicare 
     payments are increased by 10%, without regard to budget 
     neutrality for the overall home health prospective payment 
     system. This temporary increase would not be included in 
     determining subsequent payments.


             subtitle b--direct graduate medical education

     Section 511. Increase in floor for direct graduate medical 
         education payments
       A hospital's approved per resident amount for cost 
     reporting periods beginning during FY 2002 would not be less 
     than 85% of the locality adjusted national average per 
     resident amount.
     Section 512. Change in distribution formula for 
         Medicare+Choice related nursing and allied health 
         education costs
       A hospital would receive nursing and allied health payments 
     for Medicare managed care enrollees based on its per day cost 
     of allied and nursing health programs and number of days 
     attributed to Medicare enrollees in comparison to that in all 
     other hospitals. The provision would be effective for 
     portions of cost reporting periods occurring on or after 
     January 1, 2001.


      subtitle c--changes in medicare coverage and appeals process

     Section 521. Revisions to Medicare appeals process
       The provision would modify the Medicare appeals process. 
     Generally, initial determinations by the Secretary would be 
     concluded no later than 45 days from the date the Secretary 
     received a claim for benefits. Any individual dissatisfied 
     with the initial determination would be entitled to a 
     redetermination by the carrier or fiscal intermediary would 
     made the initial determination. Such redetermination would be 
     required to be completed within 30 days of a beneficiary's 
     request. Beneficiaries could appeal the outcome of a 
     redetermination by seeking a reconsideration. Generally, a 
     request for a reconsideration must be initiated no later than 
     180 days after the date the individual receives the notice of 
     an adverse redetermination. In addition, if contested amounts 
     are greater than $100, an individual would be able to appeal 
     an adverse reconsideration decision by requesting a hearing 
     by the Secretary (for a hearing by an administrative law 
     judge, then in certain circumstances, for a hearing before 
     the Department of Appeals Board). If the dispute is not 
     satisfactorily resolved through this administrative process, 
     and if contested amounts are greater than $1,000, the 
     individual would be able to request judicial review of the 
     Secretary's final decision. Aggregation of claims to meet 
     these thresholds would be permitted.
       An expedited determination would be available for a 
     beneficiary who receive notice: 1) that a provider plans to 
     terminate services and a physician certifies that failure to 
     continue the provisions of the services is likely to place 
     the beneficiary's health at risk; or 2) that the provider 
     plans to discharge the beneficiary.
       The Secretary would enter into 3-year contracts with at 
     least 12 qualified independent contractors (QICs) to conduct 
     reconsiderations. A QIC would promptly notify beneficiaries 
     and Medicare claims processing contractors of its 
     determinations. A beneficiary could appeal the decision of a 
     QIC to an ALJ. In cases where the ALJ decision is not 
     rendered within the 90-day deadline, the appealing party 
     would be able to request a DAB hearing.
       The Secretary would perform outreach activities to inform 
     beneficiaries, providers, and suppliers of their appeal 
     rights and procedures. The Secretary would submit to Congress 
     an annual report including information on the number of 
     appeals for the previous year, identifying issues that 
     require administrative or legislative actions, and 
     including recommendations for change as necessary. The 
     report would also contain an analysis of the consistency 
     of the QIC determinations as well as the cause for any 
     identified inconsistencies.
     Section 522. Revisions to Medicare coverage process
       The provision would clarify when and under what 
     circumstances Medicare coverage policy could be challenged. 
     An aggrieved party could file a complaint concerning a 
     national coverage decision. Such complaint would be reviewed 
     by the Department Appeals Board (DAB) of HHS. The provision 
     would also permit an aggrieved party to file a complaint 
     concerning a local coverage determination. In this case, the 
     determination would be reviewed by an administrative law 
     judge. If unsatisfied, complainants could subsequently seek 
     review of such a local policy by the DAB. In both cases, a 
     DAB decision would constitute final HHS action, and would be 
     subject to judicial review. The Secretary would be required 
     to implement DAB decisions and ALJ decisions (in the case of 
     a local coverage policy) within 30 days. The provision would 
     also permit an affected party to submit a request to the 
     Secretary to issue a national coverage or noncoverage 
     determination if one has not been issued. The Secretary would 
     have 90 days to respond. HHS would be required to prepare an 
     annual report on national coverage determinations.


            subtitle d--improving access to new technologies

     Section 531. Reimbursement improvements for new clinical 
         laboratory tests and durable medical equipment
       The provision would specify that the national limitation 
     amount for a new clinical laboratory test would equal 100% of 
     the national median for such test. The Secretary would be 
     required to establish procedures that permit public 
     consultation for coding and payment determinations for new 
     clinical diagnostic laboratory tests and new durable medical 
     equipment. The Secretary would be required to report to 
     Congress on specific procedures used to adjust payments for 
     advanced technologies; the report would include 
     recommendations for legislative changes needed to assure fair 
     and appropriate payments.
     Section 532. Retention of HCPCS level III codes
       The provision would extend the time for the use of local 
     codes (known as HCPCS level III codes) through December 21, 
     2003; the Secretary would be required to make the codes 
     available to the public.
     Section 533. Recognition of new medical technologies under 
         Medicare inpatient hospital PPS
       The Secretary would be required to submit a report to 
     Congress no later than April 1, 2001, on potential methods 
     for more rapidly incorporating new medical services and 
     technologies used in the inpatient setting in the clinical 
     coding system used with respect to payment for inpatient 
     services. The Secretary would be required to identify the 
     preferred methods for expediting these coding modifications 
     in her report, and to implement such method by October 1, 
     2001. Additional hospital payments could be made by means of 
     a new technology group (DRG), an add-on payment, payment 
     adjustment or other mechanism. However, separate fee 
     schedules for additional new technology payments would not be 
     permitted. The Secretary would implement the new mechanism on 
     a budget neutral basis. The total amount of projected 
     additional payments under the mechanism would be limited to 
     an amount not greater than the Secretary's annual estimation 
     of the costs attributable to the introduction of new 
     technology in the hospital sector as a whole (as estimated 
     for purposes of the annual hospital update calculation).


                      subtitle e--other provisions

     Section 541. Increase in reimbursement for bad debt
       Effective beginning with cost reports starting in FY2001, 
     the provision would increase the percentage of the reasonable 
     costs associated with beneficiaries' bad debt in hospitals 
     that Medicare would reimburse to 70%.
     Section 542. Treatment of certain physician pathology 
         services under Medicare
       The provision would permit independent laboratories, under 
     a grandfather arrangement to continue, for a 2-year period 
     (2001-2002), direct billing for the technical component of 
     pathology services provided to hospital inpatients and 
     hospital outpatients. The Comptroller General would be 
     required to conduct a study of the effect of these provisions 
     on hospitals and laboratories and access of fee-for-service 
     beneficiaries to the technical component of physician 
     pathology services. The report would include recommendations 
     on whether the provisions should continue after the 2-year 
     period for either (or both) inpatient and outpatient hospital 
     services and whether the provision should be extended to 
     other hospitals.
     Section 543. Extension of advisory opinion authority
       The Office of the Inspector General's authority to issue 
     advisory opinions to outside parties who request guidance on 
     the applicability of the anti-kickback statute, safe harbor 
     provisions and other OIG health care fraud and abuse 
     sanctions would be made permanent.

[[Page H12384]]

     Section 544. Change in annual MedPAC reporting
       The provision would delay the reporting date for the MedPAC 
     report on issues affecting the Medicare program by 15 days to 
     June 15. The provision would also require record votes on 
     recommendations contained both in this report and the March 
     report on payment policies.
     Section 545. Development of patient assessment instruments
       The provision would require the Secretary to report to the 
     Congress on the development of standard instruments for the 
     assessment of the health and functional status of patients 
     and make recommendations on the use of such standard 
     instruments for payment purposes.
     Section 546. GAO report on impact of the Emergency Medical 
         Treatment and Active Labor Act (EMTALA) on hospital 
         emergency departments
       GAO would be required to evaluate the impact of the 
     Emergency Medical Treatment and Active Labor Act on 
     hospitals, emergency physicians, and on-call physicians 
     covering emergency departments and to submit a report to 
     Congress by May 1, 2001.
     Section 547. Clarification of application of temporary 
         payment increases for 2001
       The special increases and adjustments of the acute hospital 
     payment update, the indirect medical education adjustment, 
     and the disproportionate share hospital adjustment that are 
     in effect between April and October 2001 do not apply to 
     discharges after FY 2001 and are not included in determining 
     subsequent payments.
       Special update payments under the skilled nursing facility 
     prospective payment system between April and October 2001 
     would not apply to SNF services furnished after that period 
     and would not be included when determining payments for the 
     subsequent period.
       Special market basket update payments under the home health 
     prospective payment system between April and October 2001 
     would not be included in determining subsequent payments. 
     Also, temporary payments to certain rural home health 
     agencies from April 1, 2001, through September 30, 2002, 
     would not be included in determining subsequent payments.

 TITLE VI--PROVISIONS RELATING TO PART C (MEDICARE+CHOICE PROGRAM) AND 
                 OTHER MEDICARE MANAGED CARE PROVISIONS


              subtitle a--medicare+choice payment reforms

     Section 601. Increase in minimum payment amount
       The provision would set the minimum payment amount for aged 
     enrollees within the 50 states and the District of Columbia 
     in a Metropolitan Statistical Area with a population of more 
     than 250,000 at $525 in 2001. For all other areas within the 
     50 States and the District of Columbia, the minimum would be 
     $475. For any area outside the 50 States and the District of 
     Columbia, the $525 and $475 minimum amounts would also be 
     applied, except that the 2001 minimum payment amount could 
     not exceed 120% of the 2000 minimum payment amount. This 
     increase would go into effect March 1, 2001.
     Section 602. Increase in minimum percentage increase
       This provision would apply a 3% minimum update in 2001 and 
     return to the current law minimum update of 2% thereafter. 
     This increase would go into effect March 1, 2001.
     Section 603. Phase in of risk adjustment
       The current risk adjustment methodology (in which 10% of 
     payments would be based on risk-adjusted inpatient data built 
     on the 15 principal inpatient diagnostic cost groups (PIP-
     DCGs) and 90% would be adjusted solely using the older 
     demographic method) would continue through 2003. Beginning in 
     2004, the risk adjustment would be based on data from 
     inpatient hospital and ambulatory settings and the risk 
     adjustment would be phased in at 30% for 2004, 50% for 2005, 
     75% for 2006, and 100% for 2007 and subsequent years.
     Section 604. Transition to revised Medicare+Choice payment 
         rates
       Within 2 weeks after the date of enactment of the Act, the 
     Secretary must announce revised M+C capitation rates for 
     2001, due to changes from this Act. Plans that previously 
     provided notice of their intention to terminate contracts or 
     reduce their service area for 2001 would have 2 weeks after 
     announcement of the revised rates to rescind their notice and 
     submit ACR information. Further, any M+C organization that 
     would receive higher capitation payments as a result of this 
     Act must submit revised ACR information within 2 weeks after 
     announcement of the revised rates. Plans may only reduce 
     premiums, reduce cost sharing, enhance benefits, or utilize 
     stabilization funds. Any regulations that limit stabilization 
     fund amounts would be waived, with respect to ACR submissions 
     under this section of the bill. Notwithstanding the issuance 
     of revised rates, M+C organizations would continue to be paid 
     on a fee-for-service basis for costs associated with new 
     national coverage determinations that are made mid-year.
     Section 605. Revision of payment rates for ESRD patients 
         enrolled in Medicare+Choice plans
       This provision would require that the Secretary increase 
     the M+C payment rates for enrollees with ESRD. The revised 
     rates would reflect the demonstration rate (including the 
     risk-adjustment methodology) of social health maintenance 
     organizations' ESRD capitation demonstrations. The revised 
     rates would include adjustments for factors such as renal 
     treatment modality, age, and underlying cause of the disease. 
     These revised rates would be effective beginning in January 
     2002, and the Secretary of HHS would be required to publish 
     the adjustments in final form by July 1, 2001.
     Section 606. Permitting premium reductions as additional 
         benefits under Medicare+Choice plans
       This provision would permit M+C plans to offer reduced 
     Medicare Part B premiums to their enrollees as part of 
     providing any required additional benefits or reduced cost-
     sharing. An M+C organization could elect a reduction in its 
     M+C payment up to 125% of the annual Part B premium. However, 
     only 80% of this amount could be used to reduce an enrollee's 
     actual Part B premium. This would have the effect of 
     returning up to 100% of the beneficiary's Part B premium. The 
     reduction would apply uniformly to each enrollee of the M+C 
     plan. Plans would include information about Part B premium 
     reductions as part of the required information that is 
     provided to enrollees for comparing plan options. This 
     provision would be effective beginning in 2003.
     Section 607. Full implementation of risk adjustment for 
         congestive heart failure enrollees for 2001
       This provision would fully implement risk adjustment based 
     on inpatient hospital diagnoses for an individual who had a 
     qualifying congestive heart failure inpatient diagnosis 
     between July 1, 1999 and June 30, 2000, if that individual 
     was enrolled in a coordinated care plan offered on January 1, 
     2001. This would apply for only 1 year, beginning on January 
     1, 2001. This payment amount would be excluded from the 
     determination of the budget neutrality factor.
     Section 608. Expansion of application of Medicare+Choice new 
         entry bonus
       This provision would expand the application of the new 
     entry bonus for M+C plans to include areas for which 
     notification had been provided, as of October 3, 2000, that 
     no plans would be available January 1, 2001.
     Section 609. Report on inclusion of certain costs of the 
         Department of Veterans Affairs and Military Facility 
         Services in calculating Medicare+Choice payment rates
       The Secretary shall report to Congress by January 1, 2003, 
     on a method to phase-in the costs of military facility 
     services furnished by the Department of Veterans Affairs or 
     the Department of Defense to Medicare-eligible beneficiaries 
     in the calculation of an area's M+C capitation payment. This 
     report would include, on a county-by-county basis: the actual 
     or estimated costs of such services to Medicare-eligible 
     beneficiaries; the change in M+C capitation payment rates if 
     such costs were included in the calculation of payment rates; 
     one or more proposals for the implementation of payment 
     adjustments to M+C plans in counties where the payment rate 
     has been affected due to failure to account for the cost of 
     such services; and a system to ensure that when a M+C 
     enrollee receives covered services through a facility of 
     these Departments, there is an appropriate payment recovery 
     to the Medicare program.


               Subtitle B--Other Medicare+Choice Reforms

     Section 611. Payments of additional amounts for new benefits 
         covered during a contract term
       The provision would require payment adjustments to M+C 
     plans if a legislative change resulted in significant 
     increased costs, similar to the current law requirements for 
     adjusting payments due to significant increased costs 
     resulting from National Coverage Determination (NCDs). In 
     addition, this provision would require that cost projections 
     and payment adjustments be based on actuarial estimates 
     provided by the Chief Actuary of the Health Care Financing 
     Administration.
     Section 612. Restriction on implementation of significant new 
         regulatory requirements mid-year
       The provision would preclude the Secretary from 
     implementing, other than at the beginning of a calendar year, 
     regulations that impose new, significant regulatory 
     requirements on M+C organizations.
     Section 613. Timely approval of marketing material that 
         follows model marketing language
       The provision would require the Secretary to make 
     decisions, within 10 days, approving or modifying marketing 
     material used by M+C organizations, provided that the 
     organization uses model language specified by the Secretary. 
     This provision would apply to marketing material submitted on 
     or after January 1, 2001.
     Section 614. Avoiding duplicative regulation
       This provision would further stipulate when Medicare law 
     preempts State law or regulation from applying to M+C plans, 
     by specifying that the term benefit requirements includes 
     cost-sharing requirements. Second, the provision would 
     stipulate that State laws and regulations affecting marketing 
     materials, and summaries and schedules of benefits regarding 
     an M+C plan, would also be preempted by Medicare law.
     Section 615. Election of uniform local coverage policy for 
         Medicare+Choice plan covering multiple localities
       An M+C organization offering a plan in an area with more 
     than one local coverage policy would be able to elect to have 
     the local coverage policy for the part of the area that

[[Page H12385]]

     is most beneficial to M+C enrollees (as identified by the 
     Secretary) apply to all M+C enrollees enrolled in the plan.
     Section 616. Eliminating health disparities in 
         Medicare+Choice Program
       This provision would expand the M+C quality assurance 
     programs for M+C plans to include a separate focus on racial 
     and ethnic minorities. The Secretary would also be required 
     to report to Congress how the quality assurance programs 
     focus on racial and ethnic minorities, within 2 years after 
     enactment and biennially thereafter.
     Section 617. Medicare+Choice Program compatibility with 
         employer or union group health plans
       In order to make the M+C program compatible with employer 
     or union group health plans, this provision would allow the 
     Secretary to waive or modify requirements that hinder the 
     design of, offering of, or enrollment in certain M+C plans. 
     Plans included in the category are M+C plans under contract 
     between M+C organizations and employers, labor organizations, 
     or trustees of a fund established by employers and/or labor 
     organizations.
     Section 618. Special Medigap enrollment anti-discrimination 
         provision for certain beneficiaries
       This provision would extend the period for Medigap 
     enrollment for certain M+C enrollees affected by termination 
     of coverage. For individuals enrolled in an M+C plan during a 
     12-month trial period, their trial period would begin again 
     if they re-enrolled in another M+C plan because of an 
     involuntary termination. During this new trial period, they 
     would retain their rights to enroll in a Medigap policy; 
     however, the total time for a trial period could not exceed 2 
     years from the time they first enrolled in an M+C plan.
     Section 619. Restoring effective date of elections and 
         changes of elections of Medicare+Choice plans
       This provision would allow individuals who enroll in an M+C 
     plan after the 10th day of the month to receive coverage 
     beginning on the first day of the next calendar month, 
     effective June 1, 2001.
     Section 620. Permitting ESRD beneficiaries to enroll in 
         another Medicare+Choice plan if the plan in which they 
         are enrolled is terminated
       This provision would permit ESRD beneficiaries to enroll in 
     another M+C plan if they lost coverage when their plan 
     terminated its contract or reduced its service area. This 
     provision would also be retroactive, to include individuals 
     whose enrollment in an M+C plan was terminated involuntarily 
     on or after December 31, 1998.
     Section 621. Providing Choice for skilled nursing facility 
         services under the Medicare+Choice Program
       Effective for M+C contracts entered into or renewed on or 
     after the date of enactment, the provision would require an 
     M+C plan to cover post-hospitalization skilled nursing care 
     through an enrollee's ``home skilled nursing facility'' if 
     the plan has a contract with the facility or if the home 
     facility agrees to accept substantially similar payment under 
     the same terms and conditions that apply to similarly 
     situated SNFs that are under contract with the plan. A ``home 
     skilled nursing facility'' is defined as (a) one in which the 
     enrollee resided at the time of the hospital admission that 
     triggered eligibility for SNF care upon discharge, or (b) is 
     the facility that is providing such services through the 
     continuing care retirement community in which the enrollee 
     resided at the time of hospital admission, or (c) is the 
     facility in which the spouse of the enrollee is residing at 
     the time of the enrollee's hospital discharge. The 
     beneficiary would be required to receive coverage for SNF 
     care at the home facility that is no less favorable than he 
     or she would receive otherwise in another SNF that has a 
     contract with the plan.
       Home skilled nursing facilities are permitted to refuse to 
     accept Medicare+Choice enrollees or to impose conditions on 
     their acceptance of such an enrollee.
       The provision would require the Medicare Payment Advisory 
     Commission (MedPAC) to analyze and, within 2 years of 
     enactment, report to Congress on the effects of this 
     provision on the scope of benefits, administrative and other 
     costs incurred by M+C organizations, and the contractual 
     relationships between those plans and SNFs.
     Section 622. Providing for accountability of Medicare+Choice 
         plans
       The provision would mandate review of ACR submissions by 
     the HCFA Chief Actuary with respect to submissions for ACRs 
     filed on or after May 1, 2001.
     Section 623. Increased civil money penalties for 
         Medicare+Choice organizations that terminate contracts 
         mid-year
       The provision would increase to $100,000 (or such higher 
     level as the Secretary of Health and Human Services) the 
     maximum civil money penalty that could be imposed for a 
     Medicare+Choice organization that terminates its 
     Medicare+Choice contract, other than at an appropriate time 
     after providing appropriate notice.


                 SUBTITLE C--OTHER MANAGED CARE REFORMS

     Section 631. 1-Year extension of social health maintenance 
         organization (SHMO) demonstration project
       The provision would extend SHMO waivers until 30 months 
     after the Secretary submits a report with a plan for 
     integration and transition of SHMOs into an option under the 
     M+C program. This 30-month extension would supersede the 18-
     month extension in BBRA 99.
     Section 632. Revised terms and conditions for extension of 
         Medicare community nursing organization (CNO) 
         demonstration project
       Effective as if enacted with BBRA99, the provision would 
     eliminate the requirement that CNO capitated payments be 
     reduced to ensure budget neutrality. Through December 2001, 
     the projects would operate under the same terms and 
     conditions applicable during 1999, but with modification to 
     the capitation rates. From October 1, 2000, through December 
     31, 2000, the capitation rates would be adjusted for 
     inflation since 1999 and for changes in service packages, but 
     reduced by 10 percent for in projects in Arizona, Minnesota, 
     and Illinois and by 15 percent in New York. In 2001, the 
     rates would be determined by actuarially adjusting the rates 
     in the prior period for inflation, utilization, and changes 
     to the service package. Adjustments would be made to case 
     management fees for certain frail enrollees, and requirements 
     would be imposed to create greater uniformity in clinical 
     features among participating sites and to improve quality and 
     enrollee satisfaction.
       By July 1, 2001, the Secretary would be required to submit 
     to the House Committees on Ways and Means and Commerce and 
     the Senate Committee on Finance a report evaluating the 
     projects for the period July 1997 through December 1999 and 
     for the extension period after September 30, 2000. A final 
     report would be required by July 1, 2002. The provision would 
     require certain methods to be used to compare spending per 
     beneficiary under the projects.
     Section 633. Extension of Medicare municipal health services 
         demonstration projects
       The provision would extend the Medicare municipal health 
     services demonstration projects for 2 additional years, 
     through December 31, 2004.
     Section 634. Service area expansion for Medicare cost 
         contracts during transition period
       This provision would allow service area expansion for 
     Medicare cost contracts, if the request was submitted to the 
     Secretary before September 1, 2003.

                          TITLE VII--MEDICAID

     Section 701. DSH payments
       (a) Modifications to DSH allotments
       For FY2001, the provision would set each state's DSH 
     allotment equal to its allotment for FY2000 increased by the 
     percentage change in the consumer price index for that year, 
     subject to a ceiling that would be equal to 12% of that 
     state's total medical assistance payments in that year.
       For FY2002, the provision would set each state's DSH 
     allotment equal to its allotment for 2001 as determined 
     above, increased by the percentage change in the consumer 
     price index for FY2001, subject to a ceiling equal to 12% of 
     that state's total medical assistance payments in that year.
       For extremely low DSH states, states whose FY1999 federal 
     and state DSH expenditures (as reported to HCFA on August 31, 
     2000) are greater than zero but less than one percent of the 
     state's total medical assistance expenditures during that 
     fiscal year, the DSH allotments for FY2001 would be equal to 
     1 percent of the state's total amount of expenditures under 
     their plan for such assistance during that fiscal year. For 
     subsequent fiscal years, the allotments for extremely low DSH 
     states would be equal to their allotment for the previous 
     year, increased by the percentage change in the consumer 
     price index for the previous year, subject to a ceiling of 
     12% of that state's total medical assistance payments in that 
     year.
       Effective on the date that the final regulation for 
     Medicaid upper payment limits is published in the Federal 
     Register.
       (b) Assuring identification of Medicaid managed care 
           patients
       Effective for Medicaid managed care contracts in effect on 
     January 1, 2000, the provision would clarify that Medicaid 
     enrollees of managed care organizations and primary care case 
     management organizations are to be included for the purposes 
     of calculating the Medicaid impatient utilization rate and 
     the low-income utilization rate. Also effective January 1, 
     2001, states must include in their MCO contracts information 
     that allows the state to determine which hospital services 
     are provided to Medicaid beneficiaries through managed care, 
     and would also require states to include a sponsorship code 
     for the managed care entity on the Medicaid beneficiary's 
     identification card.
       (c) Application of Medicaid DSH transition rule to public 
           hospitals in all states
       The provision would revise BBA97, as modified by BBRA 99, 
     so that the 175% hospital-specific DSH limit would apply to 
     qualifying public hospitals in all states. (The limit 
     currently applies only to certain public hospitals in 
     California.) The limit, allowing DSH payments of up to 175% 
     of each hospital's cost of unreimbursed care, would apply for 
     two state fiscal years beginning on the first day of the 
     state fiscal year that begins after September 30, 2002, and 
     ends on the last day of the succeeding state fiscal year. 
     Hospitals that would qualify for the higher hospital-specific 
     limit would be those owned or operated by a state and meet 
     the minimum federal requirements for disproportionate share 
     hospitals. The permanent ceiling for California would not be 
     affected.
       For states operating under waivers approved under section 
     1115 of the Social Security Act, increase payments for public 
     hospitals under this provision would be included

