PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITATION SERVICES.

SEC. 4541. PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITATION SERVICES. (a) Payment Based on Fee Schedule.— (1) Special payment rules.—Section 1833(a) (42 U.S.C. 13951(a)) is amended— (A) in paragraph (2) in the matter before subparagraph (A), by inserting “(C),” before “(D)”; (B) in paragraph (3), by striking “subparagraphs (D) and (E) of section 1832(a)(2)” and inserting “section 1832(a)(2)(D)”; (C) in paragraph (6), by striking “and” at the end; (D) in paragraph (7), by striking the period at the end and inserting a semicolon; and (E) by adding at the end the following new paragraphs: “(8) in the case of— “(A) outpatient physical therapy services (which includes outpatient speech-language pathology services) and outpatient occupational therapy services furnished— “(i) by a rehabilitation agency, public health agency, clinic, comprehensive outpatient rehabilitation facility, or skilled nursing facility, “(ii) by a home health agency to an individual who is not homebound, or “(iii) by another entity under an arrangement with an entity described in clause (i) or (ii); and111 STAT. 455 “(B) outpatient physical therapy services (which includes outpatient speech-language pathology services) and outpatient occupational therapy services furnished— “(i) by a hospital to an outpatient or to a hospital inpatient who is entitled to benefits under part A but has exhausted benefits for inpatient hospital services during a spell of illness or is not so entitled to benefits under part A, or “(ii) by another entity under an arrangement with a hospital described in clause (i), the amounts described in section 1834(k); and “(9) in the case of services described in section 1832(a)(2)(E) that are not described in paragraph (8), the amounts described in section 1834(k).”. (2) Payment rates.—Section 1834 (42 U.S.C. 1395m) is amended by adding at the end the following new subsection: “(k) Payment for Outpatient Therapy Services and Comprehensive Outpatient Rehabilitation Services.— “(1) In general.—With respect to services described in section 1833(a)(8) or 1833(a)(9) for which payment is determined under this subsection, the payment basis shall be— “(A) for services furnished during 1998, the amount determined under paragraph (2); or “(B) for services furnished during a subsequent year, 80 percent of the lesser of— “(i) the actual charge for the services, or “(ii) the applicable fee schedule amount (as defined in paragraph (3)) for the services. “(2) Payment in 1998 based upon adjusted reasonable costs.—The amount under this paragraph for services is the lesser of— “(A) the charges imposed for the services, or “(B) the adjusted reasonable costs (as defined in paragraph (4)) for the services, less 20 percent of the amount of the charges imposed for such services. “(3) Applicable fee schedule amount—In this subsection, the term ‘applicable fee schedule amount’ means, with respect to services furnished in a year, the amount determined under the fee schedule established under section 1848 for such services furnished during the year or, if there is no such fee schedule established for such services, the amount determined under the fee schedule established for such comparable services as the Secretary specifies. “(4) Adjusted reasonable costs.—In paragraph (2), the term ‘adjusted reasonable costs’ means, with respect to any services, reasonable costs determined for such services, reduced by 10 percent. The 10-percent reduction shall not apply to services described in section 1833(a)(8)(B) (relating to services provided by hospitals). “(5) Uniform coding.—For claims for services submitted on or after April 1, 1998, for which the amount of payment is determined under this subsection, the claim shall include a code (or codes) under a uniform coding system specified by the Secretary that identifies the services furnished. “(6) Restraint on billing.—The provisions of subparagraphs (A) and (B) of section 1842(b)(18) shall apply to therapy 111 STAT. 456services for which payment is made under this subsection in the same manner as they apply to services provided by a practitioner described in section 1842(b)(18)(C).”. (3) Conforming change in billing.—Section 1866(a)(2)(A)(ii) (42 U.S.C. 1395cc(a)(2)(A)(ii)) is amended by adding at the end the following: “In the case of services described in section 1833(a)(8) or section 1833(a)(9) for which payment is made under part B under section 1834(k), clause ii) of the first sentence shall be applied by substituting for 20 percent of the reasonable charge for such services 20 percent of the lesser of the actual charge or the applicable fee schedule amount (as defined in such section) for such services.” (b) Application of Standards to Outpatient Occupational and Physical Therapy Services Provided as an Incident to a Physician’s Professional Services.—Section 1862(a), as amended by sections 4319(b), 4432(b), and 4507(a)(2)(B), (42 U.S.C. 1395y(a)) is amended— (1) by striking “or” at the end of paragraph (18); (2) by striking the period at the end of paragraph (19) and inserting “; or”; and (3) by inserting after paragraph (19) the following: “(20) in the case of outpatient occupational therapy services or outpatient physical therapy services furnished as an incident to a physician’s professional services (as described in section 1861(s)(2)(A)), that do not meet the standards and conditions (other than any licensing requirement specified by the Secretary) under the second sentence of section 1861(p) (or under such sentence through the operation of section 1861(g)) as such standards and conditions would apply to such therapy services if furnished by a therapist.”. (c) Applying Financial Limitation to All Rehabilitation Services.—Section 1833(g) (42 U.S.C. 13951(g)) is amended— (1) in the first sentence, by striking “services described in the second sentence of section 1861(p)” and inserting “physical therapy services of the type described in section 1861(p), but not described in section 1833(a)(8)(B), and physical therapy services of such type which are furnished by a physician or as incident to physicians’ services”, and (2) in the second sentence, by striking “outpatient occupational therapy services which are described in the second sentence of section 186 l(p) through the operation of section 1861(g)” and inserting “occupational therapy services (of the type that are described in section 1861(p) (but not described in section 1833(a)(8)(B)) through the operation of section 1861(g) and of such type which are furnished by a physician or as incident to physicians’ services)”. (d) Indexing Limitation.— (1) In general.—Section 1833(g) (42 U.S.C. 13951(g)), as amended by subsection (c), is further amended— (A) by striking “$900” each place it appears and inserting “the amount specified in paragraph (2) for the year”, (B) by inserting “(1)” after “(g)”, (C) by designating the last sentence as a paragraph (3), and (D) by inserting before paragraph (3), as so designated, the following: “(2) The amount specified in this paragraph—111 STAT. 457 “(A) for 1999, 2000, and 2001, is $1,500, and “(B) for a subsequent year is the amount specified in this paragraph for the preceding year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year; except that if an increase under subparagraph (B) for a year is not a multiple of $10, it shall be rounded to the nearest multiple of $10.”. (2) Report.—By not later than January 1, 2001, the Secretary of Health and Human Services shall submit to Congress a report that includes recommendations on the establishment of a revised coverage policy of outpatient physical therapy services and outpatient occupational therapy services under the Social Security Act based on classification of individuals by diagnostic category and prior use of services, in both inpatient and outpatient settings, in place of the uniform dollar limitations specified in section 1833(g) of such Act, as amended by paragraph (1). The recommendations shall include how such a system of durational limits by diagnostic category might be implemented in a budget-neutral manner. (e) Effective Dates.— (1) The amendments made by subsections (a)(1), (a)(2), and (b) apply to services furnished on or after January 1, 1998, including portions of cost reporting periods occurring on or after such date, except that section 1834(k) of the Social Security Act (as added by subsection (a)(2)) shall not apply to services described in section 1833(a)(8)(B) of such Act (as added by subsection (a)(1)) that are furnished during 1998. (2) The amendments made by subsections (a)(3) and (c) apply to services furnished on or after January 1, 1999. (3) The amendments made by subsection (d)(1) apply to expenses incurred on or after January 1, 1999.