Directs the Secretary of Health and Human Services to develop a methodology for the payment for hospital outpatient care under part B (Supplementary Medical Insurance) of title XVIII (Medicare) of the Social Security Act on the basis of a classification of patients by the diagnosis related group (DRG) of the treatment of the patients. Requires the methodology to be designed in a manner as to deny payment for such care where payment with respect to such care was intended to be provided in the payment to the hospital under the DRG related prospective payment system. Directs the Secretary to report to Congress on the methodology developed.

Directs the Secretary to report to Congress on the cost of services for which payment is made under part A (Hospital Insurance) or part B (Supplementary Medical Insurance) of title XVIII during the 30 day period prior to, and the 60 day period after, each hospitalization for which payment is made under Medicare.