[[Page H12386]]

     in the baseline expenditure limit for the purposes of 
     determining budget neutrality.
       (d) Assistance for certain public hospitals
       The provision would provide additional funds for certain 
     public hospitals that are: owned or operated by a state (or 
     by an instrumentality or unit of government within a state); 
     are not receiving DSH payments as of October 1, 2000; and 
     have a lot-income utilization rate in excess of 65% as of the 
     same date. Funds provided under this section to states with 
     eligible hospitals are in addition to DSH allotments. The 
     total assistance under this section for all states cannot 
     exceed the following amounts: $15 million for FY2002; $176 
     million for 2003; $269 million for 2004; $330 million for 
     2005 and for FY 2006 and each fiscal year thereunder, $375 
     million.
       (e) DSH payment accountability standards
       The provision would require the Secretary to implement 
     accountability standards to ensure that DSH payments are used 
     to reimburse States and hospitals that are eligible for such 
     payments and are otherwise in accordance with Medicaid 
     statutory requirements.
     Section 702. New prospective payment system for Federally-
         qualified health centers and rural health clinics
       The provision would create a new Medicaid prospective 
     payment system for federally qualified health centers (FQHCs) 
     and rural health centers (RHCs) beginning in January of 
     FY2001. Existing FQHCs and RHCs would be paid per visit 
     payments equal to 100% of the average costs incurred during 
     1999 and 2000 adjusted to take into account any increase or 
     decrease in the scope of services furnished. For entities 
     first qualifying as FQHCs or RHCs after 2000, the year visit 
     payments would begin in the first year that the center or 
     clinic attains qualification and would be based on 100% of 
     the costs incurred during that year based on the rates 
     established for similar centers or clinics with similar 
     caseloads in the same or adjacent geographic area. In the 
     absence of such similar centers or clinics, the methodology 
     would be based on that used for developing rates for 
     established FQHCs or RHCs or such methodology or reasonable 
     specifications as established by the Secretary. For each 
     fiscal year thereafter, per visit payments for all FQHCs and 
     RHCs would be equal to amounts for the preceding fiscal year 
     increased by the percentage increase in the Medicare Economic 
     Index applicable to primary care services for that fiscal 
     year, and adjusted for any increase or decrease in the scope 
     of Services furnished during the fiscal year. In managed care 
     contracts, States must make supplemental payments to the 
     center or clinic that would be equal to the difference 
     between contracted amounts and the cost-based amounts. Those 
     payments would be paid on a schedule mutually agreed to by 
     the State and the FQHC or RHC. Alternative payment methods 
     would be permitted only when payments are at least equal to 
     amounts otherwise provided.
       The provision would also direct the Comptroller General to 
     provide for a study on how to rebase or refine cost payment 
     methods for the services of FQHCs and RHCs. The report would 
     be due to Congress no later than 4 years after the date of 
     enactment.
     Section 703. Streamlined approval of continued state-wide 
         1115 Medicaid waivers
       The provision would define the process for submitting 
     requests for and receiving extensions of Medicaid 
     demonstration waivers authorized under Section 1115 of the 
     Social Security Act that have already received initial 3-year 
     extensions. It would require each state requesting such an 
     extension to submit an application at least 120 days prior to 
     the expiration date of the existing extension to submit an 
     application at least 120 days prior to the expiration date of 
     the existing waiver. No later than 45 days after the 
     Secretary receives such application, the Secretary would be 
     required to notify the State if she intends to review the 
     existing terms and conditions of the project and would inform 
     the State of proposed changes in the terms and conditions of 
     the waiver. If the Secretary fails to provide such 
     notification, the request would be deemed approved. During 
     the 30-day period beginning after the Secretary provides the 
     proposed terms and conditions to the state, those terms and 
     conditions would be negotiated. No later than 120 days after 
     the date that the request for extension was submitted (or 
     such later date as agreed to by the chief executive officer 
     of the State) the Secretary would be required to approve the 
     application subject to the agreed upon terms and conditions 
     or, in the absence of an agreement, such terms and conditions 
     that are determined by the Secretary to be reasonably 
     consistent with the overall objective of the waiver, or 
     disapprove the application. If the waiver is not approved or 
     disapproved during this period, the request would be deemed 
     approved in the terms and conditions as have been agreed to 
     (if any) by the Secretary and the State. Approvals would be 
     for periods not to exceed 3 year and would be subject to the 
     final reporting and evaluation requirements in current law.
     Section 704. Medicaid county-organized health systems
       The provision would allow the current exemption for certain 
     Health Insuring Organizations (HIOs) from certain Medicaid 
     HMO contracting requirements to apply as long as no more than 
     14% of all Medicaid beneficiaries in the state are enrolled 
     in those HIOs. This provision would be effective as if 
     included in the enactment of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985.
     Section 705. Deadline for issuance of final regulation 
         relating to Medicaid upper payment limits
       The provision would require the Secretary to issue final 
     regulations governing upper payment limits (UPLs) for 
     inpatient and outpatient services provided by certain types 
     of facilities no later than December 31, 2000. It would also 
     require that the final regulation establish a separate UPL 
     for non-state-owned or operated government facilities based 
     on a proposed rule announced in October, 2000.
       The proposed rule would specify two transition periods for 
     states with payment arrangements that are noncompliant, one 
     for states with such arrangements effective on or after 
     October 1, 1999 and the other for those states with 
     arrangements that were effective before that date. The 
     starting point of the phase-out of existing payment 
     arrangements, the percentage reduction in payments each year, 
     and the overall length of time permitted for full phase-out 
     would vary for the two transition periods.
       The provision also requires the final regulation to 
     stipulate a third set of rules governing the transition 
     period for certain states. This additional set of rules would 
     apply to states with payment arrangements approved or in 
     effect on or before October 1, 1992, or under which claims 
     for federal matching were paid on or before that date, and 
     for which such payments exceed the UPLs established under the 
     final regulation. For these states, a 6-year transition 
     period would apply, beginning with the period that begins on 
     the first state fiscal year that starts after September 30, 
     2002 and ends on September 30, 2008. For each year during the 
     transition period, applicable states must reduce excess 
     payments by 15%. Full compliance with final regulations is 
     required by October 1, 2008.
     Section 706. Alaska FMAP
       The provision would change the formula for calculating the 
     state percentage and thus the federal matching percentage for 
     Alaska for fiscal years 2001 through 2005. The state 
     percentage for Alaska would be calculated by using an 
     adjusted per capita income calculation instead of the state-
     wide average per capita income calculation generally used. 
     The adjusted per capita income for Alaska would be calculated 
     as the three year average per capita income for the state 
     divided by 1.05.
     Section 707. 1-Year extension of welfare-to-work transition
       This provision extends by 1 year the sunset on transitional 
     medical assistance for families no longer eligible for 
     welfare from September 30, 2001 to September 30, 2002.
     Section 708. Additional entities qualified to determine 
         Medicaid presumptive eligibility for low-income children
       Under Medicaid presumptive eligibility rules, States are 
     allowed to temporarily enroll children whose family income 
     appears to be below Medicaid income standards, until a final 
     formal determination of eligibility is made.
       The provision adds several entities to the list of those 
     qualified to make Medicaid presumptive eligibility 
     determinations for children. These new entities include 
     agencies that determine eligibility for Medicaid or the State 
     Children's Health Insurance program; or certain elementary 
     and secondary schools, including those operated or supported 
     by the Bureau of Indian Affairs.
     Section 709. Development of uniform QMB/SLMB application form
       This provision requires the secretary of Health and Human 
     Services to develop a simplified national application form 
     for States, at their option, to use for individuals who apply 
     for medical assistance for medicare cost-sharing under the 
     medicaid program.
     Section 710. Technical corrections
       This provision makes technical medicaid amendments that 
     exempt from certain upper income limitations individuals made 
     eligible for medical assistance, at a State's option, under 
     the Foster Care Independence Act of 1999 and under the Breast 
     and Cervical Cancer Prevention and Treatment Act of 2000.

         TITLE VIII--STATE CHILDREN'S HEALTH INSURANCE PROGRAM

     Section 801. Special rule for redistribution and availability 
         of unused fiscal year 1998 and 1999 SCHIP allotments
       The provision would establish a new method for distributing 
     unspent FY1998 and FY1999 allotments. States that use all 
     their SCHIP allotments (for each of those years) would 
     receive an amount equal to estimated spending in excess of 
     their original exhausted allotment. Each territory that 
     spends its original allotment would receive an amount that 
     bears the same ratio to 1.05% of the total amount available 
     for redistribution as the ratio of its original allotment to 
     the total allotment for all territories.
       States that do not use all their SCHIP allotment would 
     receive an amount equal to the total amount of unspent funds, 
     less amounts distributed to states that fully exhausted their 
     original allotments, multiplied by the ratio of a state's 
     unspent original allotment to the total amount of unspent 
     funds. States may use up to 10% of the retained FY1998 funds 
     for outreach activities.
       To calculate the amounts available for redistribution in 
     each formula described above,

[[Page H12387]]

     the Secretary would use amounts reported by states not later 
     than December 15, 2000 for the FY1998 redistribution and 
     November 30, 2001 for the FY1999 redistribution as reported 
     on HCFA Form 64 or HCFA Form 21, as approved by the 
     Secretary. Redistributed funds would be available through the 
     end of FY2002.
     Section 802. Authority to pay Medicaid expansion SCHIP costs 
         from title XXI appropriation
       This provision provides a technical accounting 
     clarification requested by the Health Care Financing 
     Administration. It would authorize the payment of the costs 
     of SCHIP Medicaid expansions and costs of benefits provided 
     during periods of presumptive eligibility from the SCHIP 
     appropriation rather than from the Medicaid appropriation, 
     with a subsequent offset. In addition, the provision would 
     codify proposed rules regarding the order of payments for 
     benefits and administrative costs from state-specific SCHIP 
     allotments.
     Section 803. Application of Medicaid child presumptive 
         eligibility provisions
       Under Medicaid presumptive eligibility rules, states are 
     allowed to temporarily enroll children whose family income 
     appears to be below Medicaid income standards, until a final 
     formal determination of eligibility is made. There is no 
     express provision for presumptive eligibility under separate 
     (non-Medicaid) SCHIP programs. However, the Secretary of HHS 
     permits states to develop, for separate (non-Medicaid) SCHIP 
     programs, procedures that are similar to those permitted 
     under Medicaid.
       The provision clarifies states' authority to conduct 
     presumptive eligibility determinations, as defined in 
     Medicaid law, under separate (non-Medicaid) SCHIP programs.

                       TITLE IX--OTHER PROVISIONS


                        SUBTITLE A--PACE PROGRAM

     Section 901. Extension of transition for current waivers
       The provision would permit the Secretary to continue to 
     operate the Program of All-Inclusive Care for the Elderly 
     (PACE) under waivers for a period of 36 months (rather than 
     24 months), and States may do so for 4 years (rather than 3 
     years). OBRA 86 required the Secretary to grant waivers of 
     certain Medicare and Medicaid requirements to not more than 
     10 public or non-profit private community-based organizations 
     to provide health and long-term care services on a capitated 
     basis to frail elderly persons at risk of 
     institutionalization. BBA 97 established PACE as a permanent 
     provider under Medicare and as a special benefit under 
     Medicaid.
     Section 902. Continuing of certain operating arrangements 
         permitted
       If prior to becoming a permanent component of Medicare, a 
     PACE demonstration project had contractual or other operating 
     arrangements that are not recognized under permanent program 
     regulations, the provision would require the Secretary, in 
     consultation with the state agency, to permit it to continue 
     under such arrangements as long as it is consistent with the 
     objectives of the PACE program.
     Section 903. Flexibility in exercising waiver authority
       The provision would enable the Secretary to exercise 
     authority to modify or waive Medicare or Medicaid 
     requirements to respond to the needs of PACE programs related 
     to employment and the use of community care physicians. The 
     Secretary must approve requests for such waivers within 90 
     days of the date the request for waiver is received.


   subtitle b--outreach to eligible low-income medicare beneficiaries

     Section 911. Outreach on availability of Medicare cost-
         sharing assistance to eligible low-income Medicare 
         beneficiaries
       The provision would require the Commissioner of the Social 
     Security Administration to conduct outreach efforts to 
     identify individuals who may be eligible for Medicaid payment 
     of Medicare cost sharing and to notify these persons of the 
     availability of such assistance. The Commissioner would also 
     be required to furnish, at least annually, a list of such 
     individuals who reside in each state to that state's agency 
     responsible for administering the Medicaid program as well as 
     to any other appropriate state agency. The list should 
     include the name and address, and whether such individuals 
     have experienced reductions in Social Security benefits. The 
     provision would also require the General Accounting Office to 
     conduct a study of the impact of the outreach activities of 
     the Commissioner to submit to Congress no later than 18 
     months after such outreach begins. The provision would be 
     effective one year after date of enactment.


           subtitle C--maternal and child health block grant

     Section 921. Increase in authorization of appropriations for 
         the maternal and child health services block grant
       The provision would increase the authorization of 
     appropriations for the Maternal and Child Health Services 
     Block Grant under Title V from $705,000,000 to $850,000,000 
     for fiscal year 2001 and each fiscal year thereafter.


                          subtitle d--diabetes

     Section 931. Increase in appropriations for special diabetes 
         programs for type I diabetes and Indians
       The provision would extend for 1 year, to FY2003, the 
     authority for grants to be made for both the Special Diabetes 
     Program for Type I Diabetes and for the Special Diabetes 
     Programs for Indians under the Public Health Service Act. The 
     provision would also expand funding available for these 
     programs. For each grant program, the provision would 
     increase total funding to $100 million each for FY2001, 
     FY2002 and FY2003. For FY2001 and FY2002, $30 million of the 
     $100 million for each program would be transferred from SCHIP 
     as set forth in the Balanced Budget Act of 1997; the 
     remaining $70 million would be drawn from the Treasury out of 
     funds not otherwise appropriated. In FY2003, the entire $100 
     million would be drawn from the Treasury out of funds not 
     otherwise appropriated. In addition, the provision would 
     extend the due date on final evaluation reports for these two 
     grant programs from January 1, 2002 to January 1, 2003.
     Section 932. Appropriations for Ricky Ray Hemophilia Relief 
         Fund
       This provision provides for a direct appropriation of $475 
     million for FY2001. Funds would be available until expended.


          subtitle E--information on nursing facility staffing

     Section 941. Posting of information on nursing facility 
         staffing
       The provision would require medicare skilled nursing 
     facilities and medicaid nursing facilities to post nurse 
     staffing information daily for each shift in the facility, 
     effective January 1, 2003.


    subtitle F--adjustment of multiemployer plan benefits guaranteed

     Section 951. Adjustment of multiemployer plan benefits 
         guaranteed
       The provision adjusts the level of multiemployer pension 
     plan benefits guaranteed under title IV of ERISA.

                COMMUNITY RENEWAL TAX RELIEF ACT OF 2000

       The conference agreement would enact the provisions of H.R. 
     5662, as introduced on December 14, 2000. The text of that 
     bill follows:
     A BILL To amend the Internal Revenue Code of 1986 to provide 
     for community revitalization and a 2-year extension of 
     medical saving accounts, and for other purposes.
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Community 
     Renewal Tax Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

               TITLE I--COMMUNITY RENEWAL AND NEW MARKETS

           Subtitle A--Tax Incentives for Renewal Communities

Sec. 101. Designation of and tax incentives for renewal communities.
Sec. 102. Work opportunity credit for hiring youth residing in renewal 
              communities.

   Subtitle B--Extension and Expansion of Empowerment Zone Incentives

Sec. 111. Authority to designate 9 additional empowerment zones.
Sec. 112. Extension of empowerment zone treatment through 2009.
Sec. 113. 20 percent employment credit for all empowerment zones.
Sec. 114. Increased expensing under section 179.
Sec. 115. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 116. Nonrecognition of gain on rollover of empowerment zone 
              investments.
Sec. 117. Increased exclusion of gain on sale of empowerment zone 
              stock.

                   Subtitle C--New Markets Tax Credit

Sec. 121. New markets tax credit.

         Subtitle D--Improvements in Low-Income Housing Credit

Sec. 131. Modification of State ceiling on low-income housing credit.
Sec. 132. Modification of criteria for allocating housing credits among 
              projects.
Sec. 133. Additional responsibilities of housing credit agencies.
Sec. 134. Modifications to rules relating to basis of building which is 
              eligible for credit.
Sec. 135. Other modifications.
Sec. 136. Carryforward rules.
Sec. 137. Effective date.

     Subtitle E--Other Community Renewal and New Markets Assistance

 Part I--Provisions relating to housing and substance abuse prevention 
                             and treatment

Sec. 141. Transfer of unoccupied and substandard HUD-held housing to 
              local governments and community development corporations.
Sec. 142. Transfer of HUD assets in revitalization areas.
Sec. 143. Risk-sharing demonstration.
Sec. 144. Prevention and treatment of substance abuse; services 
              provided through religious organizations.

             Part II--Advisory Council on Community Renewal

Sec. 151. Short title.
Sec. 152. Establishment.

[[Page H12388]]

Sec. 153. Duties of Advisory Council.
Sec. 154. Membership.
Sec. 155. Powers of Advisory Council.
Sec. 156. Reports.
Sec. 157. Termination.
Sec. 158. Applicability of Federal Advisory Committee Act.
Sec. 159. Resources.
Sec. 160. Effective date.

                      Subtitle F--Other Provisions

Sec. 161. Acceleration of phase-in of increase in volume cap on private 
              activity bonds.
Sec. 162. Modifications to expensing of environmental remediation 
              costs.
Sec. 163. Extension of DC homebuyer tax credit.
Sec. 164. Extension of DC Zone through 2003.
Sec. 165. Extension of enhanced deduction for corporate donations of 
              computer technology.
Sec. 166. Treatment of Indian tribal governments under Federal 
              Unemployment Tax Act.

 TITLE II--2-YEAR EXTENSION OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS

Sec. 201. 2-year extension of availability of medical savings accounts.
Sec. 202. Medical savings accounts renamed as Archer MSAs.

           TITLE III--ADMINISTRATIVE AND TECHNICAL PROVISIONS

                 Subtitle A--Administrative Provisions

Sec. 301. Exemption of certain reporting requirements.
Sec. 302. Extension of deadlines for IRS compliance with certain notice 
              requirements.
Sec. 303. Extension of authority for undercover operations.
Sec. 304. Confidentiality of certain documents relating to closing and 
              similar agreements and to agreements with foreign 
              governments.
Sec. 305. Increase in threshold for Joint Committee reports on refunds 
              and credits.
Sec. 306. Treatment of missing children with respect to certain tax 
              benefits.
Sec. 307. Amendments to statutes referencing yield on 52-week Treasury 
              bills.
Sec. 308. Adjustments for Consumer Price Index error.
Sec. 309. Prevention of duplication of loss through assumption of 
              liabilities giving rise to a deduction.
Sec. 310. Disclosure of certain information to Congressional Budget 
              Office.

                   Subtitle B--Technical Corrections

Sec. 311. Amendments related to Ticket to Work and Work Incentives 
              Improvement Act of 1999.
Sec. 312. Amendments related to Tax and Trade Relief Extension Act of 
              1998.
Sec. 313. Amendments related to Internal Revenue Service Restructuring 
              and Reform Act of 1998.
Sec. 314. Amendments related to Taxpayer Relief Act of 1997.
Sec. 315. Amendments related to Balanced Budget Act of 1997.
Sec. 316. Amendments related to Small Business Job Protection Act of 
              1996.
Sec. 317. Amendment related to Revenue Reconciliation Act of 1990.
Sec. 318. Other technical corrections.
Sec. 319. Clerical changes.

        TITLE IV--TAX TREATMENT OF SECURITIES FUTURES CONTRACTS

Sec. 401. Tax treatment of securities futures contracts.

               TITLE I--COMMUNITY RENEWAL AND NEW MARKETS

           Subtitle A--Tax Incentives for Renewal Communities

     SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL 
                   COMMUNITIES.

       (a) In General.--Chapter 1 is amended by adding at the end 
     the following new subchapter:

                  ``Subchapter X--Renewal Communities

``Part   I. Designation.
``Part  II. Renewal community capital gain; renewal community business.
``Part  III. Additional incentives.

                         ``PART I--DESIGNATION

``Sec. 1400E. Designation of renewal communities.

     ``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this title, the term 
     `renewal community' means any area--
       ``(A) which is nominated by 1 or more local governments and 
     the State or States in which it is located for designation as 
     a renewal community (hereafter in this section referred to 
     as a `nominated area'), and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as a renewal community, after consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury; the Director of the Office of Management and 
     Budget, and the Administrator of the Small Business 
     Administration, and
       ``(ii) in the case of an area on an Indian reservation, the 
     Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--Not more than 40 nominated areas may be 
     designated as renewal communities.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under paragraph (1), at least 12 must be areas--
       ``(i) which are within a local government jurisdiction or 
     jurisdictions with a population of less than 50,000,
       ``(ii) which are outside of a metropolitan statistical area 
     (within the meaning of section 143(k)(2)(B)), or
       ``(iii) which are determined by the Secretary of Housing 
     and Urban Development, after consultation with the Secretary 
     of Commerce, to be rural areas.
       ``(3) Areas designated based on degree of poverty, etc.--
       ``(A) In general.--Except as otherwise provided in this 
     section, the nominated areas designated as renewal 
     communities under this subsection shall be those nominated 
     areas with the highest average ranking with respect to the 
     criteria described in subparagraphs (B), (C), and (D) of 
     subsection (c)(3). For purposes of the preceding sentence, an 
     area shall be ranked within each such criterion on the basis 
     of the amount by which the area exceeds such criterion, with 
     the area which exceeds such criterion by the greatest amount 
     given the highest ranking.
       ``(B) Exception where inadequate course of action, etc.--An 
     area shall not be designated under subparagraph (A) if the 
     Secretary of Housing and Urban Development determines that 
     the course of action described in subsection (d)(2) with 
     respect to such area is inadequate.
       ``(C) Preference for enterprise communities and empowerment 
     zones.--With respect to the first 20 designations made under 
     this section, a preference shall be provided to those 
     nominated areas which are enterprise communities or 
     empowerment zones (and are otherwise eligible for designation 
     under this section).
       ``(4) Limitation on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating an area under paragraph 
     (1)(A),
       ``(ii) the parameters relating to the size and population 
     characteristics of a renewal community, and
       ``(iii) the manner in which nominated areas will be 
     evaluated based on the criteria specified in subsection (d).
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate nominated areas as renewal 
     communities only during the period beginning on the first day 
     of the first month following the month in which the 
     regulations described in subparagraph (A) are prescribed and 
     ending on December 31, 2001.
       ``(C) Procedural rules.--The Secretary of Housing and Urban 
     Development shall not make any designation of a nominated 
     area as a renewal community under paragraph (2) unless--
       ``(i) the local governments and the States in which the 
     nominated area is located have the authority--

       ``(I) to nominate such area for designation as a renewal 
     community,
       ``(II) to make the State and local commitments described in 
     subsection (d), and

       ``(III) to provide assurances satisfactory to the Secretary 
     of Housing and Urban Development that such commitments will 
     be fulfilled,

       ``(ii) a nomination regarding such area is submitted in 
     such a manner and in such form, and contains such 
     information, as the Secretary of Housing and Urban 
     Development shall by regulation prescribe, and
       ``(iii) the Secretary of Housing and Urban Development 
     determines that any information furnished is reasonably 
     accurate.
       ``(5) Nomination process for indian reservations.--For 
     purposes of this subchapter, in the case of a nominated area 
     on an Indian reservation, the reservation governing body (as 
     determined by the Secretary of the Interior) shall be treated 
     as being both the State and local governments with respect to 
     such area.
       ``(b) Period for Which Designation Is in Effect.--
       ``(1) In general.--Any designation of an area as a renewal 
     community shall remain in effect during the period beginning 
     on January 1, 2002, and ending on the earliest of--
       ``(A) December 31, 2009,
       ``(B) the termination date designated by the State and 
     local governments in their nomination, or
       ``(C) the date the Secretary of Housing and Urban 
     Development revokes such designation.
       ``(2) Revocation of designation.--The Secretary of Housing 
     and Urban Development may revoke the designation under this 
     section of an area if such Secretary determines that the 
     local government or the State in which the area is located--
       ``(A) has modified the boundaries of the area, or
       ``(B) is not complying substantially with, or fails to make 
     progress in achieving, the State or local commitments, 
     respectively, described in subsection (d).
       ``(3) Earlier termination of certain benefits if earlier 
     termination of designation.--If the designation of an area as 
     a renewal community terminates before December 31, 2009, the 
     day after the date of such termination shall be substituted 
     for `January 1, 2010' each place it appears in sections 1400F 
     and 1400J with respect to such area.
       ``(c) Area and Eligibility Requirements.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate a nominated area as a renewal 
     community under subsection (a) only if the area meets the 
     requirements of paragraphs (2) and (3) of this subsection.
       ``(2) Area requirements.--A nominated area meets the 
     requirements of this paragraph if--
       ``(A) the area is within the jurisdiction of one or more 
     local governments,
       ``(B) the boundary of the area is continuous, and

[[Page H12389]]

       ``(C) the area--
       ``(i) has a population of not more than 200,000 and at 
     least--

       ``(I) 4,000 if any portion of such area (other than a rural 
     area described in subsection (a)(2)(B)(i)) is located within 
     a metropolitan statistical area (within the meaning of 
     section 143(k)(2)(B)) which has a population of 50,000 or 
     greater, or
       ``(II) 1,000 in any other case, or

       ``(ii) is entirely within an Indian reservation (as 
     determined by the Secretary of the Interior).
       ``(3) Eligibility requirements.--A nominated area meets the 
     requirements of this paragraph if the State and the local 
     governments in which it is located certify in writing (and 
     the Secretary of Housing and Urban Development, after such 
     review of supporting data as he deems appropriate, accepts 
     such certification) that--
       ``(A) the area is one of pervasive poverty, unemployment, 
     and general distress,
       ``(B) the unemployment rate in the area, as determined by 
     the most recent available data, was at least 1\1/2\ times the 
     national unemployment rate for the period to which such data 
     relate,
       ``(C) the poverty rate for each population census tract 
     within the nominated area is at least 20 percent, and
       ``(D) in the case of an urban area, at least 70 percent of 
     the households living in the area have incomes below 80 
     percent of the median income of households within the 
     jurisdiction of the local government (determined in the same 
     manner as under section 119(b)(2) of the Housing and 
     Community Development Act of 1974).
       ``(4) Consideration of other factors.--The Secretary of 
     Housing and Urban Development, in selecting any nominated 
     area for designation as a renewal community under this 
     section--
       ``(A) shall take into account--
       ``(i) the extent to which such area has a high incidence of 
     crime, or
       ``(ii) if such area has census tracts identified in the May 
     12, 1998, report of the General Accounting Office regarding 
     the identification of economically distressed areas, and
       ``(B) with respect to 1 of the areas to be designated under 
     subsection (a)(2)(B), may, in lieu of any criteria described 
     in paragraph (3), take into account the existence of 
     outmigration from the area.
       ``(d) Required State and Local Commitments.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate any nominated area as a renewal 
     community under subsection (a) only if--
       ``(A) the local government and the State in which the area 
     is located agree in writing that, during any period during 
     which the area is a renewal community, such governments will 
     follow a specified course of action which meets the 
     requirements of paragraph (2) and is designed to reduce the 
     various burdens borne by employers or employees in such area, 
     and
       ``(B) the economic growth promotion requirements of 
     paragraph (3) are met.
       ``(2) Course of action.--
       ``(A) In general.--A course of action meets the 
     requirements of this paragraph if such course of action is a 
     written document, signed by a State (or local government) and 
     neighborhood organizations, which evidences a partnership 
     between such State or government and community-based 
     organizations and which commits each signatory to specific 
     and measurable goals, actions, and timetables. Such course of 
     action shall include at least 4 of the following:
       ``(i) A reduction of tax rates or fees applying within the 
     renewal community.
       ``(ii) An increase in the level of efficiency of local 
     services within the renewal community.
       ``(iii) Crime reduction strategies, such as crime 
     prevention (including the provision of crime prevention 
     services by nongovernmental entities).
       ``(iv) Actions to reduce, remove, simplify, or streamline 
     governmental requirements applying within the renewal 
     community.
       ``(v) Involvement in the program by private entities, 
     organizations, neighborhood organizations, and community 
     groups, particularly those in the renewal community, 
     including a commitment from such private entities to provide 
     jobs and job training for, and technical, financial, or other 
     assistance to, employers, employees, and residents from the 
     renewal community.
       ``(vi) The gift (or sale at below fair market value) of 
     surplus real property (such as land, homes, and commercial or 
     industrial structures) in the renewal community to 
     neighborhood organizations, community development 
     corporations, or private companies.
       ``(B) Recognition of past efforts.--For purposes of this 
     section, in evaluating the course of action agreed to by any 
     State or local government, the Secretary of Housing and Urban 
     Development shall take into account the past efforts of such 
     State or local government in reducing the various burdens 
     borne by employers and employees in the area involved.
       ``(3) Economic growth promotion requirements.--The economic 
     growth promotion requirements of this paragraph are met with 
     respect to a nominated area if the local government and the 
     State in which such area is located certify in writing that 
     such government and State (respectively) have repealed or 
     reduced, will not enforce, or will reduce within the 
     nominated area at least 4 of the following:
       ``(A) Licensing requirements for occupations that do not 
     ordinarily require a professional degree.
       ``(B) Zoning restrictions on home-based businesses which do 
     not create a public nuisance.
       ``(C) Permit requirements for street vendors who do not 
     create a public nuisance.
       ``(D) Zoning or other restrictions that impede the 
     formation of schools or child care centers.
       ``(E) Franchises or other restrictions on competition for 
     businesses providing public services, including taxicabs, 
     jitneys, cable television, or trash hauling.
     This paragraph shall not apply to the extent that such 
     regulation of businesses and occupations is necessary for and 
     well-tailored to the protection of health and safety.
       ``(e) Coordination With Treatment of Empowerment Zones and 
     Enterprise Communities.--For purposes of this title, the 
     designation under section 1391 of any area as an empowerment 
     zone or enterprise community shall cease to be in effect as 
     of the date that the designation of any portion of such area 
     as a renewal community takes effect.
       ``(f) Definitions and Special Rules.--For purposes of this 
     subchapter--
       ``(1) Governments.--If more than one government seeks to 
     nominate an area as a renewal community, any reference to, or 
     requirement of, this section shall apply to all such 
     governments.
       ``(2) Local government.--The term `local government' 
     means--
       ``(A) any county, city, town, township, parish, village, or 
     other general purpose political subdivision of a State, and
       ``(B) any combination of political subdivisions described 
     in subparagraph (A) recognized by the Secretary of Housing 
     and Urban Development.
       ``(3) Application of rules relating to census tracts.--The 
     rules of section 1392(b)(4) shall apply.
       ``(4) Census data.--Population and poverty rate shall be 
     determined by using 1990 census data.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

``Sec. 1400F. Renewal community capital gain.
``Sec. 1400G. Renewal community business defined.

