SECTION. 1. REVISION OF PER BENEFICIARY LIMITS AND PER VISIT PAYMENT 
              LIMITS FOR PAYMENT FOR HOME HEALTH SERVICES UNDER THE 
              MEDICARE PROGRAM.

    (a) Revision of Per Beneficiary Limits.--
            (1) In general.--Section 1861(v)(1)(L)(v) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)(v)) 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) the applicable amount under subclause (II) or (III); 
        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 applicable limit for cost reporting periods beginning in 
fiscal year 1998 is an agency-specific per beneficiary annual 
limitation calculated based 75 percent on 98 percent of the reasonable 
costs (including nonroutine medical supplies) for the agency's 12-month 
cost reporting period ending during fiscal year 1994, and based 25 
percent on 98 percent of the standardized regional average of such 
costs for the agency's census division, as applied to such agency, for 
cost reporting periods ending during fiscal year 1994, such costs 
updated by the home health market basket index.
    ``(III) The applicable limit for cost reporting periods beginning 
on or after October 1, 1998, is an agency-specific per beneficiary 
annual limitation calculated--
            ``(aa) based 50 percent on the per beneficiary annual 
        limitation determined under subclause (II) for the agency;
            ``(bb) based 25 percent on the standardized national mean 
        equal to $3,708.25 for fiscal year 1999 (of which $2,880.12 is 
        the labor component, and $828.13 is the non-labor component); 
        and
            ``(cc) based 25 percent on the standardized regional 
        average of the limits for the agency's census division (as 
        specified in Tables 3B and 3D published in the Federal Register 
        on August 11, 1998 (63 FR 42926));
such limits updated by the home health market basket for each 
subsequent fiscal year (if any) through the fiscal year involved.''.
            (2) New agencies.--Section 1861(v)(1)(L)(vi) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)(vi)) is amended--
                    (A) in subclause (I), by striking ``For new'' and 
                inserting ``Subject to subclause (II), for new'';
                    (B) by redesignating subclause (II) as subclause 
                (III); and
                    (C) by inserting after subclause (I) the following:
            ``(II) In the case of cost reporting periods beginning on 
        or after October 1, 1998, the limits in subclause (I) shall be 
        determined as if any reference in clause (v)(II) to `98 
        percent' were a reference to `100 percent'.
            (3) Conforming amendment.--Section 1861(v)(1)(L)(vii)(I) of 
        the Social Security Act (42 U.S.C. 1395x(v)(1)(L)(vii)(I)) is 
        amended by striking ``clause (v)(I)'' and inserting ``clause 
        (v)(II)''.
    (b) Revision of Per Visit Limits.--Section 1861(v)(1)(L)(i) of such 
Act (42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
            (1) in subclause (III), by striking ``or'';
            (2) in subclause (IV)--
                    (A) by inserting ``and before October 1, 1998,'' 
                after ``October 1, 1997,''; and
                    (B) by striking the period at the end and inserting 
                ``, or''; and
            (3) by adding at the end the following new subclause:
            ``(V) October 1, 1998, 110 percent of such median.''.
    (c) One-year Delay in Implementation of Mandatory Reduction in 
Payment Limits.--Section 4603(e) of the Balanced Budget Act of 1997 (42 
U.S.C. 1395fff note) is amended--
            (1) by striking ``described in subsection (d)'' and 
        inserting ``beginning on or after October 1, 2000''; and
            (2) by striking ``September 30, 1999'' and inserting 
        ``September 30, 2000''.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall apply to cost reporting periods beginning on or after October 1, 
1998.

SEC. 2. TWO OFFSETS.

    (a) Change in Number of Individuals Eligible To Enroll Under 
Medicare MSA.--Section 1851(b)(4)(A)(ii) of the Social Security Act (42 
U.S.C. 1395w-21(b)(4)(A)(ii)) is amended by striking ``390,000'' and 
inserting ``100,000 (for any date before January 1, 2004) or 500,000 
(for any date thereafter)''.
    (b) Three-Year Extension of Medicare MSA Termination Date.--Section 
1851(b)(4)(A)(i) of the Social Security Act (42 U.S.C. 1395w-
21(b)(4)(A)(i)) is amended by striking ``2003'' and inserting ``2006''.
Amends title XVIII (Medicare) of the Social Security Act (SSA) with respect to the computation formula for the interim system of limited payments for services provided by home health agencies, as amended by the Balanced Budget Act of 1997 (BBA '97). 
Creates a new formula for calculation of the agency-specific per beneficiary annual limitation for cost reporting periods beginning on or after October 1, 1998. 
Revises the rules for new providers for such cost reporting periods. 
Increases reasonable per visit costs for reporting periods beginning on or after October 1, 1998, from 105 percent to 110 percent of the median of the labor-related and nonlabor per visit costs for free standing home health agencies. 
Amends BBA '97 to postpone from October 1, 1999, to October 1, 2000, implementation of the mandatory 15 percent reduction in cost and per beneficiary limits under such interim system. 
Amends part C (Medicare+Choice) of SSA title XVIII to:  (1) change the number of individuals eligible to enroll for coverage in a demonstration Medical Savings Account plan from 390,000 to 100,000 (for any date before January 1, 2004) or 500,000 (for any date thereafter); and (2) provide for a three-year extension of such type of coverage.
To amend title XVIII of the Social Security Act to delay the 15% reduction and to make revisions in the per beneficiary and per visit payment limits on payment for health services under the Medicare Program, and for other purposes.