SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Home Health Equity Act of 
1998''.

SEC. 2. REVISION OF HOME HEALTH INTERIM PAYMENT FORMULA.

    (a) Restoration of Cost Limits.--Section 1861(v)(1)(L)(i)(IV) of 
the Social Security Act (42 U.S.C. 1395x(v)(1)(L)(i)(IV)) (as added by 
section 4602 of the Balanced Budget Act of 1997) is amended--
            (1) by striking ``105 percent'' and inserting ``112 
        percent''; and
            (2) by striking ``median'' and inserting ``mean''.
    (b) Change in Additions to Cost Limits.--Section 1861(v)(1)(L)(v) 
of the Social Security Act (42 U.S.C. 1395x(v)(1)(L)(v)) (as added by 
section 4602 of the Balanced Budget Act of 1997) is amended to read as 
follows:
    ``(v)(I) For services furnished by home health agencies for cost 
reporting periods beginning on or after October 1, 1997, the Secretary 
shall provide for an interim system of limits. Payment shall not exceed 
the costs determined under the preceding provisions of this 
subparagraph or, if lower, the product of--
            ``(aa) an agency-specific per beneficiary annual limitation 
        calculated based 75 percent on the reasonable costs (including 
        nonroutine medical supplies) of the standardized national 
        average cost per patient in calendar year 1994, or best 
        estimate thereof, (as published in the Health Care Financing 
        Review Medicare and Medicaid 1997 Statistical Supplement) and 
        based 25 percent on the reasonable costs (including nonroutine 
        medical supplies) of the standardized regional average cost per 
        patient for the agency's census division in calendar year 1995 
        (as so published), such national and regional costs updated by 
        the home health market basket index and adjusted pursuant to 
        clause (II); and
            ``(bb) the agency's unduplicated census count of patients 
        (entitled to benefits under this title) for the cost reporting 
        period subject to the limitation.
    ``(II) The labor-related portion of the updated national and 
regional costs described in subclause (I)(aa) shall be adjusted by the 
area wage index applicable under section 1886(d)(3)(E) for the area in 
which the agency is located (as determined without regard to any 
reclassification of the area under section 1886(d)(8)(B) or a decision 
of the Medicare Geographic Classification Review Board or the Secretary 
under section 1886(d)(10) for cost reporting periods beginning after 
October 1, 1995).''.
    (c) Conforming Amendments.--
            (1) Section 1861(v)(1)(L)(vi) of the Social Security Act 
        (42 U.S.C. 1395x(v)(1)(L)(vi)) (as added by section 4602 of the 
        Balanced Budget Act of 1997) is amended to read as follows:
    ``(vi) In any case in which the Secretary determines that 
beneficiaries use services furnished by more than 1 home health agency 
for purposes of circumventing the per beneficiary annual limitation in 
clause (v), the per beneficiary limitations shall be prorated among the 
agencies.''.
            (2) Section 1861(v)(1)(L)(vii)(I) of the Social Security 
        Act (42 U.S.C. 1395x(v)(1)(L)(vii)(I)) (as added by section 
        4602 of the Balanced Budget Act of 1997) is amended by striking 
        ``clause (v)(I)'' and inserting ``clause (v)(I)(aa)''.
    (d) Effective Date.--The amendments made by this section shall 
apply as if included in the enactment of the Balanced Budget Act of 
1997.

SEC. 3. CBO ESTIMATE OF HOME HEALTH PAYMENT SAVINGS.

    (a) Estimate.--Not later than 60 days after the date of enactment 
of this Act, and annually thereafter until the prospective payment 
system for home health agencies established by section 1895 of the 
Social Security Act (42 U.S.C. 1395fff) is in effect, the Director of 
the Congressional Budget Office (referred to in this section as the 
``Director'') shall estimate the amount of savings to the Medicare 
program under title XVIII of such Act (42 U.S.C. 1395 et seq.) 
resulting from the interim payment system for home health services 
established by the amendments to section 1861 of such Act (42 U.S.C. 
1395x) made by section 4602 of the Balanced Budget Act of 1997.
    (b) Certification.--If the Director determines that the amount 
estimated under subsection (a) exceeds the amount of savings to the 
Medicare program that the Director estimated immediately prior to the 
enactment of the Balanced Budget Act of 1997 by reason of such interim 
payment system, then the Director shall certify such excess to the 
Secretary of Health and Human Services (referred to in this subsection 
as the ``Secretary'').
    (c) Adjustment.--
            (1) In general.--If the Director certifies an amount to the 
        Secretary pursuant to subsection (b), the Secretary shall 
        prescribe rules under which appropriate adjustments are made to 
        the amount of payments to home health agencies otherwise made 
        under subparagraph (L) of section 1861(v)(1) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)) (as amended by section 
        4602 of the Balanced Budget Act of 1997) in the case of 
        outliers--
                    (A) where events beyond the home health agency's 
                control or extraordinary circumstances, including the 
                case mix of such agency, create reasonable costs for a 
                payment year which exceed the applicable payment 
                limits; or
                    (B) in any case not described in subparagraph (A) 
                where the Secretary deems such an adjustment 
                appropriate.
            (2) Amount.--The total amount of adjustments made under 
        paragraph (2) for a year may not exceed the amount certified to 
        the Secretary pursuant to subsection (b) for such year. To the 
        extent that such adjustments in a year would otherwise exceed 
        the amount certified to the Secretary pursuant to subsection 
        (b) for such year, the Secretary shall reduce the payments to 
        home health agencies in a pro rata manner so that the 
        adjustments do not exceed such amount.
Medicare Home Health Equity Act of 1998 - Amends title XVIII (Medicare) of the Social Security Act, as amended by the Balanced Budget Act of 1997 (BBA), to:  (1) restore the per visit cost limit to 112 percent of the mean (currently, 105 percent of the median) with regard to payments to home health agencies under Medicare; and (2) revise the interim payment system (IPS) for home health agency services. 
Directs the Director of the Congressional Budget Office to estimate annually the amount of savings to the Medicare program resulting from the IPS for home health agency services that was established by the BBA.  Provides that, if the Director determines that the estimated amount exceeds the amount of savings to the Medicare program that the Director estimated immediately prior to enactment of the BBA by reason of such IPS, then the Director shall certify such excess to the Secretary of Health and Human Services. Requires the Secretary, in turn, when an excess is certified, to prescribe rules under which appropriate adjustments are made to the amount of payments to home health agencies in the case of outliers: (1) where events beyond the home health agency's control or extraordinary circumstances, including the agency's case mix, create reasonable costs for a payment year which exceed the applicable payment limits; or (2) in any other case where the Secretary deems such an adjustment appropriate.
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