     ``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

       ``(a) General Rule.--Gross income does not include any 
     qualified capital gain from the sale or exchange of a 
     qualified community asset held for more than 5 years.
       ``(b) Qualified Community Asset.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified community asset' 
     means--
       ``(A) any qualified community stock,
       ``(B) any qualified community partnership interest, and
       ``(C) any qualified community business property.
       ``(2) Qualified community stock.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `qualified community stock' means any stock in a 
     domestic corporation if--
       ``(i) such stock is acquired by the taxpayer after December 
     31, 2001, and before January 1, 2010, at its original issue 
     (directly or through an underwriter) from the corporation 
     solely in exchange for cash,
       ``(ii) as of the time such stock was issued, such 
     corporation was a renewal community business (or, in the case 
     of a new corporation, such corporation was being organized 
     for purposes of being a renewal community business), and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as a 
     renewal community business.
       ``(B) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this paragraph.
       ``(3) Qualified community partnership interest.--The term 
     `qualified community partnership interest' means any capital 
     or profits interest in a domestic partnership if--
       ``(A) such interest is acquired by the taxpayer after 
     December 31, 2001, and before January 1, 2010, from the 
     partnership solely in exchange for cash,
       ``(B) as of the time such interest was acquired, such 
     partnership was a renewal community business (or, in the case 
     of a new partnership, such partnership was being organized 
     for purposes of being a renewal community business), and
       ``(C) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as a 
     renewal community business.
     A rule similar to the rule of paragraph (2)(B) shall apply 
     for purposes of this paragraph.
       ``(4) Qualified community business property.--
       ``(A) In general.--The term `qualified community business 
     property' means tangible property if--
       ``(i) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2001, and before January 1, 2010,
       ``(ii) the original use of such property in the renewal 
     community commences with the taxpayer, and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such property, substantially all of the use of 
     such property was in a renewal community business of the 
     taxpayer.
       ``(B) Special rule for substantial improvements.--The 
     requirements of clauses (i) and (ii) of subparagraph (A) 
     shall be treated as satisfied with respect to--
       ``(i) property which is substantially improved by the 
     taxpayer before January 1, 2010, and
       ``(ii) any land on which such property is located.
     The determination of whether a property is substantially 
     improved shall be made under clause (ii) of section 
     1400B(b)(4)(B), except that `December 31, 2001' shall be 
     substituted for `December 31, 1997' in such clause.
       ``(c) Qualified Capital Gain.--For purposes of this 
     section--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `qualified capital gain' means any gain 
     recognized on the sale or exchange of--
       ``(A) a capital asset, or
       ``(B) property used in the trade or business (as defined in 
     section 1231(b)).

[[Page H12390]]

       ``(2) Gain before 2002 or after 2014 not qualified.--The 
     term `qualified capital gain' shall not include any gain 
     attributable to periods before January 1, 2002, or after 
     December 31, 2014.
       ``(3) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (3), (4), and (5) of section 1400B(e) shall 
     apply for purposes of this subsection.
       ``(d) Certain Rules To Apply.--For purposes of this 
     section, rules similar to the rules of paragraphs (5), (6), 
     and (7) of subsection (b), and subsections (f) and (g), of 
     section 1400B shall apply; except that for such purposes 
     section 1400B(g)(2) shall be applied by substituting `January 
     1, 2002' for `January 1, 1998' and `December 31, 2014' for 
     `December 31, 2008'.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out the purposes 
     of this section, including regulations to prevent the abuse 
     of the purposes of this section.

     ``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

       ``For purposes of this subchapter, the term `renewal 
     community business' means any entity or proprietorship which 
     would be a qualified business entity or qualified 
     proprietorship under section 1397C if references to renewal 
     communities were substituted for references to empowerment 
     zones in such section.

                   ``PART III--ADDITIONAL INCENTIVES

``Sec. 1400H. Renewal community employment credit.
``Sec. 1400I. Commercial revitalization deduction.
``Sec. 1400J. Increase in expensing under section 179.

     ``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

       ``(a) In General.--Subject to the modification in 
     subsection (b), a renewal community shall be treated as an 
     empowerment zone for purposes of section 1396 with respect to 
     wages paid or incurred after December 31, 2001.
       ``(b) Modification.--In applying section 1396 with respect 
     to renewal communities--
       ``(1) the applicable percentage shall be 15 percent, and
       ``(2) subsection (c) thereof shall be applied by 
     substituting `$10,000' for `$15,000' each place it appears.

     ``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

       ``(a) General Rule.--At the election of the taxpayer, 
     either--
       ``(1) one-half of any qualified revitalization expenditures 
     chargeable to capital account with respect to any qualified 
     revitalization building shall be allowable as a deduction for 
     the taxable year in which the building is placed in service, 
     or
       ``(2) a deduction for all such expenditures shall be 
     allowable ratably over the 120-month period beginning with 
     the month in which the building is placed in service.
       ``(b) Qualified Revitalization Buildings and 
     Expenditures.--For purposes of this section--
       ``(1) Qualified revitalization building.--The term 
     `qualified revitalization building' means any building (and 
     its structural components) if--
       ``(A) the building is placed in service by the taxpayer in 
     a renewal community and the original use of the building 
     begins with the taxpayer, or
       ``(B) in the case of such building not described in 
     subparagraph (A), such building--
       ``(i) is substantially rehabilitated (within the meaning of 
     section 47(c)(1)(C)) by the taxpayer, and
       ``(ii) is placed in service by the taxpayer after the 
     rehabilitation in a renewal community.
       ``(2) Qualified revitalization expenditure.--
       ``(A) In general.--The term `qualified revitalization 
     expenditure' means any amount properly chargeable to capital 
     account for property for which depreciation is allowable 
     under section 168 (without regard to this section) and which 
     is--
       ``(i) nonresidential real property (as defined in section 
     168(e)), or
       ``(ii) section 1250 property (as defined in section 
     1250(c)) which is functionally related and subordinate to 
     property described in clause (i).
       ``(B) Certain expenditures not included.--
       ``(i) Acquisition cost.--In the case of a building 
     described in paragraph (1)(B), the cost of acquiring the 
     building or interest therein shall be treated as a qualified 
     revitalization expenditure only to the extent that such cost 
     does not exceed 30 percent of the aggregate qualified 
     revitalization expenditures (determined without regard to 
     such cost) with respect to such building.
       ``(ii) Credits.--The term `qualified revitalization 
     expenditure' does not include any expenditure which the 
     taxpayer may take into account in computing any credit 
     allowable under this title unless the taxpayer elects to take 
     the expenditure into account only for purposes of this 
     section.
       ``(c) Dollar Limitation.--The aggregate amount which may be 
     treated as qualified revitalization expenditures with respect 
     to any qualified revitalization building shall not exceed the 
     lesser of--
       ``(1) $10,000,000, or
       ``(2) the commercial revitalization expenditure amount 
     allocated to such building under this section by the 
     commercial revitalization agency for the State in which the 
     building is located.
       ``(d) Commercial Revitalization Expenditure Amount.--
       ``(1) In general.--The aggregate commercial revitalization 
     expenditure amount which a commercial revitalization agency 
     may allocate for any calendar year is the amount of the State 
     commercial revitalization expenditure ceiling determined 
     under this paragraph for such calendar year for such agency.
       ``(2) State commercial revitalization expenditure 
     ceiling.--The State commercial revitalization expenditure 
     ceiling applicable to any State--
       ``(A) for each calendar year after 2001 and before 2010 is 
     $12,000,000 for each renewal community in the State, and
       ``(B) for each calendar year thereafter is zero.
       ``(3) Commercial revitalization agency.--For purposes of 
     this section, the term `commercial revitalization agency' 
     means any agency authorized by a State to carry out this 
     section.
       ``(4) Time and manner of allocations.--Allocations under 
     this section shall be made at the same time and in the same 
     manner as under paragraphs (1) and (7) of section 42(h).
       ``(e) Responsibilities of Commercial Revitalization 
     Agencies.--
       ``(1) Plans for allocation.--Notwithstanding any other 
     provision of this section, the commercial revitalization 
     expenditure amount with respect to any building shall be zero 
     unless--
       ``(A) such amount was allocated pursuant to a qualified 
     allocation plan of the commercial revitalization agency which 
     is approved (in accordance with rules similar to the rules of 
     section 147(f )(2) (other than subparagraph (B)(ii) thereof)) 
     by the governmental unit of which such agency is a part, and
       ``(B) such agency notifies the chief executive officer (or 
     its equivalent) of the local jurisdiction within which the 
     building is located of such allocation and provides such 
     individual a reasonable opportunity to comment on the 
     allocation.
       ``(2) Qualified allocation plan.--For purposes of this 
     subsection, the term `qualified allocation plan' means any 
     plan--
       ``(A) which sets forth selection criteria to be used to 
     determine priorities of the commercial revitalization agency 
     which are appropriate to local conditions,
       ``(B) which considers--
       ``(i) the degree to which a project contributes to the 
     implementation of a strategic plan that is devised for a 
     renewal community through a citizen participation process,
       ``(ii) the amount of any increase in permanent, full-time 
     employment by reason of any project, and
       ``(iii) the active involvement of residents and nonprofit 
     groups within the renewal community, and
       ``(C) which provides a procedure that the agency (or its 
     agent) will follow in monitoring compliance with this 
     section.
       ``(f) Special Rules.--
       ``(1) Deduction in lieu of depreciation.--The deduction 
     provided by this section for qualified revitalization 
     expenditures shall--
       ``(A) with respect to the deduction determined under 
     subsection (a)(1), be in lieu of any depreciation deduction 
     otherwise allowable on account of one-half of such 
     expenditures, and
       ``(B) with respect to the deduction determined under 
     subsection (a)(2), be in lieu of any depreciation deduction 
     otherwise allowable on account of all of such expenditures.
       ``(2) Basis adjustment, etc.--For purposes of sections 1016 
     and 1250, the deduction under this section shall be treated 
     in the same manner as a depreciation deduction. For purposes 
     of section 1250(b)(5), the straight line method of adjustment 
     shall be determined without regard to this section.
       ``(3) Substantial rehabilitations treated as separate 
     buildings.--A substantial rehabilitation (within the meaning 
     of section 47(c)(1)(C)) of a building shall be treated as a 
     separate building for purposes of subsection (a).
       ``(4) Clarification of allowance of deduction under minimum 
     tax.--Notwithstanding section 56(a)(1), the deduction under 
     this section shall be allowed in determining alternative 
     minimum taxable income under section 55.
       ``(g) Termination.--This section shall not apply to any 
     building placed in service after December 31, 2009.

     ``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

       ``(a) In General.--For purposes of section 1397A--
       ``(1) a renewal community shall be treated as an 
     empowerment zone,
       ``(2) a renewal community business shall be treated as an 
     enterprise zone business, and
       ``(3) qualified renewal property shall be treated as 
     qualified zone property.
       ``(b) Qualified Renewal Property.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified renewal property' 
     means any property to which section 168 applies (or would 
     apply but for section 179) if--
       ``(A) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2001, and before January 1, 2010, and
       ``(B) such property would be qualified zone property (as 
     defined in section 1397D) if references to renewal 
     communities were substituted for references to empowerment 
     zones in section 1397D.
       ``(2) Certain rules to apply.--The rules of subsections 
     (a)(2) and (b) of section 1397D shall apply for purposes of 
     this section.''.
       (b) Exception for Commercial Revitalization Deduction From 
     Passive Loss Rules.--
       (1) Paragraph (3) of section 469(i) is amended by 
     redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (D), (E), and (F), respectively, and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Exception for commercial revitalization deduction.--
     Subparagraph (A) shall not apply to any portion of the 
     passive activity loss for any taxable year which is 
     attributable to the commercial revitalization deduction under 
     section 1400I.''.

[[Page H12391]]

       (2) Subparagraph (E) of section 469(i)(3), as redesignated 
     by subparagraph (A), is amended to read as follows:
       ``(E) Ordering rules to reflect exceptions and separate 
     phase-outs.--If subparagraph (B), (C), or (D) applies for a 
     taxable year, paragraph (1) shall be applied--
       ``(i) first to the portion of the passive activity loss to 
     which subparagraph (C) does not apply,
       ``(ii) second to the portion of the passive activity credit 
     to which subparagraph (B) or (D) does not apply,
       ``(iii) third to the portion of such credit to which 
     subparagraph (B) applies,
       ``(iv) fourth to the portion of such loss to which 
     subparagraph (C) applies, and
       ``(v) then to the portion of such credit to which 
     subparagraph (D) applies.''.
       (3)(A) Subparagraph (B) of section 469(i)(6) is amended by 
     striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) any deduction under section 1400I (relating to 
     commercial revitalization deduction).''.
       (B) The heading for such subparagraph (B) is amended by 
     striking ``or rehabilitation credit'' and inserting ``, 
     rehabilitation credit, or commercial revitalization 
     deduction''.
       (c) Audit and Report.--Not later than January 31 of 2004, 
     2007, and 2010, the Comptroller General of the United States 
     shall, pursuant to an audit of the renewal community program 
     established under section 1400E of the Internal Revenue Code 
     of 1986 (as added by subsection (a)) and the empowerment zone 
     and enterprise community program under subchapter U of 
     chapter 1 of such Code, report to Congress on such program 
     and its effect on poverty, unemployment, and economic growth 
     within the designated renewal communities, empowerment zones, 
     and enterprise communities.
       (d) Clerical Amendment.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subchapter X. Renewal Communities.''.

     SEC. 102. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING 
                   IN RENEWAL COMMUNITIES.

       (a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of 
     section 51(d)(5) are each amended by striking ``empowerment 
     zone or enterprise community'' and inserting ``empowerment 
     zone, enterprise community, or renewal community''.
       (b) Qualified Summer Youth Employee.--Clause (iv) of 
     section 51(d)(7)(A) is amended by striking ``empowerment zone 
     or enterprise community'' and inserting ``empowerment zone, 
     enterprise community, or renewal community''.
       (c) Headings.--Paragraphs (5)(B) and (7)(C) of section 
     51(d) are each amended by inserting ``or community'' in the 
     heading after ``zone''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after December 31, 2001.

   Subtitle B--Extension and Expansion of Empowerment Zone Incentives

     SEC. 111. AUTHORITY TO DESIGNATE 9 ADDITIONAL EMPOWERMENT 
                   ZONES.

       Section 1391 is amended by adding at the end the following 
     new subsection:
       ``(h) Additional Designations Permitted.--
       ``(1) In general.--In addition to the areas designated 
     under subsections (a) and (g), the appropriate Secretaries 
     may designate in the aggregate an additional 9 nominated 
     areas as empowerment zones under this section, subject to the 
     availability of eligible nominated areas. Of that number, not 
     more than seven may be designated in urban areas and not more 
     than 2 may be designated in rural areas.
       ``(2) Period designations may be made and take effect.--A 
     designation may be made under this subsection after the date 
     of the enactment of this subsection and before January 1, 
     2002. Subject to subparagraphs (B) and (C) of subsection 
     (d)(1), such designations shall remain in effect during the 
     period beginning on January 1, 2002, and ending on December 
     31, 2009.
       ``(3) Modifications to eligibility criteria, etc.--The 
     rules of subsection (g)(3) shall apply to designations under 
     this subsection.
       ``(4) Empowerment zones which become renewal communities.--
     The number of areas which may be designated as empowerment 
     zones under this subsection shall be increased by 1 for each 
     area which ceases to be an empowerment zone by reason of 
     section 1400E(e). Each additional area designated by reason 
     of the preceding sentence shall have the same urban or rural 
     character as the area it is replacing.''

     SEC. 112. EXTENSION OF EMPOWERMENT ZONE TREATMENT THROUGH 
                   2009.

       Subparagraph (A) of section 1391(d)(1) (relating to period 
     for which designation is in effect) is amended to read as 
     follows:
       ``(A)(i) in the case of an empowerment zone, December 31, 
     2009, or
       ``(ii) in the case of an enterprise community, the close of 
     the 10th calendar year beginning on or after such date of 
     designation,''.

     SEC. 113. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT 
                   ZONES.

       (a) 20 Percent Credit.--Subsection (b) of section 1396 
     (relating to empowerment zone employment credit) is amended 
     to read as follows:
       ``(b) Applicable Percentage.--For purposes of this section, 
     the applicable percentage is 20 percent.''.
       (b) All Empowerment Zones Eligible for Credit.--Section 
     1396 is amended by striking subsection (e).
       (c) Conforming Amendment.--Subsection (d) of section 1400 
     is amended to read as follows:
       ``(d) Special Rule for Application of Employment Credit.--
     With respect to the DC Zone, section 1396(d)(1)(B) (relating 
     to empowerment zone employment credit) shall be applied by 
     substituting `the District of Columbia' for `such empowerment 
     zone'.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to wages paid or incurred after December 31, 
     2001.

     SEC. 114. INCREASED EXPENSING UNDER SECTION 179.

       (a) In General.--Subparagraph (A) of section 1397A(a)(1) is 
     amended by striking ``$20,000'' and inserting ``$35,000''.
       (b) Expensing for Property Used in Developable Sites.--
     Section 1397A is amended by striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 115. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE 
                   FACILITY BONDS.

       (a) In General.--Paragraph (3) of section 1394(f) (relating 
     to bonds for empowerment zones designated under section 
     1391(g)) is amended to read as follows:
       ``(3) Empowerment zone facility bond.--For purposes of this 
     subsection, the term `empowerment zone facility bond' means 
     any bond which would be described in subsection (a) if--
       ``(A) in the case of obligations issued before January 1, 
     2002, only empowerment zones designated under section 1391(g) 
     were taken into account under sections 1397C and 1397D, and
       ``(B) in the case of obligations issued after December 31, 
     2001, all empowerment zones (other than the District of 
     Columbia Enterprise Zone) were taken into account under 
     sections 1397C and 1397D.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2001.

     SEC. 116. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT 
                   ZONE INVESTMENTS.

       (a) In General.--Part III of subchapter U of chapter 1 is 
     amended--
       (1) by redesignating subpart C as subpart D,
       (2) by redesignating sections 1397B and 1397C as sections 
     1397C and 1397D, respectively, and
       (3) by inserting after subpart B the following new subpart:

  ``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone 
                              Investments

``Sec. 1397B. Nonrecognition of gain on rollover of empowerment zone 
              investments.

     ``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF 
                   EMPOWERMENT ZONE INVESTMENTS.

       ``(a) Nonrecognition of Gain.--In the case of any sale of a 
     qualified empowerment zone asset held by the taxpayer for 
     more than 1 year and with respect to which such taxpayer 
     elects the application of this section, gain from such sale 
     shall be recognized only to the extent that the amount 
     realized on such sale exceeds--
       ``(1) the cost of any qualified empowerment zone asset 
     (with respect to the same zone as the asset sold) purchased 
     by the taxpayer during the 60-day period beginning on the 
     date of such sale, reduced by
       ``(2) any portion of such cost previously taken into 
     account under this section.
       ``(b) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified empowerment zone asset.--
       ``(A) In general.--The term `qualified empowerment zone 
     asset' means any property which would be a qualified 
     community asset (as defined in section 1400F) if in section 
     1400F--
       ``(i) references to empowerment zones were substituted for 
     references to renewal communities,
       ``(ii) references to enterprise zone businesses (as defined 
     in section 1397C) were substituted for references to renewal 
     community businesses, and
       ``(iii) the date of the enactment of this paragraph were 
     substituted for `December 31, 2001' each place it appears.
       ``(B) Treatment of dc zone.--The District of Columbia 
     Enterprise Zone shall not be treated as an empowerment zone 
     for purposes of this section.
       ``(2) Certain gain not eligible for rollover.--This section 
     shall not apply to--
       ``(A) any gain which is treated as ordinary income for 
     purposes of this subtitle, and
       ``(B) any gain which is attributable to real property, or 
     an intangible asset, which is not an integral part of an 
     enterprise zone business.
       ``(3) Purchase.--A taxpayer shall be treated as having 
     purchased any property if, but for paragraph (4), the 
     unadjusted basis of such property in the hands of the 
     taxpayer would be its cost (within the meaning of section 
     1012).
       ``(4) Basis adjustments.--If gain from any sale is not 
     recognized by reason of subsection (a), such gain shall be 
     applied to reduce (in the order acquired) the basis for 
     determining gain or loss of any qualified empowerment zone 
     asset which is purchased by the taxpayer during the 60-day 
     period described in subsection (a). This paragraph shall not 
     apply for purposes of section 1202.
       ``(5) Holding period.--For purposes of determining whether 
     the nonrecognition of gain under subsection (a) applies to 
     any qualified empowerment zone asset which is sold--
       ``(A) the taxpayer's holding period for such asset and the 
     asset referred to in subsection (a)(1) shall be determined 
     without regard to section 1223, and
       ``(B) only the first year of the taxpayer's holding period 
     for the asset referred to in subsection (a)(1) shall be taken 
     into account for purposes of paragraphs (2)(A)(iii), (3)(C), 
     and (4)(A)(iii) of section 1400F(b).''.
       (b) Conforming Amendments.--
       (1) Paragraph (23) of section 1016(a) is amended--
       (A) by striking ``or 1045'' and inserting ``1045, or 
     1397B'', and
       (B) by striking ``or 1045(b)(4)'' and inserting 
     ``1045(b)(4), or 1397B(b)(4)''.
       (2) Paragraph (15) of section 1223 is amended to read as 
     follows:

[[Page H12392]]

       ``(15) Except for purposes of sections 1202(a)(2), 
     1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the 
     period for which the taxpayer has held property the 
     acquisition of which resulted under section 1045 or 1397B in 
     the nonrecognition of any part of the gain realized on the 
     sale of other property, there shall be included the period 
     for which such other property has been held as of the date of 
     such sale.''.
       (3) Paragraph (2) of section 1394(b) is amended--
       (A) by striking ``section 1397C'' and inserting ``section 
     1397D'', and
       (B) by striking ``section 1397C(a)(2)'' and inserting 
     ``section 1397D(a)(2)''.
       (4) Paragraph (3) of section 1394(b) is amended--
       (A) by striking ``section 1397B'' each place it appears and 
     inserting ``section 1397C'', and
       (B) by striking ``section 1397B(d)'' and inserting 
     ``section 1397C(d)''.
       (5) Sections 1400(e) and 1400B(c) are each amended by 
     striking ``section 1397B'' each place it appears and 
     inserting ``section 1397C''.
       (6) The table of subparts for part III of subchapter U of 
     chapter 1 is amended by striking the last item and inserting 
     the following new items:

``Subpart C. Nonrecognition of gain on rollover of empowerment zone 
              investments.
``Subpart D. General provisions.''.
       (7) The table of sections for subpart D of such part III is 
     amended to read as follows:

``Sec. 1397C. Enterprise zone business defined.
``Sec. 1397D. Qualified zone property defined.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to qualified empowerment zone assets acquired 
     after the date of the enactment of this Act.

     SEC. 117. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT 
                   ZONE STOCK.

       (a) In General.--Subsection (a) of section 1202 is amended 
     to read as follows:
       ``(a) Exclusion.--
       ``(1) In general.--In the case of a taxpayer other than a 
     corporation, gross income shall not include 50 percent of any 
     gain from the sale or exchange of qualified small business 
     stock held for more than 5 years.
       ``(2) Empowerment zone businesses.--
       ``(A) In general.--In the case of qualified small business 
     stock acquired after the date of the enactment of this 
     paragraph in a corporation which is a qualified business 
     entity (as defined in section 1397C(b)) during 
     substantially all of the taxpayer's holding period for 
     such stock, paragraph (1) shall be applied by substituting 
     `60 percent' for `50 percent'.
       ``(B) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (5) and (7) of section 1400B(b) shall apply for 
     purposes of this paragraph.
       ``(C) Gain after 2014 not qualified.--Subparagraph (A) 
     shall not apply to gain attributable to periods after 
     December 31, 2014.
       ``(D) Treatment of dc zone.--The District of Columbia 
     Enterprise Zone shall not be treated as an empowerment zone 
     for purposes of this paragraph.''.
       (b) Conforming Amendments.--
       (1) Paragraph (8) of section 1(h) is amended by striking 
     ``means'' and all that follows and inserting ``means the 
     excess of--
       ``(A) the gain which would be excluded from gross income 
     under section 1202 but for the percentage limitation in 
     section 1202(a), over
       ``(B) the gain excluded from gross income under section 
     1202.''.
       (2) The section heading for section 1202 is amended by 
     striking ``50-percent'' and inserting ``partial''.
       (3) The table of sections for part I of subchapter P of 
     chapter 1 is amended by striking ``50-percent'' and inserting 
     ``Partial''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to stock acquired after the date of the enactment 
     of this Act.

                   Subtitle C--New Markets Tax Credit

     SEC. 121. NEW MARKETS TAX CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business-related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 45D. NEW MARKETS TAX CREDIT.

       ``(a) Allowance of Credit.--
       ``(1) In general.--For purposes of section 38, in the case 
     of a taxpayer who holds a qualified equity investment on a 
     credit allowance date of such investment which occurs during 
     the taxable year, the new markets tax credit determined under 
     this section for such taxable year is an amount equal to the 
     applicable percentage of the amount paid to the qualified 
     community development entity for such investment at its 
     original issue.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage is--
       ``(A) 5 percent with respect to the first 3 credit 
     allowance dates, and
       ``(B) 6 percent with respect to the remainder of the credit 
     allowance dates.
       ``(3) Credit allowance date.--For purposes of paragraph 
     (1), the term `credit allowance date' means, with respect to 
     any qualified equity investment--
       ``(A) the date on which such investment is initially made, 
     and
       ``(B) each of the 6 anniversary dates of such date 
     thereafter.
       ``(b) Qualified Equity Investment.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified equity investment' 
     means any equity investment in a qualified community 
     development entity if--
       ``(A) such investment is acquired by the taxpayer at its 
     original issue (directly or through an underwriter) solely in 
     exchange for cash,
       ``(B) substantially all of such cash is used by the 
     qualified community development entity to make qualified low-
     income community investments, and
       ``(C) such investment is designated for purposes of this 
     section by the qualified community development entity.
     Such term shall not include any equity investment issued by a 
     qualified community development entity more than 5 years 
     after the date that such entity receives an allocation under 
     subsection (f). Any allocation not used within such 5-year 
     period may be reallocated by the Secretary under subsection 
     (f).
       ``(2) Limitation.--The maximum amount of equity investments 
     issued by a qualified community development entity which may 
     be designated under paragraph (1)(C) by such entity shall not 
     exceed the portion of the limitation amount allocated under 
     subsection (f) to such entity.
       ``(3) Safe harbor for determining use of cash.--The 
     requirement of paragraph (1)(B) shall be treated as met if at 
     least 85 percent of the aggregate gross assets of the 
     qualified community development entity are invested in 
     qualified low-income community investments.
       ``(4) Treatment of subsequent purchasers.--The term 
     `qualified equity investment' includes any equity investment 
     which would (but for paragraph (1)(A)) be a qualified equity 
     investment in the hands of the taxpayer if such investment 
     was a qualified equity investment in the hands of a prior 
     holder.
       ``(5) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this subsection.
       ``(6) Equity investment.--The term `equity investment' 
     means--
       ``(A) any stock (other than nonqualified preferred stock as 
     defined in section 351(g)(2)) in an entity which is a 
     corporation, and
       ``(B) any capital interest in an entity which is a 
     partnership.
       ``(c) Qualified Community Development Entity.--For purposes 
     of this section--
       ``(1) In general.--The term `qualified community 
     development entity' means any domestic corporation or 
     partnership if--
       ``(A) the primary mission of the entity is serving, or 
     providing investment capital for, low-income communities or 
     low-income persons,
       ``(B) the entity maintains accountability to residents of 
     low-income communities through their representation on any 
     governing board of the entity or on any advisory board to the 
     entity, and
       ``(C) the entity is certified by the Secretary for purposes 
     of this section as being a qualified community development 
     entity.
       ``(2) Special rules for certain organizations.--The 
     requirements of paragraph (1) shall be treated as met by--
       ``(A) any specialized small business investment company (as 
     defined in section 1044(c)(3)), and
       ``(B) any community development financial institution (as 
     defined in section 103 of the Community Development Banking 
     and Financial Institutions Act of 1994 (12 U.S.C. 4702)).
       ``(d) Qualified Low-Income Community Investments.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified low-income community 
     investment' means--
       ``(A) any capital or equity investment in, or loan to, any 
     qualified active low-income community business,
       ``(B) the purchase from another qualified community 
     development entity of any loan made by such entity which is a 
     qualified low-income community investment,
       ``(C) financial counseling and other services specified in 
     regulations prescribed by the Secretary to businesses located 
     in, and residents of, low-income communities, and
       ``(D) any equity investment in, or loan to, any qualified 
     community development entity.
       ``(2) Qualified active low-income community business.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `qualified active low-income community business' means, with 
     respect to any taxable year, any corporation (including a 
     nonprofit corporation) or partnership if for such year--
       ``(i) at least 50 percent of the total gross income of such 
     entity is derived from the active conduct of a qualified 
     business within any low-income community,
       ``(ii) a substantial portion of the use of the tangible 
     property of such entity (whether owned or leased) is within 
     any low-income community,
       ``(iii) a substantial portion of the services performed for 
     such entity by its employees are performed in any low-income 
     community,
       ``(iv) less than 5 percent of the average of the aggregate 
     unadjusted bases of the property of such entity is 
     attributable to collectibles (as defined in section 
     408(m)(2)) other than collectibles that are held primarily 
     for sale to customers in the ordinary course of such 
     business, and
       ``(v) less than 5 percent of the average of the aggregate 
     unadjusted bases of the property of such entity is 
     attributable to nonqualified financial property (as defined 
     in section 1397C(e)).
       ``(B) Proprietorship.--Such term shall include any business 
     carried on by an individual as a proprietor if such business 
     would meet the requirements of subparagraph (A) were it 
     incorporated.
       ``(C) Portions of business may be qualified active low-
     income community business.--The term `qualified active low-
     income community business' includes any trades or businesses 
     which would qualify as a qualified active low-income 
     community business if such trades or businesses were 
     separately incorporated.
       ``(3) Qualified business.--For purposes of this subsection, 
     the term `qualified business' has the meaning given to such 
     term by section 1397C(d); except that--
       ``(A) in lieu of applying paragraph (2)(B) thereof, the 
     rental to others of real property located in any low-income 
     community shall be treated as a qualified business if there 
     are substantial improvements located on such property, and

[[Page H12393]]

       ``(B) paragraph (3) thereof shall not apply.
       ``(e) Low-Income Community.--For purposes of this section--
       ``(1) In general.--The term `low-income community' means 
     any population census tract if--
       ``(A) the poverty rate for such tract is at least 20 
     percent, or
       ``(B)(i) in the case of a tract not located within a 
     metropolitan area, the median family income for such tract 
     does not exceed 80 percent of statewide median family income, 
     or
       ``(ii) in the case of a tract located within a metropolitan 
     area, the median family income for such tract does not exceed 
     80 percent of the greater of statewide median family income 
     or the metropolitan area median family income.
     Subparagraph (B) shall be applied using possessionwide median 
     family income in the case of census tracts located within a 
     possession of the United States.
       ``(2) Targeted areas.--The Secretary may designate any area 
     within any census tract as a low-income community if--
       ``(A) the boundary of such area is continuous,
       ``(B) the area would satisfy the requirements of paragraph 
     (1) if it were a census tract, and
       ``(C) an inadequate access to investment capital exists in 
     such area.
       ``(3) Areas not within census tracts.--In the case of an 
     area which is not tracted for population census tracts, the 
     equivalent county divisions (as defined by the Bureau of the 
     Census for purposes of defining poverty areas) shall be used 
     for purposes of determining poverty rates and median family 
     income.
       ``(f) National Limitation on Amount of Investments 
     Designated.--
       ``(1) In general.--There is a new markets tax credit 
     limitation for each calendar year. Such limitation is--
       ``(A) $1,000,000,000 for 2001,
       ``(B) $1,500,000,000 for 2002 and 2003,
       ``(C) $2,000,000,000 for 2004 and 2005, and
       ``(D) $3,500,000,000 for 2006 and 2007.
       ``(2) Allocation of limitation.--The limitation under 
     paragraph (1) shall be allocated by the Secretary among 
     qualified community development entities selected by the 
     Secretary. In making allocations under the preceding 
     sentence, the Secretary shall give priority to any entity--
       ``(A) with a record of having successfully provided capital 
     or technical assistance to disadvantaged businesses or 
     communities, or
       ``(B) which intends to satisfy the requirement under 
     subsection (b)(1)(B) by making qualified low-income community 
     investments in 1 or more businesses in which persons 
     unrelated to such entity (within the meaning of section 
     267(b) or 707(b)(1)) hold the majority equity interest.
       ``(3) Carryover of unused limitation.--If the new markets 
     tax credit limitation for any calendar year exceeds the 
     aggregate amount allocated under paragraph (2) for such year, 
     such limitation for the succeeding calendar year shall be 
     increased by the amount of such excess. No amount may be 
     carried under the preceding sentence to any calendar year 
     after 2014.
       ``(g) Recapture of Credit In Certain Cases.--
       ``(1) In general.--If, at any time during the 7-year period 
     beginning on the date of the original issue of a qualified 
     equity investment in a qualified community development 
     entity, there is a recapture event with respect to such 
     investment, then the tax imposed by this chapter for the 
     taxable year in which such event occurs shall be increased by 
     the credit recapture amount.
       ``(2) Credit recapture amount.--For purposes of paragraph 
     (1), the credit recapture amount is an amount equal to the 
     sum of--
       ``(A) the aggregate decrease in the credits allowed to the 
     taxpayer under section 38 for all prior taxable years which 
     would have resulted if no credit had been determined under 
     this section with respect to such investment, plus
       ``(B) interest at the underpayment rate established under 
     section 6621 on the amount determined under subparagraph (A) 
     for each prior taxable year for the period beginning on the 
     due date for filing the return for the prior taxable year 
     involved.
     No deduction shall be allowed under this chapter for interest 
     described in subparagraph (B).
       ``(3) Recapture event.--For purposes of paragraph (1), 
     there is a recapture event with respect to an equity 
     investment in a qualified community development entity if--
       ``(A) such entity ceases to be a qualified community 
     development entity,
       ``(B) the proceeds of the investment cease to be used as 
     required of subsection (b)(1)(B), or
       ``(C) such investment is redeemed by such entity.
       ``(4) Special rules.--
       ``(A) Tax benefit rule.--The tax for the taxable year shall 
     be increased under paragraph (1) only with respect to credits 
     allowed by reason of this section which were used to reduce 
     tax liability. In the case of credits not so used to reduce 
     tax liability, the carryforwards and carrybacks under section 
     39 shall be appropriately adjusted.
       ``(B) No credits against tax.--Any increase in tax under 
     this subsection shall not be treated as a tax imposed by this 
     chapter for purposes of determining the amount of any credit 
     under this chapter or for purposes of section 55.
       ``(h) Basis Reduction.--The basis of any qualified equity 
     investment shall be reduced by the amount of any credit 
     determined under this section with respect to such 
     investment. This subsection shall not apply for purposes of 
     sections 1202, 1400B, and 1400F.
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this section, 
     including regulations--
       ``(1) which limit the credit for investments which are 
     directly or indirectly subsidized by other Federal tax 
     benefits (including the credit under section 42 and the 
     exclusion from gross income under section 103),
       ``(2) which prevent the abuse of the purposes of this 
     section,
       ``(3) which provide rules for determining whether the 
     requirement of subsection (b)(1)(B) is treated as met,
       ``(4) which impose appropriate reporting requirements, and
       ``(5) which apply the provisions of this section to newly 
     formed entities.''.
       (b) Credit Made Part of General Business Credit.--
       (1) In general.--Subsection (b) of section 38 is amended by 
     striking ``plus'' at the end of paragraph (11), by striking 
     the period at the end of paragraph (12) and inserting ``, 
     plus'', and by adding at the end the following new paragraph:
       ``(13) the new markets tax credit determined under section 
     45D(a).''.
       (2) Limitation on carryback.--Subsection (d) of section 39 
     is amended by adding at the end the following new paragraph:
       ``(9) No carryback of new markets tax credit before january 
     1, 2001.--No portion of the unused business credit for any 
     taxable year which is attributable to the credit under 
     section 45D may be carried back to a taxable year ending 
     before January 1, 2001.''.
       (c) Deduction for Unused Credit.--Subsection (c) of section 
     196 is amended by striking ``and'' at the end of paragraph 
     (7), by striking the period at the end of paragraph (8) and 
     inserting ``, and'', and by adding at the end the following 
     new paragraph:
       ``(9) the new markets tax credit determined under section 
     45D(a).''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following new item:

``Sec. 45D. New markets tax credit.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to investments made after December 31, 2000.
       (f) Guidance on Allocation of National Limitation.--Not 
     later than 120 days after the date of the enactment of this 
     Act, the Secretary of the Treasury or the Secretary's 
     delegate shall issue guidance which specifies--
       (1) how entities shall apply for an allocation under 
     section 45D(f)(2) of the Internal Revenue Code of 1986, as 
     added by this section;
       (2) the competitive procedure through which such 
     allocations are made; and
       (3) the actions that such Secretary or delegate shall take 
     to ensure that such allocations are properly made to 
     appropriate entities.
       (g) Audit and Report.--Not later than January 31 of 2004, 
     2007, and 2010, the Comptroller General of the United States 
     shall, pursuant to an audit of the new markets tax credit 
     program established under section 45D of the Internal Revenue 
     Code of 1986 (as added by subsection (a)), report to Congress 
     on such program, including all qualified community 
     development entities that receive an allocation under the new 
     markets credit under such section.

         Subtitle D--Improvements in Low-Income Housing Credit

     SEC. 131. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING 
                   CREDIT.

       (a) In General.--Clauses (i) and (ii) of section 
     42(h)(3)(C) (relating to State housing credit ceiling) are 
     amended to read as follows:
       ``(i) the unused State housing credit ceiling (if any) of 
     such State for the preceding calendar year,
       ``(ii) the greater of--

       ``(I) $1.75 ($1.50 for 2001) multiplied by the State 
     population, or
       ``(II) $2,000,000,''.

       (b) Adjustment of State Ceiling for Increases in Cost-of-
     Living.--Paragraph (3) of section 42(h) (relating to housing 
     credit dollar amount for agencies) is amended by adding at 
     the end the following new subparagraph:
       ``(H) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2002, the $2,000,000 and $1.75 amounts in subparagraph (C) 
     shall each be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2001' for `calendar year 1992' in subparagraph 
     (B) thereof.

       ``(ii) Rounding.--

       ``(I) In the case of the $2,000,000 amount, any increase 
     under clause (i) which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.
       ``(II) In the case of the $1.75 amount, any increase under 
     clause (i) which is not a multiple of 5 cents shall be 
     rounded to the next lowest multiple of 5 cents.''.

       (c) Conforming Amendments.--
       (1) Section 42(h)(3)(C), as amended by subsection (a), is 
     amended--
       (A) by striking ``clause (ii)'' in the matter following 
     clause (iv) and inserting ``clause (i)''; and
       (B) by striking ``clauses (i)'' in the matter following 
     clause (iv) and inserting ``clauses (ii)''.
       (2) Section 42(h)(3)(D)(ii) is amended--
       (A) by striking ``subparagraph (C)(ii)'' and inserting 
     ``subparagraph (C)(i)''; and
       (B) by striking ``clauses (i)'' in subclause (II) and 
     inserting ``clauses (ii)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 2000.

     SEC. 132. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING 
                   CREDITS AMONG PROJECTS.

       (a) Selection Criteria.--Subparagraph (C) of section 
     42(m)(1) (relating to certain selection criteria must be 
     used) is amended--
       (1) by inserting ``, including whether the project includes 
     the use of existing housing as part of a community 
     revitalization plan'' before the comma at the end of clause 
     (iii); and

[[Page H12394]]

       (2) by striking clauses (v), (vi), and (vii) and inserting 
     the following new clauses:
       ``(v) tenant populations with special housing needs,
       ``(vi) public housing waiting lists,
       ``(vii) tenant populations of individuals with children, 
     and
       ``(viii) projects intended for eventual tenant 
     ownership.''.
       (b) Preference for Community Revitalization Projects 
     Located in Qualified Census Tracts.--Clause (ii) of section 
     42(m)(1)(B) is amended by striking ``and'' at the end of 
     subclause (I), by adding ``and'' at the end of subclause 
     (II), and by inserting after subclause (II) the following new 
     subclause:

       ``(III) projects which are located in qualified census 
     tracts (as defined in subsection (d)(5)(C)) and the 
     development of which contributes to a concerted community 
     revitalization plan,''.

     SEC. 133. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT 
                   AGENCIES.

       (a) Market Study; Public Disclosure of Rationale for Not 
     Following Credit Allocation Priorities.--Subparagraph (A) of 
     section 42(m)(1) (relating to responsibilities of housing 
     credit agencies) is amended by striking ``and'' at the end of 
     clause (i), by striking the period at the end of clause (ii) 
     and inserting a comma, and by adding at the end the following 
     new clauses:
       ``(iii) a comprehensive market study of the housing needs 
     of low-income individuals in the area to be served by the 
     project is conducted before the credit allocation is made and 
     at the developer's expense by a disinterested party who is 
     approved by such agency, and
       ``(iv) a written explanation is available to the general 
     public for any allocation of a housing credit dollar amount 
     which is not made in accordance with established priorities 
     and selection criteria of the housing credit agency.''.
       (b) Site Visits.--Clause (iii) of section 42(m)(1)(B) 
     (relating to qualified allocation plan) is amended by 
     inserting before the period ``and in monitoring for 
     noncompliance with habitability standards through regular 
     site visits''.

     SEC. 134. MODIFICATIONS TO RULES RELATING TO BASIS OF 
                   BUILDING WHICH IS ELIGIBLE FOR CREDIT.

       (a) Adjusted Basis To Include Portion of Certain Buildings 
     Used by Low-Income Individuals Who Are Not Tenants and by 
     Project Employees.--Paragraph (4) of section 42(d) (relating 
     to special rules relating to determination of adjusted basis) 
     is amended--
       (1) by striking ``subparagraph (B)'' in subparagraph (A) 
     and inserting ``subparagraphs (B) and (C)'';
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Inclusion of basis of property used to provide 
     services for certain nontenants.--
       ``(i) In general.--The adjusted basis of any building 
     located in a qualified census tract (as defined in paragraph 
     (5)(C)) shall be determined by taking into account the 
     adjusted basis of property (of a character subject to the 
     allowance for depreciation and not otherwise taken into 
     account) used throughout the taxable year in providing any 
     community service facility.
       ``(ii) Limitation.--The increase in the adjusted basis of 
     any building which is taken into account by reason of clause 
     (i) shall not exceed 10 percent of the eligible basis of the 
     qualified low-income housing project of which it is a part. 
     For purposes of the preceding sentence, all community service 
     facilities which are part of the same qualified low-income 
     housing project shall be treated as one facility.
       ``(iii) Community service facility.--For purposes of this 
     subparagraph, the term `community service facility' means any 
     facility designed to serve primarily individuals whose income 
     is 60 percent or less of area median income (within the 
     meaning of subsection (g)(1)(B)).''.
       (b) Certain Native American Housing Assistance Disregarded 
     in Determining Whether Building Is Federally Subsidized for 
     Purposes of the Low-Income Housing Credit.--Subparagraph (E) 
     of section 42(i)(2) (relating to determination of whether 
     building is federally subsidized) is amended--
       (1) in clause (i), by inserting ``or the Native American 
     Housing Assistance and Self-Determination Act of 1996 (25 
     U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' 
     after ``this subparagraph)''; and
       (2) in the subparagraph heading, by inserting ``or native 
     american housing assistance'' after ``home assistance''.

     SEC. 135. OTHER MODIFICATIONS.

       (a) Allocation of Credit Limit to Certain Buildings.--
       (1) The first sentence of section 42(h)(1)(E)(ii) is 
     amended by striking ``(as of'' the first place it appears and 
     inserting ``(as of the later of the date which is 6 months 
     after the date that the allocation was made or''.
       (2) The last sentence of section 42(h)(3)(C) is amended by 
     striking ``project which'' and inserting ``project which 
     fails to meet the 10 percent test under paragraph (1)(E)(ii) 
     on a date after the close of the calendar year in which the 
     allocation was made or which''.
       (b) Determination of Whether Buildings Are Located in High 
     Cost Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) 
     is amended--
       (1) by inserting ``either'' before ``in which 50 percent''; 
     and
       (2) by inserting before the period ``or which has a poverty 
     rate of at least 25 percent''.

     SEC. 136. CARRYFORWARD RULES.

       (a) In General.--Clause (ii) of section 42(h)(3)(D) 
     (relating to unused housing credit carryovers allocated among 
     certain States) is amended by striking ``the excess'' and all 
     that follows and inserting ``the excess (if any) of--

       ``(I) the unused State housing credit ceiling for the year 
     preceding such year, over
       ``(II) the aggregate housing credit dollar amount allocated 
     for such year.''.

       (b) Conforming Amendment.--The second sentence of section 
     42(h)(3)(C) (relating to State housing credit ceiling) is 
     amended by striking ``clauses (i) and (iii)'' and inserting 
     ``clauses (i) through (iv)''.

     SEC. 137. EFFECTIVE DATE.

       Except as otherwise provided in this subtitle, the 
     amendments made by this subtitle shall apply to--
       (1) housing credit dollar amounts allocated after December 
     31, 2000; and
       (2) buildings placed in service after such date to the 
     extent paragraph (1) of section 42(h) of the Internal Revenue 
     Code of 1986 does not apply to any building by reason of 
     paragraph (4) thereof, but only with respect to bonds issued 
     after such date.

     Subtitle E--Other Community Renewal and New Markets Assistance

 PART I--PROVISIONS RELATING TO HOUSING AND SUBSTANCE ABUSE PREVENTION 
                             AND TREATMENT

     SEC. 141. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD 
                   HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY 
                   DEVELOPMENT CORPORATIONS.

       Section 204 of the Departments of Veterans Affairs and 
     Housing and Urban Development, and Independent Agencies 
     Appropriations Act, 1997 (12 U.S.C. 1715z-11a) is amended--
       (1) by striking ``Flexible Authority.--'' and inserting 
     ``Disposition of HUD-Owned Properties. (a) Flexible Authority 
     for Multifamily Projects.--''; and
       (2) by adding at the end the following new subsection:
       ``(b) Transfer of Unoccupied and Substandard Housing to 
     Local Governments and Community Development Corporations.--
       ``(1) Transfer authority.--Notwithstanding the authority 
     under subsection (a) and the last sentence of section 204(g) 
     of the National Housing Act (12 U.S.C. 1710(g)), the 
     Secretary of Housing and Urban Development shall transfer 
     ownership of any qualified HUD property, subject to the 
     requirements of this section, to a unit of general local 
     government having jurisdiction for the area in which the 
     property is located or to a community development corporation 
     which operates within such a unit of general local government 
     in accordance with this subsection, but only to the extent 
     that units of general local government and community 
     development corporations consent to transfer and the 
     Secretary determines that such transfer is practicable.
       ``(2) Qualified hud properties.--For purposes of this 
     subsection, the term `qualified HUD property' means any 
     property for which, as of the date that notification of the 
     property is first made under paragraph (3)(B), not less than 
     6 months have elapsed since the later of the date that the 
     property was acquired by the Secretary or the date that the 
     property was determined to be unoccupied or substandard, that 
     is owned by the Secretary and is--
       ``(A) an unoccupied multifamily housing project;
       ``(B) a substandard multifamily housing project; or
       ``(C) an unoccupied single family property that--
       ``(i) has been determined by the Secretary not to be an 
     eligible asset under section 204(h) of the National Housing 
     Act (12 U.S.C. 1710(h)); or
       ``(ii) is an eligible asset under such section 204(h), 
     but--

       ``(I) is not subject to a specific sale agreement under 
     such section; and
       ``(II) has been determined by the Secretary to be 
     inappropriate for continued inclusion in the program under 
     such section 204(h) pursuant to paragraph (10) of such 
     section.

       ``(3) Timing.--The Secretary shall establish procedures 
     that provide for--
       ``(A) time deadlines for transfers under this subsection;
       ``(B) notification to units of general local government and 
     community development corporations of qualified HUD 
     properties in their jurisdictions;
       ``(C) such units and corporations to express interest in 
     the transfer under this subsection of such properties;
       ``(D) a right of first refusal for transfer of qualified 
     HUD properties to units of general local government and 
     community development corporations, under which--
       ``(i) the Secretary shall establish a period during which 
     the Secretary may not transfer such properties except to such 
     units and corporations;
       ``(ii) the Secretary shall offer qualified HUD properties 
     that are single family properties for purchase by units of 
     general local government at a cost of $1 for each property, 
     but only to the extent that the costs to the Federal 
     Government of disposal at such price do not exceed the costs 
     to the Federal Government of disposing of property subject to 
     the procedures for single family property established by the 
     Secretary pursuant to the authority under the last sentence 
     of section 204(g) of the National Housing Act (12 U.S.C. 
     1710(g));
       ``(iii) the Secretary may accept an offer to purchase a 
     property made by a community development corporation only if 
     the offer provides for purchase on a cost recovery basis; and
       ``(iv) the Secretary shall accept an offer to purchase such 
     a property that is made during such period by such a unit or 
     corporation and that complies with the requirements of this 
     paragraph; and
       ``(E) a written explanation, to any unit of general local 
     government or community development corporation making an 
     offer to purchase a

[[Page H12395]]

     qualified HUD property under this subsection that is not 
     accepted, of the reason that such offer was not acceptable.
       ``(4) Other disposition.--With respect to any qualified HUD 
     property, if the Secretary does not receive an acceptable 
     offer to purchase the property pursuant to the procedure 
     established under paragraph (3), the Secretary shall dispose 
     of the property to the unit of general local government in 
     which property is located or to community development 
     corporations located in such unit of general local government 
     on a negotiated, competitive bid, or other basis, on such 
     terms as the Secretary deems appropriate.
       ``(5) Satisfaction of indebtedness.--Before transferring 
     ownership of any qualified HUD property pursuant to this 
     subsection, the Secretary shall satisfy any indebtedness 
     incurred in connection with the property to be transferred, 
     by canceling the indebtedness.
       ``(6) Determination of status of properties.--To ensure 
     compliance with the requirements of this subsection, the 
     Secretary shall take the following actions:
       ``(A) Upon enactment.--Upon the enactment of this 
     subsection, the Secretary shall promptly assess each 
     residential property owned by the Secretary to determine 
     whether such property is a qualified HUD property.
       ``(B) Upon acquisition.--Upon acquiring any residential 
     property, the Secretary shall promptly determine whether the 
     property is a qualified HUD property.
       ``(C) Updates.--The Secretary shall periodically reassess 
     the residential properties owned by the Secretary to 
     determine whether any such properties have become qualified 
     HUD properties.
       ``(7) Tenant leases.--This subsection shall not affect the 
     terms or the enforceability of any contract or lease entered 
     into with respect to any residential property before the date 
     that such property becomes a qualified HUD property.
       ``(8) Use of property.--Property transferred under this 
     subsection shall be used only for appropriate neighborhood 
     revitalization efforts, including homeownership, rental 
     units, commercial space, and parks, consistent with local 
     zoning regulations, local building codes, and subdivision 
     regulations and restrictions of record.
       ``(9) Inapplicability to properties made available for 
     homeless.--Notwithstanding any other provision of this 
     subsection, this subsection shall not apply to any properties 
     that the Secretary determines are to be made available for 
     use by the homeless pursuant to subpart E of part 291 of 
     title 24, Code of Federal Regulations, during the period that 
     the properties are so available.
       ``(10) Protection of existing contracts.--This subsection 
     may not be construed to alter, affect, or annul any legally 
     binding obligations entered into with respect to a qualified 
     HUD property before the property becomes a qualified HUD 
     property.
       ``(11) Definitions.--For purposes of this subsection, the 
     following definitions shall apply:
       ``(A) Community development corporation.--The term 
     `community development corporation' means a nonprofit 
     organization whose primary purpose is to promote community 
     development by providing housing opportunities for low-income 
     families.
       ``(B) Cost recovery basis.--The term `cost recovery basis' 
     means, with respect to any sale of a residential property by 
     the Secretary, that the purchase price paid by the purchaser 
     is equal to or greater than the sum of: (i) the appraised 
     value of the property, as determined in accordance with such 
     requirements as the Secretary shall establish; and (ii) the 
     costs incurred by the Secretary in connection with such 
     property during the period beginning on the date on which the 
     Secretary acquires title to the property and ending on the 
     date on which the sale is consummated.
       ``(C) Multifamily housing project.--The term `multifamily 
     housing project' has the meaning given the term in section 
     203 of the Housing and Community Development Amendments of 
     1978.
       ``(D) Residential property.--The term `residential 
     property' means a property that is a multifamily housing 
     project or a single family property.
       ``(E) Secretary.--The term `Secretary' means the Secretary 
     of Housing and Urban Development.
       ``(F) Severe physical problems.--The term `severe physical 
     problems' means, with respect to a dwelling unit, that the 
     unit--
       ``(i) lacks hot or cold piped water, a flush toilet, or 
     both a bathtub and a shower in the unit, for the exclusive 
     use of that unit;
       ``(ii) on not less than three separate occasions during the 
     preceding winter months, was uncomfortably cold for a period 
     of more than 6 consecutive hours due to a malfunction of the 
     heating system for the unit;
       ``(iii) has no functioning electrical service, exposed 
     wiring, any room in which there is not a functioning 
     electrical outlet, or has experienced three or more blown 
     fuses or tripped circuit breakers during the preceding 90-day 
     period;
       ``(iv) is accessible through a public hallway in which 
     there are no working light fixtures, loose or missing steps 
     or railings, and no elevator; or
       ``(v) has severe maintenance problems, including water 
     leaks involving the roof, windows, doors, basement, or pipes 
     or plumbing fixtures, holes or open cracks in walls or 
     ceilings, severe paint peeling or broken plaster, and signs 
     of rodent infestation.
       ``(G) Single family property.--The term `single family 
     property' means a 1- to 4-family residence.
       ``(H) Substandard.--The term `substandard' means, with 
     respect to a multifamily housing project, that 25 percent or 
     more of the dwelling units in the project have severe 
     physical problems.
       ``(I) Unit of general local government.--The term `unit of 
     general local government' has the meaning given such term in 
     section 102(a) of the Housing and Community Development Act 
     of 1974.
       ``(J) Unoccupied.--The term `unoccupied' means, with 
     respect to a residential property, that the unit of general 
     local government having jurisdiction over the area in which 
     the project is located has certified in writing that the 
     property is not inhabited.
       ``(12) Regulations.--
       ``(A) Interim.--Not later than 30 days after the date of 
     the enactment of this subsection, the Secretary shall issue 
     such interim regulations as are necessary to carry out this 
     subsection.
       ``(B) Final.--Not later than 60 days after the date of the 
     enactment of this subsection, the Secretary shall issue such 
     final regulations as are necessary to carry out this 
     subsection.''.

     SEC. 142. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

       In carrying out the program under section 204(h) of the 
     National Housing Act (12 U.S.C. 1710(h)), upon the request of 
     the chief executive officer of a county or the government of 
     appropriate jurisdiction and not later than 60 days after 
     such request is made, the Secretary of Housing and Urban 
     Development shall designate as a revitalization area all 
     portions of such county that meet the criteria for such 
     designation under paragraph (3) of such section.

     SEC. 143. RISK-SHARING DEMONSTRATION.

       Section 249 of the National Housing Act (12 U.S.C. 1715z-
     14) is amended--
       (1) by striking the section heading and inserting the 
     following:


                    ``risk-sharing demonstration'';

       (2) by striking ``reinsurance'' each place such term 
     appears and insert ``risk-sharing'';
       (3) in subsection (a)--
       (A) in the first sentence, by inserting ``and with insured 
     community development financial institutions'' after 
     ``private mortgage insurers'';
       (B) in the second sentence--
       (i) by striking ``two'' and inserting ``four''; and
       (ii) by striking ``March 15, 1988'' and inserting ``the 
     expiration of the 5-year period beginning on the date of the 
     enactment of the Community Renewal Tax Relief Act of 2000''; 
     and
       (C) in the third sentence--
       (i) by striking ``insured'' and inserting ``for which risk 
     of nonpayment is shared''; and
       (ii) by striking ``10 percent'' and inserting ``20 
     percent'';
       (4) in subsection (b)--
       (A) in the first sentence--
       (i) by striking ``to provide'' and inserting ``, in 
     providing'';
       (ii) by striking ``through'' and inserting ``, to enter 
     into''; and
       (iii) by inserting ``and with insured community development 
     financial institutions'' before the period at the end;
       (B) in the second sentence, by inserting ``and insured 
     community development financial institutions'' after 
     ``private mortgage insurance companies'';
       (C) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) assume a secondary percentage of loss on any mortgage 
     insured pursuant to section 203(b), 234, or 245 covering a 
     one- to four-family dwelling, which percentage of loss shall 
     be set forth in the risk-sharing contract, with the first 
     percentage of loss to be borne by the Secretary;''; and
       (D) in paragraph (2)--
       (i) by striking ``carry out (under appropriate delegation) 
     such'' and inserting ``perform or delegate underwriting,'';
       (ii) by striking ``function as the Secretary pursuant to 
     regulations,'' and inserting ``functions as the Secretary''; 
     and
       (iii) by inserting before the period at the end the 
     following: ``and shall set forth in the risk-sharing 
     contract'';
       (5) in subsection (c)--
       (A) in the first sentence--
       (i) by striking ``of'' the first place it appears and 
     inserting ``for'';
       (ii) by inserting ``received by the Secretary with a 
     private mortgage insurer or insured community development 
     financial institution'' after ``sharing of premiums'';
       (iii) by striking ``insurance reserves'' and inserting 
     ``loss reserves'';
       (iv) by striking ``such insurance'' and inserting ``such 
     risk-sharing contract''; and
       (v) by striking ``right'' and inserting ``rights''; and
       (B) in the second sentence--
       (i) by inserting ``or insured community development 
     financial institution'' after ``private mortgage insurance 
     company''; and
       (ii) by striking ``for insurance'' and inserting ``for 
     risk-sharing'';
       (6) in subsection (d), by inserting ``or insured community 
     development financial institution'' after ``private mortgage 
     insurance company''; and
       (7) by adding at the end the following new subsection:
       ``(e) Insured Community Development Financial 
     Institution.--For purposes of this section, the term `insured 
     community development financial institution' means a 
     community development financial institution, as such term is 
     defined in section 103 of Reigle Community Development and 
     Regulatory Improvement Act of 1994 (12 U.S.C. 4702) that is 
     an insured depository institution (as such term is defined in 
     section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813)) or an insured credit union (as such term is defined in 
     section 101 of the Federal Credit Union Act (12 U.S.C. 
     1752)).''.

     SEC. 144. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE; 
                   SERVICES PROVIDED THROUGH RELIGIOUS 
                   ORGANIZATIONS.

       Title V of the Public Health Service Act (42 U.S.C. 290aa 
     et seq.) is amended by adding at the end the following part:

[[Page H12396]]

      ``Part G--Services Provided Through Religious Organizations

     ``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.

       ``(a) Designated Programs.--Subject to subsection (b), this 
     part applies to discretionary and formula grant programs 
     administered by the Substance Abuse and Mental Health 
     Services Administration that make awards of financial 
     assistance to public or private entities for the purpose of 
     carrying out activities to prevent or treat substance abuse 
     (in this part referred to as a `designated program'). 
     Designated programs include the program under subpart II of 
     part B of title XIX (relating to formula grants to the 
     States).
       ``(b) Limitation.--This part does not apply to any award of 
     financial assistance under a designated program for a purpose 
     other than the purpose specified in subsection (a).
       ``(c) Definitions.--For purposes of this part (and subject 
     to subsection (b)):
       ``(1) The term `designated program' has the meaning given 
     such term in subsection (a).
       ``(2) The term `financial assistance' means a grant, 
     cooperative agreement, or contract.
       ``(3) The term `program beneficiary' means an individual 
     who receives program services.
       ``(4) The term `program participant' means a public or 
     private entity that has received financial assistance under a 
     designated program.
       ``(5) The term `program services' means treatment for 
     substance abuse, or preventive services regarding such abuse, 
     provided pursuant to an award of financial assistance under a 
     designated program.
       ``(6) The term `religious organization' means a nonprofit 
     religious organization.

     ``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.

       ``(a) In General.--Notwithstanding any other provision of 
     law, a religious organization, on the same basis as any other 
     nonprofit private provider--
       ``(1) may receive financial assistance under a designated 
     program; and
       ``(2) may be a provider of services under a designated 
     program.
       ``(b) Religious Organizations.--The purpose of this section 
     is to allow religious organizations to be program 
     participants on the same basis as any other nonprofit private 
     provider without impairing the religious character of such 
     organizations, and without diminishing the religious freedom 
     of program beneficiaries.
       ``(c) Nondiscrimination Against Religious Organizations.--
       ``(1) Eligibility as program participants.--Religious 
     organizations are eligible to be program participants on the 
     same basis as any other nonprofit private organization as 
     long as the programs are implemented consistent with the 
     Establishment Clause and Free Exercise Clause of the First 
     Amendment to the United States Constitution. Nothing in this 
     Act shall be construed to restrict the ability of the Federal 
     Government, or a State or local government receiving funds 
     under such programs, to apply to religious organizations 
     the same eligibility conditions in designated programs as 
     are applied to any other nonprofit private organization.
       ``(2) Nondiscrimination.--Neither the Federal Government 
     nor a State or local government receiving funds under 
     designated programs shall discriminate against an 
     organization that is or applies to be a program participant 
     on the basis that the organization has a religious character.
       ``(d) Religious Character and Freedom.--
       ``(1) Religious organizations.--Except as provided in this 
     section, any religious organization that is a program 
     participant shall retain its independence from Federal, 
     State, and local government, including such organization's 
     control over the definition, development, practice, and 
     expression of its religious beliefs.
       ``(2) Additional safeguards.--Neither the Federal 
     Government nor a State shall require a religious organization 
     to--
       ``(A) alter its form of internal governance; or
       ``(B) remove religious art, icons, scripture, or other 
     symbols,

     in order to be a program participant.
       ``(e) Employment Practices.--Nothing in this section shall 
     be construed to modify or affect the provisions of any other 
     Federal or State law or regulation that relates to 
     discrimination in employment. A religious organization's 
     exemption provided under section 702 of the Civil Rights Act 
     of 1964 regarding employment practices shall not be affected 
     by its participation in, or receipt of funds from, a 
     designated program.
       ``(f) Rights of Program Beneficiaries.--
       ``(1) In general.--If an individual who is a program 
     beneficiary or a prospective program beneficiary objects to 
     the religious character of a program participant, within a 
     reasonable period of time after the date of such objection 
     such program participant shall refer such individual to, and 
     the appropriate Federal, State, or local government that 
     administers a designated program or is a program participant 
     shall provide to such individual (if otherwise eligible for 
     such services), program services that--
       ``(A) are from an alternative provider that is accessible 
     to, and has the capacity to provide such services to, such 
     individual; and
       ``(B) have a value that is not less than the value of the 
     services that the individual would have received from the 
     program participant to which the individual had such 
     objection.

     Upon referring a program beneficiary to an alternative 
     provider, the program participant shall notify the 
     appropriate Federal, State, or local government agency that 
     administers the program of such referral.
       ``(2) Notices.--Program participants, public agencies that 
     refer individuals to designated programs, and the appropriate 
     Federal, State, or local governments that administer 
     designated programs or are program participants shall ensure 
     that notice is provided to program beneficiaries or 
     prospective program beneficiaries of their rights under this 
     section.
       ``(3) Additional requirements.--A program participant 
     making a referral pursuant to paragraph (1) shall--
       ``(A) prior to making such referral, consider any list that 
     the State or local government makes available of entities in 
     the geographic area that provide program services; and
       ``(B) ensure that the individual makes contact with the 
     alternative provider to which the individual is referred.
       ``(4) Nondiscrimination.--A religious organization that is 
     a program participant shall not in providing program services 
     or engaging in outreach activities under designated programs 
     discriminate against a program beneficiary or prospective 
     program beneficiary on the basis of religion or religious 
     belief.
       ``(g) Fiscal Accountability.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     religious organization that is a program participant shall be 
     subject to the same regulations as other recipients of awards 
     of Federal financial assistance to account, in accordance 
     with generally accepted auditing principles, for the use of 
     the funds provided under such awards.
       ``(2) Limited audit.--With respect to the award involved, a 
     religious organization that is a program participant shall 
     segregate Federal amounts provided under award into a 
     separate account from non-Federal funds. Only the award funds 
     shall be subject to audit by the government.
       ``(h) Compliance.--With respect to compliance with this 
     section by an agency, a religious organization may obtain 
     judicial review of agency action in accordance with chapter 7 
     of title 5, United States Code.

     ``SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.

       ``No funds provided under a designated program shall be 
     expended for sectarian worship, instruction, or 
     proselytization.

     ``SEC. 584. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG 
                   TREATMENT PROGRAMS.

       ``(a) Findings.--The Congress finds that--
       ``(1) establishing unduly rigid or uniform educational 
     qualification for counselors and other personnel in drug 
     treatment programs may undermine the effectiveness of such 
     programs; and
       ``(2) such educational requirements for counselors and 
     other personnel may hinder or prevent the provision of needed 
     drug treatment services.
       ``(b) Nondiscrimination.--In determining whether personnel 
     of a program participant that has a record of successful drug 
     treatment for the preceding three years have satisfied State 
     or local requirements for education and training, a State or 
     local government shall not discriminate against education and 
     training provided to such personnel by a religious 
     organization, so long as such education and training includes 
     basic content substantially equivalent to the content 
     provided by nonreligious organizations that the State or 
     local government would credit for purposes of determining 
     whether the relevant requirements have been satisfied.''.

             PART II--ADVISORY COUNCIL ON COMMUNITY RENEWAL

     SEC. 151. SHORT TITLE.

       This part may be cited as the ``Advisory Council on 
     Community Renewal Act''.

     SEC. 152. ESTABLISHMENT.

       There is established an advisory council to be known as the 
     ``Advisory Council on Community Renewal'' (in this part 
     referred to as the ``Advisory Council'').

     SEC. 153. DUTIES OF ADVISORY COUNCIL.

       The Advisory Council shall advise the Secretary of Housing 
     and Urban Development (in this part referred to as the 
     ``Secretary'') on the designation of renewal communities 
     pursuant to the amendment made by section 101 and on the 
     exercise of any other authority granted to the Secretary 
     pursuant to the amendments made by this title.

     SEC. 154. MEMBERSHIP.

       (a) Number and Appointment.--The Advisory Council shall be 
     composed of 7 members appointed by the Secretary.
       (b) Chairperson.--The Chairperson of the Advisory Council 
     (in this part referred to as the ``Chairperson'') shall be 
     designated by the Secretary at the time of the appointment.
       (c) Terms.--Each member shall be appointed for the life of 
     the Advisory Council.
       (d) Basic Pay.--
       (1) Chairperson.--The Chairperson shall be paid at a rate 
     equal to the daily rate of basic pay for level III of the 
     Executive Schedule for each day (including travel time) 
     during which the Chairperson is engaged in the actual 
     performance of duties vested in the Advisory Council.
       (2) Other members.--Members other than the Chairperson 
     shall each be paid at a rate equal to the daily rate of basic 
     pay for level IV of the Executive Schedule for each day 
     (including travel time) during which they are engaged in the 
     actual performance of duties vested in the Advisory Council.
       (e) Travel Expenses.--Each member shall receive travel 
     expenses, including per diem in lieu of subsistence, in 
     accordance with applicable provisions under subchapter I of 
     chapter 57 of title 5, United States Code.
       (f) Quorum.--Four members of the Advisory Council shall 
     constitute a quorum but a lesser number may hold hearings.
       (g) Meetings.--The Advisory Council shall meet at the call 
     of the Secretary or the Chairperson.

     SEC. 155. POWERS OF ADVISORY COUNCIL.

       (a) Hearings and Sessions.--The Advisory Council may, for 
     the purpose of carrying out this part, hold hearings, sit and 
     act at times and places, take testimony, and receive evidence 
     as

[[Page H12397]]

     the Advisory Council considers appropriate. The Advisory 
     Council may administer oaths or affirmations to witnesses 
     appearing before it.
       (b) Powers of Members and Agents.--Any member or agent of 
     the Advisory Council may, if authorized by the Advisory 
     Council, take any action which the Advisory Council is 
     authorized to take by this section.
       (c) Obtaining Official Data.--The Advisory Council may 
     secure directly from any department or agency of the United 
     States information necessary to enable it to carry out this 
     part. Upon request of the Chairperson of the Advisory 
     Council, the head of that department or agency shall furnish 
     that information to the Advisory Council.

     SEC. 156. REPORTS.

       (a) Annual Reports.--The Advisory Council shall submit to 
     the Secretary an annual report for each fiscal year.
       (b) Interim Reports.--The Advisory Council may submit to 
     the Secretary such interim reports as the Advisory Council 
     considers appropriate.
       (c) Final Report.--The Advisory Council shall transmit a 
     final report to the Secretary not later September 30, 2003. 
     The final report shall contain a detailed statement of the 
     findings and conclusions of the Advisory Council, together 
     with any recommendations for legislative or administrative 
     action that the Advisory Council considers appropriate.

     SEC. 157. TERMINATION.

       (a) In General.--The Advisory Council shall terminate 30 
     days after submitting its final report under section 156(c).
       (b) Extension.--Notwithstanding subsection (a), the 
     Secretary may postpone the termination of the Advisory 
     Council for a period not to exceed 3 years after the Advisory 
     Council submits its final report under section 156(c).

     SEC. 158. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT.

       The Federal Advisory Committee Act (5 U.S.C. App.) shall 
     not apply to the Advisory Council.

     SEC. 159. RESOURCES.

       The Secretary shall provide to the Advisory Council 
     appropriate resources so that the Advisory Council may carry 
     out its duties and fuctions under this part.

     SEC. 160. EFFECTIVE DATE.

       This part shall be effective 30 days after the date of its 
     enactment.

                      Subtitle F--Other Provisions

     SEC. 161. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP 
                   ON PRIVATE ACTIVITY BONDS.

       (a) In General.--Paragraphs (1) and (2) of section 146(d) 
     (relating to State ceiling) are amended to read as follows:
       ``(1) In general.--The State ceiling applicable to any 
     State for any calendar year shall be the greater of--
       ``(A) an amount equal to $75 ($62.50 in the case of 
     calendar year 2001) multiplied by the State population, or
       ``(B) $225,000,000 ($187,500,000 in the case of calendar 
     year 2001).
       ``(2) Cost-of-living adjustment.--In the case of a calendar 
     year after 2002, each of the dollar amounts contained in 
     paragraph (1) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2001' for `calendar year 1992' in subparagraph 
     (B) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $5 ($5,000 in the case of the dollar amount 
     in paragraph (1)(B)), such increase shall be rounded to the 
     nearest multiple thereof.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to calendar years after 2000.

     SEC. 162. MODIFICATIONS TO EXPENSING OF ENVIRONMENTAL 
                   REMEDIATION COSTS.

       (a) Expensing Not Limited to Sites in Targeted Areas.--
     Subsection (c) of section 198 is amended to read as follows:
       ``(c) Qualified Contaminated Site.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified contaminated site' 
     means any area--
       ``(A) which is held by the taxpayer for use in a trade or 
     business or for the production of income, or which is 
     property described in section 1221(a)(1) in the hands of the 
     taxpayer, and
       ``(B) at or on which there has been a release (or threat of 
     release) or disposal of any hazardous substance.
       ``(2) National priorities listed sites not included.--Such 
     term shall not include any site which is on, or proposed for, 
     the national priorities list under section 105(a)(8)(B) of 
     the Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (as in effect on the date of the 
     enactment of this section).
       ``(3) Taxpayer must receive statement from state 
     environmental agency.--An area shall be treated as a 
     qualified contaminated site with respect to expenditures paid 
     or incurred during any taxable year only if the taxpayer 
     receives a statement from the appropriate agency of the State 
     in which such area is located that such area meets the 
     requirement of paragraph (1)(B).
       ``(4) Appropriate state agency.--For purposes of paragraph 
     (3), the chief executive officer of each State may, in 
     consultation with the Administrator of the Environmental 
     Protection Agency, designate the appropriate State 
     environmental agency within 60 days of the date of the 
     enactment of this section. If the chief executive officer 
     of a State has not designated an appropriate environmental 
     agency within such 60-day period, the appropriate 
     environmental agency for such State shall be designated by 
     the Administrator of the Environmental Protection 
     Agency.''.
       (b) Extension of Termination Date.--Subsection (h) of 
     section 198 is amended by striking ``2001'' and inserting 
     ``2003''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to expenditures paid or incurred after the date 
     of the enactment of this Act.

     SEC. 163. EXTENSION OF DC HOMEBUYER TAX CREDIT.

       Section 1400C(i) (relating to application of section) is 
     amended by striking ``2002'' and inserting ``2004''.

     SEC. 164. EXTENSION OF DC ZONE THROUGH 2003.

       (a) In General.--The following provisions are amended by 
     striking ``2002'' each place it appears and inserting 
     ``2003'':
       (1) Section 1400(f).
       (2) Section 1400A(b).
       (b) Zero Capital Gains Rate.--Section 1400B (relating to 
     zero percent capital gains rate) is amended--
       (1) by striking ``2003'' each place it appears and 
     inserting ``2004'', and
       (2) by striking ``2007'' each place it appears and 
     inserting ``2008''.

     SEC. 165. EXTENSION OF ENHANCED DEDUCTION FOR CORPORATE 
                   DONATIONS OF COMPUTER TECHNOLOGY.

       (a) Expansion of Computer Technology Donations to Public 
     Libraries.--
       (1) In general.--Paragraph (6) of section 170(e) (relating 
     to special rule for contributions of computer technology and 
     equipment for elementary or secondary school purposes) is 
     amended by striking ``qualified elementary or secondary 
     educational contribution'' each place it occurs in the 
     headings and text and inserting ``qualified computer 
     contribution''.
       (2) Expansion of eligible donees.--Clause (i) of section 
     170(e)(6)(B) (relating to qualified elementary or secondary 
     educational contribution) is amended by striking ``or'' at 
     the end of subclause (I), by adding ``or'' at the end of 
     subclause (II), and by inserting after subclause (II) the 
     following new subclause:

       ``(III) a public library (within the meaning of section 
     213(2)(A) of the Library Services and Technology Act (20 
     U.S.C. 9122(2)(A)), as in effect on the date of the enactment 
     of the Community Renewal Tax Relief Act of 2000, established 
     and maintained by an entity described in subsection 
     (c)(1),''.

       (3) Extension of donation period.--Clause (ii) of section 
     170(e)(6)(B) is amended by striking ``2 years'' and inserting 
     ``3 years''.
       (b) Conforming Amendments.--
       (1) Section 170(e)(6)(B)(iv) is amended by striking ``in 
     any grades of the K-12''.
       (2) The heading of paragraph (6) of section 170(e) is 
     amended by striking ``elementary or secondary school 
     purposes'' and inserting ``educational purposes''.
       (c) Extension of Deduction.--Section 170(e)(6)(F) (relating 
     to termination) is amended by striking ``December 31, 2000'' 
     and inserting ``December 31, 2003''.
       (d) Standards as to Functionality and Suitability.--
     Subparagraph (B) of section 170(e)(6) is amended by striking 
     ``and'' at the end of clause (vi), by striking the period at 
     the end of clause (vii) and inserting ``, and'', and by 
     adding at the end the following new clause:
       ``(viii) the property meets such standards, if any, as the 
     Secretary may prescribe by regulation to assure that the 
     property meets minimum functionality and suitability 
     standards for educational purposes.''
       (e) Donations of Computers Reacquired by Manufacturer.--
     Paragraph (6) of section 170(e) is further amended by 
     redesignating subparagraphs (D), (E), and (F) as 
     subparagraphs (E), (F), and (G), respectively, and by 
     inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) Donations of property reacquired by manufacturer.--In 
     the case of property which is reacquired by the person who 
     constructed the property--
       ``(i) subparagraph (B)(ii) shall be applied to a 
     contribution of such property by such person by taking into 
     account the date that the original construction of the 
     property was substantially completed, and
       ``(ii) subparagraph (B)(iii) shall not apply to such 
     contribution.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to contributions made after December 31, 2000.

     SEC. 166. TREATMENT OF INDIAN TRIBAL GOVERNMENTS UNDER 
                   FEDERAL UNEMPLOYMENT TAX ACT.

       (a) In General.--Section 3306(c)(7) (defining employment) 
     is amended--
       (1) by inserting ``or in the employ of an Indian tribe,'' 
     after ``service performed in the employ of a State, or any 
     political subdivision thereof,''; and
       (2) by inserting ``or Indian tribes'' after ``wholly owned 
     by one or more States or political subdivisions''.
       (b) Payments in Lieu of Contributions.--Section 3309 
     (relating to State law coverage of services performed for 
     nonprofit organizations or governmental entities) is 
     amended--
       (1) in subsection (a)(2) by inserting ``, including an 
     Indian tribe,'' after ``the State law shall provide that a 
     governmental entity'';
       (2) in subsection (b)(3)(B) by inserting ``, or of an 
     Indian tribe'' after ``of a State or political subdivision 
     thereof'';
       (3) in subsection (b)(3)(E) by inserting ``or tribal'' 
     after ``the State''; and
       (4) in subsection (b)(5) by inserting ``or of an Indian 
     tribe'' after ``an agency of a State or political subdivision 
     thereof''.
       (c) State Law Coverage.--Section 3309 (relating to State 
     law coverage of services performed for nonprofit 
     organizations or governmental entities) is amended by adding 
     at the end the following new subsection:

[[Page H12398]]

       ``(d) Election by Indian Tribe.--The State law shall 
     provide that an Indian tribe may make contributions for 
     employment as if the employment is within the meaning of 
     section 3306 or make payments in lieu of contributions under 
     this section, and shall provide that an Indian tribe may make 
     separate elections for itself and each subdivision, 
     subsidiary, or business enterprise wholly owned by such 
     Indian tribe. State law may require a tribe to post a payment 
     bond or take other reasonable measures to assure the making 
     of payments in lieu of contributions under this section. 
     Notwithstanding the requirements of section 3306(a)(6), if, 
     within 90 days of having received a notice of delinquency, a 
     tribe fails to make contributions, payments in lieu of 
     contributions, or payment of penalties or interest (at 
     amounts or rates comparable to those applied to all other 
     employers covered under the State law) assessed with respect 
     to such failure, or if the tribe fails to post a required 
     payment bond, then service for the tribe shall not be 
     excepted from employment under section 3306(c)(7) until any 
     such failure is corrected. This subsection shall apply to an 
     Indian tribe within the meaning of section 4(e) of the Indian 
     Self-Determination and Education Assistance Act (25 U.S.C. 
     450b(e)).''.
       (d) Definitions.--Section 3306 (relating to definitions) is 
     amended by adding at the end the following new subsection:
       ``(u) Indian Tribe.--For purposes of this chapter, the term 
     `Indian tribe' has the meaning given to such term by section 
     4(e) of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450b(e)), and includes any 
     subdivision, subsidiary, or business enterprise wholly owned 
     by such an Indian tribe.''.
       (e) Effective Date; Transition Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to service performed on or after the date of the 
     enactment of this Act.
       (2) Transition rule.--For purposes of the Federal 
     Unemployment Tax Act, service performed in the employ of an 
     Indian tribe (as defined in section 3306(u) of the Internal 
     Revenue Code of 1986 (as added by this section)) shall not be 
     treated as employment (within the meaning of section 3306 of 
     such Code) if--
       (A) it is service which is performed before the date of the 
     enactment of this Act and with respect to which the tax 
     imposed under the Federal Unemployment Tax Act has not been 
     paid, and
       (B) such Indian tribe reimburses a State unemployment fund 
     for unemployment benefits paid for service attributable to 
     such tribe for such period.

 TITLE II--2-YEAR EXTENSION OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS

     SEC. 201. 2-YEAR EXTENSION OF AVAILABILITY OF MEDICAL SAVINGS 
                   ACCOUNTS.

       (a) In General.--Paragraphs (2) and (3)(B) of section 
     220(i) (defining cut-off year) are each amended by striking 
     ``2000'' each place it appears and inserting ``2002''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 220(j) is amended--
       (A) by striking ``1998 or 1999'' each place it appears and 
     inserting ``1998, 1999, or 2001'',
       (B) by striking ``600,000 (750,000 in the case of 1999)'' 
     and inserting ``750,000 (600,000 in the case of 1998)'', and
       (C) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) No limitation for 2000.--The numerical limitation 
     shall not apply for 2000.''
       (2) Subparagraph (A) of section 220(j)(4) is amended by 
     striking ``and 1999'' and inserting ``1999, and 2001''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 202. MEDICAL SAVINGS ACCOUNTS RENAMED AS ARCHER MSAS.

       (a) In General.--The following provisions are amended by 
     striking ``medical savings account'' each place it appears in 
     the text and inserting ``Archer MSA'':
       (1) Section 26(b)(2)(Q).
       (2) Section 106(b).
       (3) Section 138(b).
       (4) Section 220.
       (5) Section 848(e)(1)(B)(iv).
       (6) Subsections (a)(2) and (d) of section 4973.
       (7) Subsections (c)(4) and (e)(1)(D) of section 4975.
       (8) Subsections (a) and (d)(2)(B) of section 4980E.
       (9) Section 6051(a)(11).
       (b) Other Amendments.--
       (1) Paragraph (16) of section 62(a) is amended to read as 
     follows:
       ``(16) Archer msas.--The deduction allowed by section 
     220.''
       (2) The following provisions are each amended by striking 
     ``medical savings accounts'' each place it appears in the 
     text and inserting ``Archer MSAs'':
       (A) Paragraphs (4) and (7) of section 106(b).
       (B) Subsections (c)(1)(D), (e)(2), (f)(3)(A), (i)(4)(B), 
     and (j) of section 220.
       (C) Section 4973(d).
       (D) Subsections (b) and (d)(1) of section 4980E.
       (E) Section 6693(a)(2)(B).
       (3) Paragraph (1) of section 220(d) is amended by inserting 
     ``as a medical savings account'' after ``United States''.
       (4) The heading for section 220(d) is amended by striking 
     ``Medical Savings Account'' and inserting ``Archer MSA''.
       (5) The headings for sections 220(d)(1) and 3231(e)(10) are 
     each amended by striking ``Medical savings account'' and 
     inserting ``Archer msa''.
       (6) The headings for sections 106(b), 138(f), 220(i), and 
     4973(d) are each amended by striking ``Medical Savings 
     Accounts'' and inserting ``Archer MSAs''.
       (7) The headings for section 220(c)(1)(C) and 4975(c)(4) 
     are each amended by striking ``medical savings accounts'' and 
     inserting ``archer msas''.
       (8) The section heading for section 220 is amended to read 
     as follows:

     ``SEC. 220. ARCHER MSAS.''

       (9) The item relating to section 220 in the table of 
     sections for part VII of subchapter B of chapter 1 is amended 
     to read as follows:

``Sec. 220. Archer MSAs.''
       (10) The provisions amended by the preceding provisions of 
     this section are further amended by striking ``a Archer'' 
     each place it appears and inserting ``an Archer''.
       (11) Section 220(e)(1) is further amended by striking ``A 
     Archer'' and inserting ``An Archer''.

           TITLE III--ADMINISTRATIVE AND TECHNICAL PROVISIONS

                 Subtitle A--Administrative Provisions

     SEC. 301. EXEMPTION OF CERTAIN REPORTING REQUIREMENTS.

       Section 3003(a)(1) of the Federal Reports Elimination and 
     Sunset Act of 1995 (31 U.S.C. 1113 note) shall not apply to 
     any report required to be submitted under any of the 
     following provisions of law:
       (1) Section 13031(f) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(f)).
       (2) Section 16(c) of the Foreign Trade Zones Act (19 U.S.C. 
     81p(c)).
       (3) The following provisions of the Tariff Act of 1930:
       (A) Section 330(c)(1) (19 U.S.C. 1330(c)(1)).
       (B) Section 607(c) (19 U.S.C. 1607(c)).
       (4) Section 5 of the International Coffee Agreement Act of 
     1980 (19 U.S.C. 1356n).
       (5) Section 351(a)(2) of the Trade Expansion Act of 1962 
     (19 U.S.C. 1981(a)(2)).
       (6) Section 502 of the Automotive Products Trade Act of 
     1965 (19 U.S.C. 2032).
       (7) Section 3131 of the Customs Enforcement Act of 1986 (19 
     U.S.C. 2081).
       (8) The following provisions of the Trade Act of 1974 (19 
     U.S.C. 2101 et seq.):
       (A) Section 102(b)(4)(A)(ii)(I) (19 U.S.C. 
     2112(b)(4)(A)(ii)(I)).
       (B) Section 102(e)(1) (19 U.S.C. 2112(e)(1)).
       (C) Section 102(e)(2) (19 U.S.C. 2112(e)(2)).
       (D) Section 104(d) (19 U.S.C. 2114(d)).
       (E) Section 125(e) (19 U.S.C. 2135(e)).
       (F) Section 135(e)(1) (19 U.S.C. 2155(e)(1)).
       (G) Section 141(c) (19 U.S.C. 2171(c)).
       (H) Section 162 (19 U.S.C. 2212).
       (I) Section 163(b) (19 U.S.C. 2213(b)).
       (J) Section 163(c) (19 U.S.C. 2213(c)).
       (K) Section 203(b) (19 U.S.C. 2253(b)).
       (L) Section 302(b)(2)(C) (19 U.S.C. 2412(b)(2)(C)).
       (M) Section 303 (19 U.S.C. 2413).
       (N) Section 309 (19 U.S.C. 2419).
       (O) Section 407(a) (19 U.S.C. 2437(a)).
       (P) Section 502(f) (19 U.S.C. 2462(f)).
       (Q) Section 504 (19 U.S.C. 2464).
       (9) The following provisions of the Trade Agreements Act of 
     1979 (19 U.S.C. 2501 et seq.):
       (A) Section 2(b) (19 U.S.C. 2503(b)).
       (B) Section 3(c) (19 U.S.C. 2504(c)).
       (C) Section 305(c) (19 U.S.C. 2515(c)).
       (10) Section 303(g)(1) of the Convention on Cultural 
     Property Implementation Act (19 U.S.C. 2602(g)(1)).
       (11) The following provisions of the Caribbean Basin 
     Economic Recovery Act (19 U.S.C. 2701 et seq.):
       (A) Section 212(a)(1)(A) (19 U.S.C. 2702(a)(1)(A)).
       (B) Section 212(a)(2) (19 U.S.C. 2702(a)(2)).
       (12) The following provisions of the Omnibus Trade and 
     Competitiveness Act of 1988 (19 U.S.C. 2901 et seq.):
       (A) Section 1102 (19 U.S.C. 2902).
       (B) Section 1103 (19 U.S.C. 2903).
       (C) Section 1206(b) (19 U.S.C. 3006(b)).
       (13) Section 123(a) of the Customs and Trade Act of 1990 
     (Public Law 101-382) (19 U.S.C. 2083).
       (14) Section 243(b)(2) of the Caribbean Basin Economic 
     Recovery Expansion Act of 1990 (Public Law 101-382).
       (15) The following provisions of the Internal Revenue Code 
     of 1986:
       (A) Section 6103(p)(5).
       (B) Section 7608.
       (C) Section 7802(f)(3).
       (D) Section 8022(3).
       (E) Section 9602(a).
       (16) The following provisions relating to the revenue laws 
     of the United States:
       (A) Section 1552(c) of the Tax Reform Act of 1986 (100 
     Stat. 2753).
       (B) Section 231 of the Deficit Reduction Act of 1984 (26 
     U.S.C. 801 note).
       (C) Section 208 of the Tax Treatment Extension Act of 1977 
     (26 U.S.C. 911 note).
       (D) Section 7105 of the Technical and Miscellaneous Revenue 
     Act of 1988 (45 U.S.C. 369).
       (17) Section 4008 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1308).
       (18) Section 426 of the Black Lung Benefits Act (30 U.S.C. 
     936(b)).
       (19) Section 7502(g) of title 31, United States Code.
       (20) The following provisions of the Social Security Act:
       (A) Section 215(i)(2)(C)(i) (42 U.S.C. 415(i)(2)(C)(i)).
       (B) Section 221(i)(2) (42 U.S.C. 421(i)(2)).
       (C) Section 221(i)(3) (42 U.S.C. 421(i)(3)).
       (D) Section 233(e)(1) (42 U.S.C. 433(e)(1)).
       (E) Section 452(a)(10) (42 U.S.C. 652(a)(10)).
       (F) Section 452(g)(3)(B) (42 U.S.C. 652(g)(3)(B)).
       (G) Section 506(a)(1) (42 U.S.C. 706(a)).
       (H) Section 908 (42 U.S.C. 1108).
       (I) Section 1114(f) (42 U.S.C. 1314(f)).
       (J) Section 1120 (42 U.S.C. 1320).
       (K) Section 1161 (42 U.S.C. 1320c-10).
       (L) Section 1875(b) (42 U.S.C. 1395ll(b)).
       (M) Section 1881 (42 U.S.C. 1395rr).
       (N) Section 1882 (42 U.S.C. 1395ss(f)(2)).

[[Page H12399]]

       (21) Section 104(b) of the Social Security Independence and 
     Program Improvements Act of 1994 (42 USC 904 note).
       (22) Section 10 of the Railroad Retirement Act of 1937 (45 
     U.S.C. 231f).
       (23) The following provisions of the Railroad Retirement 
     Act of 1974:
       (A) Section 22(a)(1) (45 U.S.C. 231u(a)(1)).
       (B) Section 22(b)(1) (45 U.S.C. 231u(b)(1)).
       (24) Section 502 of the Railroad Retirement Solvency Act of 
     1983 (45 U.S.C. 231f-1).
       (25) Section 47121(c) of title 49, United States Code.
       (26) The following provisions of the Omnibus Budget 
     Reconciliation Act of 1987 (Public Law 100-203; 101 Stat. 
     1330-182):
       (A) Section 4007(c)(4) (42 U.S.C. 1395ww note).
       (B) Section 4079 (42 U.S.C. 1395mm note).
       (C) Section 4205 (42 U.S.C. 1395i-3 note).
       (D) Section 4215 (42 U.S.C. 1396r note).
       (27) The following provisions of the Inspector General Act 
     of 1978 (Public Law 95-452):
       (A) Section 5(b).
       (B) Section 5(d).
       (28) The following provisions of the Public Health Service 
     Act:
       (A) In section 308(a) (42 U.S.C. 242m(a)), subparagraphs 
     (A), (B), (C), and (D) of paragraph (1).
       (B) Section 403 (42 U.S.C. 283).
       (29) Section 404 of the Health Services and Centers 
     Amendments of 1978 (42 U.S.C. 242p) (Public Law 95-626).
       (30) The following provisions of the Older Americans Act of 
     1965:
       (A) Section 206(d) (42 U.S.C. 3017(d)).
       (B) Section 207 (42 U.S.C. 3018).
       (31) Section 308 of the Age Discrimination Act of 1975 (42 
     U.S.C. 6106a(b)).
       (32) Section 509(c)(3) of the Americans with Disabilities 
     Act 0f 1990 (42 U.S.C. 12209(c)(3)).
       (33) Section 4207(f) of the Omnibus Budget Reconciliation 
     Act of 1990 (42 U.S.C. 1395b-1 note).

     SEC. 302. EXTENSION OF DEADLINES FOR IRS COMPLIANCE WITH 
                   CERTAIN NOTICE REQUIREMENTS.

       (a) Annual Installment Agreement Notice.--Section 3506 of 
     the Internal Revenue Service Restructuring and Reform Act of 
     1998 is amended by striking ``July 1, 2000'' and inserting 
     ``September 1, 2001''.
       (b) Notice Requirements Relating to Computation of 
     Penalty.--Subsection (c) of section 3306 of the Internal 
     Revenue Service Restructuring and Reform Act of 1998 is 
     amended--
       (1) by striking ``December 31, 2000'' and inserting ``June 
     30, 2001'', and
       (2) by adding at the end the following: ``In the case of 
     any notice of penalty issued after June 30, 2001, and before 
     July 1, 2003, the requirements of section 6751(a) of the 
     Internal Revenue Code of 1986 shall be treated as met if such 
     notice contains a telephone number at which the taxpayer can 
     request a copy of the taxpayer's assessment and payment 
     history with respect to such penalty.''.
       (c) Notice Requirements Relating to Interest Imposed.--
     Subsection (c) of section 3308 of the Internal Revenue 
     Service Restructuring and Reform Act of 1998 is amended--
       (1) by striking ``December 31, 2000'' and inserting ``June 
     30, 2001'', and
       (2) by adding at the end the following: ``In the case of 
     any notice issued after June 30, 2001, and before July 1, 
     2003, to which section 6631 of the Internal Revenue Code of 
     1986 applies, the requirements of section 6631 of such Code 
     shall be treated as met if such notice contains a telephone 
     number at which the taxpayer can request a copy of the 
     taxpayer's payment history relating to interest amounts 
     included in such notice.''.

     SEC. 303. EXTENSION OF AUTHORITY FOR UNDERCOVER OPERATIONS.

       Paragraph (6), and the last sentence, of section 7608(c) 
     are each amended by striking ``January 1, 2001'' and 
     inserting ``January 1, 2006''.

     SEC. 304. CONFIDENTIALITY OF CERTAIN DOCUMENTS RELATING TO 
                   CLOSING AND SIMILAR AGREEMENTS AND TO 
                   AGREEMENTS WITH FOREIGN GOVERNMENTS.

       (a) Closing and Similar Agreements Treated As Return 
     Information.--Paragraph (2) of section 6103(b) (defining 
     return information) is amended by striking ``and'' at the end 
     of subparagraph (B), by inserting ``and'' at the end of 
     subparagraph (C), and by inserting after subparagraph (C) the 
     following new subparagraph:
       ``(D) any agreement under section 7121, and any similar 
     agreement, and any background information related to such an 
     agreement or request for such an agreement,''.
       (b) Agreements With Foreign Governments.--
       (1) In general.--Subchapter B of chapter 61 (relating to 
     miscellaneous provisions) is amended by inserting after 
     section 6104 the following new section:

     ``SEC. 6105. CONFIDENTIALITY OF INFORMATION ARISING UNDER 
                   TREATY OBLIGATIONS.

       ``(a) In General.--Tax convention information shall not be 
     disclosed.
       ``(b) Exceptions.--Subsection (a) shall not apply--
       ``(1) to the disclosure of tax convention information to 
     persons or authorities (including courts and administrative 
     bodies) which are entitled to such disclosure pursuant to a 
     tax convention,
       ``(2) to any generally applicable procedural rules 
     regarding applications for relief under a tax convention, or
       ``(3) in any case not described in paragraphs (1) or (2), 
     to the disclosure of any tax convention information not 
     relating to a particular taxpayer if the Secretary 
     determines, after consultation with each other party to the 
     tax convention, that such disclosure would not impair tax 
     administration.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Tax convention information.--The term `tax convention 
     information' means any--
       ``(A) agreement entered into with the competent authority 
     of one or more foreign governments pursuant to a tax 
     convention,
       ``(B) application for relief under a tax convention,
       ``(C) any background information related to such agreement 
     or application,
       ``(D) document implementing such agreement, and
       ``(E) any other information exchanged pursuant to a tax 
     convention which is treated as confidential or secret under 
     the tax convention.
       ``(2) Tax convention.--The term `tax convention' means--
       ``(A) any income tax or gift and estate tax convention, or
       ``(B) any other convention or bilateral agreement 
     (including multilateral conventions and agreements and any 
     agreement with a possession of the United States) providing 
     for the avoidance of double taxation, the prevention of 
     fiscal evasion, nondiscrimination with respect to taxes, the 
     exchange of tax relevant information with the United States, 
     or mutual assistance in tax matters.
       ``(d) Cross References.--

  ``For penalties for the unauthorized disclosure of tax convention 
information which is return or return information, see sections 7213, 
7213A, and 7431.''.

       (2) Clerical amendment.--The table of sections for 
     subchapter B of chapter 61 is amended by inserting after the 
     item relating to section 6104 the following new item:

``Sec. 6105. Confidentiality of information arising under treaty 
              obligations.''.

       (c) Exception From Public Inspection as Written 
     Determination.--
       (1) Closing and similar agreements.--Paragraph (1) of 
     section 6110(b) is amended to read as follows:
       ``(1) Written determination.--
       ``(A) In general.--The term `written determination' means a 
     ruling, determination letter, technical advice memorandum, or 
     Chief Counsel advice.
       ``(B) Exceptions.--Such term shall not include any matter 
     referred to in subparagraph (C) or (D) of section 
     6103(b)(2).''.
       (2) Agreements with foreign governments.--Paragraph (1) of 
     section 6110(l) is amended by inserting ``or 6105'' after 
     ``6104''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 305. INCREASE IN THRESHOLD FOR JOINT COMMITTEE REPORTS 
                   ON REFUNDS AND CREDITS.

       (a) General Rule.--Subsections (a) and (b) of section 6405 
     are each amended by striking ``$1,000,000'' and inserting 
     ``$2,000,000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act, 
     except that such amendment shall not apply with respect to 
     any refund or credit with respect to a report that has been 
     made before such date of the enactment under section 6405 of 
     the Internal Revenue Code of 1986.

     SEC. 306. TREATMENT OF MISSING CHILDREN WITH RESPECT TO 
                   CERTAIN TAX BENEFITS.

       (a) In General.--Subsection (c) of section 151 (relating to 
     additional exemption for dependents) is amended by adding at 
     the end the following new paragraph:
       ``(6) Treatment of missing children.--
       ``(A) In general.--Solely for the purposes referred to in 
     subparagraph (B), a child of the taxpayer--
       ``(i) who is presumed by law enforcement authorities to 
     have been kidnapped by someone who is not a member of the 
     family of such child or the taxpayer, and
       ``(ii) who was (without regard to this paragraph) the 
     dependent of the taxpayer for the portion of the taxable year 
     before the date of the kidnapping,
     shall be treated as a dependent of the taxpayer for all 
     taxable years ending during the period that the child is 
     kidnapped.
       ``(B) Purposes.--Subparagraph (A) shall apply solely for 
     purposes of determining--
       ``(i) the deduction under this section,
       ``(ii) the credit under section 24 (relating to child tax 
     credit), and
       ``(iii) whether an individual is a surviving spouse or a 
     head of a household (such terms are defined in section 2).
       ``(C) Comparable treatment for earned income credit.--For 
     purposes of section 32, an individual--
       ``(i) who is presumed by law enforcement authorities to 
     have been kidnapped by someone who is not a member of the 
     family of such individual or the taxpayer, and
       ``(ii) who had, for the taxable year in which the 
     kidnapping occurred, the same principal place of abode as the 
     taxpayer for more than one-half of the portion of such year 
     before the date of the kidnapping, shall be treated as 
     meeting the requirement of section 32(c)(3)(A)(ii) with 
     respect to a taxpayer for all taxable years ending during the 
     period that the individual is kidnapped.
       ``(D) Termination of treatment.--Subparagraphs (A) and (C) 
     shall cease to apply as of the first taxable year of the 
     taxpayer beginning after the calendar year in which there is 
     a determination that the child is dead (or, if earlier, in 
     which the child would have attained age 18).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 307. AMENDMENTS TO STATUTES REFERENCING YIELD ON 52-WEEK 
                   TREASURY BILLS.

       (a) Amendment to the Act of February 26, 1931.--Section 6 
     of the Act of February 26, 1931

[[Page H12400]]

     (40 U.S.C. 258e-1) (relating to the interest rate on 
     compensation owed for takings of property) is amended--
       (1) in paragraph (1), by striking ``the coupon issue yield 
     equivalent (as determined by the Secretary of the Treasury) 
     of the average accepted auction price for the last auction of 
     52 week United States Treasury bills settled immediately 
     before'' and inserting ``the weekly average 1-year constant 
     maturity Treasury yield, as published by the Board of 
     Governors of the Federal Reserve System, for the calendar 
     week preceding''; and
       (2) in paragraph (2), by striking ``the coupon issue yield 
     equivalent (as determined by the Secretary of the Treasury) 
     of the average accepted auction price for the last auction of 
     52 week United States Treasury bills settled immediately 
     before'' and inserting ``the weekly average 1-year constant 
     maturity Treasury yield, as published by the Board of 
     Governors of the Federal Reserve System, for the calendar 
     week preceding''.
       (b) Amendment to Title 18, United States Code.--Section 
     3612(f)(2)(B) of title 18, United States Code (relating to 
     the interest rate on unpaid criminal fines and penalties of 
     more than $2,500) is amended by striking ``the coupon issue 
     yield equivalent (as determined by the Secretary of the 
     Treasury) of the average accepted auction price for the last 
     auction of fifty-two week United States Treasury bills 
     settled before'' and inserting `the weekly average 1-year 
     constant maturity Treasury yield, as published by the Board 
     of Governors of the Federal Reserve System, for the calendar 
     week preceding.''.
       (c) Amendment to the Internal Revenue Code.--Section 
     995(f)(4) (relating to the interest rate on tax-deferred 
     liability of shareholders of domestic international sales 
     corporations) is amended by striking ``the average investment 
     yield of United States Treasury bills with maturities of 52 
     weeks which were auctioned during the 1-year period'' and 
     inserting ``the average of the 1-year constant maturity 
     Treasury yields, as published by the Board of Governors of 
     the Federal Reserve System, for the 1-year period''.
       (d) Amendments to Title 28, United States Code.--
       (1) Amendment to section 1961.--Section 1961(a) of title 
     28, United States Code (relating to the interest rate on 
     money judgments in civil cases recovered in Federal district 
     court) is amended by striking ``the coupon issue yield 
     equivalent (as determined by the Secretary of the Treasury) 
     of the average accepted auction price for the last auction of 
     fifty-two week United States Treasury bills settled 
     immediately prior to'' and inserting ``the weekly average 1-
     year constant maturity Treasury yield, as published by the 
     Board of Governors of the Federal Reserve System, for the 
     calendar week preceding.''.
       (2) Amendment to section 2516.--Section 2516(b) of title 
     28, United States Code (relating to the interest rate on a 
     judgment against the United States affirmed by the Supreme 
     Court after review on petition of the United States) is 
     amended by striking ``the coupon issue yield equivalent (as 
     determined by the Secretary of the Treasury) of the average 
     accepted auction price for the last auction of fifty-two week 
     United States Treasury bills settled immediately before'' and 
     inserting ``the weekly average 1-year constant maturity 
     Treasury yield, as published by the Board of Governors of the 
     Federal Reserve System, for the calendar week preceding''.

     SEC. 308. ADJUSTMENTS FOR CONSUMER PRICE INDEX ERROR.

       (a) Determinations by OMB.--As soon as practicable after 
     the date of the enactment of this Act, the Director of the 
     Office of Management and Budget shall determine with respect 
     to each applicable Federal benefit program whether the CPI 
     computation error for 1999 has or will result in a shortfall 
     in payments to beneficiaries under such program (as compared 
     to payments that would have been made if the error had not 
     occurred). As soon as practicable after the date of the 
     enactment of this Act, but not later than 60 days after such 
     date, the Director shall direct the head of the Federal 
     agency which administers such program to make a payment or 
     payments that, insofar as the Director finds practicable and 
     feasible--
       (1) are targeted to the amount of the shortfall experienced 
     by individual beneficiaries, and
       (2) compensate for the shortfall.
       (b) Coordination with Federal Agencies.--As soon as 
     practicable after the date of the enactment of this Act, each 
     Federal agency that administers an applicable Federal benefit 
     program shall, in accordance with such guidelines as are 
     issued by the Director pursuant to this section, make an 
     initial determination of whether, and the extent to which, 
     the CPI computation error for 1999 has or will result in a 
     shortfall in payments to beneficiaries of an applicable 
     Federal benefit program administered by such agency. Not 
     later than 30 days after such date, the head of such agency 
     shall submit a report to the Director and to each House of 
     the Congress of such determination, together with a complete 
     description of the nature of the shortfall.
       (c) Implementation Pursuant to Agency Reports.--Upon 
     receipt of the report submitted by a Federal agency pursuant 
     to subsection (b), the Director shall review the initial 
     determination of the agency, the agency's description of the 
     nature of the shortfall, and the compensation payments 
     proposed by the agency. Prior to directing payment of such 
     payments pursuant to subsection (a), the Director shall make 
     appropriate adjustments (if any) in the compensation payments 
     proposed by the agency that the Director determines are 
     necessary to comply with the requirements of subsection (a) 
     and transmit to the agency a summary report of the review, 
     indicating any adjustments made by the Director. The agency 
     shall make the compensation payments as directed by the 
     Director pursuant to subsection (a) in accordance with the 
     Director's summary report.
       (d) Income Disregard Under Federal Means-Tested Benefit 
     Programs.--A payment made under this section to compensate 
     for a shortfall in benefits shall, in accordance with 
     guidelines issued by the Director pursuant to this section, 
     be disregarded in determining income under title VIII of the 
     Social Security Act or any applicable Federal benefit program 
     that is means-tested.
       (e) Funding.--Funds otherwise available under each 
     applicable Federal benefit program for making benefit 
     payments under such program are hereby made available for 
     making compensation payments under this section in connection 
     with such program.
       (f) No Judicial Review.--No action taken pursuant to this 
     section shall be subject to judicial review.
       (g) Director's Report.--Not later than April 1, 2001, the 
     Director shall submit to each House of the Congress a report 
     on the activities performed by the Director pursuant to this 
     section.
       (h) Definitions.--For purposes of this section:
       (1) Applicable federal benefit program.--The term 
     ``applicable Federal benefit program'' means any program of 
     the Government of the United States providing for regular or 
     periodic payments or cash assistance paid directly to 
     individual beneficiaries, as determined by the Director of 
     the Office of Management and Budget.
       (2) Federal agency.--The term ``Federal agency'' means a 
     department, agency, or instrumentality of the Government of 
     the United States.
       (3) CPI computation error for 1999.--The term ``CPI 
     computation error for 1999'' means the error in the 
     computation of the Consumer Price Index announced by the 
     Bureau of Labor Statistics on September 28, 2000.
       (i) Tax Provisions.--In the case of taxable years (and 
     other periods) beginning after December 31, 2000, if any 
     Consumer Price Index (as defined in section 1(f)(5) of the 
     Internal Revenue Code of 1986) reflects the CPI computation 
     error for 1999--
       (1) the correct amount of such Index shall (in such manner 
     and to such extent as the Secretary of the Treasury 
     determines to be appropriate) be taken into account for 
     purposes of such Code, and
       (2) tables prescribed under section 1(f) of such Code to 
     reflect such correct amount shall apply in lieu of any tables 
     that were prescribed based on the erroneous amount.

     SEC. 309. PREVENTION OF DUPLICATION OF LOSS THROUGH 
                   ASSUMPTION OF LIABILITIES GIVING RISE TO A 
                   DEDUCTION.

       (a) In General.--Section 358 (relating to basis to 
     distributees) is amended by adding at the end the following 
     new subsection:
       ``(h) Special Rules for Assumption of Liabilities To Which 
     Subsection (d) Does Not Apply.--
       ``(1) In general.--If, after application of the other 
     provisions of this section to an exchange or series of 
     exchanges, the basis of property to which subsection (a)(1) 
     applies exceeds the fair market value of such property, then 
     such basis shall be reduced (but not below such fair market 
     value) by the amount (determined as of the date of the 
     exchange) of any liability--
       ``(A) which is assumed in exchange for such property, and
       ``(B) with respect to which subsection (d)(1) does not 
     apply to the assumption.
       ``(2) Exceptions.--Except as provided by the Secretary, 
     paragraph (1) shall not apply to any liability if--
       ``(A) the trade or business with which the liability is 
     associated is transferred to the person assuming the 
     liability as part of the exchange, or
       ``(B) substantially all of the assets with which the 
     liability is associated are transferred to the person 
     assuming the liability as part of the exchange.
       ``(3) Liability.--For purposes of this subsection, the term 
     `liability' shall include any fixed or contingent obligation 
     to make payment, without regard to whether the obligation is 
     otherwise taken into account for purposes of this title.''
       (b) Determination of Amount of Liability Assumed.--Section 
     357(d)(1) is amended by inserting ``section 358(h),'' after 
     ``section 358(d),''.
       (c) Application of Comparable Rules to Partnerships and S 
     Corporations.--The Secretary of the Treasury or his 
     delegate--
       (1) shall prescribe rules which provide appropriate 
     adjustments under subchapter K of chapter 1 of the Internal 
     Revenue Code of 1986 to prevent the acceleration or 
     duplication of losses through the assumption of (or transfer 
     of assets subject to) liabilities described in section 
     358(h)(3) of such Code (as added by subsection (a)) in 
     transactions involving partnerships, and
       (2) may prescribe rules which provide appropriate 
     adjustments under subchapter S of chapter 1 of such Code in 
     transactions described in paragraph (1) involving S 
     corporations rather than partnerships.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to assumptions of liability after October 18, 1999.
       (2) Rules.--The rules prescribed under subsection (c) shall 
     apply to assumptions of liability after October 18, 1999, or 
     such later date as may be prescribed in such rules.

     SEC. 310. DISCLOSURE OF CERTAIN INFORMATION TO CONGRESSIONAL 
                   BUDGET OFFICE.

       (a) Disclosure of Certain Tax Information.--
       (1) In general.--Subsection (j) of section 6103 (relating 
     to statistical use) is amended by adding at the end the 
     following new paragraph:
       ``(6) Congressional budget office.--Upon written request by 
     the Director of the Congressional Budget Office, the 
     Secretary shall furnish

[[Page H12401]]

     to officers and employees of the Congressional Budget Office 
     return information for the purpose of, but only to the extent 
     necessary for, long-term models of the social security and 
     medicare programs.''
       (2) Recordkeeping safeguards.--Section 6103(p) is amended--
       (A) in paragraph (4)--
       (i) in the matter preceding subparagraph (A), by inserting 
     ``the Congressional Budget Office,'' after ``General 
     Accounting Office,'',
       (ii) in subparagraph (E), by striking ``commission or the 
     General Accounting Office'' and inserting ``commission, the 
     General Accounting Office, or the Congressional Budget 
     Office'',
       (iii) in subparagraph (F)(ii), by striking ``or the General 
     Accounting Office,'' and inserting ``the General Accounting 
     Office, or the Congressional Budget Office,'', and
       (iv) in the matter following subparagraph (F), by inserting 
     ``or the Congressional Budget Office'' after ``General 
     Accounting Office'' both places it appears,
       (B) in paragraph (5), by striking ``commissions and the 
     General Accounting Office'' and inserting ``commissions, the 
     General Accounting Office, and the Congressional Budget 
     Office'', and
       (C) in paragraph (6)(A), by inserting ``and the 
     Congressional Budget Office'' after ``commissions''.
       (b) Confidentiality of Records.--
       (1) In general.--Section 203 of the Congressional Budget 
     Act of 1974 (2 U.S.C. 603) is amended by adding at the end 
     the following:
       ``(e) Level of Confidentiality.--With respect to 
     information, data, estimates, and statistics obtained under 
     sections 201(d) and 201(e), the Director shall maintain the 
     same level of confidentiality as is required by law of the 
     department, agency, establishment, or regulatory agency or 
     commission from which it is obtained. Officers and employees 
     of the Congressional Budget Office shall be subject to the 
     same statutory penalties for unauthorized disclosure or use 
     as officers or employees of the department, agency, 
     establishment, or regulatory agency or commission from which 
     it is obtained.''.
       (2) Conforming amendment.--Subsection (a) of section 203 of 
     such Act is amended by striking ``subsections (c) and (d)'' 
     and inserting ``subsections (c), (d), and (e)''.

                   Subtitle B--Technical Corrections

     SEC. 311. AMENDMENTS RELATED TO TICKET TO WORK AND WORK 
                   INCENTIVES IMPROVEMENT ACT OF 1999.

       (a) Amendments Related to Section 502 of the Act.--
       (1) Section 280C(c)(1) is amended by striking ``or credit'' 
     after ``deduction'' each place it appears.
       (2) Section 30A is amended by redesignating subsections (f) 
     and (g) as subsections (g) and (h), respectively, and by 
     inserting after subsection (e) the following new subsection:
       ``(f) Denial of Double Benefit.--Any wages or other 
     expenses taken into account in determining the credit under 
     this section may not be taken into account in determining the 
     credit under section 41.''
       (b) Amendment Related to Section 545 of the Act.--Clause 
     (ii) of section 857(b)(7)(B) is amended to read as follows:
       ``(ii) Exception for certain amounts.--Clause (i) shall not 
     apply to amounts received directly or indirectly by a real 
     estate investment trust--
       ``(I) for services furnished or rendered by a taxable REIT 
     subsidiary that are described in paragraph (1)(B) of section 
     856(d), or
       ``(II) from a taxable REIT subsidiary that are described in 
     paragraph (7)(C)(ii) of such section.''
       (c) Clarification Related to Section 538 of the Act.--The 
     reference to section 332(b)(1) of the Internal Revenue Code 
     of 1986 in Treasury Regulation section 1.1502-34 shall be 
     deemed to include a reference to section 732(f) of such Code.
       (d) Effective Date.--Subsection (c) and the amendments made 
     by this section shall take effect as if included in the 
     provisions of the Ticket to Work and Work Incentives 
     Improvement Act of 1999 to which they relate.

     SEC. 312. AMENDMENTS RELATED TO TAX AND TRADE RELIEF 
                   EXTENSION ACT OF 1998.

       (a) Amendment Related to Section 1004(b) of the Act.--
     Subsection (d) of section 6104 is amended by adding at the 
     end the following new paragraph:
       ``(6) Application to nonexempt charitable trusts and 
     nonexempt private foundations.--The organizations referred to 
     in paragraphs (1) and (2) of section 6033(d) shall comply 
     with the requirements of this subsection relating to annual 
     returns filed under section 6033 in the same manner as the 
     organizations referred to in paragraph (1).''.
       (b) Amendment Related to Section 4003 of the Act.--
     Subsection (b) of section 4003 of the Tax and Trade Relief 
     Extension Act of 1998 is amended by inserting 
     ``(7)(A)(i)(II),'' after ``(5)(A)(ii)(I),''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the Tax 
     and Trade Relief Extension Act of 1998 to which they relate.

     SEC. 313. AMENDMENTS RELATED TO INTERNAL REVENUE SERVICE 
                   RESTRUCTURING AND REFORM ACT OF 1998.

       (a) Amendments Related to Innocent Spouse Relief.--
       (1) Election may be made any time after deficiency 
     asserted.--Subparagraph (B) of section 6015(c)(3) is amended 
     by striking ``shall be made'' and inserting ``may be made at 
     any time after a deficiency for such year is asserted but''.
       (2) Clarification regarding disallowance of refunds and 
     credits under section 6015(c).--
       (A) In general.--Section 6015 is amended by redesignating 
     subsection (g) as subsection (h) and by inserting after 
     subsection (f) the following new subsection:
       ``(g) Credits and Refunds.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), notwithstanding any other law or rule of law (other than 
     section 6511, 6512(b), 7121, or 7122), credit or refund shall 
     be allowed or made to the extent attributable to the 
     application of this section.
       ``(2) Res judicata.--In the case of any election under 
     subsection (b) or (c), if a decision of a court in any prior 
     proceeding for the same taxable year has become final, such 
     decision shall be conclusive except with respect to the 
     qualification of the individual for relief which was not an 
     issue in such proceeding. The exception contained in the 
     preceding sentence shall not apply if the court determines 
     that the individual participated meaningfully in such prior 
     proceeding.
       ``(3) Credit and refund not allowed under subsection (c).--
     No credit or refund shall be allowed as a result of an 
     election under subsection (c).''.
       (B) Conforming amendment.--Paragraph (3) of section 6015(e) 
     is amended to read as follows:
       ``(3) Limitation on tax court jurisdiction.--If a suit for 
     refund is begun by either individual filing the joint return 
     pursuant to section 6532--
       ``(A) the Tax Court shall lose jurisdiction of the 
     individual's action under this section to whatever extent 
     jurisdiction is acquired by the district court or the United 
     States Court of Federal Claims over the taxable years that 
     are the subject of the suit for refund, and
       ``(B) the court acquiring jurisdiction shall have 
     jurisdiction over the petition filed under this 
     subsection.''.
       (3) Clarifications regarding review by tax court.--
       (A) Paragraph (1) of section 6015(e) is amended in the 
     matter preceding subparagraph (A) by inserting after 
     ``individual'' the following: ``against whom a deficiency has 
     been asserted and''.
       (B) Subparagraph (A) of section 6015(e)(1) is amended to 
     read as follows:
       ``(A) In general.--In addition to any other remedy provided 
     by law, the individual may petition the Tax Court (and the 
     Tax Court shall have jurisdiction) to determine the 
     appropriate relief available to the individual under this 
     section if such petition is filed--
       ``(i) at any time after the earlier of--

       ``(I) the date the Secretary mails, by certified or 
     registered mail to the taxpayer's last known address, notice 
     of the Secretary's final determination of relief available to 
     the individual, or
       ``(II) the date which is 6 months after the date such 
     election is filed with the Secretary, and

       ``(ii) not later than the close of the 90th day after the 
     date described in clause (i)(I).''.
       (C) Subparagraph (B)(i) of section 6015(e)(1) is amended--
       (i) by striking ``until the expiration of the 90-day period 
     described in subparagraph (A)'' and inserting ``until the 
     close of the 90th day referred to in subparagraph (A)(ii)'', 
     and
       (ii) by inserting ``under subparagraph (A)'' after ``filed 
     with the Tax Court''.
       (D)(i) Subsection (e) of section 6015 is amended by adding 
     at the end the following new paragraph:
       ``(5) Waiver.--An individual who elects the application of 
     subsection (b) or (c) (and who agrees with the Secretary's 
     determination of relief) may waive in writing at any time the 
     restrictions in paragraph (1)(B) with respect to collection 
     of the outstanding assessment (whether or not a notice of the 
     Secretary's final determination of relief has been 
     mailed).''.
       (ii) Paragraph (2) of section 6015(e) is amended to read as 
     follows:
       ``(2) Suspension of running of period of limitations.--The 
     running of the period of limitations in section 6502 on the 
     collection of the assessment to which the petition under 
     paragraph (1)(A) relates shall be suspended--
       ``(A) for the period during which the Secretary is 
     prohibited by paragraph (1)(B) from collecting by levy or a 
     proceeding in court and for 60 days thereafter, and
       ``(B) if a waiver under paragraph (5) is made, from the 
     date the claim for relief was filed until 60 days after the 
     waiver is filed with the Secretary.''.
       (b) Amendments Related to Procedure and Administration.--
       (1) Disputes involving $50,000 or less.--Section 7463 is 
     amended by adding at the end the following new subsection:
       ``(f) Additional Cases in Which Proceedings May Be 
     Conducted Under This Section.--At the option of the taxpayer 
     concurred in by the Tax Court or a division thereof before 
     the hearing of the case, proceedings may be conducted under 
     this section (in the same manner as a case described in 
     subsection (a)) in the case of--
       ``(1) a petition to the Tax Court under section 6015(e) in 
     which the amount of relief sought does not exceed $50,000, 
     and
       ``(2) an appeal under section 6330(d)(1)(A) to the Tax 
     Court of a determination in which the unpaid tax does not 
     exceed $50,000.''.
       (2) Authority to enjoin collection actions.--
       (A) Section 6330(e)(1) is amended by adding at the end the 
     following: ``Notwithstanding the provisions of section 
     7421(a), the beginning of a levy or proceeding during the 
     time the suspension under this paragraph is in force may be 
     enjoined by a proceeding in the proper court, including the 
     Tax Court. The Tax Court shall have no jurisdiction under 
     this paragraph to enjoin any action or proceeding unless a 
     timely appeal has been filed under subsection (d)(1) and then 
     only in respect of the unpaid tax or proposed levy to which 
     the determination being appealed relates.''.

[[Page H12402]]

       (B) Section 7421(a) is amended by inserting ``6330(e)(1),'' 
     after ``6246(b),''.
       (3) Clarification.--Paragraph (3) of section 6331(k) is 
     amended by striking ``(3), (4), and (5)'' and inserting ``(3) 
     and (4)''.
       (c) Amendment Related to Section 1103 of the Act.--
     Paragraph (6) of section 6103(k) is amended--
       (1) by inserting ``and an officer or employee of the Office 
     of Treasury Inspector General for Tax Administration'' after 
     ``internal revenue officer or employee'', and
       (2) by striking ``internal revenue'' in the heading and 
     inserting ``certain''.
       (d) Amendment Related to Section 3401 of the Act.--Section 
     6330(d)(1)(A) is amended by striking ``to hear'' and 
     inserting ``with respect to''.
       (e) Amendment Related to Section 3509 of the Act.--
     Subparagraph (A) of section 6110(g)(5) is amended by 
     inserting ``, any Chief Counsel advice,'' after ``technical 
     advice memorandum''.
       (f) Effective Dates.--The amendments made by subsections 
     (a) and (b) shall take effect on the date of the enactment of 
     this Act. The amendments made by subsections (c), (d), and 
     (e) shall take effect as if included in the provisions of the 
     Internal Revenue Service Restructuring and Reform Act of 1998 
     to which they relate.

     SEC. 314. AMENDMENTS RELATED TO TAXPAYER RELIEF ACT OF 1997.

       (a) Amendment Related to Section 101 of the Act.--Paragraph 
     (4) of section 6211(b) is amended by striking ``sections 32 
     and 34'' and inserting ``sections 24(d), 32, and 34''.
       (b) Amendment Related to Section 302 of the Act.--The last 
     sentence of section 3405(e)(1)(B) is amended by inserting 
     ``(other than a Roth IRA)'' after ``individual retirement 
     plan''.
       (c) Amendment to Section 311 of the Act.--Paragraph (3) of 
     section 311(e) of the Taxpayer Relief Act of 1997 (relating 
     to election to recognize gain on assets held on January 1, 
     2001) is amended by adding at the end the following new 
     sentence: ``Such an election shall not apply to any asset 
     which is disposed of (in a transaction in which gain or loss 
     is recognized in whole or in part) before the close of the 1-
     year period beginning on the date that the asset would have 
     been treated as sold under such election.''
       (d) Amendment Related to Section 402 of the Act.--The flush 
     sentence at the end of clause (ii) of section 56(a)(1)(A) is 
     amended by inserting before ``or to any other property'' the 
     following: ``(and the straight line method shall be used for 
     such 1250 property)''.
       (e) Amendments Related to Section  1072 of the Act.--
       (1) Clause (ii) of section 415(c)(3)(D) and subparagraph 
     (B) of section 403(b)(3) are each amended by striking 
     ``section 125 or'' and inserting ``section 125, 132(f)(4), 
     or''.
       (2) Paragraph (2) of section 414(s) is amended by striking 
     ``section 125, 402(e)(3)'' and inserting ``section 125, 
     132(f)(4), 402(e)(3)''.
       (f) Amendment Related to Section  1454 of the Act.--
     Subsection (a) of section 7436 is amended by inserting before 
     the period at the end of the first sentence ``and the proper 
     amount of employment tax under such determination''.
       (g) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Taxpayer Relief of 1997 to which they relate.

     SEC. 315. AMENDMENTS RELATED TO BALANCED BUDGET ACT OF 1997.

       (a) Amendments Related to Section  9302 of the Act.--
       (1) Paragraph (1) of section 9302(j) of the Balanced Budget 
     Act of 1997 is amended by striking ``tobacco products and 
     cigarette papers and tubes'' and inserting ``cigarettes''.
       (2)(A) Subsection (h) of section 5702 is amended to read as 
     follows:
       ``(h) Manufacturer of Cigarette Papers and Tubes.--
     `Manufacturer of cigarette papers and tubes' means any person 
     who manufactures cigarette paper, or makes up cigarette paper 
     into tubes, except for his own personal use or consumption.''
       (B) Section 5702, as amended by subparagraph (A), is 
     amended by striking subsection (f) and by redesignating 
     subsections (g) through (p) as subsections (f) through (o), 
     respectively.
       (3) Subsection (c) of section 5761 is amended by adding at 
     the end the following: ``This subsection and section 5754 
     shall not apply to any person who relands or receives tobacco 
     products in the quantity allowed entry free of tax and duty 
     under chapter 98 of the Harmonized Tariff Schedule of the 
     United States, and such person may voluntarily relinquish to 
     the Secretary at the time of entry any excess of such 
     quantity without incurring the penalty under this subsection. 
     No quantity of tobacco products other than the quantity 
     referred to in the preceding sentence may be relanded or 
     received as a personal use quantity.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in section 9302 of the 
     Balanced Budget Act of 1997.

     SEC. 316. AMENDMENTS RELATED TO SMALL BUSINESS JOB PROTECTION 
                   ACT OF 1996.

       (a) Amendment Related to Section 1201 of the Act.--
     Subparagraph (B) of section 51(d)(2) is amended--
       (1) by striking ``plan approved'' and inserting ``program 
     funded'', and
       (2) by striking ``(relating to assistance for needy 
     families with minor children)''.
       (b) Amendment Related to Section 1302 of the Act.--Clause 
     (i) of section 1361(e)(1)(A) is amended by striking ``or'' 
     before ``(III)'' and by adding at the end the following: ``or 
     (IV) an organization described in section 170(c)(1) which 
     holds a contingent interest in such trust and is not a 
     potential current beneficiary,''.
       (c) Amendment Related to Section 1401 of the Act.--Clause 
     (ii) of section 401(k)(10)(B) is amended by adding at the end 
     the following new sentence: ``Such term includes a 
     distribution of an annuity contract from--

       ``(I) a trust which forms a part of a plan described in 
     section 401(a) and which is exempt from tax under section 
     501(a), or

       ``(II) an annuity plan described in section 403(a).''.

       (d) Amendment Related to Section 1427 of the Act.--Clause 
     (ii) of section 219(c)(1)(B) is amended by striking ``and'' 
     at the end of subclause (I), by redesignating subclause (II) 
     as subclause (III), and by inserting after subclause (I) the 
     following new subclause:

       ``(II) the amount of any designated nondeductible 
     contribution (as defined in section 408(o)) on behalf of such 
     spouse for such taxable year, and''.

       (e) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Small Business Job Protection Act of 1996 to which they 
     relate.

     SEC. 317. AMENDMENT RELATED TO REVENUE RECONCILIATION ACT OF 
                   1990.

       (a) Amendment Related to Section 11511 of the Act.--
     Subparagraph (C) of section 43(c)(1) is amended--
       (1) by inserting ``(as defined in section 193(b))'' after 
     ``expenses'', and
       (2) by striking ``under section 193''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in section 11511 of the 
     Revenue Reconciliation Act of 1990.

     SEC. 318. OTHER TECHNICAL CORRECTIONS.

       (a) Modified Endowment Contracts.--
       (1) Paragraph (2) of section 7702A(a) is amended by 
     inserting ``or this paragraph'' before the period.
       (2) Clause (ii) of section 7702A(c)(3)(A) is amended by 
     striking ``under the contract'' and inserting ``under the old 
     contract''.
       (3) The amendments made by this subsection shall take 
     effect as if included in the amendments made by section 5012 
     of the Technical and Miscellaneous Revenue Act of 1988.
       (b) Affiliated Corporations in Context of Worthless 
     Securities.--
       (1) Subparagraph (A) of section 165(g)(3) is amended to 
     read as follows:
       ``(A) the taxpayer owns directly stock in such corporation 
     meeting the requirements of section 1504(a)(2), and''.
       (2) Paragraph (3) of section 165(g) is amended by striking 
     the last sentence.
       (3) The amendments made by this subsection shall apply to 
     taxable years beginning after December 31, 1984.
       (c) Certain Annuities Issued by Tax-Exempt Organizations 
     Not Treated as Debt Instruments under Original Issue Discount 
     Rules.--
       (1) Clause (ii) of section 1275(a)(1)(B) is amended by 
     striking ``subchapter L'' and inserting ``subchapter L (or by 
     an entity described in section 501(c) and exempt from tax 
     under section 501(a) which would be subject to tax under 
     subchapter L were it not so exempt)''.
       (2) The amendment made by this subsection shall take effect 
     as if included in the amendments made by section 41 of the 
     Tax Reform Act of 1984.
       (d) Tentative Carryback Adjustments of Losses From Section 
     1256 Contracts.--
       (1) Subsection (a) of section 6411 is amended by striking 
     ``section 1212(a)(1)'' and inserting ``subsection (a)(1) or 
     (c) of section 1212''.
       (2) The amendment made by paragraph (1) shall take effect 
     as if included in the amendments made by section 504 of the 
     Economic Recovery Tax Act of 1981.
       (e) Correction of Calculation of Amounts to be Deposited in 
     Highway Trust Fund.--
       (1) Subsection (b) of section 9503 is amended by striking 
     paragraph (5) and redesignating paragraph (6) as paragraph 
     (5).
       (2) The amendment made by paragraph (1) shall apply with 
     respect to taxes received in the Treasury after the date of 
     the enactment of this Act.
       (f) Expenditures From Vaccine Injury Compensation Trust 
     Fund.--Section 9510(c)(1)(A) is amended by striking 
     ``December 31, 1999'' and inserting ``October 18, 2000''.

     SEC. 319. CLERICAL CHANGES.

       (1) Clause (i) of section 45(d)(7)(A) is amended by 
     striking ``paragraph (3)(A)'' and inserting ``subsection 
     (c)(3)(A)''.
       (2) Subsection (f) of section 67 is amended by striking 
     ``the last sentence'' and inserting ``the second sentence''.
       (3) The heading for paragraph (5) of section 408(d) is 
     amended to read as follows:
       ``(5) Distributions of excess contributions after due date 
     for taxable year and certain excess rollover contributions.--
     ''.
       (4) Paragraph (3) of section 475(g) is amended by striking 
     ``267(b) of'' and inserting ``267(b) or''.
       (5) The heading for subparagraph (B) of section 529(e)(3) 
     is amended by striking ``under guaranteed plans''.
       (6) Clause (iii) of section 530(d)(4)(B) is amended by 
     striking ``; or'' at the end and inserting ``, or''.
       (7) Paragraphs (1)(C) and (2)(C) of section 664(d) are each 
     amended by striking the period after ``subsection (g))''.
       (8)(A) Subsection (e) of section 678 is amended by striking 
     ``an electing small business corporation'' and inserting ``an 
     S corporation''.
       (B) Clause (v) of section 6103(e)(1)(D) is amended to read 
     as follows:
       ``(v) if the corporation was an S corporation, any person 
     who was a shareholder during any part of the period covered 
     by such return during

[[Page H12403]]

     which an election under section 1362(a) was in effect, or''.
       (9) Paragraph (7) of section 856(c) is amended by striking 
     ``paragraph (4)(B)(ii)(III)'' and inserting ``paragraph 
     (4)(B)(iii)(III)''
       (10) Subparagraph (A) of section 856(l)(4) is amended by 
     striking ``paragraph (9)(D)(ii)'' and inserting ``subsection 
     (d)(9)(D)(ii)''.
       (11) Subparagraph (B) of section 871(f)(2) is amended by 
     striking ``19 U.S.C.'' and inserting ``(19 U.S.C.''.
       (12) Subparagraph (B) of section 995(b)(3) is amended by 
     striking ``the Military Security Act of 1954 (22 U.S.C. 
     1934)'' and inserting ``section 38 of the International 
     Security Assistance and Arms Export Control Act of 1976 (22 
     U.S.C. 2778)''.
       (13) Section 1391(g)(3)(C) is amended by striking 
     ``paragraph (1)(B)'' and inserting ``paragraph (1)''.
       (14)(A) Paragraph (2) of section 2035(c) is amended by 
     striking ``paragraph (1)'' and inserting ``subsection (a)''.
       (B) Subsection (d) of section 2035 is amended by inserting 
     ``and paragraph (1) of subsection (c)'' after ``Subsection 
     (a)''.
       (15) Paragraph (5) of section 3121(a) is amended by 
     striking the semicolon at the end of subparagraph (G) and 
     inserting a comma.
       (16) Subparagraph (B) of section 4946(c)(3) is amended by 
     striking ``the lowest rate of compensation prescribed for GS-
     16 of the General Schedule under section 5332'' and inserting 
     ``the lowest rate of basic pay for the Senior Executive 
     Service under section 5382''.
       (17) Subsection (p) of section 6103 is amended--
       (A) in paragraph (4), in the matter preceding subparagraph 
     (A)--
       (i) by striking the second comma after ``(13)'', and
       (ii) by striking ``(7)'' and all that follows through 
     ``shall, as a condition'' and inserting ``(7), (8), (9), 
     (12), (15), or (16) or any other person described in 
     subsection (l)(16) shall, as a condition'', and
       (B) in paragraph (4)(F)(ii), by striking the second comma 
     after ``(14)''.
       (18) Paragraph (5) of section 6166(k) is amended by 
     striking ``2035(d)(4)'' and inserting ``2035(c)(2)''.
       (19) Subsection (a) of section 6512 is amended by striking 
     ``; and'' at the end of paragraphs (1), (2), and (5) and 
     inserting ``, and''.
       (20) Paragraph (1) of section 6611(g) is amended by 
     striking the comma after ``(b)(3)''.
       (21) Subparagraphs (A) and (B) of section 6655(e)(5) are 
     amended by striking ``subsections (d)(5) and (l)(3)(B)'' and 
     inserting ``subsection (d)(5)''.
       (22) The subchapter heading for subchapter D of chapter 67 
     is amended by capitalizing the first letter of the second 
     word.
       (23)(A) Section 6724(d)(1)(B) is amended by striking 
     clauses (xiv) through (xvii) and inserting the following:
       ``(xiv) subparagraph (A) or (C) of subsection (c)(4) of 
     section 4093 (relating to information reporting with respect 
     to tax on diesel and aviation fuels),
       ``(xv) section 4101(d) (relating to information reporting 
     with respect to fuels taxes),
       ``(xvi) subparagraph (C) of section 338(h)(10) (relating to 
     information required to be furnished to the Secretary in case 
     of elective recognition of gain or loss), or
       ``(xvii) section 264(f)(5)(A)(iv) (relating to reporting 
     with respect to certain life insurance and annuity 
     contracts), and''.
       (B) Section 6010(o)(4)(C) of the Internal Revenue Service 
     Restructuring and Reform Act of 1998 is amended by striking 
     ``inserting `or', and by adding at the end'' and inserting 
     ``inserting `, or', and by adding after subparagraph (Z)''.
       (24) Subsection (a) of section 7421 is amended by striking 
     ``6672(b)'' and inserting ``6672(c)''.
       (25) Paragraph (3) of section 7430(c) is amended--
       (A) in the paragraph heading, by striking ``Attorneys'' and 
     inserting ``Attorneys' '', and
       (B) in subparagraph (B), by striking ``attorneys fees'' 
     each place it appears and inserting ``attorneys' fees''.
       (26) Paragraph (2) of section 7603(b) is amended by 
     striking the semicolon at the end of subparagraphs (A), (B), 
     (C), (D), (E), (F), and (G) and inserting a comma.
       (27) Clause (ii) of section 7802(b)(2)(B) is amended by 
     striking ``; and'' at the end and inserting ``, and''.
       (28) Paragraph (3) of section 7811(a) is amended by 
     striking ``taxpayer assistance order'' and inserting 
     ``Taxpayer Assistance Order''.
       (29) Paragraph (1) of section 7811(d) is amended by 
     striking ``Ombudsman's'' and inserting ``National Taxpayer 
     Advocate's''.
       (30) Paragraph (3) of section 7872(f) is amended by 
     striking ``foregoing'' and inserting ``forgoing''.

        TITLE IV--TAX TREATMENT OF SECURITIES FUTURES CONTRACTS

     SEC. 401. TAX TREATMENT OF SECURITIES FUTURES CONTRACTS.

       (a) In General.--Subpart IV of subchapter P of chapter 1 
     (relating to special rules for determining gains and losses) 
     is amended by inserting after section 1234A the following new 
     section:

     ``SEC. 1234B. GAINS OR LOSSES FROM SECURITIES FUTURES 
                   CONTRACTS.

       ``(a) Treatment of Gain or Loss.--
       ``(1) In general.--Gain or loss attributable to the sale or 
     exchange of a securities futures contract shall be considered 
     gain or loss from the sale or exchange of property which has 
     the same character as the property to which the contract 
     relates has in the hands of the taxpayer (or would have in 
     the hands of the taxpayer if acquired by the taxpayer).
       ``(2) Nonapplication of subsection.--This subsection shall 
     not apply to--
       ``(A) a contract which constitutes property described in 
     paragraph (1) or (7) of section 1221(a), and
       ``(B) any income derived in connection with a contract 
     which, without regard to this subsection, is treated as other 
     than gain from the sale or exchange of a capital asset.
       ``(b) Short-Term Gains and Losses.--Except as provided in 
     the regulations under section 1092(b) or this section, if 
     gain or loss on the sale or exchange of a securities futures 
     contract to sell property is considered as gain or loss from 
     the sale or exchange of a capital asset, such gain or loss 
     shall be treated as short-term capital gain or loss.
       ``(c) Securities Futures Contract.--For purposes of this 
     section, the term `securities futures contract' means any 
     security future (as defined in section 3(a)(55)(A) of the 
     Securities Exchange Act of 1934, as in effect on the date of 
     the enactment of this section).
       ``(d) Contracts Not Treated as Commodity Futures 
     Contracts.--For purposes of this title, a securities futures 
     contract shall not be treated as a commodity futures 
     contract.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to provide for the proper 
     treatment of securities futures contracts under this title.''
       (b) Terminations, Etc.--Section 1234A is amended--
       (1) by inserting ``(other than a securities futures 
     contract, as defined in section 1234B)'' after ``right or 
     obligation'' in paragraph (1),
       (2) by striking ``or'' at the end of paragraph (1),
       (3) by adding ``or'' at the end of paragraph (2), and
       (4) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) a securities futures contract (as so defined) which 
     is a capital asset in the hands of the taxpayer,''.
       (c) Nonrecognition Under Section 1032.--The second sentence 
     of section 1032(a) is amended by inserting ``, or with 
     respect to a securities futures contract (as defined in 
     section 1234B),'' after ``an option''.
       (d) Treatment Under Wash Sales Rules.--Section 1091 is 
     amended by adding at the end the following new subsection:
       ``(f) Cash Settlement.--This section shall not fail to 
     apply to a contract or option to acquire or sell stock or 
     securities solely by reason of the fact that the contract or 
     option settles in (or could be settled in) cash or property 
     other than such stock or securities.''
       (e) Treatment Under Straddle Rules.--Clause (i) of section 
     1092(d)(3)(B) is amended by striking ``or'' at the end of 
     subclause (I), by redesignating subclause (II) as subclause 
     (III), and by inserting after subclause (I) the following new 
     subclause:

       ``(II) a securities futures contract (as defined in section 
     1234B) with respect to such stock or substantially identical 
     stock or securities, or''.

       (f) Treatment Under Short Sales Rules.--Paragraph (2) of 
     section 1233(e) is amended by striking ``and'' at the end of 
     subparagraph (B), by striking the period at the end of 
     subparagraph (C) and inserting ``; and'', and by adding at 
     the end the following:
       ``(D) a securities futures contract (as defined in section 
     1234B) to acquire substantially identical property shall be 
     treated as substantially identical property.''
       (g) Treatment Under Section 1256.--
       (1)(A) Subsection (b) of section 1256 is amended by 
     striking ``and'' at the end of paragraph (3), by striking the 
     period at the end of paragraph (4) and inserting ``, and'', 
     and by adding at the end the following:
       ``(5) any dealer securities futures contract.
     The term `section 1256 contract' shall not include any 
     securities futures contract or option on such a contract 
     unless such contract or option is a dealer securities futures 
     contract.''
       (B) Subsection (g) of section 1256 is amended by adding at 
     the end the following new paragraph:
       ``(9) Dealer securities futures contract.--
       ``(A) In general.--The term `dealer securities futures 
     contract' means, with respect to any dealer, any securities 
     futures contract, and any option on such a contract, which--
       ``(i) is entered into by such dealer (or, in the case of an 
     option, is purchased or granted by such dealer) in the normal 
     course of his activity of dealing in such contracts or 
     options, as the case may be, and
       ``(ii) is traded on a qualified board or exchange.
       ``(B) Dealer.--For purposes of subparagraph (A), a person 
     shall be treated as a dealer in securities futures contracts 
     or options on such contracts if the Secretary determines that 
     such person performs, with respect to such contracts or 
     options, as the case may be, functions similar to the 
     functions performed by persons described in paragraph (8)(A). 
     Such determination shall be made to the extent appropriate to 
     carry out the purposes of this section.
       ``(C) Securities futures contract.--The term `securities 
     futures contract' has the meaning given to such term by 
     section 1234B.''
       (2) Paragraph (4) of section 1256(f) is amended--
       (A) by inserting ``, or dealer securities futures 
     contracts,'' after ``dealer equity options'' in the text, and
       (B) by inserting ``and dealer securities futures 
     contracts'' after ``dealer equity options'' in the heading.
       (3) Paragraph (6) of section 1256(g) is amended to read as 
     follows:
       ``(6) Equity option.--The term `equity option' means any 
     option--
       ``(A) to buy or sell stock, or
       ``(B) the value of which is determined directly or 
     indirectly by reference to any stock or any narrow-based 
     security index (as defined in section 3(a)(55) of the 
     Securities Exchange Act of

[[Page H12404]]

     1934, as in effect on the date of the enactment of this 
     paragraph).
     The term `equity option' includes such an option on a group 
     of stocks only if such group meets the requirements for a 
     narrow-based security index (as so defined).''
       (4) The Secretary of the Treasury or his delegate shall 
     make the determinations under section 1256(g)(9)(B) of the 
     Internal Revenue Code of 1986, as added by this Act, not 
     later than July 1, 2001.
       (h) Conforming Amendments.--
       (1) Section 1223 is amended by redesignating paragraph (16) 
     as paragraph (17) and by inserting after paragraph (15) the 
     following new paragraph:
       ``(16) If the security to which a securities futures 
     contract (as defined in section 1234B) relates (other than a 
     contract to which section 1256 applies) is acquired in 
     satisfaction of such contract, in determining the period for 
     which the taxpayer has held such security, there shall be 
     included the period for which the taxpayer held such contract 
     if such contract was a capital asset in the hands of the 
     taxpayer.''.
       (2) The table of sections for subpart IV of subchapter P of 
     chapter 1 is amended by inserting after the item relating to 
     section 1234A the following new item:

``Sec. 1234B. Securities futures contracts.''
       (i) Designation of Contract Markets.--Section 7701 is 
     amended by redesignating subsection (m) as subsection (n) and 
     by inserting after subsection (l) the following new 
     subsection:
       ``(m) Designation of Contract Markets.--Any designation by 
     the Commodity Futures Trading Commission of a contract market 
     which could not have been made under the law in effect on the 
     day before the date of the enactment of the Commodity Futures 
     Modernization Act of 2000 shall apply for purposes of this 
     title except to the extent provided in regulations prescribed 
     by the Secretary.''
       (j) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

                COMMUNITY RENEWAL TAX RELIEF ACT OF 2000

       Following is explanatory language on H.R. 5662, as 
     introduced on December 14, 2000.
       The conferees on H.R. 4577 agree with the matter included 
     in H.R. 5659 and enacted in this conference report by 
     reference and the following description of it.

                 TITLE I. COMMUNITY RENEWAL PROVISIONS

 A. Renewal Community Provisions (secs. 101-102 of the bill and secs. 
              51, 469, and new secs. 1400E-J of the Code)


                              Present Law

       In recent years, provisions have been added to the Internal 
     Revenue Code that target specific geographic areas for 
     special Federal income tax treatment. For example, 
     empowerment zones and enterprise communities generally 
     provide tax incentives for businesses that locate within 
     certain geographic areas designated by the Secretaries of 
     Housing and Urban Development (`HUD'') and Agriculture.


                               House Bill

       No provision. However, H.R. 5542\1\ authorizes the 
     designation of 40 ``renewal communities'' within which 
     special tax incentives would be available. The following is a 
     description of the designation process and the tax incentives 
     that would be available within the renewal communities.
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     \1\ H.R. 5542 was incorporated by reference into the 
     conference agreement that accompanied H.R. 2614 (H. Rpt. 106-
     1004), which was passed by the House of Representatives on 
     October 26, 2000.
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     Designation process
       Designation of 40 renewal communities.--The Secretary of 
     HUD,\2\ is authorized to designate up to 40 ``renewal 
     communities'' from areas nominated by States and local 
     governments. At least 12 of the designated communities must 
     be in rural areas. Of the 12 rural renewal communities, one 
     shall be an area within Mississippi, designated by the State 
     of Mississippi, that includes at least one census tract 
     within Madison County, Mississippi.
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     \2\ In making the designations, the Secretary of HUD must 
     consult with the Secretaries of Agriculture, Commerce, Labor, 
     Treasury, the Director of the Office of Management and 
     Budget; and the Administrator of the Small Business 
     Administration (and the Secretary of the Interior in the case 
     of an area within an Indian reservation).
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       The Secretary of HUD is required to publish (within four 
     months after enactment) regulations describing the nomination 
     and selection process. Designations of renewal communities 
     are to be made during the period beginning on the first day 
     of the first month after the regulations are published and 
     ending on December 31, 2001. The designation of an area as a 
     renewal community generally will be effective on January 1, 
     2002, and will terminate after December 31, 2009.\3\
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     \3\ The designation would terminate earlier than December 31, 
     2009, if (1) an earlier termination date is designated by the 
     State or local government in their designation, or (2) the 
     Secretary of HUD revokes the designation as of an earlier 
     date.
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       Elibility criteria.--To be designated as a renewal 
     community, a nominated area must meet the following criteria: 
     (1) each census tract must have a poverty rate of at least 20 
     percent,\4\ (2) in the case of an urban area, at least 70 
     percent of the households have incomes below 80 percent of 
     the median income of households within the local government 
     jurisdiction; (3) the unemployment rate is at least 1.5 times 
     the national unemployment rate; and (4) the area is one of 
     pervasive poverty, unemployment, and general distress. Those 
     areas with the highest average ranking of eligibility factors 
     (1), (2), and (3) above would be designated as renewal 
     communities. One nominated area within the District of 
     Columbia becomes a renewal community (without regard to its 
     ranking of eligibility factors) provided that it satisfies 
     the area and eligibility requirements and the required State 
     and local commitments described below.\5\ The Secretary of 
     HUD shall take into account in selecting areas for 
     designation the extent to which such areas have a high 
     incidence of crime, as well as whether the area has census 
     tracts identified in the May 12, 1998, report of the General 
     Accounting Office regarding the identification of 
     economically distressed areas. In lieu of the poverty, 
     income, and unemployment criteria, outmigration may be taken 
     into account in the designation of one rural renewal 
     community.
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     \4\ Determined using 1990 census data.
     \5\ The designation of a nominated area within the District 
     of Columbia as a renewal community becomes effective on 
     January 1, 2003 (upon the expiration of the designation of 
     the District of Columbia Enterprise Zone).
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       There are no geographic size limitations placed on renewal 
     communities. Instead, the boundary of a renewal community 
     must be continuous. In addition, the renewal community must 
     have a minimum population of 4,000 if the community is 
     located within a metropolitan statistical area (at least 
     1,000 in all other cases), and a maximum population of not 
     more than 200,000. The population limitations do not apply to 
     any renewal community that is entirely within an Indian 
     reservation.
       Required State and local commitments.--In order for an area 
     to be designated as a renewal community, State and local 
     governments are required to submit a written course of action 
     in which the State and local governments promise to take at 
     least four of the following governmental actions within the 
     nominated area: (1) a reduction of tax rates or fees; (2) an 
     increase in the level of efficiency of local services; (3) 
     crime reduction strategies; (4) actions to remove or 
     streamline governmental requirements; (5) involvement by 
     private entities and community groups, such as to provide 
     jobs and job training and financial assistance; and (6) the 
     gift (or sale at below fair market value) of surplus realty 
     by the State or local government to community organizations 
     or private companies.
       In addition, the nominating State and local governments 
     must promise to promote economic growth in the nominated area 
     by repealing or not enforcing four of the following: (1) 
     licensing requirements for occupations that do not ordinarily 
     require a professional degree; (2) zoning restrictions on 
     home-based businesses that do not create a public nuisance; 
     (3) permit requirements for street vendors who do not create 
     a public nuisance; (4) zoning or other restrictions that 
     impede the formation of schools or child care centers; and 
     (5) franchises or other restrictions on competition for 
     businesses providing public services, including but not 
     limited to taxicabs, jitneys, cable television, or trash 
     hauling, unless such regulations are necessary for and well-
     tailored to the protection of health and safety.
       Empowerment zones and enterprise communities seeking 
     designation as renewal communities.--With respect to the 
     first 20 designations of nominated areas as renewal 
     communities, preference will be given to nominated areas that 
     are enterprise communities and empowerment zones under 
     present law that otherwise meet the requirements for 
     designation as a renewal community. An empowerment zone or 
     enterprise community can apply for designation as a renewal 
     community. If a renewal community designation is granted, 
     then an area's designation as an empowerment zone enterprise 
     community ceases as of the date the area's designation as a 
     renewal community takes effect.
     Tax incentives for renewal communities
       The following tax incentives generally are available during 
     the period beginning January 1, 2002, and ending December 31, 
     2009.\6\
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     \6\ If a renewal community designation is terminated prior to 
     December 31, 2009, the tax incentives would cease to be 
     available as of the termination date.
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       Zero-percent capital gain rate.--A zero-percent capital 
     gains rate applies with respect to gain from the sale of a 
     qualified community asset acquired after December 31, 2001, 
     and before January 1, 2010, and held for more than five 
     years. A ``qualified community asset'' includes: (1) 
     qualified community stock (meaning original-issue stock 
     purchased for cash in a renewal community business); (2) a 
     qualified community partnership interest (meaning a 
     partnership interest acquired for cash in a renewal community 
     business); (3) qualified community business property (meaning 
     tangible property originally used in a renewal community 
     business by the taxpayer) that is purchased or substantially 
     improved after December 31, 2001.
       A ``renewal community business'' is similar to the present-
     law definition of an enterprise zone business.\7\ Property 
     will continue to be a qualified community asset if sold (or 
     otherwise transferred) to a subsequent purchaser, provided 
     that the property continues to represent an interest in (or 
     tangible property used in) a renewal community business.

[[Page H12405]]

     The termination of an area's status as a renewal community 
     will not affect whether property is a qualified community 
     asset, but any gain attributable to the period before January 
     1, 2002, or after December 31, 2014, will not be eligible for 
     the zero-percent rate.
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     \7\ An ``enterprise zone business'' is defined in section 
     1397B.
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       Renewal community employment credit.--A 15-percent wage 
     credit is available to employers for the first $10,000 of 
     qualified wages paid to each employee who (1) is a resident 
     of the renewal community, and (2) performs substantially all 
     employment services within the renewal community in a trade 
     or business for the employer.
       The wage credit rate applies to qualifying wages paid after 
     December 31, 2001, and before January 1, 2010. Wages that 
     qualify for the credit are wages that are considered 
     ``qualified zone wages'' for purposes of the empowerment zone 
     wage credit (including coordination with the Work Opportunity 
     Tax Credit). In general, any taxable business carrying out 
     activities in the renewal community may claim the wage 
     credit.
       Commercial revitalization deduction.--Each State is 
     permitted to allocate up to $12 million of ``commercial 
     revitalization expenditures'' to each renewal community 
     located within the State for each calendar year after 2001 
     and before 2010. The appropriate State agency will make the 
     allocations pursuant to a qualified allocation plan.
       A ``commercial revitalization expenditure'' means the cost 
     of a new building or the cost of substantially rehabilitating 
     an existing building. The building must be used for 
     commercial purposes and be located in a renewal community. In 
     the case of the rehabilitation of an existing building, the 
     cost of acquiring the building will be treated as qualifying 
     expenditures only to the extent that such costs do not exceed 
     30 percent of the other rehabilitation expenditures. The 
     qualifying expenditures for any building cannot exceed $10 
     million.
       A taxpayer can elect either to (a) deduct one-half of the 
     commercial revitalization expenditures for the taxable year 
     the building is placed in service or (b) amortize all the 
     expenditures ratably over the 120-month period beginning with 
     the month the building is placed in service. No depreciation 
     is allowed for amounts deducted under this provision. The 
     adjusted basis is reduced by the amount of the commercial 
     revitalization deduction, and the deduction is treated as a 
     depreciation deduction in applying the depreciation recapture 
     rules (e.g., sec. 1250). The commercial revitalization 
     deduction is treated in the same manner as the low-income 
     housing credit in applying the passive loss rules (sec. 469). 
     Thus, up to $25,000 of deductions (together with the other 
     deductions and credits not subject to the passive loss 
     limitation by reason of section 469(i)) are allowed to an 
     individual taxpayer regardless of the taxpayer's adjusted 
     gross income. The commercial revitalization deduction is 
     allowed in computing a taxpayer's alternative minimum taxable 
     income.
       Additional section 179 expensing.--A renewal community 
     business is allowed an additional $35,000 of section 179 
     expensing for qualified renewal property placed in service 
     after December 31, 2001, and before January 1, 2010. The 
     section 179 expensing allowed to a taxpayer is phased out by 
     the amount by which 50 percent of the cost of qualified 
     renewal property placed in service during the year by the 
     taxpayer exceeds $200,000. The term ``qualified renewal 
     property'' is similar to the definition of ``qualified zone 
     property'' used in connection with empowerment zones.
       Extension of work opportunity tax credit (``WOTC'').--The 
     bill expands the high-risk youth and qualified summer youth 
     categories in the WOTC to include qualified individuals who 
     live in a renewal community.
     GAO report
       The General Accounting Office will audit and report to 
     Congress on January 31, 2004, and again in 2007 and 2010, on 
     the renewal community program and its effect on poverty, 
     unemployment, and economic growth within the designated 
     renewal communities.
     Effective date
       Renewal communities must be designated during the period 
     beginning on the first day of the first month after the 
     publication of regulations by HUD and ending on December 31, 
     2001, The tax benefits available in renewal communities are 
     effective for the period beginning January 1, 2002, and 
     ending December 31, 2009.


                            Senate Amendment

       No provision. However, S. 3152 \8\ authorizes the 
     Secretaries of HUD and Agriculture to designate up to 30 
     renewal zones from areas nominated by States and local 
     governments. At least six of the designated renewal zones 
     must be in rural areas. The Secretary of HUD is required to 
     publish (within four months after enactment) regulations 
     describing the nomination and selection process. Designations 
     of renewal zones must be made before January 1, 2002, and the 
     designations are effective for the period beginning on 
     January 1, 2002 through December 31, 2009.
---------------------------------------------------------------------------
     \8\ S. 3152 was introduced by Senator Roth and others on 
     October 3, 2000.
---------------------------------------------------------------------------
       The eligibility criteria (as well as the population and 
     geographic limitations) are similar to those for renewal 
     communities in the House bill, except that S. 3152 provides 
     that any State without any empowerment zone would be given 
     priority in the designation process. Also, the designations 
     of renewal zones must result in (after taking into account 
     existing empowerment zones) each State having at least one 
     zone designation (empowerment or renewal zone). In addition, 
     S. 3152 provides that, in lieu of the poverty, income, and 
     unemployment criteria, outmigration may be taken into account 
     in the designation of one rural renewal zone. Under a 
     separate provision in S. 3152, the designation of the 
     District of Columbia Enterprise Zone is entended through 
     December 31, 2006.
       In order for an area to be designated as a renewal zone, 
     State and local governments are required to submit a written 
     course of action in which the State and local governments 
     promise to take at least four of the governmental actions 
     described in the House bill with respect to renewal 
     communities. However, S. 3152 does not contain any of the 
     economic growth provision requirements described in the House 
     bill.
       Tax incentives for renewal zones.--Under S. 3152, 
     businesses in renewal zones would be eligible for the 
     following tax incentives during the period beginning January 
     1, 2002 and ending December 31, 2009: (1) a zero-percent 
     capital gains rate for qualifying assets limited to an 
     aggregate amount not to exceed $25 million of gain per 
     taxpayer; \9\ (2) a 15-percent wage credit for the first 
     $15,000 of qualifying wages; (3) $35,000 in additional 179 
     expensing for qualifying property; (4) and the enhanced tax-
     exempt bond rules that currently apply to businesses in the 
     Round II empowerment zones.
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     \9\ Any gain attributable to the period before January 1, 
     2002, or after December 31, 2014, would not be eligible for 
     the zero-percent capital gains rate.
---------------------------------------------------------------------------
       GAO report.--The General Accounting Office will audit and 
     report to Congress every three years (beginning on January 
     31, 2004) on the renewal zone program and its effect on 
     poverty, unemployment, and economic growth within the 
     designated renewal zones.
       Effective date.--The 30 renewal zones must be designated by 
     January 1, 2002, and the tax benefits are available for the 
     period beginning January 1, 2002, and ending December 31, 
     2009.


                          Conference Agreement

       The conference agreement follows H.R. 5542 with the 
     following modifications. The conference agreement does not 
     include the rural renewal community designation with respect 
     to an area within the State of Mississippi. The conference 
     agreement does not include the special rule that provides 
     that one nominated area within the District of Columbia 
     becomes a renewal community (without regard to its ranking of 
     eligibility factors).

                   B. Empowerment Zone Tax Incentives

     1. Extension and expansion of empowerment zones (secs. 111-
         115 of the bill and secs. 1391, 1394, 1396, and 1397A of 
         the Code)


                              PRESENT LAW

     Round I empowerment zones
       The Omnibus Budget reconciliation Act of 1993 (``OBRA 
     1993'') authorized the designation of nine empowerment zones 
     (``Round I empowerment zones'') to provide tax incentives for 
     businesses to locate within targeted areas designated by the 
     Secretaries of HUD and Agriculture. The Taxpayer Relief Act 
     of 1997 (``1997 Act'') authorized the designation of two 
     additional Round I urban empowerment zones.
       Businesses in the 11 Round I empowerment zones qualify for 
     the following tax incentives: (1) a 20-percent wage credit 
     for the first $15,000 of wages paid to a zone resident who 
     works in the empowerment zone,\10\ (2) an additional $20,000 
     of section 179 expensing for qualifying zone property, and 
     (3) tax-exempt financing for certain qualifying zone 
     facilities. The tax incentives with respect to the 
     empowerment zones designated by OBRA 1993 generally are 
     available during the 10-year period of 1995 through 2004. The 
     tax incentives with respect to the two additional Round I 
     empowerment zones generally are available during the 10-year 
     period of 2000 through 2009.\11\
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     \10\ For wages paid in calendar years during the period 1994 
     through 2001, the credit rate is 20 percent. The credit rate 
     is reduced to 15 percent for calendar year 2002, 10 percent 
     for calendar year 2003, and 5 percent for calendar year 2004. 
     No wage credit is available after 2004 in the original nine 
     empowerment zones.
     \11\ Except for the wage credit, which is reduced to 15 
     percent for calendar year 2005, and then reduced by five 
     percentage points in each year in 2006 and 2007, with no wage 
     credit available after 2007.
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     Round II empowerment zones
       The 1997 Act also authorized the designation of 20 
     additional empowerment zones (``Round II empowerment 
     zones''), of which 15 are located in urban areas and five are 
     located in rural areas. Businesses in the Round II 
     empowerment zones are not eligible for the wage credit, but 
     are eligible to receive up to $20,000 of additional section 
     179 expensing. Businesses in the Round II empowerment zones 
     also are eligible for more generous tax-exempt financing 
     benefits than those available in the Round I empowerment 
     zones. Specifically, the tax-exempt financing benefits for 
     the Round II empowerment zones are not subject to the State 
     private activity bond volume caps (but are subject to 
     separate per-zone volume limitations), and the per-business 
     size limitations that apply to the Round I empowerment zones 
     and enterprise communities (i.e., $3 million for each 
     qualified enterprise zone business with a maximum of $20 
     million for each principal user for all zones and 
     communities) do not apply to qualifying bonds issued for 
     Round II empowerment zones. The tax incentives with respect 
     to the Round II empowerment zones generally are available 
     during the 10-year period of 1999 through 2008.


[[Continued on page H12406]]


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